David R. Baker, Chronicle Staff Writer
California regulators handed electric utilities $82.2 million in bonuses Thursday for improving energy efficiency, even though the state isn’t sure the companies saved as much power as they claim.
Money for the bonuses, approved by the California Public Utilities Commission, will come from Californians’ monthly electrical bills. The commission’s vote came after protesters asked the commissioners for a moratorium on electricity rate increases.
Although the bonuses represent an extra expense for ratepayers, there’s a strong chance that they won’t lead to higher rates, at least not for Pacific Gas and Electric Co. customers. A spokesman for the utility said Thursday that PG&E expects electricity rates to decrease by roughly 1 percent in January, in part because the natural gas that fuels California power plants is cheaper now than it was during the summer.
The efficiency bonuses are at the heart of a program designed to give electrical utilities a financial incentive to save energy. Created last year, the program gives utilities targets for cutting power use among their customers. If the utilities meet those targets, they receive bonuses. If they miss by a wide margin, they can be fined.
But the program has run into problems.
The state’s investor-owned utilities requested a total of $152 million in bonuses this fall and gave the commission data showing that they had met their efficiency goals. But the commission’s staff examined the data and issued a draft report saying that most of the utilities had badly missed their targets. Instead of rewards, they should face fines totaling about $3 million.
The commission’s staff wanted more time to resolve the discrepancy. But the utilities pushed to have the rewards issued before January so they could be booked with this year’s earnings. The commission agreed, saying that if bonuses aren’t granted on a timely basis, they aren’t much of an incentive.
“We have gone round and round and round on this issue and have sought to strike a balance of protecting ratepayers from overpaying while still giving utilities incentives,” said commission President Michael Peevey.
Critics, including some of the commission’s own staff, argued that the decision removed the program’s teeth.
“Energy efficiency has the potential to be both the most expedient and most cost-effective weapon in fighting climate change, but only if the energy savings are real and sustainable, and that requires accountability,” said Dana Appling, director of the commission’s Division of Ratepayer Advocates.
Only Commissioner Dian Grueneich voted against the $82.2 million in bonuses. She had proposed that the utilities get $47 million instead.
Pacific Gas and Electric Co., the state’s largest utility, will receive $41.5 million, while Southern California Edison will get $24.7 million. San Diego Gas and Electric Co. will receive $10.8 million, and Southern California Gas Co. will get $5.2 million.
The precise impact on utility bills is not yet clear.
Each December, utilities determine their electricity rates for the coming year by adding up all the costs that the commission has allowed them to pass on to their customers. PG&E is still calculating the rates that will take effect on Jan. 1, and the efficiency bonus will be part of that calculation.
On Thursday, the commission also approved the amount the company plans to spend on buying electricity next year, which will also go into the rate calculation.
Earlier in the meeting, an array of activists and small-business groups called on the commission to place a temporary moratorium on rate increases until the economy recovers.
“It’s time for regulators to stand up for the people,” said John Gamboa, executive director of the Greenlining Institute, which organized the protest. “You’ve got to speak up for us, because if you don’t, no one does.”