Auction Revenue Split Proves Divisive

By Published On: December 7, 2012

Allocating billions of dollars expected to be generated by the greenhouse gas auction the next eight years brought out stakeholders representing businesses, agencies, and clean energy advocates, all pushing to get a slice or more of the auction revenue pie estimated between $5.7 billion and $22.6 billion between 2013-2020. The California Public Utilities Commission hosted the all-party meeting the afternoon of Dec. 4. A proposed decision released last month by commission president Mike Peevey would direct 85 percent of the revenue to households. The remaining 15 percent is targeted at businesses expected to be hard hit by carbon emission limits (Current, Nov. 26, 2012). Qualifying small businesses are categorized as those that use 20 kW or less. Also getting part of the smaller piece of the auction pie would be “emissions-intensive industries” that spew out lots of carbon gases, and “trade-exposed businesses” expected to be undercut by competitive out-of-state businesses not subject to carbon restrictions. An alternate decision on the auction allocation is rumored to be in the works. Much of the input over the proposed disbursement of funds at the meeting called by commissioner Catherine Sandoval--attended by commissioners Mike Florio, Mark Ferron, and Tim Simon--focused on redirecting funds away from the “climate dividend.” The proposed 85 percent of cap-and-trade revenue aimed at households would lower home utility bills impacted by utilities’ carbon costs and include a “climate dividend.” This twice-a-year climate dividend is aimed at offsetting higher priced goods resulting from the state’s greenhouse gas emission reduction law. Any diversions of the existing allotment would cut into that climate dividend. Led by Pacific Gas & Electric, utilities pushed for expanding the number of small businesses that qualify for auction funds. PG&E chief counsel Chris Warner urged that it be expanded from 20 kW to include businesses that use 200 kW or less to avoid excluding 78 percent of the utility’s small business customers. Local governments and agricultural interests represented by the California Farm Bureau raised concerns that they wouldn’t reap revenue as emissions-intensive businesses. Peevey advisor Scott Murtishaw replied the Farm Bureau hasn’t provided data to support such a designation. Tim Anderson, Sonoma County Water Agency governmental affairs director, warned the current proposal excluded energy-intensive public water purveyors and wastewater agencies. “Local governments have a great opportunity to contribute to AB 32,” he said. The Green Power Institute director Greg Morris complained that the allocation scheme on the table violates the spirit of AB 32 and Air Board regulations for not allowing energy efficiency and renewable projects to share in the auction revenue. “I’m dismayed that this proposal says zero funds for those programs.” The CPUC is expected to vote on the matter at its final meeting of this year on Dec. 20.

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