BILL NUMBER: AB 1684	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JULY 19, 2004
	AMENDED IN SENATE  JUNE 14, 2004
	AMENDED IN ASSEMBLY  JANUARY 16, 2004
	AMENDED IN ASSEMBLY  JANUARY 14, 2004
	AMENDED IN ASSEMBLY  JANUARY 5, 2004

INTRODUCED BY   Assembly Members Leno and Oropeza

                        FEBRUARY 21, 2003

   An act to amend Section 379.6 of the Public Utilities Code,
relating to energy resources.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1684, as amended, Leno.  Distributed generation resources.
   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.
   Existing law requires the commission, in consultation with the
Energy 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.  This
program requires that 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 and, commencing January 1, 2007, meet a more stringent NOx
emission standard and a minimum efficiency standard.  This existing
program establishes, as of January 1, 2007, a credit for combined
heat and power units that meet a certain efficiency standard.
   This bill would expand the self-generation incentive program to
make eligible for incentive rebates a project that operates solely on
waste gas, as defined, subject to certain requirements.
   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.  Section 379.6 of the Public Utilities Code is amended
to read:
   379.6.  (a) The commission, in consultation with the State Energy
Resources Conservation and Development Commission, shall administer,
until January 1, 2008, the self-generation incentive program for
distributed generation resources originally established pursuant to
Chapter 329 of the Statutes of 2000.  Except as provided in
subdivision (b), the program shall be administered in the same form
as it existed on January 1, 2004.
   (b) Eligibility for the self-generation incentive program's level
3 incentive category shall  be subject to the following conditions:
   (1) Commencing January 1, 2005, all combustion-operated
distributed generation projects using fossil  fuels 
 fuel  shall meet an oxides of nitrogen (NOx) emissions
rate standard of 0.14 pounds per megawatthour .
   (2) Commencing January 1, 2007, all combustion-operated
distributed generation projects  using fossil  fuels
  fuel  shall meet a NOx emissions rate standard of
0.07 pounds per megawatthour and a minimum efficiency of  60
percent   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.
   (3) Combined heat and power units that meet the 60 percent
efficiency standard may take a credit to meet the applicable 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.
   (4) Notwithstanding paragraphs (1) and (2), a project that does
not meet the applicable NOx emission standard is eligible if it meets
both of the following requirements:
   (A) The project operates solely on waste gas.  The commission
shall require a customer that receives an incentive pursuant to this
paragraph to secure an interconnection agreement that specifies that
the project shall be operated solely on waste gas.  Incentives
awarded pursuant to this paragraph shall be subject to refund and
shall be refunded by the recipient to the extent the project does not
operate on waste gas.  A gas corporation or other gas supplier shall
report to the commission any deliveries of gas for a project that
has been awarded an incentive pursuant to this paragraph.  As used in
this paragraph, "waste gas" means natural gas that is generated as a
byproduct of petroleum production operations and is not eligible for
delivery to the utility pipeline system.
   (B) The air quality management district or air pollution control
district, in issuing a permit to operate the project, determines that
operation of the project will produce a net air emissions benefit,
compared to permitted emissions if the project does not operate.
   (c) In administering the self-generation incentive program, the
commission may adjust the amount of rebates, include other 
ultra clean and low emission   ultraclean and
low-emission  distributed generation technologies, as defined in
Section 353.2, and evaluate other public policy interests,
including, but not limited to, ratepayers, and energy efficiency and
environmental interests.