Regulators move to curb coal plants

Rules could ban state utilities from buying their electricity

David R. Baker
San Francisco Chronicle
December 14, 2006

California utilities would be prohibited from buying electricity from most coal-burning power plants in neighboring states under far-reaching regulations proposed by state energy regulators Wednesday.

The rules, which would impose one of California's landmark laws to curb global warming, also would limit the amount of carbon dioxide new power plants in the state could emit. Most climate scientists blame the gas for raising temperatures around the globe.

The rules proposed by the California Public Utilities Commission could have profound long-term implications.

Coal is cheap and abundant. But it produces significantly more carbon dioxide when burned than does natural gas, which fuels most California power plants.

Almost no power plants in California burn coal. But the state imports energy from coal plants located elsewhere. That power accounts for about 20 percent of California's electricity supply. And more coal plants have been proposed throughout the West, some of them designed to ship their electricity to California.

The new rules are intended as a stop-gap measure to prevent a rash of coal plant development before California adopts specific limits on statewide greenhouse gas emissions, possibly by 2010.

Under the rules, the state's investor-owned utilities would not be allowed to buy power from any source that spews more carbon dioxide than does a modern natural gas power plant. Specifically, the source could not emit more than 1,000 pounds of carbon dioxide for every megawatt hour of electricity produced. That's enough energy to light 750 homes for one hour.

"This is really aimed at encouraging new investment, new generation and new power contracts to be clean," said Julie Fitch, director of strategic planning for the utilities commission.

The rules would follow a state law passed earlier this year designed to make sure that California's crackdown on greenhouse gases doesn't foul the air in neighboring states.

As California prepares to limit carbon dioxide emissions within its borders, legislators feared that utilities might rely more on out-of-state generators, many of them using coal.

"We didn't want to have a situation where people had an incentive to sign up dirty resources right now to get in under the wire," Fitch said.

The commission is scheduled to vote on the rules in January. If approved, the regulations would take effect immediately. Existing power-supply contracts would not be affected. Nor would existing power plants within the state.

The commission's rules will not apply to municipal utilities, including those that serve Los Angeles and Sacramento. A separate government agency, the California Energy Commission, is drafting similar rules for municipal utilities.

The financial impact, at least at first, will probably be limited.

Pacific Gas and Electric Co., for example, gets about 2 percent of its power from coal, said spokesman Jon Tremayne. That electricity, however, comes from long-range contracts signed by the state's Department of Water Resources. The utility, which serves most of Northern and Central California, does not contract directly with any coal-fired plants, Tremayne said.

PG&E spokeswoman Darlene Chiu said the utility's executives had not yet seen the proposed regulations and could not comment on them. She noted, however, that the company supported the legislation behind the new rules.

Southern California municipal utilities have been far more dependent on coal than the rest of the state. But, as a result of the new law, several municipal utilities, including the Los Angeles Department of Water and Power, recently decided not to renew their contracts with a major coal-fired plant in Utah.

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