The California Public Utilities Commission (CPUC) Thursday rejected a request from the state’s major private-sector utilities to reduce the burden on businesses that pay a disproportionate amount of the surcharge on monthly natural gas utility bills that goes for public purpose programs, such as those that assist low-income customers with their bills.

The regulators’ action rebuffed the utilities’ proposal to shift about $90 million of gas utility rates annually from business customers to residential customers. It was proposed to be phased in during the next three years. Noting that it will look at alternative methods to provide future relief to business customers, the CPUC determined there was no evidence now that this portion of utility rates adversely affected the competitiveness of the state’s gas charges.

While acknowledging that the nonresidential customers pay more than their fair share of the surcharge and California’s cost of doing business is higher than most states, the CPUC nevertheless said the utilities — Pacific Gas and Electric Co., Southern California Gas Co. and San Diego Gas and Electric Co. — did not provide a strong enough case to support making a change in how the costs are allocated among customer groups.

All customers pay a portion of their monthly bills to support at least eight separate public purpose programs, including the California Alternate Rates for Energy (CARE) program for qualifying low-income households; energy efficiency programs; direct assistance for low-income customers; research/development programs, etc. CARE represents about half of the surcharge.

“It should be noted that some of the programs can be of benefit to the business sector,” said CPUC Commissioner Timothy Alan Simon. “They can benefit from energy efficiency programs, research and development, and self-generation/cogeneration programs.”

Various cost allocation methods are applied to the different programs, but for the most part, the CPUC has used a simple “equal-cent-per-therm” method, so customers using more are paying more of the public purpose program costs. The utilities proposed one method be applied — a uniform equal percent of base revenue allocation, which was supported by the state’s major business organizations, including the California Manufacturers Association, California League of Food Processors and others.

They argued that the nonresidential customers represent about 5% of the total private-sector gas utility customers, but pay nearly half of the costs of the public purpose programs.

Nevertheless, Simon said more recent data that shows the residential customers struggling with the recession, and markedly lower natural gas prices are factors the regulatory commission took into consideration in staying with current cost allocation methods. “These are legitimate considerations that warrant a more conservative approach to avoid incremental burdening of residential customers when there is little record of support for doing so,” he said.

Simon said he will explore the feasibility of a rulemaking that can provide some adjustments to the allocation methods and in addition, “shine more light on existing outreach programs, such as CARE.”

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