BILL ANALYSIS                                                                                                                                                                                                    



                                                          SB 655
                                                          Page  1

Date of Hearing:   July 12, 1999

          ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE 
                     Roderick Wright, Chair
           SB 655 (Peace) - As Amended:  July 8, 1999

  SENATE VOTE  :   28-9
  
SUBJECT  :   California Energy Commission: grant program: solar  
energy systems.

  SUMMARY  :   Requires the California Energy Commission (CEC) to  
develop a five -year program to provide grants to offset a  
portion of the costs of qualified solar and distributed  
generation installations, contingent on funding of the program  
in the Budget Act of 2000.  Specifically,  this bill  :  

1)Requires the CEC, to the extent funds are appropriated for  
  that purpose in the Budget Act of 2000, to implement a grant  
  program to accomplish specified goals, including making solar  
  energy systems cost competitive with alternate forms of  
  energy.

2)Provides that solar systems would be eligible for up to $750.

3)Requires CEC to adopt guidelines, as specified.

4)Revises definition of "solar energy system" to include any  
  solar collector or other solar energy device, or any  
  structural design feature of a building, whose primary purpose  
  is to provide for electricity generation.

5)Requires CEC, to the extent that the funds are appropriated  
  for that purpose, to develop and implement a grant program to  
  offset a portion of the costs of eligible distributed  
  generation systems, as prescribed.  

6)Provides that distributed generation systems would be eligible  
  for up to 10 percent of their cost, up to $2,000.

7)Requires the California Public Utilities Commission (CPUC) to  
  establish operational and safety standards for distributed  
  generation systems.

8)Requires CPUC to establish fair and reasonable standby rates.








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9)Defines distributed generation, for the purposes of this bill,  
  as "any onsite generation, interconnected and operating in  
  parallel with the electricity grid, that is used solely to  
  meet onsite electric load.

10)Authorizes CEC to use up to three percent of the funds  
  appropriated for the program to fund CEC's costs in  
  administering these programs.

11)Makes related finding and declarations about the merits of  
  solar technologies and distributed generation.


  EXISTING LAW  :

1)Requires CEC to expand and accelerate development of  
  alternative sources of energy, including solar resources.

2)Defines "solar energy system" to mean any solar collector or  
  other solar energy device, or structural design feature of a  
  building, whose primary purpose is to provide for the  
  collection, storage, and distribution of solar energy for  
  space heating or cooling, or for water heating.

  FISCAL EFFECT  :   Unknown.

  COMMENTS  :   

1)This bill is designed to encourage installation of  
  residential, small commercial and industrial solar and  
  distributed generation systems.  Solar systems would be  
  eligible for up to $750 dollars and distributed generation  
  systems would be eligible for 10 percent of their costs up to  
  $2,000.

2)This bill is also intended to encourage end-users to install  
  environmentally superior generation systems to meet onsite  
  load and thereby improve system reliability and environmental  
  quality by reducing system load and reducing the need for new  
  distribution system investments.

3)The amended bill's program start-up date is July 1, 2000.   
  Funding for these provisions is contingent upon enactment in  
  the Budget Act of 2000, which would take effect July 1, 2000,  








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                                                          Page  3

  assuming the Legislature meets its constitutional budget  
  deadline.

4)Existing law provides a number of mechanisms to support solar  
  energy, including property tax exemptions for the installation  
  of solar systems and grants for development and operation of  
  some solar generation technologies.  Existing law also  
  provides a credit for the cost of solar energy systems.   
  Proposition 7, passed by voters in a statewide referendum in  
  1980, exempts active solar energy systems from being assessed  
  as "new construction" under Proposition 13's property tax  
  requirements.

5)AB 1890 [(Brulte), Chapter 854, Statutes of 1996] provided  
  $540 million, collected over a four year period, to operate  
  and develop new, emerging, and existing renewable resource  
  technologies.  AB 1890 directed CEC to develop a spending plan  
  for these funds.  SB 90 [(Sher), Chapter 905, Statutes of  
  1997] codified CEC's proposals.  The SB 90 monies are awarded  
  according to the number of kilowatt hours produced, not on a  
  per-system basis.  Under SB 90, the grid-connected  
  photovoltaic segment of the solar industry, which is eligible  
  for grants under this bill, is eligible to compete for 10  
  percent of the $540 million, in the category earmarked for new  
  and emerging technologies. 

6)The solar water heating segment of the solar industry, which  
  produces no kilowatt hours, is not eligible to compete for SB  
  90 funding because no kilowatt hours are produced, but is  
  eligible for grants under this bill.  

7)Distributed generation is small scale production of  
  electricity at or near the point of use, as opposed to central  
  generation, where electricity is produced in large quantities  
  at a remote site and transferred to multiple users.   
  Distributed generation systems range from photovoltaics and  
  fuel cells to gas turbines and diesel engines in residential,  
  commercial, and industrial applications.  Under this bill,  
  distributed generation systems are required to be used only to  
  meet onsite electric load, and not sell power.

8)This bill requires CPUC to establish appropriate  
  interconnection and safety requirements, and operating  
  agreements for distributed generation.  CPUC is presently  
  studying the issue of distributed generation.  Last December,  








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                                                          Page  4

  CPUC opened a rulemaking proceeding to consider reforms in the  
  structure and regulatory framework governing electricity  
  distribution service, which includes a study of issues related  
  to distributed generation.

  REGISTERED SUPPORT / OPPOSITION  :

  Support  

BP Solar
Alternative Solar Products
Alten
Ameco
Astro Power
Aztec solar
California Solar Energy Industries Association
Diablo Solar services
Environmental Defense Fund
Environmental Solar
Goldline Electronic Controls
Helioco
Heliotrope General
Horizon Industries
Independent Energy, Inc. - Parent of Goldline Electronic  
Controls
Leveleg, Precision Solar Mounting Systems
Mark Naylor & Company
Morley Manufacturing
Off-Line Independent Energy Systems
Pacific Energy Company
Potocomm, Inc. the Wireless Power Company
PVI Photovoltaic & International
Real Goods
The Scholfield Solar Energy Company
Science Applications International Corporation
Sierra Pacific Home & Comfort Inc.
Six Rivers
Solar Connection
SolarCraft Services, Inc.
Solar Depot
Solar Unlimited
Solar Utility
Solec
South Bay Solar
SunEarth








                                                          SB 655
                                                          Page  5

Sunray Energy, Inc.
SunSpot Mechanical
Sun Utility Network
Westburne
Western Renewables Group
10 individuals

  Opposition  

None on file.


 Analysis Prepared by  :    Joseph Lyons / U. & C. / (916) 319-2083