BILL NUMBER: SB 1790 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 26, 2002
PASSED THE ASSEMBLY AUGUST 20, 2002
AMENDED IN ASSEMBLY AUGUST 16, 2002
AMENDED IN ASSEMBLY JUNE 27, 2002
AMENDED IN ASSEMBLY JUNE 20, 2002
AMENDED IN SENATE APRIL 17, 2002
INTRODUCED BY Senator Bowen
FEBRUARY 22, 2002
An act to amend Sections 25410.5, 25410.6, 25411, 25413, 25415,
25416, 25417.5, 25441, 25442.7, 25443.5, 25445, 25446, 25449.1, and
25449.3 of, and to repeal Sections 25412.5, 25441.5, and 25447.2 of,
the Public Resources Code, and to add Section 2774.6 to the Public
Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1790, Bowen. Energy resources.
(1) Existing law establishes the State Energy Conservation
Assistance Account to carry out the provisions of the Energy
Conservation Assistance Act of 1979. Existing law provides that it
is the intent of the Legislature that the account be administered by
the State Energy Resources Conservation and Development Commission to
provide grants and loans to local governments and public
institutions to maximize energy use savings through technical
assistance, demonstrations, and identification and implementation of
cost-effective energy efficiency measures and programs.
This bill would amend related legislative findings and
declarations and would state the intent of the Legislature that the
energy efficiency measures and programs for which grants and loans
may be provided are for existing and planned buildings and
facilities. This bill would make conforming changes to various
definitions under the act.
(2) Existing law defines "technical assistance program" for the
purposes of the act, as specified assistance to schools, hospitals,
local government, and public care institutions.
This bill would include in that definition specialized studies
related to energy and cost savings likely to be realized as a result
of new construction activities, and the development and evaluation of
alternative project implementation and proposals.
(3) Existing law requires the commission to approve only those
applications for projects that will recover costs through savings in
the cost of energy to the institution during repayment.
This bill would require the commission to prescribe the manner in
which the savings would be calculated.
Existing law further requires the commission to give priority to
projects that, based on anticipated savings in the cost of energy,
will most quickly recover the cost of the allocation.
This bill would delete that provision.
(4) Existing law requires each eligible institution to which an
allocation has been made to repay the principal amount of the
allocation, plus interest, in not more than 22 equal semiannual
payments.
This bill would instead require the institution to repay the
amount in not more than 30 payments.
The bill would additionally prohibit the repayment period from
exceeding the life of the equipment or lease term of the relevant
building.
(5) Existing law authorizes the commission to contract and provide
grants for specified services to be performed for eligible
institutions. Existing law provides that the amount expended for
those services may not exceed 10% of the annual appropriation from
the account.
This bill would instead provide that the amount may not exceed 10%
of the balance of the account on July 1 of each year.
Existing law authorizes the commission to charge a fee for
services provided to institutions and local jurisdictions, provided
that the funds used for the payment of services has been made
available as a result of the realization of savings in energy costs.
Existing law further provides that, if anticipated savings do not
result from the project, the repayment of fees shall be forgiven.
This bill would delete those restrictions.
(6) Existing law authorizes the commission to borrow money from,
sell loans to, or enter into loan agreements or other contracts with,
the California Economic Development Financing Authority and the
California Infrastructure and Economic Development Bank, for
specified purposes.
This bill would include the California Consumer Power and
Conservation Financing Authority among those entities.
(7) Existing law authorizes the commission to make loans to local
jurisdictions for energy project assistance. Existing law provides
that the loans may not exceed $1,000,000 for any one local
jurisdiction and provides that the loan may not exceed 75% of the
project costs.
This bill would delete the above provision and instead provide
that the loan may not exceed $5,000,000.
(8) Existing law provides that loans to local jurisdictions be
evaluated according to specified factors.
This bill would delete certain of these factors.
