BILL ANALYSIS
SB 5 X1
Page 1
Date of Hearing: April 3, 2001
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Carole Migden, Chairwoman
SB 5 X1 (Sher) - As Amended: April 2, 2001
Policy Committee: E.C.&A.Vote:16-1
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides a total of $927 million from the General Fund
for new and existing energy efficiency programs and for programs
to provide assistance to low-income households in paying their
energy bills. Specifically, this bill:
1)Allocates the funds to the following state agencies: Public
Utilities Commission (PUC) $326 million; California Energy
Commission (CEC) $405.5 million; Department of Consumer
Affairs (DCA) $10 million; Department of General Services
(DGS) $50 million; Community Services and Development (DCSD)
$120 million; Department of Water Resources (DWR) $15.46
million.
2)Allocates $240 million of the funds for the following
low-income assistance programs:
a) $100 million to augment the existing California
Alternate Rates for Energy (CARE) program, which provides
discounts on gas and electric bills.
b) $20 million to the PUC to fund weatherization
activities.
c) $120 million for the DCSD to implement the a California
Low Income Home Energy Assistance Program. At least $60
million of this total would be for weatherization and the
remainder for assistance with bill paying.
3)Includes, in the amount appropriated to the CEC, a total of
$87 million to locally-owned public utilities for energy
efficiency and low-income assistance.
SB 5 X1
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4)Requires the PUC and CEC to adopt guidelines and
cost-effectiveness criteria for the funded energy efficiency
programs and limits administrative costs to 2.5 percent of the
appropriated amounts.
5)Requires the state agencies to report to the Legislature
quarterly, commencing January 1, 2002, on the activities
funded with these appropriations.
6)Exempts contracts entered into pursuant to the above
appropriations from specified statutory provisions relating to
consulting, architectural and engineering, and services
contracts, advertising for such contracts, and DGS approval of
contracts.
7)Sunsets all of the above provisions on January 1, 2005. On
that date any unencumbered funds would revert to the General
Fund.
8)Shortens the period for legislative review of energy services
contracts proposed by DGS from 45 days to 15 days.
9)Exempts state energy projects from competitive bidding
requirements at the discretion of the Director of General
Services. (State energy projects are defined as equipment and
measures that reduce energy consumption in state buildings and
community college buildings.)
10)Exempt state energy projects from the state capital outlay
process at the discretion of the Department of Finance.
11)Sunsets the exemptions in (9) and (10) on June 30, 2003.
FISCAL EFFECT
One-time General Fund appropriation of $927 million.
COMMENTS
1)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, extended that
SB 5 X1
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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 PUC and delivered by the
investor-owned utilities. 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 specified in the legislation. SB 5X
provides General Fund monies to supplement both the PUC and
CEC programs and includes funding for efficiency measures in
state and local government buildings.
2)Low-Income 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. The recent 40% rate
increase ordered by CPUC for electrical corporations and the
recent increases in natural gas prices in California make it
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 supplement
existing assistance.
SB 5X also appropriates $120 million to DCSD to increase
energy conservation and reduce demand for energy pursuant to a
state Low Income Home Energy Assistance Program (LIHEAP).
This would complement the existing federally-funded LIHEAP to
assist customers in coping with high energy costs by providing
for weatherization services. 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 allows up to 15% for outreach and training for
consumers. At least 50% of the funds must be used for
weatherization and cash assistance is to be maximized by
allowing the state funds to be used as a supplement to federal
LIHEAP payments.
SB 5 X1
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3)Municipal Utilities . The bill provides $87 million to the CEC
for distribution to the state's municipal utilities for energy
efficiency and low-income assistance efforts analagous to the
those fund through the PUC. This is in recognition that these
state taxpayers dollars should be available to all utility
customers and not just those served by the IOUs.
4)Amendments . The following amendments are recommended:
a) Reduce the total funding to $710.3 million, as shown on
the attached chart. Generally the funding changes include
(1) eliminating overlap with AB 29X-the other major energy
conservation legislation (2) matching funding levels to a
shorter implementation period of summer and fall 2001; and
(3) increasing funding for agriculture-related programs by
$35 million.
b) Clarifying that funding provided for the CARE program is
to supplement, not supplant existing CARE funding, allow
only up to 20 percent of funds for increasing enrollment,
and place priority for funding on assisting eligible
customers that have payment arrangements or overdue
notices.
c) Allow the Department of Consumer Affairs an exemption
from state services contracting procedures until November
1, 2001. This will allow the department to engage a
contract in time to commence it's media campaign for the
summer.
d) Make all funding, except for CARE and LIHEAP, and the
contracting exemptions in Sections 5 and 6 of the bill,
operative only until March 31, 2002. Any funds
unencumbered by that time will revert to the General Fund
and be available for consideration during next year's
budget process.
e) Add provisions requiring the PUC to include the
following in their interruptible/curtailment programs:
allowing aggregation of agricultural customers to meet
minimum kilowatt requirements for participation, and
limiting curtailments for agricultural customers to 4 hours
per day and 20 hours per month.
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f) Require the Department of Finance to report quarterly to
the Legislature, commencing October 1, 2001, on any state
energy projects exempted from the state capital outlay
process or the advertising and competitive bidding
requirements of the Public Contract Code and change the
sunset date on those exemptions to January 1, 2003.
g) Making the community colleges ineligible for the
low-energy usage building materials program if funding for
community college energy efficiency projects is enacted in
AB 29X.
Analysis Prepared by : Chuck Nicol / APPR. / (916)319-2081