It’s the Infrastructure, Stupid

California Elects Jerry Brown -- How Might He Impact California's Energy Policy?

This is just a recap of what we will be looking at in the year to come with a new Governor and also a quick look at what happens next... 

NEW GOVERNOR

On November 2, 2010, Californian’s elected Jerry Brown as the next Governor.  So, how will the election impact the energy sector?

Appointments and Energy Advisors

As soon as this coming week, we can expect Brown to announce a team that will lead his transition into office.  This team will help organize and recruit those that will lead the various agencies and departments – but principally – the initial transition team typically ends up as part of the Governor’s Cabinet or Governor’s Office initial key advisor staff.

Specific to Energy, candidate Brown said he would appoint an energy advisor – he called that a “renewable energy jobs czar” -- Whomever he selects, they will be a driver for energy policy in California.

Candidate Brown on Energy

Candidate Brown campaigned on the following plan for energy:

• Building 12,000 megawatts of Localized Electricity Generation
• Building 8,000 Megawatts of Large Scale Renewables and Necessary Transmission Lines
• Dealing with Peak Energy Needs and Develop energy Storage
• A Timeline to Make New Homes and Commercial Buildings Zero Net Energy
• Making Existing Buildings More Efficient
• Adopting Stronger Appliance Efficiency Standards
• Developing More Cogeneration Projects to increase combined heat and power production by 6,500 megawatts
• Add 500,000 new renewable energy jobs

Agencies

Governor Brown will be appointing to the energy and environmental agencies:

CPUC – Brown will have at least 3 appointments to replace Commissioners Bohn, Gruenich and Ryan

CEC – Brown will have at least 3 appointments to replace Commissioners Byron, Eggert, and Wisenmiller

Other Agencies – Brown will also have appointments to agency secretary roles at Cal EPA and Resources, Chair at CARB (the entire CARB Board serves at the Governor’s pleasure), CAISO (Chair Willrich’s term is up, Board member Tom Habashi, was not confirmed. Kristine Hafner also did not win support of the current administration, and Board member Laura Doll told media she would not seek reappointment -- so 4 appointments for Brown here).

NEW LEGISLATURE/CONSTITUTIONAL OFFICERS

While the California Legislature remains unchanged as far as balance goes (Democrats still in control of the Senate and Assembly), there are rumors that we will see a new president of the Senate.  We may also see a shuffling of committee chairs. 

Already (on 11/4), the Republicans have announced that the new minority leader will be Connie Conway (Assemblywoman from Visalia).  On Friday (11/5), the Democrats re-elected Perez as Speaker.

While it should not impact the policy of energy too much, it is interesting to note that all Constitutional officers are Democrats [NOTE: AS OF THIS DATE, THE AG RACE HAS NOT YET BEEN CALLED].

All of these changes could bring changes in the views on energy policy. 

Energy Legislative Committee Chairs Re-Elected Easily

Senator Alex Padilla (D-Pacoima), current chair of the Senate Energy Utilities & Commerce Committee, won 69 percent of the vote; Assemblymember Steven Bradford (D-Los Angeles), current chair of the Assembly Energy Committee, won 82 percent of the vote.

PROPOSITIONS

With regard to the propositions, the failure of Prop 23 means that AB 32 can move forward.  The passage of Prop 26 could mean that the legislature will have to approve by 2/3 vote how and if fees will be imposed to implement AB 32.  So this makes for an interesting situation. 

Legislation and RPS vs. RES

Depending on whom Brown selects as his energy advisor or advisors, these have the potential to greatly impact what we see in the form of the next RPS bill (Rumor: We will see a new RPS bill in January, this bill has the potential to look very similar to SB 722 – and Senator Simitian is expected to again carry the RPS bill – 3^rd time the charm?).  Labor played a key role in the discussions in the last 2 versions of this effort, so considering that labor and the unions influenced by labor gave Brown $25 million (IEs that paid for the Whitman attack ads), I assume they will again play a major role and this time with a much more sympathetic ear from the Administration.

