EnergyBiz - November/December 2007 - (Page 22)

› A new law passed last year to fight global warming that requires a 25 percent reduction in California greenhouse gas emissions by 2020, which would roll back emissions to 1990 levels. › An earlier mandate for the state’s investor-owned utilities to obtain 20 percent of their energy from renewable sources by 2010. › A 2006 law requiring utilities to reduce their energy load demand by 1 percent annually over each of the next 10 years. › A solar initiative designed to drive the installation of 3,000 megawatts of new solar installations in California over the next 10 years. › A plan adopted by the state public utility commission in late September that provides a new system of incentives and penalties designed to prod utilities to exceed the state’s original energy efficiency goals. The idea is to provide incentives to ensure that utility investors and managers view energy efficiency as a core part of a utility’s operations that can yield financial benefits. The PUC’s Peevey sees the plan as a framework for the rest of the nation. “The culture of a business is often, if not always, defined by how that business makes money,” he said. “As a result, in the utility world energy efficiency has traditionally played second fiddle to the generation and transmission side of the business. This decision changes that view. It’s my hope that California’s innovation serves as a template for other states around the nation.” Another commission member, Dian M. Grueneich, said the new plan would do a lot for California’s efforts to combat global warming. “The risk and reward incentive encourages utilities to invest in energy efficiency the same way they would invest in a power plant,” she explains. “Our efforts will reduce global warming by an estimated 3.4 million tons of carbon dioxide by 2008, which The regulator is equivalent to taking about 650,000 cars off the road.” Schwarzenegger also has been a leading proponent of energy efficiency, alternative energy and greenhouse gas reduction initiatives. And he’s joined with other state and provincial officials in North America to push such efforts forward on a wider scale, often locking horns with the Bush administration. In remarks earlier this year, Schwarzenegger said California aims to cut greenhouse gas emissions 80 percent below the 1990 level by the year 2050. “Now, do I believe that what California does and the standards that we set will really solve global warming? No, of course not,” the governor said. “What we are doing is applying leverage… We are taking action ourselves, we are not waiting for the federal government, and we are not waiting for Washington.” As a result, utility executives now find themselves operating in a much different environment than a few years ago. “There are a variety of ways for us to meet our service needs, but increasing energy efficiency is a big part of it for us,” says SMUD’s Patterson. “There’s been a decoupling in California, first on the natural gas side and more recently on the electricity side,” says SDG&E’s Reed. “Profitably is no longer tied to customer usage. Our earnings would be linked to reducing power use by our customers.” In fact with incentives in place for energy efficiency under the latest PUC plan, the state’s private utilities can actually make money when customer demand drops. And public utilities like SMUD are also behind the effort, although any profit generated by lower demand would go back to customers, not shareholders. Despite the environmental benefits, not everyone in California believes this is an especially good thing. Some consumer organizations fret that the state’s push for renewable energy is making such energy supplies more expensive – and that the costs will be passed on to ratepayers. On the other hand, Peevey and executives like Reed say customers can capitalize on innovations like smart meters to cut their bills by reducing energy use at peak times. Meanwhile, California continues to pioneer new ways of powering society and addressing environmental concerns. Ferc sparks change NEW U NIT PROMOTES NEW IDE AS BY SUEDEEN k ELLY Regulatory Commission announced the creation of a new Energy Innovations Sector. This new unit recognizes the need for expertise at the commission to track the legal, regulatory and policy issues associated with renewable energy, energy efficiency, distributed generation, greenhouse gas emissions policies and advanced technologies relevant to the trans- On September 20, the Federal Energy mission grid and wholesale markets. The unit will be housed within the Office of Energy Market Regulation and will provide cross-cutting expertise to promote and manage the commission’s activities with regard to these important issues. The sector was created in response to the growing need to open access to the wholesale electric markets on a non-discriminatory basis to demand response, energy efficiency, renewables and distributed generation. While the commission has increasingly been addressing these matters in its decisions, the creation suedeen kelly of the unit will dedicate resources to perform indePhOTO cOurTesy Ferc pendent assessments of these important issues. It will provide technical support to commission staff, and will operate as in-house advisers to the commissioners in identifying and addressing the legal, regulatory, and policy issues related to the integration of demand resources, energy efficiency, distributed generation and renewable resources into wholesale markets, reliability, transmission planning, and resource adequacy. 22 E n E rgyB i z November/December 2007

Table of Contents Feed for the Digital Edition of EnergyBiz - November/December 2007

EnergyBiz - November/December 2007 Contents Continental Grid Vision Needed Readers’ Views and Opinions Next for National Grid Clearing the Air The Need for Nuclear Energy Trade Status Report The Innovators California On The Leading Edge FERC Sparks Change Getting Coal Right Leadership in Times of Turmoil Innovation Delivers Return A Tale of Two IPOs LNGs Bright Prospects Generation Techologies The Age of Superconductors Leaders with Vision Get Ready for Plug-in Hybrids Betting on Batteries Cost of Decarbonizing Nuclear Helmsman – A chat with Dale Klein, Chairman of the U.S. Nuclear Regulatory Commission Global Energy Snapshot; Low-Income Energy Help; IT Spending Robust; The Greening of State Regulators; Generating Support Simplifying Offshore Wind Regs Chasing Construction Costs Energy Agency Sets New Course Deregulation Means Higher Rates Go-To Staffer Nightmare in Manhatten

EnergyBiz - November/December 2007

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