California grooms utility giants to compete against Big Oil

california flag waving elp

SACRAMENTO, Calif. (AP) — Under new climate change legislation Gov. Jerry Brown signed Wednesday, the most populous state in the nation is encouraging electric utilities to compete as an alternative transportation fuel source by installing thousands of charging stations where people live, work and play.

The new law, SB350, requires the state to boost renewable energy use to 50 percent and double the energy efficiency of existing buildings by 2030, although Democratic leaders were forced to drop a key provision that would have pushed the state to cut oil use by half.

California is already on target to generate at least a third of its electricity from renewable sources by 2020; now state regulators will set efficiency targets for the 10 years after that.

One of the key ways state officials hope to cut greenhouse gas emissions is by encouraging residents to fuel their cars and trucks with electricity, a move that environmentalists say will pit utilities against oil companies in the marketplace.

"It basically tells the electric industry to go eat the oil industry's lunch," said Max Baumhefner, an attorney with the Natural Resources Defense Council.

While oil companies drew attention for their aggressive lobbying against the oil mandate in the original legislation proposed by Senate President Pro Tem Kevin de Leon, D-Los Angeles, California's largest private utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — were also lobbying the Brown administration, lawmakers and state regulators for provisions to boost the electric vehicle charging market.

During the first half of the year, the three private utilities spent about $2 million lobbying state government on dozens of bills, including SB350. That was more than Chevron, Valero, Shell and BP combined in that same period, according to lobbying reports filed with the state.

The oil companies did not oppose the goal of increasing electric power but point out that the state already has policies to diversify transportation fuel sources.

"We need to make sure Californians can move about our state and have access to reliable, affordable energy," said Catherine Reheis Boyd, president of the Western States Petroleum Association, which represents oil companies.

For utilities, the bill is a business opportunity as much as it is a moral imperative for Democrats who want to fight climate change. Two of Brown's top aides, who negotiated the bill, are former PG&E executives.

California is already a leader in the electric vehicle market, according to the state's Plug-in Electric Vehicle Collaborative, with four out of every 10 electric vehicles in the nation sold in California, which has 12 percent of the population. Still, they are only a fraction of the 1.7 million cars and light trucks sold in the state each year.

"Companies are going to have to prove to consumers that it's in their best interest to make that switch from traditional fuel vehicles," said Travis Miller, director of utilities research at Morningstar Inc. in Chicago. "I don't know we're at the tipping point quite yet."

One reason is the state's still-spotty infrastructure for charging electric vehicles. Utilities plan to compete with private charging companies to install tens of thousands of new charging stations to diminish driver worries of getting stranded with a dead battery. The three utilities have separate plans before state regulators to spend more than $1 billion on charging stations.

Unlike refilling gasoline or diesel at the gas station, most electric car owners do their charging at home at night, so utilities are targeting chargers for businesses and multi-unit complexes to encourage widespread adoption.

"We thought about 'Where are the other places that it makes sense for people to charge their cars?' It's probably not running into Starbucks for five minutes to get their coffee," said Aaron Johnson, vice president of customer energy solutions at Pacific Gas & Electric. "The big opportunity is workplace. It's the other place where you really park your car for a long time."

Utilities, however, have reason to move cautiously since early ventures have proved rocky.

Consumer advocates are also watching the state Public Utilities Commission, which must approve plans to install the charging stations, to ensure ratepayers who will foot the bill for the stations do not overpay. The regulatory agency has come under fire for its cozy relationship with major power company executives.

Brown on Thursday announced signing separate legislation requiring cities and counties to create a faster process to approve new charging stations, an effort to address a patchwork of regulations throughout the state that have slowed building.

Betty Plowman of the Western States Trucking Association said while the state's policies are laudable, electric vehicles aren't yet practical for many commuters. She's also worried about having to subsidize electric car drivers through her utility bill.

"Who pays for that electricity? Is it a gift from the gods?" she said.

All utility customers will pay for the chargers through their bills. But electricity providers estimate they will add only a nominal amount: $0.82 to $2 a year per customer, SDG&E estimates. Critics like Plowman said every penny counts for someone like her who is nearing retirement.

Independent computer consultant Darshan Brahmbhatt switched to a Nissan Leaf about two years ago. Brahmbhatt, who lives in Folsom, a suburb east of Sacramento, estimates his lease and extra electricity costs are about $225 a month, less than the $300 he was paying for gas alone.

"Financially, it absolutely makes sense," he said. "It's kind of really worked out great."

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


Making DDoS Mitigation Part of Your Incident Response Plan: Critical Steps and Best Practices

Like a new virulent strain of flu, the impact of a distributed denial of service (DDoS) attack is...

The Multi-Tax Challenge of Managing Excise Tax and Sales Tax

To be able to accurately calculate multiple tax types, companies must be prepared to continually ...

Operational Analytics in the Power Industry

Cloud computing, smart grids, and other technologies are changing transmission and distribution. ...

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...

Latest Energy Jobs

View more Job Listings >>