CALIFORNIA:

Schwarzenegger says he'll veto renewable portfolio mandate

SAN FRANCISCO -- California Gov. Arnold Schwarzenegger (R) has pledged to veto the 33 percent renewable portfolio standard passed by the California Legislature late last week.

A pair of renewable energy bills squeaked through the Statehouse late Friday, just before lawmakers adjourned their annual session. But the votes were met with immediate criticism from the governor, who believes the measures would unfairly limit out-of-state deliveries from wind, solar and geothermal energy sources.

"The poorly drafted, overly complex bills passed by the legislature are protectionist schemes that will kill the solar industry in California and drive prices up like the failed energy deregulation of the late 1990s," Schwarzenegger spokesman Matt David said in a statement. "The bills as drafted will be vetoed by the governor."

Schwarzenegger instead will pursue an executive order to implement what would be the most aggressive mandate in the United States, at 33 percent of total generation by 2020. His version of the RPS would attempt to permit more electricity imports from neighboring states and would likely proceed alongside a rule drafted independently of the Legislature by the California Public Utilities Commission.

The veto threat sets up a clash with environmentalists and many Democrats over their attempt to limit imports to ensure that renewable energy projects are built in-state. They argue that doing so would encourage more distributed generation and lessen the need for expensive power-line construction.

The bills that passed, from Sen. Joe Simitian (D) and Assemblyman Paul Krekorian (D), would build on the current 20-percent-by-2010 mandate, which applies only to the state's big three investor-owned utilities. For the first time, California's public power entities -- including the sprawling Los Angeles Department of Water and Power -- would be subject to the RPS under the measures.

The governor's office and others have pointed out recently that one private utility, San Diego Gas & Electric Co., is currently getting about 6 percent of its power from renewable sources and is unlikely to meet the 2010 goal. SDG&E says it needs to access imports and build more transmission lines to meet its targets.

Other issues to be worked out on the RPS include how to count renewable energy credits and whether to establish interim benchmarks before 2020. Amendments were added in recent weeks on capping prices and cost containment (to address fears that a 33 percent goal would cause the cost of power to skyrocket) to win the support of the LADWP, the Western States Petroleum Association and others.

But those concessions were not enough to win the governor's support, and it appears unlikely the Democrats have enough votes to overcome the veto.

Dan Adler, president of the California Clean Energy Fund, said he expects to hear more about the governor's approach "early this week."

Water package tanks

In another major development, Democrats in the Legislature decided late Friday that they did not have the votes to pass a comprehensive package of water bills. Last-minute negotiations over the package failed, prompting Democratic leaders to pull the bills before adjournment.

Discussions had centered on adding a water bond to the proposal to finance future levees, dams, reservoirs and canals. But the cost of that provision and a lack of consensus on how to craft it ultimately tanked the negotiations.

The collapse was another eleventh-hour defeat for environmentalists in Sacramento. Sources from the Environmental Defense Fund and the Nature Conservancy expressed disappointment but urged lawmakers to try again, perhaps in a special legislative session called specifically to address water supply issues.

"We must not lose sight of the fact that we are still in a dire situation," said Anthony Saracino, water program director for the Nature Conservancy in California. "The status quo has led us to an impending disaster that threatens the ability for all Californians to thrive."

The conference report that was pulled would have created a seven-member Delta Stewardship Council, a politically appointed panel that could push through new canals, levees and possibly dams outside the normal legislative process. The package also attempted to codify "coequal" water supply and ecosystem restoration goals that seek a delicate balance among fishing, farming and environmental interests.

But the package was dismissed by Republican lawmakers and Schwarzenegger aides who insisted it was meaningless without a water bond to fund projects like the proposed peripheral canal, which would theoretically shuttle water around the delta from the Sacramento Valley to farms in the south. Some environmentalists resisted a bond because they feared it would mean new dam construction; many groups instead favor efficiency, conservation and groundwater recycling measures.

Steve Evans, conservation director for Friends of the River, said the state does not have the money to finance a proposed $12.4 billion water bond.