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 Because the AEAP was created without a specific fund into which revenues are deposited and from which revenue can be withdrawn, all loan repayments that have been received over the past several years have been deposited in the PVEA.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