BILL NUMBER: AB 1684	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JANUARY 5, 2004

INTRODUCED BY   Assembly Member Leno

                        FEBRUARY 21, 2003

   An act to add Section  750   379.6  to
the Public Utilities Code, relating to energy resources.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1684, as amended, Leno.  Distributed  energy 
 generation resources  . 
   Existing law authorized the Department of Water Resources, until
January 2, 2003, to enter into contracts for the purchase of
electricity, to sell electricity to retail end use customers and,
with certain exceptions, to local publicly owned electric utilities,
at not more than the department's acquisition costs.  Existing law
provides for the repaying of the department's acquisition costs.
   Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations.
Existing law provides that the commission must require every
electrical corporation under the operational control of the
Independent System Operator as of January 1, 2001, to modify its
tariffs so that customers that install distributed energy resources,
as defined, are served under rates, rules, and requirements identical
to those of a customer within the same rate schedule that does not
use distributed energy resources, and to withdraw any provisions in
otherwise applicable tariffs that activate other tariffs, rates, or
rules if a customer uses distributed energy resources.  These
provisions do not relieve a customer of any obligation determined by
the commission to result from participation in the purchases of
electricity by the department.
   This bill would exclude solar installations from any cost
responsibility surcharges that the commission may impose upon
customer generation departing load.  
   Existing law requires the Public Utilities Commission on or before
March 7, 2001, and in consultation with the Independent System
Operator, to take certain actions, including, in consultation with
the State Energy Resources Conservation and Development Commission
(Energy Commission), adopting energy conservation demand-side
management and other initiatives in order to reduce demand for
electricity and reduce load during peak demand periods, including,
but not limited to, differential incentives for renewable or
superclean distributed generation resources.  Pursuant to this
requirement, the commission has developed a Self Generation Incentive
Program to encourage customers of electrical corporations to install
distributed generation that operates on renewable fuel or
contributes to system reliability.
   This bill would require the commission, in consultation with the
State Energy Resources Conservation and Development Commission, to
administer, until January 1, 2008, a self-generation incentive
program for distributed generation resources in the same form that
exists on January 1, 2004.  The bill would require
combustion-operated distributed generation using nonrenewable fuel,
in order to be eligible for incentive rebates, commencing January 1,
2005, meet a certain NOx emission standard or operate solely on
certain natural gas and provide a net air emissions benefit.  And,
commencing January 1, 2007, meet a more stringent NOx emission
standard and a minimum efficiency standard or operate solely on
certain natural gas and provide a net air emissions benefit.  The
bill would establish, as of January 1, 2007, a credit for combined
heat and power units that meet a certain efficiency standard. 
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  
  SECTION 1.  The Legislature finds and declares each of the
following:
   (a) The Public Utilities Commission in Rulemaking 02-01-011 (Order
Instituting Rulemaking Regarding the Implementation of the
Suspension of Direct Access Pursuant to Assembly Bill 1x and Decision
01-09-060) is considering the adoption of a cost responsibility
surcharge mechanism for customer generation departing load.
   (b) The imposition of cost responsibility surcharges would impose
a strong disincentive to investments in solar technology that would
reduce the risk of future electricity shortages.
   (c) The Legislature intends to exclude solar installations from
any cost responsibility surcharges that the commission may impose
upon customer generation departing load.
  SEC. 2.  Section 750 is added to the Public Utilities Code, to
read:
   750.  Notwithstanding any other law, the commission shall not
impose any cost responsibility surcharge for customer solar
generation departing load.  
  SECTION 1.  Section 379.6 is added to the Public Utilities Code, to
read:
   379.6.  (a) The commission, in consultation with the State Energy
Resources Conservation and Development Commission, shall administer,
until January 1, 2008, a self-generation incentive program for
distributed generation resources, in the same form as exists on
January 1, 2004.
   (b) Notwithstanding subdivision (a), the self-generation incentive
program shall do all of the following:
   (1) Commencing January 1, 2005, require all combustion-operated
distributed generation projects using fossil fuels to do either of
the following to be eligible for self-generation rebates under the
level 3 incentive category for nonrenewables, as established by the
commission in Decision 01-03-073, dated March 27, 2001:
   (A) Meet an oxides of nitrogen (NOx) emissions rate standard of
0.14 pounds per megawatthour.
   (B) Operate solely on natural gas that is not eligible for
delivery to the utility pipeline system, and demonstrate that the
project will provide a net air emissions benefit to the facilities'
operations, which benefit shall be certified by the air quality
management district or air pollution control district.
   (2) Commencing January 1, 2007, require all combustion-operated
distributed generation projects using fossil fuels to do either of
the following to be eligible for self-generation rebates under the
level 3 incentive category for nonrenewables, as established by the
commission in Decision 01-03-073, dated March 27, 2001:
   (A) Meet an oxides of nitrogen (NOx) emissions rate standard of
0.07 pounds per megawatthour and a minimum efficiency of 60 percent.
A minimum efficiency of 60 percent shall be measured as useful
energy output divided by fuel input.  The efficiency determination
shall be based on 100 percent load.  Combined heat and power units
that meet the 60 percent efficiency standard may take a credit to
meet the applicable oxides of nitrogen (NOx) emission standard of
0.14 pounds per megawatthour or 0.07 pounds per megawatthour.  Credit
shall be at the rate of one megawatthour for each 3.4 million
British Thermal Units (BTUs) of heat recovered.
   (B) Operate solely on natural gas that is not eligible for
delivery to the utility pipeline system, and demonstrate that the
project will provide a net air emissions benefit to the facilities'
operations, which benefit shall be certified by the air quality
management district or air pollution control district.
   (3) Provide the commission with flexibility in administering the
self-generation incentive program, including, but not limited to,
flexibility with regard to the amount of rebates, inclusion of other
ultra clean and low emission distributed generation technologies, and
evaluation of other public policy interests, including, but not
limited to, ratepayers, and energy efficiency and environmental
interests.