BILL NUMBER: SB 1	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 25, 2005
	AMENDED IN SENATE  FEBRUARY 28, 2005

INTRODUCED BY   Senators Murray and Campbell
    (   Coauthors:   Senators  
Alquist,   Chesbro,   Ducheny,   and Kehoe
  ) 
    (   Coauthors:   Assembly Members 
 Bermudez,   Chan,   Huff,   Laird,
  Leno,   Lieber,   Maze,  
Pavley,   and Wolk   ) 

                        DECEMBER 6, 2004

   An act to add Sections 25405.5 and 25405.6 to, and to add Chapter
8.8 (commencing with Section 25780) to Division 15 of, the Public
Resources Code, and to add Sections 379.8,  387.5, and 760
  and 387.5  to the Public Utilities Code,  and
to amend Sections 73, 17053.84, and 23684 of the Revenue and
Taxation Code,  relating to solar energy  , and making
an appropriation therefor  .


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1, as amended, Murray.  Energy: renewable energy resources:
Million Solar Roofs Initiative.
   (1) Existing law requires the State Energy Resources Conservation
and Development Commission (Energy Commission) to expand and
accelerate development of alternative sources of energy, including
solar resources. Existing law requires the Energy Commission, until
January 1, 2006, and to the extent that funds are appropriated for
that purpose in the annual Budget Act, to implement a grant program
to accomplish specified goals, including making solar energy systems
cost competitive with alternate forms of energy.
   Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations. The existing Public Utilities Act requires the PUC to
require Pacific Gas and Electric Company, San Diego Gas and Electric,
and Southern California Edison to identify a separate electrical
rate component to fund programs that enhance system reliability and
provide in-state benefits. This rate component is a nonbypassable
element of local distribution and collected on the basis of usage.
The funds are collected to support cost-effective energy efficiency
and conservation activities, public interest research and development
not adequately provided by competitive and regulated markets, and
renewable energy resources.
   This bill would establish the Million Solar Roofs Initiative,
administered by the Energy Commission, with the goals of placing
1,000,000 solar energy systems, as defined, on new and existing
residential and commercial customer sites, or its generation capacity
equivalent of 3,000 megawatts, establishing a self-sufficient solar
industry in 10 years, and placing solar energy systems on 50% of new
home developments in 13 years. The bill would establish the Million
Solar Roofs Initiative Trust Fund and would  continuously
appropriate   provide that, upon appropriation by the
Legislature,  moneys deposited into the fund  to
  may be expended by  the Energy Commission for
purposes of carrying out the Million Solar Roofs Initiative. The
program would require the Energy Commission to award incentives,
pursuant to a declining schedule to be adopted by the Energy
Commission, and would authorize certain other incentive programs, to
support the installation of eligible solar energy systems. The bill
would require the Energy Commission to establish eligibility criteria
for solar energy systems and to establish conditions for incentives.
The bill would require the Energy Commission to adopt guidelines
governing the program at a publicly noticed meeting.
   This bill would require that the PUC, on or before February 1,
2006, and in consultation with the Energy Commission, issue an order
opening a proceeding, or expanding the scope of an existing
proceeding, to adopt, implement, and finance a comprehensive solar
energy program to invest in and encourage the increased installation
of residential and commercial solar energy systems, with the goal of
placing solar energy systems on 1,000,000 residential and commercial
customer sites or its equivalent of 3,000 megawatts of solar
generating capacity, by December 31, 2018. The bill would require
funding of the Million Solar Roofs Initiative to be an element of the
program adopted by the PUC. The bill would require that the
reasonable cost of the program be included in the distribution
revenue requirements of electrical corporations. The bill would
require that the program adopted by the PUC be a cost-effective
investment by ratepayers in peak electricity generation capacity that
enables ratepayers to recoup the cost of their investment through
lower rates as a result of avoiding purchases of electricity at peak
rates generated by traditional generation resources. The bill would
require the PUC to adopt the program no later than January 1, 2007.
   This bill would require all local publicly owned electric
utilities, as defined, to establish a solar roofs initiative
consistent with the program adopted and implemented by the PUC,
within a reasonable time after the PUC establishes any program for
electrical corporations. All local publicly owned electric utilities
would be required to report, on an annual basis, to its customers and
to the Energy Commission, information relative to the utility's
solar roofs initiative and would authorize the Energy Commission to
establish guidelines for the information to be included in the
utility's annual report. By imposing additional duties upon local
publicly owned electric utilities, the bill would thereby impose a
state-mandated local program.
   (2) Existing law requires all electric service providers, as
defined, to develop a standard contract or tariff providing for net
energy metering, and to make this contract available to eligible
customer generators, upon request.  Existing law requires all
electric service providers, upon request, to make available to
eligible customer generators contracts for net energy metering on a
first-come-first-served basis until the time that the total rated
generating capacity used by eligible customer generators exceeds 0.5%
of the electric service provider's aggregate customer peak demand.
