Earlier this week the Editorial Board at the Los Angeles Times wrote the following:
Link California’s clean energy to the rest of the west? Sounds great, but it’s risky
By THE TIMES EDITORIAL BOARD
JUL 02, 2018
The state of California is considering forming a regional electrical grid to jointly manage power transmission in multiple western states, and the potential benefits are enormous: It would provide a gigantic new market for California utilities to sell the overabundance of solar power they generate
during the day, as well as giving them access to an equally generous array of hydroelectric- and wind-generated electricity from other states to power the lights when the sun sets over the Pacific Ocean.
Electricity rates would plunge, supporters say, given that the fuel for clean power is free and infinitely self-renewing. Coal plants and natural gas couldn’t compete over the long run and would shut down because, really, who wants to pay extra for dirty air? And eventually the big western skies would be as clear and carbon-free as they were before the first wagon rattled along the Oregon Trail. Best of all, despite the persistent efforts of the climate change deniers running the federal government, the U.S. would be a leader in reducing greenhouse gas emissions. Take that, Mr. President!
That’s the pretty picture painted by the people (one of whom is Gov. Jerry Brown) pushing the California Legislature to vote this summer to dissolve the California Independent System Operator, the entity that runs the state’s electrical grid, and replace it with a new regional organization that would buy and distribute electricity among any western states and utilities that want to participate.
But like any big payout, it requires taking a gamble. And right now ratepayer advocates, consumer groups, municipal utilities and some environmental groups say the risks are too great. (Other environmental groups are supporting the big grid proposal because of the potential to spur more states to make the transition to renewables.)
The proposal’s biggest risk is that California would have to hand over control of its power grid to an as-yet unknown entity, sacrificing the safeguards put into place two decades ago after another such gamble — on deregulation — triggered an electricity crisis that plunged the power grid into chaos.
Right now, Cal-ISO is a nonprofit public benefit corporation with board members appointed by the governor and confirmed by the state Senate. And in addition to adhering to state open-meeting laws and procedural rules, it must operate in the best interests of Californians — not of, say, Utahns, who have already expressed hostility toward California’s climate change policies and their effects on coal revenues. The bill says that the new board must also follow the state’s rules or else California will take its power grid and go home. That’s easier said than done once the state has already signed over management of its infrastructure to a board answerable not to Californians, but to President Trump’s appointees on the Federal Energy Regulatory Commission.
Proponents are also worried about a not-inconceivable scenario in which California would be forced to subsidize coal-power plants within the regional market to help Trump achieve one of his campaign promises.
The Legislature should not pass this plan, at least not right now and not in its current form. Under the proposal, the Legislature would give its blessing to the development of a governing board to oversee the regional market without knowing its composition or structure. (The bill specifies that there would be a western states committee with three members from each state to provide unspecified “guidance” to the governing board.) Final details would be worked out later and approved by the California Energy Commission. It’s troubling that the measure provides no mechanism for the Legislature to pull out if the plan evolves into something that may not be in the state’s best interests.
There’s no ticking clock here. California isn’t in danger of falling behind in its green power goals. In fact, it is well on track to have half its power come from renewable sources by 2030, as mandated by state law. Nor is there reason to think renewable power won’t catch on if there’s no regional market. Solar- and wind-generated electricity is getting cheaper every year. Someday — possibly very soon — an interconnected multi-state regional electric grid may be the safest and most sensible way to go for the next phase of clean power. But the risks are simply greater than the need at the moment.
We found this article while scanning the web on rooftop solar info. Below is a small pull out, but you can read the complete article here.
Subsidizing The Rich Through California’s Solar Scheme
So what’s the problem? First, the credit paid in California for the excess solar power is far higher than the cost of alternative electricity sources, usually from utilities or from the spot power market. Consumers without such solar installations have to finance that excessively expensive electricity, so that overall power prices are forced above the level that would prevail in the absence of the net metering system. This system, by the way, subsidizes the affluent (median income of those installing solar systems: $91,210) at the expense of all other power consumers (median of $67,821), an embarrassing reality from which the supporters of the net-metering system prefer to avert their eyes.
