BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1684
                                                                  Page  1

          Date of Hearing:   January 21, 2004

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                   AB 1684 (Leno) - As Amended:  January 16, 2004 

          Policy Committee:                              Utilities and  
          Commerce     Vote:                            12-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill allows distributed generation technologies operating  
          solely on natural gas that are not eligible for delivery to the  
          utility pipeline system to qualify for rebates under the Public  
          Utilities Commission's (PUC's) Self-Generation Incentive Program  
          (SGIP).

           FISCAL EFFECT  

          Minor special fund cost pressure to the SGIP from expanded  
          eligibility.

           COMMENTS  

           Background and Purpose  . Distributed generation (DG) is electric  
          generation connected to the distribution level of the  
          transmission and distribution grid usually located at or near  
          the intended place of use.  The PUC's Self-Generation Incentive  
          Program provides $125 million in differential rebates annually  
          to qualified DG technologies.  The highest rebates go towards  
          "clean" and "ultra-clean" technologies and the lowest rebates  
          towards fossil fuel technologies.  AB 1685 Leno (Chapter  
          894/Statutes of 2003) statutorily extended this program until  
          January 1, 2008.  AB 1685 also established that combustion  
          operated DG technologies must meet specified oxides of nitrogen  
          (NOx) emission standards for 2005 and 2007.

          AB 1684, sponsored by the California Independent Petroleum  
          Association, would allow those DG natural gas technologies that  
          are not eligible for delivery to a utility's pipeline system  
          and, due to their emissions characteristics, do not currently  








                                                                  AB 1684
                                                                  Page  2

          qualify for the SGIP rebates, to become eligible for the rebates  
          by demonstrating a net air emissions benefit.  This typically  
          would apply to the inert gases that are embedded in oil  
          extracted from California fields.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081