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
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          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  








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          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 


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