CONCLUSION

The most important message to take from this is the following: If you are working on projects in California, you really need to pay close and active attention to how the energy and renewable process develops under the new Governor and offer your opinions on a regular basis.

CATO Institute Calls President-Elect Obama's "Going Green" Plan a "wealth transfer"

The much respected CATO Institute has issued a report on the Obama energy plan to go green for the United States, and the report says the only "green" in the plan will be part of a wealth transfer.

As if that were not enough, the report also says that a federal renewable portfolio standard is unlikely to deliver much green power.  The paper dubbed President-elect Barack Obama’s plan to create a federal green power standard of 10 percent in 2012 and 25 percent in 2025 a “wealth transfer.”

Read the report:  "A Federal Renewable Electricity Requirement" www.cato.org

Obama-Nation: Historic Win -- Now What on Energy?

Historic.  That's the word that most of the pundits used to describe it.  While I have my reservations about some of the issues and how the President Elect may deal with them, I agree that we have an exciting situation in the United States.  Biut closer to my heart is energy.  And what can we expect from the president elect and the vice president elect?

Lets review what they said during the campaign and you decide.  As for me -- I see HUGE hurdles, given the economy.  Many challanges remain in California and as to how we meld with the campaign promises and the realities that come -- well, lets wait and see...

What Does Barack Obama Say About Energy?

www.barackobama.com

ü      Reduce the Burden of Rising Gas Prices on Working Families

ü      Reduce Carbon Emissions 80 Percent by 2050

ü      Invest in a Clean Energy Future

ü      Support Next Generation Biofuels

ü      Set A

merica on Path to Oil Independence

ü      Improve Energy Efficiency 50 Percent by 2030

ü      Restore U.S. Leadership on Climate Change

Senator Joe Biden

The energy challenge take sacrifice and is a moral crusade. (Dec 2007)

FactCheck: Oil did not jump $18/bbl due to Iran Resolution. (Dec 2007)

Supports cap-and-trade for greenhouse gases. (Nov 2007)

Provide for emergency fuel assistance immediately. (Oct 2007)

Make every automobile sold be a flex-fuel automobile. (Apr 2007)

Voted YES on tax incentives for energy production and conservation. (Jun 2008)

Voted YES on addressing CO2 emissions without considering India & China. (May 2008)

Voted YES on removing oil & gas exploration subsidies. (Jun 2007)

Voted YES on factoring global warming into federal project planning. (May 2007)

Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)

Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)

Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)

Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)

Voted YES on Bush Administration Energy Policy. (Jul 2003)

Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)

Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)

Voted NO on drilling ANWR on national security grounds. (Apr 2002)

Voted NO on terminating CAFE standards within 15 months. (Mar 2002)

Voted NO on preserving budget for ANWR oil drilling. (Apr 2000)

Voted NO on ending discussion of CAFE fuel efficiency standards. (Sep 1999)

Voted NO on defunding renewable and solar energy. (Jun 1999)

Voted NO on approving a nuclear waste repository. (Apr 1997)

Voted NO on do not require ethanol in gasoline. (Aug 1994)

Keep efficient air conditioner rule to conserve energy. (Mar 2004)

Establish greenhouse gas tradeable allowances. (Feb 2005)

Sponsored bill raising CAFE by a 4% per year until 2018. (Jul 2006)

Rated 83% by the CAF, indicating support for energy independence. (Dec 2006)

Designate sensitive ANWR area as protected wilderness. (Nov 2007)

CPUC's Trick or Treat on Sunrise

On all Hollows Eve, the CPUC offered a treat to SDG&E:  competing proposed decisions on thier proposed Sunrise Powerlink.  The trick:  the two proposed decisions either partly or fully oppose the project.

The first of the proposed decisions, authored by an administrative law judge, denies the application for the 150-mile Sunrise Powerlink altogether, saying the project could significantly raise electric rates and do extensive environmental damage if built, and “is not needed to meet California's current renewable (energy) requirements.”

