Capitol Alert

Utilities already regulated under cap-and-trade urge Brown to hold fast

With oil industry groups intensifying pressure on Gov. Jerry Brown to delay expanding California’s cap-and-trade program to vehicle fuels in 2015 – a measure they say will result in higher gas prices – utilities already regulated under the program are urging Brown to go forward with the expansion.

In a July 11 letter to Mary Nichols, chairwoman of the California Air Resources Board, Sempra Energy, the parent of San Diego Gas & Electric Co. and Southern California Gas Co., said the utility sector “already shoulders the responsibilities and costs” of reducing greenhouse gas emissions under the program and that delaying the expansion to vehicle fuels would be unfair.

“We believe that it is appropriate for the transportation fuel sector, which generates nearly 40% of all GHG emissions, to carry its fair share of the cost and responsibility for GHG reductions,” the letter said.

The carbon market is the centerpiece of Assembly Bill 32, landmark greenhouse gas reduction legislation passed in 2006, and utilities and big industrial polluters have been required to reduce emissions or buy allowances since 2012.

In his letter to Nichols, Sempra’s Eugene “Mitch” Mitchell argued delaying the program’s expansion to vehicles “prolongs an economic inequity among energy resources and gives an unfair price advantage to petroleum fuels compared to clean transportation alternatives such as electricity and natural gas.” The letter said delaying the program would also undermine the development of clean fuel vehicles.

The California Independent Oil Marketers Association, Republican lawmakers and some Democrats have pressed Brown in recent weeks to delay expanding the program to transportation fuels. The Western States Petroleum Association has said it could cost oil companies 12 cents or more a gallon to buy carbon credits for the fuel they sell in California each year, and industry analysts have said that cost is likely to be passed on to consumers.

Earlier this month, Assemblyman Henry Perea, D-Fresno, introduced legislation that would delay the program’s expansion.

The Brown administration has said it plans to go forward with the expansion in January. The Democratic governor expects to generate about $550 million in proceeds from cap-and-trade auctions this budget year, with funds earmarked for high-speed rail and other projects.

Related stories from Sacramento Bee