(9) Existing law authorizes the commission to make loans to local
governments owning, or leasing from entities other than privately
owned electrical utilities, street lighting systems for conversion of
such systems from incandescent or mercury vapor lighting to sodium
vapor lighting or another lighting system of equivalent energy
efficiency, if the conversion results in comparable illumination.
This bill would repeal that provision.
(10) Existing law provides that financial assistance provided to
local jurisdictions for staff training and support services, as
specified, may not exceed 75% of the cost of carrying out the
activity, except as specified.
This bill would repeal that provision.
The bill would additionally delete various obsolete provisions of
law.
(11) Existing law provides for regulation of electrical
corporations by the Public Utilities Commission.
This bill would require the Public Utilities Commission, in
consultation with the State Energy Resources Conservation and
Development Commission, to develop a program for residential and
commercial customer air-conditioning load control, as an element of
each electrical corporation's tariffed service offerings paid for
with electric rates. The bill would provide that the goal of the
program is to contribute to the adequacy of electricity supply and to
help customers reduce their electric bills in a cost-effective
manner.
Because a violation of a rule or order of the Public Utilities
Commission is a crime under existing provisions of law, the bill
would impose a state-mandated local program by creating a new crime.
(12) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 25410.5 of the Public Resources Code is amended
to read:
25410.5. The Legislature finds and declares all of the following:
(a) Energy costs are frequently the second largest discretionary
expense in a local government's budget. According to the commission,
most public institutions could reduce their energy costs by 20 to 30
percent.
(b) A variety of energy conservation measures are available to
local governments. These measures are highly cost-effective, often
providing a payback on the initial investment in three years or less.
(c) Many local governments lack energy management expertise and
are often unaware of their high energy costs or the opportunities to
reduce those costs.
(d) Local governments that desire to reduce their energy costs
through energy conservation and efficiency measures often lack
available funding.
(e) Since 1980, the Energy Conservation Assistance Account has
provided $110 million in loans, through a revolving loan account, to
600 schools, hospitals, and local governments. The energy
conservation projects funded by the account save approximately $35
million annually in energy costs.
(f) Local governments and public institutions need assistance in
all aspects of energy efficiency improvements, including, but not
limited to, project identification, project development and
implementation, evaluation of project proposals and options,
operations and maintenance, and troubleshooting of problem projects.
SEC. 2. Section 25410.6 of the Public Resources Code is amended to
read:
25410.6. (a) It is the intent of the Legislature that the
commission shall administer the State Energy Conservation Assistance
Account to provide grants and loans to local governments and public
institutions to maximize energy use savings, including, but not
limited to, technical assistance, demonstrations, and identification
and implementation of cost-effective energy efficiency measures and
programs in existing and planned buildings or facilities.
(b) It is further the intent of the Legislature that the
commission seek the assistance of utility companies in providing
energy audits for local governments and public institutions and in
publicizing the availability of State Energy Conservation Assistance
Account funds to qualified entities.
SEC. 3. Section 25411 of the Public Resources Code is amended to
read:
25411. As used in this chapter:
(a) "Allocation" means a loan of funds by the commission pursuant
to the procedures specified in this chapter.
(b) "Building" means any existing or planned structure that
includes a heating or cooling system, or both. Additions to an
original building shall be considered part of that building rather
than a separate building.
(c) "Eligible institution" means a school, hospital, public care
institution, or a unit of local government.
(d) "Energy audit" means a determination of the energy consumption
characteristics of a building or facility that does all of the
following:
(1) Identifies the type, size, and energy use level of the
building or facility and the major energy using systems of the
building or facility.
(2) Determines appropriate energy conservation maintenance and
operating procedures.
(3) Indicates the need, if any, for the acquisition and
installation of energy conservation measures.
(e) "Energy conservation maintenance and operating procedure"
means a modification or modifications in the maintenance and
operations of a building or facility, and any installations therein
(based on the use time schedule of the building or facility), which
are designed to reduce energy consumption in the building or facility
and that require no significant expenditure of funds.
