BILL ANALYSIS AB 426 Page 1 ASSEMBLY THIRD READING AB 426 (Richman) As Amended May 8, 2003 Majority vote WATER, PARKS & WILDLIFE 12-5 UTILITIES & COMMERCE 9-2 ----------------------------------------------------------------- |Ayes:|Keene, Daucher, Dymally, |Ayes:|Reyes, Richman, Campbell, | | |Shirley Horton, Leslie, | |La Malfa, La Suer, | | |Lowenthal, Parra, Pavley, | |Levine, Nunez, | | |Plescia, Spitzer, Wolk, | |Ridley-Thomas, Wolk | | |Yee | | | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Canciamilla, Berg, |Nays:|Calderon, Canciamilla | | |Bermudez, Frommer, | | | | |Matthews | | | | | | | | ----------------------------------------------------------------- APPROPRIATONS 23-1 (vote not available) SUMMARY : Requires the Department of Water Resources (DWR) to establish a program which would allow private entities to lease space above State Water Project (SWP) conveyance facilities for solar panels. Specifically, this bill : 1)Requires DWR to establish a program to authorize private entities to lease space above SWP conveyance facilities deemed appropriate for the installation of solar panels used to generate electricity. 2)Requires DWR to include as conditions in the lease that: a) The solar panels shall be interconnected to the electric transmission grid in accordance with applicable rules, orders, or tariffs of the Public Utilities Commission; and, b) If the Independent System Operator declares a Stage 3 emergency, the electricity generated from the solar panels may not be sold out of state. AB 426 Page 2 3)Authorizes DWR to impose charges that cover the actual cost incurred to implement the program. FISCAL EFFECT : According to the Assembly Appropriations Committee analysis: 1)Moderate upfront costs, in the range of $280,000 in both fiscal year (FY) 2003-04 and FY 2004-05, to DWR to establish the solar panel program. These costs may ultimately be covered by revenue generated from fees. (GF or various special accounts) 2)Moderate on going costs, perhaps $300,000 annually starting in FY 2005-06, to DWR to administer the program. Costs covered by fee revenue if DWR exercises its authority to impose fees. (GF or various special accounts) AB 426 Page 3 3)Potential moderate on-going revenue, perhaps in the range of $300,000 annually starting in FY 2004-05, from lease payments made to DWR. (Various special accounts) COMMENTS : SWP extends more than 660 miles and includes 33 storage facilities, 20 pumping plants, four hydroelectric plants, and four pumping-generating plants. SWP originates on tributaries of the Feather River and extends down the Sacramento River, through the Delta and San Joaquin Valley and over the Tehachapi Mountains into Pyramid and Castaic lakes in Southern California. SWP supplies drinking water to 22 million Californians, and irrigation water for 750,000 acres of farmland. Solar electric or photovoltaic (PV) systems convert some of the energy in sunlight directly into electricity. A PV system includes an array (a group of panels which consist of modules that are wired together), and other equipment like charge controllers, storage (batteries) and tracking and monitoring equipment, collectively called balance of system components. The author states that it has been the policy of the state to maintain a diversified energy portfolio in order to minimize risk during periods of volatile fuel prices. The author believes that many miles of SWP's open canals and pipelines could be suitable for the deployment of solar electricity generating facilities. In response to an inquiry by committee staff, DWR states that they have the current authority to lease parts of the SWP, but have never been approached by solar energy companies for use of SWP. Currently, the issue of placement of any structure within SWP right-of-way is one that DWR evaluates on a case-by-case basis. Considerations include, among other things, potential adverse effects on Aqueduct facilities, potential impacts to water operations and water deliveries, DWR personnel safety while conducting maintenance activities, potential environmental impacts, and the ability of DWR to maintain water system security. The Association of California Water Agencies (ACWA) is in opposition to the bill. ACWA maintains that the placement of solar panels above SWP conveyance facilities will interfere with the operation and maintenance of those facilities. Further, ACWA believes that the placement of these solar panels would AB 426 Page 4 compromise SWP system security measures. The California Solar Energy Industries Association (CAL SEIA) states that the bill would make available space in areas of the state where the best solar resource in the U.S. exists. CAL SEIA notes that the California Aqueduct runs directly through an area near Barstow where the existing Solar Electrical Generating Systems are currently producing 354 megawatts of solar generated electricity, and that this area has the highest solar resource in the entire world, making it an ideal location for installing PV systems. Analysis Prepared by : Kathy Mannion / W., P. & W. / (916) 319-2096 FN: 0001259