BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1524 - Sher Hearing Date:
April 23,2002 S
As Amended: April 18, 2002 FISCAL B
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DESCRIPTION
This bill authorizes the continuation of the ratepayer-funded
and California Energy Commission (CEC)-administered Renewable
Energy Program and Public Interest Energy Research (PIER)
Program for five years pursuant to the CEC's investment plans
for these programs.
BACKGROUND
AB 1890 (Brulte), Chapter 854, Statutes of 1996, required
ratepayers to fund a variety of system reliability, in-state
benefit and low-income customer programs at specified levels
from 1998 through 2001. This funding was intended to ensure
that these "public goods" programs continued (at least in the
short term) in the restructured electric industry.
Among the public goods programs are (1) public interest
research, development and demonstration and (2) in-state
operation and development of existing, new, and emerging
renewable energy sources. Prior to expending any of the funds
collected from ratepayers, the CEC was required to submit a
report to the Legislature describing the programs it would
support and the levels of support they would receive. This
original CEC investment plan was codified by SB 90 (Sher),
Chapter 905, Statutes of 1997.
SB 1194 (Sher), Chapter 1050, Statutes of 2000, extended the
collection of a public goods charge from ratepayers until 2012
and again required the CEC to develop investment plans for
renewable energy and public interest research, development, and
demonstration.
For renewable energy, the CEC was required to submit an initial
investment plan by March 31, 2002, addressing the application of
funds collected between January 1, 2002, and January 1, 2007. A
subsequent investment plan is due March 31, 2006, relating to
the application of funds collected between January 1, 2007, and
January 1, 2012. The CEC adopted its 2002-2006 investment plan
for renewable energy in June 2001. IOU ratepayers contribute
$135 million annually to this program.
For public interest research, development and demonstration, the
CEC was required to submit an initial investment plan by March
1, 2001, addressing the application of funds collected between
January 1, 2002, and January 1, 2007. A subsequent investment
plan is due March 31, 2006, relating to the application of funds
collected between January 1, 2007, and January 1, 2012. The CEC
adopted its 2002-2006 investment plan for PIER in March 2001.
IOU ratepayers contribute $62.5 million annually to this
program.
No funds may be expended in the years covered by these plans
without further legislative action. While the public goods
charge is still being collected, the CEC's authority to fund the
programs that it supports has expired. According to the CEC,
payments to renewable generators for generation occurring in
2002 have been suspended and solicitations for new PIER projects
have been suspended. Neither can resume until legislation is
enacted. This bill provides the necessary authorization to
continue these programs.
COMMENTS
1.Open-ended funding for prospective RPS. In addition to the
categories of renewable energy projects this bill directs the
CEC to support, the bill authorizes the CEC to spend an
unspecified level of funds collected for the Renewable Energy
Program for costs related to its implementation of a renewable
portfolio standard (RPS) program, if such a program is
enacted.
SB 532 (Sher), pending in the Assembly Utilities and Commerce
Committee, establishes a RPS, which, if enacted, may impose
implementation and administration costs on the CEC.
The author and the committee may wish to consider limiting the
amount of funds available to the CEC for RPS implementation
(e.g., one percent would provide $1.35 million/year) and
limiting the expenditure of those funds to things that are
required of the CEC by SB 532, or simply addressing this issue
within the RPS bill itself.
2.In-state renewables? The definition of projects eligible for
funding as existing renewable electricity generation
facilities under this bill includes facilities which generate
electricity by burning tires or garbage. This is consistent
with existing law, which has authorized ratepayer subsidies
for these projects even though the "renewability" of their
fuel source is questionable.
In addition, projects located outside California are eligible
for funding as existing renewable electricity generation
facilities if their first point of connection to the Western
Systems Coordinating Council (WSCC) transmission grid lies
within California. Further, the CEC may award funds to a new
renewable electricity generation facility located anywhere
within the WSCC grid (Western U.S., British Columbia and
Baja), if that electricity is sold under contract to customers
in California.
Under this bill as drafted, California ratepayers could be
required to subsidize the generation of electricity from
garbage in Nevada, or from a small hydroelectric project in
Montana, if that electricity is sold to customers in
California. Given that the rationale for public support of
renewables is due in part to the local environmental benefits,
such as reducing air pollution, the author and the committee
may wish to consider whether it's appropriate for these
projects to be eligible for state funding.
3.Built here, sold there. This bill would allow the CEC to
award up to $3.5 million in funds for in-state manufacturing
of renewable distributed generation equipment that could be
sold and used outside the state. The author and the committee
may wish to consider whether in-state manufacture of this
equipment should be subsidized if it is sold out of state.
POSITIONS
Sponsor:
California Energy Commission
Support:
None on file
Oppose:
Independent Energy Producers Association
Lawrence Lingbloom
SB 1524 Analysis
Hearing Date: April 23, 2002