Aligning Utility Procurement, Programs and Investments with the

Aligning Utility Procurement, Programs and Investments with
the State’s Post-2020 Climate and Policy Goals
We, California’s five largest electric utilities, support the governor’s 2030 climate vision for California to
reduce carbon while maintaining or enhancing safe, reliable and affordable electric service. Under this
proposal, we would commit to reduce our carbon emissions by 50 percent from 2012 levels by 2030.
This puts the electric sector's emission reductions on a clear path to 2050 goals, and is in line with the
carbon emissions reductions that would be seen under the governor’s goals for renewable resources
and energy efficiency outlined in his inaugural address. This proposal would provide jobs and air quality
improvements in communities across the state of California. In addition, the integrated framework
described below could serve as a model to other states and countries that seek a cost-effective
approach to carbon emission reductions.
The first step is to set a binding 2030 carbon emissions target for the state, which would cascade to a
target for the electric sector and then for each individual retail electricity service provider. In addition to
this target, each retail electricity service provider would continue to comply with the existing 33 percent
Renewables Portfolio Standard (RPS) and to pursue energy efficiency programs, but also would work
with the appropriate regulatory authority to develop an integrated portfolio of cost-effective carbon
reduction measures to meet its 2030 goal.
To meet the binding targets, policy should enable each retail electricity service provider to optimize its
portfolio of carbon reduction measures through a streamlined, transparent regulatory process. This
would be similar to the process that California’s investor-owned utilities currently use to develop longterm procurement plans. Under this policy, carbon offsets or “resource shuffling” would not count as
carbon reduction activities. The use of unbundled renewable energy credits from out of state would be
limited to levels permitted under the current 33 percent RPS.
Under such an integrated approach, future carbon reduction goals would be achieved in a more
coordinated and efficient manner by tailoring initiatives to a retail electricity service provider’s unique
portfolio and customer needs. This would result in a more cost-effective path to a low carbon electric
energy sector that maintains reliability, integrates renewable resources, and provides economic and air
quality benefits in communities across the state of California. We firmly believe this integrated approach
is a more cost-effective path forward to reducing greenhouse gas emissions than would be created
through individual mandates.
The five utilities understand and agree that we must accelerate the deployment of carbon reduction
strategies to reach this ambitious 2030 target. Reaching our goals would require significant additional
investment in traditional utility procurement and programs, and also support for customer and thirdparty initiatives. These measures include:

Additional Investment in Renewable Energy: While each utility would determine its individual,
optimal mix of carbon reduction measures, achieving 2030 goals would require additional
investment in renewable energy above the 33 percent RPS.

Additional Investment in Energy Efficiency: Reducing energy use is still the best possible way to
reduce carbon emissions. We can seek greater savings from our current programs and expand our
portfolio to include new efficiency programs too. For example, we can seek greater savings from our
current programs through a policy that credits utilities for retrofitting buildings that are below
current energy efficiency code.

Strategic Expansion of Distributed Generation: Solar rooftops reduce carbon emissions when they
displace fossil fuel generation. In areas where distributed generation is a cost-competitive tool for
carbon reduction, we should be able to partner with customers and their communities to put solar
on rooftops and near population centers. This could include programs that support customer- and
third-party-owned investments.

Acceleration of Electric Vehicle Adoption & Supporting Infrastructure: Despite significant progress
in cleaner burning fuels and higher gas mileage, vehicle emissions continue to be the largest
contributor to carbon emissions and criteria pollutants in the state (about 37% of carbon emissions
in 2012). Any successful path for long-term climate goals relies on switching mostly to ultra-lowcarbon, alternative fuel vehicles. Future policy should encourage retail electricity service providers
to play a stronger role in advancing the adoption of transportation electrification that is so critical to
meeting state goals.

Development of Other Strategies to Integrate Renewables: It is important to account for the
secondary effects of increasing amounts of renewables. A study we conducted in 2013 and more
recent analysis by the California Independent System Operator show that as we develop more solar,
there will be hours in the day when electricity generation exceeds demand. It may be important to
pursue some of the complementary carbon reduction measures that can use potential excess
energy during certain times of the year, such as energy storage or managed charging of electric
vehicles.
These investments in renewables, energy efficiency, distributed generation, electric transportation
infrastructure, and energy storage guided by the 2030 target would provide significant benefits in local
communities, including jobs, air quality improvement, and public health benefits through the reduction
of air pollutants.
This policy would complement any extension of the cap and trade program beyond 2020 that should
continue to include an allowance allocation to help manage costs for utility customers and provide a
durable framework for the electric sector’s contributions to climate goals for 2030 and beyond.