Sep 19 - Contra Costa Times (Walnut Creek, Calif.)

California utilities now lag in efforts to achieve the state's goals for energy conservation and increased use of renewable fuels, but regulators hope that the apparent shortfalls merely reflect growing pains in ambitious new programs and limitations in data collection.

State Public Utilities Commission President Mike Peevey said Monday that he remains optimistic about the state's chances for meeting its conservation and green fuels targets but acknowledged that he was "more concerned than nine months ago."

Peevey reacted after hearing a report by PUC staff at a quarterly meeting of PUC and state Energy Commission members that highlighted disappointing results in high-profile programs to step up utilities' energy efficiency and use of price signals to promote conservation. Renewable energy project sponsors also have been complaining about inadequate financial incentives, said Sean Gallagher, a PUC staff member.

Failing to meet its goals could have big consequences for the state's consumers and policy makers. Effective conservation could help electricity customers avoid picking up a multibillion-dollar tab for new power plants. The state also is counting on conservation and its renewables program to eliminate millions of tons of greenhouse gas emissions, which contribute to global warming.

State energy officials acknowledged at the meeting that the initial results in those areas were not what they had been hoping for. A utility-based program to promote more efficient use of energy at times of peak demand of 442 megawatts through July had posted only 84 megawatts of savings, or 19 percent of its goal, Gallagher said.

Another program that aims to use price signals and economic incentives to promote conservation by large customers has also gotten only halfway to its overall goal of 2,500 megawatts -- equal to several large power plants. While the installation of new meters in coming years could eventually yield substantial savings, resistance from large customers to new rate schemes has slowed the program, he said.

"It's time to take a look at whether (the original) target is achievable," Gallagher said.

Officials at the meeting said they had gotten mixed messages about the program to increase the use of fuel from solar, wind, geothermal and other renewable fuels. Utilities have expressed confidence that the goals will be met, but renewables' project developers have voiced frustration at uncertainty and insufficient financial incentives in the program.

Joe Desmond, a top energy adviser to Gov. Arnold Schwarzenegger, worried that there is inadequate reporting on progress in renewables, which state law requires to fuel 20 percent of the state's power plants by 2010. He described a scenario in which that year arrives, "People say, 'Sorry we're not there,' and then the finger-pointing starts."

Energy officials were more upbeat about their performance during a July heat wave that pushed electricity use to record levels as air conditioners roared. "The system that California has put in place over the last few years is working," said David Ashukian, an Energy Commmission staff member.

Widespead outages that hit customers resulted from a failure of neighborhood transformers, which showed up as the "weakest link in our system," he added.

Ashukian said that this summer's heat wave was an unusual event unlikely to recur more often than about every three decades. Californians had better hope so. Only about 160 megawatts of new power is expected by next summer, and only 893 megawatts by 2008, the Energy Commission estimates.

Rick Jurgens covers energy and business. Reach him at 925-943-8088 or at rjurgens@cctimes.com.

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