Fuel Price Increase Bill Gets Committee OK

JopKillerA California Chamber of Commerce-opposed “job killer” bill that increases the cost of business and creates regulatory burdens throughout the state passed a Senate policy committee this week.

SB 350 (de León; D-Los Angeles) mandates a 50% reduction in the use of petroleum fuel, requires half the state’s electricity to come from renewable sources, and mandates that energy efficiency in existing buildings be increased by 50%—all by 2030.

The CalChamber urged the Senate Energy, Utilities and Communications Committee to reject SB 350 as setting an arbitrary and unrealistic reduction of petroleum use, increase in the current Renewable Portfolio Standard and increase in building energy efficiency without regard to the impact on individuals, jobs and the economy.

Concerns raised by several committee members mirrored CalChamber objections, including the bill’s potential impact on fuel availability and cost, job displacements, and leaving decisions with potent economic consequences to a regulatory agency.

Broad Authority Undefined

SB 350 provides broad and undefined authority to the California Air Resources Board (CARB) to adopt regulations, standards and specifications “in furtherance of achieving a reduction of petroleum use in motor vehicles by 50% by January 1, 2030.”

The bill does not specify whether CARB should adopt and implement policies that have an impact on the demand for petroleum fuels, or whether it should adopt and implement policies that affect the supply of transportation fuels. SB 350 provides a blank check delegation of authority to CARB, and in doing so, gives no consideration to the cost or job loss associated with this yet-to-be-determined regulation.

Fuel Supply, Cost

Most of California’s businesses and families rely on petroleum for day-to-day transportation needs. SB 350 could compromise the availability of transportation fuels.

The California Energy Commission reported in its 2014 Integrated Energy Policy Report that 92% of all transportation fuels in California are made up of petroleum. Businesses rely on petroleum to transport goods and people, and it is unclear how the arbitrary goal in SB 350 will be met. Will there be a 50% straight reduction in the production of petroleum in the state? Will we have to ration petroleum to achieve the 50% reduction? At what cost?

In addition to the 50% reduction in petroleum use, SB 350 seeks to increase the current Renewable Portfolio Standard from 33% to 50%, as well as increase energy efficiency in buildings to 50%. Both these policies will significantly increase costs to ratepayers.

California’s energy price per kilowatt hour is among the highest in the nation and the state’s energy efficiency standards are among the strongest. Mandating upgrades to meet increased energy efficiency standards while increasing the cost of energy will make California businesses less competitive.

Key Vote

SB 350 passed Senate Energy, Utilities and Communications on a vote of 8-3.

Ayes: Hueso (D-San Diego), Hertzberg (D-Van Nuys), Hill (D-San Mateo), Lara (D-Bell Gardens), Leyva (D-Chino), McGuire (D-Healdsburg), Pavley (D-Agoura Hills), Wolk (D-Davis).

Noes: Fuller (R-Bakersfield), Cannella (R-Ceres), Morrell (R-Rancho Cucamonga).

The bill will be considered next by the Senate Environmental Quality Committee.

Staff Contact: Amy Mmagu