BILL ANALYSIS
AB 1685
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Date of Hearing: September 10, 2003
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
AB 1685 (Leno) - As Amended: September 4, 2003
SUBJECT : Electricity: Self Generation Incentive Program.
SUMMARY : 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. Specifically, this bill :
1)Requires investor owned utilities to develop differential
incentives for renewable or super clean distributed generation
resources that meet the emissions standards established under
this bill.
2)Requires PUC in consultation with the State Energy Resources
Conservation and Development Commission to administer a
self-generation incentive program in the same form as it
exists on January 1, 2004.
3)Requires combustion-operated distributed generation project
using fossil fuels, beginning January 1, 2005, to meet certain
NOx emission standards, and beginning January 1, 2007,
requires them to meet ultra-clean and low-emission standards.
4)Revises the definition of "ultra-clean" and "low-emission
distributed generation" to include electric generation
technologies that commence operation prior to December 31,
2008 and gives PUC flexibility to include other technologies,
and to consider public policy interests, such as environmental
impacts.
EXISTING LAW:
1)Requires PUC to offer differential incentives for renewable
and super clean distributed generation.
2)Requires the State Air Resources Board (ARB) to adopt
emissions standards for distributed generation technologies
beginning in 2003.
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FISCAL EFFECT : According to the Senate Appropriations Committee
PUC's costs to continue this program are approximately $300,000
to $500,000 annually, for five positions.
COMMENTS : Pursuant to AB 970 (Ducheny) Chapter 329, Statutes of
2000, authorized PUC to offer incentives for renewable and super
clean distributed generation resources. In response to AB 970
PUC established the Self Generation Incentive Program (SGIP) in
March 2001. 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. 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%
of total costs (Level 3). "Super clean" is not defined in
statute. SGIP doesn't require projects to meet any exceptional
environmental standards.
Last year, SB 1038 (Sher), Chapter 515, Statutes of 2002,
authorized 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 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, 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 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.
This bill reduces the pool of applicants eligible to receive
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incentives. Under this bill any future combustion-operated DG
projects would be required to meet the new standards, or would
no longer be eligible for the incentive and may be subject to
paying specified exist fees as set by PUC.
REGISTERED SUPPORT / OPPOSITION :
Support
The Planning and Conservation League
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
Performance Solar Inc.
POCO Solar Energy
R.A. Energy International, Inc.
RWE Schott Solar
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
California Independent Petroleum Association (unless amended)
AB 1685
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Analysis Prepared by : Daniel Kim / U. & C. / (916) 319-2083