BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1345
                                                                  Page  1

          Date of Hearing:   August 9, 2000

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS 
                              Carole Migden, Chairwoman

                     SB 1345 (Peace) - As Amended:  July 6, 2000 

          Policy Committee:                              Natural  
          ResourcesVote:11-0 (Consent)
                        Utilities and Commerce                9-1

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill: 

          1)Requires the California Energy Commission (CEC) to develop  
            grant programs that provide:

             a)   Grants of up to $750 for solar energy systems that  
               produce energy for water heating or electricity generation.

             b)   Grants of up to $2,000 for distributed generation  
               systems.

          2)   Requires the CEC to implement the grant programs, which  
            would be authorized through January 2006, to the extent that  
            funds are appropriated in the annual Budget Act.

          3)   Limits the CEC's administrative costs for the programs to  
            $250,000 annually from any amounts included in the budget.

          4)   Requires the Public Utilities Commission (PUC) to establish  
            operational and safety standards for distributed generation  
            systems.

           FISCAL EFFECT  

          1)One-time special fund cost of $180,000 to develop performance  
            standards for the various distributed generation technologies.

          2)Development and administration of the grant programs will cost  
            up to $250,000 annually for three staff positions.  








                                                                  SB 1345
                                                                  Page  2


            (The 2000-01 Budget Act includes provisional language  
            allocating up to $1 million from the Energy Resource Program  
            Account to fund the grant programs.)

          1)Future special fund pressure of several million dollars to  
            continue the grant programs through January 2006. 

          2)Minor absorbable costs to the PUC.

           COMMENTS  

           1)Background and Purpose  .  Distributed generation is small scale  
            production of electricity at or near the point of use.  
            Distributed generation systems range from photovoltaics and  
            fuel cells to gas turbines and diesel engines in residential,  
            commercial, and industrial applications. 

            This bill is designed to encourage installation of  
            residential, small commercial and industrial solar and  
            distributed generation systems. This bill is also intended to  
            encourage end-users to install environmentally superior  
            generation systems to meet onsite loads, thus improving both  
            system reliability and environmental quality by reducing  
            system load and reducing the need for new distribution system  
            investments.  

           1)Prior Legislation  .  This bill is substantially similar to SB  
            655 (Peace), which was vetoed by the Governor in 1999.  The  
            Governor maintained that bill established a new grant program  
            without establishing the source or amount of funding and  
            believed that the program should compete with other priorities  
            in the annual budget process. 

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081