Could CA’s climate credit bypass poor?

Everyone should share in the benefits of green energy

California’s new climate credit would be counted against subsidies for many poor households in Southern California under proposals by San Diego Gas & Electric and Southern California Edison.

Consumer groups say the move would effectively eradicate the climate credit for low-income customers, defeating one central purpose of the set-aside.

Arriving with utility bills this month and again in October, the climate credit reduces household electricity charges in the San Diego region by $36.24. The funds come from California’s cap-and-trade program, the nation’s first economywide approach for controlling pollution by capping total greenhouse gas emissions and issuing pollution permits that can be bought or sold by companies.

State officials have heavily promoted the credit — in utility bill inserts, paid advertisements, media briefings and internet announcements — as an opportunity to invest in energy saving gadgets or appliances. Ideally, those purchases would save customers more money on future utility bills while conserving energy and reducing pollution from power plants.

Several people familiar with the inner workings of the California Public Utilities Commission said the utilities’ position is unlikely to gain traction with decision makers. Still, lengthy briefings and utility-bill calculations have been submitted on both sides of the issue by experts and attorneys whose work is paid for by utility customers.

The issue is scheduled to be resolved later this year, but could be postponed further.

“I hope the commission isn’t going there because it seems contrary to everything that it has been saying on this issue,” said Matt Freedman, an attorney at The Utility Reform Network, or TURN. “It would be, with one hand they give and the other hand they take away.”

Edward Randolph, director of the energy division at the utilities commission, said subsidized customers, by statute and under utility commission rules, are due both the climate credit and a 30 to 35 percent bill discount.

“The climate credit is here to stay,” he said. “There is no intention by anybody at the state level of undermining that commitment to have all customers see what is, on average, a $35 credit twice a year.”

The credit was designed to provide relief as the costs of cap-and-trade permits resound through the economy.

Edison and SDG&E contend that the credit would render meaningless new limitations on subsidies to its low-income customers.

Legislation signed by Gov. Jerry Brown last year is set to reduce the current discount on electricity for residential low-income customers to between 30 percent and 35 percent of what unsubsidized customers pay.

Excluding the credit from that calculation would “provide a disproportionately greater percentage discount” to subsidized customers, Edison wrote to the commission.

SDG&E spokeswoman Stephanie Donovan said that the climate credit interferes with instructions from state lawmakers and the utilities commission to reduce and stabilize subsidies. Awarding the credit on top of subsidies is unfair to unsubsidized large consumers of home electricity, who underwrite low-income subsidies through utility bill charges listed under “Public Purpose Programs,” she said.

“I don’t think we’ve heard the last of this,” Donovan said.

Starting May 1, subsidies to low-income customers will also be paid for by the commercial and industrial sectors. The discount is delivered through the California Alternate Rates for Energy program, better known as CARE.

Households can qualify if their annual income stays below 200 percent of the poverty level, as defined by the federal government. About 278,000 residential utility customers in SDG&E territory benefit from the subsidy — or roughly one in five households.

This year’s climate credit is paid for with pollution emission permits that fetched $750 million at auction.

State officials had considered returning those proceeds directly to consumers by check, but shied away from the added administrative expenses, according to officials at the California Public Utilities Commission and the Air Resources Board that oversees cap-and-trade. Delivering the funds through utility bills was deemed to be far more efficient.

The climate credit was set at the same fixed dollar amount for all recipients explicitly to benefit low-income households the most, said Lee-Whei Tan, a regulatory analyst at the state Office of Ratepayer Advocates. She said architects of the credit highlighted in writing that the poor spend a greater portion of their incomes on basic goods and services, and will be affected more as pollution permits become more scarce and expensive.

“We’ve been arguing that this credit lives in its own reality,” she said, “that it is not part of the utilities’ world.”