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Gov. Brown seeks to extend California energy surcharge

The levy on electric bills has been in effect since 1997 and raises $400 million a year for renewable energy and efficiency programs but is set to expire at the end of the year. Brown sees its reauthorization as a way to create more high-tech jobs.

August 25, 2011|By Marc Lifsher, Los Angeles Times
  • Power lines in the Antelope Valley with Portal Ridge in the distance. An aide to the governor says the energy surcharge has created jobs and attracted venture capital to California.
Power lines in the Antelope Valley with Portal Ridge in the distance. An… (Al Seib, Los Angeles Times )

Reporting from Sacramento — In a major effort to create more high-tech jobs, Gov. Jerry Brown is sponsoring legislation to extend a state program that collects about $400 million a year from utility customers and invests it in renewable energy and efficiency programs.

The surcharge, added to monthly electric bills since 1997, is set to expire at the end of the year, and the Legislature has only two weeks to reauthorize the levy.

But because the surcharge is a tax, the bill has to be passed by a two-thirds majority of the Legislature. That would require rare bipartisan approval, yet some Republicans have shown support for the idea.

A draft of the bill — which the Brown administration calls the Clean Energy, Jobs and Investment Act of 2011 — was presented at a private meeting late last week in the governor's office with utility executives, legislative staffers, environmentalists and power plant developers, The Times has learned.

The measure is a "priority for Gov. Brown because of its proven job-creation potential and role in galvanizing California's innovative clean-tech economy," Nancy McFadden, Brown's top legislative aide, said in an email.

The surcharge has created "tens of thousands of jobs, spawned entire new industries and attracted billions of dollars of venture capital to California," she said.

The surcharge ranges from $1 to $2 a month for the typical residential bill, according to consumer advocacy group the Utility Reform Network.

The bill to reauthorize it has broad support from the renewable-energy industry, environmentalists and labor unions that would benefit from new construction jobs.

It's opposed by antitax groups and some business groups, such as the California Manufacturers & Technology Assn.

"In our view, there's plenty of public-sector funding out there to support these energy-efficiency programs," said David Wolfe, legislative director of the Howard Jarvis Taxpayers Assn. "You're gouging ratepayers with very little accountability."

The manufacturers trade group said the plan is unneeded and would lead to higher electric rates. And ratepayers' advocates, who support the aims of bill, fear that the surcharge could be grabbed by future lawmakers to fill budget holes.

Sen. Alex Padilla (D-Pacoima) had introduced legislation this year to repeal the charge. But encouraged by the job-creating potential in the governor's proposal, the chairman of the Energy, Utilities and Communications Committee now supports the effort.

"I do believe that the state of California has a role to play in funding research to help us accomplish our energy and environmental goals," he said. "But the programs have to be run in a way that's much more focused and accountable from a dollars-and-cents perspective."

Under the new measure, state regulators would collect the surcharge and spend $250 million a year on energy-efficiency activities, $75 million on renewable-energy projects and $75 million on research, development and demonstration projects.

In the last 14 years, the California Energy Commission has used more than $700 million from the surcharge to fund research that has resulted in lowering ratepayers' energy bills at least $1 billion, according to the commission.

The research created knowledge that helped spur the development of new energy-efficient products, such as wireless lighting controls, improved water heaters, high-tech thermostats, LED light fixtures and energy-stingy flat-screen televisions, the commission said.

In a January report, however, the nonpartisan Legislative Analyst's Office questioned the value of the research and the ability to quantify the benefits, saying "it is by no means clear that the investment has resulted in a payoff to the state's electricity ratepayers."

Still, the analyst's report concluded that public-interest energy research should continue beyond the law's expiration date. It recommended that future research programs be more closely focused on helping California meet its energy goals, such as requiring all electric utilities to get at least one-third of their power from wind, solar and other renewable sources by 2020.

That appears to be what the governor has in mind in a draft bill that is expected to get its first hearings in Assembly and Senate committees next week.

McFadden said the proposal would fund research to develop "innovative and emerging clean-energy technologies developed in California."

Investments would focus on small-scale projects, such as installing rooftop solar systems, weaning farmers from fossil fuels and finding ways to store renewable energy for use when the wind isn't blowing or the sun isn't shining.

Brown's office hopes that investments in energy-efficiency programs would encourage additional private capital to be spent on helping home and business owners stop wasting money on more costly energy.

All three surcharge-funded programs would be overseen by high-level panels of public and private-sector officials to ensure "greater transparency and accountability in program-funding administration," McFadden said.

Padilla predicted that a version of Brown's bill focused on clean energy and jobs would get a handful of Republican votes to pass the Legislature even though it's considered a tax increase that Republicans typically vote down.

A related measure that would extend the surcharge until 2020 passed the Assembly with 58 votes, including those of seven Republicans.

Wolfe, of the Howard Jarvis group, which advocates lower taxes and government spending, said the organization is determined to get those lawmakers to change their minds.

marc.lifsher@latimes.com

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