BILL ANALYSIS
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THIRD READING
Bill No: AB 1724
Author: Pavley (D)
Amended: 7/3/01 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 7-2, 6/26/01
AYES: Bowen, Alarcon, Murray, Sher, Speier, Vasconcellos,
Vincent
NOES: Morrow, Battin
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 50-25, 6/5/01 - See last page for vote
SUBJECT : Reliable Electric Service Investments Act
SOURCE : City of Santa Monica
DIGEST : This bill deletes existing law that is set to
begin January 1, 2002 providing that public entities are
not eligible to receive customer credits for the purchase
of renewable energy, and instead requires the Energy
Commission to establish a cap on the amount of funds which
may be awarded to public entities from the program that
provides customer credits for renewables. The intent of
the cap is to assume adequate funding of credits for
residential and small commercial customers.
ANALYSIS : Current law provides for a surcharge on
electric bills to pay for energy efficiency, renewable
energy, and research, development, and demonstration (RD&D)
CONTINUED
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projects. The authority to impose this surcharge sunsets
on January 1, 2012. As of January 1, 2002, public entities
aren't eligible to receive any customer credits for
renewable energy programs.
This bill deletes the provision that prohibits, commencing
January 1, 2002, public entities from receiving customer
credits for renewables and, instead requires the commission
to establish a cap on the aggregate amount which may be
awarded to public entities under the program, to assure
adequate funding of credits for residential and small
commercial customers.
Background
The electric surcharge to pay for energy efficiency,
renewable energy, and RD&D projects was created in the
original electric restructuring legislation, AB 1890
(Brulte), Chapter 854, Statutes of 1996. These activities
had always been supported through customer charges, but AB
1890 made those charges explicit, non-bypassable, and
established specific funding levels that were to be met
through a per kilowatt hour surcharge paid by all electric
customers, including public entities.
The public goods surcharge amounts to less than three
percent of an electricity customer's bill. This surcharge
was initially established for four years and was scheduled
to end on December 31, 2001, prior to the enactment of SB
1194 (Sher), Chapter 1050, Statutes of 2000, and AB 995
(Wright), Chapter 1051, Statutes of 2000, made various
modifications to the programs and extended the authority to
impose the surcharge for ten years.
The renewables portion of the surcharge is a $135 million
program administered by the California Energy Commission
(CEC) that has five components, including production
incentives to energy producers, customer education
programs, and customer credits for the use of renewable
energy. Those credits are $0.01/kilowatt hour (kwh) and
are credited to all direct access customers. The maximum
annual credit is $1,000 per meter with large customers
limited to an aggregate credit of $15 million out of the
total program component cost of $75 million. About 100,000
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customers participate in the customer credit program, 4-16
percent of which are made up of local governments. As part
of the agreement to extend the renewable program, SB 1194
and AB 995 specifically made public entities ineligible for
the customer credits.
Comments
That Was Then, This Is Now . Last year, when the agreement
to extend the public goods surcharge for ten years and to
eliminate the ability of public entities to receive
customer credits was made, the decision was based in part
on the notion that local governments have other ways to
fund renewable energy programs. Assuming that was the
case, the argument was there was no reason to permit public
entities to continue to draw from the fund and, worse yet,
allowing the subsidy to continue might crowd out other
potential recipients, such as residential customers who
would be more deserving of the subsidy.
Because of the dysfunctional wholesale electric market, the
direct access market has, for the time being, effectively
dried up. The market has led many customers to abandon
service and return to their regulated investor-owned or
municipal utility and has also led some direct access
providers to simply abandon their customers, forcing those
customers to go back to their default provider. This has
reduced participation in the customer credit program by
half, from a peak of about 200,000 customers, and the
customer credit program won't use all of its budget this
year.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/16/01)
City of Santa Monica (source)
Berkeley City Council
ASSEMBLY FLOOR
AYES: Alquist, Aroner, Calderon, Canciamilla, Cardenas,
Cardoza, Chan, Chavez, Chu, Cohn, Corbett, Correa, Diaz,
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Dickerson, Dutra, Firebaugh, Florez, Frommer, Goldberg,
Harman, Havice, Horton, Jackson, Keeley, Kehoe, Koretz,
Liu, Longville, Lowenthal, Matthews, Migden, Nakano,
Nation, Negrete McLeod, Oropeza, Papan, Pavley, Reyes,
Salinas, Shelley, Simitian, Steinberg, Strom-Martin,
Thomson, Vargas, Wayne, Wesson, Wiggins, Wright,
Hertzberg
NOES: Aanestad, Ashburn, Bates, Bogh, Briggs, John
Campbell, Cogdill, Cox, Daucher, Hollingsworth, Kelley,
La Suer, Leach, Leonard, Leslie, Maddox, Mountjoy, Robert
Pacheco, Rod Pacheco, Pescetti, Richman, Runner,
Strickland, Wyland, Wyman
NC:jk 7/17/01 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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