CITY OF GLENDALE CALIFORNIAREPORT TO CITY COUNCIL

October 21,2008

AGENDA ITEM

Report: Opposition to Proposition 7- Renewable Energy Generation Initiative Statute

1. Resolution Opposing Proposition 7 - Renewable Energy Generation Initiative Statute

COUNCtL ACTION

Public Hearing, I~:dinance I J

Approved forDe k 'ZV2et8Consent Calendar I

calendar

Action Item IX J Report Only [ J

ADMINISTRATIVE ACTIONSignalure

Approved , .James E. Starbird, City Manager ::,:;:..;:...J..~~~:;;tJ=:\=-

SubmittedGlenn O. Steiger, General Manager - GWP ~~:I.l.!,""'''-<',.Le&~J.l."'

PreparedSteven G. Lins, Assistant General Manager - Supply ~.-S~.-""'''''''!K2F''''

ReviewedScott H. Howard, City Attorney "--~_~=::; ;;."L~-'==~

RECOMMENDATION

It is recommended that the City Council oppose Proposition 7 - Renewable Energy Generation InitiativeStatute.

SUMMARY

Proposition 7 makes anumber of changes regarding Renewable Portfolio Standards (RPS) and the permitting ofelectricity generating facilities and transmission lines. Primarily, the measure:

• Establishes additional, higher RPS targets for electricity providers• Makes RPS requirements enforceable on publicly owned utilities (POUs)• Changes the process tor detining "market price of electricity"

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Opposition to Prop 7 - Renewable Energy Generation Iniliative StatuleOclober 21, 2008

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• Changes the cost cap provisions that limit electricity provider obligations under the RPS• Expands scope of RPS enforcement• Revises RPS-related contracting period and obligations• Sets a lower penalty rate in statute and removes the cap on the total penalty amount for failure to meet RPS

requirements• Directs the use of RPS penalty revenues• Expands Energy Commissions permitting authority

Proposition 7 proposes the following mandates on California's electric utilities:

• Increase the State's RPS requirements to the following (including all POUs):

20% by 201040% by 202050% by 2025

• Arequirement for all utilities to add at least a2% renewables per year• Caps ratepayer costs at 3% above the market price of power• Establishes apenalty of 1cent per kWh for any "retail seller' not meeting the established RPS goals in any

one year• Shifts generation and transmission permitting duties and the calculation of market price referent from the

California Energy Commission (CEC) to the California Public Utilities Commission (CPUC)• Deletes POUs' current exemption from the definition of "retail seller'• Indirectly ties POUs to the CPUC's regulations on RPS programs based on the definition of "retail seller'

• Indirectly ties POUs to the CPUC's section on penalties. (CPUC's section on assessed penalties states thatit cannot be passed on to the consumers. Thaf is nof possible for POUs who have no shareholders.

FISCAL IMPACT

Estimate of Net State and Local Government Fiscal Impact

• Increased state administrative costs of up to $3.4 million annually for the regulatory activities of the CaliforniaEnergy Resources Conservation and Development commission and the California Public Utilities Commission,paid for by fee revenues.

• Unknown impact on state and local government costs and revenues due to the measure's uncertain impact onretail electricity rates. In the short term, the prospects for higher rates - and therefore higher costs, lower salesand income tax revenues, and higher locai utility tax revenues - are more likely. In the long term, the impact onelectricity rates, and therefore state and local government costs and revenues, is unknown.

• If approved by State voters, Proposition 7 will negatively impact GWP's electric operations and will havesignificant financial implications and challenges for GWP and GWP ratepayers.

Opposilion 10 Prop 7- Renewable Energy Generation Iniliative SlalUlaOctober 21, 2008

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BACKGROUND

Proposition 7, Ihe Solar and Clean Energy Iniliative is a measure thai has qualilied tor Ihe November 4, 2008General Eleclion 8allol through asuccesslul signature circulation process.

Current Slate law (S8 1078 adopled in 2003) allows the governing board of a publicly owned ulility (i.e. CilyCouncil) 10 implement and enforce ils own RPS. On December 16, 2003, Ihe City Council approved a 10%expansion at the RPS by 2010 and a20% expansion by 2017 for GWP. This RPS will be reviewed as part ofthe Inlegrated Resource Plan now underway and options for revising GWP's RPS will be included in the plan'srecommendation.

Current Siale RPS law for Inveslor Owned Utililies (IOUs) (S8107 adopted in 2006) further accelerated fhe S81078 goal by stipulalinglhat 10Us must expand their renewable portfolio by 1% each year until reaching 20% in2010.

Renewable Energy Generation -Iniliative Stalule

• Required ulililies, including government-owned ulililles, to generale 20% of their power from renewableenergy by 2010, aslandard currently applicable only to provide eleclrical corporations.

• Raises requirement for ulilities 10 40% by 2020 and 50% by 2025.• Imposes penalties, subject to waiver, for noncompliance.• Transfers some jurisdiclion of regulatory mailers from the Public Ulililies Commission 10 Ihe Energy

Commission.• Fast-Iracks approval for new renewable energy plants.• Requires ulilities to sign longer conlracls (20-year minimum) 10 procure renewable energy.• Creales accounl to purchase rights-of-way and facilities for the Iransmission of renewable energy.