We received the following email last week from the Sierra Club. It is worth reading, then calling you state Senator and Assemblymember to tell them you oppose AB 813 too!
Sometimes wonky, inside-baseball issues can wind up creating worrisome risks for the environment, communities and workers.
Whether California should become part of a new, multi-state regional transmission organization (RTO) that oversees how electricity flows around the west is just such an issue. The idea is sometimes referred to in the press as a regional grid.
In simple terms, the idea is to create a collaboration of several states, including California, that would be able to easily sell energy back and forth across state lines and throughout the west.
So everyone who loves renewable energy should just get on board this peace train, right?
Wellllll, not exactly. As it turns out, without the right kinds of boundaries and rules, this great idea can go quickly amok.
For instance, as Sierra Club’s experts on how energy companies and markets in the west work note, it’s very possible that if not designed the right way, a regional grid could result in “resource shuffling.” That is, it might actually encourage certain coal-heavy power companies to extend the life of their plants in one part of the west and shift the renewable energy to California. Or it could fire up more natural gas plants here and in other states.
All that extended and increased use of fossil fuel plants to accommodate the ability of California’s “excess” renewable energy to flow east and the Interior West’s supply to flow to California can add up to more localized air pollution, especially for communities already struggling with dirty air, and more greenhouse gas pollution. That equals human health and planet health impacts.
There are also economic risks that cut to the core of whether California will build a more equitable economy.
California has been steadily adding renewable energy to its energy mix. This has meant lots of new jobs building big and small renewable energy generation. And not just any jobs, but good-paying jobs. Many of these jobs are held by union labor and come with good healthcare benefits and retirement plans. These are jobs that demonstrate that you can have a clean environment and a living wage.
What happens if California’s single-state transmission operator suddenly becomes a multi-state entity with states that have cheap labor, cheap land and anti-union laws? Thanks to legislation passed a couple of years ago, the biggest proponent of regionalization, the California Independent System Operator (CAISO) hired a consultant to tackle that question.
The answer was that regionalization could likely result in the loss of 110,000 jobs in the energy sector in California. That’s almost as many jobs as there are people in Berkeley.
There’s also an interesting political risk.
There’s a guy in the White House now who doesn’t like—well, apparently actually hates—renewable energy and just about anything California stands for. He appoints the majority of commissioners on the federal body that sets the rules about how RTOs operate their electricity transmission.
If California, which through the CAISO is essentially its own RTO, joins with other states in a new RTO, that new RTO will have a governing board made up of people from the other states. If the federal body comes up with a new rule that California disagrees with, but the other states in the RTO agree with, what happens? Does California just leave the RTO and is that even possible?
Is now really the time to dive into this kind of risk?
These questions and issues are among those that Sierra Club staff and activist volunteers have been asking and raising for the better part of the three years that the legislature has been considering regionalization.
Throughout that time, we have been unable to resolve our concerns. That’s partly because opening up our state to a regional market simply means accepting certain risks. We aren’t willing to put our full faith in the market to deliver an equitable energy economy that benefits–rather than harms–polluted communities and that provides long-term, good-paying jobs. We remain genuinely concerned about exposing California to the undue weirdness of the supreme tweeter’s appointees’ whims.
And that’s why we have most recently opposed Assembly Bill 813, a bill crafted in the open, but not crafted well enough to protect California from the worst potential effects of regionalization. You can read our explanation of our opposition via the letter we signed onto with consumers and labor.
Dozens of other groups have opposed this bill.
But the governor supports it and spent some time the night before it came up for its first committee vote last week calling legislators on the committee and urging them to support the bill. It passed that committee and on Tuesday will face the Senate Judiciary Committee.
The bill is based on an interesting idea. But it doesn’t provide the protections we need for the environment, public health and the economy.
We can do better than this. We must do better than this.
That’s why we oppose AB 813 and again, for the third time in three years, find ourselves fighting a wonky, inside-baseball issue.
Another news story about the scheme to hand control over California’s energy choice to others who don’t believe in climate change or robust renewable energy.
Opponents see it as a direct threat to California’s clean-energy policies.
It could cede at least some control over California’s power lines and electricity market to coal-producing states such as Wyoming and Utah whose energy policies do not align with California’s. The proposed regional grid organization also would operate squarely under the oversight of a federal government that, under President Trump, is searching for ways to keep coal-fired power plants alive.
