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WECA Political Update January 20, 2022

Thursday, January 20, 2022

Solar Conflict Heats Up. Politico reports, “The California Public Utilities Commission proposal to cut solar incentives for homeowners conflicts with a two-year-old state requirement that new homes install green technology — and that panels remain within financial reach. Wall Street has said that the CPUC’s proposal slated for a future vote would make installing rooftop solar a near-worthless investment unless paired with expensive batteries. And that could undercut the California Energy Commission’s solar mandate for new homes. ‘I think there are real questions about the compatibility of this decision,’ Michael Wara, a Stanford University law professor who directs the school’s climate and energy policy program, said in an interview about the CPUC proposal. ‘The big question will be at what point will the Energy Commission say anything publicly, or will they try to operate in private around this issue? They have to be concerned.’ When approving its solar mandate, the Energy Commission assumed installation incentives known as net metering would remain generous, easing the cost burden for developers and property owners. That helped the solar mandate comply with a cost-effectiveness test found in state law.

But the CPUC’s proposed overhaul of California’s net metering program would dramatically change the equation, reducing incentives and adding monthly fees — $48, on average — for most new solar owners unless they also install battery packs for use after the sun sets. After activating their panels, most existing solar owners would face that monthly surcharge and lower benefits for 15 years. The CPUC has argued that the changes would make solar owners pay their share of grid costs, in addition to stabilizing the electric system by incentivizing the storage of solar energy. That power would be discharged in the evenings during hot summer months when air conditioner usage drives up demand and threatens rolling blackouts.”

The proposal released last month stunned many solar supporters and attracted the attention of various public figures, including Elon Musk, who urged regulators to reconsider. In addition, former Republican Gov. Arnold Schwarzenegger, a longtime champion of rooftop solar, published a New York Times op-ed on Monday that said the draft plan “should be stopped in its tracks.”

Gov. Gavin Newsom said recently that there was “work to do,” a signal the proposal might be in for revisions.

“The CPUC, which tells utilities how much and what type of electricity to buy, has long said battery storage should be part of the procurement puzzle. But instead, its proposed rules are an attempt to juice the market by incentivizing solar storage — and sharply phasing out benefits for those with just photovoltaic panels.

But battery storage is costly — $11,000 for an average-sized battery, according to solar and storage installer Sunrun — and pandemic-era supply chain constraints and demand from recent years’ power outages have made it harder to find. Those challenges would make it difficult for solar owners to avoid losing their benefits under the changes, at least in the near term.”

The CPUC would give prospective solar owners a market transition credit that would gradually lower bill reductions to ease the transition. But in a one-sentence mention buried 121 pages into its draft document, the agency said homes complying with the CEC’s solar mandate wouldn’t be eligible. One possible explanation is that installing solar on new homes is cheaper than existing ones.

Morgan Stanley equities analysts were grim in their assessment of the proposal’s impact, writing in a research note that the draft plan “would, in our view, eliminate the economic benefits of rooftop solar in California, absent the inclusion of storage.” A solar industry-commissioned study by EQ Research reached a comparable conclusion, saying bill credits would decrease up to 84 percent compared to current incentives.

This has startled the California Building Industry Association, whose new homes must comply with the CEC’s solar mandate. CBIA earlier this month sent a letter to the CPUC, writing that the “political battleground” issue of net metering necessitates “rules that will ‘calm things down’ and move us to a place where we have reasonable, understandable, and dependable rules from which rational economic decisions can be made.” The agency’s draft plan “does the opposite,” CBIA’s letter continued, adding that the monthly fee on solar owners “may well place the cost-effectiveness of rooftop [photovoltaics] into question” and potentially violate state law. “We’ve had follow-ups with folks at the Energy Commission since,” Chris Ochoa, CBIA’s senior counsel for codes, regulatory and legislative affairs, said in an interview, “and we get the feeling that they were as shocked as anybody at how harsh the proposed decision was toward the rooftop solar industry.”

For its part, the CPUC in December acknowledged concerns over how its proposed decision would interact with the CEC’s solar mandate. “The Commission intends to collaborate with the California Energy Commission on the Title 24 [solar mandate] and its interactions with the [net metering] successor tariff,” a CPUC judge wrote.

