June 22, 2012
By Ashley Swearengin
--Ashley Swearengin is mayor of Fresno
Original source: http://www.cacurrent.com/storyDisplay.php?sid=6201
Because California is a large and complex place, we might be forgiven for not knowing our neighbors.
Take Fresno, for example. I doubt most Californians know that Fresno County has more lakes than any other in the state. Or that Fresno is California’s fifth-largest city and the third-largest city in Pacific Gas & Electric’s huge service area. We also suffer energy costs in some cases more than 2.5 times higher than our competitors in other states.
Okay, maybe people are vaguely aware of that last one.
While we might all know California is an expensive place, the real cost of our high energy prices may be lost on most Californians. Even my background in economic development hadn’t prepared me for the surprising fact that, when polled, investors see energy as one of the major reasons not to do business in California. Not only are our costs too high, but our whole energy sector is complex and difficult for investors to understand.
What do I mean by that?
We have a range of laws and regulations no other state has. Since 1973, California has been looking for more efficient energy usage and more innovative sources of energy. That has meant a lot of legislation, several state agencies, dozens of programs and billions upon billions of dollars all dedicated to energy--yes, billions, with a “b.”
We now have a rule that 33 percent of our energy must be carbon-free. We must cut our greenhouse gasses 30 percent from 1990 levels by 2020. We require a 40 percent drop in residential energy consumption by 2020 and half of all new commercial buildings must be “net-zero” users of energy by 2030. And we want to top that off, literally, with one million solar roofs.
That is a lot to aim for, and, of course, good intentions always cost more.
In February, for example, a California Public Utilities Commission report showed that the state’s renewable energy costs have ranged from 5.4 cents to 13.3 cents/kWh. That is expensive power and that doesn’t even include other costs, such as regulation, program enforcement and administration, and the inevitable time it now takes to respond to changing economic needs and updated priorities.
Knowing all of that, you start to understand how things look to investors. And when you add the history of California’s very own rolling blackouts and price-spike crisis a decade ago, the negative impression many investors have is confirmed.
Should we care?
Yes, because we want a successful and healthy state, and because we need jobs.
Fresno has long been playing its part by managing--for itself and neighboring counties--one of the state’s most successful energy efficiency programs. But we still need economic development. That is why I have been looking specifically for energy-related solutions to help tackle the economic woes faced by Fresno and the Central Valley.
In our search for options and partners in addressing energy costs, Fresno started working with PG&E. That work resulted in PG&E filing at the CPUC for an “enhanced economic development rate.” This is a rate specifically aimed at job creation in high unemployment areas, like Fresno, and the proposal generated a huge coalition of almost 40 cities, counties, and agencies lining up to support it.
In these tough economic times, this is not just an economic incentive; it is an incentive directly aimed at addressing a major issue of first impression for investors.
This proposal tackles the perception that “California doesn’t care what it might cost a business to operate; the state is only interested in its own programs and priorities.” Such perceptions not only scare job prospects away, but take for granted the jobs we have here now.
When an earlier economic development rate was being considered, PG&E tried to have help directed quickly to one of its customers that was considering expansion. Before the CPUC could even act, that customer (an organic food business founded in California) decided to expand elsewhere.
That same business has since expanded further, and again not in its “home state” of California. I don’t know if the rate now being proposed could have brought those millions of investment dollars and resulting jobs to Fresno or not, but I am sure that without the rate, even a food and agriculture center of excellence like Fresno wouldn’t even be in the running. I will not let that happen again.
No state--not even innovative and dynamic California--can afford to ignore the loss of investment after investment. This is especially keenly felt in Fresno, where it seems that for so long California’s expensive energy priorities have been set elsewhere, ignoring the impacts on Fresno and the poorest parts of the state.
Despite having ideal conditions for solar, despite leading “‘blue-tech” innovation with our best-in-the-nation Water Energy Technology Center, and despite playing our part with a cost-effective home energy efficiency program, Fresno and the Central Valley still lack the scale of resources expended elsewhere. And, despite having the fastest growing population in the state, despite having larger families and more poverty, and despite paying proportionately more for our energy, some in California still do not want to see a balanced approach to energy-related growth.
Fresno doesn’t expect me to fix all the cost and complexity of California’s energy regulation. And I do not expect that an enhanced economic development rate, even one aimed specifically at our state’s most disadvantaged communities, will be the final answer to issues of joblessness, poverty, economic underdevelopment, or even energy poverty.
However, Fresno and the Central Valley can play a significant role in correcting historical imbalances and promoting the economic catch-up of historically under-served populations. The only way that can happen is if the enhanced economic development rate is passed swiftly and without dilution by the CPUC. As a result, Fresno could get back to playing its part in working for a prosperous and healthy California.
--Ashley Swearengin is mayor of Fresno
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