Customers of California’s three private electric utilities would get rebates for conservation this summer under a proposal by Sen. Don Perata, D-Alameda.
The plan is intended to limit the state’s expected energy shortfall this summer by offering $1 billion in cash benefits for residents and businesses who reduce consumption. The money would come from the state’s estimated $8 billion surplus.
As the proposal stands, most customers would get 10 cents for each kilowatt hour saved when compared to the previous year’s usage. The program would run from May 1 to September 30.
Sacramento Municipal Utility District customers and those in other public service areas would be ineligible.
Perata said offering tangible benefits for using less electricity would give real incentives to the customers of the struggling private utilities without raising rates. Public service announcements so far have tried to encourage conservation, but have not done the trick, he said.
“I’ve been ringing doorbells the last three to four weeks in my district, and it’s become very clear that people are very skeptical about the true nature of the crisis,” Perata said. “People also did not have a true grasp on why a concerted conservation effort on their part would benefit them.”
Paying 10 cents for a kilowatt hour saved is cheaper than buying a newly generated one for 25 cents or more on the spot market, said Perata, a member of the Senate energy committee. At the same time, he argued, the reduction in demand would push market prices downward.
Perata also said he sees his program as one of the few that could have an immediate effect. He said conservation programs and additional generators currently being considered will be unable to ward off this summer’s problems.
The plan marks one of the first during the energy special session to offer direct consumer benefits for energy conservation. Bill Magavern of the Sierra Club applauded the bill, adding that his organization has considered similar ideas in recent weeks. He called the rebate proposal “one of the best ways to save electricity this summer.”
It remains unclear how consumers under different scenarios would earn rebates. Typical residents would simply compare this year’s usage to last year’s. Those who have moved would compare their usage against that of previous tenants, Perata said. But a baseline has yet to be figured for those who have moved into newly built homes.
There are also questions of fairness, said Doug Heller of The Foundation for Taxpayer and Consumer Rights. Though he called Perata’s plan a “good tool” to reduce power purchased from outside generators, he noted that taxpayers in municipal districts like SMUD would pay for the rebates but have no opportunity to earn them.
Perata’s legislation is expected to be introduced this week once details are refined.