Energy Action Plan “Report Card” and the AB32 “Umbrella”

CFEE ROUNDTABLE CONFERENCE ON ENERGY

Julie Fitch

California Public Utilities Commission

Director of Strategic Planning

October 9, 2007

2

3

Energy Action Plan genesis

• First EAP, May 2003, important because:– Brought key energy agencies together to work on

common energy policy goals– Defined concept of “loading order”

• Second EAP, October 2005, important because:– Added sections for climate change, transportation,

and research and developments– Continued EAP tradition of joint policymaking

4

Energy Action Plan 2007 Report Card

Action Area GradeEnergy Efficiency A

Demand Response D

Renewables B

Electricity Adequacy, Reliability, and Infrastructure C

Electricity Market Structure D

Natural Gas Supply, Demand and Infrastructure C

Transportation Fuels Supply, Demand, and Infrastruct. C

Research, Development, and Demonstration Incomplete

Climate Change Incomplete

Overall Report Card C

5

Energy EfficiencySuccesses• Building codes and appliance standards • Strong investor-owned utility programs (projected to

save about one large power plant annually)• Decoupling• Evaluation framework• Opportunity for shareholder rewards (for investor-

owned utilities)Ongoing work• Strategic planning framework• Inclusion of publicly-owned utilities• Comprehensive demand-side strategies• Building code enforcement

6

Demand ResponseSuccesses• Advanced metering infrastructure

– PG&E: installing ~250,000 new meters this year (out of 10 million total);

– SDG&E begins next year; – SCE application under review at CPUC

• 2500 MW of voluntary program enrollment for summer

Ongoing work• Dynamic pricing tariffs (tariffs that vary by time of day

or cost of procuring energy). – Examples: Time of Use, Critical Peak, Real-time Pricing

7

Renewables: Successes

IOU Actual and Forecasted RPS Generation

0

10,000

20,000

30,000

40,000

50,000

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

GW

h

Pre-2002 Contracts 2002 Contracts 2003 Contracts 2004 Contracts

2005 Contracts 2006 Contracts 2007 Contracts Pending Approval

Short-listed Bids Expired Contracts RPS Target

• Solar Initiative applications: 160 MW in first 8 mos. of 2007; current installed capacity in state: ~200 MW

8

Renewables: Ongoing work

Renewables Portfolio Standard• Tradeable renewable energy certificates• Relationship to climate change/AB32• Desirability/necessity of 33% mandate• Inclusion of publicly-owned utilitiesSolar Initiative• Energy efficiency requirements as condition

for solar rebate• Solar water heating?

9

Electricity Adequacy, Reliability, and Infrastructure

Successes• Resource adequacy requirements in place and

working for investor-owned utilities – reserve margin of 15-17%

• New generation coming online• New transmission being built (1600 MW operational,

2100 MW approved, up to 15,000 MW in planning)Ongoing work• Capacity market design• Resource adequacy requirements for publicly-owned

utilities• Combined heat and power/distributed generation• Clean/advanced coal?

10

Electricity Market Structure

Successes• Investor-owned utility procurement role

restored• New utility-owned generationOngoing work• CAISO Market Redesign and Technology

Update (slated for March 2008)• Independent generation (hybrid wholesale

market)?• Retail competition (direct access, retail

choice, core/non-core electricity structure)?

11

Natural Gas Supply, Demand, and Infrastructure

Successes• Natural gas efficiency levels increased• Natural gas quality rules established

Ongoing work• Solar water heating• New gas storage capacity• New pipeline capacity

12

Transportation Fuels Supply, Demand, and Infrastructure

Successes• Increasing focus on alternative fuels

Ongoing work• Continued focus on implementing AB1493

(Pavley) motor vehicle standards• Low Carbon Fuel Standard• Infrastructure for electric or natural gas-fueled

vehicles

13

Research, Development, and Demonstration

Successes• Utility efficiency programs focus on emerging

technologies

Ongoing work• Dry-cooling; once-thru cooling for electricity

generation• Clean/advanced coal, including carbon

capture and storage• Biogas

14

Climate Change

Successes• Implementing existing energy efficiency and

renewables strategies• Incorporating greenhouse gas impacts into

environmental review (CEQA) of projects• Encouraging participation in Climate Action

Registry

Ongoing work• See next few slides…

15

And along came AB32…

• Umbrella over many existing activities in Energy Action Plan framework

• Added impetus to ongoing energy work

16

AB32 Energy Activities

• Joint proceeding (CPUC and Energy Commission) to make recommendations to Air Resources Board for energy sectors (electricity and natural gas)– Agencies will adopt decisions jointly produced

• Comprehensive in scope– Statewide examination– Includes all retail providers: investor-owned

utilities, publicly-owned utilities, electric service providers and community choice aggregators

• Utility sectors will be integrated into ARB overall “scoping plan” structure for California

17

Major Outcomes Expected

Consideration of regulatory and market options• Ongoing role of regulatory measures and

programs to reach AB32 cap• Whether and how to design a cap and trade

system for California• Which entities should be regulated? (utilities,

generators, consumers, etc.)Level of potential reductions• How much mitigation can energy sectors

deliver toward 2020 goal?

18

Major Theme: Everything Relates to Climate Change

Crossing sectoral boundaries• Energy use for water supply and treatment• Electrification of transportation (cars, truck

stops, ports)• Landfill gas capture for electricity production

Crossing traditional regulatory boundaries• Common set of rules to apply to anyone who

supplies electricity and natural gas to retail customers in California

19

California’s Electricity-Related

Greenhouse Gas Emissions

Source: CA Energy Commission Emissions Inventory

2004 Electricity Sales (MWh)

In-State Generat-

ion77%

Imports23%

Emissions (MMT CO2e)

In-State Generat-

ion44%

Imports56%