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California's 100% zero-carbon power proposal back in play

After nearly a year's delay, a California Assembly panel advanced legislation to accelerate the state's renewable portfolio standard to 60% by 2030, from a current requirement of 50% by that time, while putting power supply on a path to total decarbonization by the end of 2045.

The Assembly Committee on Utilities and Energy passed Senate Bill 100, 10-5, on July 3 after delaying a vote at the end of the 2017 legislative session amid ongoing debate over the ambitious proposal. Even in passage, lawmakers from across the political spectrum voiced reservations that are likely to remain as the bill heads toward an Assembly floor vote.

SNL Image

State Sen. Kevin de León, author of SB 100
and a Democratic U.S. Senate candidate.

Source: Associated Press

Chief among those concerns is the proposal's sheer timing, as it comes amid a fast-paced fragmentation of California's retail power sector that has the state's top regulator worried about another energy crisis. In addition, growing wildfire liabilities for the state's largest electric utilities threaten their credit ratings, and perhaps also their ability to purchase additional large volumes of new renewables. Several opponents also questioned the overall cost of decarbonization and pointed to the danger of stranding natural gas generation — the state's dominant source of electricity — needed to balance an increasingly variable power mix.

"This will increase rates, this will decrease reliability [and] the cost analysis here is ambiguous," Jim Patterson, the committee's Republican vice chairman, said at the hearing. "Not now. This is a leap of faith and a gamble given the set of circumstances our ratepayers and our employers are in presently as a result of previous policy."

Assembly Member James Gallagher, another Republican, warned of exacerbating an over-reliance on intermittent solar power, which has contributed to operational challenges on the grid and a need for more flexible, fast-ramping resources as the sun sets. While the state has goals to add energy storage for such ramping, currently natural gas and hydropower fulfill most of that role. "We talk about a renewable portfolio standard, but there doesn't seem to be much of a portfolio," Gallagher said.

Power sector split

The Republican lawmakers' comments echoed opposition from the state's three large investor-owned utilities, Edison International subsidiary Southern California Edison Co., PG&E Corp.'s Pacific Gas and Electric Co. and Sempra Energy utility San Diego Gas & Electric Co. The power sector as a whole, however, is split over the prospect of ratcheting up renewables purchases toward an all-green grid, as is California's broader business community.

Joining environmental groups and renewable energy companies in support of the bill are Berkshire Hathaway Energy, whose PacifiCorp subsidiary serves parts of Northern California, the Sacramento Municipal Utility District and the California Community Choice Association, which represents new power suppliers known as community choice aggregators, or CCAs. Formed by local governments, more than a dozen CCAs have scooped up 15% of regulated retail electric demand, according to the California Public Utilities Commission, which expects that share to rise to a quarter by the end of 2018 and to more than 80% by the 2020s.

While trade groups like the California Chamber of Commerce, California Manufacturing Technology Association and Western States Petroleum Association lined up in opposition, several major employers are endorsing SB 100, including Adobe Systems Inc., Nike Inc., Levi Strauss & Co. and Salesforce.com Inc. Numerous health groups are also backing the bill.

'Doomsday fiction'

State Sen.Kevin de León, the measure's author and a Democratic U.S. Senate candidate, defended the legislation against what he called "doomsday fiction." Given falling renewable energy costs, the bill's objective "is to reduce rates not to increase rates," he said. Blasting opponents for creating "fear, uncertainty [and] doubt" about accelerating renewables purchases and moving toward 100% carbon-free electricity, De León called for "leadership that charges forward when there's confusion."

"This bill cannot solve all of the problems," Assemblymember Bill Quirk added, but it "definitely contains cost containment unlike some of our other mandates," the Democrat said. Specifically, the legislation calls for energy regulators to set limits on purchasing renewables "at a level that prevents disproportionate rate impacts."

Quirk said he was encouraged energy regulators are tackling utilities' concerns over grid reliability and how to fairly share procurement costs as a large number of their customers defect to rooftop solar and CCAs. "We need to solve those [issues] but that's not within the scope of this bill," the lawmaker said.

The Senate, which passed a version of the legislation in 2017, would need to concur with amendments. Jerry Brown, who is entering his final months as governor of the nation's largest state economy, would also need to sign it.