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Written by Ucilia Wang

The battle over a California ballot measure that would require utilities to sign more long-term contracts to buy renewable energy is heating up this week with the launch of a TV ad opposing the initiative.

According to the commercial, Prop. 7 will exclude small renewable-energy providers from the energy market and increase consumers' energy bills. The group behind the ad,

Californians Against Another Costly Energy Scheme

, received funding primarily from utilities such as the

Pacific Gas and Electric Co.

(PCG) - Get PG&E Corporation Report

, Southern California Edison Co. and others.

Prop. 7 proponents,

Californians for Solar and Clean Energy

, tout the initiative as an aggressive move to promote energy from sources such as solar, wind, geothermal and ocean waves.

Heading the campaign for Prop. 7 is Jim Gonzalez, a former San Francisco County supervisor. Funding for the petition drive to get the initiative on the ballot came from Peter Sperling, whose father, John Sperling, founded the

Apollo Group


, which operates the University of Phoenix and other vocational schools. Peter Sperling is the vice chairman of the board at Apollo.

The ballot measure calls for utilities -- both investor- and government-owned -- to get at least 20 percent of their electricity from renewable sources by 2010. The quota would increase to 40 percent by 2020 and 50 percent by 2025.

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Prop. 7 also would require utilities to sign 20-year agreements to buy renewable energy, which would have to come from power plants with capacities of 30 megawatts or larger that are located in the state or near the border. Smaller hydroelectric facilities, as well as plants that generate power from garbage, also would be eligible for these contracts if they meet certain requirements.

Electricity producers could sell power to utilities at as much as 10 percent above the price for conventional power (see the

full text of Prop. 7

). Utilities could pass on some of the extra cost to consumers, but the rate increases are capped at 3 percent.

Currently, state law requires only investor-owned utilities to meet a 20 percent level by 2010. State regulators also are considering a 33 percent requirement by 2020 as part of the effort to implement a comprehensive plan to reduce greenhouse-gas emissions (see "

California Offers Plan to Clear the Air

" on

The 20 percent mandate has prompted utilities such as PG&E and SCE to sign large contracts to buy solar and wind energy over the past year. Last week, SCE said it had agreed to buy up to 909 megawatts of electricity from a wind farm in Oregon, to be built and operated by New York City-based Caithness Energy (see "

SoCal Edison to Buy 909MW of Wind Power

" and "

PG&E to Buy 808MW From OptiSolar, SunPower

" on

Both utilities said they are on track to meet the 20 percent mandate. Both also declined to disclose the financial terms of the agreements.

Government mandates that force utilities to buy renewable energy through long-term contracts at prices higher than conventional power aren't new. Those policies have made countries such as Germany and Spain booming markets for solar companies, for example (see "

Spanish Energy Commission Votes to Shrink Solar Incentives

" and "

Solar Prices Set in Germany

" on

But those regulations don't exclude small power plants. In fact, many homeowners and farmers in Germany have installed solar panels on their roofs and properties in order to profit from the policy.

Prop. 7 opponents say the ballot measure would only benefit large energy companies because utilities would have to buy renewable energy from power plants with a minimum of 30 megawatts of capacity.

The commercial from the anti-Prop. 7 campaign featured Sue Kateley, executive director of the

California Solar Energy Industries Association

. In addition to utilities such as PG&E, the trade group's members also include solar installers



and SolarCity, as well as


(SPWR) - Get SunPower Corporation Report

, which manufactures solar panels and builds power plants.

Some environmental groups also oppose the ballot measure. The

Natural Resources Defense Council

doesn't support it, and one of its bloggers penned

a piece

arguing that the measure is poorly written and would create regulatory gridlock that prevents California from achieving its emissions-reduction goals.

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