“You’ve got to look at who we’re partnering with,” said Loretta Lynch, former president of the California Public Utilities Commission. “We’re not partnering with people who want to be clean and green.”
The new system, critics fear, could even open California’s electricity market to the kind of manipulation that plunged the state into rolling blackouts during the 2000-01 electricity crisis.
You can read the complete story on the San Francisco Chronicle’s web site by clicking here.
The push for “Regionalization” could mean that California surrenders its energy sovereignty and is required to import dirty coal-fired power. All our work at a greener, cleaner California energy policy could be buried in coal dust.
You can read more here: The Capitol weighs another big, dicey power play | CALmatters
This is a great article from our semi-local favorite, the San Diego Union-Tribune.
Here are some pull-outs from “The new solar mandate: A leap forward or a step back?”:
First, rooftop solar systems generate electricity that is anywhere from two to six times more costly than large renewable sources like utility-scale solar farms.
“Rooftop solar is an extremely expensive way to move to zero-carbon energy,” Borenstein said. “It costs a lot more than grid-scale solar. It is not cost-effective for the system as a whole.”That, Bushnell argues, raises the question about whether a mandate was really needed.
“It is a blunt instrument,” Bushnell said. “If you’re building a new home, you have a bunch of choices to make about exactly how energy-efficient you want it to be … And installing solar is now in the ‘you gotta do it’ category.”
Critics worry the new rule could crowd out lower-cost, more efficient renewable energy sources in the future.
As more solar customers get credited at the retail price, there is upward pressure on rates to cover the utilities’ costs (provided the CPUC approves those rate increases).
Borenstein says that leads to costs moving from those who have rooftop solar on their homes to those who do not.
“The CEC says individual homeowners will save money,” Borenstein said. “But they’re only going to save money because they are essentially shifting costs to other consumers, other ratepayers.”
To read the complete article please click here.
Below is a great article from Lucas Davis, a UC Berkeley professor that published a report a few years ago about the closing of San Onofre, the nuclear facility north of San Diego, and how replacing the nuclear energy with natural gas was the equivalent of adding 2,000,000 vehicles to the roads of California.
Why Am I Paying $65/year for Your Solar Panels?
700,000 California homes now have solar panels; what does this mean for everyone else’s rates?
“This is the future,” one of my neighbors recently told me, proudly showing off his rooftop solar panels, “Forget the old, inefficient utility.” The panels do look great, and, for a moment, I got caught up in my neighbor’s “green glow” of eco-righteousness. Should I be doing “my part” for climate?
But wait a second. I already am! As Severin Borenstein has been pointing out for years, a big part of the reason why rooftop solar is so popular in California is our electricity rates. And because of the way rates work, every time another neighbor installs solar, my rates go up. I’m tired of it. Why should they get all the “green glow”? Why should I be paying more for their rooftop solar, particularly given that grid-scale renewables are so much cheaper?
Almost 700,000 homes in California have installed solar, about 5% of all homes in California. Today I want to figure out what this means for the rest of us. No fancy econometrics, no complicated model. I just want to do a simple back-of-the-envelope calculation to try to figure out how big of a deal this is.
Utilities have a lot of Fixed Costs
It is helpful to take a step back and think about what it takes to deliver electricity. Utilities have lots of what economists call “fixed costs”. For example, utilities have to maintain all the transmission and distribution lines used to deliver power. These costs are fixed (not marginal) because they do not depend on how much electricity is consumed.
Who pays for these fixed costs? We all do. Every time you use electricity, you help pay for these fixed costs. There is a long history in the United States of regulators setting electricity prices equal to average costs. Economists have argued that it would be more efficient to set prices equal to marginal cost. But the truth is this didn’t matter much in the past, in part because people didn’t have much choice about whether or not to consume electricity.
Until now. Rooftop solar is an opportunity for consumers to radically reduce the amount of electricity they buy from the utility. In Hawaii there is a lot of talk of “grid defection”, but in 99.9%+ of cases solar homes continue to be connected to the grid. Solar homes use the grid just as much as other households, as they are always either importing or exporting electricity, it’s just that they consume much less grid-electricity.
