Senate Wants to Cut Aid to Utility Ratepayers in Budget Plan

Among the strategies employed by the state Senate to close California’s $25.4 billion budget hole is a legally questionable $162 million cut in energy efficiency programs paid for from the Gas Consumption Surcharge Fund.

The fund is created by a fee on residential and commercial users of natural gas.

An annual review of the surcharge is conducted by the Public Utilities Commission, which can then raise or lower the amount.

According to Gov. Jerry Brown’s proposed budget for the fiscal year beginning July 1, the fund is projected to spend $548 million this year and $588 million in the next fiscal year.

That was before the Senate’s action.

Initially, the Senate proposed taking $263 million and transferring it to the cash-starved general fund.

Senate Budget and Fiscal Review Chair Mark Leno, a San Francisco Democrat, restored $100 million to the commission to help subsidize the gas rates paid by lower income customers of the state’s three publicly owned utilities.

The largest chunk of the fund’s revenue pays for 20 percent rate subsidies under what’s called the California Alternate Rates for Energy program. The Senate maintains CARE, as the commission calls it, and the Low Income Energy Efficiency program.

Other “ public purpose programs” — among them one that reimburses utilities for paying contractors to make homes and commercial and industrial sites more energy efficient — that would have received the $163 million don’t fare as well. They are suspended for one year in the Senate’s budget.

The proposal to take the $163 million is not contained in the Assembly’s version of the budget.

A special two-house budget conference committee is scheduled to begin meeting February 23 to reconcile the differences between the two proposed spending plans.

In order to take the commission’s money, the proposal must be included in the final conference committee report — and not be line item vetoed by Brown.

Legislation in 2000 by Sen. Rod Wright, a Los Angeles Democrat, created the surcharge. The surcharge was viewed as a tax and, so, a two-thirds vote was required to pass Wright’s bill.

Senate budget writers argue that since the revenue from the surcharge was considered a tax it can be transferred to the general fund, whose income comes from taxes.

Opponents of the transfer counter that this “fee” was imposed on natural gas users and the money raised specifically earmarked by Wright’s bill for programs improving energy efficiency of utility ratepayers – not helping balance the general fund.

Brown’s Department of Finance is reviewing the move’s legality but hasn’t taken a public position for or against the Senate’s proposal.

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