BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 2705 - Committee on Agriculture Hearing Date:
June 27, 2000 A
As Amended: April 4, 2000 FISCAL B
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DESCRIPTION
Current law permits the California Department of Food &
Agriculture (CDFA) to operate a Renewable Resource Energy
Agricultural Account to develop agriculture-related energy
technology.
Current law authorizes the California Energy Commission
(CEC) to operate the Agricultural Industry Energy
Assistance Program (AIEP).
This bill codifies the CEC program and requires all funds
from loan repayments under the AIEP to be deposited into
the CEC's existing Energy Technologies Research,
Development and Demonstration Account.
This bill permits money in the account to be available for
loans and technical assistance as prescribed in the
program.
BACKGROUND
The Agricultural Industry Energy Program (AIEP) was created
in 1987 and was funded with $3 million from the Petroleum
Violation Escrow Account (PVEA). The goal of the program
was to create a revolving loan fund to pay for equipment
and services for agriculture energy conservation and
development demonstration projects.
The AIEP provides for a repayment period of not more than
seven years at a rate that is not less than 2% below the
rate earned by moneys in the Pooled Money Investment
Account.
Since its inception, the Agricultural Industry Energy
Program has issued over 110 loans in the amount of $6.2
million to fund various energy efficiency projects related
to agriculture. According to the CEC, applicants often
repay the loans within the seven-year deadline and the
program has had no defaults.
QUESTIONS
1.What is the purpose of codifying an existing program and
does this program duplicate any other program in statute
?
2.How does the Pooled Money Investment Account rate compare
to other financial rates of return?
3.Is the provision of the bill allowing up to 20% of the
fund to be set aside for technical assistance
appropriate?
COMMENTS
1)Codifying The Uncodified . Because there isn't a fund
account for the AIEP, loan re-payments under the loan
program go directly into the PVEA account. The CEC then
has to go through the budget change proposal process each
year to request money from the PVEA account in order to
have money to make new loans under the AIEP. By
codifying the Energy Technologies Research, Development
and Demonstration Account, this bill allows AIEP loan
repayments to go directly to the CEC and will allow them
to loan money for new projects without have to get money
from the PVEA account.
2)The Pooled Money Investment Account Rate . Loans under
the AIEP have been issued at a rate that's not less than
2% below the rate earned by the Pooled Money Investment
Account (PMIA). The PMIA rate for the fiscal year
1998/99 was 5.68%, compared to the recent prime rate of
9.5%.
3)Should Money Be Set Aside For "Technical Assistance?"
This bill permits up to 20% of the money in the Energy
Technologies Research, Development and Demonstration
Account to be set aside for "technical assistance."
According to the CEC, this will pay for it to be able to
monitor many of the programs that it loans money to help
establish. That monitoring will allow the CEC to share
the information it garners from successful programs with
others who could benefit from a similar program, thus
saving more energy and reducing costs. However, the
author and the Committee may wish to consider whether the
20% ceiling proposed by this bill is too high and whether
it should be lowered to ensure that more money gets out
the door to fund actual programs.
4)Does This Duplicate An Existing CDFA Program? Public
Resources Code Section 25615 establishes an energy
conservation, renewable resource, and solar energy
technologies assistance program in agriculture to be
managed by CDFA. The assistance program includes state
financial incentives including state loans, loan
guarantees, and leases and participating agreements to
stimulate the development and use of energy conservation,
solar applications and renewable resource energy
technologies. It also establishes a technical review
committee to evaluate applications for financial
assistance pursuant to the statute.
This program was created in 1980, but according to CDFA,
the program is actually defunct and hasn't funded
projects for some time. To preclude the possibility that
two virtually identical programs may be operated by two
different state agencies, the author and the Committee
may wish to consider simply deleting the program that
exists at CDFA.
ASSEMBLY VOTES
Assembly Agriculture Committee (9-0)
Assembly Utilities & Commerce Committee(8-0)
Assembly Appropriations Committee (21-0)
Assembly Floor (79-0)
POSITIONS
Sponsor:
California Energy Commission
Support:
None on file.
Oppose:
None on file.
Anna Ferrera
AB 2705 Analysis
Hearing Date: June 27, 2000