ESM 297 Week 8

ESM 297 Week 8 - ESM 297 Renewable Energy Law and Policy...

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Unformatted text preview: ESM 297 Renewable Energy Law and Policy Week 8: Community energy solutions, Part II Tam Hunt Energy Program Director/Attorney Community Environmental Council Back to renewable electricity... How do we get massive amounts of renewable electricity in our county? Currently, SCE is at 17% PG&E is at 13% The state's goal is 20% by 2010 and 33% by 2020 We need up to 200300% of our current electricity demand FROM RENEWABLES, which is what we'll need to get off petroleum So how do we do it? Public Power "Public power today is an important, contemporary American institution. From small towns to big cities, wherever public power exists, it is an expression of the American ideal of local people working together to meet local needs. It is an expression of the local control that is at the heart of our federalism system." American Public Power Association (APPA) Private Power "The roughly 1,800 municipal utilities and 900 cooperatives (owned by their customers) enjoy a range of unfair preferences, ranging from tax exemptions to subsidized loans to other state and federal subsidies. The national government produces electricity through the Tennessee Valley Authority and five regional power marketing administrations, and provides municipalities and coops preferential access to that power. Cities should simply sell their public power systems." Doug Bandow, Cato Institute (1997) The middle ground: Community Choice Aggregation Community Choice allows local governments to take control over generation of power Investorowned utilities retain control of transmission and distribution Community Choice Aggregators (CCAs) can choose to build OR buy generation Most will choose to buy immediately and then build generation facilities over time Cost savings from public money, lack of profit requirement, and no taxes paid, are passed on to consumers CCA Diagram http://www.communitychoice.info/_pdf/Commu Other key features CCA is "optout" The investorowned utility retains control of billing (along with transmission and distribution) Investorowned utilities are ostensibly "economically indifferent" This means that customers are automatically in the CCA unless they affirmatively choose to leave But are they? Utilities are trying to get back into the generation business in CA, so CCA generation may impact IOU plans And CCA could be the "camel's nose" for full municipalization Navigant's pilot studies Navigant Consulting is the predominant consultant on CCA thus far They completed a number of pilot studies recently, finding: Almost all jurisdictions were likely to achieve cost savings, even WITH a doubling of the state's Renewable Portfolio Standard (to 40%, up from 20%) The studies found an average of 3% savings under an "assetbased model" This assumed only a 2% annual utility price inflation, which is far below historical averages Navigant's pilot studies The "assetbased model" was much more likely to yield cost savings than the "marketbased model" Also, studies found that going from 20% renewables to 40% renewables only added about 1% to customer's bills! 9 of 11 saved under assetbased, only 3 of 11 saved under markets (Assumed average cost of renewables was 5.9 cents/kWh, which seems very low today) Back to the real world... Only one CCA has submitted an implementation plan to the PUC so far The San Joaquin Valley Power Authority submitted its plan in January of 2007 and the PUC approved it shortly thereafter SJVPA consists of a "joint powers authority" between 12 cities and one county in the San Joaquin Valley (Fresno is the biggest entity with the most voting power) The SJVPA plans to build a 500 MW natural gas plant near Selma More on SJVPA SJVPA will also have to meet the 20% renewables by 2010 requirement But it's not clear that obtaining more renewables was a motivator for SJVPA Rather, cost savings appear to be primary: the impl. Plan discusses a 5% savings rate for the first year But the impl. Plan does highlight energy efficiency and a plan to improve EE Likely implementation problems Cost Responsibility Surcharge (CRS) Can CCAs get enough renewables at the right price? Will the political will remain strong enough to see the process through to its end? Currently about 2 cents/kWh This is not so high as to eliminate costeffectiveness, but it will make it much harder for new CCAs Set to expire by 2012, so the longer CCAs wait, the less the surcharge will be Tam Hunt: 9630538, x. 122, [email protected] ...
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