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1 Meeting California Policy Goals, Affordable Rates and Why I Volunteered for this Job? Mark Ferron California Public Utilities Commission October 4, 2011
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Transcript of 1 Meeting California Policy Goals, Affordable Rates and Why I Volunteered for this Job? Mark Ferron...
1
Meeting California Policy Goals, Affordable Rates and Why I Volunteered for this Job?
Mark FerronCalifornia Public Utilities Commission
October 4, 2011
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Presentation Overview
• Quick biographical sketch
• How do I see my role at the Commission
• Personal observations of key issues
• Questions and Discussion
My resume
• Degrees in Mathematics and Economics
• 25 years in Banking & Finance
• 8 years as COO at DB Global Markets
• Brown for Governor 2010
• Appointed to CPUC on 22 March
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• Geek
• Show me the money!
• Foster innovation while controlling risk
• ??
• Assigned Commissioner for RPS, RA, EE, RRIM, QF/CHP and others
What it says What it means
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My initial view of the Commission’s work
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Quite a lot Not so much
• Quality and enthusiasm of the people
• Nature of the work
• Potential for high impact
• Brain-drain and demographic time bomb
• Missing context
• If I talk to you, then you can’t talk to him
Things I like about the CPUC so far
The evolving mission of this Office
1. Safety and Reliability cannot be compromised
2. Encourage new innovation and attract new capital
3. Demand Value for Money
4. Promote a healthy environment and economy
5. Look out for the underdog across all stakeholders
6. Expose entrenched, anti-competitive players to market forces Important but
not Urgent
Urgent but not Important
My observations on some key issues
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Safety
Renewables
Costs Reliability
Generation Ownership
Energy Efficiency
Role of Financing
Feed-in Tariffs & DG
San Bruno is a game changer
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Safety
Is Electricity “Sticker Shock” inevitable?
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Growth in Revenue requirement
Costs
Increase = 50%
CAGR = 6%
Increase = 58%
CAGR = 4.7%
Actual and Projected Electricity CostsTotal Statewide Expenditure ($bn)
Renewables
We have added much renewable generation
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California should get to 33% RPS by 2020
Source: California Public Utilities Commission, 2nd Quarter 2011
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
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MWh (000s)
Viability > 70%to 80%
Viability > 80%to 90%
Viability > 90%"
ExpiringContracts
Online
2020 33% RPS Mandate
20% RPS Mandate
IOU RPS Procurement ForecastWith risk weightings based on viability calculator
Renewables
A Feed-in Tariff is a powerful tool....
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PV installed in Germany has skyrocketed……
Feed-in Tariffs & DG
California
.. But a Feed-in Tariff is not a magic wand
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The levels of European FiT subsidies are unsustainable
EstimatedCost to German
Ratepayers: $8 billion per year
Feed-in Tariff range
Annual MW installed
Source: DB Climate Change Advisors “The German Feed-in Tariff for PV” May 2011
Feed-in Tariffs & DG
EurosMW
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California Interconnection Requests have Increased Exponentially
91
4113 18
2 11 1
586
11 7 9 1 5 10
100
200
300
400
500
600
700
Solar PV Biogas Biomass Small hydro Solar thermal Wind Geothermal
Nu
mb
er
of
Pro
jec
ts
Executed RPS Contracts Interconnection Requests Since 2008
Source: California Public Utilities Commission, 1st Quarter 2011
Feed-in Tariffs & DG
Independently produced power is essential
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Generation Ownership
Source: CPUC 2010 Electric & Gas Utility Cost Report
Reliability and long-term capacity: avoiding the cobweb
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Reliability
Source: California ISO 2011 Summer Assessment
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Challenges to California’s EE Programs
2010-2012 Funding Source(prior to Gas PPP sweep)
3 yr total= $3.1 Billion
ProcurementFunds
2.16
2.67
1.141.47 1.36
0
0.5
1
1.5
2
2.5
3
2002-2003 (Reported) *
2004-2005 (Reported)
2006-2008 (Evaluated)
2009 (Evaluated)
2010-2012 (Forecast)
IOU EE Portfolio Cost-effectiveness
Ben
efi
t /
Co
st (
TR
C)
Portfolio Cycle
Declining IOU Portfolio Cost Effectiveness over time
(excluding Low Income EE Programs)
PublicGoodsCharge
Energy Efficiency
What we gonna do when the money runs out?
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DOE ARRA Funds Granted in California ($m)
Role of Financing
Source: US Department of Energy
Questions and Discussion
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• Mark Ferron, Commissioner [email protected] • Charlotte Terkeurst: Chief of Staff
[email protected] • Sarah Thomas, Legal and Energy Advisor
[email protected]• Sara Kamins, Energy Advisor
[email protected] • Michael Colvin, Energy and Water Advisor
