March 14 (Reuters) - The costs to California residents to meet the ambitious goal of using renewable power for one-third of the state's electric needs by 2020 are beginning to come down, according to a state regulatory report.
But utility customers will face higher bills first, a utility executive warned, as costs for early wind and solar projects now operating are passed along to customers.
California's Renewables Portfolio Standard (RPS) program requires investor-owned utilities to increase reliance on renewable energy resources to 33 percent of total resources by 2020 as part of the state's effort to reduce greenhouse gas emissions to 1990 levels.
Overall, the state's top three utilities served 19.8 percent of their 2012 load with renewable resources, up from 17 percent in late 2011.
"California is on track to meet its interim requirement of 25 percent renewables by 2016, and is well-positioned to meet 33 percent by 2020," the California Public Utilities Commission (CPUC) said in one of several renewable updates prepared for the state legislature.
At the end of last year, PG&E Corp's Pacific Gas and Electric Co served 19 percent of its 2012 retail sales with renewable energy, up from 17.7 percent earlier in the year.
Edison International's Southern California Edison unit reached a renewable rate of 20.6 percent, up from 19.4 percent.
And Sempra Energy's renewable ratio at San Diego Gas & Electric was at 20.3 percent, up from 11.9 percent.
During the year, 1,957 megawatts of new renewable capacity came online and more than 3,000 MW is scheduled to come online before the end of 2013, the report said.
Since 2003, 4,498 megawatts (MW) of renewable capacity has begun commercial operation under the RPS program.
Last year, CPUC approved 64 contracts representing 3,725 MW of renewable capacity, the agency said.
Adjusted average prices in renewable contracts has declined from the program's early years, the agency said, easing to about 9.6 cents per kilowatt-hour for all contracts approved in 2012, down from 12.6 cents per kWh in 2011.
But California customers are just starting to see the effects of the costlier contracts on monthly bills as those renewable projects begin producing for the grid, Anthony Earley, chief executive of PG&E Corp said in comments at an energy conference last week in Houston.
"Some of the early contracts were very expensive and those projects are just now coming online," Earley said.
For customers of PG&E, the state's largest utility, renewable power will likely add 1 percent to 1.5 percent to utility bills, over any inflation-related cost increase, he said.
Earley said some long-term contracts the utility signed for renewable resources were above $200 per megawatt-hour. Those projects are now being completed and costs for the power will begin showing up on customer bills.