It’s the Infrastructure, Stupid

GHG In California

Watching the California Air Resources Board (CARB) try to find ways to curb greenhouse gases is not fun – but AB 32, signed by the Governor and championed by a Democratic legislature requires that CARB engage this process. The “early action” plans for limiting household contributions via refrigerants were so troublesome that that it got the chair of the board fired, followed by the director’s resignation. After a year of meetings, on December 6, CARB officially adopted a greenhouse gas reduction goal of 29 percent for 2020. Carving up everyone’s share is what comes next. The whole “enchilada” will not be fully cooked until 2012.

RENEWABLES

The idea was to jump start the use of renewable energy – a great idea, but the regulatory side of this is still broken. Some have suggested that the State should engage playground rules and call this one a “do-over.” Sounds good, but this is government, so simplifying the convoluted process would be like the average American assisting with re-tasking a CIA surveillance satellite. Possible, yes, but highly unlikely… In a “ballot happy” State, perhaps the path might be an initiative – and just such a trick is currently in the works. This RPS iteration would require half of the state’s power to come from renewable supplies by 2025. The idea is not fully developed yet, but it will be one to watch.

TRANSMISSION

The Devers-Palo Verde 2 line proposed by Southern California Edison (SCE) was rejected by the utility commission on the other side of the Arizona-California border. The Arizona Corporations Commission called it an attempt to suck cheap power out of their state to more prosperous Californians. SCE is angling for federal intervention in order to get the line built. Meanwhile, on this side of the California-Arizona border, SDG&E’s Sunrise Powerlink, is bumping into misinformed opposition. Similar to SCE, SDG&E is working to address concerns by pointing out that the line will bring in renewable energy – remember here that State Law requires the utilities to secure renewable power. Landowners and enviros aren’t buying it and are calling for renewables close to where they will be consumed. Let’s hope that NIMBY-ism does not win the day, since the reality is that we need a mix of everything – near and far.

GENERATION

Similar to 2000 and 2001, the last couple of years have seen several filings initiating the permitting process for the construction of generating facilities at the California Energy Commission. But they all have the same story – without a contract, the actual construction may not happen. Why the rush to file, you ask? Well, notwithstanding governments’ ability to move at glacial speed, progress has been made by regulators to stabilize the regulatory process. The good news is that the progress, while it has a way to go, has stimulated the interest of the independent power producers. Good news, because the process should yield at least some new generation and keep competition alive in California. The proof will be in how the most recent round of RFO’s come out – we should know more in early 2008.