It’s the Capitol: Energy Agencies Deflect Higher Cuts

By Published On: May 18, 2012

State energy agencies again avoided the blow of the governor’s budget ax wielded May 14. The agencies largely are funded by special pots of money--including those funded by utility ratepayers--and not the general fund, which currently is facing a deficit that’s doubled to nearly $16 billion for 2012 and 2013. Whether and to what degree revenue generated by the California Air Resources Board carbon market auction scheduled for November may be tapped by the government remains unknown. “There is nothing in the budget yet,” Gov. Jerry Brown said during the release of his 2012-13 revised spending blueprint, noting the “uncertainty of the business cycle,” and unpredictability of state revenues. How much revenue the state’s carbon emissions rights auction may produce also is uncertain. Last January, the governor estimated annual revenue at $1 billion, while the Legislative Analyst’s Office estimated it at between $600 million and $3 billion. Standard & Poor’s threatened to downgrade the state’s rating if a solid budget deal is not reached. “[I]f lawmakers are unable to agree upon solutions to the state’s budget deficit that we view as credible, we may revise the outlook back to stable,” S&P stated May 15. The two-thirds vote requirement--instead of a majority vote-- remains a concern for the rating agency. The budget approval deadline is June 15 for the upcoming fiscal year that begins in July. An indirect budget hit on energy agencies could well come through a possible shortening of state workers’ week to 38 hours. How that may impact the ability of energy agency staff to carry out their jobs, including overseeing gas pipeline safety or processing power plant permits, is unclear. “We are in the process of looking at our agency’s workload and will develop public service hours that best meet our mission,” said Clark Blanchard, spokesperson for the Natural Resources Agency, which oversees the California Energy Commission and other agencies. “Many offices that are typically open Monday through Friday will likely be closed on Friday during the proposed new schedule.” The only specific energy agency budget item in the revised spending plan is a $2.1 million authorization to the Energy Commission to administer the redesigned public goods-funded Public Interest Research Program. “The $2.1 million in the May revision is for nine positions for the Energy Commission to develop and administer the CPUC’s $127.8 million per year EPIC program” according to Blanchard. Last fall, legislators failed to reauthorize the program that funded energy efficiency, renewables, and other clean energy research and development projects approved by the Energy Commission, Brown subsequently ordered the California Public Utilities Commission to fill the void and create a similar--but more focused program--to keep projects in the pipeline. In a recent draft CPUC ruling, the Energy Commission would administer 80 percent of the research and development money, with the remaining 20 percent being under investor-owned utility control. The Energy Commission’s administrative overhead is capped at 10 percent. Investor-owned utilities, however, are fighting to get a bigger share of the program funds.

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