BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Carole Migden, Chair
1037 (Kehoe)
Hearing Date: 5/16/05 Amended: 4/27/05
Consultant: Lisa Matocq Policy Vote: E, U & C 7-2
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BILL SUMMARY:
SB 1037 (1) requires the Public Utilities Commission (PUC) to
require public and private gas and electric utilities, in
procuring energy, to first acquire all available energy
efficiency and demand reduction resources that are
cost-effective and feasible (before conventional generation or
other resources), as specified, (2) requires the PUC, in
considering an application for a certificate of public
convenience and necessity for an electric transmission or
distribution facility, to consider all cost-effective
alternatives that meet the need, as specified, and (3)
eliminates the prohibition on the use of public goods charge
revenues for new energy-efficient refrigerators.
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Fiscal Impact (in thousands)
Major Provisions 2005-06 2006-07 2007-08 Fund
PUC Probably $100 to
$500 annually, Special*
offset by fee
revenues
*Public Utilities' Reimbursement Account (PURA)
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STAFF COMMENTS:
According to the author's office, this bill, among other things,
attempts to codify the loading order principle of "energy
efficiency first contained in the Energy Action Plan, which was
adopted by the state's energy agencies.
Current law requires investor-owned utilities (IOUs) to procure
energy according to a procurement plan, approved by the PUC.
This bill requires public and private gas and electric utilities
in procuring energy, to first acquire all available energy
efficiency and demand reduction resources that are
cost-effective and feasible, as specified. Generally, this is
the existing policy of the PUC, although here it is also being
applied to local publicly-owned utilities.
Existing law, SB 1565 (Bowen, Ch. 562, St. of 2004) requires the
California Energy Commission (CEC) to adopt a statewide
transmission plan.
This bill requires the PUC, in considering an application for a
certificate of public convenience and necessity for an electric
transmission or distribution facility, to consider all
cost-effective alternatives that meet the need, as specified.
SB 1037
Page Two
The IOUs administer, subject to PUC approval, a variety of
energy efficiency programs including rebates and subsidies for
replacement appliances, including refrigerators. These programs
are funded with electricity rate revenues.
Current law requires the investor-owned utilities to impose a
surcharge, referred to as the public goods charge (PGC), on
electricity bills to fund energy efficiency and conservation
programs. Each year, the utilities collect about $200 million in
PGC revenues. Existing law also prohibits the use of such funds
for the purchase of energy-efficient refrigerators, due a
concern that the old refrigerator would be retained as a second
refrigerator, thereby undermining the purpose of the replacement
program.
This bill eliminates the prohibition on the use of PGC funds for
replacement refrigerators.
Increased costs to the PUC are unknown, but probably in the
range of $100,000 to $500,000 to conduct proceedings, consider
alternatives in transmission and distribution planning, and
comply with the other provisions of the bill. PURA revenues are
derived from an annual fee imposed on utilities. Therefore, any
increased costs to the PUC should be offset by fee revenues.
Any increased costs to local publicly owned utilities should be
recovered in rates.
SB 769 (Simitian), also being heard in this Committee today,
among other things, requires the PUC to establish a refrigerator
replacement program and repeals the prohibition on the use of
PGC revenues for new energy efficient refrigerators.
SB 1059 (Escutia), also being heard in this Committee today,
gives the CEC the authority to designate electric transmission
corridor zones.