December 4, 2012 - From the December, 2012 issue

State Sen. Alex Padilla Not Only Chairs but Leads His Energy & Utilities Committee

Senator Alex Padilla has represented District 20 of the San Fernando Valley in the California State Senate since 2006 and has chaired the Senate Energy, Utilities, and Communications Committee since 2008. In the following interview, Padilla talks MIR through the committee’s past four years, which, despite the difficulty of balancing various interest groups, saw a renewable energy mandate, a smart grid deployment plan, and increased emphasis on energy storage. He then looks four years ahead with a favorable prediction for 33 percent renewables by 2020. For Padilla, interconnectivity defines both successful consensus building and a greener energy system.


Alex Padilla

“It took multiple attempts [to pass a renewable energy mandate] because it’s not simple; it’s not just setting dates and percentages. It’s also about the rules necessary to achieve them responsibly.” -Senator Alex Padilla

Senator, four years ago you began your first Energy Committee hearing as Chairman with an articulate and thorough analysis of California’s complex energy and environmental challenges. You referenced Scottish mathematician James Maxwell’s unified theory of electromagnetism and suggested the policies and politics of energy in California were in need of a similar unified theory to bring together the diverse priorities of energy independence, job creation, reliability, safety, air quality, cost containment, and ratepayer protection, while also reducing greenhouse gases and protecting our planet. How prescient were your remarks?
(http://sd20.senate.ca.gov/news/2009-02-10-senator-padilla-s-opening-statement-first-energy-committee-hearing)
 
Senator Alex Padilla: I felt compelled in 2009 to make the statement that I did, as the new Chair of the Energy Committee, to set the tone for my colleagues on the committee and to suggest the level of detail and thoughtfulness we could expect. I think that the committee ought to consider the business before it, not just legislation but also our role as overseers of the public utilities commission and the energy commission. In addition to that, I wanted to set the tone for all other stakeholders who come before the committee to make it clear that while they may have their unique perspective or interest, it is our job as a committee to make recommendations to the full body of the senate and to be comprehensive in our thinking. So I confess I got a little bit of my geek on that day—proud of it, I did so happily—but it was with serious intent. I think that’s played out over the last four years.
 
In articulating California’s energy and environmental challenges, you focused on efficiency, conservation, the smart grid, and energy storage. What progress has the state and the nation made in regards to the aforementioned? And what may we expect from your committee and from the legislature in the coming years?
 
I think a tremendous amount of progress has been made. It took repeated efforts to finally pass a renewable energy mandate - a renewable portfolio standard - that raises the bar from the goal previously set. It took multiple attempts because it’s not simple; it’s not just setting dates and percentages. It’s also about the rules necessary to achieve them responsibly. That’s where the hard work was, and we finally got there, involving multiple legislators and Governor Brown to sign it into law. We also adopted legislation signed by Governor Schwarzenegger to mandate that every utility in California have a smart grid deployment plan and timetable.   

I think that developing the promising technology of the future will help us reach our energy and environmental goals.  And, that is only possible if we upgrade the electrical grid, which is not much different from what Edison first developed more than a century ago, to one that leverages an information technology backbone. There’s still a long way to go in having legislators and the public understand the significant value on the benefits side of a smarter grid.   

In terms of energy efficiency, when it comes to headlines or feeling like you’re really groundbreaking on something, it feels a lot better to cut a ribbon on a wind-power plant or solar-power plant, or something along those lines, than to talk about energy efficiency in residential buildings that were built pre-1970. We can and should do both.
 
Senator, some challenge the smart grid agenda of the state’s utilities, contending there’s little enthusiasm on the part of the utilities to invest in software and technology that will advance on-demand energy or energy efficiency. Is that an unfair criticism?
 
I think it is unfair criticism. That is why we passed the law and put in the requirement to deploy a smart grid. It’s not just smart maintenance in the statute but an entire smart grid, because it is the way of the future and the way to fully leverage distributed generation. For example, it requires utilities to be in a better place to manage the generation input to the grid that they may not own or control. A smart grid will allow them to do that.
 
Are California’s municipal utilities more able to pursue an aggressive renewables and efficiency agenda than the ISOs? If so, have they?

For better and for worse, the municipal utilities in California are treated differently than the investor-owned utilities. And they serve nearly 40 percent of ratepayers in the state. While the Public Utilities Commission has jurisdiction over investor-owned utilities, they don’t have that same jurisdiction over the municipal utilities. A lot of times what we’re seeing, on renewable energy for example, is a mandate on the investor-owned utilities and a strong nudge, short of a mandate, on the municipal utilities. In some cases it drives municipal utilities to be much more aggressive in obtaining whatever the goal is, and in some cases, unfortunately, it results in municipal utilities acting less aggressively or setting their own bars lower.
 
