BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2705
                                                                  Page  1

          Date of Hearing:   May 3, 2000

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS 
                              Carole Migden, Chairwoman

           AB 2705 (Committee on Agriculture) - As Amended:  April 4, 2000  


          Policy Committee:                               
          AgricultureVote:9-0 (Consent)
                        Utilities & Commerce                           8-0  
          (Consent)

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill specifies that all repayments and interest made to the  
          California Energy Commission (CEC) for loans provided under the  
          Agriculture Energy Assistance Program (AEAP) are to be deposited  
          in the Energy Technologies Research, Development, and  
          Demonstration (ETRDD) Account, instead of deposit in the  
          Petroleum Violation Escrow Account (PVEA), to be available for  
          continued loans and technical assistance.

           FISCAL EFFECT  

          Moderate revenue loss, about $500,000 annually, to the PVEA  
          resulting from the redirection of AEAP loan repayments from the  
          PVEA to the ETRDD.

           COMMENTS  

           1)Rationale  .   The AEAP was created by SB 1145 (Mello) - Chapter  
            1341, Statutes of 1986.  The program was initially funded with  
            a $3 million appropriation from the Petroleum Violation Escrow  
            Account (PVEA) and is structured as a revolving loan program  
            by which the revenues generated by loan repayments (with  
            interest) are used to defray CEC costs and to make new loans.   
            Because the AEAP was created without a specific fund into  
            which revenues are deposited and from which revenue can be  
            withdrawn, all loan repayments that have been received over  
            the past several years have been deposited in the PVEA.  This  
            has required the CEC to submit a Budget Change Proposal (BCP)  








                                                                  AB 2705
                                                                  Page  2

            every year for a PVEA appropriation equal to the amount of  
            loan repayments deposited into the PVEA in the prior year.   
            This bill, by depositing loan repayments into the ETRDD  
            Account, eliminates the need at the CEC to develop and submit  
            annual BCPs for this purpose.
           
          2)Background  .  The AEAP has provided more than 110 low-interest  
            loans totaling $6.2 million for various energy efficiency  
            projects related to agriculture;  to date, there have been no  
            defaults on these loans that carry a maximum maturity of seven  
            years and an interest rate as low as 2 percentage points below  
            the state's Pooled Money Investment Account rate.

           Analysis Prepared by  :    Steve Archibald / APPR. / (916)319-2081