With California facing a $42 billion budget deficit, the state’s year-old law (AB 118) to boost alternative fuel vehicles may be stalled.

In the meantime, representatives of the alternative fuels industry are swarming around the state and trying “to stay in the game,” according to Jill Egbert, the clean air transportation manager at Pacific Gas and Electric Co. (PG&E) “Natural gas and propane have transportation technologies that are here and readily available today, so if AB 118 can actually get funds, you will probably see more propane vehicles — especially for forklifts and heavy equipment.”

Egbert said the the law was passed with the promise of it making $120 million available for alternative fuel vehicles over a seven-year period. Using part of the private-sector utility customer-funded public funds administered by the California Energy Commission (CEC), an “Alternative and Renewable Fuel and Vehicle Technology Program” was to be created, administered by the CEC. It is still not established.

Since the first of the year announcements have been circulated on clean fuel conversions kits and clean natural gas and electric vehicles eyeing the California market. IMPCO Technologies, maker of a bifuel injection system certified by the Environmental Protection Agency, but still lacking California certification, announced it was returning to the state to mark its 50th anniversary with a new marketing push throughout North America.

IMPCO’s Fuel Systems Solutions said by the end of March it will launch a U.S. automotive alternative fuel division. “As part of our long-term growth strategy, we will begin serving U.S. automotive fleets as they can quickly build the infrastructure needed to fuel their vehicles,” said Fuel Systems President Matthew Beale.

There are various research and demonstration efforts that could probably be accelerated by the funding of AB 118, said PG&E’s Egbert, noting that there is little being done in the area of public recharging stations for electric vehicles. However, the utility is encouraged by an announcement by San Jose, CA-based Coulomb Technologies, which announced the availability of three of its “ChargePoint” public stations in the San Jose area.

A charge card is issued to electric vehicle owners that allows them to use the stations, a Coulomb spokesperson said. “The first ChargePoint charging stations are now installed and available for charging in downtown San Jose, with many more to roll out in the coming weeks,” the spokesperson said.

PG&E is working on a program with Mitsubishi Motors Corp. to test the Japanese manufacturer’s “iMiEV” electric vehicle. The iMiEV was tested the past two years by seven Japanese utilities, and now it is being tested in the United States through the partnership with San Francisco-based PG&E.

“Through its ongoing daily use, PG&E will gauge the viability of using all-electric vehicles in its operations and further understand the impact of charging electric vehicles on the electric grid,” Mitsubishi said last year when it launched the partnership.

Egbert said PG&E is concerned about the impact of vehicle recharging on the electric grid. “We’re watching it and talking to the infrastructure people to better understand it,” she said. “We don’t want vehicles to be charging on peak. We want them off-peak, and we have an electric vehicle rate to encourage customers to charge vehicles in the off-peak hours (mornings and evenings).”

Elsewhere in the nation, large utilities, such as Commonwealth Edison (ComEd) in Chicago, are building green vehicle fleets and exploring charging technology that will allow for the development of the smart grid, an initiative the Obama administration already has endorsed in its proposed economic stimulus package.

After announcing earlier in January it was adding 50 Toyota Prius hybrids and plug-in electric hybrids to its fleet, ComEd said it now has 2,100 green vehicles, representing 63% of its fleet. This includes 1,774 biodiesel trucks, 250 ethanol flex-fuel vehicles, 91 hybrids, and various other heavy equipment vehicles using biodiesel, electric and propane. The 50 new Prius vehicles are joining this mix.

On both a national and state level, however, Egbert sees increasing competition for funding in the midst of the economic and budget crises. “If President Obama can fix the economy and bring green jobs to the forefront, more power to him,” she said. And in California, she still sees AB 118 as a “huge opportunity because it would be $120 million just for transportation alone — more money than California has ever seen for [vehicular] transportation.

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