BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1345| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 SB 1345 Page 2 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. SB 1345 Page 3 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 SB 1345 Page 4 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 SB 1345 Page 5 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 SB 1345 Page 6 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 **** END ****