LA LOOKS AT CARBON TAX

Villaraigosa considers a carbon surcharge for DWP customers; The extra revenue would be used to move the utility from coal to wind, solar and geothermal sources of energy. The mayor wants 20% of the agency's power to come from renewables by December.
David Zahniser, February 28, 2010 (LA Times)

"Los Angeles Mayor Antonio Villaraigosa is moving ahead with a plan requiring customers of the Department of Water and Power to pay higher bills to help the utility tap more sources of renewable energy.

"While Villaraigosa has been talking publicly about the need for the city to tighten its belt, his advisors have been working behind the scenes to gauge public support for a monthly DWP "carbon surcharge" of $2.50 -- one that would move the utility away from coal and toward wind, solar and geothermal sources of energy."

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"Unless the DWP secures the extra revenue, Villaraigosa will not meet his goal of having 20% of the utility's electricity come from renewable sources by Dec. 31…[The proposed surcharge] could be higher or lower than the $2.50 proposal included in a voter survey commissioned by the mayor…[that] concluded that 64% of respondents would support a $2.50 surcharge…[This could influence] the City Council, which will probably vote on a new DWP surcharge in coming weeks…Villaraigosa promised to end the DWP's reliance on coal by 2020 and ensure that the agency's renewable-energy portfolio reached 40% the same year…Since then, the mayor and council members have spent much of their time on a plan to eliminate a $484-million budget shortfall, which could result in the layoffs of thousands of city employees.

"Councilwoman Jan Perry said it would be "hard to explain" why the city is scaling back on services, including road repairs and libraries, while asking DWP customers to absorb more expensive bills…Villaraigosa aides have already met twice with Perry, who heads the council's Energy and Environment Committee…[emphasizing] the poll…"

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"…[A] city-hired consulting firm released a report on the DWP's existing surcharge, known as the Energy Cost Adjustment Factor…[which] pays not just for the fluctuating cost of renewables, but also other energy sources, such as coal and natural gas…PA Consulting recommended that the City Council immediately increase that surcharge eightfold, then begin the process of restructuring rates so that customers who use less power pay comparatively less.

"One environmental advocacy group favored a "carbon tax" but doubted that the DWP was prepared to pursue Villaraigosa's newest renewable-energy promise…[Polling data showed] that 85% of respondents favored a reduction in electrical rates for those who use energy-saving appliances, while 84% backed tax incentives for companies that invest in clean energy technologies…[O]nly 52% favored a surcharge or fee to cover the cost of converting the DWP from coal to renewable sources…[H]owever, 64% of respondents said they were willing to pay a $2.50 surcharge to move the DWP off of coal…[but a] $2.50 surcharge would get Villaraigosa only part of the way toward his 2020 renewable-energy goal…"