posted on Friday, October 06, 2006 10:28 AM by Gunnar Birgisson

California Enacts More Aggressive RPS Plan

There are growing concerns that due to transmission constraints and cumbersome regulatory procedures, California will struggle to meet the requirements of its renewable portfolio standard (RPS) legislation.  Nevertheless, in a sign of the state's ambition, Gov. Schwarzenegger recently signed into law an even stricter RPS standard.

Under the new law, the state's retail providers (excluding municipal utilities) must obtain 20% of their power from renewable energy by the year 2010, instead of 2017.  However, another aspect of the law may make the utilities' challenge less onerous.  Until now, California regulators have not authorized the use of renewable energy credits (RECs) to meet RPS requirements, but the new law allows the state's Public Utilities Commission and Energy Commission to develop such a system of credits.  In addition, renewable energy from outside the state may now become eligible to help meet RPS requirements.  These provisions are likely to help integrate western renewable energy markets.

Recently, the state also enacted laws requiring a reduction in greenhouse gas emissions, and requiring the Energy Commission to address the capture and sequestration of industrial carbon dioxide.  It remains to be seen how these laws will complement each other.