California Governor Arnold Schwarzenegger on Sunday signed a bill
designed to encourage the development of combined heat and power systems in
California and make a dent in greenhouse gas emissions.

The bill (A.B. 1613), by Assemblyman Sam Blakeslee, requires utilities to
purchase electricity from cogeneration facilities, though it calls for
purchases to be "ratepayer indifferent," meaning utility ratepayers should not
be required to pay higher costs because of the facilities.

The California Public Utilities Commission will need to establish limits
on the amount of electricity that utilities would purchase from cogeneration
systems. Separately, the California Energy Commission, by 2010, will need to
adopt operating guidelines requiring cogeneration systems to operate
efficiently.

Blakeslee said he believes the bill will help spark increased use of
cogeneration facilities by schools, hospitals, hotels and other customers.
Although utilities may view cogeneration as a form of competition from
customers, California's climate law and power needs helped draw support for
the measure, he said. "Everyone appreciated that it was just the right thing
to do and the right time to do it, to foster technology that reduces GHG
emissions while bringing new power online," he said in a statement.

Schwarzenegger on Saturday vetoed a bill by Senator Christine Kehoe that
would have allowed owners of small-scale renewable generation facilities to
sell excess power to investor-owned utilities at rates set by the PUC. In his
veto message, Schwarzenegger expressed concern that the bill (S.B. 451) would
have allowed utilities to own all renewable energy credits associated with
such facilities. An REC is a credit that represents the environmental
attribute of the power produced from renewable resources, which can be sold
separate from the electricity.

The provisions of the bill, the governor said, would automatically
transfer ownership of RECs once a renewable project owner sells any amount of
electricity to a utility. "A proportional share, if correctly implemented,
could be justified. But as written, this bill removes a significant financial
incentive for renewable generators and would force them to downsize or abandon
their projects," Schwarzenegger said.