CEC spokesperson Lindsay Buckley said in a statement that her agency “can confirm we’re coordinating with the CPUC and evaluating impacts to the cost-effectiveness of the solar mandate,” adding that CEC commissioners “will have something to say later in the process,” after the final solar decision is published.

Newsom’s critical comments and his appointments late last year of two commissioners — including the agency’s new president, Alice Reynolds, who has been assigned the solar proceeding — could shake up the process, said Mike Florio, a former CPUC commissioner who voted on the previous round of net metering reforms in 2016. The proposed decision “was a little more aggressive than I was expecting,” Florio, now a senior fellow at Berkeley-based consultancy Gridworks, said in an interview. “And I have a sneaking suspicion that gives them room to back off a little bit in the final decision and not make it quite as harsh on solar.”

“There’s gold in them thar hills!” (With apologies to Mark Twain and Coldplay) Well, in this case – it is white gold – lithium. For those of you old enough to have watched “Connections,” the excellent BBC documentary series of the late 1970s – that traced the path from a particular event through a series of seemingly unrelated connections to a fundamental and essential aspect of life – you know that is kind of how my mind works.

Today, I was reminded of that when I read George Skelton’s LA Times article about lithium and the Salton Sea – that Coachella Valley body of water created by a breach in some canals that connected the Colorado River to the old Alamo River in 1905. I grew up in Southern California in the 1960s. I remembered that the Salton Sea was a popular resort destination until a lack of new freshwater started an inevitable decline (exacerbated by flooding in the 1970s).

The geothermal activity below the Salton Sea loosens up lithium that can be mined. Due to increased demand for lithium, which is crucial for electric-vehicle battery production, lithium extraction is expected to boost the local economy. In July 2021, General Motors announced partnering with Controlled Thermal Resources to develop a combined lithium extraction and power generation facility in the Hell’s Kitchen geothermal field in the Salton Sea, employing a closed-loop process. The brine will be extracted from the ground, using geothermal steam to drive a turbine generating electricity and reacting with the brine to separate the lithium hydroxide and lithium carbonate used for battery production.

As Skelton pointed out, “People have been fighting Salton Sea shrinkage, salinity, and stench for decades without much success. But now, the local economy could be headed toward a boom. Gov. Gavin Newsom is trying to help energy companies tap into a huge underground reserve of lithium that’s in high demand for the big rechargeable batteries needed to power carbon-free automobiles. ‘We have what some have described as the Saudi Arabia of lithium,’ Newsom told reporters in unveiling his $286-billion state budget proposal, referring to that country’s vast oil reserves. ‘California is leading the world in forging an oil-free future,’ the Governor said. ‘We will not sell [new] traditional gas-powered, internal combustion engines by 2035. This is dramatic. It’s profound. You can’t get serious about climate change unless you’re serious about tailpipe emissions.’ Newsom is proposing $350 million in tax credits that lithium entrepreneurs can apply for — plus regulatory streamlining to cut the lengthy, frequently agonizing process of obtaining government permits for their projects.”

So, what is the connection – beyond California’s goal of fewer gas-powered vehicles?

Assembly Member Eduardo Garcia introduced AB 983 last year that “authorizes a public entity to use, enter into, or require contractors to enter into a community workforce agreement (CWA) for construction projects related to battery manufacturing and lithium-based technology in the Salton Sea geothermal resource area.”

The only listed support was from Alianza Coachella Valley, who wrote, “CWAs are innovative PLAs which in addition to standard PLAs, integrate targeted hiring provision for individuals from underrepresented communities. AB 983 is another important step for fostering community engagement in the lithium supply chain.” Alianza describes themselves as “the only alliance in the Coachella Valley bringing together community members, nonprofits, and government to lead efforts we need for a thriving region.” Alianza’s most recent 990 (that reported over $2.0 million in grants reported their “mission is to transform the socio-economic conditions of the Coachella Valley so that people in all communities have opportunities to prosper.” I wonder if non-union workers, apprentices, and contractors are included in that inclusive community?

