Residential customers of the state's three largest utilities will see a "climate dividend" on their utility bills in 2013 as the result of a proposal adopted Thursday by the California Public Utilities Commission.
The automatic refund, expected to be $20 to $40 every six months, will automatically appear on consumer bills. The first credit should appear in July 2013.
Last month, California launched its first auction of greenhouse gas emission permits, marking the nation's first effort to put a price on carbon pollution. A ton of carbon sold for $10.09 at the auction, just slightly above the $10 floor price established by regulators, according to data released by the California Air Resources Board.
Utilities like PG&E were given free carbon permits for the first year but had to agree to sell those permits in the auction. State legislators vowed that some proceeds from the sale of those permits and from future sales had to flow back to ratepayers in some form.
"This sets an important precedent," Commission President Michael Peevey said before the unanimous vote. "It's the first time in the history of cap-and-trade where the value of allowances are flowing back to households."
The so-called "climate dividend" is expected to offset expected increases in the prices of other goods and services. The cap-and-trade system forces power plants and other industries to pay for emitting greenhouse gases or invest in ways to reduce those emissions, and many expect wholesale electricity prices to rise as a result.
The climate dividend will be equally spread among all residential customers of PG&E, Southern California Edison and San Diego Gas & Electric, regardless of how much electricity a customer uses.
"Everyone gets the same dividend," said Scott Murtishaw, an energy adviser to Peevey. "It's a way to compensate households for the fact that the price of milk might go up at the corner store and that the price of gas will go up."
Unlike some votes of the five-member commission, this decision had widespread support from utilities and consumer advocates.
"We are supportive of the proposal," said Joe Como of the CPUC's Division of Ratepayer Advocates. "It appears to strike a good balance between supporting a carbon market and minimizing the cost burden to residential and small business customers."
The total amount of money to be returned to ratepayers between 2013 and 2020 is expected to range from $5.7 billion to $22.6 billion.
Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.