DRA Responds to the Little Hoover Commission Report that Statewide Coordination is Necessary to Minimize Energy Costs for Customers,
but the Cost of Renewable Energy is a Minor Component of Total Costs
SAN FRANCISCO, December 3, 2012 - The Division of Ratepayer Advocates (DRA), the independent consumer advocate within the California Public Utilities Commission (CPUC), today issued its response to a report by the Little Hoover Commission, a bipartisan and independent state agency that, in part, opines on the efforts of the state to achieve its 33% renewable portfolio standard by 2020.
The report, REWIRING CALIFORNIA: INTEGRATING AGENDAS FOR ENERGY REFORM, determines that integrating new renewable energy resources could cause electricity rates to rise, and thus may cause a consumer backlash that could impede the state’s ability to achieve its energy and environmental policy goals.
The report properly suggests that the state needs to do what it can to control utility rates so that California is not hampered in achieving its energy and environmental objectives. Research by DRA suggests that rates may increase as much as 30% in the next eight years due to a number of factors, but the renewable premium (the marginal cost of renewable energy over traditional fossil fuel generation) may not be a significant component of the expected rate increase. Replacing aging infrastructure and improving gas systems will likely be major cost drivers, while the renewable premium should be in the range of 5% to 7% of total rate increases in the same period.
DRA recognizes that California has made tremendous progress to date, but cautions that we have to be careful to control energy costs in the future.
For more information on DRA, please visit www.dra.ca.gov.