BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 5X
Author: Sher (D), et al
Amended: 4/5/01
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
SENATE FLOOR : 28-10, 3/22/01
AYES: Alarcon, Alpert, Battin, Bowen, Burton, Chesbro,
Costa, Dunn, Escutia, Figueroa, Johannessen, Karnette,
Kuehl, Machado, McPherson, Murray, O'Connell, Ortiz,
Peace, Perata, Polanco, Romero, Scott, Sher, Soto,
Torlakson, Vasconcellos, Vincent
NOES: Ackerman, Brulte, Haynes, Knight, Margett,
McClintock, Monteith, Morrow, Oller, Poochigian
ASSEMBLY FLOOR : 74-1, 4/4/01 (Roll call not available at
CONTINUED
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time of writing)
SUBJECT : State energy projects
SOURCE : Author
DIGEST : This bill appropriates $708.9 million to various
state agencies to implement energy efficiency programs and
supplement existing energy efficiency programs.
Assembly Amendments reduce the amount appropriated from
$1.03 billion to $708.9 million, change specific
allocations, make numerous technical and clarifying changes
and add the provisions that relate to energy use among
agricultural customers.
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
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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;
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
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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 provides a total of $708.9 million from the
General Fund (GF) to implement energy efficiency programs
and supplement existing energy efficiency programs.
Specifically this bill:
1.Allocates funds to the California Public Utilities
Commission (CPUC), California Energy Commission (CEC),
Department of Consumer Affairs (DCA), Department of
General Services (DGS), Department of Community Services
and Development (DCSD), and Department of Water Resources
(DWR). Among the programs and funding specified are:
A. $100 million in new money to supplement 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, allowing up to 20% of the funds to be used
for outreach to increase enrollment.
B. $20 million for CPUC to fund weatherization
programs for low-income customers.
C. $60 million to DCSD for low-income assistance and
$60 million to expand low-income energy weatherization
programs.
D. Incentives to encourage the purchase of high
efficiency appliances to investor-owned utility (IOU)
customers through CPUC and to municipal utility
District (MUD) customers through CEC.
E. Incentives to encourage the purchase of whole-house
and indoor fans and construction of high-efficiency
residences to IOU customers through CPUC and to MUD
customers through CEC.
F. Incentives to encourage the use of high-efficiency
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lighting in commercial and residential buildings to
IOU customers through CPUC and to MUD customers
through CEC.
G. $10 million to encourage the purchase of advanced
telemetry equipment for agricultural and water pumping
customers to improve load management and demand
responsiveness.
H. $75 million to implement programs to reduce peak
load electricity usage, encourage bio-gas digestion
power production technologies, enhance conservation
and encourage use of alternative fuels through rebates
and grants available through CEC to agricultural
customers.
1.Provides that any funds not encumbered (except for CARE
program funds and Low Income Home Energy Assistance
Program (LIHEAP) funds) by March 31, 2002 shall revert to
the GF.
3.This bill also makes changes relating to agricultural
customers of energy. The bill provides that
interruptible service or curtailment programs adopted by
CPUC shall assure that the programs allow for
agricultural and water supplier customers to aggregate
multiple accounts to meet any minimum kilowatt
requirements for participation in the program, subject to
geographical, load and other parameters.
The bill provides that the CPUC shall consider whether
any binding mandatory curtailment programs adopted by the
CPUC, which exempt customers from Stage III rotating
outages in exchange for partial load curtailments during
every rotating outage period, shall provide the use of
backup generation for agricultural and water supplier
customers, as specified.
The bill requires public utility electrical corporations
to develop and offer customers on or before May 30, 2001,
the opportunity to participate in a demand reduction
program, as specified. The program shall be known as the
Scheduled Load Reduction Program.
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The bill states that the Legislature strongly urged the
CPUC to consider providing the option to all agricultural
commodity processing customers of being included in the
definition of customers eligible to be served under
agricultural tariffs to the extent it does not result in
cost shifting to other customer classes.
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.
This bill's provisions enhance the CARE program both with
regard to funding generally and through expansion of the
existing weatherization component.
This bill 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 incomes or 80% of the county median income. Under
this bill's specification DCSD is to provide both direct
rate assistance and expanding funding for low-income
weatherization. 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.
This bill has a specific set aside amount to augment the
existing CARE program funding for energy efficiency as well
as proposals to provide for widespread enhanced energy
efficiency in the state.
This bill provides for significant program accountability.
Under its proposed state energy projects, these terms
include contracting through DGS for projects considering
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qualifications, experience, type of technology employed,
cost to the agency and selection from a pool of qualified
energy service providers. All of the programs proposed
through each of the agencies specified seem to be tailored
to specific demand reduction levels and expectations and
this bill provides the agencies with flexibility to shift
funds between programs to achieve "maximum feasible energy
conservation." This bill 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 bill contains other miscellaneous provisions for
various departments to achieve more energy efficiency.
This bill also contains provisions to enhance energy
efficiency among agricultural customers, who necessarily
use electricity during peak demand periods.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
Allocates $708.9 million from the General Fund.
NC:jk 4/5/01 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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