Electricity ratepayers hurt by budget trailer bill

By CMTA Staff

Capitol Update, July 19, 2012 Share this on FacebookTweet thisEmail this to a friend

Last month the legislature adopted and the Governor signed a budget trailer bill, SB 1018, affecting the use of cap-and-trade allowance value raised by electric utilities. Under the cap-and-trade regulation, all electric generators must purchase allowances for all their greenhouse gas (GHG) emissions. Since none of the allowances will be given to them for free, the amount to be paid by electric generators will total about $600 million per year. These costs will be passed along to ratepayers in higher utility bills. Prior to SB 1018, the monies raised were to be distributed back to ratepayers to offset the higher generation costs, to be determined by the California Public Utilities Commission (CPUC). With the passage of SB 1018, the authority of the CPUC has been limited and many ratepayer groups could receive no allowance value.

SB 1018 requires revenues to be “credited directly to the residential, small business, and emissions-intensive trade-exposed retail customers of the electrical corporation.” This ignores the commercial ratepayers, public agencies, schools and universities, and manufacturers that are energy-intensive and trade-exposed who will incur all the costs of cap-and-trade with no bill credits to offset the higher bills. SB 1018 also allows up to 15 percent of the total allowance value to be directed to energy efficiency and clean energy programs that are not otherwise funded. Finally, SB 1018 requires each utility to adopt a public outreach plan to increase public awareness about the bill credit program and allows the utility to recover the costs of the program in rates. SB 1018 does not govern the use of allowance value received by municipal utilities.

SB 1018 did not go through legislative policy committees. CMTA and other customer groups and utilities were united in opposition to this provision but were unable to stop it before floor votes on the budget trailer bills.

CMTA and other customer groups have been active in the CPUC proceeding to determine the allocation of allowance value. Our position is that all such value should be returned to all ratepayers in the proportion to how they will be incurring the excess costs. There is no need or justification to withhold value for other purposes, nor is it fair or reasonable to provide value to some ratepayer groups over others. CMTA along with a large coalition of impacted ratepayers will fight for changes to SB 1018 when the legislature reconvenes in August.

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