BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           426 (Richman)
          
          Hearing Date:  8/18/03          Amended: 7/10/03       
          Consultant:  Lisa Matocq            Policy Vote: A & W 10-2
                                                                       
                                         E, U & C 5-2  
          ____________________________________________________________ 
          ___
          BILL SUMMARY:  AB 426 requires the Department of Water  
          Resources (DWR) to establish a program to lease space above  
          the state water project to private entities for the purpose  
          of installing solar panels to generate electricity. 
                              Fiscal Impact (in thousands)
           Major Provisions                 2003-04           2004-05              
           2005-06               Fund  
          
          DWR                        Increased of costs of $280-300 annually,   
             General/
                                                      offset to some extent by  
          lease revenues      Various
          
          STAFF COMMENTS:  This bill may meet the criteria for  
          referral to the Suspense File depending on the extent to  
          which DWR recovers its costs.  

          The bill, among other things, requires DWR to, upon  
          request, evaluate proposals for installing solar  
          photovoltaic systems.  The requester pays for the  
          evaluation.  It also allows, but does not require, DWR to  
          negotiate any level of compensation that is "equal to, or  
          greater than, the cost to the department to meet its  
          obligations under the agreement".  

          DWR leased space to wind energy producers to install  
          facilities in the Altamont area.  The arrangement resulted  
          in litigation which, to date, has cost state water project  
          contractors more than $3.5 million.  DWR also negotiated an  
          agreement with a telecommunications company to use the  
          state water project right-of-way to install a fiber optic  
          cable, in exchange for communications and surveillance  
          services by the company.  Apparently, this arrangement has  
          been successful.  

          STAFF RECOMMENDS that the bill be amended to:











          (1) require DWR to charge lease fees that are at least  
          sufficient to cover all of its related costs;
          (2) clarify that the requester, and not DWR, is responsible  
          for connecting the solar panels to the grid; 
          (3) require any contract to include a hold harmless  
          agreement protecting the state from liability arising out  
          of any injury or damage resulting from the installation,  
          operation or maintenance of the solar panels.