Now that California is in the
last stages of adopting its Energy Action Plan II, it is an
opportune time to discuss the comprehensive solutions being
enacted there. First and foremost, California has been able to
conduct a thorough discussion of energy policy and legislation
without sounding like a house divided. It is for these reasons
that I celebrate California as a leader in “best practices” for
state energy policy.
While there are many areas of energy where California has been
able to adopt a leadership role, the single greatest achievement
must be the spirit of cooperation permeating the entire process.
Unlike the old “business model” for getting energy policy done,
California has stopped the name-calling and the public displays of
discord between stakeholders.
This means that the important issues surrounding California
energy policy are now being decided by the California Public
Utility Commission, the CA Energy Commission, the CA EPA, the
California Legislature, the Business, Transportation and Housing
Agency, the Resources Agency, the State and Consumer Services
Agency, the California Independent System Operator (CAISO), the CA
Investor Owned Utilities (IOU), the CA municipal utilities, the
state consumer groups, the state environmental groups like the
Natural Resource Defense Council, Governor Schwarzenegger and his
Cabinet, the California Climate Registry, the California Lighting
Technology Center, the CA educational community and the private
sector without the usual politicization. In addition, the
well-respected Lawrence Berkeley Laboratory has provided analysis,
information, research studies and policy recommendations to
California decision-makers.
There are several reasons for this development. However, the
over-riding fact is that California has come through the
gut-wrenching problems caused by the Energy Crisis of 2001. Some
people liken that experience to having viewed one’s own hangman.
In fact, it could be argued that California did not need any other
reason to get its energy policy affairs in order.
There is a “perfect storm” of forces that have helped create
this new spirit of cooperation. The single most important reason
for the sanity of energy policy in California has to be the
quality of leadership and economic maturity being exhibited
throughout the process. One could argue California has a
world-class roster of energy people ready for the challenge.
With apologies to those not mentioned, some obvious names and
their credentials come to mind: Mike Peevey, President of
California Public Utilities Commission (CPUC) and 2005 Charles H.
Percy Award winner; Dr. Arthur Rosenfeld, Commissioner of
California Energy Commission and co-founder of the American
Council for an Energy Efficiency Economy (ACEEE), the University
of California's Institute for Energy Efficiency (CIEE), and the
Washington-based Center for Energy and Climate Solutions (CECS);
Joe Desmond, Chairman of the California Energy Commission and
former energy consultant; Susan Kennedy, a Commissioner of CPUC
and the CPUC's Assigned Commissioner for energy efficiency; Dian
Grueneich, a Commissioner of the CPUC with more than 25 years of
experience in energy efficiency and environmental policy and law;
Diane Wittenberg, President of California Climate Action Registry;
Dr. Sev Borenstein, Director of the University of California
Energy Institute; Dr. Michael Siminovitch, Director of California
Lighting Technology Center; Gene Rodriquez, Director of Energy
Efficiency for Southern California Edison Company, Steve McCarty
and Roland Risser, who share EE responsibilities at PG&E; and
Patty Wagner and Michelle Mueller for the Sempra companies; and
Sheryl Carter, Natural Resources Defense Council's (NRDC) Director
of Western Energy Programs and Devra Wang, NRDC’s staff scientist.
Certainly, it is worth reviewing how California has been able
to accomplish so much including the completion of the Energy
Action Plan II, whose “overarching goal was for California’s
energy to be adequate, affordable, technologically advanced and
environmentally-sound.”
First, some of the sacred cows of energy and energy policy had
to be amended. In the case of public benefits for electricity,
free-ridership (i.e. providing a rebate for products or services
that the customer would buy anyway) is still tracked but it does
not hinder achievable energy efficiency savings. In essence,
California is providing open-ended rebates for all prescribed acts
of measurable energy efficiency. With significantly expanded
budgets and energy efficiency goals, California has chosen not to
choose winners and losers. For electricity, a kilowatt saved is a
kilowatt saved, period.
Also, California has adopted a “loading order” for new sources
of electricity. The loading order prioritizes all new sources,
with the most environmentally-friendly source being the first
options and the least friendly being the last. Therefore,
California’s first response to meeting growing energy needs is
energy efficiency and demand response; then, renewable sources and
distributed generation will be deployed; and lastly, clean and
efficient fossil-fired generation will be utilized. This emphasis
on clean power allows the CPUC to play an active role in
California's emission reduction efforts and Greenhouse Gas
reporting being spearheaded by the California Climate Action
Registry.
In addition, California is using a two-pronged attack to
distribute rebates for energy efficiency, with a combination of
utility administered public benefits programs and energy
efficiency procurement programs mandated by the CPUC and run by
the utilities are both being used to reduce overall electrical
consumption. The other benefits of these energy efficiency
programs are that they come with technical and design assistance
along with energy education and product information. In fact, it
could be argued that this combined approach is more powerful than
either program is alone, especially now that the resulting energy
savings can be strictly measured and verified.
Finally, other innovations proposed in the Energy Action Plan
are as follows:
1. allowing utilities the same return-on-investment for energy
efficiency, demand response and new power plants;
2. integrating energy efficiency programs with demand response
programs so that there are no disincentives for doing both;
3. transforming Research, Development & Demonstration (RD&D)
projects into energy efficiency tools and standards;
4. restructuring the IOU rate-making process to reduce the
number of proceedings, create more transparency, adopt rates based
on clear cost-causation principles and identify opportunities to
reduce electricity costs;
5. creating a sense of regulatory certainty and a long-term
planning process capable of flexibility.
California should be honored for the orderly process it has
used to advance its best ideas into the Energy Action Plan II,
which offers one of the most comprehensive roadmap for energy
policy in the U.S. As importantly, California has become the
leader in developing energy efficiency and demand response
programs that will be a formidable tool for the demand-side of the
energy market in the future.
Combining economic development and environmental stewardship,
California has done its best work with collegiality and consensus.
While each state has its own requirements and constraints,
California deserves to be studied for its process, planning and
innovation.
References:
California's Energy Action Plan:
http://www.energy.ca.gov/energy_action_plan/2005-07-27_EAP2_DRAFT.PDF
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