What this means is that good people like my neighbor contribute much less to paying for utility fixed costs. The fixed costs haven’t gone away, but my neighbor now has a lower electricity bill so pays far less of them. This leaves the utility with a revenue shortfall, and it is forced to raise prices. So who pays for the fixed costs my neighbor used to pay? Everyone else.
A key subtlety here is “net metering”. Households who install rooftop solar pay only for the electricity they consume “on net” after solar generation. This is easy and simple, but also wrong. Implicitly, this means that they get compensated for their solar panels’ sales to the grid at the retail electricity rate. This is too high, significantly exceeding what the utility saves from not having to supply that electricity. Under an alternative rate structure, in which households were paid the wholesale rate, you would not have this “cost-shifting” away from solar households.
Ok, but how much cost shifting is actually happening? Outside California, Arizona, and Hawaii, probably not much. But California has a lot of solar, about half of all U.S. rooftop solar. How much have California electricity rates increased due to the 700,000 homes with solar?
This is tricky because we don’t actually know how much electricity is being produced by rooftop solar. Almost everyone is on net metering, so we only observe net consumption, not solar production. Fortunately, the California Energy Commission has poured over solar radiation information and other data and estimated that total annual generation from California behind-the-meter solar is 9,000 GWh. About two-thirds of this is residential, so about 6,000 GWh. To put this in some context, total annual residential electricity consumption in California is 90,000 GWh.
So how much “cost shifting” does this imply? The average residential electricity price in California is $0.185/kWh, while the average wholesale price is about $0.04/kWh. Accounting for electricity that is lost during delivery to the end customer adds about 9% more per kWh delivered. Thus, each time a California household produces a kWh, the utility experiences a revenue shortfall of about $0.14. Multiply this by total residential distributed solar generation, and you get $840 million annually. California utilities receive $15 billion annually in revenue from residential customers, so the total shortfall is about 5%.
This is a crude calculation, and it could undoubtedly be refined. For example, distributed solar proponents argue that local generation allows the utility to avoid distribution system upgrades, which would represent an additional benefit. These impacts have been found to be relatively small, but this continues to be an area of active research. On the other hand, I’ve also made an assumption that significantly decreases my estimate of cost shift. In particular, I’ve used the average residential retail price, but California customers actually pay increasing block rates so most solar customers face a marginal price well in excess of the average price.
The total revenue shortfall works out to about $0.01 per kWh, or $65/year for the average California household. This is more than I expected. And, I’d bet most Californians are not even aware that this cost shift is happening.
So why am I paying $65/year for other people to have solar? It doesn’t make sense. Sure, I’m concerned about climate change, but my $65/year could go a lot farther if it was used instead for grid-scale renewables. Moreover, this is almost certainly bad from an equity perspective, as we know that high-income households adopt solar much more often than other households. Rooftop solar isn’t getting rid of the utility. It’s just changing who pays for it.
To read the article please click here.
March 9, 2018
CONTACT: Antonio Ortega (760) 604-1092
IID, CAISO settlement promotes local renewable energy development
Imperial Irrigation District and the California Independent System Operator announced this week the two parties have reached a settlement that ends existing litigation between them.
As a result, more climate-friendly energy from the IID service area can be delivered to the rest of California.
“For IID, this has always been about ensuring basic fairness, a level playing field and protecting our balancing authority and our ratepayers for the sustained benefit of the region,” said Kevin Kelley, IID general manager.
As part of the settlement, CAISO has agreed to upgrade one of IID’s power lines (S-Line) that will allow more electricity to flow from the Imperial Valley to other markets. CAISO has also agreed to do more to help promote geothermal development, a priority for the district, in the Salton Sea Known Geothermal Resource Area.
Both parties also agreed to establish a local coordination working group to address important issues that may arise in the future.
Resolving the dispute gives the parties a common platform to move forward on issues that both agencies care about, Kelley added.
Located in what is considered the “renewable energy capital of the world” IID can serve as a conduit for renewable energy development in the west, helping California meet its aggressive renewable energy and climate goals while creating added economic development and job opportunities in a region that desperately needs them.
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