Gino DiCaro

Industrial users' impacted by low-income natural gas subsidy

By Gino DiCaro, VP, Communications

Capitol Update, Nov. 10, 2006 Share this on FacebookTweet thisEmail this to a friend

Natural gas is one of life's necessities.  It heats our homes, keeps our factories running and fuels our economy.  

Tight supplies are already causing high natural gas prices - more than double what they were in 2000. Consumers and businesses are now receiving high utility bills for both natural gas and electricity.

California enacted legislation in the 1980's establishing a low-income ratepayer assistance program to provide financial assistance to low-income gas and electric customers.  In 1997, the California Public Utilities Commission (CPUC) began requiring all customers to pay a nonbypassable gas surcharge to fund public purpose programs, including low-income assistance programs such as the California Alternate Rates for Energy (CARE) program.  The utilities recover CARE program costs through a volumetric, or usage-based rate.

CMTA is an active participant in a current CPUC proceeding dealing with the CARE rate allocation between customer classes, and continues to press the Commission to make revisions to the current equal cents per therm CARE allocation, which requires large customers to pay a disproportionate amount for the subsidy for low income gas customers.

With rising natural gas rates, it is understandable that the CPUC would want to provide some rate relief to low-income customers.  At the same time, however, they must also recognize the burden that such an effort imposes on other consumers.  Industrial customers are already paying too much of the CARE subsidy.  In the Pacific Gas & Electric system, CARE costs have increased by one thousand percent in the past five years.  For industrial customers, the CARE subsidy amounts to more than fifty percent of the total transportation rate paid to PG&E.  In contrast, the average residential gas customer pays only about $12 per year in CARE costs on the PG&E system.

A proposed decision is due from the CPUC before the end of the year.  In the meantime, if you want to do something about the high cost of social programs included in your gas bill, contact Joe Lyons, CMTA energy lobbyist, at jlyons@cmta.net

Read more Energy articles

Capitol updates archive 989898989