One of your Senate Energy Committee priorities in 2009 was storage. What progress has been made regarding energy storage, and what breakthroughs do you anticipate?
 
Today there’s certainly more awareness of the value of energy storage and an understanding of how it really could unlock the potential for even greater deployment of renewable energy, distributed generation, and peak energy consumption versus off-peak. On the one hand, I’m excited to see that there’s been significant investment in research that could solve that energy storage question, whether it’s through the State of California or Federal Department of Energy funding. The bad news is we haven’t quite cracked it yet. We haven’t figured out a way to do mass energy storage on a cost-effective basis.     

However, along with Maxwell’s unified theory there is another law in play here, Moore’s Law. Moore’s Law asserts that every two years or so (some say 18 months) computer chip performance will double. This has proven true for the past 50 years, which is pretty incredible. What hasn’t been keeping pace with Moore’s law is battery technology or storage. All of the progress with portable devices, with all the apps and empowering functions, they all rely on energy storage. Pressure is going to build for some major breakthroughs in storage, and those breakthroughs will impact everything from the smallest device to utility scale storage. Efficient storage would have a transformative impact on energy, our nation, and the world. It is something that warrants a Manhattan Project sort of focus.
 
Senator, please put in context the challenges you have as an elected state representative in managing the tug and pull exerted on your committee by the many and varied stakeholders that come before you to urge legislative action on energy and environmental matters. How do you balance the disparate demands and ultimately secure consensus from your colleagues and a signature from the governor?
 
It’s a story I tell very regularly because I think it’s at the core of policy-making when it comes to energy. When I first became chair, people lined up at the door to come meet with me. So I’d attend one meeting and it was somebody arguing for alternative energy and renewable energy as a way towards energy independence for the nation. It was a matter of national security, and therefore, it ought to be the focus. That’s a valid perspective and an important one - it’s part of our consideration.    

The next meeting would focus on climate change and the urgency with which we must reduce greenhouse gas emissions. This is also an important perspective, but different. To develop an energy plan strictly through the lens of energy independence is very different from creating an energy plan strictly through the lens of greenhouse gas emissions. For example, most people who put climate change first and foremost are unwilling to discuss nuclear energy, even if the nuclear energy has zero emissions. (Not that I’m a proponent of nuclear energy, but for the purpose of argument.)    

Another meeting will feature someone saying, “The cleantech sector has been one of the few bright spots in the down economy; therefore we should invest in it and help get people back to work.” What politician today doesn’t want to be known for creating more jobs?    

I think our job is to acknowledge the multiple objectives, if you will, but also to work toward progress in each of these areas, energy independence, our workforce, and emission reductions. And, at the end of the day, for those who might have forgotten what life was like in California 12 years ago or so, the stability and reliability of the grid is always first and foremost.
 
Turning now to the important nexus between energy and water, you have authored bills on point. What inspires your legislation? And is the nexus of water and energy policy a priority concern of your senate committee and the legislature?
 
What most people don’t understand is how interconnected water and energy really are. Reports suggest that about one fifth of our state’s energy use on a daily basis goes to moving water around the state. That’s a very significant amount. That’s not just energy being consumed, but the costs and emissions associated with that.    

The good news is legislation I offered a couple of years ago basically builds on the tremendous success that we’ve seen in Los Angeles with water efficiency. Thanks to various water efficiency measures, the average consumption of water per capita is a little bit lower than it was a generation ago. But unlike Los Angeles, much of the state has a long way to go to see gains. My legislation will push the entire state to be more water efficient.
 
Hurricane Sandy’s devastation led NYC Mayor Bloomberg to press for investment in more resilient public infrastructure and coastal protection. California faces similar threats—whether future sea rise, Delta saltwater intrusion, or earthquakes. How is the legislature responding to such challenges?
 
Adequately maintaining and when necessary replacing aging infrastructure is a nationwide issue. Both Mayor Bloomberg and Governor Cuomo have launched investigations into the resiliency of their infrastructure, examining whether the owners of infrastructure had made the proper maintenance and upgrade investments over time to withstand a storm like Sandy. Unfortunately, when you see blackouts to the extent and length of time that we are seeing on the East Coast, it has a significant impact on the economy, but more importantly, on people’s lives.    

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In Northern California, San Bruno exposed the dangers of aging natural gas pipeline infrastructure with tragic consequences. This led to hearings and mandates to evaluate and update infrastructure. We need to do a far better job of evaluating and recognizing weaknesses in our infrastructure and addressing them before they fail.    