Many experts and environmentalists stale Ihal the inlent of Proposilion 7 to increase renewable energy in IheSiale of California is commendable. However, the measure is so complicaled and poorly wrillen Ihat many feelthai this measure would hurt ralher than help the cause of renewable energy in the stale. For example, manyimportanl taclors were not considered when Ihis iniliative was cratted, such as adequacy of Iransmissioninfraslructure and the cosls associated wilh renewable resources. In addition, in order 10 overturn existing RPSlegislalion approved in 2006, il would require a two-Ihirds vole of Ihe California Legislalure 10 do so. II isbelieved thai if Proposilion 7 passes, that il will lead 10 chaos in our regulalory processes and many years oflitigation.

The official commillee opposing Prop. 7 is called Californians Against Another Costly Energy Scheme.Entities opposing Proposilion 7 are:

Environmental groups Renewable energy providers Cities

Aclerra: Action for aSustainable Earth Bright Source Energy Cily of Agoura Hills

Alliance for Responsible Energy Policy

California League of Conservation Voters

California Solar Energy Industries As: Cily of Alhambra

Cily of Blythe

Opposition to Prop 7- Renewable Energy Generation Initiative SlatuteOctober 21, 2008

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Cenler for Energy Efficiency and Renewable Techno California Wind Energy Association City of Burbank

CE Generalion City of Cathedral City

Climate Protection Campaign

Endangered Habitats League

Environmental Defense Fund

Environmental Enlrepreneurs

Greenlining Institute

Cleantech America

enXco

GreenVolts

First Solar

Fortistar

City of Claremont

City of Clovis

City of EI Monte

City of Indian Wells

City of La Puente

Natural Resources Defense Council

Orange County Coastkeeper

Independent Energy Producers Associ, City of La Verne

City of Montebello

San Jose Conservation Corps

Sierra Club California

Trees for Seal Beach

Union of Concerned Sclenlists

Vote Solar Initiative

World Wide Green Corps

Consumer groups

California Alliance for Consumer Protection

Consumers Coalition of California

Consumer Federation of California

Consumers First, Inc.

Citizens Against Regulatory Excesses

Horjzon Wind Energy

Large-Scale Solar Association

OptiSolar Inc.

Phat Energy

POCO Solar Energy Inc.

Pure Energy Systems, Inc.

PPM Energy

SCHon Solar

Solahart All Valley

Solarecity Electric

Solar Millennium, LLC

Solar Monkey

SolarWorld California

Solei Inc.

Sun Light & Power

Sun Miner, LLC

Sun Power

The Solar Alliance

City of Monterey Park

City of Morgan Hill

City of Pasadena

City of Porterville

City of Rosemead

City of Seal Beach

City of South EI Monte

City of TusHn

Local governments

League of California Cities

California State Association of CounJ

California Special Districts Associath

Opposition 10 Prop 7- Renewable Energy Generation Initiative StaMeOctober 21,2008

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Political organizations Labor

California Democratic Party American Federation of State, County and Municipal Employ,

California Republican Party

California Republican AssemblyCalifornia Coalition of Utility Employees

California Republican LeagueCalifornia Labor Federation AFL-CIO

California Young DemocratsContra Costa Building and Construction Trades Council

California Log Cabin Republicans

Green Party of California

Maria Elena Durazo, Los Angeles County Federation of Labc

Executive Secretary- Treasurer

International Brotherhood of Electrical Workers, Local 1245Libertarian Party of California

IBEW Local 18The Peace & Freedom Party of California

IBEW Local 47Los Angeles County Lincoln Clubs

IBEW Local 465Placer County Republican Party

IBEW Local 1245Republican Party of Los Angeles County

IBEW 9th DistrictRepublican Party of Tulare County

San Diego County Democratic PartyState Building and Construction Trades Council of California

Solano County Republican Party

Young Republican Federation of California,

Sacramento Chapter

Taxpayer groups Ethnic groups Faith-based organizations

Minister Eddie Pierson, Academic Upr

Signal Hill

The Salvation Army, Southeast Corps

Huntington Beach

American GI Forum of California

Asian Americans in Commercial F\Protection Committee

California Taxpayers'

AssociationAsian Business Association, Los

The California Taxpayer Angeles

Sacramento County

Taxpayers League

Estate

Asian Business Association of On

Reverend Eric P. Lee, Southern Chris

Leadership Conference, Los Angeles

Kern County Taxpayers County

AssociationBarstow Hispanic Chamber of

Progressive Jewish Alliance

Alameda County Taxpaye Commerce

Opposition to Prop 7 - Renewable Energy Generation InitiaHve StatuteOctober 21, 2008

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Raoul Wallenberg Jewish Democratic Club

Association Black Chamber of Commerce of Utilities

Alliance of Contra Costa Orange County

Orange County Taxpayer Commerce

Taxpayers

Association

California Black Chamber of

California Hispanic Chamber of

California Municipal Utilities Association

Sacramento Municipal Utility District Board of

Directors

CommerceContra Costa TaxpayersPG&E Corporation

Association Filipino American Chamber of Sempra Energy

Humboldt Taxpayer's Lea Commerce of Orange County Southern California Edison Company

