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United States

CALIFORNIA LOOKS TOWARDS POOL

The California Public Utilities Commission (CPUC) voted three to one on May 24 to endorse development of a British style wholesale power pool to begin operation in January 1997, backpedalling from its "retail wheeling" proposal which captured international attention in April 1994.

The lone dissenter, Commissioner Jessie Knight Jr, released his own proposal which embraces retail wheeling. The CPUC will receive comments throughout the rest of this year and expect to finalise its restructuring package by mid 1996.

The American Wind Energy Association (AWEA) hailed both CPUC options with a smile. Each one includes a requirement for purchases of renewable energy that closely replicates AWEA's proposed renewables portfolio standard (see previous story). "By adopting the renewables portfolio standard, the CPUC has placed its support firmly behind fair competition and the renewable energy industry," said AWEA's executive director Randy Swisher. "The commission's support is a signal that low cost renewables can continue to play an important role in California's energy mix. Once again, California is leading the way toward a sound energy policy."

The CPUC states it does not plan to "undertake future cycles of the Biennial Resource Plan Update." However, the CPUC wholesale pool proposal requires all existing wind power purchase contracts to be honoured by newly created distribution utilities. All costs considered above market prices would be financed by a market transition surcharge. The CPUC will encourage wind developers and utilities to re-negotiate existing contracts by allowing the utility to keep 20% of any re-negotiated capacity payments. Half of the cost savings associated with lower wind power purchase contracts would be used to finance the above-market costs associated with existing projects.

Meanwhile, the California Legislature held two hearings on May 9 and 10 to try and explore whether the various special interests in the power world, including the wind industry, could come to their own consensus on a restructuring reform plan. FloWind representative David Simpson, an attorney with San Francisco-based Young, Vogl Harlick & Wilson, made the case for wind power. "The current uncertainty is killing the wind industry," said Simpson testifying before the Senate Energy, Utilities and Communications committee. He told the committee that "the wind power industry is being starved at the very moment when it can compete with conventional fuel sources." Simpson suggested that a renewables portfolio standard be set at the current level of renewable capacity (excluding hydro) in California, which is 12%. This percentage would gradually rise to 13.5% by the year 2002. The standard "is the easiest to implement, the most consistent with the free market and the most likely to result in cost effective clean power for California," stated Simpson. Implementing such a plan would add 440 MW of renewables such as wind power in California over the next six years.

AWEA consultant Nancy Rader acknowledges that the wind industry restructuring strategy is focused on state legislative action. The aim is to get either the Center for Energy Efficiency and Renewable Technologies (CEERT) or Independent Energy Producers (or both) to endorse AWEA's portfolio standard and help lobby for its adoption. CEERT includes both Kenetech and Zond as members. The Union of Concerned Scientists, also a member of CEERT, has already tentatively endorsed AWEA's proposal.

It is becoming increasingly apparent that only by linking up with these, and other special interests -- including consumer and industrial customers -- will AWEA be able to prevail in California's Legislature.

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