CARE blames RPS for rising CA energy costs

August 21, 2013 | By Barbara Vergetis Lundin

California is currently implementing a broad range of costly and often conflicting regulatory programs with little discussion among policymakers about the cumulative impact of these actions and having unintended consequences. That is the contention of a newly formed group of statewide associations, local business groups, elected officials, and industry leaders calling themselves Californians for Affordable & Reliable Energy (CARE).

Credit: David Ball/Wikimedia Commons

The coalition positions itself as being designed to highlight the state's energy challenges and promote the need for a comprehensive state energy plan that prioritizes affordability, reliability and adequate supply.

Navigant recently prepared a report for CARE examining key cost drivers of three prominent energy programs. The research contends that the 33 percent Renewable Portfolio Standard requirement is leading to increased prices and rates as utilities attempt to incrementally phase in renewable energy to their portfolios while adjustments already made have created new challenges in the management of providing reliable electric service.

Implementation of AB 32 has added to electricity prices attributable to the "carbon component" of energy costs, according to Navigant and the impact of these carbon price increases on electricity bills will be felt disproportionately by end users.

The California Air Resources Board's assumptions that full compliance with the Low Carbon Fuel Standard will result in negligible price increases have been called into question by a number of detailed studies, including Navigant's, claiming that considerable uncertainty lies in the eventual cost impacts and litigation to date regarding the legality of its rules, as well as uncertainty regarding the potential supply of alternative fuels and associated infrastructure required.

According to Navigant, the difference in energy costs between California and its neighboring states impacts business, job creation and local communities. Such effects include increased costs for city or county vehicle fleets, heating and cooling costs for schools, electricity costs at water treatment facilities, and costs for providing other essential public services.

"There is not a single, credible source of analytics and data that can inform companies and policymakers regarding the cumulative costs of these climate change policies and regulations in combination with many other recently approved and/or proposed energy-related policies," said Patrick Mealoy, managing director in the energy practice at Navigant Consulting, Inc. "The uncertainty about cumulative impacts is a serious challenge for policymakers."

According to the Little Hoover Commission, "In a short period, the state has adopted a series of transformative policy initiatives, any of which taken individually would take years of careful planning to implement. The policies were adopted one at a time without the benefit of a cohesive design. Now they are being implemented simultaneously without an overarching plan. The state has not produced a comprehensive assessment of the total cost of implementing this group of policies, inhibiting consumers and businesses in their ability to plan for this new future."

In light of these studies, the coalition is urging the state to develop an energy strategy that can enhance economic recovery and job outlook before adding additional layers of new energy laws and regulations.

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http://www.fierceenergy.com/story/care-blames-rps-rising-ca-energy-costs/2013-08-21