(f) "Energy conservation measure" means an installation or
modification of an installation in a building or facility that is
primarily intended to reduce energy consumption or allow the use of a
more desirable energy source.
(g) "Energy conservation project" means an undertaking to acquire
and to install one or more energy conservation measures in a building
or facility, and technical assistance in connection with that
undertaking.
(h) "Facility" means any major energy using system of an eligible
institution whether or not housed in a building.
(i) "Hospital" means a public or nonprofit institution that is
both of the following:
(1) A general hospital, tuberculosis hospital, or any other type
of hospital, other than a hospital furnishing primarily domiciliary
care.
(2) Duly authorized to provide hospital services under the laws of
this state.
(j) "Hospital building" means a building housing a hospital and
related operations, including laboratories, laundries, outpatient
departments, nurses' home and training activities, and central
service operations in connection with a hospital, and also includes a
building housing education or training activities for health
professions personnel operated as an integral part of a hospital.
(k) "Local government building" means a building that is primarily
occupied by offices or agencies of a unit of local government or by
a public care institution.
(l) "Project" means a purpose for which an allocation may be
requested and made under this chapter. Those purposes shall include
energy audits, energy conservation and operating procedures, and
energy conservation measures in existing and planned buildings and
facilities, energy conservation projects, and technical assistance
programs.
(m) "Public care institution" means a public or nonprofit
institution that owns:
(1) A long-term care institution.
(2) A rehabilitation institution.
(3) An institution for the provision of public health services,
including related publicly owned services such as laboratories,
clinics, and administrative offices operated in connection with the
institution.
(4) A residential child care center.
(n) "Public or nonprofit institution" means an institution owned
and operated by:
(1) The state, a political subdivision of the state, or an agency
or instrumentality of either.
(2) An organization exempt from income tax under Section 501(c)(3)
of the Internal Revenue Code of 1954.
(3) In the case of public care institutions, an organization also
exempt from income tax under Section 501(c)(4) of the Internal
Revenue Code of 1954.
(o) "School" means a public or nonprofit institution, including a
local educational agency, which:
(1) Provides, and is legally authorized to provide, elementary
education or secondary education, or both, on a day or residential
basis.
(2) Provides, and is legally authorized to provide, a program of
education beyond secondary education, on a day or residential basis
and meets all of the following requirements:
(A) Admits as students only persons having a certificate of
graduation from a school providing secondary education, or the
recognized equivalent of that certificate.
(B) Is accredited by a nationally recognized accrediting agency or
association.
(C) Provides an education program for which it awards a bachelor's
degree or higher degree or provides not less than a two-year program
that is acceptable for full credit toward a degree at any
institution that meets the requirements of subparagraphs (A) and (B)
and provides that program.
(3) Provides not less than a one-year program of training to
prepare students for gainful employment in a recognized occupation
and that meets the provisions of (2).
(p) "School building" means a building housing classrooms,
laboratories, dormitories, athletic facilities, or related facilities
operated in connection with a school.
(q) "Technical assistance costs" means costs incurred for the use
of existing personnel or the temporary employment of other qualified
personnel, or both, necessary for providing technical assistance.
(r) "Technical assistance program" means assistance to schools,
hospitals, local government, and public care institutions and
includes, but is not limited to:
(1) Conducting specialized studies identifying and specifying
energy savings and related cost savings that are likely to be
realized as a result of:
(A) Modification of maintenance and operating procedures in a
building or facility, in addition to those modifications implemented
after the preliminary energy audit, or
(B) Acquisition and installation of one or more specified energy
conservation measures in the building or facility, or as a result of
both.
(C) New construction activities.
(2) Planning of specific remodeling, renovation, repair,
replacement, or insulation projects related to the installation of
energy conservation measures in the building or facility.
(3) Developing and evaluating alternative project implementation
methods and proposals.
(s) "Unit of local government" means a unit of general purpose
government below the state or a special district.
