CMTA opposes extension of public goods charge

By CMTA Staff

Capitol Update, April 8, 2011 Share this on FacebookTweet thisEmail this to a friend

Two bills to extend the public goods charge (PGC) are opposed by CMTA:  AB 1303 (Das Williams, D-Santa Barbara) would continue the program through 2020 and  AB 723 (Steven Bradford, D-Inglewood) continues it through 2016.

The program began as a part of electric industry restructuring to fund programs for energy efficiency programs, renewable energy, low-income assistance, and energy research and development that California feared would not be funded by the utilities in a deregulated environment.  The amount to be collected for these purposes is appropriately identified as a tax.

CMTA believes an extension of the program is not justified in the current regulatory and economic environment. California has significantly retreated from the deregulated market since the energy crisis. Retail direct access is limited, the power exchange is defunct, and utilities can be granted cost recovery by the CPUC for expenditures that are not subject to competitive pressures.  The fear that utilities will not get cost recovery for legitimate energy programs is no longer justified.

Since 1996 California has imposed renewable portfolio standards and climate change goals on the investor owned utilities, independent power producers, municipal utilities and energy service providers that have overtaken the original purpose of the PGC.  The cap and trade program will provide financial incentives to pursue the projects currently funded by the PGC if they are a cost-effective means to create energy savings or achieve greenhouse gas emission reductions.  If such programs are not pursued under the new regulatory paradigm, they should not be artificially propped up by funding from the PGC.

The energy and climate initiatives enacted since restructuring have, and will, far exceed the costs approved to be collected through the PGC.  The above-market costs of renewables to meet the RPS goals exceed the funds available in the PGC accounts by millions of dollars.  The PGC was originally capped at a certain level of funding to protect ratepayers.  That purpose has not been realized, and is another reason to discard the program.

CMTA will testify at the hearing of AB 723 and AB 1303 this Monday, April 11, in the Assembly Utilities and Commerce Committee.

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