Calif. global warming law will have little impact on bottom line, study says

Oct 7 - McClatchy-Tribune Regional News - Dean Calbreath The San Diego Union-Tribune

California's global warming law will have minimal impact on the state's small businesses, adding mere pennies to their monthly energy bills, according to a study released today by the Brattle Group, an economic analysis firm in Los Angeles.

The law -- formally known as the Global Warming Solutions Act of 2006 -- requires that California sharply cut back its reliance on fossil fuels over the next decade.

The law has become a focal point in the November election. Two Texas-based oil companies -- Tesoro and Valero -- are financially backing Prop. 23, which would postpone the implementation of the law until the state's jobless rate drops below 5.5 percent for four consecutive quarters. It has done that only three times since 1980.

In their advertisements, Prop. 23's backers describe the law as "a new energy tax" that will result in "a 60 percent increase in electricity rates."

But the Brattle study -- focusing specifically on small businesses -- said the law would impose no tax, either directly or indirectly, on small businesses. The study also found that even though energy prices will go up slightly under the proposition, the impact will be negligible, since energy costs typically total just 1.4 percent of costs in the state's 700,000 small businesses.

As an example, the study cited Mercado International 2000, a mid-sized supermarket and tortilla production in Chula Vista. The study picked the market specifically because it uses a greater proportion of its budget on energy, totaling 2.1 percent of its budget, than the average for small businesses in the state. The study projected that the law would increase costs at most by 0.1 percent -- "so small to be virtually unnoticeable to customers." The price of a year's supplies of tortillas, for instance, would rise from $30 to $30.03.

Gerardo Herrera, who runs the Mercado, said the study showed that he could continue to offer affordable products "while reducing our own energy use and helping the state meet its clean energy and climate goals."

Gov. Arnold Schwarzenegger, gubernatorial candidates Jerry Brown and Meg Whitman, and the state's major utilities, including Sempra Energy, have all voiced their opposition to Prop. 23. The opponents argue that the global warming law is already helping create new businesses in California, focusing on energy-saving technologies and services.

Thomas Ackerman, vice president of Spirit Graphics in Chula Vista and a member of the California Business Alliance for a Green Economy, said the study "confirms what I already knew: AB 32 won't hurt small businesses, and in the long term, it will be good for California companies."

Ackerman said he has already taken a number of modest steps to improve energy efficiency in his business, "all of which have benefited my bottom line and given me a competitive advantage."