BILL ANALYSIS
SB 769
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Date of Hearing: August 17, 2005
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
SB 769 (Simitian) - As Amended: August 15, 2005
Policy Committee: UtilitiesVote:6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires the Public Utilities Commission (PUC) to
expand existing low-income ratepayer refrigerator replacement.
Specifically, this bill:
1)Establishes a goal of expanding the replacement of low-income
ratepayers' refrigerators by at least 20,000 additional
units-above the number targeted for replacement through the
existing Low Income Energy Efficiency (LIEE) program-through a
new five-year program to be implemented by the commission,
effective from July 1, 2006 through July 1, 2011, targeting
replacement of refrigerators in low-income rental housing
units.
2)Requires that, if the 20,000-unit goal is not met in any year
of the program, the following year's goal shall be increased
such that the total five-year program goal remains at 100,000
units.
3)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.
4)Requires that the energy-inefficient refrigerators come under
the control of a certified appliance recycler.
5)Prohibits any inefficient refrigerator replaced as part of
this program from being refurbished or reused and requires
that all recyclable components be recycled.
6)Allows the PUC to upwardly adjust the 20,000 targeted amount
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of annual refrigerator replacements through the program after
an evaluation of the overall ratepayer and low-income
ratepayer savings resulting from the avoided (California
Alternate Rates for Energy) CARE expenditures, from avoided
bill defaults, from the reduction in overall energy demand,
and from reduced energy bills of low-income ratepayers.
7)Requires the PUC to report to the Legislature, with specified
information concerning the program's outcomes.
FISCAL EFFECT
1)Tens of millions of dollars in additional subsidies for
refrigerator replacement over five years in order to meet the
bill's goal. These costs would come from ratepayers and would
constitute either a reallocation of existing resources
currently used for other energy conservation activities, an
increase by the PUC in the Public Goods Charge (see below), or
to the extent allowable under current law, an increase in
electricity rates.
2)The PUC would incur one-time costs and ongoing costs of about
$50,000 for program start-up and review.
COMMENTS
1)Background and Purpose . The PUC oversees the Low Income Energy
Efficiency (LIEE) program which funds efficiency and
weatherization programs for low-income ratepayers. (This
program is funded from the Public Goods Charge-a
non-bypassable surcharge on electric bills that also funds
conservation, public interest energy research, and renewable
energy-related activities.) For increasing energy efficiency,
refrigerator replacement is a common choice due to
cost-effectiveness. Post 2001 refrigerators are typically
more than 50% efficient than pre-1992 refrigerators. Given
that refrigerators consume a relatively large portion (up to
20%) of total residential consumption, such increased
efficiency can be a very effective way to lower overall
household electricity demand.
The investor-owned utilities currently administer refrigerator
replacement programs for low-income customers that use the
same income guidelines as proposed in SB 769. In 2004, about
42,000 refrigerators in low-income residences were replaced
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under these programs-Pacific Gas and Electric-PG&E (20,000),
San Diego Gas and Electric (7,000), and Southern California
Edison (16,000)-at a cost of almost $29 million.
This bill is targeted at low-income renters who do not own
their own refrigerators but pay their own electric bills.
Such 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.
2)Opposition . PG&E questions the rationale of placing the bill's
requirements only on the three investor-owned utilities and
not on the municipal utilities. PG&E is also concerned that
the bill would require a rate increase.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081