CPUC Resuscitating Public Goods Funding

By Published On: October 7, 2011

The California Public Utilities Commission is stepping into the breach left by the state Legislature to potentially fund energy efficiency, renewable energy, and research and development programs. Instead of leaving it to lawmakers--who decided to let the public goods surcharge expire--the commission is following Gov. Jerry Brown’s direction to have appointed policymakers continue the programs’ goals. When politicians denied the surcharge renewal, they pointed to unspent millions of dollars, and questioned the wisdom of continuing to direct that large amount of money to investor-owned utilities annually. Regulators opened a rulemaking Oct. 6 aimed at keeping the surcharge on monthly consumer bills flowing. The Utility Reform Network executive director Mark Toney said he hoped the commission would use the upcoming rulemaking to improve utility energy efficiency programs. Utility Consumers’ Action Network executive director Michael Shames said “utilities’ energy efficiency funds have not been particularly well spent.” He said, for instance, that San Diego Gas & Electric diverted up to $8 million into an energy innovations center the CPUC never authorized. Such controversies arose in the Legislature when lawmakers weighed continuing the public goods charge, particularly when it came to the Public Interest Energy Research program. It is funded by the surcharge and run by the California Energy Commission. “It lacked strategic focus and a clear sense the investments had a return,” Toney said. CPUC president Mike Peevey said keeping the funds flowing for the clean energy programs is “a matter of pride” for the commission and Gov. Brown. He compared the commission’s move to restore and revamp the public goods programs to the California Solar Initiative, which the CPUC adopted at former Gov. Arnold Schwarzenegger’s request after the Legislature failed to pass a bill. Lawmakers subsequently enacted into law the program the CPUC adopted. In a separate action, the commission voted to sweep $155 million of unused funds from various utility energy efficiency accounts into a natural gas efficiency program raided by the Legislature earlier this year to help close the state’s general fund budget gap (Current, Sept. 30, 2011). The commission opened the rulemaking on public purpose programs after the Legislature failed to reauthorize their funding at the end of its session. The levy at issue amounts to about $1.50/month for the average residential customer and was expected to raise $400 million next year. The surcharge expires at the end of this year. Peevey said that in the course of the rulemaking the commission intends to incorporate “constructive ideas for reform” on renewing the surcharge, particularly about how the funds are administered. A Legislative hearing on the public goods charge program is expected this fall. Assembly Committee on Utilities & Commerce chair Steven Bradford (D-Gardena) said that administration of the surcharge money for energy efficiency and renewable energy needs to be improved. Commissioner Mike Florio supported opening the rulemaking, but said he didn’t want to create a split between the governor and Legislature over the commission’s authority to continue charges and revamp how the money is spent. The commission’s authority to act in the face of legislative gridlock is going to be a key issue in the rulemaking, according Linda Sarizawa, Division of Ratepayer Advocates deputy director. Commissioner Tim Simon supported the move, but noted that many of the programs funded by the public goods surcharge duplicate other programs. The commission’s separate action to shift $155 million of unspent utility funds to replace lawmakers’ diversion of the gas efficiency program funds to the state general fund illustrated concerns regulators face as they weigh how to craft a continuing public purpose funding program. “There’s no reason money should be left on the table,” in utility accounts, said Serizawa. She said that the CPUC should audit utility energy efficiency accounts regularly to detect unspent money. In introducing the backfill measure for the gas program, commissioner Mark Ferron agreed that an audit should be performed. He expressed concern that the utilities might be getting too much money for energy efficiency or may not be spending it efficiently. He raised questions about potential duplication and a focus on low-cost measures--like giving out compact fluorescent light bulbs--that bring no permanent savings. Florio supported the funding backfill, but also raised concern about why so much money could be sitting unused in utility accounts--most of the surplus collected prior to 2009. “I think it’s our duty to put the money to work,” he said, calling for it to either be spent for beneficial programs or returned to ratepayers. Simon said the gas program backfill would have a positive impact on job availability in the ongoing recession. Regulators plan to conclude the proceeding in two phases, the first before end of the year governing what charges ratepayers should pay, if any. The second phase to be worked out by spring of 2012 is to govern how the money should be used.

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