Carbon Reduction Surcharge

The Carbon Reduction Surcharge will be deposited into a Renewable Energy and Efficiency Trust Fund that is expected to create 18,000 jobs over the next ten years and the foundation for a local green economy.

LOS ANGELES – Mayor Villaraigosa announced a proposal for a Carbon Reduction Surcharge as part of the Energy Cost Adjustment Factor (ECAF) rate action undertaken by the Board of Water and Power Commissioners this week. This Surcharge will change the way Los Angeles achieves its renewable energy goals while spurring job creation in the City.

“For Los Angeles to be the cleanest, greenest city, we need participation from every Angeleno. This carbon reduction surcharge empowers every person in this city to play a role in building our green future and placing Los Angeles at the forefront of the green revolution,” Mayor Villaraigosa said. “By investing in renewables and energy efficiency, we are building the foundation for an emerging industry that will attract good paying, green collar jobs to Los Angeles.”

The carbon reduction surcharge serves as both a financial incentive and an investment tool. The increase will incentivize stakeholders to use alternative energy, and therefore reduce Los Angeles’ dependence on fossil fuels. However, the carbon surcharge will not drastically affect the average rate-payer; their average monthly bill will increase by less than $2.50.

The funds from the surcharge will be also be deposited into a Renewable Energy and Efficiency Trust Fund that is expected to generate 18,000 jobs over the next ten years and help lay the foundation for a local green economy. The Trust Fund will specifically invest in two types of programs: energy efficiency and a solar feed-in tariff.

The energy efficiency program will train and deploy Angelenos to conduct efficiency retrofits throughout the City. Working in conjunction with the LA Community College District, the Community Development Department and the Joint Training Institute, the LADWP will recruit entry-level workers, train and deploy them in teams to conduct energy audits and energy efficiency retrofits. These energy efficiency retrofits can save businesses and home-owners money on things like lighting, air-conditioning, and refrigeration. The program can start as early as winter of 2010.

The solar feed-in tariff (FiT) will allow the owner of an in-basin solar facility to sell electricity directly to the LADWP that they will feed directly into the LADWP’s electric grid. The LADWP will pay for the energy through a 20 year power-purchase agreement. The FiT will create jobs in both the public and private sector in manufacturing solar equipment, installation and maintenance, program administration and upgrading utility grids while also reducing electricity use during peak hours, reducing transmission congestion and accelerating deployment of renewable energy resources.

“After carefully studying this policy for many months, the Los Angeles Business Council strongly supports an ambitious Feed-in Tariff (FiT) program in our region,” said Los Angeles Business Council President Mary Leslie. “A well-designed FiT program would unleash a major source of clean, locally generated energy to meet Los Angeles’ renewable goals, providing incentives and cost-savings for businesses, public institutions and residences to produce solar energy and sell it back to our utility.”

To ensure that the Carbon Reduction Surcharge is transparent for ratepayers and stakeholders, a neutral rate-payer advocate will be appointed and placed in the Office of the Controller to oversee it. The Carbon Reduction Surcharge will appear as an itemized charge on the customer’s bill.