I. The Age of Dinosaurs (1975-1981)


The California Energy Commission (CEC) was established in response to the energy crisis of the early 1970s. The investor-owned electric utilities were insisting that California needed to build a fleet of nuclear and coal plants up and down the entire state. The Legislature decided that a new agency with special powers was necessary to formulate a comprehensive state policy for the licensing of new powerplants. The agency's responsibilities would include data collection, environmental protection, conservation, and rigorous analysis of the need for additional plants. Most of the Energy Commission's licensing authority was previously held by the California Public Utilities Commission, although the CEC was also granted new powers over municipal utilities. (That is one reason the two agencies have been feuding for approximately the last 25 years.)

When Governor Ronald Reagan signed the bill creating the Energy Commission (the Warren-Alquist Act, Chapter 276, Statutes of 1974), he agreed to a provision granting the new Governor elected in November 1974 the right to appoint all five Energy Commissioners. Thus, as the CEC opened for business in 1975, its Commissioners were all appointees of Governor Jerry Brown. Change was coming. A young, vigorous, and independent agency had been born, the child of Jerry Brown, Senator Alan Alquist, and Assemblyman Charles Warren.

The Energy Commission immediately entered a period of intense conflict with the three major investor-owned utilities: Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E).

The major bones of contention:

1. Resource Planning.

The utilities believed there was a tremendous need for new powerplants in California, based upon their resource planning system called "econometrics". This approach equated economic growth with increased electricity demand. Since California was clearly growing at a phenomenal rate rate, the utilities forecasted a vast demand for new electric capacity. To meet this need, the utilities proposed an armada of new, large, expensive powerplants, primarily fueled by coal and nuclear power. Utility resource plans contained far more powerplants than they ever intended to build, under a theory that if so many plants were under consideration, at least some of them would end up being licensed and constructed.

The Energy Commission categorically rejected econometrics as inaccurate and unreliable. Instead, the CEC helped pioneer the alternative of "end use" forecasting, in which actual electric demand is calculated and projected into the future based upon real patterns of use. The CEC approach also included significant anticipated reductions in electricity use from new conservation programs (building and appliance efficiency standards) that the Energy Commission immediately began implementing under the mandate of Public Resources Code section 25402 "to reduce the wasteful, uneconomic, inefficient, or unnecessary consumption of energy." (The CEC's pioneering conservation work was successful and helped set national standards.)

The CEC's first official forecast of future electricity demand (Biennial Report I or BR 1) was significantly lower than utility projections. The utilities would insist for years to come that the Energy Commission was underestimating demand and the lights would go out. These forecasting battles went on until it became clear that California's demand for new electricity was actually less than most CEC projections. Eventually the utilities abandoned their total reliance upon econometrics, and end use forecasting, with the help of computers, became the only game in town. Utility and CEC forecasts grew closer together as the years passed.

However, in the 1970s, the lower CEC forecasts called into question the need for all the large powerplants the utilities were proposing to build.

2. Powerplant Licensing.

When the Energy Commission began, virtually every powerplant applicant had to file a Notice of Intention (NOI), which included at least three alternative sites. If the NOI was approved (a lengthy process), the next step would be filing an Application for Certification (AFC) for one of the acceptable sites. Granting the AFC after a second proceeding meant actual licensing of the powerplant.

The utilities dutifully filed Notices of Intention for the conventional facilities in their resource plans, projects such as Sundesert (Docket Nos. 76-NOI-1, 76-NOI-2), an SDG&E/SCE nuclear powerplant (the most contested NOI of this era); PG&E's Stanislaus Nuclear Project , 2,400 MW, (Docket No. 77-NOI-3; PG&E Fossils I and II, 1,600 MW, (coal plants), Docket No. 77-NOI-4, and Southern California Edison's California Coal Power Plant (Cal Coal), Docket No. 79-NOI-3. There were also some oil burners and natural gas plants filed as NOIs.

