Energy Measure Gets Short Circuit

0

Edison International has joined a coalition of environmental groups, labor organizations and somewhat unexpectedly renewable energy producers in opposing an initiative on the November ballot that would require the utility to double the pace of contracts for renewable energy.

The Rosemead-based parent of Southern California Edison, the region’s main electric company, has taken a leadership position by spending at least $14 million to oppose Proposition 7 on the November ballot.

Dubbed the “Solar and Clean Energy Act of 2008,” Proposition 7 is the brainchild of Jim Gonzales, a former San Francisco supervisor and is being bankrolled by billionaire University of Phoenix founder John Sperling. It would require that all electric utilities in the state get half of their electricity from renewable sources such as wind, solar and geothermal energy by 2025.

But the proposition could freeze out smaller companies.

“We’re opposed to this measure because it excludes systems under 30 megawatts from inclusion in the renewable portfolio,” said Pat Redgate, chief executive of Ameco Solar Inc., a Long Beach designer and installer of solar energy systems for homes and businesses. “About 95 percent of the projects now running are under 30 megawatts.”

Backers of the proposition say that smaller generators would still be included in the contracts, but wouldn’t get a streamlined approval process granted to projects with capacity to produce 30 megawatts. A megawatt is 1 million watts and can power between 500 and 1,000 homes.

The state’s electric utilities now receive almost 11 percent of their power from renewable sources; Edison is ahead of the pack with 16 percent. But state officials have conceded that most, if not all, of the state’s investor-owned and municipal utilities will not meet the existing 20 percent mandate by 2010.

To reach the goals set forth in Proposition 7, electric utilities would have to grow their renewable energy portfolios by at least 2 percent a year, double the pace currently mandated. If the utilities fail to demonstrate effort towards meeting the target, they could face substantial fines.

In a July poll by the Field Corp., before ads began running against the measure, Proposition 7 received 63 percent support.

Proponents contend that the state needs to speed up its renewable energy projects to maintain the state’s lead in the cutting edge field because rising oil prices have led to a shift in attitude towards renewable energy.

“The state Legislature has dropped the ball and refused to pass tougher renewable standards,” said supporter S. David Freeman, the former general manager of the Los Angeles Department of Water & Power who is now chairman of the Port of Los Angeles Board of Commissioners. “This initiative would take us back in the lead to 50 percent renewable by 2025.

But opponents contend Proposition 7 would raise electric rates, create supply problems and subject existing energy contracts to cancellation or renewal. The opposition is almost entirely funded by the state’s two largest utilities Edison and San Francisco-based PG & E; Corp. each of which has put in $13.7 million to date, dwarfing the $5.5 million that Sperling has put in.

“Southern California Edison believes Proposition 7 is misguided because it would upend the existing regulatory process, disrupt existing renewables development, significantly raise rates and threaten reliability,” the utility said in a statement. Edison spokeswoman Lauren Bartlett said the company declined to comment beyond that for this article.

The utility is far from the only opponent in an unusually broad coalition. Just last week, the state public utilities commission voted to oppose the measure.

Most of the state’s major business groups are opposed, including local groups such as the Los Angeles Area Chamber of Commerce and the Valley Industry and Commerce Association.

“Proposition 7 will actually hurt renewable energy development in the state while driving up consumer costs,” the L.A. Chamber said in its position statement.

Opponents also fear a rapid increase in renewable power contracts could wreak havoc on the state’s already overtaxed electricity transmission grid.


Small producers excluded?

What is unusual about the campaign is that several environmental organizations have joined Edison and PG & E; in opposition. They say the initiative is poorly written and could end up excluding small-scale renewable projects.

“This initiative is well-intentioned but is badly designed,” said Ralph Kavanagh, senior attorney with the Natural Resources Defense Council in San Francisco, noting that the ballot language takes up 70 pages.

“Many of these renewable power projects are small-scale; cutting them out of the process makes no sense,” said Jan Smutny-Jones, executive director of the Independent Energy Producers Association, which represents about 80 percent of the renewable energy generators in the state.

The 30 megawatt threshold prompted the Independent Energy Producers Association to take the unusual step of opposing a measure whose stated aim is to increase the production of renewable energy in the state. “My job is to promote renewables,” Smutny-Jones said. “So opposing this initiative is awkward.”

Few renewable energy producers are headquartered in Los Angeles County; most are located in Northern California. But the Los Angeles region does have its share of solar panel developers and installers. One such company, Los Angeles-based Solar Integrated Technologies Inc., has not taken a position on Proposition 7. “I’ve heard about the initiative, but haven’t studied it closely,” Chief Executive Randall MacEwen said.

Ameco’s chief executive, Redgate, said passage of the initiative will hurt his company.

“This could cost us business opportunities,” he said. “Even if what the proponents say is true and small systems like ours would be allowed, all the money would flow to the big projects, leaving companies like ours out in the cold. Normally, we would favor anything that promotes the use of solar power. But this measure is too much, too fast, too soon.”

Previous article Big Movers
Next article Goldman Eyes IndyMac
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

No posts to display