BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1685
                                                                  Page  1


          Date of Hearing:  April 21, 2003

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                                 Sarah Reyes, Chair
                     AB 1685 (Leno) - As Amended:  April 10, 2003
           
          SUBJECT  :  Energy:  self generation incentive program.

           SUMMARY :  Requires the California Public Utilities Commission  
          (PUC) in consultation with the State Energy Resources  
          Conservation and Development Commission to administer a  
          self-generation incentive program for solar electricity  
          generation until January 1, 2017.  Specifically, this bill  :

          1)Requires PUC in consultation with the State Energy Resources  
            Conservation and Development Commission to administer a  
            self-generation incentive program for solar electricity  
            generation.

          2)Requires the program to continue until January 1, 2017 in the  
            same form as it exists on January 1, 2004.

           EXISTING LAW  : 

          1)Requires PUC to develop an incentive program to encourage  
            customers of investor-owned utilities to install distributed  
            generation, which operates on renewable fuel or contributes to  
            system reliability.

          2)Establishes the self generation incentive program to provide  
            incentives for customers of Pacific Gas and Electric (PG&E),  
            Southern California Edison (Edison), San Diego Gas & Electric  
            (SDG&E) and Southern California Gas Company (SoCalGas) to  
            install photovoltaics, wind turbines, fuel cells,  
            microturbines, small gas turbines, and internal combustion  
            engines to provide some or all of their electricity for onsite  
            use.

           FISCAL EFFECT  :  Unknown.

           COMMENTS  :

           The purpose of this bill  :  According to the author AB 1685  
          re-authorizes a very successful program that would otherwise  








                                                                  AB 1685
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          expire at the end of 2004.  California has everything to gain  
          from the continued growth of solar and other renewable energy  
          technologies - clean air, new jobs and increased energy  
          independence.

           Self-Generation Incentive Program  :  AB 970, signed by the  
          Governor on September 6, 2000, required PUC to initiate certain  
          load control and distributed generation activities, including  
          providing financial incentives.  PUC decision 01-03-073  
          authorizes the Self-Generation Inventive Program, and allocated  
          $125 million per year through 2004 for program administration  
          and customer incentives.  Technologies eligible to receive  
          incentive payments under the program are photovoltaics, wind  
          turbines, fuel cells, internal combustion engines, small gas  
          turbines and microturbines.

          The program has three categories of incentive payments and  
          maximum incentive and system size limits:

           ----------------------------------------------------------------- 
          |Incentiv|Incentiv| Maximum  |Minimum | Maximum |    Eligible     |
          |   e    |   e    |percentage| system | system  |  technologies   |
          |category|offered |    of    |  size  |  size   |                 |
          |        |        | project  |        |         |                 |
          |        |        |   cost   |        |         |                 |
          |--------+--------+----------+--------+---------+-----------------|
          |Level 1 |$4.50/Wa|50        |30 kW   |1 MW     |Photovoltaics,   |
          |        |tt      |percent   |        |         |fuel cells       |
          |        |        |          |        |         |operating on     |
          |        |        |          |        |         |renewable fuel,  |
          |        |        |          |        |         |wind turbines    |
          |--------+--------+----------+--------+---------+-----------------|
          |Level 2 |$2.50/Wa|40        |None    |1 MW     |Fuel cells       |
          |        |tt      |percent   |        |         |operating on     |
          |        |        |          |        |         |nonrenewable     |
          |        |        |          |        |         |fuel and         |
          |        |        |          |        |         |utilizing        |
          |        |        |          |        |         |sufficient waste |
          |        |        |          |        |         |heat recovery    |
          |--------+--------+----------+--------+---------+-----------------|
          |Level 3 |$1.00/Wa|30        |None    |1 MW     |Microturbines,   |
          |        |tt      |percent   |        |         |internal         |
          |        |        |          |        |         |combustion       |
          |        |        |          |        |         |engines and      |








                                                                  AB 1685
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          |        |        |          |        |         |small gas        |
          |        |        |          |        |         |turbines         |
          |        |        |          |        |         |utilizing        |
          |        |        |          |        |         |sufficient waste |
          |        |        |          |        |         |heat recovery    |
          |        |        |          |        |         |and meeting      |
          |        |        |          |        |         |reliability      |
          |        |        |          |        |         |criteria         |
           ----------------------------------------------------------------- 

          The Self-Generation Incentive Program provides incentive funding  
          to renewable and non-renewable self-generation unites up to 1 MW  
          in size.  PG&E, SCE, SoCalGas, and the San Diego Regional Energy  
          Office (serving SDG&E customers) administer the program  
          throughout their respective service territories.

           Most of the applicants seem to be in photovoltaics  :  The PUC  
          November 2002 status report on the Self-Generation Incentive  
          Program showed that there were 248 total applicants in 2002, of  
          which 145 applicants were in photovoltaics technology but  
          applicants in internal combustion engine technology produced  
          twice as many kilowatts with half as many applicants.

           Committee recommendation on changing the sunset date  :  This bill  
          currently requires the program to continue until January 1,  
          2017.  The committee recommendation is to instead have this bill  
          sunset on January 1, 2008 so that the incentive program can be  
          reviewed at that time to determine whether it is worthwhile to  
          continue with it or focus instead on other areas of technology.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Shell Solar Industries
          Light Energy Systems
          POCO Solar Energy
          Six Rivers Solar
          SoCal Solar Energy
          Performance Solar Inc.
          AMECO
          EcoEnergies

           Opposition 








                                                                 AB 1685
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          None on file.


           Analysis Prepared by  :    Daniel Kim / U. & C. / (916) 319-2083