Smart Grid Plans by California Utilities Get Passing ‘Mid-Term’ Grades

News Release

Contacts:
Lori Sinsley, (415) 308-6097, [email protected]
Tim O’Connor, (415) 293-6132, [email protected]

(San Francisco, CA – August 16, 2011) The smart grid plans to modernize California’s electricity grid have comprehensive visions and coherent strategies, but lack commitments to measure and verify progress on delivering benefits set by state clean energy and energy efficiency laws, according to Environmental Defense Fund (EDF).

Those laws include California’s Global Warming Solutions Act, also known as AB 32 [PDF] (to reduce greenhouse gas emissions to 1990 levels by 2020), the Renewable Portfolio Standard (increasing renewable electricity use from 20 percent to 33 percent of total electricity delivered by 2020) and the California Solar Initiative (installing 1,940 megawatts (MW) of solar energy by 2017, equivalent to the generating capacity of more than three average-sized 600 MW coal-fired power plants).

EDF used its recently released smart grid evaluation framework [PDF], or “score card,” to analyze approximately 1,000 pages of material submitted by PG&E, SDG&E and SCE to the California Public Utilities Commission (CPUC). While the plans show that a smart grid in California can deliver significant consumer and environmental benefits, utilities must commit to regularly providing detailed updates on their progress meeting energy law requirements in order to get passing ‘final’ grades.

“California’s legislature and Public Utilities Commission (CPUC) specified that utilities must deliver the full range of smart grid benefits, and this evaluation will help ensure that happens,” said Tim O’Connor, EDF’s director of California’s climate and energy initiative. “We developed our framework based on the agency’s decision and kept the utilities informed about how plans would be scored. That’s why we were disappointed that their roadmaps didn’t include metrics or milestones to track progress.”

PG&E, SDG&E and SCE serve more than 11 million customer accounts and estimate that they will make new smart grid investments between $2.4 billion and $3.6 billion from now thru 2020.

“These public utilities will be investing billions of taxpayer dollars in the smart grid, so we can’t afford for them not to get it right,” said Miriam Horn, director of EDF’s smart grid initiative. “The smart grid is critical to achieving the state’s goals: to eliminate massive inefficiencies in the system, dramatically increase California’s reliance on renewable energy, including “distributed” energy made in communities’ own backyards; shift to zero-emission electric vehicles; and empower consumers to manage their energy use, footprint and bills. But the smart grid will only achieve these things if it is designed from the outset to do so, and if utilities are held accountable for delivering on their promises.”

Those promises, if realized, are significant. PG&E, for example, estimates that it will cut costs by up to $2 billion and reduce up to 2.1 million metric tons (MMT) of carbon dioxide (CO2) emissions. SCE estimates it will be able to charge 1 million electric vehicles by 2020 and avoid up to 1,900 (MW) of peak demand by 2014 (peak demand is typically the most costly to deliver and often the most polluting). SDG&E estimated that it will cut 6.8 MMT of various types of global warming pollution and save up to $615 million in fuel costs.

The plans of SDG&E and SCE got the highest cumulative grades with a ‘B-‘; while PG&E’s plan earned a ‘C.’ Evaluated by EDF energy experts and consultants, the scores reflect whether plans chart a course to achieve four state objectives: radically increase California’s reliance on clean energy and flexible demand; empower consumers; create a platform for new energy technologies and services; and reduce the electric system’s impact on air, water and land. A separate team of EDF staff worked with SDG&E in an advisory role during the design of its plan.

“SDG&E earned its overall score by working with lots of stakeholders and really digging into how to provide the full range of possible benefits. But we still need to see measurable commitments to deliver environmental and customer value,” said O’Connor. “These plans are roadmaps that will guide this multi-year journey toward a modernized grid. They must provide the state and ratepayers with mileage markers showing if we’re on the right track.”

“Utilities should view these scores as ’mid-term grades.’ They will have a chance to improve their plans and scores during the ongoing Public Utilities Commission process,” concluded O’Connor. “Utilities need to report progress on an ongoing basis for all to see. They can’t hide that they’re missing many key ingredients and EDF will be working to hold them accountable.”

Beyond California, EDF is working on multiple smart grid projects to ensure that consumers have the information and protections they need, and that ratepayer investments deliver returns in the form of cleaner air, improved public health, reduced energy costs and a stronger economy. These include the $25 million Pecan Street Project, in Austin, Texas, that is designed to understand and address what the community needs.

Environmental Defense Fund, a leading national nonprofit organization, creates transformational solutions to the most serious environmental problems. EDF links science, economics, law and innovative private-sector partnerships. Visit us on Twitter at @EnvDefenseFund and @EDF_CA, at our California blog, California Dream 2.0, and on Facebook at facebook.com/EnvDefenseFund.