BILL ANALYSIS
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THIRD READING
Bill No: SB 5X
Author: Sher (D), et al
Amended: 3/5/01
Vote: 27 - Urgency
SENATE ENERGY, U.&C. COMMITTEE : 7-0, 2/13/01
AYES: Bowen, Alarcon, Vasconcellos, Battin, Sher, Vincent,
Dunn
SENATE APPROPRIATIONS COMMITTEE : 7-1, 2/21/01
AYES: Alpert, Battin, Bowen, Burton, Karnette, Perata,
Speier
NOES: Johnson
SENATE FLOOR : 24-12, 3/5/01
AYES: Alarcon, Alpert, Battin, Bowen, Burton, Chesbro,
Dunn, Escutia, Figueroa, Karnette, Kuehl, Machado,
McPherson, Murray, O'Connell, Ortiz, Peace, Perata,
Polanco, Scott, Sher, Soto, Torlakson, Vasconcellos
NOES: Ackerman, Brulte, Haynes, Johannessen, Johnson,
Knight, Margett, McClintock, Monteith, Morrow, Oller,
Poochigian
SUBJECT : State energy projects
SOURCE : Author
DIGEST : This bill appropriates $1.03 billion to various
state agencies in order to reduce peak electricity demand,
to enhance low-income energy assistance programs, and to
encourage energy efficiency (these provisions sunset
CONTINUED
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January 1, 2005). The bill authorizes state agencies to
develop energy conservation and efficiency projects (this
provision sunsets June 30, 2003).
ANALYSIS : Background:
Low Income Energy Assistance
Current law establishes a low-income energy assistance
program for electric and natural gas service customers of
the IOUs known as CARE which is funded by a surcharge on
energy bills. The CARE program includes both discounts on
the electric and natural gas bill, as well as a residential
weatherization program.
Current regulations limit CARE eligibility to those
households earning less than 150% of the federal poverty
level, which is an annual income of $25,800 for a family of
four. The CARE discount, which is established by the CPUC,
is 15% of a family's monthly electric or natural gas bill.
The cost to ratepayers for the CARE program is about $180
million annually.
The percentage of eligible customers who participate in the
CARE program varies widely throughout the state. In PG&E's
service area, 36% of eligible customers participate, while
in SCE's service area, 59% of those eligible are
participating. Between PG&E, SCE, and SDG&E, a little more
than one million households participate in CARE.
A second low income energy assistance program, known as the
Low Income Home Energy Assistance Program (LIHEAP), is
funded by the federal government and administered through
the Department of Community Services and Development. This
program is budgeted at $63 million this year, though that
has been supplemented with about $40 million in additional
emergency federal funding.
LIHEAP eligibility is 60% of the state's median income, or
about $33,000 per year, and serves about 150,000 people
statewide, far fewer than the CARE program.
LIHEAP has three programs: 1) home energy assistance,
payable directly to the utility or other energy provider;
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2) a crisis program for emergencies; 3) a residential
weatherization program. The current levels of home energy
assistance provide funding for about 2.3 months of energy
payments.
Energy Efficiency
The electric restructuring statutes provided for
substantial funding of energy efficiency programs through a
non-bypassable surcharge on electric bills. Last year AB
995 (Wright), Chapter 1051, Statutes of 2000, and SB 1194
(Sher), Chapter 1050, Statutes of 2000, were enacted,
extending that surcharge for 10 years. The energy
efficiency portion of the surcharge is less than 1% of each
customer's bill and the money derived from the surcharge
pays for energy efficiency programs administered by the
CPUC and delivered by the IOUs. Last year, the Legislature
also approved AB 970 (Ducheny), Chapter 329, Statutes of
2000, which authorized $50 million for a variety of energy
efficiency programs. Those funds have been committed to
six types of projects which were specified in the
legislation.
Investments in energy efficiency programs have proven to be
very cost-effective. In May 2000, the CPUC reported that
in 1999, it spent $242 million in energy efficiency
programs to save 825 million kilowatt hours of electricity
and 15 million therms of gas, making the programs far
cheaper than buying additional energy. Similar savings
were reported for 1998 programs. A March 2000 RAND study
commissioned by the CEC found cumulative benefits of up to
$1,300 per capita with reduced air pollution.
Description :
This bill is essentially divided into three different
parts: (a) enhances the existing low-income energy
assistance programs, (b) establishes a variety of energy
efficiency programs, (c) increases distributed electric
generation capacity, particularly with respect to state and
municipal buildings. The bill appropriates a total of
$1,039,500,000 for these purposes.
All three parts of the bill rely on General Fund money on a
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one-time basis.
