potrero view

May 2009

Consumer Advocates Concerned Over Carbon Study

By Herman Wong

Earlier this year the California Public Utilities Commission (CPUC) authorized Southern California Edison Company to spend upwards of $30 million on the Hydrogen Energy California study, or HECA.  HECA will examine the feasibility of developing a facility to turn petroleum coke, a refinery byproduct, into a gas that could be used to produce electricity.  Much of the related greenhouse gases would be captured and stored underground.  According to Mark Nelson, the investor owned utility’s director of generation planning and strategy, “It’s got a lot of really strong attributes that make it compelling for the customers.”

But consumer advocacy groups are outraged at the CPUC’s decision to use what they believe to be a backdoor process to funnel consumer funds to support research by private companies. “It’s really nothing more than a gift from Edison customers to these two energy giants when there’s no indication they needed the money,” said Bob Finkelstein, The Utilities Reform Network’s, or TURN, legal director.  Edison would collaborate on the HECA study with Hydrogen Energy International LLC, which is owned by the multinational energy companies BP and Rio Tinto.  

When contacted for comment, a CPUC spokesperson sent a link to a press release, in which Commission president Michael Peevey expressed his support for the project as a step forward in reducing the state’s carbon footprint. “If shown to be technically feasible and commercially reasonable, the HECA facility, and potentially other generation utilizing carbon capture technology, will be resources that will advance California’s move towards reduced greenhouse gas emissions while producing reliable power,” Peevey is quoted as saying.  Peevey also “encouraged the other investor-owned utilities, as well as the publicly-owned utilities, to become partners in the HECA study project, and for all utilities to work together on commercializing carbon capture and storage technology.”  Pacific Gas and Electric Company has expressed interest in joining in on the study at a later phase.

Southern Edison California Company, with CPUC support, had originally requested funding for the HECA study last fall through an advice letter, a regulatory review process that doesn’t trigger the need for comprehensive hearings.  After TURN and other groups protested the move, the Commission halted the process, and in February determined that the advice letter was an inappropriate channel for the funding request.  The Commission directed Edison to track its project costs, which could be as much as $17 million in its first phase, and to file an application to recoup these expenses.  The company filed an application in early April, according to Nelson.  The process will take up to 16 months, with the first study phase expected to be completed before the application is approved.

According to Finkelstein, after directing Edison to proceed with the study the Commission is unlikely to then deny its application to pass on costs to its customers.  Finkelstein is concerned that the Commission’s actions have established a poor precedent. “I think one, the Commission will look for ways to get around its own rules where they want to, and the precedent that if you are a private company out there and you want to get ratepayer money for your project you can get this commission to sign off on it.”

A CPUC spokesperson pointed to the Commission’s formal resolution, which states that Edison’s request “is consistent with stated Commission and state policies recognizing the necessity to explore all feasible means of meeting long-term [greenhouse gas] reduction goals.”

According to Joe Como, the Division of Ratepayer Advocates’ chief counsel, it doesn’t make sense to charge energy users for research by a utility company which other institutions are already conducting.  “There are a lot of very good universities and research institutes out there that are already doing this kind of work,” Como said.  “It’s not necessary for the utilities to spend ratepayer money to do the same thing that’s already being done in other places.”

Edison’s Nelson said Hydrogen Energy International believes that that the utilities’ participation in the study is critical, and that the project could create long-term benefits for the state.  “If this is a successful feasibility study it could move on to be a 1,500, to 2,000 megawatts of very low carbon electricity for California.”

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