BILL ANALYSIS
SB 769
Page 1
Date of Hearing: June 27, 2005
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Lloyd E. Levine, Chair
SB 769 (Simitian) - As Amended: June 22, 2005
SENATE VOTE : 34-3
SUBJECT : Energy Efficient Refrigerators.
SUMMARY : Requires the California Public Utilities Commission
(PUC) to expand existing low income ratepayer refrigerator
replacement programs by increasing the number of energy
inefficient refrigerators that are replaced each year by a
minimum of 50,000. Specifically, this bill :
1)Establishes a goal of expanding existing low income ratepayer
refrigerator replacement programs by replacing at least 50,000
additional refrigerators per year by creating a program that
targets inefficient refrigerators in low income rental units
with new energy efficient refrigerators.
2)Requires the new program to provide incentives to owners of
low-income residential rental units with energy-inefficient
refrigerators to replace those refrigerators with
energy-efficient models.
3)Requires that the incentives are paid upon proof of purchase
of the energy-efficient refrigerator and proof that the new
refrigerator is to replace an operating inefficient
refrigerator.
4)Prohibits any inefficient refrigerator replaced as part of
this program from being refurbished or reused and requires
that all recyclable components be recycled.
5)Allows the PUC to upwardly adjust the 50,000 targeted amount
of refrigerator replacements through the program after an
evaluation of the overall ratepayer and low-income ratepayer
savings resulting from the avoided CARE expenditures, from
avoided bill defaults, from the reduction in overall energy
demand, and from reduced energy bills of low-income
ratepayers.
6)Provides that the provisions of this bill will sunset in 5
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years.
EXISTING LAW
1)Requires Pacific Gas & Electric Company (PG&E), Southern
California Edison (SCE), and San Diego Gas and Electric
Company (SDG&E) to collect a combined $228 million annually
from customers to pay for energy efficiency and conservation
activities. This amount, which is annually adjusted at the
lesser of the inflation rate or the growth in electricity
sales, is raised by a non-bypassable surcharge on electric
bills known as the Public Goods Charge (PGC).
2)Provides for a low-income energy efficiency program funded at
not less than 1996 levels. The PUC is required to ensure that
low income customers are not overburdened by monthly energy
expenditures and to allocate whatever funds are necessary to
adequately fund the program.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author the purpose of this bill is
to increase energy reliability and affordability for all energy
consumers by reducing the demand for energy in limited income
residential rental units.
1) History : AB 1890 (Brulte), Chapter 854, Statutes of 1996,
established a $228 million annual minimum funding level for
energy efficiency efforts funded through a non-bypassable PGC on
all ratepayers bills. The $228 million has been annually
adjusted by the lesser of the rate of inflation or the growth in
electric consumption. The PUC also oversees the Low Income
Energy Efficiency (LIEE) program which funds efficiency programs
for low-income ratepayers. This program is funded directly
through rates paid to the electric utilities.
Refrigerator replacement programs are common energy efficiency
programs because of their relative cost-effectiveness. Modern
refrigerators (i.e. post 2001) are typically better than 50%
more efficient than pre-1992 refrigerators. Given the relatively
large amounts of electricity a refrigerator consumes (up to 20%
of total residential consumption), increasing its efficiency by
50% can be a very effective way to lower overall household
electricity demand. All the investor-owned utilities currently
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administer programs for low-income customers that use the same
income guidelines as proposed by this bill.
2) 2004 Program Summaries : In 2004, SCE replaced approximately
16,000 refrigerators in low income residences at a cost of $9.4
million. Additionally, SCE has been authorized to pay for the
entire cost of a replacement refrigerator for renters whether
they own the refrigerator or not, but has not implemented the
program.
Pacific Gas & Electric (PG&E) replaced approximately 20,000
refrigerators in low income residences at a cost of $15.5
million. PG&E has two programs. The first applies to customers
who own their own refrigerator and pay their own electric bill;
it pays for the entire installed cost of a new refrigerator.
Ninety-nine percent of PG&E's replacement refrigerators are
placed through this program. The second program applies to
landlords who own the refrigerators in the tenants' premises and
who also pay the electric bill. This program requires the
landlord to pay $200 of the total installed cost.
San Diego Gas & Electric (SDG&E) replaced approximately 7,000
refrigerators in low income residences at a cost of $4 million.
SDG&E has two programs, the biggest of which is for low-income
renters. Where the renter does not own the refrigerator, SDG&E
will pay half the cost of the new refrigerator with the
landlord paying the other half.
3) Why concentrate on low income: This bill is targeted at
low-income renters who do not own their own refrigerators but
pay their own electric bills. These renters have little
incentive or means to purchase their own refrigerators. Their
landlords similarly have no incentive because the electric bill
is paid by the renter. SCE's program covers this situation by
paying the entire cost of a replacement refrigerator. SDG&E's
program covers this situation by paying for half the cost of a
replacement refrigerator. PG&E's refrigerator replacement
program does not target this type of customer.
3) Is this the best way to reduce demand and help low-income
ratepayers: To fund the program proposed by this bill the PUC
will either have to shift money from other low-income energy
efficiency programs or increase electricity rates. This will
either create a zero sum game where other effective programs
will lose money or will add an unspecified amount to all
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ratepayers' bills.
4) Lofty goals : This bill provides that the goal is to replace
50,000 additional refrigerators in low income households per
year. It also provides that the PUC may adjust that target
upward. The bill does not give the PUC the authority to adjust
the goal downward. The result of these provisions may be to
establish a requirement that at least 50,000 refrigerators are
replaced a year instead of creating a flexible goal.
The PUC, PG&E, SCE, and SDG&E have all expressed concern that
the 50,000 goal may not be obtainable. Last year the three
largest investor owned utilities replaced approximately 42,000
refrigerators in low income homes. This bill would require the
utilities to more than double their current programs in 2006.
While there are over 2 million low income ratepayers in
California, there is no clear information how may of those
ratepayers are renters in places where the landlord would or
could replace the refrigerators and what the cost would be to
reach these people. Without this information, opponents fear
that this bill may set standards that cannot be met.
To assure that the bill does not create requirements that,
overtime, are impossible to meet or may not be an effective use
of ratepayer's dollars in reducing energy demand and providing
assistance to low income ratepayers, the committee may want to
consider amending the bill to allow the PUC to downwardly adjust
the replacement goals .
REGISTERED SUPPORT / OPPOSITION :
Support
Californians Against Waste
California Apartment Association
California Rural Legal Assistance Foundation
Clean Power Campaign
Environment California
Environmental Defense
Natural Resources Defense Council (NRDC)
Planning and Conservation League
San Francisco Public Utilities Commission
Sierra Club California
Southern California Edison
The Utility Reform Network
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Union of Concerned Scientists
Utility Consumers' Action Network
Western Center On Law & Poverty
Opposition
California Public Utilities Commission
Sempra (unless amended)
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083