Public Utilities

Businesses that provide the public with necessities, such as water, electricity, natural gas, and telephone and telegraph communication.

California Approves Measures Designed to Reduce Greenhouse Gases

The California Public Utilities Commission in January 2007 approved a regulation that prohibits utilities from purchasing electricity that is produced by power plants that produce greenhouse gases. The rule was adopted pursuant to an emissions control bill that the California Legislature passed in 2006. Under the new rule, utilities will not be able to purchase power from most coal-burning plants, because few of these plants are able to meet the new guidelines.

Scientists have proven that carbon dioxide and other greenhouse gases contribute to the problem of global warming. Despite this fact, increased use of alternative energy sources has been slow. In 2006, plans for more than 20 power plants had been introduced for construction in the Rocky Mountain states as well as the southwest. Plans called for these plants to burn coal, which is plentiful and relatively inexpensive, and much of the energy produced by the plants would be sent to California. These coal-burning plants would produce high quantities of carbon dioxide. As of 2001, California ranked second in the nation among states, behind Texas, in the production of carbon dioxide.

Members of the California Legislature introduced a bill entitled the Global Warming Solutions Act of 2006, which directly addressed the problem not only associated with gases produced by these power plants, but also the gases produced by oil refineries and cement plants. Under the legislation, the state aimed to reduce industrial carbon dioxide emissions by 25 percent by 2020. Although other states, such as New York, have considered proposals, the California legislation was the most aggressive proposal for attacking the problem of the production of greenhouse gases.

The State of California has taken a number of steps to reduce its energy consumption and to reduce the emission of greenhouse gases. For a number of years, the state has required that home devices such as refrigerators, air conditioners, and water heaters become more energy efficient. The state has also targeted chargers for cell phones and computers, as well as remote-controlled devices. Consumers in California also reportedly have begun to trade in their sport utility vehicles for more energy efficient models, including newer hybrid vehicles.

The proposal was not uniformly applauded. California has introduced several initiatives designed to address the causes of global warming, but critics say that these efforts could hurt consumers in California due to the increase in energy costs. In 2002, California became the first state to enact legislation that regulated emissions of carbon dioxide from automobile tailpipes, but that law has been challenged in federal court by members of the automobile industry. More recently, California Governor Arnold Schwarzenegger approved a proposal that requires builders to offer roofs that can convert sunlight into electricity.

Schwarzenegger signed the Global Warming Solutions Act in September 2006. The specific provisions of the act resulted from negotiations between the Democrat-controlled legislature and the governor, who is a Republican. In addition to establishing the goals for reducing greenhouse gases, the legislation also granted new authority to the California Air Resources Board, which was charged with setting specific emissions targets for various industries.

About four months after the passage of the act, the California Public Utilities Commission considered a proposed rule that would prohibit California utilities from buying electricity from power plants that exceed state emissions standards. Under the rule, California utilities could not make "new long-term commitments" with facilities that produce more than 1,100 pounds of carbon dioxide per kilowatt-hour. Such commitments include new construction, "major investments" in existing plants, and contracts lasting five years or longer. At the time of its adoption, coal-burning plants located outside of California supplied about 20 percent of the state's electricity.

The commission unanimously approved the proposal in January 2007. Members of the commission said that the regulation was necessary in order to implement the provisions of the 2006 legislation. According to commissioner Dian M. Grueneich, "The Emissions Performance Standard is a vital step towards achieving the emissions reduction goals of [the Global Warming Solutions Act] and protecting our ratepayers against the risk of high carbon prices in the not-too-distant future. At the same time, this decision leaves the door open to new, advanced technologies and carbon sequestration projects that will allow the energy industry to develop clean and sustainable sources of power."

Utility companies also praised the new standard. "The CPUC's greenhouse gas emissions performance standard is an essential step to addressing climate change. PG&E applauds the CPUC's vision and leadership in designing an aggressive and pragmatic policy, which encourages all of California's energy providers to invest in long term renewable energy sources," said Thomas B. King, Chief Executive Officer with Pacific Gas and Electric Co. "We are committed to doing our part by continuing to develop our renewable energy portfolio and providing our customers with among the cleanest energy in the nation."

At the time of the signing of the new standards, more than 220 companies had registered their emission levels with the California Climate Action Registry, which is a voluntary project that allows companies to register their levels of greenhouse gas emissions. The legislation passed in 2006 provided incentives for companies to submit these emission levels.