Hot debate on climate think tank

California utility customers will foot the bill for a $600-million global-warming think tank under a Public Utilities Commission program that critics say is a costly and questionable departure from the agency’s mission to make sure ratepayers get affordable and reliable power.

The California Institute for Climate Solutions, approved Thursday, was pushed by commission President Michael Peevey, and the concept behind it -- accelerating research into ways to quickly cut harmful greenhouse gas emissions -- enjoyed broad support.

Gov. Arnold Schwarzenegger praised the commission for creating the institute, which “will bring together the state’s preeminent colleges, universities and laboratories to fight climate change.”

The project also won backing from several environmental groups as well as a long list of research institutions that hope to be awarded some of the institute’s money.

“California, with all its resources, can afford to be bold,” Peevey said in an interview after the vote. But, he added, “I realize that it’s not a universal view.”

Peevey, whose term ends in December, faced fervent opposition from lawmakers and consumer groups who called the project too expensive and the funding an unfair tax on customers of Southern California Edison, Southern California Gas Co., Pacific Gas & Electric and San Diego Gas & Electric.

“Consumers are already paying their fair share for renewable energy and conservation programs,” said Mark Toney, executive director of the Utility Reform Network. “Forcing them to pay more for an expensive academic exercise that may or may not provide benefits in the end is simply going too far.”

Don Kempf, 82, is one of the ratepayers who will begin paying for the new institute in a few months. Edison expects the surcharge to add 12 cents a month to residential bills, but Peevey said it would add 25 to 30 cents a month. Kempf believes global warming is a threat, but he objects to being singled out to fund research that would benefit all of the state’s residents.

“It really disturbs me,” said Kempf, who lives in Orange and gets his power from Edison. Of the utilities commissioners, he said: “Are they consumer advocates? I just wonder.”

John Bohn and other commissioners had misgivings about the plan, but Peevey won unanimous commission support by making several last-minute changes. To tie the institute’s work more closely to the needs of ratepayers, Peevey added a requirement that projects be judged using a “ratepayer benefits index” that would gauge each project’s cost-effectiveness and emissions reductions and whether the results could be applied in the energy industry.

Before adding his vote, Bohn read a six-page statement that called the program an “audacious leap” that “pushes the boundaries of our duty and our jurisdiction almost to the breaking point.”

After the meeting, Bohn said he voted for the institute because “with proper and vigorous commission supervision, the likelihood is that it will make a positive contribution.”

He said, however, that he was wary of the cumulative effect of a succession of new charges for utility customers.

“As commissioners, we need to think through every time we take money out of ratepayers’ pockets,” Bohn said. “We need to remember that it’s not our money, and it’s not taxpayers’ money. It’s from ratepayers who are paying for a utility service . . . and they don’t have any choice.”

State Senate President Pro Tem Don Perata (D-Oakland) didn’t comment on the commission’s action Thursday, but in February, he made it clear that he didn’t approve.

“I think it’s a singularly bad idea,” Perata told utilities commissioner Timothy Alan Simon during his confirmation hearing. “I don’t know if there’s anything that we can do about it during the budget, but if we can, I assure you I will.”

Under the program, electric and gas utilities regulated by the state commission would collect $60 million a year for 10 years to fund the institute. Utility customers would be assessed a small surcharge for each kilowatt-hour and therm of natural gas they used.

The plan requires the institute to raise matching funds over time.

The surcharge wouldn’t be added to bills sent out by the Los Angeles Department of Water and Power or any of the other government-owned utilities. Peevey said the commission doesn’t have the authority to assess customers of publicly owned utilities.

Peevey turned to ratepayers for the funds, he said, because power companies account for one-third of the state’s greenhouse gas emissions. In addition, the state Legislature isn’t likely to set aside funds for the institute while it faces a gaping budget deficit, he said.

“The imperative is so great . . . and we don’t have the luxury of waiting,” Peevey said. “That’s the bottom line.”

The institute’s work and funding would accelerate applied research and technological developments that reduce greenhouse gas emissions, as called for under California’s Global Warming Solutions Act of 2006. Some research would be aimed at helping California adapt to climate change.

While they praised the institute’s mission, the Consumer Federation of California, the commission’s independent Division of Ratepayer Advocates and others warned Peevey that it could be illegal to use ratepayer funds to tackle such a broadly defined statewide issue.

“We’ve questioned the legality of using utility bills as a way of raising taxes,” said Alexis K. Wodtke, staff attorney at the Consumer Federation.

Michael Shames, executive director of San Diego-based Utility Consumers’ Action Network, echoed the sentiment. “It’s audacious, daring and probably illegal.”

State Air Resources Board Chairwoman Mary D. Nichols, whose agency oversees many of the state’s climate change initiatives, said she backed Peevey’s plan.

“We’ve absolutely embraced this proposal, and we were involved in its design,” Nichols said Thursday. “We’re very familiar with it, and we’re very enthusiastic about it.”

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