California Gov. Jerry Brown is unleashing what may be a major political battle in the waning days of the state legislative session over whether to extend an energy surcharge that provides up to $400 million for research and development (R&D) in energy saving and alternative energy. Brown is trying to make the case that the $1-2 monthly charge on residential utility bills is a job-creating mechanism.

The initiative on the energy surcharge is an adjunct to broader job-creation programs and tax reforms/incentives that Brown and state lawmakers rolled out Thursday. The effort, which was part of Brown’s original budget proposal to the lawmakers earlier this year, involves tax credits for small businesses that add jobs and up to $1 billion in tax credits for businesses investing in manufacturing equipment.

Draft legislation on the energy surcharge, dubbed the Clean Energy, Jobs and Investment Act, has been hammered out with utilities, labor unions, environmentalists and legislative staff members in recent days, according to a report in Thursday’s Los Angeles Times. The bill attempts to reauthorize the charges collected by private-sector utilities and then allocated for various projects by the California Energy Commission (CEC).

“There is no bill number yet, just language from the governor’s office,” said a Sacramento-based utility executive whose company still is not supporting the proposal. “We’re working with the governor’s office on some changes.”

The utility representative said a main concern is that if the surcharge funds are extended that they be protected from being diverted by lawmakers to help resolve budget shortfalls. Reportedly, California lawmakers diverted $155 million of gas surcharge funds to help plug a hole in the general fund budget earlier this year.

Under the Brown-backed proposal, $250 million of surcharge revenues would be allotted annually to various energy efficiency programs. Another $75 million would be directed at renewable energy development, and the remaining $75 million would support alternative energy and efficiency R&D efforts.

During the past 14 years of the surcharge’s existence, the CEC has used more than $700 million for research that it calculates has saved consumers in the state more than $1 billion. California contends that it has kept its per-capita energy consumption essentially flat over the past 30 years.

State Sen. Alex Padilla, who heads the Energy, Utilities and Communications Committee, has changed his earlier opposition to extending the utility surcharge to support the governor’s initiative, but some third-party sources are skeptical. The nonpartisan Legislative Analyst’s Office questioned the value of the programs.

The independent analysis still concluded that the energy research should continue beyond the expiration date at the end of this year. Earlier this year, a related measure that would extend the surcharge to 2020 passed the state Assembly with 58 of a possible 80 votes.

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.