CPUC Approves Significant Energy Rate Reduction to Attract Jobs

FRESNO – The California Public Utilities Commission (CPUC) today, in the culmination of a 19-month proceeding, approved two new PG&E rates especially designed to attract jobs to California.  An unprecedented 40 California cities and counties (the Local Government Parties or LGP) who have supported PG&E throughout this process applaud the CPUC for this decision.

Fresno Mayor Ashley Swearengin

“For us, this process has always been about jobs,” Fresno Mayor Ashley Swearengin said.  “Areas of high unemployment in a state that is perceived as wealthy pose a particular problem for local policy makers.  With this substantial step forward by the Public Utilities Commission and PG&E, we see not only the addition of a significant new tool to combat joblessness, but also meaningful new engagement by the PUC and PG&E with our communities.”

The Rates

In today’s vote, the CPUC approved a PG&E application for two economic development rates: a Standard-EDR to apply in any part of the PG&E service area and an Enhanced-EDR targeted at areas of high unemployment.

High unemployment here means at least 125% of the state average unemployment level.  These new rates can only be offered to a business locating new jobs in California or a struggling business that would otherwise move out-of-state or close operations altogether because of high power costs. The Governor’s Office of Business and Economic Development (GO-Biz) will be directly involved in determining customer eligibility.

The Enhanced-EDR offers a 30% reduction in qualifying businesses’ electric bills for 5 years.  (The Standard-EDR offers a guaranteed 12% reduction, itself an improvement over past incentive rates.)  This reduction is aimed squarely at locations outside California that compete with California for jobs.

“We have higher headline rates than neighboring states,” said Bobby Kahn, executive director of the Madera County Economic Development Corporation.   “While there may be good reasons for that, the headline still hurts us when competing for new jobs.”  He added:  “That’s why this significant reduction was so important.  It helps to level the playing field.”

During this process, the CPUC held hearings and the LGP provided expert witness testimony that “only a meaningful reduction in electric rates would be effective as an incentive for new businesses.”  The LGP supported PG&E’s calculations that resulted in the 30% reduction, for the target high-unemployment areas, as both meaningful and affordable.

The Process

This long process began with visits by Fresno Mayor Swearengin and her team to PG&E and the CPUC in 2011 and was followed up by PG&E’s Application.

Approval for the Enhanced-EDR took time because the CPUC process had to make sure that the reductions would be “self-funding” and not pass costs on to non-participating ratepayers.  The new rates will, in fact, benefit all ratepayers by adding new customers who will share in paying for the fixed costs of the PG&E system.

“All of us in the LGP, from the Central Valley to the Northern Counties, hope that this is merely the start of a stronger engagement with the vital work of the CPUC,” Swearengin said.