California Utility Regulators OK $600M Customer-funded GHG Research Effort
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California utility regulators have voted to commit more than a half-billion dollars – paid for by the ratepayers of the state’s privately owned utilities -- to a research and development effort devoted to finding new technologies to reduce greenhouse gas emissions and getting them to market.
The five members of the California Public Utilities Commission, meeting at the commission's San Francisco headquarters (pictured) unanimously approved the proposal creating the California Institute for Climate Solutions. However, not all of them were fully pleased with the result. Commissioner John Bohn said the decision pushed the boundaries of the commission’s jurisdiction almost to the breaking point and he questioned charging ratepayers for investigating new technologies that might never be successful.
Commission President Michael Peevey, who carried the proposal, said California had long been a leader in environmental issues and that it was again time “to take bold and immediate action.”
The plan (see CPUC press statement here; full text of decision here) calls for $60 million a year for 10 years in ratepayer funds to go toward the institute. Most of that money, at least 85 percent, would be used to fund grants for applied research intended to support greenhouse gas reductions, as demanded by California’s landmark law, AB 32.
The institute was charged with targeting research focused on “practical and commercially viable technologies that will reduce" greenhouse gas emissions, as well as the means of adapting to the impacts of climate change that may now be inevitable. It is also intended to speed "the transfer of these technologies from the laboratory to market place," according to the lengthy decision approved by the commission Thursday.
The document also contains a requirement that officials of the new institute seek matching funds from other sources at least equal to the money coming from ratepayers.
Overseeing the institute, which was charged with working collaboratively with the state’s colleges and national laboratories, will be a board composed of government officials, university officials, lawmakers and representatives of utilities, environmental groups and certain industries, including agriculture. It will be co-chaired by the utility commission president and the president of the University of California. A physical headquarters for the institute is yet to be determined.
The California commission’s vote comes amid increasing calls for public financing of research and development to discover and implement new technologies to mitigate global warming (see Climate Law Update story here).
Still, there was clearly unease about charging the state’s ratepayers for the costs. The institute will be funded by a surcharge on electric and gas customers’ bills. Peevey noted that some have asked why utility ratepayers alone should be asked to pay for the institute. His response:
“The short answer, frankly, is that they shouldn’t. Ratepayer financing should serve as seed money to leverage other public and private sources of funds, and I think it will. Certainly broad-based taxpayer financing would be preferable, if it was available. But we cannot wait for the Legislature to allocate funds any more than the United States can defer decisive action on climate change until China and India take action.”
Despite voting for the proposal, Bohn expressed deep reservations:
“By this action we announce our intent to assess the private utility ratepayers of the state of California $600 million over a 10-year period in order to establish and operate a new organization devoted to seeking and implementing technology solutions to the global problem of climate change. We are, in short, telling the ratepayers that as a condition of receiving essential utility services delivered by monopoly enterprises under our jurisdiction they are required to pay for research and commercialization of technologies that may indeed never deliver the results that impact global warming or, at best, are unlikely to deliver those results in the near term.”
Bohn concluded that the commission's decision "pushes the boundaries of our duty and our jurisdiction almost to the breaking point."
The institute’s work is to be carried out under a strategic plan scheduled to be in place in about a year. The governing board was also charged with establishing panels to establish protocols for transferring technology and looking at potential workforce impacts in the energy sector.
In a separate move, the utility commission approved a $4.6 million request by Southern California Edison to participate in a study on reducing greenhouse emissions from coal-fired electricity generation. The technology under consideration, according to a statement from the utility commission (see text here) would convert coal through a gasification process into predominantly hydrogen and carbon monoxide gases. The hydrogen would fuel a power plant while the carbon monoxide would be sequestered underground.
Peevey said the company would participate in a project known as the Southwest Regional Partnership on Carbon Sequestration. Among other participants, the U.S. Department of Energy has put $65 million toward the effort, he said.
(Photo of California Public Utilities Commission building: Climate Law Update)
