BILL ANALYSIS                                                                                                                                                                                                    


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                                 THIRD READING

          Bill No:  SB 1
          Author:   Murray (D)
          Amended:  5/31/05
          Vote:     21

           SENATE ENERGY, UTILITIES & COMMUN. COMM.  :  10-0, 4/26/05
          AYES:  Escutia, Morrow, Alarcon, Battin, Campbell, Cox,  
            Dunn, Kehoe, Murray, Simitian
          NO VOTE RECORDED:  Bowen

           SENATE APPROPRIATIONS COMMITTEE  :  8-4, 5/26/05
          AYES:  Migden, Alarcon, Alquist, Escutia, Florez, Murray,  
            Ortiz, Romero
          NOES:  Aanestad, Ashburn, Battin, Poochigian
          NO VOTE RECORDED:  Dutton

           SUBJECT  :    Energy:  Million Solar Roofs Initiatives

           SOURCE  :     Author

           DIGEST  :    This bill establishes the Million Solar Roofs  
          Initiative, the goal of which is to place one million solar  
          energy systems, or 3,000 megawatts, on new or existing  
          residential and commercial buildings by 2018.

           ANALYSIS  :    Current law, (SBX2 82 [Murray] Chapter 10,  
          Statues of 2001), requires the Department of General  
          Services, in consultation with the California Energy  
          Commission (CEC) to ensure that solar energy equipment is  
          installed, no later than January 1, 2007, on all state  


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          buildings and state parking facilities where feasible and  
          cost-effective, as specified.  Apparently, very few systems  
          have been installed as a result of this statute. 

          Existing law also establishes numerous subsidy programs for  
          solar photovoltaic (PV) systems.  For example, the  
          Self-Generation Incentive Program (SGIP), within the Public  
          Utilities Commission (PUC), provides incentives to  
          customers for the installation of qualifying (greater than  
          30 kW) solar, wind turbines, etc.  The current incentive is  
          $3.50/watt.  The SGIP is funded by a charge imposed on  
          utility bills, which generates about $125 million annually,  
          of which the PV portion is about $70 million.  The PUC has  
          imposed an administrative sunset of December 31, 2007.  A  
          cost-effectiveness report of the SGIP is due in July 2005. 

          Current law also establishes the Emerging Renewables  
          Program (ERP), administered by the CEC, for systems less  
          than 30 kW, which provides a rebate of $2.80 per watt for  
          installation of PV systems.  In addition, there are a  
          number of other solar subsidies available, such as: 

          1.7.5 percent personal income and corporate tax credit for  
            taxpayers who purchase solar or wind systems.   
            Approximately 4,000 taxpayers claimed the solar credit in  

          2.Property tax exemption for solar energy systems installed  
            between January 1, 1999 and January 1, 2006.

          3.Net metering program for PV systems, which credits the  
            customer for electricity produced by spinning the meter  

          4.Federal tax credits.

          Since 1976, the state has provided more than $1 billion in  
          tax credits for solar energy systems.  In addition, the PV  
          portions of the CEC and PUC programs mentioned above  
          generate about $100-110 million annually.

          This bill proposes to increase the number of PV systems in  
          the state from about 12,000 to one million, or increase  
          solar capacity from about 93 megawatts to 3,000 megawatts  


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          (about the equivalent of six small power plants) by  
          increasing electricity rates and offering solar subsidies.

          Specifically, the bill:  

          1.  Requires the CEC to develop, implement and fund the  
              Million Solar Roofs Initiative (MSRI), and establish  
              solar subsidies, not to exceed the subsidy level in  
              existence on January 1, 2006 (probably $2.80-3.00/watt,  
              or about $7,250 for a 2.5kW residential system), which  
              decrease annually to zero by the end of 2016.

          2.  Requires the CEC, in implementing the MSRI, to evaluate  
              the costs and benefits of having an increased number of  
              solar systems as part of the electrical system, as  

          3.  Requires the PUC to adopt a program by January 1, 2007  
              to implement and finance the MSRI, and to include the  
              reasonable cost of the program in the distribution  
              revenue requirements of electrical corporations.

          4.  Requires the PUC program to be a cost-effective  
              investment by ratepayers in peak electricity generation  
              capacity, as specified.

