The structural problem: rate design discourages decarbonization
The investments that most reduce industrial emissions — electrifying process heat, deploying carbon capture, self-generating from recovered waste heat — all increase a facility's electricity use, often dramatically. California's rate design makes that a penalty: every incremental kilowatt-hour carries the highest industrial price in the West plus a stack of nonbypassable charges unrelated to the cost of serving the new load. CLECA's recent filings make the point bluntly, and it is a diagnosis NRDC and Sierra Club have independently reached: current rate design materially discourages the industrial electrification the state's climate strategy assumes.
The affirmative agenda in R.26-04-009
In the Advanced Electric Rate Design rulemaking (R.26-04-009), CLECA is pursuing structural fixes: implementation of AB 2109's process heat recovery exemption on an expedited parallel track; consideration of equipment-specific, submetered marginal-cost rates for incremental beneficial-electrification load; nonbypassable-charge exemptions or time-differentiation for that load; and the addition of Emissions-Intensive, Trade-Exposed (EITE) customer retention as a scoped issue, citing AB 1207's mandate to prevent emissions leakage. The argument is that rate-design reform — not new ratepayer-funded incentive programs — is the durable path to industrial decarbonization.
Protecting decarbonizing customers in Rule 30
In PG&E's Electric Rule 30 proceeding (A.24-11-007), CLECA argues that heightened risk-mitigation provisions designed for speculative new load — including a seventy-five percent minimum demand charge from year one — should not be applied to existing industrial customers who are adding load to decarbonize or expand established operations. CLECA's asks are an exemption for what it calls Decarbonizing and EITE Existing Customers, preservation of existing Rule 15/16 procedures, and continued availability of exceptional-case treatment. The Commission's own Electric Rate Design Principles 3, 4, 8, and 9 (D.23-04-040) support differentiating customers by their actual risk profile: an established facility electrifying a gas-fired process is not a speculative load that may never materialize.
Why retention is climate policy
Keeping energy-intensive production in California, under California's environmental standards and carbon price, produces better global outcomes than pushing it to jurisdictions with weaker rules and dirtier grids. That is the leakage logic CARB's EITE framework recognizes — and CLECA extends it to rate design: a facility that leaves does not decarbonize, it relocates its emissions. Every element of this agenda, from AB 2109 to Cap-and-Invest allocation to the Manufacturing Decarbonization Incentive, aims at the same outcome — making the electricity-intensive path to lower emissions investable here.