BILL ANALYSIS
SB 5 X1
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Date of Hearing: March 28, 2001
ASSEMBLY COMMITTEE ON ENERGY COSTS AND AVAILABILITY
Roderick D. Wright, Chair
SB 5 X1 (Sher) - As Proposed to be Amended: March 28, 2001
SUBJECT : State Energy Projects.
SUMMARY : This bill provides a total of $1, 039,500,000 from the
General Fund (GF) to implement energy efficiency programs and
supplement existing energy efficiency programs. Specifically
this bill:
Allocates $321 million to the California Public Utilities
Commission (CPUC); $464.5 million to the California Energy
Commission (CEC); $10 million to the Department of Consumer
Affairs (DCA); $50 million to the Department of General Services
(DGS); $24 million to the Department of Corrections (DOC); $120
million to the Department of Community Services and Development
(DCSD), and $15.460 million to the Department of Water Resources
(DWR).
Among the programs and funding specified are:
Low-income programs include .
1)$100 million in new money for the existing California
Alternate Rates for Energy (CARE) program, a CPUC administered
program that provides a discount on gas and electric bills for
low-income customers;
2)$20 million for CPUC to fund weatherization programs for
low-income customers;
3)$60 million to the DCSD for low-income assistance;
4)$60 million to DCSD to expand low-income energy weatherization
programs.
Energy Efficiency Programs to provide .
1)Incentives to encourage the purchase of high efficiency
appliances: a) $66 million to investor-owned utility (IOU)
customers through CPUC; b) $20.2 million to municipal utility
district (MUD) customers through CEC;
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2)Incentives to encourage the purchase of whole-house and indoor
fans: a) $5.8 million to IOU customers through CPUC; b) $2.2
million to MUD customers through CEC;
3)Incentives to encourage the construction of high-efficiency
residences: a) $28 million to IOU customers through CPUC; b)
$6.7 million to MUD customers through CEC;
4)Incentives to encourage the use of high-efficiency lighting in
commercial and residential buildings: a) $100 million to IOU
customers through CPUC; b) $6.8 million to MUD customers
through CEC;
5)$20 million for retrofits for pumps and motors of oil or gas
producers and pipelines;
6)$20 million to encourage installation of load-shifting and
energy efficiency technologies in municipal buildings;
7)$70 million to encourage load-shifting in buildings;
8)$45 million in innovative energy efficiency programs;
9)$50 million to lower urban air conditioning usage in schools,
colleges, universities, hospitals, and other non-residential
buildings;
10)$15 million for innovative peak load reduction measures in
the service areas of public utilities;
11)$50 million for a peak load reduction program for
agricultural customers;
12)$14.5 million to encourage installation of high efficiency
traffic lights;
13)$64 million to provide incentives for water and waste water
treatment systems to reduce peak usage;
14)$15 million to encourage installation of demand-responsive
and energy efficiency technologies in municipal buildings;
15)$50 million to encourage implementation of energy efficiency
programs in state buildings;
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16)$10 million to DCA for a public education program;
17)$7 million to teach students about energy efficiency;
18)$1.4 million and 16 people for CEC to implement its part of
this energy efficiency program;
19)$600,000 for CEC to assess electric and natural gas markets.
21)This bill contains a sunset provision for January 1, 2004.
22)This bill contains an urgency statute.
EXISTING LAW :
1)Provides for energy efficiency programs administered by CPUC
and CEC.
2)Establishes the CARE program for reduced rate electric and gas
service to low-income customers.
FISCAL EFFECT : Allocates $1.039 billion from GF.
COMMENTS :
This bill provides for expansion of the existing low-income
programs, including the weatherization programs, and for
implementation of significant energy efficiency programs to
reduce peak demand.
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 CPUC, is 15% of a family's
monthly electric or natural gas bill. The cost to ratepayers
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for the CARE program is about $180 million annually, and that
cost will expand as the program enrollment expands. The
percentage of eligible customers who participate in the CARE
program varies widely throughout the state. In Pacific Gas &
Electric's (PG&E) service area, 36% of eligible customers
participate, while in Southern California Edison's (SCE) service
area, 59% of those eligible are participating. Between PG&E,
SCE, and San Diego Gas & Electric (SDG&E), a little more than
one million households participate in CARE. Other measures,
including AB 3 X1 (Wright) propose expansion of the existing
CARE program and additional outreach to ensure that as many
qualified customers as if feasible become enrolled. SB 5 X1's
provisions enhance the program both with regard to funding
generally and through expansion of the existing weatherization
component.
