Legislative Analyst Claims Governor Circumventing the Law

Governor Arnold Schwarzenegger is circumventing the Legislature by seeking to have all providers of retail electricity get 33 percent of it from renewable sources, according to a budget review by the Legislative Analyst.

In its examination of the “Resources and Environmental Protection” part of the GOP governor’s spending plan for the fiscal year beginning July 1, the Legislative Analyst notes on Page 24 that Schwarzenegger is ordering electricity providers and the state Air Resources Board to boost electricity generated from renewable sources to 33 percent when current law calls for only a 20 percent mandate.

And has improperly spent $2.5 million so far and wants to spend an additional $4 million.

Last fall, Schwarzenegger vetoed legislation that would have required publicly and privately owned utilities to boost electricity from renewable sources to 33 percent by 2020.

Schwarzenegger said he supported the 33 percent level but that the legislative proposal “would make it more difficult and costly to achieve this very important goal.”

In his veto message, Schwarzenegger cited two executive orders he issued, one in November 2008 and the other in September 2009.

The first sets a 33 percent by 2020 renewable target for all electricity sellers.

The second orders the air board to adopt regulations imposing the 33 percent renewable level as part of implementation of AB 32, the landmark global warming law that aims to reduce greenhouse gas emissions to 1990 levels by the end of the decade.

“I remain ready to sign legislation that codifies a workable 33 percent (renewables portfolio standard) mandate. California has a rare opportunity to champion the development of renewable energy and reduce greenhouse gas emissions in-state and beyond,” the governor’s veto message concludes.

Citing a legal opinion by the Legislative Counsel, the Legislative Analyst contends neither one nor two executive orders trumps a statute.

“The Governor may not issue an executive order that has the effect of enacting, enlarging, or limiting legislation,” the analyst writes in its budget assessment.

“In the context of the governor’s September 2009 executive order, we are advised that the (air board) may not adopt a renewable energy–related regulation that contravenes, changes, or replaces the statutory requirements of the current (renewables) law.”

The current law, signed in 2006, requires 20 percent of electricity from privately owned utilities to come from renewable sources. Publicly owned utilities are not required to meet the same standard.

Nor does the Legislative Counsel believe AB 32 gives the air board the ability to write such a regulation since it would contravene current renewables portfolio law.

“Given this legal opinion, in our view it would clearly be inappropriate for the administration to circumvent the existing (renewables) law by attempting to implement a new renewable energy standard on its own authority,” the analyst writes.

The air board estimates it will spend $1.9 million during the current fiscal year and $750,000 in the next to develop the 33 percent renewables regulations called for by the governor’s executive order.

“No specific funding requests for this purpose have been submitted to the Legislature for the budget year,” the analyst writes.

In his budget plan for the current fiscal year, Schwarzenegger sought a $322,000 increase for the Public Utilities Commission so it could begin creating a 33 percent renewables standard. The Legislature denied the request, saying legislation to establish the 33 percent standard was needed first.

The PUC has continued to do planning and analysis for a 33 percent standard and estimates it will spend $553,000 this year  — $423,000 for staff costs and $130,000 in consulting fees.

The PUC plans to spend another $423,000 for staffing costs in the fiscal year beginning July 1.

Schwarzenegger also proposes a $2.8 million increase for the commission to implement a 33 percent standard in the 2010–11 fiscal year. Of the $2.8 million, $1.8 million would add seven employees and $1 million annually — for each of the next five years — to contract for outside evaluation and technical assistance.

“This regulatory activity should not occur until or unless the Legislature enacts a 33 percent standard, and only then should be implemented in a fashion consistent with any policy parameters for a revised (renewables standard) that have been established by the Legislature,” the analyst concludes.

The air board’s actions are “particularly problematic,” the analyst says, because the board is “delving into a subject matter—renewable energy procurement—that is both outside its area of statutory responsibility and outside its area of technical expertise.”

Work on a 33 percent standard by the board also duplicates that of the PUC, “an inefficient use of state resources.”

Accordingly, the analyst recommends denying the $2.8 million budget request by the public utilities commission, and reducing the commission’s spending by $423,000 – the amount the commission anticipates implementing a 33 percent will cost in the budget year.

The air board’s budget should be reduced $750,000—the amount the board anticipates spending to develop a renewable energy standard regulation in the budget year.

And, finally the analyst says:

“Specifically direct (the comission and the board) to immediately cease spending funds for the purpose of developing a new renewable energy standard or similar requirement absent the enactment of legislation that authorizes such activities.”

-30-