SEC. 4. Section 25412.5 of the Public Resources Code is repealed.
SEC. 5. Section 25413 of the Public Resources Code is amended to
read:
25413. Applications may be approved by the commission only in
those instances where the eligible institution has furnished
information satisfactory to the commission that the costs of the
project, plus interest on state funds loaned, calculated in
accordance with Section 25415, will be recovered through savings in
the cost of energy to the institution during the repayment period of
the allocation.
The savings shall be calculated in a manner prescribed by the
commission.
SEC. 6. Section 25415 of the Public Resources Code is amended to
read:
25415. (a) Each eligible institution to which an allocation has
been made under this chapter shall repay the principal amount of the
allocation, plus interest, in not more than 30 equal semiannual
payments, as determined by the commission. The first semiannual
payment shall be made on or before December 22 of the fiscal year
following the year in which the project is completed. The repayment
period may not exceed the life of the equipment, as determined by the
commission or the lease term of the building in which the energy
conservation measures will be installed.
(b) Notwithstanding any other provision of law, the commission
shall, unless it determines that the purposes of this chapter would
be better served by establishing an alternative interest rate
schedule, periodically set interest rates on the loans based on
surveys of existing financial markets and at rates not less than 3
percent per annum.
(c) The governing body of each eligible institution shall annually
budget an amount at least sufficient to make the semiannual payments
required in this section. The amount shall not be raised by the
levy of additional taxes but shall instead be obtained by a savings
in energy costs or other sources.
SEC. 7. Section 25416 of the Public Resources Code is amended to
read:
25416. (a) The State Energy Conservation Assistance Account is
hereby created in the General Fund. Notwithstanding Section 13340 of
the Government Code, the account is continuously appropriated to the
commission without regard to fiscal year.
(b) The money in the account shall consist of all money authorized
or required to be deposited in the account by the Legislature and
all money received by the commission pursuant to Sections 25414 and
25415.
(c) The money in the account shall be disbursed by the Controller
for the purposes of this chapter as authorized by the commission.
(d) The commission may contract and provide grants for services to
be performed for eligible institutions. Services may include, but
are not limited to, feasibility analysis, project design, field
assistance, and operation and training. The amount expended for
those services may not exceed 10 percent of the balance of the
account as determined by the commission on July 1 of each year.
(e) The commission may make grants for innovative projects and
programs. The amount expended for grants may not exceed 5 percent of
the annual appropriation from the account.
(f) The commission may charge a fee for the services provided
under subdivision (d).
SEC. 8. Section 25417.5 of the Public Resources Code is amended to
read:
25417.5. (a) In furtherance of the purposes of the commission as
set forth in this chapter, the commission has the power and authority
to do all of the following:
(1) Borrow money, for the purpose of obtaining funds to make loans
pursuant to this chapter, from the California Economic Development
Financing Authority, the California Infrastructure and Economic
Development Bank, and the California Consumer Power and Conservation
Financing Authority from the proceeds of revenue bonds issued by any
of those agencies.
(2) Pledge, to provide collateral in connection with the borrowing
of money pursuant to paragraph (1), loans made pursuant to this
chapter or Chapter 5.4 (commencing with Section 25440), or the
principal and interest payments on loans made pursuant to this
chapter or Chapter 5.4 (commencing with Section 25440).
(3) Sell loans made pursuant to this chapter or Chapter 5.4
(commencing with Section 25440), at prices determined in the sole
discretion of the commission, to the California Economic Development
Financing Authority, the California Infrastructure and Economic
Development Bank, and the California Consumer Power and Conservation
Financing Authority to raise funds to enable the commission to make
loans to eligible institutions.
(4) Enter into loan agreements or other contracts necessary or
appropriate in connection with the pledge or sale of loans pursuant
to paragraph (2) or (3), or the borrowing of money as provided in
paragraph (1), containing any provisions that may be required by the
California Economic Development Financing Authority, the California
Infrastructure and Economic Development Bank, or the California
Consumer Power and Conservation Financing Authority as conditions of
issuing bonds to fund loans to, or the purchase of loans from, the
commission.
