BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1037
                                                                  Page  1

          Date of Hearing:   August 17, 2005

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

                   SB 1037 (Kehoe) - As Amended:  August 15, 2005 

          Policy Committee:                              UtilitiesVote:7-3
                        Natural Resources                     7-2

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              Yes

           SUMMARY  

          This bill:  

          1)Requires gas and electric investor-owned utilities (IOUs) and  
            municipal utilities to meet their unmet energy resource needs  
            first through all available energy efficiency and demand  
            reduction resourses that are cost-effective, reliable, and  
            feasible.

          2)Requires the Public Utilities Commission (PUC), in  
            consultation with the California Energy Commission (CEC), to  
            identify all potentially achievable natural gas and  
            electricity efficiency savings and to establish efficiency  
            targets for the gas and electric IOUs to achieve.

          3)Requires the PUC, in considering an application for a  
            certificate of public convenience and necessity for an  
            electric transmission line, to consider cost-effective  
            alternatives that would meet the electricity supply need.

          4)Requires municipal utilities to annually report to their  
            customers and to the CEC their investments in energy  
            efficiency and demand reduction programs.

           FISCAL EFFECT  

          Minor absorbable costs to the PUC and the CEC.

           COMMENTS  

           Purpose  . This bill is intended to codify recent PUC decisions  








                                                                  SB 1037
                                                                  Page  2

          requiring electricity companies to make energy efficiency  
          measures their first priority in planning to meet new demands. 

          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 by stating that energy needs should first be  
          met by energy efficiency and demand reduction programs before a  
          utility procures new electricity from renewable resources or  
          fossil fuel fired generating facilities. The EAP and its loading  
          order have no force of law and merely state the planning  
          preferences of the state's energy agencies.  However, elements  
          of the EAP, including the loading order, have been incorporated  
          into PUC decisions governing the privately-owned utilities it  
          regulates.  This bill thus codifies those decisions with respect  
          to the IOUs and statutorily extends this loading order to the  
          municipal electric utilities, which are not regulated by the  
          PUC.
           
           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081