BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1685|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 1685
Author: Leno (D), et al
Amended: 9/4/03 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 5-1, 7/8/03
AYES: Bowen, Alarcon, Dunn, Murray, Vasconcellos
NOES: McClintock
NO VOTE RECORDED: Morrow, Battin, Sher
SENATE APPROPRIATIONS COMMITTEE : 8-4, 8/29/03
AYES: Alpert, Ashburn, Bowen, Burton, Escutia, Karnette,
Machado, Murray
NOES: Battin, Aanestad, Johnson, Poochigian
NO VOTE RECORDED: Speier
ASSEMBLY FLOOR : 54-25, 6/2/03 - See last page for vote
SUBJECT : Energy: self-generation incentive program
SOURCE : The Planning and Conservation League
DIGEST : The bill extends the Self-Generation Incentive
program until January 1, 2008 and requires that
combustion-operated distributed generation projects meet
specific emissions targets in order to qualify for
Self-Generation Incentive Program rebates.
ANALYSIS : Existing law requires the State Public
Utilities Commission (PUC) to offer differential incentives
for renewable and super clean distributed generation (AB
CONTINUED
AB 1685
Page
2
970 [Ducheny], Chapter 329, Statutes of 2000).
Pursuant to AB 970, the PUC established the Self-Generation
Incentive Program (SGIP).
This bill extends the SGIP until January 1, 2008 by
requiring the PUC, in consultation with the California
Energy Commission, to administer, until January 1, 2008,
the incentive program in the same form that exists on
January 1, 2004.
The bill, beginning January 1, 2005, requires
combustion-operated distributed generation project using
fossil fuels to meet certain NOx emission standards, and
beginning January 1, 2007, requires them to meet
ultra-clean and low-emission standards.
The bill revises the definition of "ultra-clean" and
"low-emission distributed generation" to include electric
generation technologies that commence operation prior to
December 31, 2008.
The bill gives the PUC flexibility to include other
technologies, and to consider public policy interests, such
as environmental impacts.
Background
Pursuant to AB 970's direction to offer incentives for
renewable and super clean distributed generation resources,
the PUC established the SGIP in March 2001. The SGIP
offers $125 million of financial assistance per year
through 2004 for installation of photo-voltaics, fuel
cells, and certain gas-fired resources up to one megawatt
in size. The SGIP offers incentives of $4.50 per watt of
installed on-site renewable generation capacity, up to a
maximum of 50% of total installation costs (Level 1).
Certain non-renewable self-generation is also eligible
under the category of "super clean," but with lower
incentives. Fuel cells using non-renewable fuel and waste
heat recovery are eligible for $2.50 per watt, up to 40% of
total costs (Level 2). Internal combustion engines and
micro-turbines using waste heat recovery (i.e.
co-generation) are eligible for $1.00 per watt, up to 30%
AB 1685
Page
3
of total costs (Level 3). "Super clean" is not defined in
statute. The SGIP doesn't require projects to meet any
exceptional environmental standards.
Last year, SB 1038 (Sher), Chapter 515, Statutes of 2002,
authorized the PUC to offer special rate treatment to
"ultra-clean and low-emission" distributed generation in
order to encourage early compliance with emissions
standards established by the ARB pursuant to SB 1298
(Bowen), Chapter 741, Statutes of 2000. SB 1038 defined
"ultra-clean and low-emission" as distributed generation
meeting 2007 ARB emission limits, plus an efficiency
standard, and commencing operation by December 31, 2005.
In March 2003, the PUC issued Decision 03-04-030, which
defined distributed generation customers' responsibility
for unrecovered electricity procurement costs incurred by
the investor-owned utilities and the Department of Water
Resources. Among other things, the decision grants a
complete exemption from any such charges for distributed
generation that's eligible for financial incentives under
the SGIP, and only requires projects to meet existing
emissions standards. The same decision grants a lesser
exemption for self-generation that meets the more stringent
"ultra-clean and low-emission" criteria.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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
AB 1685
Page
4
revenues
*Public Utilities' Reimbursement Account (PURA)
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.
The PUC's costs to continue the program are approximately
$300,00 - $500,000 annually, for five positions.
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.
SUPPORT : (Verified 9/5/03)
The Planning and Conservation League (source)
State Public Utilities Commission (support, if amended -
position reflects 7/16/03 version)
City and County of San Francisco
Pacific Gas and Electric Company
AMECO
Bay Solar Power Design
Borrego Solar Systems, Inc.
California Solar Energy Industries Association
City of San Diego
East Bay Municipal Utility District
EcoEnergies
International Energy Systems Corporation
Light Energy Systems
Ocean Beach Organic Food Co-op
Owens Electric Inc.
Pacific Energy Company
AB 1685
Page
5
Performance Solar Inc.
POCO Solar Energy
R.A. Energy International, Inc.
Sacramento Municipal Utility District
San Diego Regional Energy Office
Shell Solar Industries
Short Electric
Six Rivers Solar, Inc.
SoCal Solar Energy
Solar Integrated Technologies
SOLutions in Solar Electricity
Solar Wind Works
SUN Utility Network, Inc.
Tri-Power Group
Numerous individuals
OPPOSITION : (Verified 9/5/03)
Southern California Edison Company (prior version)
ASSEMBLY FLOOR :
AYES: Berg, Bermudez, Calderon, Canciamilla, Chan, Chavez,
Chu, Cohn, Corbett, Correa, Daucher, Diaz, Dutra,
Dymally, Firebaugh, Frommer, Goldberg, Hancock, Harman,
Jerome Horton, Jackson, Kehoe, Koretz, La Malfa, Laird,
Leno, Levine, Lieber, Liu, Longville, Lowenthal,
Maldonado, Matthews, Montanez, Mullin, Nakanishi, Nakano,
Nation, Negrete McLeod, Nunez, Oropeza, Parra, Pavley,
Reyes, Richman, Ridley-Thomas, Salinas, Simitian,
Steinberg, Vargas, Wiggins, Wolk, Yee, Wesson
NOES: Aghazarian, Bates, Benoit, Bogh, Campbell, Cogdill,
Cox, Dutton, Garcia, Haynes, Shirley Horton, Houston,
Keene, La Suer, Leslie, Maddox, Maze, McCarthy, Mountjoy,
Pacheco, Plescia, Runner, Samuelian, Strickland, Wyland
NC:cm 9/9/03 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****