The implications of deregulation for biomass and renewable energy in California

Abstract

California has been leading the nation down the path of electric utility deregulation, beginning with the April 1994, California Public Utilities Commission`s (CPUC) Blue Book restructuring proposal. The road for renewable energy producers has been particularly rocky, leaving the future of renewable energy production very much in doubt. The original CPUC proposal provided for competition among generating sources on the basis of price alone, without regard for environmental considerations. The California legislature took up electric utility deregulation legislation during 1996, culminating in AB 1890, California`s landmark restructuring legislation, which was passed unanimously by the Senate and Assembly, and signed into law by the governor on September 28, 1996. AB 1890 assigned to the California Energy Commission (CEC) the task of determining how to allocate the renewables transition funds between existing and new renewable generating sources, and among the various renewable energy technologies that are available for deployment in California. The California Environmental Protection Agency (Cal/EPA) was assigned the task of reporting to the legislature about the specific benefits provided by biomass energy production in California, and about policies that could shift some of the cost of biomass energy production away from the electric ratepayer, on to beneficiaries of the environmental benefits of biomass energy production. This study describes the development of the CEC and Cal/EPA reports to the California legislature, and provides an analysis of the major issues that were encountered during the course of their development. The study concludes with a consideration of the future prospects for biomass and renewable energy production in the state.