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[But...But...] Facing sweltering summers, California's Newsom floats plan for state to buy energy

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Leroy N. Soetoro

Jun 2, 2023, 5:56:51 PM6/2/23

SACRAMENTO, Calif. (AP) — For most of the year, California's quest to rid
itself of fossil fuels seems on track: Electric cars populate highways
while energy from wind, solar and water provides much of the power for
homes and businesses.

Then it gets hot, and everyone in the nation's most populous state turns
on their air conditioners at the same time. That's when California has
come close to running out of power in recent years, especially in the
early evenings when electricity from solar is not as abundant.

Now, Democratic Gov. Gavin Newsom wants to buy massive amounts of
renewable energy to help keep the lights on. The idea is to use the
state's purchasing power to convince private companies to build largescale
power plants that run off of heat from underground sites and strong winds
blowing off the coast — the kinds of power that utility companies have not
been buying because it's too expensive and would take too long to build.

“We laid out the markers on solar and wind, but we recognize that’s not
going to get us where we need to go,” Newsom said during a news conference
last week. “The issue of reliability has to be addressed.”

There’s a lot at stake, not just for the future of clean energy, but for
Newsom himself. The Democratic governor, now in his second term and widely
seen as a future presidential candidate, insists California will be carbon
neutral by 2045. But this goal is often mocked in the summer when, to
avoid rolling blackouts, state officials turn on massive diesel-powered
generators to make up the state’s energy shortfall.

Demand for electricity in California has increased as the state takes step
to move away from fossil fuels, including banning the sale of new gas-
powered cars by 2035. California will need to add about 40 gigawatts of
new power over the next 10 years, according to the California Independent
Systems Operator, which manages the state's power grid. One gigawatt is
enough to power about 750,000 homes.

If the state buys lots of power from offshore wind and geothermal sources,
it could mean they don’t need those emergency diesel-powered generators
anymore. Wind is typically strongest in the evenings, and geothermal
energy is available all the time.

This would be a big change for California, where up to now utility
companies have been responsible for buying their own power. Customers
would have to pay for the new power the state buys through a new, still
undetermined, charge on their electric bills.

Californians already pay some of the nation’s highest energy bills. But
one consumer advocacy group said Newsom’s proposal could be better for
customers in the long-run. State regulators would not decide what the
charge will be until the power projects are up and running — potentially
several years away.

“There's nothing free here, it's just a question of what's the most
efficient way to develop resources,” said Matthew Freedman, staff attorney
with The Utility Reform Network, a group that advocates for affordable and
reliable energy. “It’s our hope that this arrangement will result in lower
total costs across the state.”

Newsom's proposal has the support of some of the state's largest investor-
owned utilities, including Pacific Gas & Electric. PG&E spokesperson
Lynsey Paulo called Newsom's proposal “likely the most efficient way to
achieve a clean energy future,” saying that the state should make sure the
power it buys is distributed fairly among utilities in the state.

Publicly-owned utilities, like the Los Angeles Department of Water and
Power, fear the state's entrance into the energy market will create new
competition, potentially increasing prices for everyone in a market
already struggling with a lack of supply.

Patrick Welch, legislative director for the California Municipal Utilities
Association, said if California starts buying power the state would be
competing with utilities “and that could further drive up prices.”

“In the past two or three years, the market for new resources has gotten
incredibly tight,” he said. “That tightness is really impacting the price
of energy and particularly during the summer months.”

Democratic lawmakers have changed Newsom's proposal to ease some of those
concerns. While Newsom wanted the state to buy any type of power,
lawmakers say it should be restricted to offshore wind and geothermal —
two power sources that the utility companies currently aren't buying. The
proposal is pending in the legislature.

“When you leave stuff vague, then it creates uncertainty. And at this
point in time, uncertainty is not good in the investment world," said
Assemblymember Steve Bennett, a Democrat and chair of the budget
subcommittee that is vetting Newsom’s proposal.

Advocates say California is in a prime position to try something like
this. Last year, five companies spent more than $750 million to lease
areas off the California coast for offshore wind projects. These projects
could collectively generate close to 5 gigawatts of energy, according to
Alex Jackson, director of American Clean Power Association, which
represents these companies. That's enough to power more than 3.5 million

If approved, the next step is getting the permits and building the
turbines and the infrastructure necessary to transport the power to the
grid. It would be easier for these companies to sell all of their power to
the state instead of selling pieces of it to multiple utilities.

“We do think there is real advantages of having a single buyer,” Jackson

Another area ripe for new energy development is the Salton Sea, a large
saltwater lake in Southern California that has been slowly drying up.
Beneath the surface of the lakebed, heat from the Earth warms underground
water. Geothermal power plants use steam from this water to spin turbines
that generate electricity. The water also contains lots of lithium, which
is used to make batteries that power cell phones and electric cars.

There are only a few companies capable of building these large, complex
power plants that take many years to build.

“This isn’t the ‘Field of Dreams.’ You need to know that there is a
customer for that power,” said Assemblymember Jim Wood, a Democrat who
supports the proposal. “Otherwise, you’re not going to be able to appeal
to investors to be able to pull down the resources to invest the billions
of dollars it’s going to take.”

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dozens of judges and three SCOTUS justices.
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