California Climate Credit to Provide $800 Million in Electric Bill Savings for Over 11.5 Million Households

The California Public Utilities Commission announced on Oct. 3 that over 11.5 million residents will receive reductions in their October electric bills through the California Climate Credit. In total, California will pay over $800 million for residents and $82 million for small businesses.

The credit is funded by proceeds from the Cap-and-Trade program, which establishes a declining limit on major sources of greenhouse gas emissions, creating an economic incentive for investment in cleaner, more efficient technologies. The credit is automatically applied to utility bills twice a year. Most residents receive a natural gas credit in April, and electric credits in April and October. In April of this year, California paid $1.6 billion for electricity bill credits. The climate credit effectively directs payment from entities that emit large amounts of greenhouse gases toward residents and businesses.

The average credit on electric bills in October is around $71. The credits, ranging from $32 to $174 vary by utility and market prices for emission allowances. For example, Pacific Power consumers receive the highest credit at $174.25 while Bear Valley customers receive $32.24.

California’s latest quarterly auction of carbon permits sold out with allowances for the current year clearing at $30.24 per allowance, an 18.3 percent drop compared to the previous auction. Auction prices have declined since the record high set in February, indicating possible market uncertainty surrounding the future design of the cap-and-trade program. The California Air Resources Board is considering revisions to regulations governing the cap-and-trade program.