Letter to Governor Brown and the Legislature on Revisiting California's Energy Future
Full Report
Executive Summary
Press Release
FOR IMMEDIATE RELEASE
October 24, 2014
For Additional Information Contact:
Carole D’Elia, Executive Director
(916) 445-2125
Commission Again Calls for Answers on Renewable Energy Costs
The Little Hoover Commission in a letter report sent Friday to Governor Brown and the Legislature renewed its call to bring greater clarity on the aggregated costs and consequences of the energy policies being implemented in California.
The letter is a result of ongoing oversight the Commission committed to in its 2012 report, Rewiring California: Integrating Agendas for Energy Reform. As part of this oversight, the Commission held a public hearing in April 2014 to get an update from the administration and key energy organizations, as well as stakeholders, on progress made responding to the concerns raised in the 2012 report.
“Many of the questions and concerns raised in 2012 remain,” said Little Hoover Commission Chairman Pedro Nava. “Two years later, California still lacks a comprehensive and prioritized action plan to attain its energy and environmental goals and minimize costs to electricity customers. And we still don’t know what all of these energy-related policies, in the aggregate, will cost.”
California is undergoing a massive transformation in the way electricity is produced and distributed, from a system predominately powered by fossil fuels to one in which one-third of all electricity will come from renewable energy sources. As California implements policies to achieve its ambitious renewable energy goal, it also is implementing its groundbreaking policies to reduce greenhouse gas emissions. At the same time, California is complying with water quality rules that require retrofitting 17 coastal power plants and the state’s only operating nuclear power plant and encouraging expansion of distributed renewable energy, such as rooftop solar.
If these policies are not carefully calibrated, Californians could be unnecessarily burdened with higher electricity rates. Greenhouse gas emissions might increase in the energy sector if new natural-gas-fired peaker plants are needed to quickly replace renewable energy when the sun is not shining and the wind is not blowing.
At the April hearing, a new threat was discussed – the possibility that there will be too much electricity generated from renewable energy sources, particularly solar energy – in the afternoon. Without adequate management, or the development of affordable storage, this could lead to available electricity not getting purchased, which could cause financers to think twice about funding new renewable power plants. Accelerating time-of-use pricing, which could give Californians greater options for controlling their energy use and ultimately how much they spend on electricity, also could shift use patterns so that appliances could be run and electric vehicles charged when energy supply is high and demand is low.
The Commission also heard that cooperation and collaboration among the energyrelated organizations is at an all-time high and that agreements on aligning processes and assumptions used for planning purposes are being memorialized in public documents. The Commission applauds this positive trend, but remains concerned whether the current structure can nimbly address and take advantage of technology-driven changes in the electricity industry.
The Commission remains disappointed that many of the questions it asked in 2012 still have no answers. The state still does not know what its recent energy-related policies will cost in the aggregate, how these policies might affect reliability and whether they are achieving California’s environmental and economic goals.
As a result, in its October 23 letter, the Commission reiterates its recommendations from 2012 and commits to revisiting this topic again in 2015. In the letter, the Commission recommends:
- The Governor, through executive order, should direct the state’s energy organizations to address concerns raised by the Little Hoover Commission in a timely manner, specifically, to assess, how much, in the aggregate, recent major policies related to energy will affect electricity rates and reliability and whether these policies are achieving California’s goals.
- The Governor, through a public process, should establish a comprehensive plan to prioritize current and future energy goals. The plan should identify what actions need to be taken and in what order to maximize progress toward the stated goals.
- The Governor and the Legislature should develop a plan to modernize energy governance. Organizational reform ultimately is essential if the state is to realize its manifold energy and environmental goals.
The Little Hoover Commission is a bipartisan and independent state agency charged with recommending ways to improve the efficiency and effectiveness of state programs. The letter to the Governor and the Legislature and documents from the April 2014 public hearing, including the agenda and written testimony submitted by witnesses, are available on the Commission’s website at www.lhc.ca.gov.
Fact Sheet
Study Description
In 2012, the Little Hoover Commission reviewed energy governance in California. That review culminated in a report which raised concerns regarding costs and electricity system reliability as the state moved to achieve its goal of having 33 percent of all retail electricity sales come from renewable power by 2020 at the same time it was implementing other significant energy-related policies. Concerns also were raised that in the rush to meet the 2020 deadline, renewable power plants in certain locations would negatively impact the environment, particularly desert habitat, and the renewable power goal could potentially impede the state’s ability to achieve other environmental policy goals.
The Commission recommended that the state assess, in the aggregate, the cumulative impact of major energy-related policies on electricity rates and reliability and whether these policies are achieving California’s stated environmental goals. The Commission recommended the state’s utility regulators require that major electric utilities make information on the underlying costs of electricity easily available to consumers.
The Commission also identified the need for an overarching, comprehensive plan to prioritize current and future energy goals to ensure proposed legislation is consistent with the state’s goals. Until the state develops a strategic energy plan, the Commission recommended a moratorium on new energy-related mandates. Finally, the Commission recommended the state develop a plan to modernize energy governance.