The Energy Commission essentially viewed all of these projects as costly, unneeded, environmentally undesirable, utility dinosaurs, and generally had no wish to see them licensed. The CEC would not give in to the utilities.

Due to its radioactive dangers, nuclear power was unbelievably controversial, and the utility nukes had little backing at the CEC. Proposition 15, a statewide citizens initiative with strong environmental support, sought to ban nuclear powerplants in 1976. While the initiative was ultimately defeated, the Legislature first tried to undermine it by passing Public Resources Code section 25524.2. The Legislature ironically achieved the initiative's major goal.

This new statute required an Energy Commission finding that the problem of high-level nuclear waste disposal had been solved before any future nuclear plant could be licensed. Since the CEC could not make the finding, this section effectively prohibited all the utility nukes. (The utilities sued the Energy Commission, claiming Federal laws invalidated [preempted] this statute, but the United States Supreme Court sided with California in the Energy Commission's greatest single legal victory: Pacific Gas and Electric vs. State Energy Resources Conservation and Development Commission (1983) 461 U.S. 190, 103 S.Ct. 1713, 75 L.Ed.2d 752.

Nuclear power was already dead nationally after the 1978 Three Mile Island near meltdown accident. No nuclear plants have been ordered anywhere in the country since then. In California, only those grandfathered utility nuclear plants, not subject to Energy Commission licensing, such as Diablo Canyon and San Onofre, were completed. Similarly PG&E constructed its last large dam projects, New Melones (blocking the Stanislaus River) and Helms Pumped Storage. (The CEC had no jurisdiction over dams.)

The utility coal plants also went nowhere at the Energy Commission. The acid rain and other harmful pollutants caused by conventional coal burning was a strong deterrent to licensing these facilities, given California's existing air quality problems. One small, 100 MW, innovative facility was certified by direction of the Legislature (Cool Water Coal Gasification Demonstration Project, Docket Nos. 78-NOI-4, 78-AFC-2). However the other large coal/fossil projects all died, even though a few did survive the NOI phase, only to be submitted and later withdrawn as AFCs.

In the end, the Energy Commission licensed none of the conventional utility fossil and nuclear projects filed in the 70s. Reluctantly, the utilities eventually withdrew or abandoned every single such facility. One repercussion was a series of utility efforts over many years to abolish the Energy Commission, which nearly succeeded at the Legislature. There was also the persistent, absurd slander that the CEC has never licensed any powerplants at all. (20 years later, the Commission would be charged with refusing to turn down any powerplant applications.)

What I call the Age of Dinosaurs conclusively ended in 1980-81 with two events. First, the Energy Commission did not move forward with SCE's 1,190 MW oil-burning Lucerne Valley Project, Docket Nos. 78-NOI-1, 80-AFC-2. This "contingency certification" was Edison's last unsuccessful attempt to license a conventional project at the Energy Commission.

Edison, together with PG&E, finally attempted to circumvent CEC jurisdiction with an out-of-state coal plant, the $5 billion, 2,500 MW Harry Allen-Warner Valley Energy System, proposed for Utah and Nevada. Strip mining and coal burning pollution from the project threatened both Bryce Canyon and Zion National Parks in Utah. The California Public Utilities Commission had authority over this application, but the Energy Commission intervened at the PUC to question project need, and the Environmental Defense Fund vigorously opposed it with a new computer model demonstrating there were less expensive alternatives. SCE and PG&E hastily withdrew Harry Allan-Warner Valley on February 11, 1981 in order to prevent the Energy Commission from filing a brief at the PUC explicitly detailing why this large, costly project was completely unnecessary. Extinction had occurred.

The Age of Dinosaurs was over. Conservation would play a major factor in reducing need. The future of new powerplant construction in California would belong to what the Energy Commission now called "preferred", "alternative" or "renewable" resources. They would be much smaller in size than the failed conventional utility projects.