Consumer Federation of California

It can be a challenge to turn anywhere on the legislative compass without smacking into energy-conscious laws. The new paradigm arrives under a plethora of nomenclatures – global warming, greenhouse gas emissions, climate change, renewable energy – all attempting to rescue us from fossil fuel dependence that appears to be harming the planet.

On Nov. 4, two ballot initiatives aiming to increase the use of renewable solar, clean fuels and wind energy present themselves amid challenges that they are either too expensive or misconceived.

Proposition 7

When proponents and opponents come from the same side of an issue, things can get interesting.

In a nutshell, electricity in California is distributed and regulated by three different types of service. Investor Owned Utilities, also referred to as IOU, hold 68 percent of the market, while publicly owned utilities like the Sacramento Municipal Utilities District and electric service providers split the balance at 24 percent and 8 percent, respectively. Amador County is served by the privately owned, for-profit IOU, Pacific Gas and Electric Co. IOUs are legally required to serve a specific geographic service area and are regulated by the California Public Utilities Commission.

The switch that allows light to fill a living room arrives through four principal components – the generating facility, or the hydropower station for Amador; the interstate electricity grid; the transmission lines that carry electricity from powerhouse to grid; and finally the distribution lines that carry that energy to one’s living room. Different regulatory and permitting responsibilities are held by federal, state and local agencies depending on the project. For Amador, its hydroelectric generating facility is permitted by the Federal Energy Regulatory Commission through licensing agreements.

Current laws require IOUs and ESPs to acquire renewable resource energy on their own or purchased from others, at an increase rate of 1 percent, which sets the target at 20 percent by 2010. Solar and wind are the allowable energies, not hydroelectric. As of 2006, the IOUs were at 13 percent renewable energy as defined by the PUC.

Proposition 7 does not change PG&E’s target of 20 percent by 2010, but it does throw publicly owned utilities into the boat with them. The future requirements to all utilities have been raised to 40 percent by 2020 and 50 percent by 2025. Taking into consideration that renewable energy has yet to be produced at the same cost as current services raises a concern as to what PG&E will have to pay to meet this demand and who will pay for the increase. The answer is that the rate payers will bear the burden. At this time, the law holds a 10 percent above market rate cap on procured energy and rate increases.

Proposition 7 has been funded almost entirely by Peter Sperling, the billionaire son of the founder of the University of Phoenix. He is deeply interested in the climate change debate. The legislation was written with a team of lawyers and Jim Gonzalez, a former San Francisco county supervisor and political consultant.

Raju Yenamandra, director of sales for Solar Works California Inc., called the initiative well intentioned, but poorly executed in the Los Angeles Times. "The significant advantages we have with our technology is all of a sudden being diminished by this particular proposition," he told the Times.

Locally, Jerry Scott, founder and director of Amador Citizens For Energy Conservation, recently presented a plan of action to the board of supervisors. Scott offered his group to conduct an audit of current energy use within the county, with recommendations and custom conservation solutions, at no charge.

As for the ballot legislation, Scott said, "I believe it is poorly written with too many loopholes. Even the highly regarded Union of Concerned Scientists are recommending a ‘no’ vote on both propositions 7 and 10."

Another original member of ACEC, Marilyn Nutter, offered her impressions of both initiatives. "It is my understanding that it would focus on hybrid development and hurt wind and solar exploration," she said. "I think there is a lot of confusion on both, which is why most people I talked with are voting ‘no.’ With the economy what it is and California still trying to work out a budget, most people don’t want money going towards more bond/increased taxes."

Opponents say the proposition could shut out small generators of wind and solar energy.

The cost to the state from the proposed legislation is estimated at $3.4 million annually. Other potential short-term costs and reduced revenues resulting from the measure cannot be determined at this time. Long term, the hope is for a healthier environment with ratepayer cost savings and revenue increases seen by state and local governments, but the legislation leaves no clear path to that happy ending.

Proposition 10

Less complicated is Proposition 10, which is looking to authorize $5 billion in bonds to be paid back over the next 30 years to offer rebates for purchasing certain high fuel economy or alternative fuel vehicles. Twenty percent would be used as incentives for research, development and production of renewable energy technology. Development of alternative fuel vehicles would be allocated 11 percent and another 5 percent in incentives would be offered toward the purchase of renewable energy technology. The remaining 6 percent would go toward renewable technology education grants at eight cities and several colleges.

Critics of the proposition claim it is a taxpayer-funded giveaway to Texas oilman T. Boone Pickens, who has financed the $7.7 million campaign and who owns a natural gas company called Clean Energy Fuels.

Richard Holober, executive director of Consumer Federation of California, told the San Francisco Chronicle, "Look, we’re not against natural gas. What we’re against is using billions of dollars of tax money – precious tax money – to distort the market and promote one form of energy over others that we think have a much better future."

Proposition supporters believe other fuels would be able to compete with natural gas for the same funding and that the state could monitor rebates. According to the state Legislative Analyst’s Office, the bond money would buy a real reduction in greenhouse gas emissions.

Repayment of the bonds, totaling $10 billion with interest, would come from increased state sales tax revenues and an increase in vehicle licensing fees between the years of 2009 and 2018.

"I’m totally in favor of renewable energy and clean fuels. Proposition 10 appears to lean a little too far toward natural gas as the only solution," said Brad Barnard, a salesman at Jeff Holman Auto Center. "Culture shock at the pump is causing us to grab at the first solutions that arrive. I wish there had been a little more refinement of the legislation. There are other alternatives like solar and wind that could be developed. Who knows, maybe they could design wind turbines in the grill of the cars."

Barnard didn’t believe the proposition would affect sales at his Martell dealership.