BILL ANALYSIS
SB 1037
Page 1
Date of Hearing: July 5, 2005
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Loni Hancock, Chair
SB 1037 (Kehoe) - As Amended: June 29, 2005
SENATE VOTE : 26-14
SUBJECT : Energy efficiency.
SUMMARY : Requires electric utilities, municipal utilities
(munis), and the Public Utilities Commission (PUC) to make
energy efficiency programs a priority before acquiring other
sources of electricity or building new transmission lines.
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 PUC
approval.
THIS BILL :
1)Requires the PUC to require 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.
2)Requires the PUC, in considering an application for a
certificate of public convenience and necessity for an
electric transmission line, to consider all cost-effective
alternatives that would meet the need, as specified.
3)Requires munis, 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.
SB 1037
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4)Requires munis to annually report to its customers and to the
California Energy Commission (CEC) its investments in energy
efficiency and demand reduction programs.
FISCAL EFFECT : Unknown.
COMMENTS :
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, "California's economy and environment
have benefited substantially from continued investments in
cost-effective energy efficiency, saving California customers
over $4 billion over the last decade. These energy savings are
achieved at typically less than half the cost of generating
power. However, uncertainties surrounding changes in the energy
markets and regulation jeopardize these investments and the
benefits they produce. To overcome the energy crisis of 2001,
California launched an aggressive energy conservation campaign
with impressive results. Those efforts saved money and
protected the environment at the same time. In 2001, the first
six months of demand reductions saved an estimated $660 million
in spot market purchases and helped avoid up to $20 billion in
projected costs of summertime rolling blackouts."
The CPUC recently adopted aggressive energy saving targets to
help the state's three major utilities more than double their
savings for both natural gas and electricity over the next
decade. According to the author, this bill will codify those
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.
SB 1037
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REGISTERED SUPPORT / OPPOSITION :
Support
Natural Resources Defense Council (source)
Public Utilities Commission
Opposition
None on file
Analysis Prepared by : Kyra Emanuels Ross / NAT. RES. / (916)
319-2092