CPUC OKs $600M for Climate Institute

By Published On: April 11, 2008

In spite of concerns over the burden on ratepayers, the California Public Utilities Commission April 10 unanimously approved spending $600 million of utility customer money to create a University of California climate change research and development institute. “This is an audacious leap,” warned commissioner John Bohn. He insisted that the regulators limit the financial obligations it imposes on investor-owned utility ratepayers. He invoked the costs associated with various programs, including the Million Solar Roofs initiative (in which subsidies are paid to those who install solar devices), demand response (where rates are lowered when customers reduce electricity use on demand), transmission lines, and energy efficiency programs. “We pay while the rest of the world gets a free ride,” Bohn said. He added climate change is a global problem that needs national and international solutions. However, he cast his vote in favor of the ruling by Mike Peevey, commission president. Commissioner Dian Grueneich also noted she was concerned about the costs of a new global warming research and development center. She said she approved the ruling because recent revisions included greater commission oversight of the university-based California Institute for Climate Solutions, tighter conflict-of-interest rules to prevent insiders from reaping unfair subsides, and the requirement that the institute find matching funds. Grueneich also insisted that the institute’s administrative costs be held below 10 percent of its budget. Peevey asserted that the institute, which is set to receive $60 million every year for a decade, will develop innovative clean and energy efficient technologies that help cut greenhouse gas emissions and help the state adapt to an altered climate. Under the approved ruling, the location of the institute will be decided via a competitive bid process. It will be governed by a 21-member board headed by the CPUC president and president of the U.C. system. Another commissioner is mandated to sit on the board, as are the California Environmental Protection Agency secretary and representatives from the investor-owned utilities–as well as stakeholders from other sectors. A subcommittee is set to be formed to develop technology transfer rights and protocols. The entity will also be subject to performance reviews and financial audits. The Division of Ratepayer Advocates opposed tapping into ratepayers’ wallets for institute funding. DRA, the California Energy Commission, and The Utility Reform Network also unsuccessfully insisted that utility shareholders bear a proportional financial burden of the institute’s cost. The first job of the institute’s board is to develop a framework by March 3, 2009, that lays out how the entity will develop global warming reduction technologies “at the lowest cost.” The ruling also specifies that 75 percent of the money from utility electric and gas customers be put out for applied research projects that are competitively bid. It calls for a minimum 10 percent of the funds to be dedicated to education and work development. The University of California, Berkeley, entered into a controversial $500 million deal with BP to develop alternative fuels. Under that arrangement, BP is set to have unfettered access to university research while its work is expected to be proprietary. There are similar arrangements at U.C. Davis Institute of Transportation and Stanford University between for-profit energy companies and academia.

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