The cap-and-trade market is aimed at decreasing carbon emissions. Photo: Justin Sullivan/Getty
The cap-and-trade market is aimed at decreasing carbon emissions. Photo: Justin Sullivan/Getty

Next month you should see a $30-40 credit on your PG&E bill — thanks to California’s new greenhouse gas regulations. Under the cap-and-trade program, the state’s biggest power companies will be paying $750 million in credits on consumers’ April and October bills.

The April rebate is the first climate credit being handed down to users as part of the state’s new cap-and-trade program. The rebate, which will average about $35 per bill, is aimed at offsetting increasing electricity prices from the cap-and-trade program. State officials are also urging people to use the money to buy energy-efficient products such as LED light bulbs and smart thermostats. But California Public Utilities Commission President Michael Peevey told KQED’s Scott Detrow that, of course, people might not follow those recommendations.

“Now obviously not everyone’s going to conclude that,” Peevey said. “Because, as was said earlier, some people are going to want to spend it on other things.”

California’s cap-and-trade program went into effect at the end of 2012 in an attempt to create an exchange for carbon emissions. KQED Science explained at the time how the cap-and-trade program is supposed to work.

The state first caps the amount of carbon that businesses are allowed to emit. If those companies don’t lower their emissions, they have the option of buying additional permits. Each allowance grants the company the right to emit 1 ton of carbon dioxide. Those allowances can be bought and sold at auctions. Companies are also allowed to pay other organizations to reduce their greenhouse gases, which counts against their obligations.

The utility companies were given the number of allowances they need for free under the system, with the requirement that they sell them at one of the auctions and use the money to rebate consumers — as they are doing now. In the future, the utilities will eventually have to buy their permits.

All of the money that investor-owned utilities like PG&E and Southern California Edison collected is either being refunded to consumers or used to buy down the costs of wholesale electricity, which should also benefit the consumer, said Stanley Young, spokesman for the state’s Air Resource Board. PG&E and the other investor-owned utilities do not get to keep the profits made in the cap-and-trade market. “Not a penny,” said Young.

The non-investor-owned utilities, like Sacramento Municipal Utility District, are not required to rebate the funds, but most of those companies are using the money they made selling their allowances to help their ratepayers by buying more renewable energy or offsetting costs, said Young.

While the cap-and-trade market’s goal is to reduce carbon emissions and move the state toward renewable resources, there are fears that it will also increase the costs of energy for consumers.

“Wholesale electricity prices are going up because of the cost of the carbon embedded in them,” said Young. But, he said, residential ratepayers should not see that cost on a bill, because the utility companies will use the money from the trade program to buy down wholesale electricity. Larger businesses, though, will see their bills go up. (There will likely be PG&E rate increases later this year for individual consumers, but they are not directly a result of the cap-and-trade program, said Young.)

To date, the utility companies have had to bring only their electricity production under the program, but in 2015 gas will also be regulated by cap-and-trade. However, there will be only partial rebates to consumers for gas. The details of that are still being worked out by the CPUC, and consumers could see their gas bills go up in the future.

In the meantime, you do not need to do anything to get the credit. It will show up as a line on your April and October bills.


Kelly O'Mara

Kelly O'Mara is a writer and reporter in the San Francisco Bay Area. She writes about food, health, sports, travel, business and California news. Her work has appeared on KQED, online for Outside Magazine, epsnW, VICE and in Competitor Magazine, among others. Follow Kelly on Twitter @kellydomara.

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