The California Public Utilities Commission (CPUC) has approved requests by the state's major energy utilities to maintain (and in some cases expand) funding for certain programs designed to aid in the development of low emission vehicles (LEV) and infrastructure. However, the CPUC approved less than the total requested by the state's energy utilities and stressed that ratepayer funding should not be used to support utility involvement in the competitive transportation market. Recent action by the state legislature revoked the CPUC's express discretion to establish special incentive tariffs for the use of natural gas and electricity as vehicle fuels.

The CPUC also lost its power to permit natural gas

utilities to construct refueling stations, support vehicle conversions centers, offer incentives for vehicle conversions or purchase of factory equipped natural gas vehicles, or pass the costs of such programs on to ratepayers.

The newly approved plans were developed pursuant to a set of guidelines set forth in a 1993 decision (see Re Utility Involvement in the Market for Low-emission Vehicles, 145 PUR4th 243 (Cal.P.U.C.)) where the CPUC ruled that utilities would be permitted to charge ratepayers for the reasonable costs of LEV programs if the utility could demonstrate that a given program would fulfill one or more of its "traditional utility responsibilities."

In applying the guidelines to specific programs, the CPUC found that the possibility that a market for such vehicles would increase system throughput was not sufficient justification to support ratepayer funding. The CPUC also commented that its pending consideration of options for restructuring the electric industry created uncertainty about long-term treatment of electric vehicle program costs in rates. Re Low Emission Vehicles, Investigation 91-10-029, Rulemaking 91-10-028, Decision 95-11-035, Nov. 21, 1995 (Cal.P.U.C.).

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