How SB722 fell through legislative cracks

Editor's note: California's Renewable Portfolio Standard (RPS), SB 722, which pushed for a 33% standard of renewable energy in the State, failed in the Senate due to the legislative session running out of time. 

The demise of the most important environmental bill of the year provides a case study in what is wrong with the legislative process in Sacramento.

Problem No. 1: The final version of SB722, which would have required sellers of electricity to draw 33 percent of their power from renewable resources by 2020, was not available until 7 p.m., Aug. 31 - five hours before the session was to end. It did not reach the Senate floor until 11:30 p.m., amid a traffic jam of last-minute legislation. "It was a risky strategy to start so late," said Ann Notthoff of the Natural Resources Defense Council. It did not work. The clock struck midnight without a vote.

But the time crunch was only one of the factors that sank SB722.

Perhaps the biggest impediment to passage of the 64-page bill was the number of interest groups with a stake in the outcome: utilities, environmentalists, labor unions, big companies such as Safeway and Shell Oil that procure their own electricity, and developers of wind, solar and geothermal power. Each faction, and the factions within the factions, kept pushing for amendments.

Passage of a bill with multiple stakeholders becomes exponentially more difficult when the drafters try to start dictating the tiniest details of how to reach that 33 percent threshold, instead of delegating the fine points to regulators such as the state Public Utilities Commission.

"There is this culture of micromanaging we've developed in Sacramento," said Susan Kennedy, chief of staff to Gov. Arnold Schwarzenegger. In the case of SB722, she said, legislative staffers were trying to "design energy markets" while inserting amendments to satisfy the specific concerns of various interests.

"What you end up with," said Kennedy, "is a Frankenstein."

Some of the amendments were seemingly at cross purposes with the bill's ambitious goals for expanding the use of renewables. For example, Southern California Edison insisted on provisions that would allow it to escape the 2020 deadline under certain conditions, such as problems with transmission - an amendment opposed by environmental groups and Pacific Gas & Electric Co.

Yet the political reality is that the bill was unlikely to pass without the support of Southern California Edison. Its proposed "off-ramp" from SB722's targets was included.

For SB722 author Sen. Joe Simitian, D-Palo Alto, it seemed that each amendment begat another. Each vote gained risked losing another.

"These were not ideological issues with these folks," Simitian said of the jostling among stakeholders. "They were all looking at it from the standpoint of: 'How does it work for us?' That's what you have in interest-group politics."

The challenge is compounded in a term-limited Legislature, where leadership's leverage is weakened and the role of staff - and lobbyists - is amplified.

"Every issue got more and more arcane," said Lenny Goldberg, a consumer advocate, of the late negotiations.

Some of SB722's provisions were certain to drive up the cost of renewable energy. For example:

-- Organized labor, which has considerable pull in the Democrat-controlled Legislature, insisted that 75 percent of the renewable energy must come from within the state. Also, the unions wanted - and received - a clause that workers on any renewable project that received state incentives must be paid at prevailing union wages.

-- Renewable energy coming from out of state would count toward the 33 percent threshold only if it was part of a contract for 10 or more years. There were two big problems with this clause: One, while the long-term contract requirement would not necessarily burden public utilities - which have the ability to recover their costs, even bad investments, in the ratemaking process - it would be an enormous problem for companies that buy and sell electricity on short-term contracts. After all, the cost of renewables could drop dramatically within a few years.

Schwarzenegger vetoed a similar bill last year, citing its limit on "importation of cost-effective renewable energy from other states in the West." The governor, whose pathbreaking on climate change is likely to be a defining legacy of his tenure, has said he is open to the possibility of revisiting the renewable-energy legislation in a special session before he leaves office. But the governor would insist that the bill be revised to eliminate the union protections and streamline the permitting process for renewable-energy projects, Kennedy said.

A deal seems maddeningly close, but slips away each time an amendment is added to appease a particular interest group. Such is the world of the open-air bazaar of lawmaking in Sacramento.

Simitian compared the process of keeping a coalition of conflicting interests together to juggling dinner plates. One drops, then another, then another.

"All of a sudden," he said, "you find yourself with a bunch of broken crockery."