While California has moved forward with the most aggressive climate-related targets in the world, the failure of the state legislature to extend the Public Goods Charge (PGC), a key mechanism for funding renewable energy RD&D and energy efficiency programs, may undercut the state’s capacity to reach its ambitious climate goals. With the PGC expiring on January 1, the California Public Utilities Commission (CPUC) has stepped in, but major questions about the future of the charge remain. Today’s GR Energy and Climate Brief assesses the future of this key financing mechanism and its implications for California.

Due to the holidays, our next brief will be published on Tuesday, January 10, 2012. We wish all of you a wonderful holiday season and a healthy, happy and prosperous New Year.

Though California has distinguished itself as the most aggressive state in the nation in passing legislation, the failure of the state legislature to extend the Public Goods Charge (PGC) - a key mechanism for funding renewable energy RD&D and energy efficiency programs - may severely undercut the state’s capacity to reach its ambitious climate goals. With the PGC set to expire on January 1st and state legislators unable to secure the necessary two-thirds majority needed for renewal, the California Public Utilities Commission (CPUC) has stepped in and may impose a similar, but re-branded charge – not, however, without questions over its authority to do so. Today’s GR Energy and Climate Brief assesses the future of this key financing mechanism and its implications for California.

An Under-Funded Mandate: While the California Legislature has aggressively backed electricity and emissions reduction targets and an RPS of 33% by the end of the decade, it failed to extend the PGC - one of the funding mechanisms instrumental to achieving these goals. On average, the PGC has generated $73 million annually for renewable energy, $70 million for RD&D, and approximately $228 million for energy efficiency. Without the continuation of such a charge, RD&D in particular would slow or stagnate; more specifically, existing law requires that 79% of the monies collected be used for multi-year, consumer-based programs to foster emerging technologies in distributed generation applications. It is these nascent companies and their would-be customers that stand to lose the most as there is no replacement funding mechanism should the charge be eliminated. With Federal ARRA funding drying up and other renewable energy tax credits set to expire, charge revenues remain vital to advance early stage technologies that are not yet able to attract market funding but will be essential to achieving the state’s GHG and efficiency goals.

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