BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 2593 - Calderon
Hearing Date: June 8, 2004
A
As Amended: April 19, 2004 FISCAL
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5
9
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DESCRIPTION
Previous law required the California Public Utilities
Commission (CPUC) to offer differential incentives for
renewable and super clean distributed generation (AB 970
(Ducheny), Chapter 329, Statutes of 2000). Pursuant to AB
970, the CPUC established the Self-Generation Incentive
Program (SGIP) in March 2001.
Existing law (AB 1685 (Leno), Chapter 894, Statutes of
2003) repealed the above provision, requires the CPUC to
administer the SGIP until 2008, and prescribes eligibility
for gas-fired distributed generation as follows:
1.In 2005 and 2006, projects must meet an oxides of
nitrogen (NOx) emissions rate of 0.14 pounds per
megawatthour.
2.In 2007, projects must meet a NOx emissions rate of 0.07
pounds per megawatthour and have a minimum efficiency of
60 percent.
This bill authorizes the CPUC to suspend collection of
funds from ratepayers to support SGIP incentives if the
CPUC determines sufficient funds are available to meet the
reasonable anticipated demand for incentives for that year.
BACKGROUND
Pursuant to AB 970's direction to offer incentives for
renewable and super clean distributed generation resources,
the CPUC established the SGIP in March 2001. The current
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%
of total costs (Level 3).
Last year, AB 1685 required the CPUC to continue the SGIP
until 2008 "in the same form as it exists," except
eligibility standards for gas-fired distributed generation
were raised. AB 1685 established a two-stage emissions
standard which, in 2005 and 2006, requires projects to
exceed current emissions standards to be eligible for SGIP
rebates. In 2007, projects must meet the emission standard
slated for implementation by the ARB in 2007.
The sponsor of this bill, Southern California Edison (SCE),
collects $26 million per year for its SGIP. However, it
has awarded incentives totaling just $15 million since
2001.
COMMENTS
1.Why are SCE's SGIP awards so much less than it has
collected? SCE indicates interest in its SGIP is high,
but doesn't explain why its awards are so low relative to
the amount authorized by the CPUC. Similar programs
administered by the California Energy Commission have
been oversubscribed. The author and the committee may
wish to consider whether the CPUC should be required to
audit the SGIP to determine whether it is being
effectively implemented by the utilities and report to
the Legislature on the matter.
2.Does the CPUC need statutory authority to suspend
collection of SGIP funds? The level of funding for the
SGIP is not prescribed in statute. However, AB 1685
generally required the CPUC to continue the SGIP until
2008 in the same "form," which may prevent the CPUC from
altering funding levels.
Initially, this bill required the CPUC to suspend
collection if it determined sufficient funds had already
been collected. In the Assembly Utilities and Commerce
Committee, the bill was amended to authorize the CPUC
suspend collection. The author and the committee may
wish to consider whether giving the CPUC such authority
is necessary.
3.Is the San Diego Gas & Electric (SDG&E) exemption
necessary? When the bill required the CPUC to suspend
collection, it included an exemption from the requirement
for SDG&E ("electrical corporation that serves no more
than two counties"). While the bill now simply
authorizes the CPUC to suspend collection, it still
doesn't apply to SDG&E. This suggests the CPUC's
existing authority to suspend collection of SDG&E SGIP
funds would be removed by the bill. The author and the
committee may wish to consider whether this exemption
should be removed.
4.Conflict with related legislation. AB 1684 (Leno),
pending in this committee, extends SGIP eligibility to
projects which do not meet the emissions standards
established by AB 1685, if the project operates solely on
natural gas that is not eligible for delivery to the
utility pipeline system (waste gas), and the project
provides a net air emissions benefit. AB 1684 and AB
2593 are in conflict in that each bill amends the same
section of existing law. To resolve the conflict, the
author and the committee may wish to consider amending
this bill so that it adds a separate, new section or
combining the two bills.
ASSEMBLY VOTES
Assembly Floor (77-0)
Assembly Appropriations Committee(20-0)
Assembly Transportation Committee(12-0)
POSITIONS
Sponsor:
Southern California Edison
Support:
None on file
Oppose:
None on file
Lawrence Lingbloom
AB 2593 Analysis
Hearing Date: June 8, 2004