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SMUD Is Showing How California Can Lead the Way

Jan. 22, 2019
The state’s utilities must have 60% of their power mix come from renewable resources by 2030, and by 2045, all retail electricity sold must be met by carbon-free resources.

California Gov. Jerry Brown recently signed some of the most ambitious clean energy and carbon reduction goals in the world. The state’s utilities must have 60% of their power mix come from renewable resources by 2030, and by 2045, all retail electricity sold must be met by carbon-free resources.

As California pursues some milestone goals, one of the state’s leading utilities has been taking an even bolder path. SMUD, a community-owned, not-for-profit electric utility serving 1.5 million residents in California’s capital region, already had a running start on the road to 2045.

For instance, the greenhouse-gas reduction goals SMUD established several years ago predated and exceeded those set by the state. SMUD is also a trendsetter in making time-of-day rates standard for all customers and in supporting the electrification of buildings and transportation to improve regional air quality.

Utilities are required to submit an Integrated Resource Plan (IRP) to the California Energy Commission in early 2019, outlining their investment priorities through 2040. The approach SMUD took in developing its IRP shines a light on how a utility with a reputation for innovation intends to deliver on aggressive carbon reduction goals while maintaining the reliability customers expect and keeping its electric rates among the lowest in the state.

“SMUD does much more than deliver electrons,” SMUD CEO & General Manager Arlen Orchard said. “The IRP will help us achieve several goals for our customers and community, including affordability, reliability environmental leadership, economic development and supporting disadvantaged communities.”

“By taking a holistic approach to sustainability, we’re serving the social, economic and environmental needs of the greater community – for today, tomorrow and years to come.”

In the near term, SMUD’s Board of Directors set a greenhouse gas (GHG) goal of 60 percent below 1990 emissions by 2030. The longer-term goal for SMUD is to achieve a net-zero GHG position in 2040. By focusing on local investments renewable energy and building and transportation electrification, SMUD’s IRP looks to achieve a 64-percent reduction in the Sacramento region’s GHG emissions by 2040.

Orchard recognizes the heavy lift inherent in meeting SMUD’s IRP goals but says the utility is up for the challenge.

“We’re laser-focused on carbon reduction,” he said. “We have a long history of achieving carbon reductions that exceed state and national trends, and we fully anticipate being able to continue doing that.”

A key component in SMUD’s IRP is a $2 billion investment over 20 years in the electrification of buildings and transportation. As California’s reliance on carbon-based fuels decreases each year, increased electrification will reduce GHG emissions, improve air quality and advance economic development across the Sacramento region.

SMUD is partnering with developers in the region to create new all-electric single- and multi-family housing developments. Together with an all-electric smart home program incentivizing retrofits of existing homes, SMUD is boosting Sacramento’s all-electric housing stock.

SMUD ramped up its longstanding support of electric transportation with a “Charge Free for Two Years” incentive for customers who purchase or lease a new EV. The utility is installing DC fast-charging stations across the region, assisting major employers in deploying workplace charging, and testing new business models for renewable integration and charging.

The EV momentum accelerated in 2018 when Sacramento was designated the first “Green City” in the Volkswagen Electrify America Investment Plan. SMUD particularly supports Electrify America’s commitment to making electric transportation more available to low-income customers.

This dovetails nicely with the “Sustainable Communities” strategy SMUD is rolling out to help customers and neighborhoods in three key areas: social well-being, a healthy environment, and a prosperous economy. Support for traditionally underserved communities is a central tenet of the strategy as SMUD aims to improve access to distributed resources such as rooftop and community solar, storage, and clean transportation alternatives.

Customers in disadvantaged communities, which tend to be located near freeways and co-generation facilities, will also benefit from the decarbonization efforts set forth in SMUD’s IRP. And the dollars invested in local renewables and electrification will have a profound impact on the regional economy, Orchard said.

“Our IRP provides holistic and long-term investment to help our customers, community and region thrive in a new energy future,” Orchard said.

“while cutting GHG emissions is a major goal of the IRP, so is ensuring reliable electricity for our customers,” Orchard said. “The plan recognizes that at least through 2040, the Sacramento region will need a certain amount of gas generation for reliability purposes. SMUD will find offsetting reductions through electrification to ensure that our carbon footprint is next zero by 2040 – five years ahead of what the state is planning to do.

“The IRP is a living document that provides the pathway forward.”

SMUD has laid out a bold vision for the Sacramento region’s energy future. While the state is requiring utilities to update their resource plans every five years, SMUD will review its IRP annual to ensure it incorporates the latest innovations into its approach.

 “Community-owned utilities exist for one reason – to serve the needs of our customers and our communities,” Orchard said. “SMUD has been doing that successfully for more than 70 years, and it’s our job to keep doing it. We plan to lead the way.”

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