The Commission committed to holding additional hearings and meetings to follow-up on the concerns raised in its 2012 report. On Thursday, April 24, 2014, the Commission conducted a public hearing at 9:30 a.m. in Room 437 of the State Capitol.
Previous Studies
- Rewiring California: Integrating Agendas for Energy Reform
(Report #214, December 2012)
- A Review of the Governor's Reorganization Plan to Create a Department of Energy
(Report #182, June 2005)
- A Review of Governor's Reorganization Plan #1 on Energy, Oil and Recycling Programs
(Report #131, March 1995)
- A Study of the Organization and Coordination of Electric Energy Planning and Electric Utility Regulation in California
(Report #59, February 1984)
Agenda
Overview
In this report, the Commission renews its call to bring greater clarity on the aggregated costs and consequences of the energy policies being implemented in California. The Commission urges the state to develop a comprehensive energy plan. This report updates recommendations the Commission made in its December 2012 report, Rewiring California: Integrating Agendas for Energy Reform.
During its review, the Commission found that many of the questions and concerns raised in 2012 remain. State officials have not answered the question: how much will it cost to achieve the state’s goal of 33 percent renewable energy by 2020, while simultaneously implementing several other major environmental goals.
The Commission reiterates its recommendations from 2012 and recommends the state modernize its energy governance structure.

-
April 242014Energy Governance Progress Update9:30 a.m., State Capitol, Room 437, Sacramento, CAPublic HearingAgenda
AGENDA
Public Hearing on Energy Governance Progress Update
Thursday, April 24, 2014, at 9:30 a.m.
State Capitol, Room 437
Sacramento, CA
Opening RemarksAn Update on Progress from California's Energy Organizations
- Robert Oglesby, Executive Director, California Energy Commission
- Edward Randolph, Director, Energy Division, California Public Utilities Commission
- Karen Edson, Vice President, Policy and Client Services, California Independent System Operator
Joint written testimony received from the Governor's Office, California Energy Commission, California Public Utilites Commission and California Independent System Operator.
Affordable and Reliable Energy: Perspectives of Business and Industry Leaders- Robert Lapsley, President, California Business Roundtable (Written Testimony)
- Patrick Mealoy, Managing Director, Navigant Consulting Inc. (Written Testimony)
- Attachment: Navigant Consulting, Inc. August 16, 2013. Preliminary Assessment of Regulatory Cost Drivers in California’s Energy Market
Overarching Goals for Energy and the Environment
- Stephanie Chen, Energy and Telecommunications Policy Director, The Greenlining Institute (Written Testimony)
- Ralph Cavanagh, Co-Director, Energy Program, Natural Resources Defense Council (Written Testimony)
- Attachment: Natural Resources Defense Council. July 2013. California’s Energy Efficiency Success Story: Saving Billions of Dollars and Curbing Tons of Pollution.
- Nancy E. Ryan, Director of Policy and Strategy, Energy and Environmental Economics Inc. (Written Testimony)
- Attachment: Energy and Environmental Economics Inc. January 2014. Investigating a Higher Renewables Portfolio Standard in California.
- Severin Borenstein, Director of the University of California Energy Institute and Co-Director of the Energy Institute at the Haas School of Business, University of California, Berkeley (Written Testimony)
- Attachment: Independent Advisory Panel. January 2014. Report Regarding the Five California Utilities' Study of Integration of Renewable Energy into California's Electric System, "Investigating a Higher Renewables Portfolio Standard in California."
Public Comments
Public NoticePUBLIC NOTICE
FOR IMMEDIATE RELEASE
April 11, 2014For Additional Information Contact:
Carole D’Elia, Executive Director
(916) 445-2125Revised Notice of Meeting
(Updated Witness List)On Thursday, April 24, 2014, the Little Hoover Commission will conduct a public hearing to follow up on issues it raised in its December 2012 report, Rewiring California: Integrating Agendas for Energy Reform. The hearing will begin at 9:30 a.m. in Room 437 of the State Capitol in Sacramento.
In the report, the Commission recommended the state assess how much, in the aggregate, recent major policy changes related to energy will affect electricity reliability and rates, and whether these policies are achieving California’s stated energy goals. Additionally, the Commission recommended the state develop guidelines for utilities to provide consumers a breakdown of all costs reflected in the retail price of electricity. The Commission also recommended the state identify barriers that need to be overcome so that consumers can better manage their energy use. The Commission also recommended the state establish a comprehensive plan to prioritize current and future energy goals.
At this hearing, the Commission will hear from representatives from the California Energy Commission, the California Public Utilities Commission and the California Independent System Operator. They will provide an update on the progress California’s energy organizations have made addressing the Commission’s concerns. The Commission also will hear from a panel that will provide the perspective of business and industry and includes the president of the California Business Roundtable and a managing director from Navigant Consulting Inc. A final panel will discuss overarching goals for energy and the environment and will include Stephanie Chen, director of energy and telecommunications at the Greenlining Institute; Ralph Cavanagh, co-director of the energy program at the Natural Resources Defense Council; Nancy Ryan, director of policy and strategy at Energy + Environmental Economics Inc.; and, Severin Borenstein, director of the University of California Energy Institute at Berkeley.
