A groundbreaking California law requires all investor-owned utilities to increase their renewable energy use by 1% per year, eventually to 20%.
The Renewable Energy Portfolio Standard, signed in September, “dwarfs anything any [other state] has done,” said Nancy Rader of the California Wind Energy Association.
But there’s a catch. The Public Utility Commission and the California Energy Commission will set a “benchmark price” for energy, primarily natural gas, which utilities must pay for 10 years. That figure, to be set as early as June 2003, could make or break the program.
If bids for renewable energy come in higher than the benchmark, the difference will be subsidized by the Public Goods Charge, $135 million per year from an existing surcharge on Californians’ energy bills. But if that fund runs out, the law is waived until the following year. If renewable energy comes in lower than the price for gas and other nonrenewables, the fund would last longer, allowing enough investment to meet the 20% goal.
The good news for renewable-energy proponents is that the benchmark is supposed to account for the full cost of natural gas energy, including expensive construction already paid for. Renewable-energy plants, which could run on free, stable fuel like sun and wind, could compete better under this formula.
“Renewable” excludes new hydroelectric contracts but does allow geothermal — by far the state’s largest “renewable” source [see p.15].