   This bill would, notwithstanding these requirements, require the
PUC to order  electrical corporations   electric
service providers  to expand the availability of net energy
metering so that it is offered on a first-come-first-served basis
until the time that the total rated generating capacity used by all
eligible customer-generators exceeds  0.5%   5%
 of the  electrical corporation's total electricity
sales   electric service provider's aggregate custom
peak demand  .
   (3)    Existing law authorizes the PUC to
fix the rates and charges for every public utility, and requires
that those rates and charges be just and reasonable. 

   This bill would require the PUC, in collaboration with the Energy
Commission, to develop time-variant electricity pricing tariffs for
all customers that are not subject to mandatory time-variant pricing,
including net-metered customers. 
    (4)    Existing law requires
the Energy Commission to expand and accelerate development of
alternative sources of energy, including solar resources
   This bill would require that beginning January 1, 2010, a seller
of production homes, as defined, offer the option of a solar energy
system, as defined, to all customers negotiating to purchase a new
production home constructed on land meeting certain criteria and to
disclose certain information. The bill would require that not later
than July 1, 2009, the Energy Commission initiate a public proceeding
and make findings if and under what conditions solar energy systems
are to be required on new residential and nonresidential buildings.

   (4) The Personal Income Tax Law and the Bank and Corporation Tax
Law authorize various credits against the taxes imposed by those
laws. Existing law allows a credit against those taxes for taxable
years beginning on and after January 1, 2004, and before January 1,
2006, for certain amounts relating to the use of solar or wind energy
systems, as defined.  
   This bill would make that credit applicable for taxable years
beginning on and after January 1, 2004, and before January 1, 2017.
 
   (5) Existing property tax law, until January 1, 2006, provides
that, for property tax lien dates for the 1999 -2000 to 2004-05
fiscal years, inclusive, the term "newly constructed" as used in the
California Constitution does not include the construction or addition
of any active solar energy system, as defined.  
   This bill would continue that exclusion for an active solar energy
system, as defined, until January 1, 2018, for property tax lien
dates for the 1999-2000 to 2016-17 fiscal years, inclusive. By
requiring local taxing authorities to perform duties with regard to
the continuation of the active solar energy system exclusion, the
bill would impose a state-mandated local program.   
    (5)   
    (6)    Under existing law, a violation of the
Public Utilities Act or an order or direction of the PUC is a crime.

    Various provisions of this bill are within the act and require
action by the PUC to implement the bill's requirements. Because a
violation of those provisions or of PUC actions to implement those
provisions would be a crime, this bill would impose a state-mandated
local program by creating new crimes.
    (6)   
   (7)    The California Constitution requires the
state to reimburse local agencies and school districts for certain
costs mandated by the state. Statutory provisions establish
procedures for making that reimbursement.
   This bill would provide that no reimbursement is required by this
act for specified reasons.
   Vote:  2/3   majority  . Appropriation:
 yes   no  . Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 25405.5 is added to the Public Resources Code,
to read:
   25405.5.
   (a) As used in this section, the following terms have the
following meanings:
   (1) "kW" means kilowatts or 1,000 watts, as measured from the
alternating current side of the solar energy system inverter
consistent with Section 223 of Title 15 of the United States Code.
   (2) "Production home" means a single family residence constructed
as part of a development of at least 50 homes per project that is
intended or offered for sale.
   (3) "Solar energy system" means a photovoltaic solar collector or
other photovoltaic solar energy device that has a primary purpose of
providing for the collection and distribution of solar energy for the
generation of electricity, and that produces at least 1 kW  ,
but not more than 1 megawatt,  alternating current rated peak
electricity.
   (b) A seller of production homes shall offer a solar energy system
option to all customers that enter into negotiations to purchase a
new production home constructed on land for which an application for
a tentative subdivision map has been deemed complete on or after
January 1, 2010, and disclose the following:
   (1) The total installed cost of the solar energy system option.
   (2) The estimated cost savings associated with the solar energy
system option, as determined by the commission pursuant to Chapter
8.8 (commencing with Section 25780) of Division 15.
  SEC. 2.  Section 25405.6 is added to the Public Resources Code, to
read:
   25405.6.
   Not later than July 1,  2009   2006  ,
the commission shall initiate a public proceeding and make findings
if and under what conditions solar energy systems shall be required
on new residential and new nonresidential buildings, including the
establishment of numerical targets. For purposes of this section, a
solar energy system means a photovoltaic solar collector or other
photovoltaic solar energy device that has a primary purpose of
providing for the collection and distribution of solar energy for the
generation of electricity.
