BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 26XX| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED AB 26XX Page 2 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 AB 26XX Page 3 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, AB 26XX Page 4 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 **** END ****