(b) In connection with the pledging of loans, or of the principal
and interest payment on loans, pursuant to paragraph (2) of
subdivision (a), the commission may enter into pledge agreements
setting forth the terms and conditions pursuant to which the
commission is pledging loans or the principal and interest payment on
loans, and may also agree to have the loans held by bond trustees or
by independent collateral or escrow agents and to direct that
payments received on those loans be paid to those trustee,
collateral, or escrow agents.
(c) The commission may employ financial consultants, legal
advisers, accountants, and other service providers, as may be
necessary in its judgment, in connection with activities pursuant to
this chapter.
(d) Notwithstanding any other provision of law, this chapter
provides a complete, separate, additional, and alternative method for
implementing the measures authorized by this chapter, including the
authority of the eligible institutions or local jurisdictions to have
borrowed and to borrow in the future pursuant to loans made pursuant
to this chapter or Chapter 5.4 (commencing with Section 25440), and
is supplemental and additional to powers conferred by other laws.
SEC. 9. Section 25441 of the Public Resources Code is amended to
read:
25441. The commission shall provide financial assistance to local
jurisdictions for the purpose of providing staff training and
support services, including, but not limited to, planning design,
permitting, energy conservation, comprehensive energy management,
project evaluation, and development of alternative energy resources.
SEC. 10. Section 25441.5 of the Public Resources Code is repealed.
SEC. 11. Section 25442.7 of the Public Resources Code is amended
to read:
25442.7. (a) Loans under this article may not exceed five million
dollars ($5,000,000) for any one local jurisdiction unless the
commission determines, by unanimous vote, that the public interest
and objectives of this chapter would be better served at a higher
loan amount.
(b) Loan repayments shall be made in accordance with a schedule
established by the commission. Repayment of loans shall be made in
full unless the commission determines, by unanimous vote, that the
public interest and objectives of this chapter would be better served
by negotiating a reduced loan repayment for a project that fails to
meet the technical or financial performance criteria through no fault
of the local jurisdiction.
SEC. 12. Section 25443.5 of the Public Resources Code is amended
to read:
25443.5. (a) In furtherance of the purposes of the commission as
set forth in this chapter, the commission has the power and authority
to do all of the following:
(1) Borrow money, for the purpose of obtaining funds to make loans
pursuant to this chapter, from the California Economic Development
Financing Authority, the California Infrastructure and Economic
Development Bank, and the California Consumer Power and Conservation
Financing Authority from the proceeds of revenue bonds issued by any
of those agencies.
(2) Pledge, to provide collateral in connection with the borrowing
of money pursuant to paragraph (1), loans made pursuant to this
chapter or Chapter 5.2 (commencing with Section 25410), or the
principal and interest payments on loans made pursuant to this
chapter or Chapter 5.2 (commencing with Section 25410).
(3) Sell loans made pursuant to this chapter or Chapter 5.2
(commencing with Section 25410), at prices determined in the sole
discretion of the commission, to the California Economic Development
Financing Authority, the California Infrastructure and Economic
Development Bank, and the California Consumer Power and Conservation
Financing Authority to raise funds to enable the commission to make
loans to eligible institutions.
(4) Enter into loan agreements or other contracts necessary or
appropriate in connection with the pledge or sale of loans pursuant
to paragraph (2) or (3), or the borrowing of money as provided in
paragraph (1), containing any provisions that may be required by the
California Economic Development Financing Authority, the California
Infrastructure and Economic Development Bank, or the California
Consumer Power and Conservation Financing Authority as conditions of
issuing bonds to fund loans to, or the purchase of loans from, the
commission.
