Solving California's Energy Crisis
Government mismanagement has contributed to an energy cost crisis in California, putting the state at a competitive disadvantage, while placing a severe drag on our economy. Businesses in California now face energy rates nearly twice as high as businesses in other Western states. California residents face rates that are 61 percent higher. These high energy rates are an unacceptable burden for people who live and do business in California. And the current bureaucratic rules are making the crisis worse, instead of better.
The Current Lack of a Clear Energy Policy Is Making the Crisis Worse
Sacramento is still debating between moving between a command and control regulatory structure and a limited regulatory framework. The current lack of a clear policy and regulatory guidance is contributing to the crisis. California cannot attract investments and build the needed energy capacity under the current regulatory framework because potential investors do not know whether they will be allowed to sell electricity in a viable market. Without immediate action, Californians will face energy shortages as soon as 2006, while paying a widening price gap compared to other western states.
The Gray Davis Program: $20 Billion in Added Costs - and No Relief for Energy Consumers
Gray Davis' answer has been to add more bureaucracies and more regulatory confusion. His program has saddled the state with new debt that will cost Californians $2 billion per year in extra energy costs for the next ten years -- while doing nothing to make power more reliable and affordable in the state.
Power Costs (cents/kWh)
Source: US Energy Information Agency, Electric Power Monthly
|Cal Rates||US Average||Western States Average|
|Year||Normal Weather Planning Reserves||Hot Weather Planning Reserves|
A Brief History:
California energy consumption has grown over the decades due to rapid economic and population growth. Until the 1970s, California power costs were in line with those of other Western states. However, cost overruns on nuclear plants and mandatory requirements to purchase expensive power caused the state's power rates to mushroom. In response to this, Sacramento looked for a solution in market driven reforms. In 1996, lawmakers passed AB 1890. Passed with unanimous and bipartisan support, AB 1890 focused on deregulating wholesale electricity while maintaining strict control of retail prices. There were significant flaws in the original legislation and subsequent policy responses that led to the energy crisis:
What We Need to Do:
Policy makers need to take action to cut the risk of future power supply shortages. The state needs an energy policy that links wholesale and retail markets and rationalizes and clarifies the role of state agencies. States like California that project regulatory uncertainty heighten risk for investors and threaten further delays in new power infrastructure investment. A rational and consistent power policy will ultimately result in lower costs and greater reliability for Californians.
As Governor, I will:
As Governor, I will:
As Governor, I will:
As Governor, I will:
As Governor, I will:
California's economic future depends significantly on the quality of our environment. We face serious environmental challenges, which have profound impact on public health and the economy. "Jobs vs. the environment" is a false choice. Overwhelming evidence demonstrates that clean air and water result in a more productive workforce, and a healthier economy, which will contribute to a balanced state budget. Moreover, it is children who suffer disproportionate impacts of environmental toxins. Studies show that children who live near freeways, for example, suffer significantly higher asthma rates and learning disabilities. This administration will protect and restore California's air, water and landscapes so that all the people of California can enjoy the natural beauty that is California.
Full Policy: The Schwarzenegger Administration will protect and restore California's air, water, and landscapes with the following initiatives:
1. Cut Air Pollution Statewide by Up to 50% -- and Restore Independence From Foreign Oil.
Breathing clean and healthy air is a right of all Californians, especially our children, whose health suffers disproportionately when our air is polluted. The future health of California's environment and economy depend on our taking action now.
As Governor I will:
Invest in Hydrogen Highways. Several leading auto manufacturers have stated that they can have tens of thousands of competitively priced hydrogen fuel cell cars on the road by the end of this decade if the fueling infrastructure were is available. I will create a public-private partnership to ensure that before 2010, California has a network of stations in place to allow motorists a real choice of cleaner fuels to put in their tank.
These "Hydrogen Highways" will ensure the availability of hydrogen fueling stations every 20 miles on California's major interstate highways. I will challenge businesses to match the government's investment in these new fueling stations.
Fight for federal dollars for hydrogen fuel development. The federal government plans to spend more than one billion dollars over the next five years to support hydrogen fuel development. I will fight to make sure that a substantial portion of this money is invested in California, and I will seek the maximum benefit from any federal tax incentives.
