Background

In 2001, California small business energy users faced electricity blackouts.  Today, we face high prices for electricity and rising prices for natural gas and transportation fuels.

For many small businesses, the cost of energy is viewed as “embedded” or non-controllable as an expense.  As these costs increase, firms must absorb the impacts with the end result a inevitable reduction in profits.  Small businesses directly in the bulls eye of rising gas prices can rapidly lose the ability to sustain themselves without making drastic operational adjustments. 

Small businesses are additionally impacted by energy prices due to the effect higher oil prices have on other commodities.  As other industries absorb higher oil costs, higher prices for raw materials are “passed through” and small firms are hit doubly hard because they often cannot negotiate down these costs and at the same time face resistance in raising their prices to make up the difference.

Small Business California has already acted decisively to address this problem on the “defensive” side of the ledger by successfully leading the effort to make sure California small business energy efficiency programs, offered mainly by the 4 large investor owned utilities, Pacific Gas & Electric, Southern California Edison, Southern California Gas and San Diego Gas & Electric, are providing real value for the millions of dollars that annually fund these efforts.  

Our involvement through service on the California Public Utility Commission approved Monitoring & Verification Panel that oversees small business efficiency programs helped to identify major areas of potential improvement which will lead to a more accurate counting of actual savings achieved by California firms. 

Again because of SBCal initiatives, all CA utilities will roll out small business targeted
 

On Bill Financing

On Bill Financing (OBF), mechanisms patterned after successful programs in New England.  OBF programs are designed to eliminate the “first cost” barriers for small businesses so that investing in energy efficiency can be quickly translated into a profit building enterprise.

OBF Overview, presented by Columbia University

One major reason why all California small businesses should be very interested in utility operated energy efficiency programs is because we are paying for these programs. There is a “PPP” line item on every energy bill that amounts to as much $40 per $1000 of energy consumed and the money we pay for these “Public Purpose Funds” is spent to create and operate small business energy efficiency programs in California. 

Looking ahead, California small businesses will be the key to creating the new enterprises that will help to solve our energy cost problems.  SB-Cal is working with CA legislative staff to help deliver solutions.  For instance, new national regulations are mandating the use of cleaner fuels in many states including California beginning in 2006-0.  MBTE is now banned in most states so a growing market for bio-diesel additives and ethanol is guaranteed.  SB-Cal will continue working to make sure California small businesses have the best possible opportunity to grow the feedstocks and develop the refining capacity that will make our state a net exporter of these fuel additives.  As an example, we’re working with regional recycling experts to focus on creating a micro-refinery for used vegetable oil.  A ten person firm can run a one acre operation that produces over 5 million gallons of vegetable oil based bio-diesel fuel per year.

Small Business California will be supporting appropriate CA Senate and Assembly energy related bills as they are introduced when those legislative efforts are clearly beneficial to our membership base.