BILL ANALYSIS
AB 1724
Page 1
Date of Hearing: April 25, 2001
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick D. Wright, Chair
AB 1724 (Pavley) - As Introduced: March 19, 2001
SUBJECT : Public utilities: Reliable Electric Service
Investments Act.
SUMMARY : This bill deletes an existing sunset on public
entities' eligibility to receive customer credits for purchasing
renewable energy that is not under contract with a utility.
EXISTING LAW :
1)Requires the California Energy Commission (CEC) to perform
duties relating to the conservation and development of energy
resources under the Warren-Alquist State Energy Resources
Conservation and Development Act.
2)Requires investor-owned utilities (IOUs) and municipal
utilities to collect a public goods surcharge from each
electricity customer to fund four specific programs: a)
energy efficiency and conservation activities; b) public
interest RD&D; c) in-state operation and development of
existing, new, and emerging renewable energy sources; and, d)
assistance to low-income users.
3)Provides customer credits to anyone who purchases renewable
energy not under contract with a utility.
4)Sunsets the customer credit to public entities on January 1,
2002.
FISCAL EFFECT : Unknown.
COMMENTS :
Customer Credits for Renewable Energy
AB 1890 (Brulte), Chapter 854, Statutes of 1996 provided $540
million from ratepayers (including local governments) to
encourage investment and competition in a renewable energy
market during the transition years from 1998 to 2001. The funds
were placed in the Renewable Resource Trust to be administered
AB 1724
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by CEC. Last year, [AB 995 (Wright), Chapter 1051, Statutes of
2000] and [SB 1194 (Sher), Chapter 1050, Statutes of 2000],
among other things, extended the collection of funds by the
three IOUs for the Renewable Resource Trust for an additional 10
years in five year blocks.
Included in the various allocations of the funds are customer
credits for the purchase of renewable energy that is not under
contract with a utility. The customer's total credit is based
on how much electricity was consumed in a one-year period (up to
10 cents per kilowatt hour with a $1000 cap per electric meter)
and could be incorporated either into the electricity price paid
to the provider or itemized separately.
Repeal of Existing Sunset of Public Entities' Eligibility for
Customer Credit
Under existing law, the renewable energy customer credit is
available through CEC for both private and public entities that
want to purchase renewable energy. However, AB 995 and SB 1194
sunset the eligibility of public entities for the customer
credit on January 1, 2002.
According to supporters of this bill, because public agencies
regularly pay for the customer credit, they deserve access to
its benefits. An example of a community using renewable energy
is the City of Santa Monica. The City of Santa Monica has
committed to purchasing 100% of its power for municipal purposes
from suppliers of renewable energy. Under the existing CEC
program, the city received approximately $200,000 in
reduced-price rates per year to partially offset the higher
costs of renewable electricity.
Staff Recommends :
The AB 995 and SB 1194 provided a 2002 sunset on public
entities' eligibility to receive the renewable energy customer
credit. This was done in order to give top priority to
residential customers, and during a time when it wasn't clear
there would be adequate funds to accommodate all residential
customers seeking the credit. Since the enactment of AB 995 and
SB 1194, the electricity market has undergone a dramatic
upheaval. Soaring wholesale electricity prices have wreaked
havoc on the financial condition of both the IOUs and
alternative energy service providers (ESPs). Many ESPs have
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returned customers to IOU default service. The market for
renewable or "green" power is considerably less robust than it
was one year ago, especially among residential customers. At
the same time, a number of cities have shown a continued
commitment to renewable energy. This bill would help enable
public entities to purchase renewable power beyond 2002.
However, given the high wholesale prices and the turmoil in
California's electricity market,
it remains unclear how many customers will choose "green" power
in the near term, with or without the renewable energy credit.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Berkeley
City of Santa Monica
Opposition
None on file.
Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083