A renewable power mandate poised to clear the California Legislature this week differs significantly from a sister version of the standard that went into effect under an executive order signed by former Gov. Arnold Schwarzenegger (R) in 2008.

The California Assembly this week is expected to take up and approve a renewable portfolio standard (RPS) requiring utilities to generate 33 percent of their power from renewable sources by 2020, taking up where the state's 20-percent-by-2010 version left off. The state Senate passed the same bill last month (E&ENews PM, Feb. 24).

The law would replace the executive order. Broadly, the targets and intent of the measure, which was authored by Sen. Joe Simitian (D), are the same as the Schwarzenegger order to boost clean energy sources like wind, geothermal, small hydroelectric and solar. But a closer look reveals a number of important differences, starting with the agency in charge of implementation.

Under the executive order, the state Air Resources Board was delegated much of the authority to oversee the RPS, which would for the first time apply to both public and private power. That decision, brought about because the California Public Utility Commission (PUC) has no jurisdiction over public power entities such as the Los Angeles Department of Water and Power, led to an extensive rulemaking at ARB last year.

The air board approved a slate of rules that put Schwarzenegger's order into motion in September (Greenwire, Sept. 24, 2010). Crucially, the ARB version of the 2020 RPS included no cost-containment ceiling and said utilities could comply by purchasing renewable energy certificates for 100 percent of their requirement.

The Simitian bill would change all of those key details, putting more authority in the hands of the PUC while asking public power to come up with models for compliance on their own. The PUC would handle oversight of the state's investor-owned utilities with the air board retaining the authority (under the state's climate change law) to loosely oversee and, if need be, punish public utilities.

Moreover, the new law would enact cost-containment measures and put a cap on the use of out-of-state renewable energy certificates (RECs). All of these measures would likely make the RPS less susceptible to litigation and send a stronger signal to investors, experts said.

Why the law?

Laura Wisland, an energy analyst at Union of Concerned Scientists, described the legislation as much tougher than the executive order, which was signed by Schwarzenegger only because of disagreements at the time over how to deal with imported power from other states.

Under that order, utilities "could technically do nothing to replace the fossil fuels in their portfolios and buy credits," Wisland said. "The Simitian approach gives authority to the PUC to require renewables of IOUs and requires public utilities to do the same for themselves."

With Gov. Jerry Brown (D) expected to sign the legislation, Wisland said a law from the Golden State -- often seen as the leader in renewable development -- would send a clear message to investors that the 33-percent goal will be the ruling standard and not subject to quick change.

"They don't have the certainty they need if it's not a law," she said. "There are more hurdles to reversing it. It would presumably be more difficult than shutting down an agency program or having a new governor come in and say, 'I'm changing my mind.'"

The law also is important because it gives utilities more reason to raise their rate base and justify the increase during proceedings before regulators or local leaders. Carl Zichella, director of Western Transmission at the Natural Resources Defense Council, said the order could have easily been vacated, which would have thrown any rate proceeding into doubt.

"The authority for cost recovery is greater," he said. "You have to go back and repeal a statute."

The industry agrees. Mike Hall, CEO of San Diego-based Borrego Solar Systems Inc., called the law "tremendously important" for the solar sector because funds have essentially run dry for residential and commercial installations under the California Solar Initiative.

"Without an RPS, given the budget situation, it would be more challenging to continue momentum," said Hall, adding that his company has doubled in size since 2009, hiring 30 new employees. "It's not going to continue unless there's some kind of long-term program."

A final concern, which is still likely to play out in courts, is whether any RPS that reaches into out-of-state electricity would stand up to a challenge under the U.S. Constitution's Commerce Clause. ARB chief Mary Nichols has said the air board's rule was written to withstand such scrutiny, but it remains to be seen how the issue will play out with respect to the RPS legislation.

Enough transmission for 33 percent?

A broader concern is power lines and whether the transmission exists to meet 33 percent renewables. Zichella, a specialist in transmission, insisted the state has enough power lines either in place or in the works, crediting the process under the 2010 RPS for getting regulators thinking proactively.

"Most of the work that's been done with transmission planning has assumed we'd be exceeding 20 percent," Zichella said. "Nobody's taken by surprise by this."

Zichella noted that the California Independent System Operator, which runs the grid, has conducted its planning and analysis for the next decade based on the 33-percent target, assuming it would be in place. There are bottlenecks -- particularly from south to north in the Central Valley -- and Zichella agreed that more lines are needed to move electrons from the desert in Arizona, but he was confident in predicting the grid will be ready.

Wisland of the Union of Concerned Scientists was just as comfortable saying transmission is sufficient, though some environmentalists have been pushing more localized power sources, such as rooftop solar, to avoid major capital upgrades. Hall said solar is poised to increase its share of renewable generation -- which currently sits at about 2 percent, far behind wind and geothermal -- partly because of the transmission question.

"Solar, by its nature, is a smaller-scale deployment," Hall said. "From 20 to 33, you're going to see that solar is a much larger portion of the next 13 percent. That's because a lot of the low-hanging fruit, in terms of of sites like geothermal and wind, is taken."

Stanley Young, a spokesman at ARB, said the agency supports replacing its rule with a law, though the agency does believe a few pieces of "cleanup legislation" might be needed following passage of the Simitian bill.

Sullivan is based in San Francisco.