Landmark Climate Bill Directs Electric Utilities to Displace Oil Companies

Within 15 years, California will generate at least half of its electricity from renewable resources and double savings from energy efficiency gains, two milestones included in Senate Bill (SB) 350. News coverage of this bill prior to its passage overlooked these monumental targets and focused on the oil companies' unsightly lobbying to remove a petroleum reduction goal from the bill. Meanwhile, few have noticed the provisions of Senator Kevin de León's legislation that make replacing oil as the dominant transportation fuel a core mission of the electric industry -- allowing Californians to "fill up" at home on cleaner electricity that's the cost equivalent of dollar-a-gallon gas.

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Recent analysis concludes mass adoption of electric cars, trucks, and buses would cut California's petroleum use by 18 percent in 2030. To get there, people need to be able to plug-in their vehicles where they live, work, and play. Electric utilities can make this happen. That's why SB 350 concludes: "Widespread transportation electrification requires electrical corporations to increase access to the use of electricity as a transportation fuel."

Senator de León's landmark bill also establishes that, a "principal goal" of electric utility "resource planning and investment" is "to improve the environment and to encourage the diversity of energy resources through improvements in energy efficiency, development of renewable energy resources, and widespread transportation electrification."

California's investor-owned utilities are multi-billion dollar corporations that make investments on a scale that could actually erode the monopoly enjoyed by Big Oil for far too long.

And, unlike the oil industry, the electric industry is closely regulated by state agencies, such as the California Public Utilities Commission (CPUC). Using this authority, SB 350 directs the CPUC to order the electric utilities under its jurisdiction to:

...file applications for programs and investments to accelerate widespread transportation electrification to reduce dependence on petroleum, meet air quality standards, achieve the goals set forth in the Charge Ahead California Initiative, and reduce emissions of greenhouse gases to 40 percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050.

Reducing dependence on petroleum is self-explanatory, but the other goals listed in this legislative directive deserve unpacking:

  • Meeting air quality standards means complying with fast approaching federal Clean Air Act deadlines. To do this, we need to essentially stop burning fossil fuels in the greater Los Angeles metro area and in the Central Valley, which still suffer from some of the dirtiest air in the nation.
  • Achieving the goals of the Charge Ahead California Initiative means placing one million electric vehicles on California's roads by 2023 and ensuring that communities historically exposed to a disproportionate share of air pollution enjoy the benefits of zero-emission vehicles.
  • Reducing emissions of greenhouse gases to the levels specified by SB 350 means we need to generate electricity almost exclusively from renewable resources like wind and solar and use that clean electricity to power our cars, trucks, buses, trains, forklifts, etc.

Given the scale of these goals and the imperative to act quickly to meet them, the utility "programs and investments to accelerate widespread transportation electrification" required by SB 350 cannot be small-potato pilots. They must be transformative investments that make driving on electricity more convenient than driving on gasoline.

The widespread adoption of electric vehicles enabled by this investment should actually pay dividends for all utility customers. Under California law, when electric utilities take in new revenue (in this case, money that would have gone to oil companies), they are required to return any surplus to customers in the form of lower electric rates.

Thankfully, California's utilities have already stepped up to the plate, proposing a collective $1.1 billion investment in electric vehicle charging infrastructure and other market acceleration programs. Those proposals are designed to charge cars when there is spare capacity in the electric grid and when wind and solar energy are abundant, in line with another directive contained in SB 350:

Deploying electric vehicles should assist in grid management, integrating generation from eligible renewable energy resources, and reducing fuel costs for vehicle drivers who charge in a manner consistent with electrical grid conditions.

In other words, utility efforts to accelerate widespread transportation electrification required by SB 350 should also lower the costs of meeting SB 350's goal of generating at least half of California's electricity from renewable resources like wind and solar.

Cars, trucks, and buses powered with clean, domestic electricity, the price of which doesn't jump through the roof every time a hurricane hits the Gulf of Mexico or a refinery explodes in Richmond -- a vision that will be the law of the land in the Golden State as soon as Governor Brown signs SB 350.

About the Authors

Max Baumhefner

Attorney, Clean Vehicles and Fuels, Energy & Transportation program

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