BILL ANALYSIS
AB 2593
Page 1
Date of Hearing: April 12, 2004
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
AB 2593 (Calderon) - As Amended: April 12, 2004
SUBJECT : Self-Generation Incentive Program.
SUMMARY : Requires that the California Public Utilities
Commission (CPUC) suspend for a year the collection of the
surcharge for the Self-Generation Incentive Program when it
determines it has sufficient funds to meet current year demand
for incentives. Specifically, this bill
1)Requires the CPUC to determine annually whether the
Self-Generation Incentive Program has sufficient funds
available to meet reasonably anticipated demand for incentives
to the program. After the determination is made the and if
funds are anticipated to be available to meet the number of
applicants that year then the CPUC would suspend collection of
the surcharge for that year.
2)Specifies that the bill does not apply to ratepayers of an
electrical corporation that serves no more than two counties
(i.e., San Diego Gas & Electric (SDG&E)).
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.
FISCAL EFFECT : Unknown.
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.
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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.
AB 1685 Leno (Chapter 894, Statutes of 2003), extended the SGIP
until January 1, 2008, by requiring 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 also revised the definition of
"ultra-clean" and "low-emission distributed generation" to
include electric generation technologies that commence operation
prior to December 31, 2008.
This bill seeks to suspend the collection of funds for the
support of the SGIP in any year the CPUC determines that the
program has sufficient funds to meet the reasonably anticipated
demand for incentives for that year. The sponsors argue that
the reasons for the suspension stem from the fact the total
amount of incentives paid to eligible participants since the
program inception is approximately $15 million, even though $104
million has been collected in rates. To reduce the impact on
ratepayers, Edison argues that the SGIP should be funded on a
forecasted need.
Why doesn't this bill apply to SDG&E? In SDG&E's case they
believe that the way the bill is currently structured could
potentially under fund their SGIP if the CPUC determined
incorrectly that the utility had sufficient funds available and
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suspended collection of funds for the program for that year,
which is why they are requesting to be excluded from the bills
requirements.
One Size Doesn't Fit All. On the face of the proposal the idea
sounds warranted to limit the amount collected from ratepayers
if the program is under subscribed and a large balance exists at
the end of the year. The sponsor points out that the CPUC
should determine the forecasted fund amount at the beginning of
the year and suspend collection of additional funds if the need
can be met with the existing authorization. Unfortunately, this
approach lends itself to complication that may ultimately lead
to underfunding and overfunding the program during different
years depending on the accuracy of CPUCs projections.
PG&E's successful implementation of SGIP: In PG&E's case they
had notified the Governor's Office this month regarding the
overwhelming volume of commercial scale photo voltaic
applications in their service territory, causing applications in
Level 1 of the SGIP to be oversubscribed for the first time. In
order to meet this unexpected demand PG&E transferred $10
million from Level 2 budget and $5 million from
administrative/M&E budget. PG&E's chart on the number of
applications submitted shows that a dramatic spike had occurred
at the end of the calendar year in November and December that
was unanticipated by the utility.
Why is there such a high surplus in this program for Edison? As
a result of the growing success of the SGIP, and in particular
the Level 1 incentive program, in PG&E's service territory the
question that needs to be answered is why is Edison is having so
much difficulty disbursing the funds for these incentives and
what should the utility and the CPUC be doing differently to
ensure greater success for this program in Edison's service
territory.
PUC has existing process to adjust amounts for SGIP: The CPUC
annually approves the fund amount for the SGIP for the different
utilities (as it did for 2004 in D.01-03-073). In cases where
the utility cannot utilize all its funds then the CPUC can
adjust the fund level for that utility.
Should there be an audit of Edison's SGIP? In Edison's case
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their SGIP has accrued an unusually high balance since its
inception. The question that should then be asked is whether
the CPUC or the Bureau of State Audits should audit Edison's
administration of their SGIP to ascertain why the program is not
working as effectively for them as it is for the other
utilities.
REGISTERED SUPPORT / OPPOSITION :
Support
Southern California Edison
Opposition
None on file
Analysis Prepared by : Daniel Kim / U. & C. / (916) 319-2083