Our partners at California Watch have an intriguing story today questioning the effectiveness of Pacific Gas and Electric Co.’s ClimateSmart program, which offers the utility’s customers a chance to go “carbon neutral” for a price.

Sign up with ClimateSmart, and you’ll pay a little extra for electricity and natural gas, about $5 per month for the average customer. PG&E then spends the money on projects that offset carbon dioxide emissions, such as restoring or preserving forests.

California Watch examines one of those projects and argues that ClimateSmart participants are effectively paying twice to save the same trees, because the group that owns the forest bought it with the help of California taxpayers.

But there’s an interesting tangent to the story. ClimateSmart, launched with great fanfare in 2007, is losing customers.

About 30,000 people participate in the program, or roughly .6 percent of PG&E’s 5.1 million electricity customers. In 2008, that number was just under 31,000.

When the California Public Utilities Commission approved ClimateSmart, 3.3 percent of the company’s customers — about 168,300 — were expected to sign up within three years. ClimateSmart never came close.

Read ClimateSmart’s 2010 annual report, and you’ll see that PG&E blames the anemic numbers in part on the process of extending the program.

It was originally conceived as a three-year experiment, but PG&E asked the commission to extend it through the end of 2011. Critics were already attacking ClimateSmart as a waste of cash, so the commissioners ordered PG&E not to spend any of the program’s money on marketing until they reached a decision. That process took from November of 2009 through October of 2010 — hence, the dearth of new customers in 2010.

Fair enough. But ClimateSmart appears to have been losing customers before the CPUC clamped a hold on marketing. At the end of 2008, 30,948 customers were enrolled, according to the 2008 annual report. By the end of 2009, that number had slipped to 30,045.

Will this experiment continue? Stay tuned.

— David R. Baker