California Approves “Carbon Adder” for Electric Utility Plans

On December 16, 2004, the California Public Utilities Commission (CPUC) approved a requirement that a “carbon adder” be included in resource plans for three of California’s utilities, Pacific Gas and Electric Company, Southern California Edison, and San Diego Gas and Electric Company. The carbon adder explicitly takes into account the social cost of carbon emissions from electricity generation facilities when comparing prices of fossil fuel and renewable generation, as well as demand-side management investments. The carbon adder will be used for utility planning purposes only, and will not be assessed to consumers. Taking the cost of carbon into account will mean that a power source is considered more cost effective if it avoids a ton of CO2 emissions for $8 to $25. The CPUC based this range of costs on a number of studies, including the Idaho Power Company’s 2004 resource planning process, which assessed a carbon adder of $12.30 per ton of CO­2.

Press Release
Read the Decision (pdf)