BILL ANALYSIS
Appropriations Committee Fiscal Summary
1685 (Leno)
Hearing Date: 8/20/03 Amended: 8/18/03
Consultant: Lisa Matocq Policy Vote: E, U & C
5-1
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BILL SUMMARY: AB 1685 extends the Self-Generation Incentive
Program (SGIP), until January 1, 2008. Beginning January
1, 2005, it requires distributed generation (DG) projects
operating by combustion to meet certain NOx emission
standards, and beginning January 1, 2007, it requires them
to meet ultra-clean and low-emission standards.
Fiscal Impact (in thousands)
Major Provisions 2003-04 2004-05
2005-06 Fund
State projects -- Unknown-see
comments below General/
Various
PUC program admin. -- Probably $300 annually,
Special*
should be offset by fee
revenues
*Public Utilities' Reimbursement Account (PURA)
STAFF COMMENTS: This bill may meet the criteria for
referral to the Suspense File to the extent that
combustion-operated, state DG projects may no longer be
eligible for incentives in the future. The SGIP was
established in 2001; it provides incentives to customers
that install qualifying self-generation equipment
(renewable, and "super-clean" nonrenewable), such as
photo-voltaics, wind turbines, small gas turbines, and
internal combustion engines. The program is funded by a
distribution charge imposed on utility bills, which
generates about $125 million annually. According to
Southern California Edison, only $33.6 million in
incentives has been paid to date. Although there is no
statutory sunset, the PUC established a December 31, 2004
administrative sunset; their positions and associated
funding expire on June 30, 2004.
This bill reduces the pool of applicants eligible to
receive incentives. In 2001-2002, state DG projects, mainly
combustion-operated, have received $2 million in
incentives. At least 3 of these projects are not currently
permitted to meet the new standards proposed by this bill.
In these 3 projects, the equipment owner received the
incentive, however, the state derives a benefit in the form
of lease revenues and energy cost savings. The total
revenues/savings of these 3 projects is $1.29 million over
the life of the contracts. It is unknown whether the state
intends to pursue similar projects in the future, or
whether the alternative technologies in the SGIP can
generate similar savings/revenues for the state.
The bill also gives the PUC flexibility to include other
technologies, and to consider public policy interests, such
as environmental impacts. It is unknown what other
technologies might be included in the future. The PUC's
costs to continue the program are about $300,000-$350,000
annually, for five positions.
SB 107 (Bowen), which passed this Committee, but is pending
reconsideration in the Assembly Utilities and Commerce
Committee, is similar to this bill.