Category — California

“Regulators who don’t approve smart stuff are by elimination reducing themselves to certificators of dumb stuff. When nuclear optimism peaked, backers said that its power would be “too cheap to meter.” The bill for the smart grid is turning out to be too confusing to meter, but like in the nuclear heyday, the momentum is irresistible.”

I have some kind words for the California Public Utilities Commission’s Division of Ratepayer Advocates (DRA), its in-house department charged with representing small consumers in rate proceedings.

DRA has long been agnostic about the benefits of smart meters. But with the release of “Case Study of Smart Meter System Deployment: Recommendations for Ensuring Ratepayer Benefits,” the issue of high costs relative to benefits is on the table.

Better late than never.

Complexity Unbound

DRA’s lightly redacted public version analyzes the gap between anticipation and reality in Southern California Edison’s “Advanced Metering Infrastructure” (AMI or SmartConnect) rollout program.

The numbers are interesting, but DRA’s big point is that the CPUC has hardly any idea about what it does or doesn’t know amid the hyper complexity of smart meter costs and benefits. [Read more →]

[Editor's Note: This post concludes a two-part series on counter-productive regulation passed in the name of addressing man-made climate change.]

In Part One yesterday, I summarized the recent research by U.C. Berkeley researcher Margaret Taylor, which found that cap-and-trade programs (CTP) impede technological innovation. Not only do they stifle future technological improvements, CTP often erase past improvements.

California’s Global Warming Solutions Act (AB32) and the Air Resources Board’s implementation of that law to date provide a sobering example of the Taylor Thesis.

California Improvements before Cap-and-Trade

California is the only state insisting on implementing economy wide cap-and-trade. The climate impact, if the programs (unrealistic) goals are achieved, are miniscule. Nonetheless, the program is to start later this year, according to the California Air Resources Board (CARB). Not acknowledged by these uber-bureaucrats, California has the third BEST carbon intensity in the U.S., according to the Congressional Research Service.

The carbon intensity of the U.S. is only a quarter of China’s and is well below the average of the world. Every ton of cement California imports from Arizona, every basket of fruit the U.S. imports from Chile, and every techno-gadget we import from Asia, in other words, result in a net increase of emissions, compared to our producing those things here at home. [Read more →]

Part I yesterday reviewed in-state electricity generation and power imports required to meet California’s current power demand. Part II today shows how Renewable Energy Credits may be used to meet California’s aggressive renewable energy goals.

Renewable Energy Credits

Renewable Energy Credits (RECs) are the power generation credits that a distribution system can use to meet its renewable portfolio. These RECs come in two flavors—bundled and unbundled. The bundled RECs are the credits that are bought and used within the same distribution system; unbundled RECs are those bought by one distribution system but used in another. These RECs are managed by the Center for Resource Solutions, which also prevents double counting of credits.

Unbundled RECs are particularly interesting, because it means that a distribution system doesn’t need to build renewable energy power plants because the distribution system can simply buy the renewable power that is generated in another distribution system.

Paper Renewables?

This creates significant problems for the exporting distribution system. For example, the Bonneville Power Administration is currently negotiating with California about (in BPA’s words)

potentially significant negative consequences for Northwest and California consumers if decisions about the use of unbundled RECs are made without full consideration of the infrastructure requirements associated with the delivering a reliable, least cost supply of renewable energy to California.

So, what are the consequences? The use of unbundled RECs seems to mean that California could purchase all the renewable power generated by all the windmills that are connected to the California grid.

This is happening right now as California is contracting for wind energy from places as far away as Alberta, Canada. The electricity generated in Alberta, however, will not arrive in California. It is too far away. The only thing that is happening is that Californians are paying for it to meet their renewable portfolio. This seems pretty strange, that Californians are required to pay for a benefit that they don’t get.

The fact that 15 percent of its imports in 2009 are “unspecified” probably means that California intends to purchase enough renewable energy credits to meet its goal. This would mean that it would not need to build any more renewable power generators. It just needs to purchase the power from its neighbors (at the expense of the rate payers in California).

There are three major problems with unbundled RECs: [Read more →]

California is committed to a renewable energy portfolio to provide 33 percent of its electricity by 2020 from qualifying resources such as wind, solar, geothermal, biomass, and small hydroelectric facilities.

Can this portfolio succeed? Ambitious goals take more than legislative action to have a chance for success. It takes an actual plan that can be implemented with actual engineering accomplishments.

Drastic Increase Needed

In order to determine the probability of success, we can look at California’s renewable energy sources in prior years. These are available on the Internetand are presented in the following graph.

The plot shows the actual renewable sources of electricity generated in California from 2005 to 2009 and shows the projected increase required to achieve the goal of 33 percent by 2020. Notice that the renewable contribution has been rather constant over the previous years and requires a dramatic increaseto achieve the goal. This implies that something different needs to be done than what has been done it the past, otherwise the projection line will be ever steeper and eventually needs to be abandoned.

