California Sets the Path Toward a Clean Electric Grid

The California Public Utilities Commission just affirmed its commitment to our state's environmental goals by making sure that all companies responsible for providing power to Californians must comply with the Golden State’s carbon reduction mandates.
Credit: *This figure, constructed by NRDC, is for illustrative purposes only; emissions reduction paths have been simplified and specific requirements for SB100’s 2045 specific mandates are yet to be determined.

The California Public Utilities Commission just affirmed its commitment to our state's environmental goals by making sure that all companies responsible for providing power to Californians must comply with the Golden State’s carbon reduction mandates.

This decision approves a novel plan that would set California’s electricity sector on the path toward reducing emissions to 40 percent below 1990 levels by 2030 and encourage power companies to prioritize pollution reduction in our most vulnerable communities. Although this is a strong step forward to reduce California’s greenhouse gasses, making sure that California does its part to combat the harmful effects of climate change while continuing to spur the clean energy economy; the commission will need to take stronger steps in the future to ensure compliance with California’s more recent and aggressive environmental goals requiring a zero-carbon electric grid by 2045.

The commission rejected a plan that combined the proposals submitted by the load-serving entities—which include all of California’s investor-owned utilities, Community Choice Aggregators (CCAs), and direct service providers—because they would not sufficiently reduce emissions. Instead, the decision approved unanimously last week:

  • Adopts the commission’s plan that cuts planned emissions enough to set us on a path to meet our 2030 climate goals;
  • Establishes a new process to figure out how to buy more power if needed to ensure a reliable low-carbon grid;
  • Requires nineteen of thirty-nine load-serving entities to re-file their individual plans because they did not submit adequate information on air-pollutants associated with their electric generation.

What is required?

Senate Bill 350  set the state’s 2030 greenhouse gas emission reduction target and also requires the commission to initiate an integrated resource planning (IRP) proceeding to determine how the electric sector should plan to affordably reduce its share of emissions to ensure a clean electric grid for all. Here’s how it works:

  1. The commission develops directional guidance for load-serving entities (known as a “reference plan”) to construct their own individual plans. The commission also develops 2030 emissions targets for each load-serving entity.
  2. Then each load-serving entity submits its own detailed plan.
  3. The commission then carefully stitches these individual plans together, working with the load-serving entities to smooth out any rough edges, such as differing assumptions regarding future statewide electric load, to develop a final statewide plan.
  4. This cycle will repeat every two to three years.

Compliance planning for SB100, which requires 100 percent carbon-free electricity, will also be conducted through the IRP. As SB100 was signed into law late last year after most of the work in this first IRP cycle had already been completed, this first commission-approved plan does not consider SB100’s targets.

The commission’s decision is a step in the right direction.

The commission correctly rejected a plan that falls short of state goals. In this first IRP cycle, the sum of carbon emissions in 2030 from all submitted plans—38 million metric tons (MMT)—was greater than the commission’s 34 MMT emissions target. Because of this shortcoming, the commission instead adopted the “reference plan,” which had been developed by the commission to provide guidance to load-serving entities in order to ensure emission reduction targets are on track.

The decision also initiates a “procurement track”—a public process to determine how the state should buy electricity if the load-serving entities can’t figure out how to meet the state’s environmental goals while maintaining a reliable electric grid. The procurement track dramatically changes the tone of this statewide planning proceeding as this makes it crystal clear to the state’s load-serving entities that if they don’t adequately plan to deliver on reliable and clean energy, the commission will step in to do it instead.

This procurement track will serve two purposes:

  1. It will serve as a backstop to identify and buy the type of power required to sufficiently reduce carbon and maintain reliability when the load-serving entities’ plans fall short.
  2. It will also help smaller companies, such as California’s many new CCAs, buy expensive and necessary resources through collective action, including with the state’s large investor-owned utilities. CCAs, an alternative to the traditional investor owned utilities, are local non-profit agencies that buy power on behalf of their residents from alternative suppliers while still receiving transmission and distribution service from their existing utility.

Another core objective of the IRP is to prioritize air pollution reduction in California’s most vulnerable communities. The first step in solving this problem is to understand and disclose how much air pollution could be caused by each load-serving entities’ power plans. Nineteen load-serving entities did not completely disclose this information and the decision orders those companies to re-file their plans with complete information.

What more is needed?

Now that the commission has successfully overseen the development of the first statewide IRP and established that it is serious about California’s 2030 environmental targets, it should start thinking about how to meet SB 100’s goal to ensure “renewable energy resources and zero-carbon resources supply 100 percent of retail sales of electricity to California” by 2045. This effort would also support former Governor Brown’s Executive Order B-55-18, which sets a goal for California to become carbon-neutral by the same year.

However, at this point no one has defined what “zero-carbon” means. Nonetheless, the chart shown below aims to show the likely range (green lines in the chart) of what we think “zero-carbon” could mean. The chart clearly shows that the emissions reduction rate implied by the combined load-serving entity plans is woefully insufficient compared to the rate of carbon reduction required to attain a zero-carbon grid by 2045. The trajectory adopted by the commission’s decision, although better, is still too slow to get us to where we need to be.

To ensure that the state’s electric system is set up to meet California’s 2045 zero-carbon goals, the commission should conduct 2030 emissions reduction planning for the next IRP cycle in the context of our 2045 objectives. It isn’t good enough to ensure that we are on track to comply with our 2030 goals when our 2045 goals require far more. Complying with our 2045 targets is a necessary step in our global fight against the harmful effects of climate change; some of which are already being felt in California in the form of droughts, and destructive and frequent wildfires. Finally, the commission and the state’s power companies need to prioritize clean air in some of our most vulnerable communities—which also face some of the worst air pollution in the state—while decarbonizing the state’s electric grid.