The second proposed decision, written by Commissioner Grueneich, approves the project but denies SDG&E its preferred northern route.  Grueneich argues that Powerlink is needed to meet state goals in reducing greenhouse gases, but the utility should use a southern route through

San Diego

County

that avoids

Anza-Borrego

Desert

State Park

and all tribal lands.

The full commission is not expected to vote on the two proposed decisions until December 4 at the earliest.  The commission will hear comments from interested parties and oral arguments at a public hearing in

San Francisco

on November 7.

So, What do Sarah and Joe Say About Energy?

While I will make no predictions on who ultimately wins the presidential election, I have been tracking where the candidates stand on energy matters.  Followin is where the vice presidential candidates stand on the matter.  And by the way, remember that the VP debate is tonight.  Here's what you can look out for on energy:

Governor Sarah Palin

Produce more of our own oil & gas, for national security. (Sep 2008)

Gas pipeline:history's largest private-sector infrastructure. (Sep 2008)

More pipelines; more nukes; more coal; more alternatives. (Sep 2008)

Claimed major triumph: $500 million subsidy for gas pipeline. (Aug 2008)

Global warming affects Alaska, but is not man-made. (Aug 2008)

Resource rebate: suspend AK 8-cent fuel tax for one year. (Aug 2008)

Gasline Inducement Act: 1,715-mile natural gas pipeline. (Aug 2008)

Commercialize Alaska's North Slope natural gas. (Aug 2008)

Appointed an Alaska oil and gas commissioner. (Aug 2008)

To win, GOP must push energy independence. (Aug 2008)

Agrees with Obama on more Alaska oil & gas production. (Aug 2008)

Windfall oil profits tax prevents investment. (Aug 2008)

Lift moratorium on offshore drilling. (Jul 2008)

Convinced McCain to drill offshore; not yet on drilling ANWR. (Jul 2008)

Exxon-Mobil should pay $507 million for Exxon Valdez spill. (Jul 2008)

Unlock ANWR; we're ready, willing and able to contribute. (Jun 2008)

Energy relief plan: $100 per person monthly, for oil & gas. (May 2008)

Bush is right: drill ANWR & develop our own supplies. (Apr 2008)

Fully fund for the Petroleum Systems Integrity Office. (Feb 2008)

$250M for proven alternative energy, including wind & hydro. (Jan 2008)

Gas pipelines are approved if they meet Alaska's needs. (Jan 2008)

National energy policy not an either/or proposition. (Nov 2007)

Fund cellulosic biofuel research in Farm Bill. (Oct 2007)

Submitted legislation to build natural AGIA gas pipeline. (Mar 2007)

Stranded Gas Development Act no longer applies. (Nov 2006)

Get ANWR open. (Nov 2006)

Chaired the Alaska Oil and Gas Conservation Commission. (Nov 2006)

Pursue gasline plan that is best for ALL Alaskans. (Nov 2006)

Met with producers and employee groups for pipeline deal. (Oct 2006)

Firm start date as part of gasline incentive offer. (Oct 2006)

Opposes natural gas reserves tax--it's not earned income yet. (Oct 2006)

Analyze potential costs associated with climate change. (Oct 2006)

Senator Joe Biden

The energy challenge take sacrifice and is a moral crusade. (Dec 2007)

FactCheck: Oil did not jump $18/bbl due to Iran Resolution. (Dec 2007)

Supports cap-and-trade for greenhouse gases. (Nov 2007)

Provide for emergency fuel assistance immediately. (Oct 2007)

Make every automobile sold be a flex-fuel automobile. (Apr 2007)

Voted YES on tax incentives for energy production and conservation. (Jun 2008)

Voted YES on addressing CO2 emissions without considering India & China. (May 2008)

Voted YES on removing oil & gas exploration subsidies. (Jun 2007)

Voted YES on factoring global warming into federal project planning. (May 2007)

Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)

Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)

Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)

Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)

Voted YES on Bush Administration Energy Policy. (Jul 2003)

Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)

Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)

Voted NO on drilling ANWR on national security grounds. (Apr 2002)

