Utilities bought or were given carbon credits last year under California's cap and trade system. Those that increased their supply of green energy had fewer emissions. That meant they had more credits to sell on the cap and trade market. The billion dollars in sales will go to rate payers for investor-owned utilities.
Edward Randolph with the California Public Utilities Commission says the amount of the discount depends on the progress each utility made toward using more green energy.
"PG&E's customers' credits will be a little bit lower because PG&E starts with a fairly clean portfolio where some other smaller utilities, the credit is much higher because they had a higher dependence on coal in the past."
Customers of Liberty Utilities, Southern California Edison, San Diego Gas and Electric and Pacific Power will also receive the credit.
"We hope that actually the individual homeowners, the individual rate payers will use that credit themselves to invest in energy efficiency or other measures that they can take to help reduce their own carbon footprint."
About 11 million residential and about one million small business customers will receive the credit.
It will appear on the April and October bills this year and next.