  SEC. 3.  Chapter 8.8 (commencing with Section 25780) is added to
Division 15 of the Public Resources Code, to read:
      CHAPTER 8.8.  Million Solar Roofs Initiative

   25780.
   The Legislature finds and declares all of the following:
   (a) California has a pressing need to procure a steady supply of
affordable and reliable peak electricity.
   (b) Solar generated electricity is uniquely suited to California's
needs because it produces electricity when California needs it most,
during the peak demand hours in summer afternoons when the sun is
brightest and air conditioners are running at capacity.
   (c) Procuring solar electric generation capacity to meet peak
electricity demand increases system reliability and decreases
California's dependence on unstable fossil fuel supplies.
   (d) Solar generated electricity diversifies California's energy
portfolio. California currently relies on natural gas for the bulk of
its electricity generation needs. Increasing energy demands place
increasing pressure on limited natural gas supplies and threaten to
raise costs.
   (e) More than 150,000 homes will be built annually in California
in the coming years, challenging energy reliability and
affordability.
   (f) Investing in residential and commercial solar electricity
generation installations today will lower the cost of solar generated
electricity for all Californians in the future. In 10 years, solar
peak electric generation can be procured without the need for
rebates.
   (g) Increasing California's solar electricity generation market
will also bring additional manufacturing, installation, and sales
jobs to the state at a higher rate than most conventional energy
production sources.
   (h) Funding a Million Solar Roofs Initiative is a cost-effective
investment by ratepayers in peak electricity generation capacity and
ratepayers will recoup the cost of their investment through lower
rates as a result of avoiding purchases of electricity at peak rates,
with additional system reliability and pollution reduction benefits.

   (i) Solar energy systems provide substantial energy reliability
and pollution reduction benefits. Solar energy systems also diversify
our energy supply and thereby reduce our dependence on imported
fossil fuels.
   25781.
   As used in this chapter, the following terms have the following
meanings:
   (a) "kW" means kilowatts or 1,000 watts, as measured from the
alternating current side of the solar energy system inverter
consistent with Section 223 of Title 15 of the United States Code.
   (b) "kWh" means kilowatthours, as measured by the number of
kilowatts generated in an hour.
   (c) "MW" means megawatts or 1,000,000 watts.
   (d) "Solar energy system" means a photovoltaic solar collector or
other photovoltaic solar energy device that has a primary purpose of
providing for the collection and distribution of solar electrical
 energy for the generation of electricity, and that produces at
least 1 kW alternating current rated peak electricity.
   (e) "Million Solar Roofs Initiative" means the program established
by this chapter.
   25782.
   (a) The commission shall develop and implement a multiyear Million
Solar Roofs Initiative to provide funding and support to foster the
installation of solar energy systems on new and existing residential
and commercial customer sites in California. The goals of this
program are the placement of solar energy systems on 1,000,000
residential and commercial sites, or its generation capacity
equivalent of 3,000 MW, the establishment of a self-sufficient solar
industry in which solar energy systems are a viable mainstream option
for both homes and businesses in 10 years, and the placement of
solar energy systems on 50 percent of new homes in 13 years.
   (b) All funds used for the Million Solar Roofs Initiative shall be
expended in accordance with the following:
   (1) The commission shall award monetary incentives for eligible
solar energy systems not to exceed the existing level of incentive in
effect on January 1, 2006. The incentive level shall decline each
year thereafter at a rate of no less than 7 percent per year and
shall be zero as of December 31, 2016. The commission shall adopt and
publish a schedule of declining incentive levels no less than 60
days in advance of the first decline in incentive levels.
   (2) Notwithstanding paragraph (1), the commission may increase the
incentive level by not more than 50 percent above the maximum
incentive level established pursuant to paragraph (1) for solar
energy systems that are installed on "zero energy homes" or "zero
energy commercial structures." Prior to an increase in the incentive
level, the commission shall adopt definitions for "zero energy homes"
and "zero energy commercial structures" through a public process,
including at least one public hearing with not less than 30 days'
notice.
   (3) Notwithstanding paragraph (1), the commission may increase the
incentive level by not more than 25 percent above the maximum
incentive level established pursuant to paragraph (1) for solar
energy systems that are installed on homes or commercial structures
that exceed the commission's established building standards by a
specified percentage as determined by the commission.
   (4) Awards shall be made for the installation of eligible solar
energy systems on new or existing residential and commercial customer
sites that are or will be receiving electrical distribution service
from an electrical corporation that is contributing funds to support
the Million Solar Roofs Initiative pursuant to Section 379.8 of the
Public Utilities Code.
   (5) Awards shall not be made for eligible solar energy systems
installed on the premises of individuals or entities that are not
contributing funds to support the Million Solar Roofs Initiative.
   (c) The commission shall establish eligibility criteria for solar
energy systems, including the following:
   (1) The solar energy system is intended primarily to offset part
or all of the consumer's own electricity demand.
