1 Renewable Energy in California Brian C Prusnek Deputy Cabinet Secretary Governor Arnold Schwarzenegger The views and opinions discussed in this presentation are my own and not representative of the Schwarzenegger Administration

2 Background By law established in 2002, California Investor Owned Utilities must procure 20% of their power from renewable resources by 2010.

3 The Major Criticism… “The framework and process for implementing California's policy bears little resemblance to…other states and has…taken longer than…processes used in most states. Indeed, we are unaware of any state RPS process that comes close to approximating the detail, complexity, and duration of the process in California.”[1][1] [1] PDF

4 Detail, Complexity and Duration Unnecessary oversight and process  Utilities go through renewable solicitations AND general solicitations.  Solution: Set goal and allow renewables to be treated like other resources under an Integrated Resource Planning approach. Early fears of above-market costs created additional process  To remedy this, a cost socialization element was created whereby an administratively established market price, the Market Price Referent (MPR), is set annually.  Renewable projects above the MPR, require that utilities have “above market prices” socialized over entire system rather than from its customers. These above market costs are called Supplemental Energy Payments. Kill one bird with two stones?  The RPS is further complicated because the Public Utilities Commission determines the MPR and approves renewable contracts whether they are above or below the MPR. But because of existing law, if the cost of the approved project is above the MPR, the utility applies to the Energy Commission for approval to gain access to SEPs.

5 Other Challenges Only hydro (less than 30MWs) counts Transmission, transmission, transmission

6 Focus on the Positive RPS based on energy, not capacity Significant renewable resource opportunities FERC decision allows renewable transmission to be recovered in the Transmission Access Charge Million Solar Roofs Initiative and world leading energy efficiency programs Climate change law makes the RPS the floor rather than the ceiling

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8 Wind Generation Solar

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10 Recommendations Renewables should be integrated into utility general procurements Target should be set – end of story. Transmission must be addressed If climate change legislation is developing, it makes little sense to mandate a large amount of renewable resources