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Green-loving California may dodge utility bill bullet

While rest of the US pays 20-30% more

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California may get the last laugh standing firm by its tree-hugging ways.

It was largely a day of foreboding environmental forecasts at the Silicon Valley Leadership Group's Energy Summit held at Stanford on Friday. But as fuel prices continue to rise — there may at least be a promise of California offering consumers some hope.

CEO of California power company Pacific Gas and Electric Peter Darbee said the state's aggressive approach to slashing greenhouse-gas emissions will help shield it from significant utility price hikes that will soon grip the country.

"About two thirds of what drives increased utility prices are fuel costs," said Darbee. "What we've seen with natural gas prices is that it will go up very substantially, from prices like $3 to $4 per million BTUs to prices like $10 to $12."

In addition, the runaway growth in China and India is raising demand and the prices for things like turbines, copper, aluminum, and steel — making building a new generation of power plants much more costly.

"But the rates in California will be going up much less than the rates across the entire United States," said Darbee. "What we have learned from our discussions from other utility companies across the country is that they may be looking at between 20 and 30 per cent increases in energy bills in the future," he said.

Darbee believes California, in contrast, will only suffer rate hikes in the single digits. Guess Enron taught us a valuable lesson.

PG&E attributes this bittersweet news for Californians partly to the company's more diverse portfolio of plants across the state, including nuclear power, hydro power, solar and wind.

Darbee also said that while many states have completely deregulated their energy markets, California opted for a hybrid system which helped hold down the costs. Therefore, PG&E is in a somewhat unique position of earning more money by selling less of its product.

The company offers major rebates and incentives to companies which reduce their power consumption. This has prompted many major Silicon Valley tech companies to take steps toward thinking greener with data center cooling and server consolidation.

"Many other states are looking towards California for its leadership in respect to the design of its energy efficiency incentive programs," said Darbee. "The rest of the nation is looking towards us, so we must ensure that it's successful."

California also passed into law the first statewide effort in the US to decrease greenhouse gas emissions across all sectors of the economy. The Global Warming Solutions Act of 2006, signed by governor Arnold Schwarzenegger, effectively brings the state near compliance with Kyoto Protocol provisions. California's Air Resource Board is also planning to build upon the law to require the state to cut greenhouse gas emissions by 2020 to the levels they were at in 1990 — 169 million metric tons. ®

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