The recent 40% rate increase ordered by CPUC for electrical
corporations and the recent increases in natural gas prices in
California make it much more important to ensure that enrollment
in the CARE program is expanded. The $100 million allocation in
SB 5 X1 could help finance additional outreach as well as
program areas.
Low Income Home Energy Assistance Program (LIHEAP) .
As proposed to be amended, SB 5 X1, appropriates $120 million to
DCSD specifically to increase energy conservation and reduce
demand for energy within this program, assist customers in
coping with high energy costs and provide for weatherization
services and cash assistance payments.
Eligibility for California LIHEAP is to include households with
incomes not exceeding the greater of 60% of the state median
income or 80% of the county median income. Under the measure's
specification DCSD is to examine the penetration of other energy
programs, including federal LIHEAP and utility company programs,
and identify the adequacy of services to elderly, disabled,
limited English speaking persons and migrant farm workers and
households with very young children. The program shall
establish reasonable spending limits, including up to 15% for
outreach and training for consumers. Weatherization programs
shall account for not less than 50% of program funds and shall
maximize cash assistance programs by allowing funds to be used
as a supplement to federal LIHEAP payments.
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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
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, 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 CEC found cumulative
benefits of up to $1,300 per capita with reduced air pollution.
Other pending legislation, including AB 29 X1 (Kehoe), AB 40 X1
(Steinberg), AB 41 X1 (Lowenthal) and AB 42 X1 (Cedillo) contain
provisions and funding similar to SB 5 X1 for energy efficiency
programs. Only AB 5 X1 has a specific set aside amount to
augment the existing CARE program funding.
The specific programs and funding levels at CPUC and CEC are as
follows:
CPUC CEC
$66 million to encourage $20.2 million
purchase of high-
efficiency HVAC equipment and appliancesefficiency HVAC
equipment and
$100 million to provide immediate assistance
to customers enrolled in the CARE program$60 million for
energy efficiency
peak demand reduction
and low-
$20 million to augment funding assistanceincome assistance
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and
measures in public utility service for weatherization
programs.
low-income weatherization areas
under CPUC jurisdiction.
These programs are in addition to the programs funded for DCSD
for both low income assistance and weatherization. CEC programs
are geared to municipal utility customers, while CPUC's programs
are for customers of investor owned utilities (IOUs). DCSD
programs are outside of any utility auspice.
Program Accountability .
SB 5 X1 provides for significant program accountability. Under
its proposed state energy projects, these terms include
contracting through DGS for the projects subject to Request for
Proposal (RFP) procedures and awarding of contracts considering
qualifications, experience, type of technology employed, cost to
the agency and selection from a pool of qualified energy service
providers. While it can be argued that these additional steps
may delay implementation of some of the specified measures, it
is more important to ensure that the projects are successfully
completed in an efficient and cost-effective manner.
All of the programs proposed seem to be tailored to specific
demand reduction levels and expectations and the measure
provides the agencies with flexibility to shift funds between
programs to achieve "maximum feasible energy conservation." The
measure also employs tracking and auditing procedures which
should ensure that program funds are expended prudently and
which should provide for accounting of actual energy savings
accrued.
This measure contains other miscellaneous provisions for various
departments to achieve more energy efficiency. They include $24
million to DOC to install systems to retrofit generation units
to improve environmental performance of existing units. $10
million is allocated to the DCA to implement public awareness
for peak demand reduction. $120 million to DCSD to supplement
LIHEAP and to increase participation in the LIHEAP program. All
of these allocations should provide for direct demand reduction.
Staff recommends .
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It should be noted that there is no additional funding provided
in this bill for CPUC, though both CPUC and CEC have extensive
existing programs for energy efficiency augmented in the
measure. There is $1.4 million provided for additional staff at
CEC for these programs. Since these are expansions of existing
programs and no additional CPUC funding is provided, it seems
that staff can be redirected from other areas at CEC to handle
what are largely existing programs and programs which will be
completed in two and a half years.
There is also $7 million allocated to educate school children
about energy efficiency. Given all the other allocations in
this measure for public awareness, including $10 million to DCA,
it seems that additional education of school children beyond all
of the energy efficiency programs for schools and the overall
public awareness programs may be duplicative. Staff recommends
that the additional CEC staff funding and the $ 7 million for
student education be removed from this measure as
programmatically duplicative.
REGISTERED SUPPORT / OPPOSITION :
Support
Californians Against Waste
Clean Power Campaign
Environmental Defense
Lieutenant Governor, Cruz M. Bustamante
Older Women's League of California
Planning and Conservation League
Opposition
None on file.
Analysis Prepared by : Kelly Boyd / E. C. & A. / (916)
319-2083