BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
MARTHA M. ESCUTIA, CHAIRWOMAN
SB 1037 - Kehoe Hearing Date:
April 19, 2005 S
As Amended: April 11, 2005 FISCAL B
1
0
3
7
DESCRIPTION
Existing law:
1. Establishes and funds various energy efficiency programs
for public and private electric and gas utilities.
2. Prohibits the use of energy efficiency funds for the
purchase of energy-efficient refrigerators.
3. Requires each investor-owned electric utility to
purchase energy according to a procurement plan, subject to
California Public Utilities Commission (CPUC) approval.
This bill:
1. Repeals the prohibition on the use of energy efficiency
funds for refrigerator rebates.
2. Requires public and private electric and gas utilities,
in procuring energy, to first acquire all available energy
efficiency and demand reduction resources that are cost
effective.
3. Expresses legislative intent that cost-effective
alternatives are considered in transmission and
distribution planning, and that transmission planning is
conducted on a statewide basis, rather than
project-by-project.
BACKGROUND
California's energy agencies, including the CPUC, have adopted
an "Energy Action Plan" (EAP) which includes a "loading order"
for the acquisition of new resources. The loading order
prioritizes energy efficiency. The EAP and its loading order
are unenforceable themselves. However, elements of the EAP,
including the loading order, have been incorporated into CPUC
decisions governing the privately-owned utilities it regulates.
The EAP has not been adopted by, and is not directly enforceable
upon, publicly-owned utilities. Publicly-owned utilities are
subject to state law, but are not subject to CPUC jurisdiction.
Instead, they are public agencies governed by local elected
officials.
According to the author, this bill will codify recent CPUC
decisions on energy efficiency and take the first step in a
truly statewide energy efficiency policy by requiring
publicly-owned utilities to acquire energy efficiency before
conventional generation or other resources.
COMMENTS
1. Reefer madness. Since 2000, it has been a crime to use
energy efficiency funds for refrigerator rebates.
Notwithstanding evidence of their popularity and
cost-effectiveness, the ban on refrigerator rebates came at
the insistence of a now-departed legislator who really
didn't like them. However, refrigerator rebates have
continued, using other funding sources. This bill would
repeal the ban on the use of energy efficiency funds for
refrigerator rebates.
2. Codifying the "loading order" and applying it to
municipal utilities. This bill attempts to apply the
loading order's principle of "energy efficiency first" as a
statutory requirement for both electric and natural gas
procurement of both private and publicly-owned utilities.
This is a laudable concept, but the bill's sparse language
leaves questions about how it will be implemented,
especially in the case of publicly-owned utilities not
regulated by the CPUC. "Energy efficiency first" is
already the CPUC's general policy, but the CPUC-regulated
utilities may say it shouldn't be codified because it may
need to be adjusted according to particular circumstances.
Publicly-owned utilities may make similar arguments in an
effort to preserve flexibility in procurement decisions.
Another question raised by this provision is its
application to short-term vs. long-term procurement. For
example, while utilities make long-term procurement
decisions according to long-term plans guided by state
policy, they also buy smaller blocs of energy constantly in
order to meet fluctuating customer demand. It may be
impractical to require first consideration of energy
efficiency when a utility is scrambling to keep the lights
on or the burner lit, although that is what this bill
suggests.
Another question this bill leaves unanswered is how its
provisions would be enforced, particularly upon
publicly-owned utilities.
3. Transmission intent language unclear, inconsistent with
existing law and SB 1059 (Escutia). The transmission
provisions in Section 5 have two parts. The first suggests
that cost-effective alternatives should be considered in
transmission and distribution planning. The second
suggests that transmission planning should be conducted on
a statewide basis, rather than project-by-project.
It is unclear how the first part would be applied or what
it adds, since analysis of alternatives is necessarily part
of the transmission permitting process. The author and the
committee may wish to consider either making this an
operative part of the CPUC's transmission and distribution
permitting process (i.e. requiring the CPUC to consider
non-transmission alternatives before permitting a new
line), or taking it out.
The second part in inconsistent with SB 1565 (Bowen),
Chapter 692, Statutes of 2004, which requires the
California Energy Commission (CEC) to adopt a statewide
transmission plan. Under SB 1565, transmission planning is
already conducted on a statewide basis by the CEC. Since
the provisions of this bill are in the chapter of the
Public Utilities Code dealing with CPUC approval of utility
facilities, the context implies the CPUC would do the
statewide planning.
The second part is also inconsistent with SB 1059, approved
by this committee April 5. SB 1059 furthers the CEC's role
in transmission planning by giving it authority to
designate electric "transmission corridor zones." The
author and the committee may wish to consider removing
these transmission planning provisions in deference to
existing law and SB 1059.
POSITIONS
Sponsor:
Natural Resources Defense Council
Support:
None on file
Oppose:
None on file
Lawrence Lingbloom
SB 1037 Analysis
Hearing Date: April 19, 2005