California Proposition 7

Continuing series on Election 2008 Propositions

Proposition 7: Renewable Energy Generation. Initiative Statute.

* Requires utilities, including government-owned utilities, to generate 20% of their power from renewable energy by 2010, a standard currently applicable only to private electrical corporations.
* Raises requirement for utilities to 40% by 2020 and 50% by 2025.
* Imposes penalties, subject to waiver, for noncompliance.
* Transfers some jurisdiction of regulatory matters from Public Utilities Commission to Energy Commission.
* Fast-tracks approval for new renewable energy plants.
* Requires utilities to sign longer contracts (20 year minimum) to procure renewable energy.
* Creates account to purchase rights-of-way and facilities for the transmission of renewable energy.

Fiscal Impact:
* Increased state administrative costs of up to $3.4 million annually for the regulatory activities of the California Energy Resources Conservation and Development Commission and the California Public Utilities Commission, paid for by fee revenues.

* Unknown impact on state and local government costs and revenues due to the measure’s uncertain impact on retail electricity rates. In the short term, the prospects for higher rates – and therefore higher costs, lower sales and income tax revenues, and higher local utility tax revenues – are more likely. In the long term, the impact on electricity rates, and therefore state and local government costs and revenues, is unknown

Argument FOR:
– It would make California the world leader in clean power technology.
– It would help create over 370,000 new high wage jobs.
– It meets environmental protection standards as outlined in the Warren-Alquist Act and Desert Protection Act.
– Provides for review by local government.
– Will have no negative impact on small-scale renewables and will likely benefit small-scale renewables
– Provides a “feed-in tariff” for any size project, under which utilities must buy power offered by renewable energy companies that is cost-effective.
– Strengthens penalties for utility non-compliance by eliminating the current cap on penalties imposed by the Public Utilities Commission

Argument AGAINST:
– so poorly written that it could hurt the cause of renewable energy in the state.
– will force small wind and solar companies out of the market. It excludes renewable plants smaller than 30mw from counting towards the new requirements. Today, nearly 60% of contracts under California’s renewable requirements are with these small providers. Excluding small providers will eliminate a major source of clean power and thousands of jobs.
– contains a provision that virtually guarantees that electricity consumers will pay 10% above market rates for renewable power forever – even when the costs of solar and wind sources become more competitive. Nothing in the text of the initiative limits increases in electric bills to 3% as proponents claim.
– will cost consumers and taxpayers hundreds of millions per year in higher electric rates – a $300 increase per household per year. By eliminating competition from smaller renewable providers and creating a seller’s market that forces customers to pay 10% above market for renewable energy, Prop. 7 will increase costs to electricity consumers and taxpayers by hundreds of millions of dollars per year. That’s why the non-partisan Legislative Analyst cautions that “…the prospects for higher electricity rates are more likely in the short term…” and the initiative might “…also lead to higher long-run electricity rates.”
– will slam the brakes on renewable energy development. It locks into law many flaws that are currently stifling renewable power development in California and creates new roadblocks to renewable development. Prop. 7 arbitrarily shifts authority over the renewables market from the California Public Utilities Commission to the California Energy Commission, which could lead to significant delays, added bureaucracy and costly lawsuits.
– Prop. 7’s problems would be virtually impossible to fix. No changes can be made without another vote of the people or an unlikely 2/3 vote of the legislature.

My recommendation: NO

On the surface this proposition seems fantastic; making California the clean energy leader and new jobs. Who could argue with that? But, I tend to believe the hundreds of organizations against this measure that feel, yes, it is a great idea, but this measure needs to be written better. Under this measure, we may have more jobs, which would be good cause we would need more money to pay for our increased bills. I also am a supporter of small businesses and this slams the brakes on their expansion, giving all the power to utility companies that are not under any governmental regulation. I also think it says something when 3 leading newspapers are for the measure, while 40 newspapers are against.

Here are the websites:
FOR Prop 7
AGAINST Prop 7