Voted NO on terminating CAFE standards within 15 months. (Mar 2002)

Voted NO on preserving budget for ANWR oil drilling. (Apr 2000)

Voted NO on ending discussion of CAFE fuel efficiency standards. (Sep 1999)

Voted NO on defunding renewable and solar energy. (Jun 1999)

Voted NO on approving a nuclear waste repository. (Apr 1997)

Voted NO on do not require ethanol in gasoline. (Aug 1994)

Keep efficient air conditioner rule to conserve energy. (Mar 2004)

Establish greenhouse gas tradeable allowances. (Feb 2005)

Sponsored bill raising CAFE by a 4% per year until 2018. (Jul 2006)

Rated 83% by the CAF, indicating support for energy independence. (Dec 2006)

Designate sensitive ANWR area as protected wilderness. (Nov 2007)

I will give the edge to the Right Honorable Governor Palin on this issue.  What do you think?

McCain vs. Obama on Energy – Who Wins this Battle?

So, we have heard a lot from both of the presidential campaigns on energy this week, but have either of the candidates delivered knockout punches on the issue?  In my opinion, neither candidate has done that – but for now I would score the fight in favor of McCain, only because he is not loading up his plan with more spending.  Take a look for yourself, and make your decision.

 

What Does John McCain Say About Energy?

www.johnmccain.com

ü      Expanding Domestic Oil And Natural Gas Exploration And Production

ü      Taking Action Now To Break Our Dependency On Foreign Oil By Reforming Our Transportation Sector

ü      Investing In Clean, Alternative Sources Of Energy

ü      Protecting Our Environment And Addressing Climate Change: A Sound Energy Strategy Must Include A Solid Environmental Foundation

ü      Promoting Energy Efficiency

ü      Addressing Speculative Pricing Of Oil

ü      Does Not Support A Windfall Profits Tax

 

What Does Barack Obama Say About Energy?

www.barackobama.com

ü      Reduce the Burden of Rising Gas Prices on Working Families

ü      Reduce Carbon Emissions 80 Percent by 2050

ü      Invest in a Clean Energy Future

ü      Support Next Generation Biofuels

ü      Set America on Path to Oil Independence

ü      Improve Energy Efficiency 50 Percent by 2030

ü      Restore U.S. Leadership on Climate Change

Here We Go Again, A Stressed Out Grid

For the past three summers, we have had the same story.  Early in the year, the government agencies will state: "not to worry, the grid looks fine for this summer and it appears we will have plenty of energy to keep the lights on."  But as we have experienced in the past two consecutive summers, this one is no different.

For starters, this summer's fire season started a bit earlier than normal.  At one point in the last couple of weeks we were up to 1700 fires burning across California.  One national television network called their headline "California On Fire" -- indeed.  While we can be thankful for the brave men and women that have battled back these fires and have knocked the numbner down to around 500 fires currently burning, the problem is that 3 of those fires are currently threatening transmission lines in northern and central California.

Now add heat to the equation.  California this week is experiencing our second heatwave of the summer.  Stronger than the last one earlier in the year, the California Independent System Operator (CAISO)is predicting that consumtion may near the records we saw in 2006 (heaviest consumption of electricity is predicted for Wednesday and Thursday, given the anticipated high temperatures in major parts of the state).  The only potential good news is that the heatwave will likely be concentrated to California and not affect the rest of the West -- if it does, we are in trouble.

What happens if the heatwave does hit other Western states?  Well, that means that the power they would normally ship to California will likely be consumed at home, so the power for the region will be constrained and in short supply.  Ugly, right?

One more thing... The aging infrastructure.  Will our older power plants hold up to a third summer in a row of heatwaves, fires and transmission issues?  I know that the good folks that work at those places will do what they did the last two summers in a row and work their hardest to make sure that the facilities run and produce power.  But will the aging steel cooperate?

