BILL ANALYSIS
SB 1038
Page A
Date of Hearing: August 19, 2002
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick D. Wright, Chair
SB 1038 (Sher) - As Amended: August 15, 2002
SENATE VOTE : Vote not relevant.
SUBJECT : Renewable energy.
SUMMARY : Reinstates, continues, and modifies components of the
Renewable Energy Program (REP) Investment Plan, and the Public
Interest Energy Research (PIER) Investment Plan. Specifically,
this bill :
1)Provides the legislative approval necessary for the California
Energy Commission (CEC) to expand PIER and REP program funds.
2)Requires that an independent evaluation of PIER program be
conducted.
3)Extends the sunset, from January 1, 2000 to January 1, 2007,
on certain program criteria provisions of PIER program.
4)Permits CEC to award investor-owned utilities (IOUs) up to 10
percent of PIER funds for transmission and distribution
related functions.
5)Requires IOUs to spend specified levels of public goods
surcharge revenues on in-state operation of existing and new
emerging renewable resources technologies, and modifies the
allocation of funds, according to the following percentages:
---------------------------------------------------------
| Purpose | Existing | This bill |
| | law | |
|--------------------------------+-----------+------------|
| Improve competitiveness of | 45% | 20% |
| renewables | | |
|--------------------------------+-----------+------------|
| Develop renewables facilities | 30% | 50% |
|--------------------------------+-----------+------------|
| Develop emerging technologies | 10% | 17.5% |
|--------------------------------+-----------+------------|
|Promotion of renewables markets | 15% |12.5% |
SB 1038
Page B
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EXISTING LAW requires:
1)Electrical corporations to identify a separate rate component
to fund cost-effective energy efficiency, public interest
renewable energy research, and related "public goods"
programs.
2)CEC to submit an initial investment plan<1> for renewable
energy by March 2002.
3)CEC to submit an initial investment plan for public interest
research, development and demonstration by March 2001.
FISCAL EFFECT: Unknown.
COMMENTS :
Assembly Bill 1890 (Brulte)<2> required the state's three major
IOUs to collect $540 million from their ratepayers over a
four-year period (1998-2002) to help support renewable
electricity-generation technologies and develop a renewable
market. Senate Bill 90 (Sher)<3> subsequently established a
Renewable Resource Trust Fund, placed the $540 million into the
fund, and specified how CEC would distribute the funds in the
following categories:
Existing Renewable Resources
New Renewable Resources
Emerging Renewable Resources
Customer-Side Renewable Resources Purchases
Consumer Education
Prior to expending any of the funds collected from ratepayers,
CEC was required to submit a report to the Legislature
describing the programs it would support, and the levels of
support they would receive.
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<1> The investment plans cover proposed expenditures for funds
collected between January 2002 and January 2007.
<2> Chapter 854, Statutes of 1996
<3> Chapter 905, Statutes of 1997
SB 1038
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In 2000, AB 995 (Wright)<4> and SB 1194 (Sher)<5> codified the
Reliable Electric Service Investments Act (RESIA) and continued
collection of funds from 2002 to 2012. Under the RESIA an
amount beginning at $135 million annually is collected from
ratepayers, beginning January 2002, and CEC is required to
provide recommendations concerning allocation of the funds
collected over the first five years of that period.
For renewable energy , CEC was required to submit an initial
investment plan by March 31, 2002, addressing the application of
funds collected between January 1, 2002, and January 1, 2007.
CEC adopted its 2002-2006 investment plan for renewable energy
in June 2001. IOU ratepayers contribute $135 million annually
to this program.
For public interest research, development and demonstration , CEC
was required to submit an initial investment plan by March 1,
2001, addressing the application of funds collected between
January 1, 2002, and January 1, 2007. CEC adopted its 2002-2006
investment plan for PIER in March 2001. IOU ratepayers
contribute $62.5 million annually to this program.
Subsequent investment plans for funds collected between 2007 and
2012 are due in March 2006.
This bill is necessary to continue funding for PIER and
renewable energy plans.
No funds may be expended in the years covered by these plans
without further legislative action. While the public goods
charge is still being collected, CEC's authority to fund the
programs that it supports has expired.
According to CEC, payments to renewable generators for
generation occurring in 2002 have been suspended and
solicitations for new PIER projects have been suspended.
Neither can resume until legislation is enacted. This bill
provides the authorization necessary to continue these programs.
Waste tire, solid waste generation, & most small hydroelectric
technologies not "renewable."
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<4> Chapter 1051, Statutes of 2000
<5> Chapter 1050, Statutes of 2000
SB 1038
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Existing law defines "in-state renewable electricity generation
technology" for purposes of funding of some elements of the
plans in a way that includes waste tire and solid waste
generation technologies, as well as landfill gas and digester
gas.
This bill removes waste tire and solid waste generation
technologies from the definition,<6> and therefore also from
eligibility for funding, the author not being convinced of the
"renewability" of these sources of fuel, prompting the
opposition noted below. In addition, small hydroelectric power
facilities would no longer qualify as renewables for purposes of
the programs if the project appropriated any additional water,
effectively eliminating renewable energy funding eligibility for
hydroelectric power from dams.
Author's amendment re: City of Davis photovoltaic generation.
The author intends to offer an amendment in Committee taken at
the request of Assemblymember Thomson on behalf of the City of
Davis. The amendment would authorize direct access electric
transmission by the City of Davis and exempt it from various
fees that would be otherwise owing to Pacific Gas & Electric
(PG&E) for use of its transmission lines to send power from its
photovoltaic generation facility to city offices across town.
Technical amendments.
1)On page 21, lines 2 and 3, and on page 24, lines 19 and 20,
"Western States Coordinating Council (WSCC)" should be changed
to "Western Electric Coordinating Council (WECC)."
2)On page 20, a statement of legislative intent to increase the
amount of renewable electricity generated per year, "so that
it equals at least 17 percent of the total electricity
generated for consumption in California per year by 2006"
should be amended to conform with AB 57 (Wright), which
requires IOUs to procure renewable energy with the goal of
ensuring that at least additional 1 percent per year of the
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<6> This bill changes the term slightly, to "in-state renewable
electricity generation facility," and adds facilities using
ocean thermal, tidal current, and wave energy generation
technologies, located within the state's territorial boundaries,
to the definition.
SB 1038
Page E
electricity sold by IOU is renewable energy until a 20 percent
renewable resources portfolio is achieved.
REGISTERED SUPPORT / OPPOSITION :
Support
California Biomass Energy Alliance
California Cast Metals Association
East Bay Municipal Utility District
FPL Energy
Natural Resources Defense Council
Opposition
California Refuse Removal Council
Los Angeles County Solid Waste Management Committee
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083