Calif. PUC’s Picker says DOE grid study to have little impact on utilities, operators

Source: By Monica Trauzz, E&E • Posted: Thursday, August 3, 2017

As the Trump administration moves to reverse Obama-era policies aimed at reducing emissions, California recently extended its greenhouse gas market through 2030. Will the Trump administration’s air policies have an impact on California’s efforts to reduce emissions? During today’s OnPoint, Michael Picker, president of the California Public Utilities Commission, explains why he believes the federal policy landscape will not affect states that have acted aggressively on emissions.

Monica Trauzzi: Hello and welcome to OnPoint. I’m Monica Trauzzi. With me today is Michael Picker, president of the California Public Utilities Commission. Thank you for joining me.

Michael Picker: Oh, thank you very much for having me here.

Monica Trauzzi: So California Gov. Jerry Brown recently signed a bill that extends your state’s greenhouse gas market to 2030. It comes at a time when the federal government is reversing policies to reduce emissions, including exiting the Paris Agreement.

Why does California continue to believe that this is a path that’s a sure bet economically?

Michael Picker: Well, so far we’ve actually prospered fairly well with major investments in renewables. We are on a path to reduce carbon in the electric industry, and we think that this will help us to actually reduce costs and reducing carbon emissions in other industries, like gas, which is about 30 percent of all the emissions in the state. Gas used in homes for heating and cooking and industry. Then in transportation where petroleum is a major contributor.

Monica Trauzzi: Do you think that California’s utilities are essentially shielded from the risks associated with the changing federal policy landscape because you had such an early start on clean energy?

Michael Picker: I think so. There’s a certain deference to state powers in these things. Most of the things that we do in our retail market that’s not really driven by the bulk electric system is really still state jurisdictional, and that’s pretty common. I think that would be a significant change in the relationship between the federal and state government for them to actually to reduce those traditional lines.

You see the public power movement arise in concern, as well as EEI. I think that there’s not a whole lot that needs to be done at least in California at the federal level.

I think that the major things that would be different is that a lot of the financing mechanisms that President Obama put in place during the depths of the recession to help get very nervous banks to start to finance these new infrastructure requirements, those were very helpful, but they’re not so necessary now. The renewables and a lot of these other electric needs are financeable and competitive.

Monica Trauzzi: Something like the Clean Power Plan would have had an impact though, right?

Michael Picker: No. Not so much as I can see.

Monica Trauzzi: It’s off the table now.

Michael Picker: Don’t think it’s making much difference in the West. Maybe in the Southeast and some of the Midwestern states, but in our daily work and our long-term thinking, I don’t think it really had a significant impact. We were ahead of the game, and I think that so are many of the other Western states just because they are rich in resources and that’s the direction they’re heading.

Monica Trauzzi: So we’re awaiting the release of the Department of Energy’s grid study. The outcome of that study could very well have an impact on utilities and grid operators. If that study comes —

Michael Picker: Really?

Monica Trauzzi: You don’t think so?

Michael Picker: How?

Monica Trauzzi: If it comes back to show that renewables have had an unfair advantage, do you think that we could see a policy shift?

Michael Picker: Tell me what an unfair advantage is.

Monica Trauzzi: Well, I’m not the one doing the study. If the study comes back to show that, do you think we could see markets sway?

Michael Picker: Probably not. We’ll just keep marching along.

Monica Trauzzi: In California. Do you think elsewhere in the country it will play?

Michael Picker: Hard to say. Again, a lot of these things for me are like watching the British wrestle with Brexit or the outcome of the Scottish independence vote. It’s really distant thunder, and it doesn’t always translate into actions that far to the West.

Monica Trauzzi: So this DOE study will not have an impact on your commission or California’s utilities.

Michael Picker: I doubt it. I think we have a whole series of challenges that we’re always dealing with in terms of reliability. One of the things that we’re wrestling with really hard is the loss of a bunch of once through cooled peakers along — gas plants along the coast and we’re replacing them with peakers because we don’t need that kind of technology. They’re difficult to site and get constructed in those heavily urbanized areas, but that’s the kind of technology you need to make the grid fairly reliable.

So that’s just a traditional local land-use kind of issue, and we just work our way through those.

Monica Trauzzi: Over at EPA, Administrator Pruitt is launching a review of climate science. It’s the red team, blue team review. How do you think a review of this scale could end up impacting energy markets? Any impact? I know you think the DOE study won’t have an impact, and is there an impact on long-term decisionmaking by utilities if again here the review comes out critical of climate science?

Michael Picker: Well, I think if there’s any kind of consideration of it, it’s probably going to be state by state and utility by utility. In California the utilities have not owned generation since 1998. So I think they’re going to be pretty agnostic to the results of that report either.

From their perspective, the technologies that have best value are going to look like fairly low-carbon technologies in other places. So again, I think that this is all aimed at a different universe than we live in.

Monica Trauzzi: California stands on its own.

Michael Picker: Maybe. I think there’s some similarities throughout the West. The differences in the West are probably areas that would merit some federal attention. For example, the fragmentation of electric markets and the anarchy of having 38 different balancing authorities.

So those are things that I think are real and immediate to all of us, but these other things, we have a lot of renewable resources in the West. A lot of wind and solar and a healthy amount of geothermal. So those are actually reasonably cost-effective purchases at this point.

We’re all learning how to deal with the challenge of having a fairly variable electric supply. The tougher thing is to learn how do we deal with an ever-changing set of demand. So those things are what preoccupy us. I think that that’s true of a lot of the other big demand centers in the West. The major cities in hot climate zones.

Monica Trauzzi: I want to get one final question in before we go. Before the show we were talking a bit about the great interest that you’ve been seeing in California in terms of jobs, even from folks at EPA and DOE. Tell me a little bit about that.

Michael Picker: So we have 250 open positions at the California Public Utilities Commission alone. We’re seeing a wave of retirements coming. When I understood that there were likely to be budget cuts at EPA and DOE, I was here for another conference, and I took the opportunity to go over and leaflet people at those two agencies to let them know that there were jobs at the California Public Utilities Commission, as well as the California Air Resources Board and the California Energy Commission.

So, so far we’ve hired four people and have been negotiating with another six or seven who are really our executive director’s top picks. We have 500 inquiries. We’re running job webinars so people can truly understand the work that the agencies are offering because we all have very different functions and to see whether people are interested.

I expect we’ll definitely recruit a few more people out of that list of 500 inquiries we’ve received. So again, we welcome people to a nice, warm, dry, Mediterranean climate and to a pleasant lifestyle and very engaging, rich work that people value.

Monica Trauzzi: Well, you make it sound so good.

Michael Picker: Thank you.

Monica Trauzzi: Thank you for coming on the show. Thanks for watching. We’ll see you back here tomorrow.