BILL ANALYSIS
AB 1684
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CONCURRENCE IN SENATE AMENDMENTS
AB 1684 (Leno)
As Amended August 25, 2004
2/3 vote. Urgency
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|ASSEMBLY: |79-0 |(January 29, |SENATE: |34-1 |(August 26, |
| | |2004) | | |2004) |
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Original Committee Reference: U. & C.
SUMMARY : Requires the California Public Utilities Commission
(PUC) in consultation with the Energy Resources Conservation and
Development Commission (CEC) to administer a self-generation
incentive program for all combustion operated fossil fuel
distributed generation projects as specified. Specifically,
this bill :
1)Requires PUC to administer, until January 1, 2008, a
self-generation incentive program in the same form as exists
on January 1, 2004; and as established in AB 970 (Ducheny)
Chapter 329, Statutes of 2000, only for Level 1 (photovoltaic,
fuel cells operating on renewable fuel, and wind turbines) and
Level 2 (fuel cells operating on renewable fuel) technologies.
2)Requires that Level 3 (microturbines, internal combustion
engines and small gas turbine) technologies to meet an oxide
of nitrogen (NOx) emission rate standard of .14 pounds per
megawatthour by 2005 to qualify for the self generation
incentive program.
3)Requires that by January 1, 2007, all combustion operated
distributed generation projects using fossil fuel meet NOx
emissions rate standard of .07 pounds per megawatthour and a
minimum efficiency of 60% of useful energy output divided by
fuel input.
4)Provides projects are still eligible for self generation
incentives even though they don't meet NOx emissions rate
standards as set combustion operated distributed generation if
they operate solely on waste gas or if the air quality
management district or air pollution control district issues a
permit to the project because it will produce onsite net air
emission benefits.
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5)Requires distributed generation projects seeking eligibility
for incentives under this program to first secure a permit
before receiving any incentives.
6)Includes an urgency clause.
The Senate amendments add language allowing distributed
generation projects or projects that provide a onsite net air
emission benefit as determined by the air quality management
district or air pollution control district to be exempt from NOx
emissions rate standards set for 2005 and 2007 as specified in
this bill in order to eligible for self generation incentive
program funding. Distributed generation projects seeking
eligibility for incentives under this program to first secure a
permit before receiving any incentives. The Senate amendments
also add an urgency.
AS PASSED BY THE ASSEMBLY , this bill required:
1)PUC to administer, until January 1, 2008, a self-generation
incentive program for distributed generation in the same form
as exists on January 1, 2004.
2)By January 1, 2005, that all combustion operated distributed
generation projects using fossil fuels to meet NOx emissions
rate standards of .14 pounds per megawatt hour and by January
1, 2007, to meet emission rate standards of .07 pounds per
megawatt hour or operate solely on natural gas that is not
eligible for delivery to the utility pipeline system to be
eligible for rebates under PUC self-generation incentive
program.
FISCAL EFFECT : Minor special fund cost pressure to the
Self-Generation Incentive Program (SGIP) from expanded
eligibility.
COMMENTS : Background: 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. There are many applications for DG
like as backup power for customers during emergencies, standby
generation for end users that require an interruptible power
supply or as a primary source of electricity eliminating the
reliance on the grid.
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PUC administers SGIP that provides differential rebates to
qualified DG technologies. The highest rebates go towards
"clean" and "ultra-clean" technologies and the lowest rebate go
towards fossil fuel technologies. PUC decision 01-03-073
established the level of the rebates to different DG
technologies pursuant to AB 970 (Ducheny), Chapter 329, Statutes
of 2000.
AB 970 required PUC to identify and take action to reduce or
remove constraints on the state's existing electrical
transmission and distribution system by creating incentives for
load control and distributed generation.
AB 1685 (Leno), Chapter 894, Statutes of 2003, requires PUC to
continue to administer a SGIP until January 1, 2008. AB 1685
establishes that combustion operated DG technologies must meet
specified NOx emission standards for 2005 and 2007. The 2007
NOx emission standards were set according to the Air Resources
Board (ARB) pursuant to SB 1298 (Bowen), Chapter 741, Statutes
of 2000, that required ARB to develop emission standards
equivalent to the Best Available Control Technology (BACT) for
permitted central station power plants in California.
Last year the author of AB 1685 had committed to trying to
resolve problems with the bill that prohibited companies that
used flared waste gas to operate distributed generation
technology. Under the stringent air emissions rate standards
set by AB 1685 these companies would no longer meet the program
eligibility even though the use of flared waste gas to operate
distributed generation projects was better for air quality than
flaring it into the open. The Senate amendments craft a narrow
compromise that allows companies that flare waste gas or show
net air emissions benefit as determined by the air quality
management district or the air pollution control district to be
exempt from NOx emissions rate standards set for 2005 and 2007
and continue to be eligible for PUC self generation incentive
program. Also, by being eligible for the self-generation
incentive program the projects would be exempt from exit fees
per PUC Decision 03-04-030.
Analysis Prepared by : Daniel Kim / U. & C. / (916) 319-2083
FN: 0008904
AB 1684
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