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Front Page

Published Thursday, July 26, 2001, in the San Jose Mercury News

California's Energy Crisis 

California's eyes are on Texas' model for creating power


BY Dion Nissenbaum
Mercury News Sacramento Bureau

SACRAMENTO -- Californians looking for someone to blame for their energy woes have created a convenient scapegoat in their search for villains: cowboy boot-wearing Texas electricity barons who are making billions in profits.

But if you look beyond the stereotype, the Lone Star state may offer California a surprising solution for its energy woes.

 Texas is drawing attention, not for its vast oil fields, but for its expanding acres of wind turbines -- a symbol of the state's success in fostering a homegrown alternative energy industry.

 A Texas initiative -- signed by then-Gov. George W. Bush -- has been so successful that California environmentalists are holding it up as a model for the state to follow.

 ``It's the most successful example that we've seen across the country,'' said Matt Freedman, an attorney with the Utility Reform Network, a San Francisco-based consumer group. ``Gov. Gray Davis has a chance to show that he can do Bush one better.''

 On Friday, Davis administration sources said, the Democratic governor is expected to embrace a similar plan that would increase the amount of power California draws from renewable energy companies.

Heightened interest

California's energy crisis has sparked an increased interest in renewable energy at the state and national level not seen since the gas lines of the 1970s.

 From Sacramento to Washington, lawmakers are taking a new look at ways to build more plants that rely on the sun, wind or water instead of natural gas, coal or uranium.

 To do so, 13 states, including Texas, have passed laws that attempt to set aside a certain portion of the energy market for alternative energy companies.

 The Texas law commits the state to building 2,000 megawatts of renewable energy -- about 2 percent of its overall energy use -- by 2009. Texas expects to be halfway to that goal by the end of this year.

 To ensure a market for the power, state power providers are required to draw a slice of their energy from renewable energy companies.

 While California already has a much more vibrant alternative energy market -- 10 to 12 percent of its energy comes from renewable power -- the state has no similar targets. 

Environmentalists are joining with state leaders like Sen. Byron Sher, D-Redwood City, and Assemblyman Fred Keeley, D-Santa Cruz, to change that. Both lawmakers are trying to refine legislation that would call on California to draw 20 percent of its power from alternative energy sources by 2010.

 Friday, sources said, Davis is expected to unveil a new plan that would require state power providers to draw 17 percent of their energy from renewable energy companies by 2006. 

The governor plans to unveil the details during a visit to an alternative energy company in Berkeley. 

Although many agree with the idea in principle, there is heated debate over how to meet that goal.

Natural gas plants

The challenge has also been compounded by the $43 billion in long-term contracts the state locked in to buy 20 years worth of power. While state law called on contract negotiators to get as much renewable power as they could, they ended up relying heavily on natural-gas fired plants. More than 90 percent of the contracts are with such plants, according to a report by the California Public Interest Research Group.

 The contracts have come under fire from critics who contend that they will force the state into paying artificially high prices for years. There is also concern that relying so heavily on plants fueled by natural gas would leave California vulnerable to another energy crisis.

 Alternative energy companies said they offered good deals to the state but were shut out of the process.

 ``It really threatens to cut off the renewable energy industry in California,'' said Jonathan Weisgall, vice president of legislative and regulatory affairs at CalEnergy, one of the state's largest alternative energy companies.

 S. David Freeman, the governor's point man during the contract negotiations, conceded that the state had failed to do enough to reach out to alternative energy companies.

 ``They're right to criticize us now,'' he said. ``We haven't achieved the kind of results that we need. So we're playing catch-up ball.''

 Critics are hoping that California will re-negotiate some of the contracts and create more room for alternative energy companies.

 The alternative energy debate has also heated up in Washington, where Bush has taken flak for proposing an energy policy with a heavy emphasis on boosting drilling for oil and gas.

 Lawmakers including Sen. James Jeffords, a Vermont independent, has proposed pushing the nation's renewable energy supplies from 2 percent to 20 percent by 2020.

Holding out hope

Supporters of the plan are hoping that Bush will look back on what he did as governor when he finalizes his national proposal.

 ``We still hold out some hope that President Bush will decide to incorporate some elements of the Texas model in federal energy policy,'' said Alan Nogee, director of the clean energy program for the Union of Concerned Scientists.

Mercury News Staff Writer Brandon Bailey contributed to this report.

Contact Dion Nissenbaum, dnissenbaum at, or (916) 441-4603.

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