Energy Agencies Escape Gov.’s Budget Cuts

Governor Arnold Schwarzenegger vowed January 10 to cut all agency programs by 10 percent to address the state’s $14 billion deficit. The California Air Resources Board, not only escaped the axe, but expects increased funding. The state water board plans for increased funding to explore the nexus of water and energy. The California Public Utilities Commission also figures that the cuts will not affect its budget. The California Energy Commission was unclear whether the cuts would affect it. The move is said to be “specific to general fund agencies,” stated Claudia Chandler, CEC spokesperson. Energy agencies all have special funding. However, Chandler added that in the past cuts have extended to special fund programs. To implement the state’s efforts to curb global warming, the Air Board is expecting an increase of $5.6 million for 27 positions, according to CARB chair Mary Nichols. The agency plans to get another $8.4 million to enforce its climate change activities, she added. “Most of our funding comes from special funds,” Nichols said. However, she noted that the agency would be giving up $240,000 in research money. More money is also expected to flow to the State Water Resources Control Board to lessen energy use. “So less water needs to be pumped up and down the state,” said board director Dorothy Rice. In related energy budget news, Schwarzenegger, in his January 8 “State of the State” speech, concentrated on the expected $14 billion deficit. The state is spending up to $600 million a month more than it is taking in, he said. The “State of the State” speech also touched on energy, but only obliquely. The governor said he plans to submit legislation on energy. However, his office could not provide any details on what part of the energy industry may be affected by the planned legislation. “Stay tuned,” was all the executive office spokesperson Bill Maile would say. While the details of the industry were unavailable, one thing was clear: Part of the governor’s plan is to mimic what the CPUC allows for utilities--performance-based incentives. In this case, the governor’s office acknowledged that the focus would be “infrastructure development.” Again, it did not detail the type of infrastructure it would cover. The governor’s office expressly stated that Schwarzenegger intends to increase his executive power to make financial decisions. Neither the deficit or the multibillion dollar debt the state has is connected with the $11 billion dollar state issuance of energy bonds for buying energy through the Department of Water Resources during the energy crisis--money that led the state to issue the then-largest municipal bond offering in history. The 2003 $11 billion bonds the state issued to cover energy payments when utilities were unable to borrow money during the 2000-01 energy crisis still counts for about $10 billion in debt, according to Russell Mills, Department of Water Resources contractor for financial reporting. Backed by ratepayers, the state pays off between $400 and $500 million a year on that debt, he explained. The total is due in 2022, but could be accelerated if the state finds itself able to pay more, he added.

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Energy Agencies Escape Gov.’s Budget Cuts

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