December 17, 2004
California PUC Requires Utilities to Account for Global Warming Gas Costs
Rule to Shift Toward Cleaner and More Efficient Electricity Sources Marks State's First Attempt to Address Electric Sector's Carbon Emissions BERKELEY, Dec. 16—The California Public Utilities Commission (CPUC) today continued the trend of California and other states demonstrating leadership on addressing global warming by requiring the state's electric utilities to account for the future cost of reducing carbon emissions in choosing energy sources. In voting to approve the ten-year resource plans of the state's three largest utilities, the Commission effectively requires utilities to invest in conservation, improving energy efficiency, and developing renewable energy sources before relying on dirtier fossil sources of energy. "The CPUC's landmark action today will help protect the environment from the serious consequences of continued global warming, while protecting consumers from paying higher costs for reducing carbon emissions in the future," said John Galloway, UCS Senior Energy Analyst in Berkeley, California. "It is cheaper to prevent carbon emissions today than it will be to clean up carbon emissions tomorrow." The CPUC will require the utilities to account for carbon and other greenhouse gas emissions when considering purchases from fossil fuel plants, and considers cleaner sources more cost-effective if they prevent carbon emissions at a cost of less than $8-25 per ton. "Since there are many energy efficiency and renewable energy options available today that are less expensive than new fossil fuel plants, we don't actually expect any increase in rates as a result of this policy," said Galloway. "But energy efficiency and renewable energy will become clear priorities." UCS advocated for the greenhouse gas hedge value at the CPUC by introducing analysis in expert testimony, hearings, and filed comments. UCS also called for increased use of renewable energy in the resource plans. UCS demonstrated the likelihood of greenhouse gas regulations and the impact on consumers of further ignoring the risk. Consumer and environmental groups, as well as two of the utilities whose resource plans were under consideration, supported this approach. The California utilities now join PacifiCorp, in Washington state, and Idaho Power Company, utilities that already voluntarily factor the cost of carbon regulations into their long-term planning activities. "Nationally, electricity generation is the largest source of carbon emissions, producing 40 percent of total U.S. emissions," said Alan Nogee, UCS Clean Energy Program Director. "This decision from a Republican administration puts the White House on notice that it can no longer ignore cost-effective steps to prevent global warming." | 
