D0804054 Attachment

Attachment A	Charter of the California Institute for Climate Solutions
Attachment B	Conflict of Interest Policy Statement for the Governing Board of the California Institute for Climate Solutions
Attachment C	CICS Governing Board
Attachment D	Summary of Party Comments on CICS

OPINION ESTABLISHING CALIFORNIA INSTITUTE FOR
CLIMATE SOLUTIONS

1. Summary

Confronting climate change is the preeminent environmental challenge of our time. As we noted in the Order Instituting Rulemaking (OIR), stabilizing greenhouse gas (GHG) emissions will require an economic and technological transformation on a scale equivalent to the Industrial Revolution.¹ This decision, by creating the California Institute for Climate Solutions, (CICS or Institute), adopts a bold and innovative approach to expanding California's leadership on this most pressing of environmental issues. The mission of the CICS is consistent with the purpose and findings contained in Assembly Bill (AB) 32, The Global Warming Solutions Act of 2006,² and Senate Bill (SB) 1368, regulating emissions of GHG from electric utilities.³ In AB 32, the Legislature found that global warming "poses a serious threat to the economic well-being, public health, natural resources, and the environment of California." (Section 38501(a).) In SB 1368, the Legislature determined that "it is vital to ensure all electricity load-serving entities [LSE] internalize the significant and underrecognized cost of emissions recognized by the PUC with respect to the investor-owned electric utilities (IOU), and to reduce California's exposure to costs associated with future federal regulation of these emissions." (SB 1368, Section 1(g).)

The Institute will provide significant benefit to ratepayers by accelerating applied research and development (R&D) of practical and commercially viable technologies that will reduce GHG in order to slow global warming, as well as technologies that will allow California to adapt to those impacts of climate change that may now be inevitable. The Institute will have a particular focus on speeding the transfer of these technologies from the laboratory to market place.

The funding for the CICS, $60 million per year for 10 years via a new surcharge on customer bills, is an investment in California's future that we expect will benefit all Californians. We think it is appropriate to take steps to ensure that the benefits that flow from the Institute's research benefits all Californians, regardless of socioeconomic status. To this end, we form a Workforce Transition Subcommittee (WTS) of the Governing Board that will study ways to support the energy sector's transition to a carbon-constrained future through anticipating and preparing for the resultant changes in its workforce needs. This subcommittee will submit a report to the Governing Board and the Commission six months from its initiation, and the Commission shall act on its recommendations within three months from receipt. Further, the Commission expects that the practices and policies of the hub and the resources of the host institution will be used to support participation that is broadly representative of the population of California in the projects funded by the CICS.

The investment in the Institute will leverage the State's considerable intellectual capital for the purpose of accomplishing the following mission:

(1) To administer grants for mission-oriented, applied and directed research that results in practical technological solutions and supports development of policies likely to reduce GHG emissions or help California's electricity and natural gas sectors adapt to the impacts of climate change.

(2) To speed the transfer, deployment, and commercialization of technologies that have the potential to reduce GHG emissions or otherwise mitigate the impacts of climate change in California.

(3) To facilitate coordination and cooperation among relevant institutions, including private, state, and federal entities, in order to most efficiently achieve mission-oriented, applied and directed research.

These pillars of the Institute's mission will be supported by the formation of new channels of communication between academics, utilities, business, environmentalists, researchers, policy-makers, investors, and the public.

In order to provide direction to the Institute's mission, maximize ratepayer benefit, and minimize unnecessary redundancy, the Institute's Strategic Research Committee (SRC) shall first develop a Strategic Plan that will identify those areas of research and technological innovation that are most likely to achieve the greatest GHG reductions in the energy sector at the lowest cost. The Strategic Plan will be the framework from which the Institute will formulate its budget, short-term and long-term goals, and grant administration process. The Strategic Planning process is to be structured in a way to maximize ratepayer benefit and cost-effectiveness, while avoiding redundancy.

The Institute will fund mission-oriented applied and directed research with an emphasis on the development and rapid transfer of the knowledge gained to the electric and gas sectors for implementation. The Institute will reduce GHG emissions within the state both by transferring technology for cleaner energy and improved energy efficiency (EE) that has already been developed and by formulating new commercially viable technology.

In order to maximize the intellectual resources available within the State, the Institute will work collaboratively with California's academic institutions, including the University of California (UC), the California State University and Community College systems (CSU/CC), Stanford University (Stanford), the California Institute of Technology (CalTech), the University of Southern California (USC) as well as California's national research laboratories: Lawrence Berkeley National Laboratory, Lawrence Livermore National Laboratory, Sandia National Laboratory, the Jet Propulsion Laboratory, and the National Aeronautics & Space Administration Ames Research Center (National Laboratories). These institutions will be a critical link in developing and commercializing new technologies through the CICS grant process.

The location of the hub or headquarters of the Institute will be determined through a competitive, peer-reviewed process.

Finally, in today's decision, we take care to ensure that the Institute will remain accountable to the Commission and the ratepayers. First, one Commissioner and the Director of the Division of Ratepayer Advocates (DRA) have seats on the Governing Board. Second, the Commission will retain oversight over the Institute by having the following decisions placed on a Commission agenda for Commission approval: all non ex officio appointments to the Governing Board; appointments to the Executive Committee; the Strategic Plan; annual proposed budget; annual report that includes external financial audit; biennial external performance review; list of grant recipients; and the intellectual property (IP) and technology transfer policies and protocols.

And most importantly, this decision is not a contract and may be modified by the Commission at any time pursuant to its authority under Pub. Util. Code § 1708.⁴ We also clarify that the Charter for the Institute may not be modified or changed without Commission approval. In addition, we recognize that the Legislature could initiate efforts to address climate change and replace ratepayer funding with funding from other revenue sources.

The Institute Charter, the Governing Board Conflict of Interest Policy, and the Governing Board composition chart are attached to this decision in Attachments A-C.

¹ Eileen Claussen, Technology and Climate Change: Sparking a New Industrial Revolution (March 10, 2002), http://www.pewclimate.org/press_room/speech_transcripts/transcript_technolog.cfm

² AB 32 (Stats. 2006, Ch. 488, effective September 27, 2006), codified in Division 24.5 of the Health and Safety Code.

³ SB 1368 (Stats. 2006, Ch. 598, effective September 29, 2006), codified in Division 4.1, Chapter 3, Section 8340 of the Public Utilities Code.

⁴ Pub. Util. Code § 1708 provides: The commission may at any time, upon notice to the parties, and with opportunity to be heard as provided in the case of complaints, rescind, alter, or amend any order or decision made by it. Any order rescinding, altering, or amending a prior order or decision shall, when served upon the parties, have the same effect as an original order or decision.