BILL ANALYSIS
Appropriations Committee Fiscal Summary
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| |6(Burton) |
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|Hearing Date: 2/15/01 |Amended: 2/14/01 |
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|Consultant: Lisa Matocq |Policy Vote: E, U & C |
| |7-0 |
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BILL SUMMARY: SB 6X (1) creates the California Consumer
Power and Conservation Financing Authority (CPCFA), (2)
authorizes the issuance of bonds up to $5 billion, and (3)
specifies that the CPCFA shall not undertake any new
projects after January 1, 2007.
Fiscal Impact (in thousands)
Major Provisions 2001-02 2002-03
2003-04 Fund
Bond debt Potentially $5,000,000 plus
interest Special*
CPCFA administration Unknown, potentially $250-500 annually,
Special*
offset by revenues
*California Consumer Power and Conservation Financing Authority
Fund.
STAFF COMMENTS: The CPCFA is created for the purposes of
(1) ensuring an adequate and reliable electricity supply at
reasonable rates and achieving an adequate reserve by 2006,
(2) establishing, acquiring, financing, operating, or
constructing generating facilities and other projects, and
(3) providing financial assistance for projects or programs
as follows:
to any individual, or private or public entity, for
projects or programs involving facilities, equipment,
improvements, or appliances,
loans for energy (electric and natural gas) conservation
programs such as those involving energy efficient
appliances. As a condition of the loan, the participant
must conduct a public awareness campaign,
to owners of aged, inefficient, electric power plants to
perform upgrades necessary to improve its efficiency and
environmental performance.
The bill authorizes the CPCFA to:
issue bonds not exceeding $5 billion,
use eminent domain,
hire employees and contract with private entities,
charge and recover its administrative costs and expenses,
including operating and financing-related costs, from
participating parties and from ratepayers, as specified,
mortgage, or pledge the authority's interest in projects,
assets, bonds, etc.,
borrow or receive moneys from governmental or private
entities.
The bill also:
creates the CPCFA Fund and provides that all moneys in
the fund, upon appropriation, shall be available for
expenditure,
specifies that neither the full faith and credit nor the
taxing power of the State or any local agency is pledged
for payment of principal/interest on the bonds,
requires the CPCFA to consult with the Energy Commission
and Cal-ISO in determining the need for additional
generation facilities,
requires generation-related projects financed through the
CPCFA to provide power to consumers at rates based on
cost, as determined by the CPCFA, which may include a
reasonable rate of return,
requires the CPCFA to develop appropriate strategies to
facilitate a dependable natural gas supply, and
specifies that the CPCFA is to be governed by a 7-member
board of directors all of whom serve without compensation
but are to be reimbursed for travel and per diem and $100
per full meeting day.
Costs for the CPCFA administration are unknown but
potentially $250,000-$500,000 annually based on existing
financing authorities within the state.
STAFF NOTES that (1) to the extent that the state
constructs and operates new generation facilities, there
are potential savings to ratepayers, (2) although the
intent of the conservation provisions is for the CPCFA to
make low-cost loans to utilities so that they can offer
energy-improvement loans to their customers at lower
interest rates, the bill does not specifically require that
the cost savings be passed on to the borrower, and (3)
although the sponsor of the bill indicates that $1 billion
in revenue bond proceeds would be dedicated to the
conservation measures, the bill does not specify such a
limit.
STAFF RECOMMENDS AMENDMENTS TO:
(1) require that the CPCFA be subject to the
annual budget process
(2) require annual reporting to the Joint
Legislative Budget and Appropriations Committees of the
CPCFA's activities and expenditures, and require an
evaluation of the effectiveness of the programs of, and
continued need for, the CPCFA prior to the sunset
(3) establish a due date for the CPCFA to develop
natural gas strategies
(4) in Section 3365, require that the
participating utility certify that loan duration won't
exceed the useful life of the purchase
(5) specify on page 20, line 14 that where the
participating party is an electrical corporation subject
to the PUC ratemaking authority, that the CPCFA shall
consult with the PUC in determining rates for purposes of
this section
(6) strike "tax anticipation notes" from the
definition of "Bonds" on page 3
(7) clarify that aggregate borrowing may not
exceed $5 billion
(8) require, rather than allow, the CPCFA's
administrative and other costs to be recovered from
participating parties
(9) make technical changes as follows:
(a) clarify that the costs described on page 9, lines
31-34 are to be recovered
from participating parties
(b) on page 16, line 6, strike "financial assistance"
and insert "loans"
(c) on page 5, line 28, strike "7" and insert "6"
(d) clarify that the sunset also applies to the
undertaking of new programs,
financing, etc.