With help from Tanya Snyder and Alex Nieves
OFFSHORE HEADWINDS: Chalk it up to offshore wind’s nascent foothold in the U.S. and a spate of bad headlines recently that when Danish developer Orsted announced last night it was pulling out of two New Jersey projects, our editors wanted to know what it means for California.
The short answer, according to industry observers, is not much. Orsted’s two New Jersey projects were in the works pre-Covid and pre-Ukraine war, both of which triggered supply chain problems, inflation and rising interest rates. Those costs will already be baked in when California starts talking numbers with the five developers that have leased waters off its Central and Northern coasts.
“While we were disappointed to learn of Orsted’s decision related to a select set of projects on the East Coast, it does not impact our efforts in California,” said Molly Croll, who represents the five developers as the American Clean Power Association’s director of Pacific offshore wind, in a statement. “Offshore wind’s future in the U.S. and specifically in California remains strong.”
It’s stronger than ever as of last month, actually, thanks to a new law Gov. Gavin Newsom signed that gives the state the ability to enter directly into contracts with offshore wind developers. The industry had pushed hard for the authority, arguing they needed the certainty of a buyer for the power they plan to invest billions to produce.
The new purchase mechanism “helps provide market assurance for developers while affordably progressing the energy transition for ratepayers,” said Martin Goff, California project director for Norwegian company Equinor, which has a lease off of Morro Bay. “California’s waters are home to some of the best offshore wind resources in the nation.”
That’s not to say all is smooth sailing on the West Coast. The challenges on the East Coast spotlight the difficulties of planning and executing huge, expensive projects that take many years to build. California doesn’t expect any offshore turbines to start generating electricity until 2030 at the earliest.
And California has some unique West Coast obstacles: The water is so deep off the coast here that the wind turbines will have to float, rather than being fixed to the ocean floor. On the Central Coast, indigenous tribes are pushing for creation of the Chumash Heritage National Marine Sanctuary next to the proposed wind farm — a proposal the federal government advanced in August. And the state’s renowned environmental protections present hurdles of their own.
Why bother, given all these hurdles? It’s because offshore wind can deliver power in the crucial early-evening hours when solar drops off but energy consumption doesn’t — making it a centerpiece of California’s plan to eliminate fossil fuels from its retail electric supply. The state is counting on enough energy from offshore wind to power roughly 25 million homes by 2045.
“As Governor Newsom said in China last week, California is working to be the first state on the West Coast to power our homes and cities with offshore wind power,” spokesperson Daniel Villaseñor said in an email. “Offshore wind is critical to our clean energy future and California is laying the groundwork to make it a reality.”
California has other advantages in its long coastline and large population, which makes it easier to harness economies of scale with its energy purchases, according to industry observers. Eastern states are beginning to band together to get the same benefit.
A new bid solicitation in Connecticut puts forward another potential solution: It includes an index pricing option that would allow adjustments due to inflation.
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PRICE THIS: The fight over insurance reform is getting even spicier.
The American Property Casualty Insurance Association, or APCIA, launched a campaign today against Consumer Watchdog, the group that’s been attacking industry and Insurance Commissioner Ricardo Lara’s proposals to woo insurers back to the state in the wake of devastating wildfires.
The trade group’s campaign paints Consumer Watchdog as a “publicity-seeking, dark money front that only looks out for its own interests and that of its secret funders.” APCIA also launched a separate website to promote the industry’s ideas to fix the insurance crisis in the state, including allowing the use of forward-looking models to price risk. The campaigns will include a significant ad buy, spokesperson Steve Maviglio said.
Lara spokesperson Michael Soller has also been turning the heat up on Consumer Watchdog, though both he and APCIA said it wasn’t a concerted effort.
“Watchdog stands alone in earning millions of dollars from insurance companies which can be passed on to consumers under rules they wrote,” he wrote in an email last week. “That explains why they are opposing changes, while groups representing actual consumers, farmers, homeowners associations and many others are in support.”
The attacks are only emboldening Jamie Court, the group’s hard-charging president who recorded an insurance and building industry lobbyist on an August flight boasting about his attempts to get a legislative deal on insurance reform.
“If Lara and insurance companies are attacking Consumer Watchdog, we must be doing something right,” he said in an interview. Court acknowledged his group is funded by fees it gets from insurance companies through the rate filing process, but claimed his group’s intervention has saved consumers much more money.
The group is amping up its rhetoric even more: Harvey Rosenfield, the group’s founder and the author of Proposition 103, which capped insurance rates, called Lara’s moves a “betrayal of the voters” and compared him to Chuck Quackenbush, an insurance commissioner who left office in 2000 ensnared in scandal, at the group’s annual dinner earlier this week.
IN RELATED NEWS, WHEN THE SENATE ASKS: A pair of U.S. Senate committees sent letters to 40 private insurance companies in California, Louisiana, Florida and Texas today asking them to explain how they plan to cover escalating losses arising from extreme weather fueled by climate change, writes POLITICO’s Zack Colman.
Senate Budget Committee Chair Sheldon Whitehouse (D-R.I.) and Finance Committee Chair Ron Wyden (D-Ore.) said their committees are worried about the financial fallout from skyrocketing insurance premiums, property devaluation and threats to household incomes if insurance markets fail to adapt.
ON TRACK: U.S. EPA on Wednesday finalized changes to federal locomotive rules that clarify states have the authority to regulate emissions from existing locomotive engines, a significant win for California regulators mired in a lawsuit with rail companies.
The California Air Resources Board was sued by the railroad industry in June, following the agency’s approval of rules that would phase out locomotives more than 23 years old starting in 2030 and require railroads to set aside billions of dollars to purchase zero-emission locomotives. Rail companies say that zero-emissions locomotive technology has not been adequately tested and isn’t ready to handle the bulk of the country’s freight movement.
The Association of American Railroads and American Short Line and Regional Railroad Association argued in a federal court filing that state regulators don’t have authority to issue locomotive rules that have historically been preempted by federal standards.
EPA said last fall that it would consider a policy change that would allow states to set tougher-than-federal standards, in response to petitions from California regulators.
CARLSON’S CAROUSEL: Acting NHTSA Administrator and former UCLA law professor Ann Carlson survived the latest skirmish Tuesday in Sen. Ted Cruz’s war against her.
The full Senate voted down a Cruz amendment to the minibus spending bill that would have forbidden NHTSA from using appropriated funds to pay a NHTSA acting or temporary administrator “who was nominated to that position and whose nomination was subsequently withdrawn” — effectively defunding Carlson’s salary.
Carlson has been leading NHTSA since last August, when Steve Cliff left the agency to become executive officer of the California Air Resources Board.
The Texas Republican helped tank her nomination to officially lead the agency last spring with a negative campaign painting her as an environmental radical. His beef with Carlson in particular is that her background as an environmental law professor doesn’t qualify her to lead a transportation safety agency. (NHTSA, along with EPA, regulates vehicle emissions.)
LAND RETIREMENT: Karen Mouritsen, director of the Bureau of Land Management’s California office, is retiring at the end of the year after more than 30 years at the agency, Scott Streater reports for POLITICO’s E&E News.
She’d served as California director since October 2019, overseeing more than 15 million acres of federal land.
BLM’s California office is leading the agency’s push to develop federal land for renewable energy projects; BLM approved three major solar projects there last year and is currently evaluating the proposed Easley Solar Project, on 2,700 acres of BLM lands and about 990 acres of private lands north of Desert Center, Calif.
— The Sacramento Bee is offering $5,000 grants for regional climate projects.
— California car dealers say electric vehicles now represent a fifth of sales.
