BILL ANALYSIS SB 1194 Page 1 Date of Hearing: June 28, 2000 ASSEMBLY COMMITTEE ON APPROPRIATIONS Carole Migden, Chairwoman SB 1194 (Sher) - As Amended: June 21, 2000 Policy Committee: Utilities and Commerce Vote: 11-1 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill extends an electrical usage rate charge to continue funding three energy-related programs. Specifically, this bill: 1)Extends the collection of a nonbypassable system benefits charge on all electric utility bills for 10 years to continue funding: a) energy efficiency and conservation activities; b) public interest research, development, and demonstration (RD&D) and; c) in-state operation and development of existing, and emerging renewable energy resources. 2)Requires investor-owned and municipal utilities to collect specific dollar amounts for each of the programs beginning on January 1, 2002, through January 1, 2012. (A total of $425.5 million is to be collected for the three programs in 2002; this amount will be adjusted annually at a rate equal to the lesser of the annual growth in electric commodity sales or inflation.) 3)Requires the Public Utilities Commission (PUC) to continue administering the energy efficiency programs. 4)Prohibits expenditure of any moneys collected for the RD&D and renewal energy programs without further Legislative action. 5)Requires the Energy Resources Conservation and Development Commission (CEC) to develop specified investment plans, by March 2001, covering the first five year increment of the RD&D and renewable energy programs, and requires subsequent investment plans in 2006 covering the second five-year increment. SB 1194 Page 2 6)Requires the governor to appoint an independent review panel by January 2004 to submit a report to the Legislature and CEC by January 2005 that evaluates the three programs and includes recommendations to assist the Legislature in determining whether to change or eliminate the collection of system benefits charge after 2006. 7)Adds an additional condition-misrepresentation of material fact during application-by which an electrical service provider may have their registration revoked by the PUC. FISCAL EFFECT 1)The PUC indicates minor absorbable special fund costs to continue administering the energy efficiency programs. 2)The CEC indicates absorbable costs to prepare the investment plans for future legislative consideration to determine expenditure of funds collected for the RD&D and renewable energy programs. 3)Absorbable special fund costs for the PUC and the CEC to provide assistance to the independent review panel. COMMENTS 1)Background . As part of the state's electrical restructuring legislation of 1996 (AB 1890, Brulte), the three investor-owned utilities, Southern California Edison Company (SCE), Pacific Gas and Electric Company (PG&E) and San Diego Gas and Electric Company (SDG&E), are required to collect specified amounts to fund the three programs through 2001. While this bill extends the authority to collect funds to support the programs for up to 10 years (in two five-year blocks), rather than simply extending the funding authorization, this bill requires the CEC to first develop investment plans for the renewable and RD&D programs covering each five year block. 2)System Benefits Charge . The bill establishes that the system benefits charge to fund the three programs is nonbypassable for every customer of an electrical corporation. Growth in the amounts authorized for collection will be limited to the SB 1194 Page 3 lesser of the annual growth in electric commodity sales or inflation. These provisions place limits on program funding levels and customer surcharge rates, which large users have indicated provides them greater certainty regarding costs to support these programs. Analysis Prepared by : Chuck Nicol / APPR. / (916)319-2081