Korean Heath Education Informati Business

Inland Empire Taxpayers and Research Center

AssociationCalifornia Chamber of Commerce

Latin Business Association

Lafayette Taxpayers

Association

Mexican American Political

Association

California Council for Environmental and Econ

Balance

CommerceSutter County Taxpayers

League of Placer County

Taxpayers

San Diego Tax Fighters

California Manufacturers & TechnologyNational Council of Negro Womer

AssociationHigh Desert Section

California Retailers AssociationOrange County Hispanic Chambel

California Small Business Action Committee

Association Regional Hispanic Chamber of California Small Business Association

Valley Taxpayers' Coalitic Commerce California Small Business Roundtable

Inc. RepUblican National Hispanic California Business Properties Association

Ventura County Taxpayer Assembly of Greater L.A.

Association

Waste Watchers, Inc.

Senior groups

California Business Roundtable

Tulare Kings Hispanic Chamber o'California Grocers Association

Commerce

California Retailers AssociationUnited Cambodian Community, In

Americans

California Alliance for RetVictor Valley African American

Chamber of Commerce

California Senior Advocat C" d 'IVIC an community

League . t'orgamza IonsCongress of California

Seniors Southern California Water Commi

Public safety Committee, Inc.

Opposition to Prop 7 - Renewable Energy Generation Initiative StatuteOctober 21, 2008

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Association

Rio Hondo Community DevelopmlCalifornia State Firefighte

Corporation

Los Bomberos de Los

Angeles

Tenant Associations Coalition Poli

Action Committee

East Los Angeles Boys &Girls Cll

GrassRoots Community Network

Connecting Communities

Rosamond Community Services

District

San Francisco Planning and Urbal

Research

Southeast Community Developme

Corporation

Total Education Solutions, South

Pasadena

If approved, Proposition 7 will eliminate the ability of this community to decide the timing and cost impactsassociated with the "greening" of ifs energy portfolio. This measure violates the City's legislative principle ofpreserving local control of the City's utility to the City Council by making POUs subject to the jurisdiction of theCEC and the CPUC.

Therefore, it is recommended that the City Council support Glendale Water & Power in opposing Proposition 7 ­Renewable Energy Generation Initiative Statute.

EXHIBIT(S)

(n/a)

RESOLUTION NOo _

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GLENDALE,OPPOSING A STATEWIDE BALLOT INITIATIVE, PROPOSITION 7, TO REQUIRE

GOVERNMENT-OWNED UTILITIES TO GENERATE 50% OF THEIR POWERFROM RENEWABLE RESOURCES BY 2025

WHEREAS, cutTent State law allows the governing board of a publicly owned utility(i.e. City Council) to implement and enforce its own Renewable Portfolio Standard ("RPS"); and

WHEREAS, on December 16, 2003, the City Council approved a 10% expansion of theRPS by 2010 and a 20% expansion by 2017 for GWP; and

WHEREAS, current State law for Investor Owned Utilities ("IOUs") further acceleratedthe RPS goal by stipulating that IOUs must expand their renewable portfolio by 1% each yearuntil reaching 20% in 2010; and

, WHEREAS, Proposition 7, the Renewable Energy Generation Initiative Statute wouldrequire Glendale to generate 20% of their power from renewable energy by 201 0, 40% by 2020and 50% by 2025; and

WHEREAS, the measure is complicated and so poorly written that many feel that thismeasure would hurt rather than help the cause of renewable energy in the state; and

WHEREAS, many factors were not considered when the initiative was drafted, such asadequacy of transmission infrastructure and the costs associated with renewable resources; and

WHEREAS, there is a long list of entities opposing Proposition 7 including cities,environmental groups, utilities, businesses, and OtlICTS; and

WHEREAS, Proposition 7 would eliminate the ability of this community to decide thetiming and cost impacts associated with the "greening" of its energy portfolio; and

WHEREAS, this measure violates the City's legislative principle ofpreserving localcontrol of the City's utility to the City Council by subjecting the City of Glendale to thejurisdiction of the California Energy Conunission and the California Public UtilitiesCommission.

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NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THECITY OF GLENDALE, CALIFORNIA, that the Council hereby expresses its opposition tothe Renewable Energy Generation Initiative Statute, (Proposition 7) on the November 4, 2008general election ballot.

The City Clerk shall certify to the Adoption of this Resolution.

Adopted by the Council of the City of Glendale on this day

MayorATTEST:

City Clerk

STATE OF CALIFORNIA )) SS.

COUNTY OF LOS ANGELES. )

of October, 2008.

I, Ardashes Kassakhian, City Clerk of the City of Glendale, hereby certify that theforegoing Resolution No. was adopted by a majority vote of the Council ofthe City of Glendale, Califomia, at a regular meeting held on the day of______ 2008, and that the same was adopted by the following vote:

Ayes:Noes:Abstain:Absent:

City Clerk

A!'IlROVED AS TO FORMC ..~,R ------------- :>

CITY ATfORNEY

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