Looking at the Pieces

So, exactly which of the renewable energy sources can be increased to reach the goal? It is generally accepted that biomass, geothermal, and small hydro cannot be increased significantly, which leaves the intermittent sources of solar and wind to do the job. Is it reasonable to expect that solar and wind can accomplish the task? The gap that must be closed by 2020 is 21 percent of the total electricity consumption.

Solar currently contributes only 0.3 percent (2009) of the electricity used in California. This contribution is too small to expect a significant contribution by 2020. It might be doubled by 2020, but this is still a small amount.

Windcontributed 2.7 percent (2009). The expectation that it will close the 21-percent renewable gap is unrealistic, however, for the following reasons: [Read more →]

“The fraudulence of … ‘goals’ for emission reductions, ‘offsets’ that render even iron-clad goals almost meaningless, an ineffectual ‘cap-and-trade’ mechanism must be exposed. We must rebel against such politics-as-usual.”

- James Hansen, “Never-Give-Up Fighting Spirit,” November 30, 2009

“The truth is, the climate course set by [the] Waxman-Markey [cap-and-trade bill] is a disaster course. It is an exceedingly inefficient way to get a small reduction of emissions. It is less than worthless….”

-James Hansen, “Strategies to Address Global Warming,” July 13, 2009.

The case for government intervention in the name of addressing man-made climate change concerns alleged market failure. But there is a second key factor in the debate over public policy activism: government failure.

The letter below, signed by 41 Left environmental groups , is a welcome example of policy activists assessing the ‘cure’ in terms of the ‘disease’. And it is a reminder that cap-and-trade on the federal level–long championed by Environmental Defense Fund (EDF) and such corporations as Enron (Ken Lay) and Duke Energy (James Rogers, a Lay protoge)–is dead from both sides of the political spectrum.

The California protest brings to mind the trenchant criticism of federal cap-and-trade by James Hansen. “Washington appears intent on choosing a [cap-and-trade] path defined by corporate greed,” Hansen wrote last year. “Unless the public gets engaged, the present Administration may jam down the public’s throat just such an approach, which, it can be shown, is not a solution at all.”

Hansen added in the same article:

“Cap-and-trade’s complexity provides a breeding ground for special interests…. [T]ry reading the Waxman-Markey 2,000-page bill to figure out who would get the money! Why do those special interests deserve it anyhow?”

- James Hansen, “The People vs. Cap-and-Tax,” paper delivered to the Chairperson of the Carbon Trading Summit, New York City, January 12, 2010. [Read more →]

Despite the state’s deep economic wounds, California’s Governor Jerry Brown last month signed SB 2X that increased the state’s already ambitious renewable portfolio standard (RPS) goal from 20% to 33% by 2020. Together with the state’s Global Warming Solutions Act of 2006 (AB 32), which requires caps on greenhouse gas emissions starting next year, the new law will push up the price of electricity and further delay the Golden State’s economic recovery by permanently driving away businesses and manufacturing jobs.

Worst-Run State: Kentucky, then ….

Last October, 24/7 Wall St., a financial news and opinion electronic newsletter, ranked the best- and worst-managed states in America. The best-run state was Wyoming, which received high marks in just about every category. Wyoming is also the least-populous state, perhaps hinting at one reason for its success.

The worst state on this list was Kentucky, barely edging out California for last-in-class honors. “While it does not quite rank as the worst state on our list, California stands out as being among the most poorly governed,” the publication wrote. “The most populous state in the union has been mired in debt and political unrest for nearly a decade. It bears the unique honor of being the only state considered economically unstable enough to have its debts, at a record $341 billion, rated at an A- by S&P.”

This year, without the $3.5 billion in federal stimulus funds to cover their losses, California legislators may finally be forced to pragmatically deal with a $19 billion budget deficit, which comes on top of a 2010–2011 carryover deficit of $6.1 billion.

Other Bad Ratings

A low opinion of California’s business climate is not limited to 24/7 Wall St. In its 2010 annual survey of the best and worst states for business, The Chief Executive magazine gave its “booby prize” for worst state to California for the second year in a row. The global consulting firm Bain & Co. found that “California is far worse [for business] than any other state by a very significant margin.” Development Counselors International (specialists in business relocations) surveyed corporate executives in March 2011 and found that 72% responded that California has the “worst business climate” in the entire U.S. [Read more →]

Background:Earlier this year, I wrote about a new, tentative California Superior Court decision that threw a monkey wrench into California Air Resources Board’s climate regulatory scheme.

 a California superior court once again ruled against the California Air Resources Board (CARB) for failing to comply with environmental law pursuant to AB 32, California’s global warming law. The tentative decision directs CARB to rewrite its California Environmental Quality Act (CEQA) documentation, and to cease implementation of the AB 32 Scoping Plan until the violation is corrected.

