Transcript No Slide Title

California Energy Commission
IEP Annual Meeting
Energy Policy
Perspectives from a customer turned regulator
Jeffrey D. Byron
California Energy Commission
October 9, 2006
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California Energy Commission
Overview
• California Energy Policy
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Governor’s Goals
Energy Action Plan II
2005 Integrated Energy Policy Report
New legislation
• Implementation issues
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California Energy Commission
CA Policy Development
• Governor’s Executive Orders
• Governor’s Response to ’04 IEPR Update
and ’03 IEPR
• Energy Action Plan II
• 2005 Energy Report
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California Energy Commission
Governor’s Energy Goals
• Adequate and reliable energy supplies when
and where needed
• Affordable energy to households and
business
• Advanced technologies improve economic
and environmental conditions
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California Energy Commission
Governor’s Energy Policies
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Supports the Loading Order
Strengthen infrastructure
Reduce transport fuel use, GHG effects
Improve energy permitting, planning
Employ risk, cost benefit analysis
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California Energy Commission
“Loading Order”
of Energy Actions
• Improve Efficiency First
• Diversify Resources
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Renewables
Clean fuels, new alternatives
Conventional resources
Distributed generation
• Improve Infrastructure
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California Energy Commission
Governor’s Climate Change Goals
• By 2010, reduce greenhouse gas emissions to
2000 levels.
• By 2020, reduce greenhouse gas emissions to
1990 levels.
• By 2050, reduce greenhouse gas emissions to
80% below 1990 levels.
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California Energy Commission
Energy Action Plan II
Joint Agency Adoption:
Implementation of the Governor’s Goals
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CEC & CPUC lead
Input from CA ISO, Cal EPA, stakeholders
CEC adopted September 21, 2005
CPUC adopted October 6, 2005
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California Energy Commission
EAP II Electricity Actions
• Increase efficiency
– Efficiency standards, programs
– Green Buildings Action Plan (-20% by 2015)
– Demand response, dynamic pricing programs
• Diversify generation
– 20% renewables by 2010, possibly 33% by 2020
– Increase distributed generation, CH&P
– Develop ‘clean coal policy’ in ’05 IEPR
• Improve Infrastructure
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Implement long-term procurement, 15-17% reserves
Streamline transmission siting process
Plan for, reserve transmission corridors
Better market rules, including new capacity mkt.
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California Energy Commission
2005 Integrated Energy
Policy Report (IEPR)
• Collaboration with federal, state and local
agencies
• 60 Committee/Commission hearings and
workshops
• 25,000+ pages of docketed materials
• More than 50 staff and consultant papers and
reports
• Adopted November 21, 2005
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California Energy Commission
2005 IEPR Recommendations
Efficiency and Demand Response
• The CPUC and Energy Commission should monitor IOUs
energy efficiency programs to ensure peak savings are captured
in their efficiency portfolios.
• The CPUC, DWR, Energy Commission, local water agencies
and other stakeholders should assess efficiency improvements
in hot/cold water use in homes/businesses, and include these
improvements in the 2006-08 programs.
• The Energy Commission should establish (consistent with SB
1027) reporting requirements for POUs to ensure efficiency
goals are comparable to those of the IOUs.
• The CPUC and Energy Commission must vigorously pursue
actions to ensure the state’s demand response goals are met.
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California Energy Commission
2005 IEPR Recommendations
Renewable resources
• The Energy Commission should ensure that POUs meet the
same RPS targets for eligibility and compliance as the IOUs
• By the end of 2006, the CPUC and Energy Commission should
establish a joint proceeding to develop a simpler/more
transparent RPS process.
• The CPUC and Energy Commission should closely monitor the
2005 renewable procurement cycle to determine the potential
value of greater contract standardization.
• To prevent under-procurement, the CPUC should require IOUs
to procure a prudent contract-risk margin, starting at 30%.
• The CPUC should quickly develop new standardized wind repowering contracts to more efficiently harness wind resources
and reduce bird deaths.
