BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 306 - Gatto Hearing Date:
July 5, 2011 A
As Amended: June 14, 2011 FISCAL B
3
0
6
DESCRIPTION
Current law that sunsets January 1, 2012, requires the CPUC to
require each investor owned utility (IOU) to assess as a
ratepayer surcharge, commonly known as the Public Goods Charge
(PGC), $228 million per year for energy efficiency, $65.5
million for renewable energy, and $62.5 million for energy
research development and demonstration (RD&D).
Current law sunsets January 1, 2012, requires the CEC to
develop, implement, and administer a program to fund public
interest energy RD&D activities that, as determined by the CEC,
are not adequately provided for by competitive and regulated
markets.
Current law establishes the goal of the CEC's RD&D program,
known as the Public Interest Energy Research program (PIER) as
developing, and helping bring to market, energy technologies
that provide increased environmental benefits, greater system
reliability, lower system costs, and tangible benefits to
electric utility customers.
Current law and CEC regulations specify the process for CEC to
solicit applications for PIER research awards, including
criteria for evaluating competing proposals and making research
awards with PIER funds.
Current law provides funding for CEC operations from, among
other sources, a usage-based monthly surcharge on electric
utility customers that is deposited in the Energy Resources
Program Account (ERPA).
Current law establishes the Renewable Resources Trust Fund
(RRTF) with up to $65.5 million per year collected from a
customer surcharge to support renewable energy programs
administered by the State Energy Resources Conservation and
Development Commission (CEC).
This bill would require the CEC to conduct research on
generating electricity using piezoelectric technology under
roadways and railways and require CEC to collaborate with the
Department of Transportation to establish pilot projects using
this technology if CEC finds, based on initial research, that
the technology has the potential to generate electricity with
performance, reliability, and cost projections that are
comparable to existing renewable or emerging renewable energy
sources.
This bill would authorize the CEC, upon appropriation by the
Legislature, to use PIER or ERPA funds to conduct this research
and pilot projects.
BACKGROUND
PIER Program Grant Award Criteria - The PIER program was
established in 1996 for the purpose of ensuring continuation of
public interest energy research after deregulation of the
state's wholesale electricity markets. The program is funded
solely by the Public Goods Charge. The general goal of the PIER
program is to develop, and help bring to market, energy
technologies that provide increased environmental benefits,
greater system reliability, lower system costs, and tangible
benefits to electric utility customers through the following
investments:
Advanced transportation technologies that reduce air
pollution and greenhouse gas emissions beyond applicable
standards, and that benefit electricity and natural gas
ratepayers.
Increased energy efficiency in buildings,
appliances, lighting, and other applications beyond
applicable standards, and that benefit electric utility
customers.
Advanced electricity generation technologies that
exceed applicable standards to increase reductions in
greenhouse gas emissions from electricity generation, and
that benefit electric utility customers.
Advanced electricity technologies that reduce or
eliminate consumption of water or other finite resources,
increase use of renewable energy resources, or improve
transmission or distribution of electricity generated
from renewable energy resources.
Current law directs that, to achieve these goals, the CEC shall
adopt a portfolio approach for the program that does all of the
following:
Effectively balances the risks, benefits, and time
horizons for various activities and investments that will
provide tangible energy or environmental benefits for
California electricity customers.
Emphasizes innovative energy supply and end use
technologies, focusing on their reliability,
affordability, and environmental attributes.
Includes projects that have the potential to enhance
transmission and distribution capabilities.
Includes projects that have the potential to enhance
the reliability, peaking power, and storage capabilities
of renewable energy.
Demonstrates a balance of benefits to all sectors
that contribute to the Public goods Charge.
Addresses key technical and scientific barriers.
Demonstrates a balance between short-term, mid-term,
and long-term potential.
Ensures that prior, current, and future research not
be unnecessarily duplicated.
Provides for the future market utilization of
projects funded through the program.
Ensures an open project selection process and
encourages the awarding of research funding for a diverse
type of research as well as a diverse award recipient
base and equally considers research proposals from the
public and private sectors.
Coordinates with other related research programs.
Current law also requires the CEC to give preference to
"California-based entities" in making grant awards and
authorizes the CEC to negotiate with PIER grant recipients for
the state to collect an equitable share of rights in any
intellectual property derived as a result of PIER-funded
research.
PIER Already Funds Piezoelectric Technology Research - The CEC
has already spent about $400,000 in PIER funds on research of
piezoelectric technology conducted over the past eight years as
part of the Enabling Technology Demonstration (ETD) program that
PIER manages through the California Institute for Energy and the
Environment at the University of California Berkeley. According
to CEC, the UC Berkeley research team is currently developing
piezoelectric technologies for two smart grid applications. The
results of PIER-funded piezoelectric technology research are
expected to be summarized in a final report in the 2012-13 time
frame.
Piezoelectric Technology - Piezoelectricity is the charge that
accumulates in certain materials, such as crystals and ceramics,
in response to applied mechanical strain. Piezoelectric
material emits electrical impulses when pressure is put on it.
By installing piezoelectric material under roads, it is possible
to capture the mechanical energy that is usually released
through vibrations and heat as cars and trucks travel over the
roadway. According to the author, this energy, which is usually
lost, can then be converted it into electrical energy and stored
at the roadside to be used to power roadside lighting, call
boxes, or even plugged straight in to local distribution grids.
