BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           1685 (Leno)
          
          Hearing Date:  8/28/03          Amended: 8/18/03 and  
          proposed to
                                                                       
                   be amended by LCR 317824                      
          Consultant:  Lisa Matocq            Policy Vote: E, U & C  
          5-1                      
          ____________________________________________________________ 
          ___
          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.  It also  
          makes related changes. 
                              Fiscal Impact (in thousands)
           Major Provisions         2003-04              2004-05                  
           2005-06               Fund  
          State projects                    --                      See  
          comments below             General/
                                                             Various            
                  
          PUC program admin.        --                Probably $300-350  
          annually,        Special*
                                                      should be offset by fee  
          revenues 
          *Public Utilities' Reimbursement Account (PURA)
          
          STAFF COMMENTS: SUSPENSE FILE.  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.  PUC staff  
          anticipate renewing the program.  











          This bill reduces the pool of applicants eligible to  
          receive incentives. State DG projects, mainly  
          combustion-operated, have received $2 million in  
          incentives.  As proposed to be amended, at least three of  
          these projects would meet the new standards in this bill.  
          Any future state combustion-operated DG projects would be  
          required to meet the new standards, or would no longer be  
          eligible for the incentive.  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. 

          Proposed author amendments modify the emissions standards  
          for combustion-operated projects.