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Other Budget Issues

Last Updated: 5/20/2011
Budget Issue: Request for 10 positions to implement 33 percent Renewables Portfolio Standard (RPS)
Program: Public Utilities Commission
Finding or Recommendation: Recommend that one position requested for Governor's distributed generation initiative be denied and that four positions requested for transmission planning and permitting be approved only on a limited-term basis. Recommend that the five remaining positions in the request (two of which are for a limited term) be approved as requested.
Further Detail

Governor’s May Revision Proposal. The Governor’s 2011-12 May Revision requests an increase of 10 positions (8 permanent and 2 limited-term) and $2,093,000 (including $100,000 for consulting services) from the Public Utilities Commission Utilities Reimbursement Account for the California Public Utilities Commission (CPUC) to implement the state's new statutorily mandated 33 percent RPS. Of the 10 positions proposed, four are intended to work on RPS program implementation, one of which is to be solely focused on distributed generation. Another four positions are intended to work on transmission planning and permitting. The remaining two positions (which are limited-term) are administrative law judge positions which will draft all decisions necessary to implement the new 33 percent requirements.

Recent Legislation Enacted to Increase RPS Target. California enacted the state’s first RPS in 2002.  Amended in 2006, the RPS legislation mandated that investor-owned utilities (IOUs), by 2010, meet 20 percent of their electricity procurement from renewable resources, such as solar, geothermal, biomass, or wind power, either from their own power sources or through the purchase of electricity from others. Chapter 1, Statutes of 2011, 1st Ex. Sess. (SB X1 2, Simitian), increased the RPS target to 33 percent by 2020, applying the requirement to both IOUs and publicly owned utilities.  

Administration Proposes to Go Beyond Recently Enacted RPS Legislation With Its Distributed Generation Initiative. The Governor's proposal requests funding for one position to establish programs and processes to satisfy the "Governor's goal" of achieving 12,000 megawatts (MW) of renewable distributed generation. We think that this is a major change in policy direction that should be first evaluated and adopted by the Legislature before being implemented. We note that CPUC consultants have found that the high reliance on distributed generation may represent the most costly means of meeting the state’s RPS goals. As such, the Legislature will likely want to provide its policy direction in this area.  

Transmission Planning and Permitting Work Does Not Require Permanent Positions.The proposal provides that the need to permit at least three new major transmission lines in the next few years as the basis for the request for four permanent transmission-related positions. While this process is likely to be time consuming (and subject to litigation), the siting-related work nonetheless will be completed at some finite point in the future. There will be the need for ongoing inspection of lines once they are operational, but at this point, it is not possible to determine what level of staffing will be needed for any ongoing work that may be necessary.

LAO Recommendation. The adoption of renewable energy procurement requirements raises a number of important and complex policy issues. The Legislature has clearly demonstrated its intention to set its policy in this area, most recently by the enactment of Chapter 1 discussed above. Since the component of the May Revision proposal to pursue 12,000 MW of renewable distributed generation reflects a major shift in policy that has not been evaluated or adopted by the Legislature, we recommend that the position authority and associated funding for the one requested position related to distributed generation be denied. In addition, we recommend that the Legislature approve the four positions requested for transmission planning and permitting on a limited-term basis, rather than on a permanent basis as requested. Once the authority for these four positions expires, the Administration can return to the Legislature with a workload analysis to justify transmission-related staffing requirements on an ongoing basis. Finally, we recommend approval of the remaining five positions requested, two of which are for a limited term, on the basis that they have been justified on a workload basis and are consistent with the Legislature's policy direction in this area.