BILL NUMBER: AB 864	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 28, 2011
	AMENDED IN ASSEMBLY  APRIL 13, 2011

INTRODUCED BY   Assembly Member Huffman

                        FEBRUARY 17, 2011

   An act to amend Section 379.6 of the Public Utilities Code,
relating to electricity.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 864, as amended, Huffman. Electricity: self-generation
incentive program.
   Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations, as defined. Existing law requires the PUC, in
consultation with the State Energy Resources Conservation and
Development Commission (Energy Commission), to administer, until
January 1, 2016, a self-generation incentive program (SGIP) for
distributed generation resources and to separately administer solar
technologies pursuant to the California Solar Initiative. Existing
law limits eligibility for SGIP incentives to distributed energy
resources that the PUC, in consultation with the State Air Resources
Board (state board), determines will achieve reductions in emissions
of greenhouse gases pursuant to the California Global Warming
Solutions Act of 2006.
   This bill would require that distributed energy resources with a
nameplate generating capacity of up to 10 megawatts are eligible for
incentives, but would limit the award of incentives to not more than
5 megawatts of that capacity.  The bill would limit incentives
being made available for distributed energy resources with a
nameplate generating capacity above 3 megawatts to those technologies
that meet cost-effectiveness rules established by the commission.
The bill would require that incentives made available for distributed
energy resources with a nameplate generating capacity greater than 3
megawatts   be based on a declining schedule determined by
the commission. 
   Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the
commission is a crime.
   Because the program that is extended under the provisions of this
bill are within the act and a decision or order of the commission
would be required to implement the program requirements, a violation
of these provisions would impose a state-mandated local program by
expanding the definition of a crime.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 379.6 of the Public Utilities Code is amended
to read:
   379.6.  (a) (1) The commission, in consultation with the Energy
Commission, may authorize the annual collection of not more than the
amount authorized for the self-generation incentive program in the
2008 calendar year, through December 31, 2011. The commission shall
require the administration of the program for distributed energy
resources originally established pursuant to Chapter 329 of the
Statutes of 2000 until January 1, 2016. On January 1, 2016, the
commission shall provide repayment of all unallocated funds collected
pursuant to this section to reduce ratepayer costs.
   (2) The commission shall administer solar technologies separately,
pursuant to the California Solar Initiative adopted by the
commission in Decision 06-01-024.
   (b) (1) Eligibility for incentives under the program shall be
limited to distributed energy resources that the commission, in
consultation with the State Air Resources Board, determines will
achieve reductions of greenhouse gas emissions pursuant to the
California Global Warming Solutions Act of 2006 (Division 25.5
(commencing with Section 38500) of the Health and Safety Code).
   (2)  (A)    Distributed energy resources with a
nameplate generating capacity of up to 10 megawatts shall be eligible
for incentives, but incentives shall not be available for more than
five megawatts of that capacity. 
   (B) Incentives shall not be made available for distributed energy
resources with a nameplate generating capacity greater than 3
megawatts unless the technology utilized for the distributed energy
resource meets cost-effectiveness rules established by the
commission. This subparagraph does not require the commission to open
a new proceeding and it is the intent of the Legislature that the
commission apply the cost-effectiveness rules developed in Rulemaking
10-05-004.  
   (C) Incentives made available for distributed energy resources
with a nameplate generating capacity greater than 3 megawatts, up to
5 megawatts of capacity, shall be based on a declining schedule
determined by the commission. 
   (c) Eligibility for the funding of any combustion-operated
distributed generation projects using fossil fuel is subject to all
of the following conditions:
   (1)  An oxides of nitrogen (NOx) emissions rate standard of 0.07
pounds per megawatthour and a minimum efficiency of 60 percent, or
any other NOx emissions rate and minimum efficiency standard adopted
by the State Air Resources Board. A minimum efficiency of 60 percent
shall be measured as useful energy output divided by fuel input. The
efficiency determination shall be based on 100-percent load.
   (2) Combined heat and power units that meet the 60-percent
efficiency standard may take a credit to meet the applicable NOx
emissions standard of 0.07 pounds per megawatthour. Credit shall be
at the rate of one megawatthour for each 3.4 million British thermal
units (Btus) of heat recovered.
   (3) The customer receiving incentives shall adequately maintain
and service the combined heat and power units so that during
operation, the system continues to meet or exceed the efficiency and
emissions standards established pursuant to paragraphs (1) and (2).
   (4) Notwithstanding paragraph (1), a project that does not meet
the applicable NOx emissions standard is eligible if it meets both of
the following requirements:
   (A) The project operates solely on waste gas. The commission shall
require a customer that applies for an incentive pursuant to this
paragraph to provide an affidavit or other form of proof, that
specifies that the project shall be operated solely on waste gas.
Incentives awarded pursuant to this paragraph shall be subject to
refund and shall be refunded by the recipient to the extent the
project does not operate on waste gas. As used in this paragraph,
"waste gas" means natural gas that is generated as a byproduct of
petroleum production operations and is not eligible for delivery to
the utility pipeline system.
   (B) The air quality management district or air pollution control
district, in issuing a permit to operate the project, determines that
operation of the project will produce an onsite net air emissions
benefit, compared to permitted onsite emissions if the project does
not operate. The commission shall require the customer to secure the
permit prior to receiving incentives.
   (d) In determining the eligibility for the self-generation
incentive program, minimum system efficiency shall be determined
either by calculating electrical and process heat efficiency as set
forth in Section 216.6, or by calculating overall electrical
efficiency.
   (e) In administering the self-generation incentive program, the
commission may adjust the amount of rebates and evaluate other public
policy interests, including, but not limited to, ratepayers, and
energy efficiency, peak load reduction, load management, and
environmental interests.
   (f) The commission shall ensure that distributed generation
resources are made available in the program for all ratepayers.
   (g) (1) In administering the self-generation incentive program,
the commission shall provide an additional incentive of 20 percent
from existing program funds for the installation of eligible
distributed generation resources from a California supplier.
   (2) "California supplier" as used in this subdivision means any
sole proprietorship, partnership, joint venture, corporation, or
other business entity that manufactures eligible distributed
generation resources in California and that meets either of the
following criteria:
   (A) The owners or policymaking officers are domiciled in
California and the permanent principal office, or place of business
from which the supplier's trade is directed or managed, is located in
California.
   (B) A business or corporation, including those owned by, or under
common control of, a corporation, that meets all of the following
criteria continuously during the five years prior to providing
eligible distributed generation resources to a self-generation
incentive program recipient:
   (i) Owns and operates a manufacturing facility located in
California that builds or manufactures eligible distributed
generation resources.
   (ii) Is licensed by the state to conduct business within the
state.
   (iii) Employs California residents for work within the state.
   (3) For purposes of qualifying as a California supplier, a
distribution or sales management office or facility does not qualify
as a manufacturing facility.
   (h) The costs of the program adopted and implemented pursuant to
this section shall not be recovered from customers participating in
the California Alternate Rates for Energy (CARE) program.
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.