CEC OKs Using PIER Funds for Vehicle Fuel Projects

By Published On: March 17, 2006

The California Energy Commission will expand its Public Interest Energy Research (PIER) program to fund transportation projects. The agency is using the program-funded through electric rates-in the quest for better automotive mileage and new fuels, such as biodiesel and ethanol. At its March 15 meeting, the commission approved a new long-term Electricity Research Investment Plan, pledging that any transportation projects will benefit electric ratepayers. “We’re all for petroleum demand reduction at the Center for Energy Efficiency and Renewable Technologies,” said John Shears, center visiting research fellow. “However, we’d be concerned if too much of the budget was shifted to transportation fuels.” Shears told Circuit that there are “a lot of initiatives at the utility level-energy efficiency, renewables-that could really use that PIER money” instead of funding gasoline alternatives. Traditionally, PIER bequeaths funds to research projects such as energy efficiency, demand response, renewable power, and distributed generation. However, SB 76, enacted in 2005, said that the CEC “may” expand the PIER program to encompass transportation as long as it “provides an electricity ratepayer benefit.” The electricity research program is funded with $62.5 million a year collected from electric utility ratepayers. A parallel natural gas program is funded by ratepayer money collected from gas utilities. The commission plans to adopt an updated research investment plan for natural gas-which also will include a new transportation component. The electricity funds run from 2007 through 2012. “It’s a problem if there’s no connection back to electric ratepayers,” David Modisette, California Electric Transportation Coalition executive director, told Circuit. “We don’t think electric ratepayers should be paying for biodiesel, ethanol, or more efficient gasoline-powered vehicles.” The coalition consists of Southern California Edison, Pacific Gas & Electric, the Los Angeles Department of Water & Power, and the Sacramento Municipal Utility District. CEC members said they agree that the transportation projects should benefit utility ratepayers. They indicated that the details of how the projects should benefit ratepayers are open to discussion in upcoming workshops that will establish new application and project selection criteria for the PIER program. At issue is a statement in the adopted plan that says the commission “intends to use a broad interpretation of electricity ratepayer benefits as they apply to transportation research projects.” Benefits could include reduced emissions of pollutants and greenhouse gases or increased use of alternative fuels. The state’s utilities may be sympathetic to the need to develop cleaner fuels for cars, said Modisette, but they question whether using ratepayer money is the appropriate way to fund such research. He said utilities will be looking for a more direct benefit to electricity ratepayers as new PIER project funding criteria are developed. In other action, the CEC agreed to intervene in the California Public Utilities Commission’s 2006 long-term procurement proceeding. The CEC aims to ensure that the CPUC incorporates recommendations from its 2005 Integrated Energy Policy Report. “It would be to convey the importance of reaching long-term agreements now,” said CEC member John Geesman. “I think they should read the damn report.” The CEC has long contended that one key to increasing the reliability of the state?s grid is to have utilities sign long-term power-purchase agreements with power producers. The commission also wants the contracting process to be more transparent to the public. However, the Energy Commission is concerned that the CPUC will not fully follow through on the CEC’s recommendations, leaving the Integrated Energy Policy Report gathering dust on a shelf.

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