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Political Landscape: Decision keeps energy bills from increasing

December 29, 2010

Glendale and Burbank taxpayers quietly dodged what might have been millions of dollars in increased energy bills as a decision on clean energy policy by the California Air Resources Board favored their local utilities.

On Dec. 16, the board issued guidelines for California's cap-and-trade legislation, part of a larger effort to reduce the state's reliance on coal and other polluting sources of power. After a two-year rulemaking process, the agency decided that utilities needing so-called pollution credits initially will get them for free, rather than having to buy them from other utilities.

"We were very pleased, given the possibilities, including the possibility at one point of increasing rates as much as 30%," Glendale Water & Power General Manager Glenn Steiger said.

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Ron Davis, head of Burbank Water & Power and president of the California Municipal Utilities Assn., said the decision averted a "double burn."

The state already is imposing strict timelines for conversion to solar and other non-polluting power sources under a bill signed in 2006 by Gov. Arnold Schwarzenegger, and that requires significant investment by utilities. Forcing some agencies to buy credits on top of that would have been unfair, Davis said.

Instead, Davis said, "We will do cap-and-trade in California, and not have rate shock to consumers."

The air board will allow free credits for the first three years of the program, which begins to take effect in 2012. By 2020, the state's goal is to reduce greenhouse gas emissions by 15%, returning them to 1990 levels.

If the air board had put in place a bought-credits system, Davis said, Southern California municipal suppliers likely would have had to pay substantial sums to Northern California utilities, such as Pacific Gas & Electric and the Sacramento Municipal Utility District, which have access to hydroelectric power from rivers.

During the rulemaking process, Steiger said, Burbank and Glendale "put significant resources in place in order to have our opinion heard."

Davis credited the Los Angeles Department of Water & Power for playing a pivotal role in persuading California Air Resources Board Chairman Mary Nichols and others to steer clear of a paid-credits program.

"L.A. DWP gets lots of bad ink," Davis said, referring in part to coverage of financial disputes between the utility and the city of Los Angeles. "But L.A. DWP was instrumental in getting a fair outcome here."

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Schiff spends day on other side

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