Authority in Market for Green Energy
California’s newly created public power authority on Friday took the first steps toward creating one of the nation’s largest public efforts at generating electricity using energy from the sun, wind and other renewable resources.
The California Consumer Power and Conservation Financing Authority voted to give its chairman, S. David Freeman, permission to negotiate contracts with renewable energy providers.
As promoters of energy generated by wind, sun, steam and cow manure jockeyed for attention at the board meeting, Freeman said the power authority initially will fund about 1,000 megawatts worth of renewable energy proposals. An even heavier investment in power plants that do not use natural gas will come as the agency carries out its mission to build for California a “strategic reserve” of electricity, he added.
“It’s important to recognize that by going with renewables first, this agency . . . is willing to put its money where its mouth is,” Freeman said in opening the meeting.
“Over the years the renewables have gotten the music and fossil fuels have gotten the action. We intend to provide action on both fronts, but . . . to be sure no one feels that renewables are second-class citizens as far as the state is concerned,” the authority will deal with renewable energy projects first, he said.
The power authority did not set a limit on how much money it will spend on this first round of contracting for renewable energy, but it has the license to raise $5 billion in bonds.
Consumer and environmental activists see the power authority as a natural fit with one of their top priorities in the Legislature this session--a bill that would require utilities and other retail sellers of electricity to generate at least 20% of their power with renewable energy. Geothermal, wind and solar energy make up about 8% of California’s electricity production.
The bill, SB 531 by Sen. Byron Sher (D-Stanford), failed by a 7-10 vote to pass the Assembly Utilities and Commerce Committee Thursday, but it is up for reconsideration Monday. Environmentalists are lobbying hard to win additional votes to keep the bill alive.
“The public power authority can sign contracts now to jump-start renewable power development,” said Matt Freedman, an attorney with the Utility Reform Network, “then pass it on to the utilities, who would be obligated to buy it under this standard.”
The power authority also plans to consider proposals to build additional gas-fired generators by next summer. Those are scheduled to be discussed at the authority’s next meeting on Sept. 17.
Republican lawmakers, private energy producers and other critics, however, say that the power authority and the proposed legislation would do nothing but add to the cost of electricity. Power plants under construction or planned will soon guarantee that California has abundant electricity, they say. They note that the state’s intervention in the electricity market has left ratepayers with billions of dollars of long-term contracts to buy electricity, often at prices considerably higher than the current market rate.
The state has overextended its reach into managing power markets, said Gary Ackerman, executive director of the Western Power Trading Forum, which represents companies that generate power. “Further intrusions will cost taxpayers more money,” he said. “It makes no earthly sense for the state to stick yet another fist into this tar baby.”
But power authority board member John Stevens, a former Davis energy advisor, said a recent dramatic decline in electricity prices has prompted some power plant developers to abandon their plans to build new plants.
“We are at the mercy of people who can turn their power plants on or off whenever they please,” said Freeman. “We have got to build up 15% reserves that are controlled by the people of California.”
During Friday’s meeting, the power authority’s board heard from dozens of businessmen seeking taxpayer backing for their projects, including windmills, solar farms and power plants that would burn cattle-generated methane.
Companies have submitted proposals capable of generating a total of 2,500 megawatts--as much power as the city of Sacramento uses at summer peak.
Most existing and planned power plants in California burn natural gas. Environmentalists have urged Gov. Gray Davis and the Legislature to diversify California’s energy sources as they try to fix a power shortage and a dysfunctional electricity market.
Not only do wind, solar, geothermal and other such power sources provide a hedge against rising natural gas prices, environmentalists argue, but renewable energy spares the state air pollution and the release of greenhouse gases blamed for changing the global climate.
Activists with the group Greenpeace performed a street theater skit called “Dr. Fossil vs. the Super Solar Man” before Friday’s power authority meeting.
They found an agreeable audience in Freeman, the former general manager of the Los Angeles Department of Water and Power. In his 50-year career at some of the nation’s biggest publicly owned utilities, he has earned a reputation for fostering conservation and solar energy.
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