Once again, 2008 is what I call a "Summer of Hope."  Hope the fires don't disrupt transmission, hope the heatwaves don't engulf the whole west and that they don't last too long, and hope that the againg infrastructure holds up.  Wouldn't it be nice to say, "good thing we are building the necessary infrastructure to deal with this problem?"

Well, I "hope" that legislators and the regulators are paying attention. 

A New Renewable Plan for California?

There is a rumor that the Schwarzenegger Administration is in the process of preparing an executive order and legislative package to expand the Renewable Portfolio Standard (RPS -- this is the requirment that in state utilities procure a specific amount of generation from renewable sources) from 20% to 33% by 2020.  There may be three options to get to 33%: 1) a legal mandate, 2) a goal set in law (thorough legislation) or 3) set by the Air Resources Board in the AB 32 Scoping Plan.  There will be three elements in implementing this policy.  There will be an executive order (EO) with two primary elements on transmission and siting.  There will be a third element which will be a legislative package of bills.

The devil is always in the details, but if the move to 33% will truly streamline the siting process, which is the only reason to do this, then I would say that this is not only necessary, but it would become the only way that the state might actually achieve this goal.  Of course, no investment will be attracted if contracts are not offered to attract that business.  I do hope everyone is mindful of that. 

While I understand tha this is still under development, sources close to the proces indicated that this has moved from a conceptual draft and is closer to being official in the coming weeks.  Stay tuned!

  

US Moving on Federal GHG Legislation

The U.S. Senate voted Monday to go forward with legislation to cut greenhouse-gas emissions dramatically by mid-century.  The 74-14 vote was enough to ensure that the chamber will vote on the bill later this week.  While the bill isn't expected to pass Congress this year, the U.S. Senate leaders who have been working on it believe they have set the stage for action as soon as next year, when a new U.S. president takes over.  Presidential candidates from both parties support mandatory emissions reductions, although Senator John McCain (Republican from Arizona) and  Barack Obama (Democrat from Illinois) differ on the details (Conflicting wire stories are reporting that Senator Hillary Clinton will drop out of the race today.)

 

Congress is acting after a U.N. scientific panel last year said the world needs to cut emissions of heat-trapping gases into the atmosphere by 50% to 85% by 2050 in order to prevent, or at least help mitigate, damage from climate change. Scientists say global warming can bring rising sea levels, more severe weather events like intense tropical cyclones, and more deaths from heat waves, floods and droughts.

 

The biggest question is how will this effort impact the California GHG reduction law that was signed into law last year?  The rumor is that California and other states currently working on GHG reduction regulations will go along with a federal program -- and may even allow themselves to be trumped be federal law if the federal law will bring financial benefits to the states.  Stay tuned as those details are still in the works.

 

FERC Says SoCal in Danger of Blackouts

Southern California faces a greater threat of power outages this summer, according to a statement by FERC due to shrinking power reserves.

“This remains a concern despite implementation of demand response of more than 1,400 MW” projected by the state grid operator in late April, said Charles Whitmore, FERC’s senior market advisor.  FERC staff pointed to supply risks arising from decreased power imports to the state, as well as possible generation and transmission outages and summer temperatures on par with last summer’s heat waves.

CAISO, however, does not predict blackouts in Southern California this summer.  They quickly pointed to measures to curb peak demand and new generation coming online, adding that demand response programs have grown, but stressing that “Southern California’s load continues to grow--and most of the new generation that has come on line in the state since 2001 has been in Northern California.”  

FERC also noted that wholesale power prices are rising.  The continuing increase is attributed to higher natural gas prices because of increased demand from the fleet of new gas-fueled power plants, lower imports of liquefied natural gas and lower gas storage.

 

Interestingly, CEC also issued their summer assessment on the heals of this comment from FERC, and in thier assessment, they said that Southern California has a 3.8% chance of a staged emergency this summer, but that it still remains "below target reliability standards."

 

If nothing else, this should be read as a warning that our infrastructure to deal with our current and future energy demand is not in place.  Will we get lucky and squeeze through a hot summer without blackouts, or will we have finger pointing when the lights go out in the middle of July, August or September?