BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 18XX - Goldberg Hearing
Date: August 29, 2001 A
As Amended: August 21, 2001 FISCAL/URGENCY
B
X
2
1
8
DESCRIPTION
This bill finds the state should encourage hospitals to decrease
peak load by incorporating energy efficient technologies as part
of their seismic retrofit plans.
This bill requires the California Energy Commission (CEC) to
establish a grant program solely for thermal energy storage
technologies to reduce peak load demand by public and private
hospitals. Both public and private hospitals are eligible for
grants, though all non-profit hospitals must be awarded grants
before for-profit hospitals receive any award. Grants are to be
awarded on a competitive basis and must be based on the average
number of kilowatts reduced during peak demand periods.
This bill appropriates $20 million from the General Fund for
this program.
This bill becomes operative only if the Director of Finance
determines there are sufficient unencumbered funds set aside by
SB 5X (Sher), Chapter 7, Statutes of 2001, that revert back to
the General Fund after March 31, 2002.
This bill is an urgency measure.
BACKGROUND
Thermal energy storage is a process for cooling buildings by
using energy at night to make ice, which is then used to cool
buildings during the day. By using energy at night instead of
in the middle of the day, thermal energy storage takes advantage
of much lower off-peak energy rates and avoids using energy when
it's most expensive and scarce. This is known as load shifting
- a much different concept than energy conservation, wherein
less energy is used through the use of more efficient devices or
changes in behavior. In fact, thermal energy storage systems
may actually use more electricity than conventional cooling
systems. The electricity rate increases approved by the
California Public Utilities Commission (CPUC) have increased the
differential between peak and off-peak rates, thus creating an
additional incentive to deploy thermal energy storage
technology.
In 1996, the CEC staff issued a report on thermal energy storage
entitled "Source Energy and Environmental Impacts of Thermal
Energy Storage" (P500-95-005). That report declared that
thermal energy storage is a technology that offers compelling
energy, environmental, diversity, and economic development
benefits to California. It noted that the technology is "poised
for full commercialization" and cited both environmental and
cost benefits.
AB 970 (Ducheny), Chapter 329, Statutes of 2000, and SB 5X
(Sher), Chapter 7, Statutes of 2001, provided funding for peak
demand reduction activities, for which the technology described
in this bill already qualifies.
AB 29X (Kehoe), Chapter 8, Statutes of 2001, provided $50
million for additional energy efficiency loans for hospitals,
schools, and local governments through an existing CEC loan
program. AB 29XX and SB 5X spent a combined $700 million on
energy efficiency programs.
SB 52XX (Chesbro), pending on the Senate Appropriations
Committee's suspense file, requires the CEC to analyze thermal
energy storage technology for cost-effectiveness and to
determine how and if thermal energy storage can help California
meet its peak energy needs.
COMMENTS
1.Is This Bill Premature? As noted above, this committee
recently passed SB 52XX (Chesbro), which requires the CEC to
analyze thermal energy storage technology to determine whether
it's a cost-effective way to help California meet its peak
energy needs. That measure originally sought to require the
CEC to provide financial incentives to commercial, industrial,
agricultural, and educational building owners and designers to
use thermal energy storage.
In light of the pending study, the author and committee may
wish to consider whether it's premature to commit $20 million
in state grant money to hospitals that wish to purchase this
technology.
2.Similar Program Already Exists . The CEC has an existing
program, the Energy Conservation Assistance program, which
provides low-cost loans specifically to hospitals and schools
on a competitive basis. Much, but not all, of the funding for
that program has been committed. As an alternative to
creating a new grant program exclusively for hospitals, the
author and committee may wish to consider whether it would be
more appropriate to simply direct the $20 million in this bill
into the existing loan program and allow it to be tapped by
hospitals and schools.
3.Specifying The Technology . This bill specifically devotes $20
million for grants for thermal energy storage. It's not clear
why this particular technology should be singled out for
funding, as different technologies may be more efficient
depending on the particular circumstances of the hospital.
As such, the author and committee may wish to consider whether
making the bill less technology-specific is more appropriate.
This could be accomplished by the following:
Page 2, Line 11: After "of" insert "technologies such as";
delete "other related technologies"
Page 2, Line 26: Delete "thermal energy storage"
4.Do Hospitals Deserve Additional Special Treatment? This bill
also raises the issue of whether hospitals should be singled
out for an additional $20 million in energy efficiency
funding. While hospitals have suffered from electric rate
increases, so too have many other businesses, homeowners, and
renters. What circumstances warrant additional funding to be
set aside exclusively for hospitals beyond the approximately
$700 million set aside by SB 5X and AB 29X that was set aside
for all businesses and residential customers?
ASSEMBLY VOTES
Assembly Floor (72-0)
POSITIONS
Sponsor:
Author
Support:
Adventist Healthcare Coalition
Air-Conditioning and Refrigeration Institute - CA Thermal
Storage Equipment Section
California Association of Public Hospitals and Health Systems
Calmac Manufacturing Corporation
Childrens Hospital Los Angeles
KSEngineers
Loma Linda University Medical Center
White Memorial Medical Center
Oppose:
None on file
Randy Chinn
AB 18XX Analysis
Hearing Date: August 29, 2001