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The fate of the California Energy Commission’s ratepayer-funded multi-million dollar renewables and energy efficiency research program hinges on legislative reauthorization. Funding authority for the agency’s $62.5 million/year Public Interest Research Program (PIER) sunsets at the end of 2011 unless two-thirds of the lawmakers approve a bill to extend its life this session. The Senate Energy, Utilities & Communications Committee March 1 debated the implications of either continuing the Energy Commission’s PIER program as is, tightening program criteria, or simply handing over the money to investor-owned utilities. “How should [the program] look going forward in these tough budget and economic times?” asked committee chair, Senator Alex Padilla (D- Pacoima). He and the Legislative Analyst Office raised questions about the commission-funded research projects’ cost-effectiveness and payoff to ratepayers. Padilla’s proposed bill, SB 35, reauthorizes the PIER public goods charge funding for only another year. It awaits a hearing in his committee. “Some [PIER] projects appear to have only a tenuous connection to the subject of energy,” Tiffany Roberts, LAO energy analyst, told the panel. The Energy Commission has spent $700 million on alternative energy and efficiency research since the program was created in 1996 as part of the state’s deregulation plan. Lawmakers grappled with how to assess ratepayer benefits. Underlying that issue is the tricky matter of defining the program’s research goal. They questioned whether it’s commercial success, supporting an experimental technology that does not become commercially viable in the short term or something in between? “You have to be cautious when talking about research,” said Senator Rod Wright (D-Los Angeles). He noted that Viagra was initially developed as a heart medication but later proved to be more effective curing another malady. Wright has authored SB 410, a competing PIER renewal bill. It extends PIER funding another 10 years, to 2022. That bill is also in the energy committee’s line up with no hearing date set. Lenny Goldberg, The Utility Reform Network lobbyist, objected to any whiff of redirecting the PIER money to the deficit-ridden general fund. Lawmakers said they plan to sweep into the general fund more than the $162 million from the CPUC-administered fees collected from gas utility customers for efficiency. “Where’s the ratepayer benefit?” Goldberg asked. The commission’s handling of its Public Interest Research Program has been criticized for high administrative costs arising from third-party contract overhead. While the commission’s project overhead is 10 percent, the average overhead for a key contractor, University of California, is 30 percent. Another bone of contention is the uncertainty over who holds the intellectual property rights to projects when a mix of funds is used. The commission defended its PIER program but acknowledged the need for program improvements. “The program pays for itself several times over,” said Robin Smutny-Jones, Energy Commission executive director. “Last year, $21 million in PIER funds “leveraged $500 million” of federal funds, she added. There was a push lawmakers and utilities to redirect PIER money to the investor-owned utilities. They currently receive ratepayer funds for alternative energy research. Representatives from Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric said that post-deregulation utilities have a greater incentive to invest in the kinds of research the PIER funds target. Wright warned about redirecting money away from the commission. “Money has the potential to corrupt a lot of people,” he said. In addition to bills by Padilla and Wright, other pending legislation extends the PIER program funded beyond this year. That includes: AB 723 by Assemblymember Stephen Bradford (D-Los Angeles) reauthorizing funding for another four years. AB 1303 by Assemblymember Das William (D-Santa Barbara) funding the PIER program to 2020. It also specifies that 20 percent of the money be used to advance renewable energy deployment.

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