California carbon charges, credits hitting power bills
April 2, 2014
Liberty Utilities' electricity customers will see two new lines on power bills starting this month. One is a per-kilowatt-hour carbon pollution permit charge and the other a California climate credit — which should translate into little change or some reductions in many customers' bills for now, according to the company which serves the South Lake Tahoe area.
The changes are part of California's cap-and-trade system. It mandates utility companies to meet renewable energy portfolio targets in a push to cut the state's carbon dioxide emissions to 1990 levels by 2020.
The California Global Warming Solutions Act requires 33 percent of the electricity that utilities distribute to their customers to come from renewable energy sources by 2020.
Liberty Utilities is already meeting a 20 percent renewable energy portfolio target with its electricity purchases from NV Energy, mostly through buying power from geothermal sources.
But the utility now must purchase carbon pollution permits for its non-renewable electricity that results in carbon dioxide emissions. Such "allowances" offered to it and other utilities are limited and will decrease over time.
Liberty Utilities customers will see a $0.0077 per kilowatt hour "carbon pollution permit cost" on their bills starting this month, said Ken Wittman, manager of rates and regulatory affairs for the utility.
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The charge is a mechanism for the utility company to recover its costs for buying carbon pollution permits.
Money that California raises from carbon permit auctions is slated to be spent on renewable energy investment projects, with a little more than half of the money used to fund the "climate credits" that also will appear on customers' power bills starting this month and offset the carbon pollution permit charges.
The goal of the credits is to shield customers from the higher costs for electricity and other goods and to give them more chances to invest in energy-savings upgrades.
"That's the good thing they'll see," Wittman said about the California climate credits.
The value of the climate credits will vary among utilities around the state. Liberty's residential customers will see twice-yearly credits of $41.60 on their electricity bills in April and October. The credits should match or exceed the carbon pollution charges they face, Wittman said.
Small businesses will see similar climate credits, except on a monthly basis and based on their power usage. They also should break even this year, but are expected to assume more costs as their power subsidies are reduced over the next five years, Wittman said.
Wittman said he hopes customers will take advantage of the programs Liberty Utilities offers to help people conserve energy. Information about those programs is available on its website.
"I'm hoping this will encourage our customers to go out and become greener, whether it's just turning off the light when they leave the room or putting in more energy efficient appliances or light bulbs or insulation in their home," Wittman said. "There are various energy savings we will help them with."