Review of PIER - In order to evaluate whether the PIER program
that sunsets on January 1, 2012, should be reauthorized, this
committee has conducted several informational hearings and
investigation of the program and the nearly $700 million in
research funds awarded since the program began. In February, the
Legislative Analyst's Office (LAO) issued a report based on its
independent review of the PIER program and recommended, among
other things, that PIER-funded research should be more narrowly
and strategically focused on meeting the state's technological
challenges to meeting its ambitious energy goals.
COMMENTS
1. Author's Purpose . According to the author, this bill
will ensure that CEC conducts research on piezoelectric
energy-harvesting technology, which he claims is a
promising technology that allows use of the roadways as a
means of offsetting the emissions from cars by producing
green electricity from the transportation system.
2. Legislature Dictating PIER Awards . This bill raises the
issue of whether it is appropriate for the Legislature to
dictate what research awards the CEC should make,
effectively bypassing the CEC's process for comparing and
evaluating which research projects should receive limited
PIER funds. The Legislature has required CEC to consider
many criteria, specified above, regarding individual
research awards and the entire portfolio of research
funded. Sidestepping that process with legislation
requiring funding for a specific technology undermines the
integrity of that process and the goals of the program as
defined by the Legislature. It also opens the floodgates
for advocates of other technologies to pursue legislation
rather than follow the CEC's established process.
3. Jumping to First in Line . The CEC has about $70 million
in PIER funds to award research grants each year but
receives applications for many more grants than it can
fund. According to the CEC, in the past two years alone,
48 worthwhile proposals totaling $30 million and 153 small
grants totaling $8 million had to be rejected because of
insufficient PIER funds even though they met the criteria
defined by the Legislature, passed technical merit, and had
potential to advance technologies and provide public
benefits. Projects denied funding include research on
renewable energy technologies in agricultural communities,
integration of biomass and solar energy, and net zero
energy homes, to name a few. This bill puts research on
piezoelectric technology first in line, with no
consideration of whether it has met the criteria other
research projects must meet, and bumping out other projects
that have already been deemed worthy of funding.
4. Is This Bill Necessary ? CEC already is funding research
on piezoelectric technology and has authority under current
law to award additional PIER funds for more related
research. CEC expects the results of this research to be
available within the next year or so, which will likely
inform CEC's decision on whether more funding is warranted.
However, the focus of the current piezoelectric research
is at the micro-watt level for demand response
applications, and this bill seeks to fund research at the
kilo-watt and megawatt level.
5. ERPA Funds Not for Research . ERPA funds are collected
from a surcharge on ratepayers in order to provide funding
for administration of the CEC. Authorizing CEC to use ERPA
funds for energy research contravenes the PIER program and
would make those funds unavailable for their intended
purpose. If CEC cannot make up for the loss from other
funding streams, the CEC potentially could increase the
ERPA surcharge on electricity ratepayers, although any
significant increase would require legislation because the
surcharge already is near the maximum rate allowed under
existing law.
6. Transportation Pilot Projects . This bill was heard in
the Senate Transportation and Housing Committee on June 29.
The committee amended the bill to require that the
Department of Transportation follow its established testing
protocol outlined in that committee's analysis. It should
be noted, however, that the bill requires the department to
collaborate with CEC on a pilot project only after the
CEC's initial research, and only if the CEC finds, based on
that research, that the technology "has the potential to
generate electricity with performance, reliability, and
cost projections that are comparable to existing renewable
or emerging renewable energy sources."
7. Focus on Renewable Energy . The author claims that
piezoelectric energy-harvesting technology is a promising
technology for developing renewable energy. It requires
the pilot projects if the CEC finds, based on the initial
research, that the technology meets specified criteria as a
renewable energy source. Given this focus on renewable
energy, and given that the RRTF has a positive fund
balance, funding from the RRTF may be more appropriate for
this bill. Thus, the author and committee may wish to
consider amending the bill to strike out page 2, lines 16
to 21, inclusive, and insert:
(c) The commission may expend the moneys in the
Renewable Resources Trust Fund, upon appropriation by
the Legislature, to implement this section.
8. Competitive Bid Research Award . The author claims that
this bill is not intended to result in CEC awarding a sole
source contract for a particular company and that the CEC
should instead solicit competitive bids. Thus, the author
and committee may wish to amend the bill to provide that,
if funding is appropriated for the initial research
required by this bill, a research award can be made only by
a competitive bid process.
9. Ratepayer Impact . The sources of potential funding for
the research this bill would require are derived from
ratepayer surcharge on electricity customers.
PRIOR VOTES
Senate Transportation and Housing Committee
(9-0)
Assembly Floor (73-3)
Assembly Appropriations Committee (12-5)
Assembly Transportation Committee (11-1)
Assembly Natural Resources Committee
(6-1)
POSITIONS
Sponsor:
Author
Support:
California Lieutenant Governor
Center for Climate Change Solutions-UCLA
Channel Technologies Inc.
Environmental Defense Fund
Professor Qibing Pei, Materials Science and Engineering at UCLA
Sierra Club California
State Building and Construction Trades Council of California
Valley Industry & commerce Association
An Individual
Oppose:
Pacific Gas and Electric Company
Southern California Edison (unless amended)
Jacqueline Kinney
AB 306 Analysis
Hearing Date: July 5, 2011