Public Goods Charge in Flux

By Published On: October 14, 2011

The California Public Utilities Commission is reviewing whether to change the way money is raised and administered for renewable energy subsidies and energy research and development. As part of their review, regulators also are examining whether the 15-year-old programs are still necessary. At issue is $167 million/year in surcharge revenue administered by the state’s other energy agency, the California Energy Commission. “We expect to participate fully with the CPUC as a partner during this process,” said Energy Commission spokesperson Susanne Garfield. With the Legislature this year refusing to require ratepayers to fund the public programs, the CPUC is left in the position of determining whether or not to require ratepayer funding. As an alternative, the CPUC is considering whether the programs could be funded with proceeds utilities are to receive starting next year from auctioning emissions rights under the state’s carbon cap-and-trade program. The CPUC also is weighing whether the Energy Commission should remain in the driver’s seat steering the programs, or whether to set up a new administrative structure. As the CPUC specifically weighs funding a continued energy research effort, some question its legal authority to do so. The Utility Reform Network executive director Mark Toney said the CPUC lacks legal authority to levy charges on ratepayers for energy research, development, and demonstration work. The Legislature would need to grant the commission that authority, he maintained. Division of Ratepayer Advocates deputy director Linda Sariwaza also raised questions about the CPUC’s authority to charge ratepayers for research. She recalled a $600 million research center the CPUC tried to set up within the University of California in 2008 to study clean energy technology in an effort to reduce greenhouse gases. The Legislature blocked the CPUC from funding the proposed center with ratepayer money (Current, Aug. 29, 2008). There also appears to be some doubt about legal authority at the commission level. Just before the CPUC voted Oct. 6 to open a rulemaking on continued funding for the public goods charge programs, commissioner Mike Florio said he would support his agency’s action only “to the extent our jurisdiction allows.” Economic impacts also weigh on the CPUC. Commissioner Tim Simon raised concern about the impact of continuing to charge ratepayers for the programs because of the impact on their utility bills. CPUC president Mike Peevey--who championed the earlier research center--countered that the programs have a “demonstrable” benefit to ratepayers. He urged critics to join with his agency in trying to improve them for the coming years. The CPUC plans to deal with these and other issues in its rulemaking on future funding for the CEC-administered programs. One is widely known as the Public Interest Energy Research, or PIER, program. The other is a renewable energy subsidy program. Some raise the possibility that the CPUC may enlarge the research program. California Energy Efficiency Industry Council chair Steven Schiller even pointed out the prospect that the Legislature should require public utility customers to contribute to the research program, as well as investor-owned utility customers. Schiller also warned that research programs like PIER are bound to see some failures if they’re worthwhile. PIER endured criticism in the Legislature because some of its projects did not result in tangible technology advances. The CPUC is moving after the Legislature failed to renew the public goods charge at the end of its session last month. The surcharge has been in place since the state’s failed utility deregulation experiment. The Energy Commission has been spending $70 million/year of public goods revenue on the PIER program. It provides funding for energy research, development, and demonstration projects to outside researchers and organizations on a contract basis. In its renewable energy program, the Energy Commission gives out $73 million in public goods surcharges to subsidize biomass plant operators and to those who install small-scale renewable energy systems. That includes solar rooftops on new homes and other small-scale fuel cell, wind, and solar energy systems. Also on the table in the CPUC rulemaking is a $24 million/year natural gas research and development program the Energy Commission administers that’s funded by public purpose money. In a separate proceeding, the CPUC is weighing how to replace $256 million/year in expiring public goods charge revenue that it has directed to utility energy efficiency programs.

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