BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Tom Torlakson, Chairman

                                           1036 (Perata)
          
          Hearing Date:  5/7/07           Amended: A I
          Consultant:  Bob Franzoia       Policy Vote: Energy 8-0
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          BILL SUMMARY: SB 1036 would, effective 7/2008, recast the  
          Renewables Portfolio Standard Program, a program for the  
          purchase of renewable energy.  The bill would recast the program  
          as follows:
          - Repeal the authorization for the New Renewable Resources  
          Account (NRRA) within the Renewable Resource Trust Fund.
          - Delete the requirement that the California Energy Commission  
          (CEC) award supplemental energy payments to cover above-market  
          costs of renewable resources.
          - Require the CEC to terminate all production incentives awarded  
          prior to January 2002 from the NRRA unless the project began  
          generating electricity by 1/2007.
          - Require the CEC to transfer the remaining unencumbered funds  
          in the NRRA to be allocated amongst retail sellers on the basis  
          of annual sales of electricity.
          - Require refund of NRRA funds to customers within 180 days of  
          receipt.
          - Place cost limits upon electrical corporations on the  
          renewables portfolio standard.
          - Make moneys in the NRRA available for a new purpose.
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                            Fiscal Impact (in thousands)
           Major Provisions         2007-08      2008-09       2009-10     Fund
           Revision of renewable energy      $70,000 annually (new  
          surcharge paid by      Private
          funding mechanism      customers)
                                                                  
          Refund                           Estimated $370,000 (to be  
          returned to      Special*
                                           customers)                 

          PUC/CEC                           Minor costs ongoing; minor  
          savings one      Special/
                                            time                       
          General       











          * New Renewable Resources Account
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          STAFF COMMENTS: Under current law, investor owned utilities are  
          required to increase their purchases of renewable energy by one  
          percent of sales per year until 20 percent of their retail sales  
          are from renewable resources by 2010.  The CEC is authorized to  
          award supplemental energy payments if the price for renewable  
          energy exceeds the market price for electricity.  Funding for  
          these payments comes from an existing surcharge on electric  
          bills.

          While the bill strikes the authority of the CEC to award  
          supplemental energy payments to renewable energy producers, the  
          bill authorizes the Public Utilities Commission (PUC) to allow  
          investor owned utilities to recover costs for renewable energy  
          that are in excess of market prices.  These supplemental energy  
          payments are capped such that the payments for projects will not  
          exceed what would have been collected in the public goods charge  
          for new renewable energy projects.