   (2) All components in the solar energy system are new and unused,
and have not previously been placed in service in any other location
or for any other application.
   (3) The solar energy system has a warranty of not less than 10
years to protect against defects and undue degradation of electrical
generation output.
   (4) The solar energy system is located on the same premises of the
end-use consumer where the consumer's own electricity demand is
located.
   (5) The solar energy system is connected to the electrical
corporation's electrical distribution system within the state.
   (6) The solar energy system has meters or other devices in place
to monitor and measure the system's performance and the quantity of
electricity generated by the system.
   (d) The commission  may  shall 
establish conditions on incentives that require or encourage all of
the following:
   (1) Appropriate siting and high quality installation of the solar
energy system  by developing installation guidelines that
maximize the performance of the system and prevent qualified systems
from being inefficiently or inappropriately installed. The goal of
this paragraph is to achieve efficient installation of solar energy
systems to promote the greatest energy production per ratepayer
dollar  .
   (2) Optimal solar energy system performance during periods of peak
electricity demand, including the use of advanced metering systems,
onsite performance meters, dispatchable battery backup systems, and
performance based incentives.
   (3) Appropriate energy efficiency improvements in the new or
existing home or commercial structure where the solar energy system
is installed.  
   (4) Rate equipment, components, and systems to assure reasonable
performance and to develop standards that provide for compliance with
the minimum ratings. 
   (e) The commission may limit the amount of funds available for any
system or project of multiple systems and reduce the level of
funding for any system or project of multiple systems that has
received, or may be eligible to receive, any other government or
utility funding, incentive, or credit, except for any income or
property tax credit or exemption.
   (f) The commission may provide proportional program support, not
to exceed 10 percent of the overall funds for the Million Solar Roofs
Initiative, for installation of solar energy systems on affordable
housing projects undertaken pursuant to Section 50052.5, 50053, or
50199.14 of the Health and Safety Code. If deemed appropriate in
consultation with the California Tax Credit Allocation Committee, the
commission may establish a revolving loan or loan guarantee program
for affordable housing projects consistent with the requirements of
Chapter 5.3 (commencing with Section 25425).
   (g) Pursuant to this chapter, the commission may provide
incentives in the form of a monetary incentive or its equivalent to
purchasers, lessees, lessors, or sellers of an eligible solar energy
system. The incentive shall benefit the end-use consumer by directly
and exclusively reducing the purchase or lease cost of the eligible
solar energy system, or the cost of electricity produced by the
eligible solar energy system. Incentives shall be issued on the basis
of the rated electrical capacity of the system measured in watts, or
in the electricity production of the system, measured in kW, as
determined by the commission.
   25783.
   In administering the Million Solar Roofs Initiative, the
commission shall do all the following:
   (a) Examine and implement, to the extent appropriate, financing
options that could lower solar energy system financing costs to
residential and commercial customers. The commission shall examine
wholesale and retail mortgage markets, and other issues that it deems
appropriate.
   (b) Acquire, if the commission determines it necessary,
appropriate technical and administrative services or expertise to
support the Million Solar Roofs Initiative. The commission may award
contracts to develop or administer all or a portion of the Million
Solar Roofs Initiative.
   (c) Publish educational materials designed to demonstrate how
builders may incorporate  those   solar energy
systems during construction as well as  energy efficiency
measures that best complement solar energy systems.
   (d) Develop and publish the estimated annual electrical generation
and savings for solar energy systems. The estimates shall vary by
climate zone, type of system, size, lifecycle costs, electricity
prices, and other factors the commission determines to be relevant to
a consumer when making a purchasing decision.
   (e) Provide assistance to builders and contractors in support of
the Million Solar Roofs Initiative. The assistance may include
technical workshops, training, educational materials, and related
research.
   (f) Publish, and make available to the public, at least once
annually, the balance of funds available for the Million Solar Roofs
Initiative and the percentage of new and existing residential and
commercial customer sites that are equipped with solar energy systems
funded by the Million Solar Roofs Initiative.  
   (g) Develop an offset program that allows a developer or seller of
production homes to forego the offer requirement of Section 25405.5
on one project, by installing solar energy systems generating
specified amounts of electricity on other projects. The amount of
electricity required to be generated from solar energy systems used
as an offset pursuant to this subdivision, shall be equal to the
amount of electricity generated by solar energy systems installed on
a similarly sized project within that climate zone, assuming 20
percent of the prospective buyers would have installed solar energy
systems. 
   25784.
   (a) The commission shall adopt guidelines governing the Million
Solar Roofs Initiative authorized under this chapter, at a publicly
noticed meeting offering all interested parties an opportunity to
comment. Not less than 30 days' public notice shall be given of the
meeting required by this section, before the commission initially
adopts guidelines. Substantive changes to the guidelines shall not be
adopted without at least 10 days' written notice to the public.
