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State regulators vote to ban utilities from buying dirty power
Friday, January 26, 2007
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SAN FRANCISCO — California utility regulators banned power companies Thursday from buying electricity from high-polluting energy sources, including most out-of-state coal plants, to curb global warming.

The Public Utilities Commission voted 4-0 to adopt the “greenhouse gas emissions performance standard,” which will prohibit investor-owned utilities from entering or renewing long-term contracts to obtain electricity from sources that emit more carbon dioxide than a modern natural gas plant.
“It represents a significant milestone in our ongoing efforts to address the challenge of climate change,” PUC President Michael Peevey said.

The new rules are expected to affect energy markets across the West. While there are almost no coal-fired plants in California, about 20 percent of the state’s electricity comes from coal plants in Nevada, Wyoming, Utah and other Western states.
The new standard is aimed at encouraging investment in cleaner energy sources such as wind and solar, while discouraging use of coal and other high-polluting sources.

Coal is inexpensive and plentiful, but releases high levels of carbon dioxide, a gas blamed for trapping heat in the Earth’s atmosphere and raising temperatures worldwide.
The standard, which is expected to take effect Feb. 1, was adopted as part of California’s strategy to combat climate change by reducing emissions of greenhouse gases. Legislation signed into law last year required the state to adopt emissions standards for investor-owned and municipal utilities.

The PUC regulates the state’s three investor-owned utilities — PG&E in San Francisco, Southern California Edison in Rosemead and San Diego Gas and Electric, owned by Sempra Energy in San Diego. Together, they supply power to more than 70 percent of Californians.

The three utilities said Thursday they support the emissions standard and did not anticipate much impact on electricity rates. Coal only makes up 1 percent of electricity at PG&E, 3 percent at SDGE and 7 percent at SCE, company officials said.

The California Energy Commission is drawing up a similar emissions standard for municipal utilities, which import more electricity from out-of-state coal plants. The CEC is expected to issue its rules by July.

Municipal utilities in Anaheim, Los Angeles, Pasadena and Truckee ran into strong opposition when they tried to secure long-term contracts with out-of-state coal plants before the emissions standard took effect.

Environmentalists praised the PUC’s emissions standard Thursday, saying it could encourage other states to adopt similar rules.

“It will help transition California’s energy market to one that produces less greenhouse gas emissions,” said Jim Metropulos of the Sierra Club. “Other states may look at it and decide that they also want to transition from dirty coal power to cleaner, green power.”

But Luke Popovich of the Washington-based National Mining Association, which represents the coal industry, said restricting emissions would drive up energy costs because coal makes up about half of the nation’s electricity supply. Such restrictions will do little to combat global warming unless other countries adopt similar limits, he added.

“We don’t think it makes sense for the United States to unilaterally deny itself use of its most abundant energy source, which is coal,” Popovich said. “It is hardly going to solve anything unless we get China and India and other rapidly expanding economies into some sort of control regime.”

Bob Finkelstein, who heads The Utility Reform Network in San Francisco, said California ratepayers may pay a little more now, but will benefit from cleaner-energy sources in the long run.

“Consumers now and later will be better off if we start planning today for an energy future that doesn’t have dirty coal,” he said.

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On the Net:

California Public Utilities Commission: http://www.cpuc.ca.gov/

California Energy Commission: http://www.energy.ca.gov/
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