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California Energy Commission
2005 IEPR Recommendations
Procurement Recommendations
• CPUC should require IOUs to procure enough energy/capacity
to meet net short positions and provide for retirement of aging
plants by 2012.
• By the end of 2006, the CPUC should develop coming/going
rules for departing load.
• The Energy Commission and CPUC should establish
transparent resource planning and procurement processes for
all-source and renewable resources, and eliminate confidential
procurement review groups.
• The Energy Commission and CPUC should develop transparent
and standardized methods for addressing least-cost best-fit
criteria and consistently apply a renewable “rebuttablepresumption” to all procurement.
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California Energy Commission
2005 IEPR Recommendations
Combined Heat & Power (CHP)
• The Energy Commission and the CPUC should establish annual
utility procurement targets by the end of 2006.
• The CPUC should require IOUs to purchase electricity from
these facilities at prevailing wholesale prices.
• The CPUC should explore regulatory incentives that reward
utilities for promoting customer and utility-owned CHP projects.
• The CPUC should require IOUs to provide CA ISO scheduling
services for these facilities and be compensated.
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California Energy Commission
2005 IEPR Recommendations
Transmission infrastructure
• The Legislature should expeditiously transfer transmission
permitting to the Energy Commission using the Warren-Alquist
Act’s power facility and siting certification process as a
framework.
• The Energy Commission, CPUC, and the CA ISO should
collaborate to investigate changes to the CA ISO tariff to
encourage construction of transmission for renewable
generation interconnections.
• The Legislature should assign the Energy Commission the
statutory authority to establish a statewide corridor planning
process and designate future corridors.
• The Energy Commission should actively participate in the
corridor planning processes under the Federal Energy Act of
2005.
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California Energy Commission
EAP II Natural Gas Actions
• Increase efficiency
– Efficiency standards
– Efficiency programs
– Demand response programs
• Diversify sources
– Consider importation of LNG
– Encourage landfill, biomass & other renewables
• Improve Infrastructure
– Increase pipeline capacity
– Increase storage capacity
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California Energy Commission
2005 IEPR Recommendations
Natural gas
• The state must make certain that existing
infrastructure is maintained and retained.
• The state needs to continue to evaluate the
need for additional pipeline capacity to meet
customer demand during winter’s coldest
days or when there are interstate pipeline
disruptions.
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California Energy Commission
EAP II Transportation Actions
• Increase efficiency
– Reduce petrol fuels use
• CEC to develop reduction goals, plan, timetable 3/31/06
• Improve federal CAFE standards, tire efficiency
• Diversify fuel sources
– Develop alternatives including hydrogen
• Improve Infrastructure
– Expand refinery capacity
– Expand import infrastructure capability
– Develop guiding principles for new facility approval
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California Energy Commission
2005 IEPR Recommendations
In transportation, the state should:
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Simultaneously reduce petroleum fuel use, increase fuel diversity/security, and reduce air
emissions/greenhouse gases.
Implement a public goods charge to establish a funding source for a transportation program
that includes infrastructure, technology/fuels research, analytical support, and incentive
programs.
Continue to work with other states to pressure the federal government to double vehicle fuel
efficiency standards and enact fleet procurement requirements that include super-efficient
gasoline/diesel vehicles.
Establish non-petroleum diesel fuel standard so that all diesel fuel sold in California contains
a minimum of 5% non-petroleum content that would include biodiesel, ethanol, and gas-toliquid.
Establish a state renewable gasoline fuel standard so that all gasoline sold in California
contains a minimum of 10% renewable content.
Investigate how IOUs can help to develop equipment/infrastructure to fuel electric and
natural gas vehicles.
For its fleet of vehicles, establish a minimum fuel economy standard and a procurement
requirement for alternative fuels/vehicles, and
examine the use of re-refined and synthetic oils.
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California Energy Commission
2005 IEPR Recommendations
Climate Change
Although more specific recommendations must await
Governor Schwarzenegger’s Climate Action Team
Report due in January 2006, the Energy Commission
recommends:
• Setting a greenhouse gas performance standard for
utility procurement no higher than emission levels
from new combined cycle natural gas turbines.