Here in Los Angeles, two winters ago when there were record levels of rainfall in December of 2010, we received two mandated reports as the PUC sought to determine the number of people whose phone service was out. There is a mandate that service be restored within a 24-hour time period. A vast majority of people in Los Angeles did not experience an outage of any type, but for those who did, it took far too long for telecommunication companies to restore service. We must ask, regardless of whether it is power lines, gas lines or phone lines: are the utility companies adequately investing in good infrastructure to avoid failures or outages? I think that’s the most important observation when it comes to Sandy.
 
What about California’s levees and the State’s threatened coastal communities?
 
The legislature voted to place a water bond on the ballot. It has been postponed as the Governor and legislative leadership waits for the right timing. Meanwhile, the Sacramento/San Joaquin Delta, the heart of our state water system, is at very real risk. The sooner we get voter approval, the sooner all the good work can be done to stabilize the levees and better protect California’s water supply.    

On another note, there are a handful of policy issues that overlap our Energy and Utilities Committee and the Senate’s Natural Resources Committee. In the last couple of years, the biggest example has been the issue of once-through cooling—power plants on the coast that use seawater as part of their cooling process. For a number of reasons, climate change being one of them, there’s an effort to wean the State of California and our utilities off once-through cooling power plants and onto dry-cooling power plants and power plants that are located elsewhere. I think we’re slowly getting there.    

There are timetables now set for utilities to stop using these power plants on the coast. It’s not as aggressive as some people might like, but, again, this is due to balancing our multiple goals, key among them, system stability and reliability. When the utilities sign into a contract with a power plant, for power purchase, it tends to be a decades-long contract. To exit a contract prematurely, relative to the contract terms, or to start relying on energy generated from a new facility, usually leaves utilities and ratepayers on the hook for the older investment. So we’ve tried to move aggressively to shorten the timeframe of those contracts. It’s too aggressive for some and not enough for others, which tells me we’re probably on the right the track.
 
Senator, let’s now focus on California’s transmission issues, especially with integrating renewables into the State’s electric grid. Your committee has asked a lot of the utilities lately—but have they adequately planned for and do they have the wherewithal to meet the state’s ambitious 33 percent renewables goal?
 
Every utility that I’ve talked to - and we require updates each year – reports that they have met the 20 percent mark that was set in the past, and they are, at least on a contractual basis, on track for reaching 33 percent by the year 2020.    

I think the questions that we need to be mindful of are, number one, is every contract that utilities sign and are counting on to achieve compliance really going to deliver? We are experiencing an aggressive push towards renewable energy, and there are players in renewable energy that are either relatively new to California or relatively new to the energy sector. Some are relying on relatively new technologies and hoping their projects deliver. We have to be prepared in the event they don’t.    

The other thing that we’ll be paying close attention to going forward is the rate impacts. A lot of the renewable energy projects have been sold under a certain cost structure to the utilities and to ratepayers. When something is unexpectedly more expensive than projected, someone has to pay for it. I want to make sure ratepayers are protected.
 
Could you comment on the State’s present and future energy resource mix? What do you envision California’s energy supply portfolio will include, going forward?
 
When we talk about renewable energy, we’re not being too prescriptive on one technology or type of renewable energy. We’ve allowed in the state law for utilities to figure out what works best for them.    

If you live in Northern California, where you have a lot more wind and water, they will be a bigger part of your portfolio. In Southern California, especially in the middle of Imperial Valley, we have a lot more sun to work with. So each geographic area and utility footprint will have a mix that makes sense for them.    

Unfortunately, we do not see enough other states pursuing with sufficient vigor a renewable energy mandate of their own. I think we’ve learned enough in California, sometimes the hard way, to be a good model and case study for other states to follow in developing a national renewable energy policy.
 
In closing, and referencing your opening 2009 statement as Chair of the Senate Energy and Utilities Committee, has the State reached consensus on a policy and a politically unified theory for energy, renewables, and climate change?
 
I don’t think we have quite yet, but we’re on our way. Every issue that we’ve talked about in this interview, whether it’s the interplay between energy and water, or energy and information technology, or renewables and storage, they are all necessary. The bottom line is, everything is interconnected. While we want to move as aggressively as possible to a greener energy system and a greener energy economy, it’s complicated, and you have multiple factors that play off one another at all times. That is the most fundamental lesson from Maxwell’s Unified Theory. Hopefully, it’s more integrated in our policy-making process today than it was four years ago when I first took over as chair.

© 2014 The Planning Report | David Abel, Publisher, ABL, Inc.