The decision is based on violations of process only and does not address any scientific or economic substance of either the CEQA documentation or of the scoping plan. Reactions have been mixed from “no big deal” to “hallelujah.”

The judge’s decision states that CARB violated state environmental law with its 2008 plan to reduce greenhouse gases and its more recent cap-and-trade regulatory schema.

If the judge’s decision is made final without substantive change, the state would be ordered to stop the implementation of AB 32 until the CEQA process is fully complied with.

Update: Court Ruling Final

In March, the tentative decision was made final, except for orders and relief. Judge Ernest Goldsmith ruled that CARB had failed to conduct such an [alternatives] review but left open the question of whether the agency could conduct rulemaking, environmental studies or do any other work while the legal issues were being resolved. The state said at the time that it would appeal.

Well, the decision is now final and complete. California [CARB] must immediately halt work on its cap-and-trade program until it completes a review of alternative approaches to reducing climate change, the court ruled on May 20.

Cap-and-Trade was set to begin operating in January 2012, but the Court’s order could cause delays. Many participants hold the view that ARB dodged a potentially fatal bullet in its implementation of cap and trade. The Court could have ruled that a trading scheme was an unacceptable method of reducing emissions. The Court could also have stayed the entire suite of regulations that the state is pursuing, 69 in all, including a low-carbon fuel standard, local development and smart growth guidelines, and emissions reductions from ships and trucks. [Read more →]

A California superior court recently issued a tentative decision against the California Air Resources Board (CARB) for failing to comply with environmental law pursuant to the implementation of AB 32, California’s global warming law.

The tentative decision directs CARB to rewrite its documentation pursuant to the California Environmental Quality Act (CEQA), and to cease implementation of the AB 32 Scoping Plan until the violation is corrected. The decision is based on violations of process, not the scientific or economic substance of either the CEQA documentation or the scoping plan as critics of climate alarmism would have liked.

Reactions to the tentative finding have ranged from “no big deal” to “hallelujah.” But it is a big deal; CARB’s implementation of AB 32 hangs in the balance, at least for the time being.

Will CARB convince the trial judge to change his decision–or flaunt the order even if unchanged? Rest assured if the decision becomes final, CARB will appeal.

Will CARB admit, maybe, that mistakes were made and work to improve their own process and analyses, rather than just push the blame elsewhere?

Comments from both parties were just submitted. We will see what transpires, but it is wishing too much for a mea culpa from CARB. [Read more →]

On November 2, California voters defeated Proposition 23 by 61 to 39 percent, rejecting a suspension of of the state’s Global Warming Solutions Act, otherwise known as Assembly Bill 32 (AB32).

California in general bucked a national trend on Election Day with all but one statewide office going to the Democrats. As of this writing, the Attorney General race has the Republican Steve Cooley slightly ahead in the vote count, but no official call has been made.

Pundits and politicians are making much about the Proposition 23 vote, but what does it really say? Equally important is the national message to be taken from the proposition’s defeat.

It is not what is being portrayed by the otherwise humbled Left environmentalists.

Mainstream Hype

Fred Krupp, president of Environmental Defense Fund, said the Prop 23 defeat sends “a big signal” to the rest of the country and the world that Californians stand firmly behind the law, which would cut greenhouse gas emissions in the state to 1990 levels by 2020. “This is the largest referendum anywhere on the planet where people have directly voted on clean energy and climate policy,” Krupp said in an interview. “It’s the largest state in the country sending a clear message that they want a clean energy economy and clean energy jobs.”

The primary cheerleader for AB32, Governor Schwarzenegger, was not shy about his feelings either, calling Proposition 23′s defeat “a huge, huge victory” for California, the state’s environment, the green-tech industry and job growth. [Read more →]

Many Californians are concerned about the continuing economic viability of the Golden State, especially with the impending implementation of the California Global Warming Solutions Act, also known as AB (Assembly Bill) 32. The goal of the act is to reduce greenhouse gas (GHG) emissions to 1990 levels by 2020, through a program administered and enforced by the California Air Resources Board (CARB).

Almost all economic modeling of GHG emissions regulations find that the costs of such programs outweigh their benefits. The estimates have come from a wide spectrum of organizations, including the U.S. Environmental Protection Agency, U.S. Energy Information Administration, Brookings Institution, consulting-firm Charles River Associates, and others.

Contrary to the economic consensus, CARB has gone the other direction and argues that command-and-control and cap-and-trade will so increase the efficiency of energy use that Californians will benefit substantially by 2020. But CARB’s self-interested study is flawed as a new study by economist Robert Michaels explains.

CARB’s Suspect Economic Modeling

Recently, the San Francisco Chronicle exposed CARB’s overestimate of pollution from diesel trucks of 340 percent, an error that has caused independent truckers to leave the business rather than bear the costs by CARB. And now Professor Michaels of California State University, Fullerton (website here) explains the many ways in which CARB’s economic modeling of AB 32 is fatally flawed and how CARB threatens California’s economic welfare: [Read more →]