• Additional consideration is needed before
determining what if any role greenhouse gas
emission offsets should play in complying with such a
standard.
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California Energy Commission
EAP II R&D Actions
• R&D should respond to policy goals
• Emerging technologies that improve:
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Efficiency
Effectiveness
Environment
Infrastructure
Transportation
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California Energy Commission
Implementation
• The policy framework is largely in place
• It is now time for action….
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California Energy Commission
Recent legislation
Key energy bills enacted in 2005/2006 provide
part of the implementation framework
A few of these bills include:
• AB 32 and SB 1368
• SB 1 and SB 107
• SB 1059
• AB 2021 and 2005’s AB 380
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California Energy Commission
Greenhouse gas regulation
• AB 32 (Nunez, Chapter 488, Statutes of 2006)
requires the Air Resources Board to establish
greenhouse gas reporting requirements by 2008 and
emission limits and reduction measures by 2011
• SB 1368 (Perata, Chapter 598, Statutes of 2006)
requires the PUC to create a greenhouse gas
performance standard for the IOUs by February 28,
2007, and the Energy Commission to create a
standard consistent with the PUC’s for publicly
owned utilities by June 30, 2007
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California Energy Commission
Renewable energy
• SB 1 (Murray, Chapter 132, Statutes of 2006)
establishes requirements and procedures to
implement the California Solar Initiative (CSI) to be
administered by the California Public Utilities
Commission (CPUC) and the California Energy
Commission (Energy Commission).
• SB 107 (Simitian, Chapter 464, Statutes of 2006)
revises California’s Renewable Portfolio Standard
(RPS) by accelerating the 20 percent renewable
energy target from 2017 to 2010
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California Energy Commission
Transmission
• SB 1059 (Escutia, Chapter 638, Statutes of 2006)
authorizes the Energy Commission to designate
transmission corridors for future use, under certain
conditions, that are consistent with the strategic plan
for the State’s transmission grid
• Governor Schwarzenegger vetoed AB 974, noting the
need for one-stop transmission permitting integrated
with energy planning
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California Energy Commission
Publicly owned utilities
• AB 2021 (Levine, Chapter 734, Statutes of 2006)
requires local publicly owned utilities (POUs) to report
on achievable cost-effective electricity measures and
targets for statewide efficiency, and to report on their
investments in energy efficiency and demand
programs
• AB 380 (Nunez, Chapter 367, Statutes of 2005)
requires local publicly owned utilities (POUs) to
undertake and accomplish resource adequacy, and
designates the CEC to oversee these activities and to
periodically report to the legislature
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California Energy Commission
Next steps
• This new legislation provides useful direction
to the Energy Commission, PUC, the state’s
utilities and others on how to accomplish the
state’s energy policy goals
• Implementation is now the key.
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California Energy Commission
Implementation needs
Resource adequacy
• Implementation of the first phase of resource
adequacy was important this summer
– The contracts the IOUs had in place for out of
state capacity was a factor in getting adequate
imports during the July heat storm
• … but more work lies ahead.
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California Energy Commission
Implementation needs
Long-term procurement
• The IOUs have begun to sign long-term
contracts
• … but the real need to sign adequate
contracts to incent new generation remains
critical (and overall progress has been slow).
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California Energy Commission
Implementation needs
Renewable resources
• The initial steps in implementing the
renewable portfolio standard have been slow
and painful; we're starting to see progress on
the contract front
• … but reaching the goal of 20% of electricity
generation in 2010 coming from renewables
(now law) will be extremely difficult.
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California Energy Commission
Implementation needs
Transmission
• Fixing the state's transmission problems
remains a big problem
• … and more needs to be done.
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California Energy Commission
Interesting times
• I have the privilege to be named to the
Energy Commission in interesting times as
the state turns to the hard work of
implementing ambitious policies
• I have great confidence in the ability of the
Energy Commission and the state to rise to
the challenge and to keep these interesting
times from turning into a curse
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