Expedite clean fuel transportation. Expedite private efforts to build and mass market competitively priced cleaner fuel cars, buses, trucks and generators in California before 2010. I will direct all appropriate state agencies to accelerate use of the cleanest vehicles commercially available to meet the state's transportation needs. I will also encourage municipal, county and federal government agencies in California to do the same.
I will direct the California Energy Commission and California Environmental Protection Agency to ensure that California's fuel marketplace offers producers and consumers a real choice of fuels that are more plentiful, cost-effective and at the same time reduce harmful pollutants and greenhouse gasses. Fuel choices should include compressed natural gas (CNG), liquefied natural gas (LNG), ethanol, hydrogen, electric, low-sulfur and non-petroleum diesel blends.
Get gross-polluting vehicles off the road now. Less than 10 percent of vehicles currently operating on California's roads are contributing contribute close to 50 percent of the California's mobile source air pollution. I will insist on strong enforcement of new federal and state requirements for significant reductions in particulate matter and other emissions from diesel-fueled trucks and buses. I will look to expand innovative market-based mechanisms such as "scrappage" systems so that California can obtain the maximum reduction in tons of emitted pollutants at the lowest possible cost to the state. Under my Administration, the state will lead by example - identifying and permanently retiring those heavily used vehicles that do the greatest harm to our air quality.
Protect California's air quality standards for industrial facilities
I will direct the Air Resources Board to examine the impact of the federal decision to exempt new sources of industrial air pollution from "new source review". Encouraging new investment in California's industrial facilities should result in greater protection of workers and families in adjacent neighborhoods.
Relieve Traffic Congestion
I will seek to implement innovative, market-based and means of reducing congestion on California's highways - including congestion pricing, eliminating congestion-causing toll booths when they can easily be replaced by technology, and similar measures.
3. Solve California's Electrical Energy Crisis.
An unreliable energy system discourages businesses from locating or even remaining in California, resulting in lost jobs and state revenues, I will take action to prevent brownouts or blackouts, such as those experienced during the Davis Administration in California and this year on the East Coast. Almost one third of California's entire in-state generation base is over 40 years old. I will immediately lay the groundwork to expand the state's power supplies, with special emphasis on clean, renewable sources, through the following steps:
Promote Solar and Renewables. Increase California's use of solar power in cooperation with developers, the Building Industry Association, labor, community organizations, and bi-partisan state legislators to provide incentives for new homes built in California to include solar photovoltaics (PV). The goal of this program would be that, starting in 2005, 50% of new homes would include solar PV. As Governor I will also support the extension of tax credits for businesses and commercial establishments which install on-grid solar photovoltaic and other renewable generation systems.
Increase the Reliability of the Grid. I will work to improve the reliability of the electric grid serving the western United States to prevent the type of blackouts which plagued the eastern United States and Canada during the summer of 2003. I will call for a summit to bring together the state's utilities, contractors, and California Independent System Operator (CAISO) with the Federal government and other states and regional energy interests to strengthen the grid reliability. Investments should be consistent with the CAISO's annual transmission plan and should evaluate demand, transmission, and generation alternatives.
Save Energy Through Green Buildings
A host of case studies demonstrate that retrofitting commercial buildings with energy-saving lighting and other technologies is repaid in five years or less based on electricity savings. Incentives will be established, including a Green Building Bank, using private financing and targeted public loan guarantees, to swiftly retrofit as many buildings as possible, reducing the need for new power plants, saving money for businesses and taxpayers alike, and preserving air quality. The Green Building Bank will also help finance the addition of solar PV on large flat rooftops, repaid over time by the value of the new energy generated.
Increase Renewable Energy. As Governor, I will fully endorse California's Renewable Portfolio Standard (RPS), which requires that 20% of the state's total power supplies be generated from renewable sources by 2017. My Administration will also direct the California Energy Commission to define incentives and implement strategies that will target achievement of the 20% standard a full seven years early - - by 2010 - - and set the state on course to derive 33% of its power from renewable sources by 2020.