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CPUC Head Committed to 'Selling' Global Warming Policymaking

California is taking some risks in sprinting out front in setting energy policy based on global warming assumptions and delaying future benefits for utility consumers from some of these efforts, but the longer term costs of not doing anything would be far greater, according to California's chief regulator, Michael Peevey. He made this point in a speech Monday to the Edison Electric Institute (EEI) Financial Conference in Las Vegas, NV.

Peevey, the president of the California Public Utilities Commission, added there was an element of "selling" and promotion related to his state's policies, but he thinks there is growing widespread "recognition of the catastrophic consequences that will result if we pursue a business-as-usual approach that fails to consider the impacts of energy use on the environment -- particularly with respect to global warming."

As a regulator, Peevey said part of his job is to help utilities, "and by extension ratepayers," to take what he called "the long view. "In general, there is a tendency to focus on the near-term costs to the detriment of long-term gain because the future benefits are less tangible than the costs of the policies needed to secure them. Such myopia is no longer acceptable."

He admitted that California's massive, decade-long $3 billion solar initiative and its newly mandated longer term cap on greenhouse gas (GHG) emissions do not carry immediate benefits for utility ratepayers who will be footing the bill.

"Arguably, our most risky policy effort is the carbon cap [GHG emissions limits]," Peevey said. "They are policies in which many of the benefits, in terms of moderating global warming, depend very much on whether other states, and indeed, the global community, decide to follow suit."

Eventually, Peevey believes the economics will work out for both the California Solar Initiative calling for 3,000 MW of solar photovoltaic (PV) systems on more than one million California home and business rooftops with $3 billion in incentives. The state's massive subsidy will eventually "drive the costs of solar downward," he said. The goal is to transform solar "into a technology that can compete on an equal footing with conventional resources while providing clean distributed power."

Similarly, Peevey readily promotes the idea that California's newly created GHG emissions cap for power plants will be a plus for the state's economy. "We believe that the aggressive goals can be met in a manner that won't dramatically increase consumer rates," he said, contending that much of the savings can be achieved under existing programs with an eventual compliance program that is flexible, permitting offsets and permit trading.

Peevey and the policies in California he is promoting are part of what he considers an "emerging consensus" on the need for progressive, activist environmental policies that "make sense from an economic standpoint."

He is convinced that California's evaluation of the economic impacts of an aggressive carbon mitigation strategy "indicates these measures will provide net economic benefits, by improving our efficiency, and freeing up resources that can be used to grow the economy.

"The strategies identified by the state's Climate Action Team to achieve the emission reduction goals of the state are anticipated to, in and of themselves, contribute 83,000 jobs to the economy and an additional $4 billion by 2020. And looking more broadly, The Stern Report, commissioned by the British government, and issued [Oct. 30], indicates that the cost of carbon mitigation measures sufficient to stabilize carbon concentrations at 550 ppm will cost approximately 1% of global GDP annually, but will stave off economic losses of 20% global GDP."

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