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California's alternative-energy program under scrutiny

Billions spent on wind, hydrogen, cow manure projects are questioned after some investments go bust, but the program is expected to grow. It could surpass current state support for the UC system.

October 13, 2013|By Ralph Vartabedian and Evan Halper
  • California Public Utilities Commission President Michael R. Peevey and Southern California Edison Chairman John Bryson chat after the utility dedicates the Mountainview generating facility in Redlands in 2006. Peevey calls the state's alternative energy program a success.
California Public Utilities Commission President Michael R. Peevey and… (Mark Boster, Los Angeles…)

California is spending nearly $15 million to build 10 hydrogen fueling stations, even though just 227 hydrogen-powered vehicles exist in the state today.

It's a hefty bet on the future, given that government officials have been trying for nine years, with little success, to get automakers to build more hydrogen cars.

The project is part of a sprawling but little-known state program that packs a powerful financial punch: It spent $1.6 billion last year on a myriad of energy-efficiency and alternative-energy projects.

Even as California has scaled back education, law enforcement and assistance to the disabled in this era of financial stress, the energy program has continued unrestrained and is expected to grow significantly in coming years.

State agencies have invested in milk trucks that run on cow manure, power plants fueled by ocean tides and artificial photosynthesis for powering vehicles and buildings.

The spending is drawing increasing scrutiny. Some of the energy investments have gone bust, electricity costs have soared, and some economists have disputed the benefits. The legality of some consumer fees that fund the programs also is being challenged in court.

The alternative-energy projects are largely financed by small charges on electricity bills or obscure consumer fees that are seldom noticed. The hydrogen fueling stations, for example, will be financed by a $3 fee on license plates.

Proponents of this spending say the funds are working the way they were designed. The money is helping position the state as an international leader in energy-conservation technology, said Michael Peevey, president of the California Public Utilities Commission.

"We are on a mission to deal with climate change," said Peevey, who oversees most of the spending. "It is considered a great success story."

Not everybody is convinced that the investments are doing any good for ratepayers.

"Suddenly, you look up and there are literally hundreds of millions of dollars going into investments that produce marginal benefits," said state Sen. Rod Wright (D-Inglewood), a member of the Energy, Utilities and Communications Committee.

"You know the tale of Robin Hood? Well, this is robbing the 'hood," he said. "You are taking from poor people to give to rich people."


Over the last decade, the state has invested nearly $15 billion in its campaign for energy efficiency and alternative energy.

The vast majority of the money is doled out through about 20 programs run by three agencies — the California Energy Commission, the Public Utilities Commission and the Air Resources Board.

The spending dates back to the 1970s energy crisis. More recently, the passage of the 2006 Global Warming Solutions Act has shifted California's focus to become a leader in greenhouse-gas reduction.

The largest amount is for a $1-billion-a-year program that funds rebates and subsidies — on products including solar panels, industrial equipment and energy-efficient swimming pool pumps — for residential and commercial customers of utilities. About 24,000 free refrigerators were delivered to families that met income qualifications.

The rest of the money is largely spread among a tangled collection of special projects and programs. The agencies have wide discretion in distributing the money, which has resulted in a program that lacks a comprehensive strategy, according to a report by the Legislative Analyst's Office.

The disbursements in 2012 included $317 million for renewable-energy projects; about $250 million for advanced transportation projects; and $44 million for research grants, according to the report.

The spending is headed sharply higher due to two recent laws that created roughly $1 billion in new taxes and fees for clean-energy goals. "We are moving in the direction of spending $2.5 billion per year on energy efficiency and alternative-energy programs," said Tiffany Roberts, author of the Legislative Analyst's Office report.

At that point, the spending would surpass the current level of state support for the University of California system.

Many of the projects involve technologies and research that even aggressive venture capitalists will not touch.

Robert B. Weisenmiller, chairman of the California Energy Commission, said he believes his agency's approach has "hit some real home runs."

The commission recently awarded $1.6 million to a UC Berkeley team researching a high-tech solution to cold feet. The team is developing a personal-comfort system for offices, including a low-power foot warmer, desk fan and temperature-controlled chair.

Researcher Fred Bauman said the foot warmer resembles a bread box open on one side, allowing workers to stick their feet in to get warmed from the top down. It would run on an average of 30 watts, a tiny amount compared to the 1,500-watt portable heaters that people put under their desks.

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