Notwithstanding any other provision of law, any guidelines adopted
pursuant to this chapter shall be exempt from the requirements of
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code.
   (b) Funds to further the purposes of this chapter may be committed
for multiple years.
   25785.
   (a) The Million Solar Roofs Initiative Trust Fund is hereby
created in the State Treasury.
   (b) The money in the fund may be expended to implement and support
the Million Solar Roofs Initiative pursuant to this chapter 
and may be used for the commission's administration only 
upon appropriation by the Legislature in the annual Budget Act.
   (c) Revenues collected by electrical corporations pursuant to
Section 379.8 of the Public Utilities Code shall be transmitted to
the commission at least quarterly for deposit in the Million Solar
Roofs Initiative Trust Fund.  After setting aside in the fund
money that may be needed for expenditures authorized by subdivision
(b), the   The  Treasurer shall immediately deposit
money received pursuant to this section into the Million Solar Roofs
Initiative Trust Fund for the current calendar year. 
Notwithstanding Section 13340 of the Government Code, the money in
the fund is hereby continuously appropriated to the commission
without regard to fiscal year for the purposes enumerated in this
chapter. 
   (d) Upon  appropriation by the Legislature and 
notification by the commission, the Controller shall pay all awards
of the money in the fund for purposes enumerated in this chapter. The
eligibility of an award shall be determined solely by the commission
based on the procedures it adopts under this chapter. Based on the
eligibility of an award, the commission shall also establish the need
for a multiyear commitment to any particular award and so advise the
Department of Finance. An eligible award submitted by the commission
to the Controller shall be accompanied by a summary description of
how payment of the award furthers the purposes enumerated in this
chapter, and an accounting of future costs associated with any award
or group of awards known to the commission to represent a portion of
a multiyear funding commitment.
  SEC. 4.  Section 379.8 is added to the Public Utilities Code, to
read:
   379.8.
   (a) Notwithstanding any other law, on or before February 1, 2006,
the commission, in consultation with the State Energy Resources
Conservation and Development Commission, shall initiate a new
proceeding or expand the scope of an existing proceeding to adopt,
implement, and finance a comprehensive solar energy program to invest
in and encourage the increased installation of residential and
commercial solar energy systems in the state. The goal of the program
is placing solar energy systems on one million residential and
commercial customer sites or its equivalent of 3,000 MW solar
generating capacity in the state by December 31, 2018.
   (b) The commission's proceeding shall do all of the following:
   (1) Evaluate current programs of the commission and the State
Energy Resources Conservation and Development Commission to determine
the level of additional funding needed to adequately support the
goal of placing solar energy systems on one million residential and
commercial customer sites or its equivalent of 3,000 MW solar
generating capacity in the state by December 31, 2018.
   (2) Encourage participation by a broad and diverse range of
interests from all areas of the state, and interested state entities.

   (c) The commission shall include the reasonable cost of the
program in the distribution revenue requirements of electrical
corporations.
   (d) Notwithstanding any other provision of law, any charge imposed
to fund the programs adopted and implemented pursuant to this
section shall be imposed upon all customers, including those
residential customers subject to the rate cap required by Section
80110 of the Water Code for existing baseline quantities or usage up
to 130 percent of existing baseline quantities of electricity.
   (e) The commission shall adopt the program no later than January
1, 2007.
   (f) The program adopted by the commission pursuant to this
section, shall do all of the following:
   (1) Be a cost-effective investment by ratepayers in peak
electricity generation capacity that enables ratepayers to recoup the
cost of their investment through lower rates as a result of avoiding
purchases of electricity at peak rates generated by traditional
powerplants and peaker generation units, with additional system
reliability and pollution reduction benefits.
   (2) Utilize the most cost-effective administrative mechanism to
adequately accomplish the goals of the program.
   (3) Provide a predictable long-term funding mechanism sufficient
to encourage adequate investment by the solar industry.
   (4) Make time-variant pricing available for all ratepayers with a
solar energy system, upon adoption of time-variant pricing tariffs
pursuant to Section 760. The commission shall structure any
time-variant pricing so that ratepayers receive due value for their
contribution to the purchase of solar energy systems and customers
with solar energy systems continue to have an incentive to use
electricity efficiently.
   (5) Require San Diego Gas and Electric Company, Southern
California Edison Company, and Pacific Gas and Electric Company to
each designate at least one employee to be accountable for solar
energy system installations and operations.
   (6) Require San Diego Gas and Electric Company, Southern
California Edison Company, and Pacific Gas and Electric Company to
each monitor and report key solar program performance and progress
data to the commission in a clearly identified place on the utility's
Internet Web site.
