Bill sparks statewide conversation on whether certain state-mandated programs should be paid through energy bills
SAN DIEGO, May 8, 2023 – Seeking to provide financial relief to its customers, San Diego Gas & Electric is advocating for state legislation for a second year in a row that would require specific state-mandated programs (also known as public purpose programs) be paid through the state’s general fund, rather than through customers’ electric bills.
Over the years, the state Legislature has enacted many social programs that are funded by charges collected through electric bills, including rate discounts for food banks, low-income households, and economic development; school energy efficiency improvements; rebates for energy-efficiency products, outreach and education; special rates for residents in disadvantaged communities who enroll in renewable energy programs; research and development for new clean energy technologies; electric generation using green waste, among other programs.
Introduced by Assemblymember Carlos Villapudua, AB 982 proposes creating a special state fund to pay for public purpose programs. AB 982 passed its first hurdle in March 2023, when it was ratified by the Assembly Committee on Utilities and Energy. The bill is currently awaiting passage by the Assembly’s Appropriations Committee, which is expected to take it up by May 19. Once ratified by Appropriations, the bill can eventually move forward to the floor of both legislative houses.
AB 982 states that public purpose program costs would “more appropriately be funded by all taxpayers because the benefits accrue to society at large, not only to electrical customers or the electrical system.”
Since 2012, public purpose program costs have increased by more than 230% or ~ 10% per year on average. In 2023, SDG&E must collect $488.6 million through electric bills to fund 15 PPPs. By shifting costs for some of these state-mandated programs to the state’s budget can reduce SDG&E’s electricity rates by about 3%.
“SDG&E is advocating for common sense solutions to make energy more affordable,” said SDG&E Vice President of Customer Services Dana Golan. “If approved, this legislation would provide our customers with much needed bill relief.”
“It is time to remove the burden of mandated program costs from electric utility customers’ monthly bills,” said Assemblymember Villapudua, D-Stockton. “Up and down the state, I hear outcries from Californians about their struggles to keep up with bills.”
What goes into an energy bill and the impact of AB 982
Three key components go into an energy bill: the cost of the commodity (the actual electricity or natural gas), delivery charges, and charges for public purpose programs. By regulation, utilities cannot mark up the commodity cost. If SDG&E buys the commodity for a dollar, it sells the commodity to customers for a dollar. The delivery charge covers the cost of pipes, wires, and other infrastructure to get the energy to homes and businesses. The last component, most pertinent to AB 982, consists of charges for various public purpose programs.