Edison’s Revolt Carries the Day

Energy efficiency slush fund voted down.

On a day when Republican Sen. Sam Blakeslee complained about “a long string of union giveaways” in the California Legislature, it was refreshing to hear toward the end of Friday’s marathon final day of lawmaking that Fortune 500 companies still know how to throw their weight around the Capitol as well.

In a debate over a proposed change in the calculation of corporate tax liabilities, senators of both parties were unafraid to assert during floor speeches who was for it — Apple, Genentech and Qualcomm among them — and who was against it, notably International Paper and General Motors.

On that vote, International Paper carried the day, although Gov. Jerry Brown, who sought the change, suggested that the actual culprit was the unmentioned influence of “cigarette makers” such as Philip Morris.

But it was during the debate on an unsuccessful effort to renew a utility surcharge that funds energy efficiency programs, renewable energy projects and clean energy research that the continuing role of business influence was most boldly asserted.

Senate Republican leader Bob Dutton of Rancho Cucamonga stood and flat out acknowledged that he intended to vote no based on a recent conversation he’d had in his office with the chairman of Edison International. Folks in Ventura County best know that company through its subsidiary, Southern California Edison, to which they write monthly checks.

The Edison chairman was concerned that electricity rates will continue to rise as California seeks to produce one-third of its electrical power from renewable sources, Dutton related, and was worried about a potential “ratepayer revolt.”

When the same issue had been raised by an Edison lobbyist at a committee hearing a week earlier, Chairman Steven Bradford, D-Inglewood, questioned why a company that is seeking a 17 percent rate increase would be so concerned about a 1.5 percent surcharge that’s already in place.

Edison experienced 7 percent earnings growth last year and forecasts continued growth this year.

Whatever the merits of Edison’s concerns, it won the day after executing a furious lobbying blitz to kill the bill. The so-called “public goods charge” will expire on Dec. 31.

Whether its expiration will have any noticeable effect on electricity bills is questionable, say groups that were on both sides of the issue.

The Utility Reform Network, a consumer group, also opposed the public goods charge, primarily because it felt there are more efficient ways to raise money for energy efficiency and clean energy programs.

“Every year, ratepayers pay $1 billion for energy efficiency programs right now. Of that, $250 million comes from the public goods charge. It’s all rolled into the pot,” Lenny Goldberg, a lobbyist for TURN, told me this week.

To make up for the loss of the surcharge, the Public Utilities Commission will likely allow utilities to build the additional energy-efficiency money into their rates. “Energy efficiency is first in the loading area for new procurement,” he said.

In other words, the regulators know that the best and cheapest way to increase the supply of electrical power is to reduce demand.

Bernadette Del Chiaro, director of clean energy programs for Environment California, told me that the defeat of the public goods charge was a “huge setback — but the PUC, if it chose, could move forward in a pretty big way.”

She noted that after the Legislature failed to approve former Gov. Arnold Schwarzenegger’s “million solar roofs” program, he simply directed his appointees at the PUC to implement it through regulation.

The Brown administration has signaled it may take the same approach.

Goldberg and Del Chiaro both believe there will be a need now for the PUC to build into the rate structure about $75 million for energy research to replace the expiring revenue.

More than concern about a potential “ratepayer revolt” or the minuscule effect the public goods charge had on overall utility bills, it appears that the utilities’ concern about control of this research money is what drove the opposition.

“The bulk of the money the PUC collects from ratepayers is already controlled by the utilities,” Del Chiaro noted. “The research program was one area over which utilities didn’t have a lot of control.”

Edison and its utility brethren from Northern California and San Diego made the point in a letter to lawmakers this summer. The utilities “should be integral” to research decisions, the letter said.

In the end, it appears the only revolt here was a utility uprising against the California Energy Commission, which controlled the research grants.

At the bottom of every legislative battle, it’s almost always about some interest group defending its turf.