BILL ANALYSIS
AB 29 X1
Page 1
Date of Hearing: March 14, 2001
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Carole Migden, Chairwoman
AB 29 X1 (Kehoe) - As Amended: March 5, 2001
Policy Committee: Energy Cost and
Availability Vote: 14-0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes four new energy conservation programs and
augments an existing program under the direction of the
California Energy Commission. Specifically, this bill:
1)Appliance Grants . Directs the CEC to establish a grant
program for low-income persons and low-income housing
authorities and corporations to replace energy inefficient
appliances with models meeting federal efficiency standards.
2)Retrofit Grants and Loans . Directs the CEC to establish a
grant and low-interest loan program for low-income persons and
residential property owners and small businesses to retrofit
existing buildings with energy-saving improvements.
3)Small Business Refrigeration Loans . Directs the CEC to
establish a low-interest loan program for small businesses to
install energy-efficient refrigeration equipment.
4)Renewable Technologies . Augments an existing CEC program that
"buys down" or pays a percentage of the cost of consumer-based
renewable resource electricity generation systems.
5)Interval Meters for Small Business . Directs the CEC to
establish a program to reimburse qualified small businesses
for up to $800 of the cost of installing an interval meter (a
device that measures electricity usage in real time), if the
business reduces its electricity usage by not less than 10%
for the year following the date of installation.
FISCAL EFFECT
AB 29 X1
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The bill appropriates $450 million from the General Fund, as
follows (dollars in millions):
Appliance Grants $200
Retrofit Grants and Loans 100
Small Business Refrigeration Loans 75
Renewable Technologies 50
Interval Meters for Small Business 25
Total $450
COMMENTS
1)Potential Summer 2001 Energy Savings . In evaluating the
various energy conservation measures introduced in the special
session, a key consideration is whether the proposal offers
the potential for demand reduction in the summer of 2001, when
the prospect for shortages and blackouts is greatest
(particularly in the first part of the summer). In general,
proposals to augment existing conservation programs offer a
greater likelihood of immediate relief than proposals to
establish new programs. The CEC indicates that it would not
be able to implement the four new programs authorized by this
bill before the end of this fiscal year, and possibly not in
time to generate energy savings in the summer of 2001. The
augmentation to the existing renewable resources program in
this bill, however, could produce savings this summer -
although the CEC prefers the alternative approach incorporated
into AB 37X (Frommer) (see discussion below).
2)Appliance Grants . This bill appropriates $200 million to
establish a appliance grant program to help eligible
low-income persons (and housing authorities and corporations)
offset part of the costs of purchasing energy-efficient air
conditioners, heat pumps, refrigerators, freezers and washing
machines. This program would supplement several existing
appliance grant programs presently operated by the Investor
Owned Utilities (IOUs) and the Municipal Utility Districts,
which are not limited to low-income consumers. A recent CEC
study recommended that the CEC take over the IOU programs to
avoid the conflict-of-interest inherent in an IOU
administering a conservation program that reduces its revenues
AB 29 X1
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and profits. This finding was supported by several consumer
groups. The CEC cautions, however, that the specific rebated
amounts per appliance type specified in AB 29X would impair
its ability to design a cost-effective program. The CEC would
prefer the flexibility to establish grant amounts that could
be tiered to account for the availability of grants and
rebates in different service areas and the consumers' income.
A disadvantage of establishing a new program administrative
start-up time. An alternative approach would be to augment
existing IOU appliance grant programs. The Legislature may
wish to consider some combination of these two approaches.
3)Retrofit Grants and Loans . The bill appropriates $100 million
to establish a grant and low-interest loan program for energy
retrofits including, but not limited to, energy-efficient
siding, insulation and double-paned windows. Eligible
projects are limited to alterations, repairs and additions to
a home or building in existence on the effective date of the
act.
The committee may wish to consider whether additions should be
eligible for grants and loans, given that additions already
are required to comply with CEC building standards under
current law.
4)Renewable Resources . This bill augments by $50 million an
existing CEC program that provides rebates and other financial
incentives to consumers to install renewable resource
electricity generation systems of 10 kilowatts or less. At
least one-half of this amount would be allocated by the CEC
for photovoltaic technologies; the remainder would be
allocated for solar thermal electric, fuel cell technologies
that utilize renewable fuels, and wind turbines. The CEC may
provide grants of up to 30% of the cost of a system. Most
grant recipients are private residences, and the average grant
is approximately $6,000.
The CEC indicates that it presently has about $40 million
available for this program in the Emerging Renewable Resources
Account within the Renewable Resources Trust Fund (which is
continuously appropriated for this purpose). However, the CEC
has received an increase in grant applications in recent
months, and indicates the program would be able to spend
additional resources in the summer months.
AB 29 X1
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The CEC prefers the augmentation approach included in AB 37X
(Frommer), which also would augment the program by $50
million, but would allow the CEC to provide grants in excess
of 30% of the cost of renewable resource generation system, at
its discretion.
5)Interval Meters . The bill appropriates $25 million to
reimburse small businesses for up to $800 of the cost of
installing interval meters, which measure electricity usage in
real time. The CEC indicates, however, that the meters would
not give small businesses the incentive to conserve energy in
the absence of a peak load pricing schedule, which provides
the user with a financial incentive to shift load off peak.
Presently, peak load pricing is available only to large users,
in excess of 500 kilowatts, in the IOU and MUD service areas.
Moreover, the CEC indicates that the best target for achieving
additional conservation through peak load pricing would be
users in the 200 to 500 kilowatt range, regardless of whether
such users are small businesses. Many small businesses either
do not use significant amounts of electricity or have limited
ability to shift their loads to nonpeak times.
In order to achieve a significant load reduction in the summer
of 2001, the Legislature may wish to direct the Public
Utilities Commission (PUC) to extend peak load pricing to the
targeted group of users, in conjunction with providing funds
for interval meters. The CEC states the cost of purchasing
meters for users in the 200 to 500 kilowatt range would be
about $40 million, and that it would be administratively
simpler to provide grants rather than reimbursements.
Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081