BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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                              UNFINISHED BUSINESS
                                        

          Bill No:  SB 1345
          Author:   Peace (D)
          Amended:  8/25/00
          Vote:     21

            
           SENATE ENERGY, U.&C. COMMITTEE  :  8-0, 4/11/00
          AYES:  Bowen, Alarcon, Brulte, Hughes, Kelley, Peace,  
            Solis, Vasconcellos

           SENATE APPROPRIATIONS COMMITTEE  :  13-0, 5/25/00
          AYES:  Johnston, Alpert, Bowen, Burton, Escutia, Johnson,  
            Karnette, Kelley, Leslie, McPherson, Mountjoy, Perata,  
            Vasconcellos

           SENATE FLOOR  :  39-0, 6/1/00 (Consent)
          AYES:  Alarcon, Alpert, Bowen, Brulte, Burton, Chesbro,  
            Costa, Dunn, Escutia, Figueroa, Hayden, Hughes,  
            Johannessen, Johnson, Johnston, Karnette, Kelley, Knight,  
            Leslie, Lewis, McPherson, Monteith, Morrow, Mountjoy,  
            Murray, O'Connell, Ortiz, Peace, Perata, Polanco,  
            Poochigian, Rainey, Schiff, Sher, Solis, Soto, Speier,  
            Vasconcellos, Wright

           ASSEMBLY FLOOR  :  75-0, 8/28/00 - See last page for vote
           

           SUBJECT  :    State Energy Commission:  grant program:  solar
                      energy systems

           SOURCE  :     Author

           
           DIGEST  :    This bill establishes a grant program to offset  
                                                           CONTINUED





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          a portion of the costs in solar and low-pollution  
          distributed generation systems.

           Assembly Amendments  :

          1. Delete provision requiring CEC to develop and adopt  
             guidelines.

          2. Delete provision authorizing CEC to use 3% of funds for  
             administration.

          3. Delete operative date of July 1, 2001.

          4. Provide that the bill shall not affect the existing PUC  
             authority to adopt regulations, as specified.

          5. Delete provision requiring PUC to establish  
             interconnection and safety requirements and operating  
             agreements for distributed generation.

           ANALYSIS  :   Current federal law provides a credit equal to  
          10% of the cost of energy property placed in service during  
          a given tax year.

          The California Constitution was amended in 1980 to clarify  
          that active solar energy systems would not be assessed as  
          "new construction" under Proposition 13's property tax  
          limitations.

          This bill 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.  








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          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.

           Background  :
          
          Existing law provides a variety of mechanisms to support  
          and encourage the development of solar energy programs,  
          including property tax exemptions for installation of solar  
          systems and grants for development and operation of some  
          solar generation technologies.

          AB 1890 (Brulte), (Chapter 854, Statutes of 1996), provided  
           $540 million, collected over four years, to operate and  
          develop new, emerging and existing renewable resource  
          technologies.  The CEC was charged with developing a  
          spending plan for these funds, as well as others dedicated  
          in AB 1890 for various public purpose programs.  The CEC   
          spending plan was codified by SB 90 (Sher), (Chapter 905,  
          Statutes of 1997).

          Under SB 90, the grid-connected photovoltaic segment of the  
          solar industry (which is potentially eligible for grants  
          under this bill) is eligible to compete for 10% of the $540  
          million - the portion designated for new and emerging  
          technologies.  Photovoltaics, or PV systems, include the  
          traditional panels and other types of receptors that take  
          in sunlight and provide electricity for residential and  
          industrial use. 

          Distributed generation (DG) is a growing industry that has  
          been receiving quite a bit of attention as the state's  







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          energy needs continue to grow.  With recent energy  
          shortages during peak demand periods, uncertainties about  
          the future competitive marketplace and new power plant  
          generation still two to three years from completion, DG  
          systems are reaching more and more commercial customers -  
          with residential systems in the advanced development  
          stages.   

          Distributed generation (DG) 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 transmitted to multiple  
          users.  DG systems range from photovoltaics and fuel cells  
          to gas turbines and diesel engines in residential,  
          commercial and industrial applications that can operate in  
          conjunction with, or independent of, the electricity grid. 

           Prior legislation  :  

          This bill is similar to SB 655 (Peace) of 1999, which was  
          approved by this committee but vetoed by the Governor.  The  
          Governor's veto message reads:

               "While I am supportive of efforts to promote emerging  
               solar and distributed generation technologies, this  
               bill establishes a new grant program without  
               establishing the source or amount of funding.  This  
               program, while important, should compete with other  
               priorities in the annual budget process."

          This bill is also similar to SB 116 (Peace) of 1998, which  
          established a grant program for solar systems, but not  
          distributed generation systems.  In addition, SB 116  
          reinstated a property tax exemption for the installation of  
          solar systems.  SB 116 was vetoed by Governor Wilson, who  
          objected to the grant program, stating a preference for  
          "fair and open market competition without government  
          subsidization of one particular industry."  The property  
          tax exemption provisions of SB 116 were reinstated by AB  
          1755 (Keeley), (Chapter 855, Statutes of 1998).

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No








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          The Senate Budget and Fiscal Review Committee is proposing  
          an appropriation of $1.7 million from the Energy Resources  
          Programs Account for the purposes of this bill.  The bill  
          authorizes the CEC to spend $250,000 of the funds  
          appropriated for the program to fund its costs in  
          administering the program.  Unknown costs for grants.

           SUPPORT  :   (Verified  5/30/00) (Unable to reverify at time  
          of writing)

          California Manufactures & Technology Association
          California Solar Energy Industries Association
          Clean Power Campaign
          ESDI, Inc.
          Environmental Solar Design, Inc.
          Goldline Electronic Controls
          Heliocol Solar
          Horizon Industries
          Independent Power Providers
          New Energy
          Off Line Independent Energy Systems
          Renewable Energy Concepts, Inc.
          San Diego Regional Energy Office
          Sierra Club
          Solar Depot
          Solar Roofs. Com
          SUN Utility Network
          USAN
          Astro Power
          Aztec Solar
          California State Association of Electrical Workers
          Environmental Defense Fund
          Kyocere Solar, Inc.
          Pacific Solar Company
          Politico Group - National Electrical Contractors  
          Association
          Politico Group - California Legislative Conference of the  
          Plumbing, Heating
            and Piping Industry
          Science Application International Corporation
          Sierra Pacific
          Various individuals 









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          ASSEMBLY FLOOR  :
          AYES:  Aanestad, Ackerman, Alquist, Aroner, Ashburn,  
            Baldwin, Bates, Battin, Baugh, Bock, Brewer, Briggs,  
            Calderon, Campbell, Cardenas, Cardoza, Cedillo, Corbett,  
            Correa, Cox, Cunneen, Davis, Dickerson, Ducheny, Dutra,  
            Firebaugh, Gallegos, Granlund, Havice, Honda, House,  
            Jackson, Kaloogian, Keeley, Knox, Kuehl, Leach, Lempert,  
            Leonard, Longville, Lowenthal, Machado, Maddox,  
            Maldonado, Margett, Mazzoni, McClintock, Migden, Nakano,  
            Olberg, Oller, Robert Pacheco, Papan, Pescetti, Reyes,  
            Romero, Runner, Scott, Shelley, Steinberg, Strickland,  
            Strom-Martin, Thompson, Thomson, Torlakson, Villaraigosa,  
            Vincent, Washington, Wayne, Wesson, Wiggins, Wildman,  
            Wright, Zettel, Hertzberg


          NC:jk  8/29/00   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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