There will be an opportunity for public comment at the end of the hearing. The Commission also encourages written comments. Immediately following the hearing, the Commission will hold a business meeting in Conference Room 175 on the first floor of 925 L Street in Sacramento.
All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Thursday, April 17, 2014.
Video - Robert Oglesby, Executive Director, California Energy Commission

-
April 242014Energy Governance Progress Update9:30 a.m., State Capitol, Room 437, Sacramento, CAPublic HearingAgenda
AGENDA
Public Hearing on Energy Governance Progress Update
Thursday, April 24, 2014, at 9:30 a.m.
State Capitol, Room 437
Sacramento, CA
Opening RemarksAn Update on Progress from California's Energy Organizations
- Robert Oglesby, Executive Director, California Energy Commission
- Edward Randolph, Director, Energy Division, California Public Utilities Commission
- Karen Edson, Vice President, Policy and Client Services, California Independent System Operator
Joint written testimony received from the Governor's Office, California Energy Commission, California Public Utilites Commission and California Independent System Operator.
Affordable and Reliable Energy: Perspectives of Business and Industry Leaders- Robert Lapsley, President, California Business Roundtable (Written Testimony)
- Patrick Mealoy, Managing Director, Navigant Consulting Inc. (Written Testimony)
- Attachment: Navigant Consulting, Inc. August 16, 2013. Preliminary Assessment of Regulatory Cost Drivers in California’s Energy Market
Overarching Goals for Energy and the Environment
- Stephanie Chen, Energy and Telecommunications Policy Director, The Greenlining Institute (Written Testimony)
- Ralph Cavanagh, Co-Director, Energy Program, Natural Resources Defense Council (Written Testimony)
- Attachment: Natural Resources Defense Council. July 2013. California’s Energy Efficiency Success Story: Saving Billions of Dollars and Curbing Tons of Pollution.
- Nancy E. Ryan, Director of Policy and Strategy, Energy and Environmental Economics Inc. (Written Testimony)
- Attachment: Energy and Environmental Economics Inc. January 2014. Investigating a Higher Renewables Portfolio Standard in California.
- Severin Borenstein, Director of the University of California Energy Institute and Co-Director of the Energy Institute at the Haas School of Business, University of California, Berkeley (Written Testimony)
- Attachment: Independent Advisory Panel. January 2014. Report Regarding the Five California Utilities' Study of Integration of Renewable Energy into California's Electric System, "Investigating a Higher Renewables Portfolio Standard in California."
Public Comments
Public NoticePUBLIC NOTICE
FOR IMMEDIATE RELEASE
April 11, 2014For Additional Information Contact:
Carole D’Elia, Executive Director
(916) 445-2125Revised Notice of Meeting
(Updated Witness List)On Thursday, April 24, 2014, the Little Hoover Commission will conduct a public hearing to follow up on issues it raised in its December 2012 report, Rewiring California: Integrating Agendas for Energy Reform. The hearing will begin at 9:30 a.m. in Room 437 of the State Capitol in Sacramento.
In the report, the Commission recommended the state assess how much, in the aggregate, recent major policy changes related to energy will affect electricity reliability and rates, and whether these policies are achieving California’s stated energy goals. Additionally, the Commission recommended the state develop guidelines for utilities to provide consumers a breakdown of all costs reflected in the retail price of electricity. The Commission also recommended the state identify barriers that need to be overcome so that consumers can better manage their energy use. The Commission also recommended the state establish a comprehensive plan to prioritize current and future energy goals.
At this hearing, the Commission will hear from representatives from the California Energy Commission, the California Public Utilities Commission and the California Independent System Operator. They will provide an update on the progress California’s energy organizations have made addressing the Commission’s concerns. The Commission also will hear from a panel that will provide the perspective of business and industry and includes the president of the California Business Roundtable and a managing director from Navigant Consulting Inc. A final panel will discuss overarching goals for energy and the environment and will include Stephanie Chen, director of energy and telecommunications at the Greenlining Institute; Ralph Cavanagh, co-director of the energy program at the Natural Resources Defense Council; Nancy Ryan, director of policy and strategy at Energy + Environmental Economics Inc.; and, Severin Borenstein, director of the University of California Energy Institute at Berkeley.
There will be an opportunity for public comment at the end of the hearing. The Commission also encourages written comments. Immediately following the hearing, the Commission will hold a business meeting in Conference Room 175 on the first floor of 925 L Street in Sacramento.
All public notices for meetings are on the Commission’s website, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Commission Executive Director Carole D’Elia at (916) 445-2125 or littlehoover@lhc.ca.gov by Thursday, April 17, 2014.
Video - Robert Oglesby, Executive Director, California Energy Commission