(b) In connection with the pledging of loans, or of the principal
and interest payment on loans, pursuant to paragraph (2) of
subdivision (a), the commission may enter into pledge agreements
setting forth the terms and conditions pursuant to which the
commission is pledging loans or the principal and interest payment on
loans, and may also agree to have the loans held by bond trustees or
by independent collateral or escrow agents and to direct that
payments received on those loans be paid to those trustee,
collateral, or escrow agents.
(c) The commission may employ financial consultants, legal
advisers, accountants, and other service providers, as may be
necessary in its judgment, in connection with activities pursuant to
this chapter.
(d) Notwithstanding any other provision of law, this chapter
provides a complete, separate, additional, and alternative method for
implementing the measures authorized by this chapter, including the
authority of the eligible institutions or local jurisdictions to have
borrowed and to borrow in the future pursuant to loans made pursuant
to this chapter or Chapter 5.2 (commencing with Section 25410), and
is supplemental and additional to powers conferred by other laws.
SEC. 13. Section 25445 of the Public Resources Code is amended to
read:
25445. The commission shall design a local jurisdiction energy
assistance program for the purpose of providing financial assistance
under Article 2 (commencing with Section 25441) and providing loans
under Article 3 (commencing with Section 25442). A local
jurisdiction's energy assistance program shall be funded through the
commission's existing local government assistance programs, except
that if a project is not eligible for funding under an existing
program, the commission may fund the project under this chapter.
SEC. 14. Section 25446 of the Public Resources Code is amended to
read:
25446. Loans made pursuant to this program shall, at a minimum,
be evaluated on both of the following factors:
(a) Project feasibility.
(b) Energy savings or energy production potential sufficient to
repay the loan in accordance with Section 25442.
SEC. 15. Section 25447.2 of the Public Resources Code is repealed.
SEC. 16. Section 25449.1 of the Public Resources Code is amended
to read:
25449.1. The commission shall enter into an agreement with the
State Department of Education to expend petroleum violation escrow
funds to supplement, and not supplant, other available funds in order
to provide loans to school districts to purchase, maintain, and
evaluate energy efficient equipment and small power production
systems.
SEC. 17. Section 25449.3 of the Public Resources Code is amended
to read:
25449.3. (a) The Local Jurisdiction Energy Assistance Account is
hereby created in the General Fund. All money appropriated for
purposes of this chapter and all money received from local
jurisdictions from loan repayments shall be deposited in the account
and disbursed by the Controller as authorized by the commission.
(b) The commission may charge a fee for the services provided
under this chapter.
(c) The commission may contract for services to be performed by
eligible institutions, as defined in subdivision (c) of Section
25411. Those services may include, but are not limited to,
performance of a feasibility analysis, and providing project design,
field evaluation, and operation and training assistance. The amount
expended for contract services may not exceed 10 percent of the
annual scheduled loan repayment to the Local Jurisdiction Energy
Assistance Account, as determined by the commission not later than
July 1 of each fiscal year.
SEC. 18. Section 2774.6 is added to the Public Utilities Code, to
read:
2774.6. The commission, in consultation with the State Energy
Resources Conservation and Development Commission, shall develop a
program for residential and commercial customer air-conditioning load
control, as an element of each electrical corporation's tariffed
service offerings paid for with electric rates. The goal of the
program shall be to contribute to the adequacy of electricity supply
and to help customers reduce their electric bills in a cost-effective
manner. The program may include peak load reduction programs for
residential and commercial air-conditioning systems, if the
commission determines that the inclusion would be cost-effective.
SEC. 19. The Legislature finds and declares all of the following:
(a) Air-conditioning load constitutes 28 percent of California's
peak electricity demand, the largest single component of electricity
demand.
(b) Reducing peak load of, and implementing load control for,
residential and commercial air-conditioning systems by the state's
electrical corporations can achieve a significant reduction of
California's peak electricity demand in a cost-effective manner.
(c) It is the intent of the Legislature that the state establish
cost-effective load control programs for residential and commercial
air-conditioning systems.
SEC. 20. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.