Bill would increase costs to industrials for low-income natural gas discount

By CMTA Staff

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

Legislation has been introduced to make it easier for residential customers to qualify for the California Alternative Rates for Energy (CARE) program.

Existing decisions by  the California Public Utilities Commission (CPUC) establish eligibility for the CARE program at 200 percent of the federal poverty guidelines.  AB 2576 (Hector De La Torre, D-South Gate) requires the CPUC to establish eligibility for the CARE program at 250 percent of the federal poverty guidelines.

This would significantly increase the number of CARE-eligible customers, thereby increasing the costs of the program and necessitating a rate increase.

With rising natural gas rates, it is understandable that the policymakers 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.

CMTA has an "oppose unless amended" position and would no longer oppose the bill if it were amended to require the CPUC to reallocate CARE costs to ensure a fair allocation among the customer groups.  It is imperative that no additional costs be shifted to noncore, industrial customers, who are already paying more than their fair share. 

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