BILL ANALYSIS
SB 5 X1
Page 1
( Without Reference to File )
SENATE THIRD READING
SB 5 X1 (Sher)
As Amended April 5, 2001
2/3 vote. Urgency
SENATE VOTE :28-10
ENERGY 16-1 APPROPRIATIONS 14-0
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|Ayes:|Wright, Canciamilla, |Ayes:|Migden, Daucher, Aroner, |
| |Diaz, Dutra, Goldberg, | |Cedillo, Keeley, Correa, |
| |Jackson, Keeley, Leonard, | |Goldberg, Maldonado, |
| |Migden, Oropeza, Reyes, | |Papan, Shelley, Simitian |
| |Richman, Steinberg, | |Wesson, Wiggins, Wright |
| |Vargas, Shelley, Zettel | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|John Campbell | | |
| | | | |
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SUMMARY : Provides a total of $710.3 million from 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;
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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 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; and,
h) Provides $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.
2)Provides that any funds not encumbered (except for CARE program
funds and LIHEAP funds) by March 31, 2002 shall revert to General
Fund.
3)Provides for additional interruptible electric service programs to
allow aggregation of multiple accounts to meet any minimum kilowatt
(kw) requirements, subject to geographical, load and other
parameters to be determined by CPUC.
4)Requires CPUC to provide, for agricultural and water supplier
customers, the use of back-up generation to offset curtailed load
to the extent allowed under existing law, under any optional
binding mandatory curtailment programs exempting customers from
Stage 3 rotating outages.
5)Requires public utility electrical corporations to offer its
customers, by May 30, 2001, the opportunity to participate in a
demand reduction program during morning or evening system peak
conditions, in addition to other programs available. The program
is known as the Scheduled Load Reduction Program.
6)Strongly urges CPUC to consider providing the option to all
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agricultural commodity processing customers to be included in the
definition of customers eligible to be served under agricultural
tariffs.
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.
3)Allows customers of public utility electrical corporations to
participate in voluntary electric service curtailment and demand
reduction programs.
FISCAL EFFECT : Allocates $710.3 million 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.
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 175% of the federal poverty level. The CARE
discount, which is established by 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, 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. SB 5
X1's provisions enhance the program both with regard to funding
generally and through expansion of the existing weatherization
component.
SB 5 X1, appropriates $120 million to DCSD specifically to increase
energy conservation and reduce demand for energy within this program,
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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 provide both direct rate assistance and
expanded 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.
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. AB 5 X1 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.
SB 5 X1 provides for significant program accountability. Under its
proposed state energy projects, these terms include contracting
through DGS for projects considering 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 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 that should
ensure program funds are expended prudently and provide for
accounting of actual energy savings accrued.
This measure contains other miscellaneous provisions for various
departments to achieve more energy efficiency.
The measure also contains provisions to encourage demand reduction
through expanded participation in interruptible service programs of
public utility electrical corporations. The additional measures
allow for aggregation of multiple accounts to meet specified load
reduction requirements under existing curtailment program parameters,
and allow for partial load reduction during rotating outages as terms
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of exemption from rotating outages. The measure also strongly urges
the CPUC to allow agricultural product processors to be included in
agricultural tariffs.
Analysis Prepared by : Kelly Boyd / E. C. & A. / (916) 319-2083
FN: 0000324