BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 1138 - La Suer Hearing Date:
July 10, 2001 A
As Amended: May 3, 2001 FISCAL B
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DESCRIPTION
This bill authorizes the California Infrastructure and Economic
Development Bank (Infrastructure Bank) to make low-interest
loans to private entities for re-powering or construction of
power plants up to 150 megawatts.
The bill requires that power from eligible plants be sold only
in California, with a right of first refusal offered to the
Department of Water Resources (DWR) or a public or private
utility.
The bill sunsets January 1, 2007.
BACKGROUND
The Infrastructure Bank has broad authority to issue tax-exempt
and taxable revenue bonds, provide financing to public agencies,
provide credit enhancements, acquire or lease facilities, and
leverage state and federal funds.
Under the Infrastructure State Revolving Fund Program, the
Infrastructure Bank provides low-cost financing to public
agencies for a wide variety of infrastructure projects. Private
entities are not eligible for loans and power generation is not
among the eligible project categories.
This bill authorizes the Infrastructure Bank to make loans for
up to 75% of the cost of certain generation projects to private
entities that are sponsored by a public entity, but does not
provide any funding to support such loans.
COMMENTS
1)Duplication of Power Authority functions. The projects
described in this bill are generally eligible for financing
from the California Consumer Power and Conservation Financing
Authority (Power Authority), established by SB 6X (Burton),
Chapter 10, Statutes of 2001. The Power Authority has been
charged with achieving adequate energy capacity in the state
and authorized to finance projects consistent with that goal.
The Power Authority's financing function is similar to the
Infrastructure Bank's, but is focused specifically on
energy-related projects. The author and the committee may
wish to consider whether it is appropriate or necessary to
establish a separate loan program for small power plants at
the Infrastructure Bank, whose mission is otherwise unrelated
to ensuring an adequate energy supply and may be ill-prepared
to prioritize the investment of public funds in new power
plant projects.
2)Terms of power sale uncertain. This bill requires power to be
offered to DWR or a public or private utility, but does not
specify the terms. To be eligible for Power Authority
funding, generation-related projects must sell electricity at
cost-of-service rates. The author and the committee may wish
to consider whether this bill should include a cost-of-service
requirement and/or a requirement that the terms of sale be
established prior to issuance of the loan so the public has a
better idea of what it's getting for its money.
3)California only? As a condition of eligibility for a loan
under this bill, power must be sold exclusively within
California. This condition may be difficult to enforce and
impose a potentially unlawful and counterproductive restraint
of commerce if it is enforced.
This type of policy runs the risk of inviting similar
defensive measures from other states. California is a net
importer of electricity and has long benefited, both in
economic and environmental terms, from seasonal exchanges with
neighboring states whose demand for electricity peaks at
different times. The electricity generating infrastructure
throughout the West has developed with a recognition of the
efficiencies of mutually beneficial exchanges. Balkanization
of power supplies would require each state to dramatically
increase its generating capacity.
4)Definition of power plant. Under this bill, hydroelectric
facilities are eligible for loans from the Infrastructure
Bank. This is inconsistent with SB 6X, which prohibits the
Power Authority from investing in a new hydroelectric project
without specific statutory authorization. The author and the
committee may wish to consider whether hydroelectric projects
should be eligible.
This bill also includes transmission lines in the definition
of power plant facilities eligible for loans from the
Infrastructure Bank. However, the way the bill is drafted,
they would not be able to meet the loan eligibility criteria
because some of the criteria are related to generation
facilities and could not be met by a transmission facility
(i.e. 150 MW or less, operating only during peak demand). The
author and the committee may wish to consider whether
transmission lines should be eligible and, if so, whether
conditions more applicable to transmission lines should be
added to the bill.
ASSEMBLY VOTES
Assembly Floor (76-0)
Assembly Appropriations (20-0)
Assembly Utilities and Commerce Committee (12-0)
Assembly Jobs, Economic Development & the Economy Committee
(11-0)
POSITIONS
Sponsor:
Author
Support:
California Chamber of Commerce
Orange County Business Council
Oppose:
None on file
Lawrence Lingbloom
AB 1138 Analysis
Hearing Date: July 10, 2001