SAN FRANCISCO - A renewable energy measure on the California ballot Nov. 4 would be "generally not favorable" for the long-term credit quality of public power utilities in the state, according to a report Standard & Poor's released last week.
Proposition 7 would significantly stiffen renewable energy standards for electric utilities.
The measure would apply the state's existing standards, which require investor-owned utilities to generate 20% of their power from renewable sources by 2010, to public power utilities as well. The ballot measure would also increase that standard to 40% by 2020 and to 50% by 2025.
Current law directs public utilities to develop their own renewable portfolio standards, and allows them to define the electricity sources that it counts as renewable. Proposition 7 would go much farther, by extending to public power the mandates that apply to investor-owned utilities, as well as increasing those mandates substantially over time.
The measure would have only a marginal effect on public power credits in the short term, according to the Standard & Poor's report.
"However, we believe that the Prop. 7 mandates are generally not favorable for credit quality in the long term, because they represent a loss of autonomy regarding utilities' policies and targets. In addition, the proposition would significantly accelerate the need for renewable energy resources and could necessitate rate increases to cover the cost," the report said.
"If the measure were to pass, Standard & Poor's Ratings Services would evaluate its impact on a case-by-case basis," the report said. "Generally, our view is that mandates such as these will put upward pressure on utilities' cost of power by adding to or redirecting investments in generation, often to more expensive options."
As of Oct. 18, the campaign for Proposition 7 reported spending almost $9 million, almost entirely from Arizona billionaire Peter Sperling, whose father founded the for-profit University of Phoenix.
Opponents - largely the state's three large investor-owned utilities - reported spending more than $30 million. Most mainstream environmental organizations are also opposed, saying the initiative contains flawed language that would harm smaller developers of renewable energy and actually hinder the development of renewable energy.
There hasn't been a publicly released poll on Proposition 7 since July, when the Field Poll found that 82% of voters surveyed said they weren't aware of the measure.