BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1037|
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THIRD READING
Bill No: SB 1037
Author: Kehoe (D)
Amended: 5/31/05
Vote: 21
SEN. ENERGY, UTIL. & COMMUNICATIONS COMM. : 7-2, 4/19/05
AYES: Escutia, Alarcon, Battin, Bowen, Dunn, Kehoe,
Simitian
NOES: Morrow, Cox
NO VOTE RECORDED: Campbell, Murray
SENATE APPROPRIATIONS COMMITTEE : 7-2, 5/16/05
AYES: Migden, Alquist, Battin, Bowen, Florez, Murray,
Ortiz
NOES: Aanestad, Ashburn
NO VOTE RECORDED: Dutton, Escutia, Poochigian, Speier
SUBJECT : Energy efficiency
SOURCE : Natural Resources Defense Council
DIGEST : This bill (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
recourses that are cost-effective, reliable, and feasible
(before conventional generation or other resources), as
specified, and (2) requires the PUC, in considering an
application for a certificate of public convenience and
necessity for an electric transmission, to consider all
CONTINUED
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cost-effective alternatives that meet the need, as
specified.
Senate Floor Amendments of 5/31/05 establish energy
efficiency savings targets for electric and gas utilities
and make related technical changes. (See note in
analysis.)
ANALYSIS : Current law requires investor-owned utilities
to procure energy according to a procurement plan, approved
by the PUC.
This bill requires the PUC to establish energy efficiency
savings targets based on an evaluation of all potentially
achievable cost-effective savings for investor-owned
electric and natural gas facilities.
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, reliable, 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.
This bill requires utilities, in meeting or exceeding
savings targetes, to acquire energy efficiency first.
Existing law, SB 1565 (Bowen), Chapter 562, Statutes of
2004, requires the California Energy Commission 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.
This bill requires publicly-owned utilities to report
investments in energy efficiency programs annually to its
customers and the California Energy Commission.
NOTE: According to the Senate Energy, Utilities and
Communications Committee analysis:
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Amendments Don't Make Sense . To achieve an "energy
efficiency savings target," a utility would necessarily
acquire energy efficiency. To say, as the amendment do,
that a utility must first acquire energy efficiency to
achieve an energy efficiency target appears to compromise
the established PUC practice of considering "energy
efficiency first" in utility resource planning and
procurement - i.e., first compared to generation and other
resources.
It goes without saying that a utility will acquire energy
efficiency first (and second and third) in achieving an
energy efficiency target.
These amendments appear to confine, rather than expand,
procurement of energy efficiency.
Comments
California's energy agencies, including the PUC, 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 PUC 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 PUC
jurisdiction. Instead, they are public agencies governed
by local elected officials.
According to the author's office, this bill codifies recent
PUC decisions on energy efficiency and takes 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
Increased costs to the PUC are unknown, but approximately
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$100,000 to $500,000 to conduct proceedings, consider
alternatives in transmission and distribution planning, and
comply with the other provisions of the bill. Public
Utilities' Reimbursement Account 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.
SUPPORT : (Verified 5/31/05)
Natural Resources Defense Council (source)
Public Utilities Commission
NC:mel 6/1/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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