No On California Prop. 7

 California's Proposition 7 is well-intentioned but so badly written that it is likely to hinder, rather than accelerate, fulfillment of our need for more renewable energy resources.  

NRDC has been fighting for renewables and for energy efficiency for over 20 years.  We are not shy about litigating against the power industry when appropriate.  I've been debating Prop. 7 for the last few weeks.  Invariably, the proponents claim that NRDC is in bed with the power companies, who also oppose Prop. 7 and who are funding the "No on 7" ads that you see on TV.  Well, the bed is getting pretty crowded because every major environmental organization in California, all the principal representatives of California's renewable energy industry, every major newspaper, the Democratic Party, the Republican Party, business, labor and taxpayer organizations are all against it.  

Why?  Here are the major drafting flaws.  And keep in mind, built into Prop. 7 is a 2/3 vote requirement for any legislative fixes.  We've just seen how destructive that is in the 80-day struggle to pass a budget in California. 

  • The small solar industry will be destroyed.  There is a very odd combination of sections of Prop. 7 that makes renewable facilities under 30 megawatts not eligible to be counted against the renewable energy requirements.  This will include all of the rooftop solar installations that you see.  For those of you keeping score at home, this results from the interplay of Sections 6, 7 and 14 (in that order) of the Proposition.  Proponents say this isn't so because these sections of Prop. 7 will go into different California Codes, but their argument makes no sense because a judge will look at the Proposition as a whole.  The California Public Utilities Commission agrees with us on this issue - and they will have the last word if Prop. 7 passes, regardless of whatever the Prop. 7 proponents now say their intention was. 
  • Prop. 7's loopholes for non-compliance are enormous.  Take a look at Section 9 of the Proposition.  The loopholes include having an executed contract rather than having actual units on line - this is "paper energy."  Also, the municipally-owned utilities get a special break:  5 years to evade the limits because they had "insufficient time" to meet the targets.
  • The pricing system discourages competition.  Prop. 7 calls for a market price to be set, allows renewable facilities to offer power at 10% over that price, and requires the utilities to take the power at that price.  This market plus 10% price will become a floor, not a ceiling - if you were a renewable producer, why offer a lower price when the utility must take the higher price?  Because of this, the language in Prop. 7's preamble about reducing prices to consumers by 3% is fantasy.
  • Prop. 7 wreaks havoc on facility siting and environmental review.  Prop. 7 massively disrupts the process for siting renewable energy facilities and the transmission lines that will serve them by trying to rewrite perfectly sound longstanding rules and oust local governments from their traditional role in land use decisions.  In addition, under Prop. 7 if a box is checked on a form saying that there are no serious environmental issues with the siting of new facilities or transmission lines, the environmental review time is reduced to 6 months.  I have been litigating environmental land use cases for many years, and I can tell you that 6 months isn't enough for meaningful public review of a large project given the shenanigans that project proponents and their governmental allies often pull.  If you like having some degree of local control over power line siting, you can kiss it goodby if Prop. 7 passes. 

What should we do instead?  NRDC supported SB 411 in the last legislative session - a bill that would have raised the renewables target to 33%, the same target in the state's draft scoping plan for AB 32, California's Global Warming Solutions Act.  SB 411 failed, but its proponents believe that issues raised by consumers, labor and power companies have been resolved and that we will see a 33% standard signed into law in the next legislative session after an open, public process where flaws can be identified and solutions worked out.  

This is a much better solution than falling for the feel-good ads for Prop. 7 and enacting a confusing, poorly-drafted plan that will take years to straighten out.  NRDC recommends  a "No" vote on Prop. 7.    

About the Authors

David Pettit

Senior Attorney, Southern California Air program

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