Yesterday’s webinar, hosted by Information Forecast, Inc., on REC Trading in California brought up some interesting points that I just hadn’t considered before and got me thinking. The number one thing that stood out in my mind during this hour and a half program on the differences between Senate Bill 722 and the California Public Utility Commision’s (CPUC) executive order AB 32, was the fact that even today, California’s public utilities are not held to the regulations of the states RES. WHAT??? How is it/why is it that public utilities are not held accountable for their electricity portfolios? Investor Owned Utilities (IOU) are currently required to meet a 20% renewable portfolio standard, IOU’s are contributing to a cleaner environment, and IOU’s are taking on additional costs to implement these government mandated standards. All the while, the public utility companies stand on the wayside, running business as usual, producing their energy from sources such as coal and gas, which massively pollute the already smoggy environment that is California.
It seems these sort of follies are occurring all the time and all over the place, but I guess I just hadn’t expected it to be happening in such a forward thinking, green state as California. Currently California has a mandate of 20% renewable energy by 2017, which most IOU’s are already achieving. So, last September, Governor Schwarzenegger gave an executive order to the CPUC to implement a program that will increase the states RES from 20% by 2017 to 33% by 2020. The order came with a few rules/guidelines:
- establish 33% RES under current climate change law
- establish priority on resources with greatest economic benefit
- exempt small utilities (< 200 MWh’s in annual sales)
- exempt utilities with hydroelectricity in their portfolios
- tier the program with smaller, shorter-term goals
This program is expected to be voted upon at the Air Resources Board’s July 22, 2010 meeting, at which time the program would be adopted. However, there is currently another program running through the legislature which will conflict with the above mentioned program, Senate Bill 722. Last year, a bill passed through the legislature which would have implemented a 33% RES for California, but when it reached Governor Schwarzenegger’s desk, it was vetoed. Since that time, the senate has been working on another program which would take into account economic issues facing the state with the hopes of running it through the legislative process before the senate session closes this August. It’s this SB 722 that gave the webinar it’s title, REC Trading in California.
Under SB 722, REC (Renewable Energy Credit) trading will be a substantial factor for many utilities reaching to achieve a 33% renewable electricity portfolio. Meaning many utilities will not actually need to produce 33% renewable electricity, they will only need to deliver 33% renewable electricity. The difference between what they can produce and what they are required to deliver as far as renewables are concerned will be made up through the purchasing these REC’s. Some key points to SB 722 are:
- utilities are limited to 10% of their portfolio from REC’s
- there is no price cap for an REC
- grandfathering of contracts will occur for any agreement approved before June 1, 2010
For additional information on SB 722 and AB 32, visit the CPUC website.
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