Low-Income Energy Assistance Programs
This bill provides:
1.$321 million to the PUC in order to reduce peak electricity demand
and meet urgent needs of low-income households, to be allocated to
electric and gas electrical corporations as follows:
A. Purchase of high-efficiency HVAC and appliances $
66,000,000
B. CARE (low-income) program expansion 100,000,000
C. Weatherization for low-income households 20,000,000
D. Pump/motor retrofits for oil/gas producers
20,000,000
E. High-efficiency lighting
100,000,000
F. Demand-responsive and energy efficient technologies in
buildings owned or operated by cities or counties
15,000,000
PUC TOTAL $321,000,000
Energy Efficiency Programs
This bill provides:
1.$464.5 million to the California Energy Commission (CEC)
in order to reduce peak electricity demand, to be
allocated as follows:
A. $87 million to locally owned public utilities for
the following:
1) High-efficiency heating, ventilating, air
conditioning and
appliances
$ 20,200,000
2) High-efficiency lighting
6,800,000
3) Assistance in the service areas of the
utilities
analogous to those measures and programs
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funded in the service area of PUC
60,000,000
A. Improve demand-responsiveness in HVAC, lighting,
70,000,000
and advanced metering of energy usage
B. Lower air conditioning usage in schools, hospitals,
etc 50,000,000
C. Third party peak demand reduction in public
utilities'
service areas
60,000,000
D. Reduce peak load in agricultural sector
50,000,000
E. Light-emitting diode (LED) traffic signals
14,500,000
F. Reduce peak usage of water/wastewater treatment
systems
64,000,000
G. Demand-responsiveness and energy-efficient
technologies
in buildings owned or operated by cities or
counties 15,000,000
H. Teach school children about energy efficiency
7,000,000
I. Retrofit distributed generation of municipal water
districts,
as specified
20,000,000
J. Fund 16 personnel years
1,400,000
AA.Fund four personnel years to provide accurate and
timely
assessments of electricity and natural gas markets
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600,000
M. Loans to schools for energy conservation measures
25,000,000
CEC TOTAL 464,500,000
Electric Generation Capacity
This bill provides:
1.$10 million to the Department of Consumer Affairs for a
public awareness campaign to reduce demand $
10,000,000
2.$24 million to the Department of Corrections to retrofit
generation units to improve environmental performance
$ 24,000,000
3.$50 million to the Department of General Services to
$ 100,000,000
implement state energy projects, as specified
4.$120 million to the Department of Community Services
$120,000,000
and Development to supplement or expand the Low
Income Home Energy Assistance Program
OTHER TOTAL
$254,000,000
NET TOTAL
$1,039,500,000
The bill defines "state energy projects" as (1) equipment,
load management techniques, and other measures/services
which reduce energy consumption and provide for more
efficient use of energy in state buildings or facilities,
or buildings or facilities owned or operated by community
colleges.
For electric generation projects which the state
undertakes, the bill proposes that the projects be eligible
to be exempt from competitive bidding requirements and the
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capital outlay process, and that the procedures established
be exempt from the Administrative Procedures Act.
The bill requires the CEC to adopt efficiency standards for
outdoor lighting, as specified.
The bill requires the Public Utilities Commission (PUC) and
the CEC to (1) develop cost-effectiveness criteria for the
programs funded, and provide a copy of that criteria within
10 days of development to the Legislature and Governor, (2)
limit administrative costs to not more than 2 % of the
amounts appropriated, (3) establish matching criteria, and
(4) within six months, contract for an audit of
expenditures and their effectiveness in achieving a
reduction in peak energy demand (the audit is to be
submitted to the Legislature and Governor within one year).
The bill requires the PUC and CEC to ensure that funds
expended pursuant to this bill are not seized by creditors
in the event of bankruptcy.
The bill authorizes the PUC and CEC to shift funds among
program categories in order to achieve the purposes of the
bill.
The bill provides that for state agencies, at least 85% of
funds expended, where appropriate, be used for direct
rebates, purchases, buy-downs, loans, or other incentives
to achieve the goals of the bill.
The bill provides that state agencies shall provide
quarterly reports to the Legislature on expenditures,
activities and effectiveness of the expenditures in
achieving the goals of the bill.
State generation projects are encouraged, but not required,
to be clean.
The bill provides that any funds unencumbered by January 1,
2005 shall revert to the General Fund.
According to the author's staff, the appropriations are
intended to be one-time. AB 970 (Ducheny, Ch. 329, St. of
2000), among other things, appropriated $50 million to the
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Energy Commission to implement energy conservation
programs. Apparently those funds have been depleted. This
bill significantly expands some of the programs established
by AB 970 and creates new ones.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
Appropriates $1,039,500,000 as follows:
$321,000,000 for low-income energy assistance
$464,500,000 for energy efficiency programs
$254,000,000 for electric generation capacity
NC:jk 3/7/01 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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