PUC seeking permits for imported electricity

California regulators are recommending a program that requires utilities to obtain permits for emissions at out-of-state power plants that generate electricity sent into the state and endorsed a cap-and-trade system that allows polluters to trade permits.

Regulating emissions at the point of delivery into the California electricity system is preferable because the most populous U.S. state imports a fifth of its power, the Public Utilities Commission said in a proposal on its website dated Feb. 8. Those imports from neighboring states represent more than half of the greenhouse gases generated to supply California.

The recommendations are part of an effort by state regulators to reduce greenhouse gas emissions blamed for global warming to 1990 levels by 2020. Regulations to meet the targets are scheduled to take effect in 2012.

“The fundamental question is how do you deal with covering greenhouse gas emissions associated with imported electricity,” said Joshua Bushinsky, western policy coordinator with the Pew Center on Global Climate Change in Arlington, Va.

An alternative plan that was rejected by the Public Utilities Commission would have regulated greenhouse gases at the power retailer, which potentially would “interfere with the functioning of the wholesale electricity markets,” the commission report said. “Wholesale prices from low-emission generation would rise.”

A cap-and-trade system requires power plants and other polluters to obtain permits for emissions of carbon dioxide and other greenhouse gases released into the atmosphere. The permits can be traded if the power plants are able to keep their emissions below a certain threshold.

The system may allow the electricity industry to curb emissions at a lower cost and can be combined with mandatory reductions, the Public Utilities Commission said.

The proposal will be considered by the California Energy Commission on March 12 and the Public Utilities Commission on March 13.