BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1724
                                                                  Page  1

          Date of Hearing:   May 16, 2001

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Carole Migden, Chairwoman

                  AB 1724 (Pavley) - As Introduced:  March 19, 2001 

          Policy Committee:                              Natural  
          ResourcesVote:  9-2
                        Utilities                             11-5

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill deletes the January 2002 sunset on local governments'  
          eligibility to purchase renewable energy and receive a rate  
          discount ("customer credit") through the California Energy  
          Commission's (CEC's) Renewable Energy Program. 

           FISCAL EFFECT  

          The total amount to be collected for the next 10 years through a  
          utility surcharge, for the customer credit program and for other  
          energy programs, has been established in prior legislation.  By  
          continuing to allow public entities eligible for the credits,  
          this bill could change the allocation of those credits.  This  
          amount is unknown, but the current credit to the City of Santa  
          Monica exceeds $200,000 annually.

           COMMENTS  

           Background and Purpose  .  AB 1890 (Brulte), Chapter 854, Statutes  
          of 1996 provided $540 million from a surcharge on utility  
          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 by the CEC.   
          Last year, AB 995 (Wright), Chapter 1050, Statutes of 2000 and  
          SB 1194 (Sher), Chapter 1050, Statutes of 2000, among other  
          things, extended the collection of funds by the three investor  
          owned utilities for the Renewable Resource Trust for an  
          additional 10 years.  









                                                                  AB 1724
                                                                  Page  2

          Among the various allocations of the funds are "customer  
          credits" for the purchase of renewable energy from a renewable  
          energy service provider registered by the CEC.  Through this  
          program, participating customers either receive a credit on  
          their energy bill or the renewable energy providers reduce the  
          price of the energy they sell to the participants.  Under  
          existing law, the credit is available through the CEC for both  
          private and public entities.  However, AB 995 and SB 1194 sunset  
          the eligibility of public entities for the customer credit on  
          January 1, 2002. 

          According to supporters of the bill, including the Cities of  
          Berkeley and Santa Monica, because public agencies regularly pay  
          for the customer credit, they deserve access to its benefits.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081