          5.  Requires municipal utilities to adopt similar programs  
              funded by a surcharge.

          6.  Requires production home builders to offer solar as an  

          7.  Requires the CEC to conduct random audits of solar  
              energy systems to evaluate their operational  

          8.  Provides that upon implementation of the MSRI, the PV  
              portions of the ERP the SGIP shall be discontinued and  
              their respective funding (about $100-110 million)  
              deposited into the MSRI Trust Fund at the 2004-05  

          9.  Exempts low-income customers participating in the  
              California Alternate Rates for Energy (CARE) program  


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              from any rate increases necessary to fund the program.

          10. Makes related changes.

          Note: For an extensive discussion of the issues involved,  
          please refer to the
                Senate Energy, Utilities and Communications Committee  

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

          According the to Senate Appropriations Committee:

                          Fiscal Impact (in thousands)

           Major Provisions                2005-06     2006-07     
           2007-08   Fund  
          PUC                 $140      $279      $279             
                              Costs should be recovered from fee  

          CEC                 $705      $1,385    $1,485 Unspecified
                              Costs should be recovered from  

          State agencies' energy costs            See comments below   

          *Public Utilities' Reimbursement Account (PURA)

          California's electricity rates are among the highest in the  
          nation.  The electricity cost savings associated with 3,000  
          MW are indeterminable, but significant. On the other hand,  
          rate increases will help fund the subsidy program.  Senate  
          Appropriations staff notes that energy costs of state  
          agencies are in excess of $500 million annually.  For  
          illustrative purposes, a one percent increase in the  
          state's energy costs could result in increased costs of $5  
          million annually.

          Note: For a detailed breakdown of all costs, please refer  
          to the Senate


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                Appropriations Committee analysis.

           SUPPORT  :   (Verified  5/31/05)

          Schwarzenegger Administration
          Attorney General Bill Lockyer
          Akeena Solar
          Alliance for Nuclear Responsibility
          American Colar Energy Society
          American Federation of State, County and Municipal  
          American Lung Association
          Bluewater Network
          Borrego Solar 
          California Alliance For Consumer Protection
          California Building Officials
          California Interfaith Power and Light 
          California League of Conservation Voters
          California Public Interest Research Group
          California Public Utilities Commission
          Carville Sierra, Inc. 
          City of Aliso Valley 
          City of Berkeley 
          City of Irvine 
          City of Santa Cruz
          City of Sebastopol 
          Clarum Homes
          Clean Power Campaign
          Coalition for Clean Air
          Community Environmental Council
          Cooperative Community Energy 
          East Bay Municipal Utility District
          Energy Independence Now 
          Environment California
          Global Green USA
          Gray Panthers
          Green Lease, Inc.
          Greenpeace USA
          Henry T. Perea, Councilmember 7th District
          Industrial Environmental Association 
          KYOCERA International, Inc.
          Marin County Board of Supervisors 
          Merced/Mariposa County Asthma Coalition
          National Wildlife Federation


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          New Vision Technologies
          NorCal Solar
          Northern California Solar Energy Association 
          Oakland City Mayor Jerry Brown 
          Our Children's Earth
          Pacific Environment 
          Pacific Gas and Electric Company (if amended)
          Physicians for Social Responsibility
          Planning and Conservation League
          Powerlight Solar Electric Systems
          Public Citizen
          PV Manufacturers Alliance 
          Rainforest Action Network
          Real Goods
          Relational Culture Institute
          Sacramento City Mayor Heather Fargo 
          San Diego City Council Member Donna Frye 
          San Francisco County Board of Supervisors 
          San Francisco Mayor Gavin Newsome 
          San Jose City Mayor Ron Gonzalez 
          Sempra Energy (if amended)
          Sharp Solar
          Sierra Club California 
          Solar Integrated Technologies 
          South Coast Air Quality Management District
          Sun Power & Geothermal Energy
          The Better World Group
          Union of Concerned Scientists 
          Vote Solar
          Working Assets
          World Council for Renewable Energy
          Yolo County Board of Supervisors

           OPPOSITION  :    (Verified  5/31/05)

          California Manufacturers and Technology Association
          California Chamber of Commerce
          Associated Builders and Contractors (oppose unless amended)
          California Building Industry Association (oppose unless  
          Southern California Edison (oppose unless amended)
          The Utility Reform Network (oppose unless amended)


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          NC:nl  5/31/05   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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