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California climate credit on PG&E bill

Discussion in 'Energy, Environment, and Policy' started by Merrill, May 3, 2014.

  1. Merrill

    Merrill Active Member

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    I did some research on this so-called climate credit, can anyone more familiar with this explain how it works and how it will help climate change. It seems somewhat convoluted and very surprised that our power company would give anything back.
     
  2. omgwtfbyobbq

    omgwtfbyobbq Member

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    AB32 requires emitters engage in a cap-and-trade program, so they need to pay for the associated externalized costs of their emisssions. The CPUC decided in 2012 to return most of the proceeds of this program to utility customers.

    So... It's a roundabout way of having businesses pay consumers for the externalized costs of their Carbon emissions through the electric utilities.The idea is that either utilites wil switch to renweables, which they've done to some degree, or compensate consumers for the externalized costs of their products.

    What is the California Climate Credit? | Energy Upgrade California

    California To Start Giving Millions Of Dollars Of Climate Credits To Electricity Users | ThinkProgress
     
  3. Merrill

    Merrill Active Member

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    Thanks omgwtfbyobbq, I knew there was a hitch and as stated this rebate is to help offset the expected increases in rates. You can be sure the the increases will be more than the rebates.
     
  4. omgwtfbyobbq

    omgwtfbyobbq Member

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    I think that depends on the structure of the Carbon fees in AB32. The net cost to go from ~20% renewables to ~33% renewables might be greater than the Carbon fees being levied in emitters.

    On the other hand, if the cost of Carbon credits was greater than the cost to build additional renewable infrastructure, then rate payers would get back more from the Carbon fees via the CPUC than their bills would increase by the additional cost of generation. I'm not sure if this is the case, but it certainly provides incentive for companies to reduce Carbon emissions.

    My guess is that the cost of Carbon fees has to at least be close to the cost of new generation, and it's most effective if it's more than the cost of renewable generation.

    In addition, the credit for households is the same regardless of how much electricity they use, so frugal households would likely see a net benefit even if the increased cost of renewable generation in the aggregate was greater than the Carbon fees.

    It's a bit convoluted, but it's essentially compensation for an externalized cost that is distributed evenly among the households in the "Commons", and the net effect is that the cost of additional renewable generation will be apportioned based on a household's electricity use. Households that use more electricity will pay a proportionally greater share of the cost to transition to more renewables.
     

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