BILL ANALYSIS                                                                                                                                                                                                    



                                                                    SB 1345
                                                                    Page  1

          SENATE THIRD READING
          SB 1345 (Peace)
          As Amended August 25, 2000
          Majority vote 

           SENATE VOTE  :39-0  
           
           NATURAL RESOURCES   11-0        UTILITIES AND COMMERCE      9-1 
           
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          |Ayes:|Wayne, Aanestad,          |Ayes:|Wright, Pescetti,         |
          |     |Dickerson, Jackson,       |     |Calderon, Cardenas,       |
          |     |Keeley, Lowenthal,        |     |Frusetta, Mazzoni, Reyes, |
          |     |Machado, Migden, Oller,   |     |Vincent, Wesson           |
          |     |Robert Pacheco, Steinberg |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |Nays:|Maddox                    |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           APPROPRIATIONS      20-0                                        
           
           ----------------------------------------------------------------- 
          |Ayes:|Migden, Campbell,         |     |                          |
          |     |Ackerman, Alquist,        |     |                          |
          |     |Aroner, Ashburn, Brewer,  |     |                          |
          |     |Cedillo, Corbett, Davis,  |     |                          |
          |     |Kuehl, Maldonado, Papan,  |     |                          |
          |     |Romero, Shelley, Thomson, |     |                          |
          |     |Wesson, Wiggins, Wright,  |     |                          |
          |     |Zettel                    |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Revises the definition of solar energy system and  
          implements a new grant program through the California Energy  
          Commission (CEC) to offset a portion of the costs of solar  
          energy systems and distributed generation (DG) systems.   
          Specifically,  this bill  :

          1)Revises the definition of "solar energy system" to add DG to  
            the definition.

          2)Defines "distributed generation" as any onsite generation  
            interconnected and operating in parallel with the electricity  
            grid, that is used solely to meet onsite electrical load.







                                                                    SB 1345
                                                                    Page  2


          3)Creates a grant program through CEC to provide grants of up to  
            $750 to homebuilders or homeowners who install thermal solar  
            systems or specified photovoltaic solar systems in their  
            homes.

          4)Creates a grant program through CEC for up to $2,000 to  
            homebuilders or homeowners who install DG systems in their  
            homes.

          5)Requires the California Public Utilities Commission (CPUC) to  
            establish operational and safety standards for DG systems  
            installed under the grant program. 

           EXISTING LAW  : 

          1)Pursuant to the Federal Internal Revenue Code, provides credit  
            equal to 10% of the cost of energy property placed in service  
            during a given tax year.

          2)Pursuant to the California Constitution, provides that active  
            solar energy systems are not assessed as "new construction"  
            for purposes of assessing State property tax.

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

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

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee analysis, one-time special fund costs of $180,000 to  
          develop performance standards for the various distributed  
          generation technologies and development and administrative costs  
          of up to $250,000 annually for three staff positions.   
          Additionally, the current Budget has $1.5 million in funding for  
          this program.

           COMMENTS  :  According to the sponsors of this bill, existing law  
          enacted by the passage of AB 1890 (Brulte), Chapter 854,  
          Statutes of 1996 and SB 90 (Sher), Chapter 905, Statutes of  
          1997, established measures designed to increase the usage of  
          photovoltaic technologies through the Emerging Renewables  







                                                                    SB 1345
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          program now being administered by CEC.  However, small-scale  
          solar thermal technologies were not addressed in these bills.   
          This bill would establish parallel, but smaller incentives for  
          small-scale solar thermal technologies used in water heating  
          applications, with a focus on new residential construction.  

          This bill creates incentives for the instillation of thermal  
          solar systems by providing grants to homebuilders or homeowners  
          for up to $750 per grant.  The grant program would also allow  
          for photovoltaic battery pack systems to be eligible under the  
          grant program.

          In addition to thermal solar systems, AB 1890 also did not  
          provide incentives for DG systems.  Unlike solar systems, DG  
          systems allow the user, through a variety of means (i.e.,  
          microgeneration, wind turbines, gas turbines, fuel cells, solar  
          dish stirling engines, and reciprocal internal combustion  
          engines) to provide short term energy that does not rely upon  
          traditional means of obtaining energy.  Most often, DG systems  
          are used by facilities like hospitals, which cannot afford to be  
          without electricity even if the more traditional systems have a  
          break in service.
           
          The DG systems eligible under this bill would be required to  
          meet the same emission standards as central station power  
          plants.  In addition, this bill would require the CPUC to  
          establish operation and safety standards for DG systems.

          This bill is similar to SB 655 (Peace) which was vetoed by the  
          Governor.  In his veto message the Governor noted that while he  
          was supportive of efforts to promote emerging solar and  
          distributed generation technologies, the bill did not have any  
          funding attached to the programs.  


           Analysis Prepared by  :  Kyra Emanuels / NAT. RES. / (916)  
          319-2092 
                                                                FN: 0006436