BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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                                 THIRD READING


          Bill No:  AB 26XX
          Author:   Calderon (D)
          Amended:  9/14/01 in Senate
          Vote:     27

           
           SENATE ENERGY, U.&C. COMMITTEE  :  9-0, 8/29/01
          AYES:  Bowen, Morrow, Alarcon, Battin, Dunn, Murray,  
            Poochigian, Sher, Vincent

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SENATE FLOOR  :  40-0, 9/14/01
          AYES:  Ackerman, Alarcon, Alpert, Battin, Bowen, Brulte,  
            Burton, Chesbro, Costa, Dunn, Escutia, Figueroa, Haynes,  
            Johannessen, Johnson, Karnette, Knight, Kuehl, Machado,  
            Margett, McClintock, McPherson, Monteith, Morrow, Murray,  
            O'Connell, Oller, Ortiz, Peace, Perata, Polanco,  
            Poochigian, Romero, Scott, Sher, Soto, Speier, Torlakson,  
            Vasconcellos, Vincent

           ASSEMBLY FLOOR  :  56-11, 9/15/01 - See last page for vote


           SUBJECT  :    Electrical energy:  electrical corporations:   
          tariffs

           SOURCE  :     Author


          DIGEST  :    This bill requires the Public Utilities  
          Commission (PUC), when establishing new tariffs for  
          customers using distributed energy resources, to consider  
          specified factors so that customers with more efficient  
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          units pay a lower cost.

          Extends the operation date of the State Assistance Fund for  
          Energy until 7/1/11 and requires interest rates on energy  
          loans to be not less than 3% per annum.

           ANALYSIS  :    Existing law provides five- and ten-year  
          waivers of "standby charges" for specified distributed  
          generation (DG) installations and requires PUC to require  
          investor-owned utilities to establish new, cost-based  
          tariffs applicable to customers using DG.

           This bill  requires the PUC, in establishing these new  
          tariffs, to consider coincident peak load and the  
          reliability of a customer's DG, so that customers with more  
          reliable DG and those that reduce peak demand pay lower  
          rates.

          DG is typically considered to be a site-specific generation  
          resource which is owned by the customer and used to meet  
          some or all of that customer's energy needs, including  
          electricity and, in many applications, heating.

          Examples of DG units range from a residential rooftop solar  
          array to an collection of large combustion turbines at a  
          commercial office building or industrial facility.  DG can  
          be used for reliability back-up (standby or emergency  
          generation), to meet base load requirements, to meet  
          peaking requirements, or to meet all on-site requirements,  
          and sell power to adjacent sites ("over the fence"  
          transactions).

          For a customer that owns a DG unit that is connected to the  
          utility distribution system, on-site generation is  
          complemented by power purchased through, and delivered by,  
          the utility.  Depending on the reliability, capacity and  
          purpose of the DG unit, the customer may, at various times,  
          buy some or all of its power from the utility, or "sell"  
          power back to the utility through a net-metering  
          arrangement.

          SB 28X (Sher), Chapter 12, Statutes of 2001, included  
          provisions establishing five- and ten-year waivers of  
          "standby charges" for specified DG installations and  







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          requiring investor-owned utilities to establish new,  
          cost-based tariffs applicable to customers using DG.

           Comments
           
          SB 28X was constructed to reward the most efficient,  
          reliable, peak demand-reducing DG installations by offering  
          a longer waiver for more efficient units and requiring  
          customers to pay real-time rates to qualify for the waiver.  
           This bill applies a similar principle to the cost-based  
          tariffs that will be in effect after the waivers  
          established by SB 28X expire.

          The existing State Assistance Fund for Enterprise Act of  
          1989 establishes the State Assistance Fund for Energy,  
          California Business and Industrial Development Corporation.  
           Under the act, the corporation, until July 1, 2001, is  
          authorized to make energy efficiency improvement loans to  
          small businesses for a fixed rate of interest for a term  
          not exceeding five years.

          This bill would extend the operative date of the act until  
          July 1, 2011.

          Under existing law, a school, hospital, public care  
          institution, or a unit of local government may submit an  
          application to the State Energy Resources Conservation and  
          Development Commission for an allocation for the purposes  
          of financing projects such as energy audits, energy  
          conservation and operating procedures, energy conservation  
          measures, energy conservation projects, and technical  
          assistance programs.  Existing law requires each eligible  
          institution to which an allocation has been made to repay  
          the principal amount of the allocation, plus interest, as  
          specified.  Under existing law, the commission, except as  
          specified, must periodically set interest rates on the  
          loans based on surveys of existing financial markets and at  
          rates not lower than the Pooled Money Investment Account.

          This bill would instead require the interest rates to be  
          not less than 3% per annum.

          Existing law requires the commission to provide loans to  
          local jurisdictions for purposes that include purchase,  







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          maintenance, and evaluation of both energy efficient  
          equipment for existing and new facilities and small power  
          production systems, and to improve the operating efficiency  
          of existing local transportation systems.  Existing law  
          requires the commission, except as specified, to  
          periodically set interest rates on the loans based on  
          surveys of existing financial markets and at rates not  
          lower than the Pooled Money Investment Account.

          This bill would instead require the interest rates to be  
          not less than 3% per annum. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/29/01)

          Pacific Gas and Electric Company


           ASSEMBLY FLOOR  :
          AYES:  Alquist, Aroner, Ashburn, Bates, Bogh, Calderon,  
            Bill Campbell, Cardoza, Cedillo, Chavez, Cogdill, Cohn,  
            Corbett, Correa, Daucher, Diaz, Dutra, Firebaugh, Florez,  
            Frommer, Goldberg, Harman, Havice, Hollingsworth, Horton,  
            Keeley, Kehoe, Kelley, Koretz, Leach, Longville,  
            Lowenthal, Maddox, Maldonado, Matthews, Migden, Nakano,  
            Negrete McLeod, Oropeza, Rod Pacheco, Pescetti, Reyes,  
            Salinas, Shelley, Simitian, Steinberg, Strom-Martin,  
            Thomson, Vargas, Washington, Wesson, Wiggins, Wright,  
            Wyman, Zettel, Hertzberg
          NOES:  Aanestad, Briggs, John Campbell, Cox, Dickerson,  
            Leonard, Leslie, Mountjoy, Runner, Strickland, Wyland


          NC:sl  9/18/01   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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