BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           426 (Richman)
          
          Hearing Date:  8/28/03          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 by lease revenues  
                                       Various

          
          STAFF COMMENTS:  SUSPENSE FILE. 

          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 requires DWR to recover its  
          costs from lease revenues.   

          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.  











          Recent author amendments reduce costs by (1) requiring,  
          rather than authorizing, DWR to charge lease fees that are  
          at least sufficient to cover its costs, (2) clarifying that  
          the lessee is responsible for connecting the solar panels  
          to the grid, and (3) requiring that contracts 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.  
            

          STAFF RECOMMENDS that the bill be amended to require that  
          DWR negotiate lease revenues based on fair market value.