   (7) Consider energy efficiency and demand side management options,
in addition to solar energy system procurement, for new residential
and commercial construction.
   (8) Notwithstanding Section 2827, require  electrical
corporations   an electric service provider  to
expand the availability of net energy metering so that it is offered
on a first-come-first-served basis until the time that the total
rated generating capacity used by all eligible customer-generators
exceeds 5 percent of the  electrical corporation's total
electricity sales   electric service provider's
aggregate customer peak demand  .  However, the net metering cap
shall not exceed 2 percent until the commission has established an
appropriate net metering time-variant rate design that considers the
costs to all net metering participants and ratepayers as a whole and
that considers the recovery of the fixed costs of providing
distribution service to customers. The commission shall monitor the
level of net energy metering for each electrical corporation to
ensure that the cap is increased in a timely manner as needed to
further the objectives of this section.
   (9) The commission may impose the requirements of this subdivision
on an electrical corporation in addition to those specified, when
and to the extent the commission determines this to be appropriate.
   (g) The program adopted by the commission pursuant to this section
shall also include elements for the purpose of funding a Million
Solar Roofs Initiative by the State Energy Resources Conservation and
Development Commission pursuant to Chapter 8.8 (commencing with
Section 25780) of Division 15 of the Public Resources Code. These
program elements shall exclude customers participating in the State
Energy Resources Conservation and Development Commission's Million
Solar Roofs Initiative from the rate cap for residential customers
for existing baseline quantities or usage by those customers of up to
130 percent of existing baseline quantities, as required by Section
80110 of the Water Code.
  SEC. 5.  Section 387.5 is added to the Public Utilities Code, to
read:
   387.5.
   (a) The governing body of a local publicly owned electric utility,
as defined in Section 9604, shall establish a comprehensive solar
roofs initiative consistent with programs adopted and implemented by
the commission pursuant to Section 379.8.
   (b) The level of expenditure for program elements shall be
consistent with those established for the three largest electrical
corporations in California, and shall be at a rate proportional to
the size of the ratepayer base served by the local publicly owned
electric utility.
   (c) A local publicly owned electric utility shall establish the
program within a reasonable period of time, but not to exceed six
months, after the commission adopts and implements its programs
pursuant to Section 379.8.
    (d) A local publicly owned electric utility shall, on an annual
basis beginning June 1, 2007, report to its customers and to the
State Energy Resources Conservation and Development Commission,
information relative to the utility's solar roofs initiative. The
State Energy Resources Conservation and Development Commission may
establish guidelines for the information to be included in the
utility's annual report. Any guidelines established pursuant to this
subdivision shall be adopted in the manner specified in Section 25784
of the Public Resources Code.  Notwithstanding any other provision
of law, any guidelines adopted by the State Energy Resources
Conservation and Development Commission pursuant to this subdivision
shall be exempt from the requirements of Chapter 3.5 (commencing with
Section 11340) of Part  I   1  of Division
3 of Title 2 of the Government Code.    
  SEC. 6.  Section 760 is added to the Public Utilities Code, to
read:
   760.
   The commission, in collaboration with the State Energy Resources
Conservation and Development Commission, shall develop optional
time-variant electricity pricing tariffs for all customers who are
not subject to mandatory time-variant pricing, including net-metered
customers.   
   SEC. 6.    Section 73 of the   Revenue and
Taxation Code   is amended to read: 
   73.
   (a) Pursuant to the authority granted to the Legislature pursuant
to paragraph (1) of subdivision (c) of Section 2 of Article XIII A of
the California Constitution, the term "newly constructed," as used
in subdivision (a) of Section 2 of Article XIII A of the California
Constitution, does not include the construction or addition of any
active solar energy system, as defined in subdivision (b).
   (b) (1) "Active solar energy system" means a system that uses
solar devices, which are thermally isolated from living space or any
other area where the energy is used, to provide for the collection,
storage, or distribution of solar energy.
   (2) "Active solar energy system" does not include solar swimming
pool heaters or hot tub heaters.
   (3) Active solar energy systems may be used for any of the
following:
   (A) Domestic, recreational, therapeutic, or service water heating.

   (B) Space conditioning.
   (C) Production of electricity.
   (D) Process heat.
   (E) Solar mechanical energy.
   (c) (1) (A) The Legislature finds and declares that the definition
of spare parts in this paragraph is declarative of the intent of the
Legislature, in prior statutory enactments of this section that
excluded active solar energy systems from the term "newly
constructed," as used in the California Constitution, thereby
creating a tax appraisal exclusion.
   (B) An active solar energy system that uses solar energy in the
production of electricity includes storage devices, power
conditioning equipment, transfer equipment, and parts related to the
functioning of those items. In general, the use of solar energy in
the production of electricity involves the transformation of sunlight
into electricity through the use of devices  such as
  , including  solar cells or other collectors.