WECA was the only opposition, observing there is no prohibition in law to adopting a CWA, and saw it as subterfuge. For reasons not related to our opposition -- Garcia tabled the bill, but I am sure it will be resurrected this year -- particularly with money in the Governor’s budget for tax credits -- which I am sure whetted Warren Buffet’s appetite! I expect if it comes back, it will include a PLA requirement -- similar to the one in AB 680 by Assembly Member Burke from last year -- which mandates a PLA for any construction project of $1 million or more that is funded by grants from the Greenhouse Gas Reduction Fund (GGRF).

Union in decline: UFW membership hits “statistically zero” as legal, political losses pile up The San Joaquin Valley Sun wrote recently, “Following a crushing U.S. Supreme Court defeat last June that overturned a 47-year-old rule that granted United Farm Workers representatives virtually unfettered access to farming outfits to recruit workers, the union finds itself in a lurch, a new report says. The court defeat was followed by an even more crucial legislative defeat that would have enacted a card-check voting system for farmworker union elections, all at the hands of Gov. Gavin Newsom. Membership is so low that UC Merced researchers say farmworker union membership is now statistically zero.” Is there a model here that could be replicated?

Sen. Mark Kelly supports change to Senate’s filibuster rule for voting-rights legislation Unlike Arizona’s senior Senator Kyrsten Sinema (D-Ariz.), the Arizona Republic has reported Sen. Mark Kelly, (D-Ariz.), “will support a change to the filibuster rule, showing for the first time a willingness to bend on an issue that has tied the Senate in knots for a year as the Democratic legislative agenda has stalled. Kelly, who is up for reelection this year, will back a ‘talking filibuster’ rule only for the proposed voting rights legislation that he co-sponsors.” Unfortunately, Kelly is a little late as the change collapsed late Wednesday night with a 52-48 vote. Sens. Joe Manchin (D-W.Va.) and Sinema joined all 50 Republicans in opposing the rules change that would have allowed the voting rights bill to advance with a simple majority.

Sinema’s moderate stance is not universally popular – particularly in parts of the donor community. According to Politico, “a group of big-dollar donors who have spent millions electing Sinema and other Democratic senators is threatening to sever all funding to her if she doesn’t drop her opposition to changing Senate rules to pass voting rights legislation. In a letter to the Arizona lawmaker, 70 Democratic donors — some of whom gave Sinema’s 2018 campaign the maximum contribution allowed by law — said they would support a primary challenge to Sinema and demanded that she refund their contributions to her 2018 campaign if she doesn’t budge.” This is just stupid. The last two Senate elections in Arizona (2018 and 2020) were decided by only 2.4 percent. If a more progressive Democrat were to get the nomination – the general election would almost certainly go to the Republican.

Former California Legislator, County Supervisor Jeff Stone to seek state Senate seat in Nevada After spending much of his career in Riverside County and California politics, Jeff Stone wants to return to a state capitol — but not the one in Sacramento. Instead, Stone, whose career includes stints on the Temecula City Council, the Riverside County Board of Supervisors, and in the California State Senate, is seeking a seat in the Nevada State Senate, after the self-employed pharmacist moved with his wife in 2020. Story

Hiring Our Heroes (HOH) recently launched Career Forward -- a new training and work placement program that prepares transitioning service members, veterans, and military spouses for employment within in-demand careers. After completing their certificates, graduates may be hired directly or complete an internship with host companies. Since launching, HOH has enrolled more than 1,300 learners in the Career Forward program. These military community members learn industry-validated skills through a Google Career Certificate in data analytics, IT support, IT automation with Python, project management, or user (UX) design. HOH is inviting companies to use the Career Forward program to see firsthand the exceptional value that veterans and military spouses may provide to your workplace. Connect with HOH

Birds Know If your company is looking to scale, it may be wise to learn from the birds. Flying in a “V” formation, one bird sets the pace, and the others know to cycle to the front when the leader needs to sink back. It’s a mindset that ensures everyone feels valued while the company is the primary focus. That’s the advice of Tony Bates, chairman, and CEO of Genesys, after his time leading Cisco System Inc.’s service-provider business and serving as CEO of Skype, where he was responsible for expanding the company to more than 170 million connected users. He spoke with The Business Journals’ Marq Burnett about how a simple framework is key to growth, along with empathy and no in-fighting. Story