While natural gas interests in California are wary about several proposed laws aimed at transmission pipeline operations in the wake of the San Bruno explosion last year, Pacific Gas and Electric Co. is raising a red flag on another gas issue that is tied to some of the current proposals to begin cutting into a $25 billion state budget deficit.

Gov. Jerry Brown and lawmakers are in the midst of an intense fight over how much and what to cut in state spending, and the utility ratepayer-funded natural gas energy efficiency program has become a part of a state legislative budget committee proposal. It calls for taking $155 million from the utility gas surcharge fund for the state's general fund, money collected to support the energy efficiency efforts.

Late on Wednesday Brown's office reported that positive bipartisan meetings were taking place in Sacramento. Following "positive and productive" budget talks, Brown spokesman Gil Duran confirmed that Brown has continued to "engage in positive and productive budget discussions with legislators on both sides of the aisle," and he has asked to have the two Democratic leaders in the legislature temporarily delay any vote on the budget in order "to allow more time to find common ground and to put the state's finances back in balance.”

That may provide PG&E and other parties the time needed to turn back the part of the budget proposal to take the gas efficiency funds. Separately, the California Public Utilities Commission postponed action on proposed changes in the risk/reward incentive mechanisms for the utilities' energy efficiency programs.

On Tuesday PG&E's Edward Bedwell, vice president for government relations, wrote members of the state legislature, warning that the budget idea to shift the utility energy funds is "bad for the environment, misleads California utility customers and is illegal."

PG&E is telling the legislature that raiding the energy efficiency funds will make it more difficult for the state to meet its environmental, energy and economic goals. The utility estimated that its programs alone save consumers about $240 million annually and in 2009 cut greenhouse gas (GHG) emissions by 161,103 tons.

"Energy efficiency is the most cost-effective means of attaining [AB 32] GHG emissions reductions," Bedwell said. "As California's population and economy grows, meeting our shared climate change law GHG reduction goals becomes more expensive and difficult if our funding and commitment to energy efficiency is reduced."

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