On May 24th, 2102 the CPUC approved a decision that establishes a framework for investment in energy-related research, development and deployment projects. The Decision will ensure that California electricity customers continue to receive substantial economic, environmental and public health benefits from applied research, demonstration and deployment projects and market facilitation of those projects by authorizing funding and establishing stringent accountability guidelines. California has been investing in energy RD&D for decades. These projects were most recently funded through the public good charge, which sunset at the end of 2011. The CPUC relied on existing California Public Utility code sections that explicitly authorize RD&D as a component of the rate structure in approving the decision. Additional legislation providing policy guidance for these RD&D investments could set a path for future investments. The decision builds on California’s successful history of innovation in energy and ensures investments position California to meet future challenges including increased reliance on renewable energy, improving energy efficiency, maintaining reliability and meeting California’s mandate to cut greenhouse gas emissions. The decision addressed a number of important issues raised in the 2011 legislative process and includes a number of new elements designed to improve planning and decision-making, protect customers and reduce costs.
Here are some of the most important parts of the program design:
- Transparency: The EPIC decision created a process for applications that results in increased transparency, coordination and oversight, including for non-PIER RD&D. The CEC and IOUS will have to submit completed investment plans every three years and provide public annual reports. Legislative review would be appropriate at both of these stages.
- Administrative Model: The EPIC decision establishes a new model that includes improved, more integrated administration. The Decision establishes 4 administrators – the 3 electric IOUs plus the CEC which are required to coordinate planning of RD&D investments. The Decision also establishes criteria and processes for public input and program implementation that are new and significantly expanded from PIER under the PGC.
- Stakeholder Review: The EPIC proceeding had numerous interveners from a variety of sectors: utilities, environmental groups, consumer groups, clean-tech companies, biomass companies, industrial customers, local governments, the University of California and others. Similarly, the administrators are required to establish stakeholder groups for regular review and input of investment plans and progress.
- Scope of Research: Because the PUC is using its existing ratemaking authority, the research, development and demonstration projects must provide benefits to electricity customers. The decision goes to great lengths to detail how these benefits must be demonstrated, qualified and quantified.
- Competition: The EPIC decision has a strong preference for competitive bids. While other contracting models are allowed, they will have to be justified.
- Intellectual Property: The EPIC decision requires the Administrator to seek to maximize benefits to the customers and the state of California though IP agreements and publicizing data and findings, wherever feasible.
- Administrative cost limits: The administrators are limited to 10% of the cost of the program, commensurate with other utility programs like energy efficiency and CSI.
- Revamped Renewable program: The EPIC allows renewable RD&D projects, but requires that they meet the same customer benefit requirements as any other investment. Ongoing payments to existing facilities are eliminated. The New Solar Homes Program was also curtailed unless and until the Legislature determines to modify the cap on the CSI program.
- Bioenergy: The CEC is required to invest 20% of its demonstration and deployment budget in emerging bioenergy related technologies in the first investment period. Future set-asides for bioenergy will be evaluated as part of the triennial review and planning process.
For the Program to work, the legislature will have to allow the CEC to keep RD&D staff to do this work – staff in which California has already made substantial investment. The real work to ensure California continues its leadership in energy innovation is ahead , but we are up to the task.