BILL NUMBER: AB 1684	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 23, 2004
	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   emissions  standard and, commencing
January 1, 2007, meet a more stringent NOx  emission
  emissions  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 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 fuel shall meet a 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.
   (3) Combined heat and power units that meet the 60 percent
efficiency standard may take a credit to meet the applicable NOx
 emission   emissions  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  
applies for  an incentive pursuant to this paragraph to 
secure an interconnection agreement   provide an
affidavit or other form of proof,  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   an
onsite  net air emissions benefit, compared to permitted 
onsite  emissions if the project does not operate.   The
commission shall require the customer to secure the permit prior to
receiving incentives. 
   (c) In administering the self-generation incentive program, the
commission may adjust the amount of rebates, include other 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.