Good afternoon. I am Commissioner Timothy Alan Simon from the California Public Utilities Commission. So much is happening in the energy policy arena currently, particularly in the State of California. The need for procuring cleaner, more diverse energy supply in order to meet various legislative mandates and policy objectives is driving investment in infrastructure and green workforce development in California. With aggressive targets for our Renewable Portfolio Standard, Energy Efficiency Strategic Plan, and greenhouse gas emissions reductions in fulfillment of Assembly Bill 32, California’s energy sector is in the midst of significant change. Furthermore, as we move toward a more carbon constrained world, it is critical that we strike an effective balance between investing in new energy supply while also attempting to keep electricity rates reasonable.
Addressing Climate Change and Resource Adequacy needs in an expeditious manner while the public remains budget-constrained in a difficult economy poses a tremendous challenge. This is why Energy Efficiency is one of our most critical tools and has remained at the top of California’s resource Loading Order since the development of our Energy Action Plan in 2003. There is currently no cheaper, cleaner, and more reliable resource than Energy Efficiency, and California’s recently published Strategic Plan charts a path toward very aggressive strategies that will serve as some of our most cost-effective solutions to Climate Change and diverse energy supply needs. Renewable resources and transmission planning are more expensive solutions than energy efficiency, but they are nevertheless essential tools for meeting California’s policy goals.
Regulation and Markets
California’s energy market has become a hybrid of utility owned generation and competitive procurement since AB 1890 was signed into law and ordered divestiture of utility owned generation in the late 1990s. The California Electricity Crisis obviously made us rethink our approach to regulating our electricity market, and now our Investor Owned Utilities are back in the business of procuring a variety of generation resources in order to fulfill our long term procurement planning goals.
In view of the rising costs of steel and ever expanding general project economics for new generation and natural gas pipelines, it is incumbent upon us to continue to keep a watchful eye on utility project proposals and expenditures. I support continued investment in California’s utilities industry, and I think the capital structures and rates of return on ratebase that are authorized for our IOUs demonstrate a commitment to the financing of capital projects that are necessary to meet our dynamic resource needs. However, I also believe that ratepayer funds are sacred and must be used wisely to generate broad economic benefits. Adequate green collar job opportunities, particularly for the underserved, is one social benefit that should serve as a return on ratepayers’ investment in our growing energy economy.
I appreciate this opportunity to participate on this panel, and look forward to working with other states to achieve our common energy policy goals.