However, an active solar energy system used in the production of
electricity includes only equipment used up to, but not including,
the stage of the transmission or use of the electricity. For the
purpose of this paragraph, the term "parts"
                  includes spare parts that are owned by the owner
of, or the maintenance contractor for, an active solar energy system
that uses solar energy in the production of electricity and which
spare parts were specifically purchased, designed, or fabricated by
or for that owner or maintenance contractor for installation in an
active solar energy system that uses solar energy in the production
of electricity, thereby including those parts in the tax appraisal
exclusion created by this section.
   (2) An active solar energy system that uses solar energy in the
production of electricity also includes pipes and ducts that are used
exclusively to carry energy derived from solar energy. Pipes and
ducts that are used to carry both energy derived from solar energy
and from energy derived from other sources are active solar energy
system property only to the extent of 75 percent of their full cash
value.
   (3) An active solar energy system that uses solar energy in the
production of electricity does not include auxiliary equipment, such
as furnaces and hot water heaters, that use a source of power other
than solar energy to provide usable energy. An active solar energy
system that uses solar energy in the production of electricity does
include equipment, such as ducts and hot water tanks, that is
utilized by both auxiliary equipment and solar energy equipment, that
is, dual use equipment. That equipment is active solar energy system
property only to the extent of 75 percent of its full cash value.
   (d) This section shall apply to property tax lien dates for the
1999-2000 to  2004-05   2016-17  fiscal
years, inclusive. For purposes of supplemental assessment, this
section shall apply only to qualifying construction or additions
completed on or after January 1, 1999.
   (e) This section shall remain in effect only until January 1,
 2006   2018  , and as of that date is
repealed, unless a later enacted statute that is enacted before
January 1,  2006   2018  , deletes or
extends that date.
   SEC. 7.    Section 17053.84 of the   Revenue
and Taxation Code   is amended to read: 
   17053.84.
   (a) For each taxable year beginning on or after January 1, 2001,
and before January 1, 2004, there shall be allowed as a credit
against the "net tax," as defined in Section 17039, an amount equal
to the lesser of 15 percent of the cost that is paid or incurred by a
taxpayer, after deducting the value of any other municipal, state,
or federal sponsored financial incentives, during the taxable year
for the purchase and installation of any solar or wind energy system
installed on property in this state, or the applicable dollar amount
per rated watt of that solar or wind energy system, as determined by
the Franchise Tax Board in consultation with the State Energy
Resources Conservation and Development Commission.
   (b) For each taxable year beginning on or after January 1, 2004,
and before January 1,  2006   2017  , there
shall be allowed as a credit against the "net tax," as defined in
Section 17039, an amount equal to the lesser of 7.5 percent of the
cost that is paid or incurred by a taxpayer, after deducting the
value of any other municipal, state, or federal sponsored financial
incentives, during the taxable year for the purchase and installation
of any solar or wind energy system installed on property in this
state, or the applicable dollar amount per rated watt of that solar
or wind energy system, as determined by the Franchise Tax Board in
consultation with the State Energy Resources Conservation and
Development Commission.
   (c) For purposes of this section:
   (1) "Applicable dollar amount" means four dollars and fifty cents
($4.50) for any taxable year beginning on or after January 1, 2001,
and before January 1,  2006   2017  .
   (2) "Solar energy system" means a solar energy device, in the form
of a photovoltaic system, with a peak generating capacity of up to,
but not more than 200 kilowatts, used for the individual function of
generating electricity, that is certified by the State Energy
Resources Conservation and Development Commission and installed with
a five-year warranty against breakdown or undue degradation.
   (3) "Wind energy system" means a wind energy conversion system
consisting of a wind turbine, a tower, and associated control or
conversion electronics, with a peak generating capacity of up to, but
not exceeding, 200 kilowatts, use for the individual function of
generating electricity, that is certified by the State Energy
Resources Conservation and Development Commission and installed with
a five-year warranty against breakdown or undue degradation.
   (4) A credit may be allowed under this section with respect to
only one solar or wind energy system per each separate legal parcel
of property or per each address of the taxpayer in the state.
   (5) No credit may be allowed under this section unless the solar
or wind energy system is actually used for purposes of producing
electricity and primarily used to meet the taxpayer's own energy
needs.
   (d) No other credit and no deduction may be allowed under this
part for any cost for which a credit is allowed by this section. The
basis of the solar or wind energy system shall be reduced by the
amount allowed as a credit under subdivision (a) or (b).
   (e) No credit shall be allowed to any taxpayer engaged in those
lines of business described in Sector 22 of the North American
Industry Classification System (NAICS) Manual published by the United
States Office of Management and Budget, 1997 edition.
   (f) If any solar or wind energy system for which a credit is
allowed pursuant to this section is thereafter sold or removed from
this state within one year from the date the solar or wind energy
system is first placed in service in this state, the amount of credit
allowed by this section for that solar or wind energy system shall
be recaptured by adding that credit amount to the net tax of the
taxpayer for the taxable year in which the solar or wind energy
system is sold or removed.
   (g) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and the succeeding seven years if necessary,
until the credit is exhausted.
   (h) This section shall remain in effect only until December 1,
 2006   2017  , and as of that date is
repealed.
   SEC. 8.    Section 23684 of the   Revenue
and Taxation Code   is amended to read: 
   23684.
   (a) For each taxable year beginning on or after January 1, 2001,
and before January 1, 2004, there shall be allowed as a credit
against the "tax," as defined in Section 23036, an amount equal to
the lesser of 15 percent of the cost that is paid or incurred by a
taxpayer, after deducting the value of any other municipal, state, or
federal sponsored financial incentives, during the taxable year for
the purchase and installation of any solar or wind energy system
installed on property in this state, or the applicable dollar amount
per rated watt of that solar or wind energy system, as determined by
the Franchise Tax Board in consultation with the State Energy
Resources Conservation and Development Commission.
   (b) For each taxable year beginning on or after January 1, 2004,
and before January 1,  2006   2017  , there
shall be allowed as a credit against the "net tax," as defined in
Section 17039, an amount equal to the lesser of 7.5 percent of the
cost that is paid or incurred by a taxpayer, after deducting the
value of any other municipal, state, or federal sponsored financial
incentives, during the taxable year for the purchase and installation
of any solar or wind energy system installed on property in this
state, or the applicable dollar amount per rated watt of that solar
or wind energy system, as determined by the Franchise Tax Board in
consultation with the State Energy Resources Conservation and
Development Commission.
   (c) For purposes of this section:
   (1) "Applicable dollar amount" means four dollars and fifty cents
($4.50) for any taxable year beginning on or after January 1, 2001,
and before January 1,  2006   2017  .
   (2) "Solar energy system" means a solar energy device, in the form
of a photovoltaic system, with a peak generating capacity of up to,
but not more than 200 kilowatts, used for the individual function of
generating electricity, that is certified by the State Energy
Resources Conservation and Development Commission and installed with
a five-year warranty against breakdown or undue degradation.
   (3) "Wind energy system" means a wind energy conversion system
consisting of a wind turbine, a tower, and associated control or
conversion electronics, with a peak generating capacity of up to, but
not exceeding, 200 kilowatts, used for the individual function of
generating electricity, that is certified by the State Energy
Resources Conservation and Development Commission and installed with
a five-year warranty against breakdown or undue degradation.
   (4) A credit may be allowed under this section with respect to
only one solar or wind energy system per each separate legal parcel
of property or per each address of the taxpayer in the state.
   (5) No credit may be allowed under this section unless the solar
or wind energy system is actually used for purposes of producing
electricity and is primarily used to meet the taxpayer's own energy
needs.
   (d) No other credit and no deduction may be allowed under this
part for any cost for which a credit is allowed by this section. The
basis of the solar or wind energy system shall be reduced by the
amount allowed as a credit under subdivision (a) or (b).
   (e) No credit may be allowed to any taxpayer engaged in those
lines of business described in Sector 22 of the North American
Industry Classification System (NAICS) Manual published by the United
States Office of Management and Budget, 1997 edition.
   (f) If any solar or wind energy system for which a credit is
allowed pursuant to this section is thereafter sold or removed from
this state within one year from the date the solar or wind energy
system is first placed in service in this state, the amount of credit
allowed by this section for that solar or wind energy system shall
be recaptured by adding that credit amount to the tax of the taxpayer
for the taxable year in which the solar or wind energy system is
sold or removed.
   (g) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" in the
following year, and the succeeding seven years if necessary, until
the credit is exhausted.
   (h) This section shall remain in effect only until December 1,
 2006   2017  , and as of that date is
repealed.
   SEC. 7.     SEC. 9. 
   No reimbursement is required by this act pursuant to Section 6 of
Article XIII B of the California Constitution because the only costs
that may be incurred by a local agency or school district will be
incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.
   SEC. 8.    SEC. 10. 
   No reimbursement is required by this act pursuant to Section 6 of
Article XIII B of the California Constitution  for certain other
costs that may be incurred by a local agency or school district 
because a local agency or school district has the authority to levy
service charges, fees, or assessments sufficient to pay for the
program or level of service mandated by this act, within the meaning
of Section 17556 of the Government Code.
   SEC. 11.   
   No reimbursement is required by this act pursuant to Section 6 of
Article XIII B of the California Constitution because the duties
imposed on a local agency or school district by this act were
expressly included in a ballot measure approved by the voters in a
statewide election, within the meaning of Section 17556 of the
Government Code.