BILL ANALYSIS                                                                                                                                                                                                    

                   Senate Appropriations Committee Fiscal Summary
                          Senator Christine Kehoe, Chairman

                                           46 (Blakeslee)
          Hearing Date:  08/17/2009           Amended: 07/15/2009
          Consultant: Brendan McCarthy    Policy Vote: EU&C 11-0
          BILL SUMMARY:   
          This bill extends the sunset of the Energy Conservation  
          Assistance Account program and the Local Jurisdiction Energy  
          Assistance Account program until 2020. These two programs  
          provide loans to local governments and other public agencies to  
          fund energy conservation projects. The bill also removes a  
          member of the California Energy Commission from the membership  
          of the SAFE-BIDCO board.
                            Fiscal Impact (in thousands)

           Major Provisions         2009-10      2010-11       2011-12     Fund
          Lost loan repayments to           About $80 million over the  
          next decade            General
             the General Fund                                     

          STAFF COMMENTS: This bill meets the criteria for referral to the  
          Suspense file. 
          Under current law, funds in the Energy Conservation Assistance  
          Account (ECAA) are used to provide loans to schools, hospitals,  
          and local governments. The loans are used to finance energy  
          conservation projects. The savings generated by the energy  
          conservation projects are used to repay the loan, typically over  
          ten years. After that, the borrower keeps the savings. This  
          program is set to sunset on January 1, 2011. The ECAA was funded  
          by a series of appropriations from the General Fund over the  
          last thirty years totaling about $80 million. The last  
          appropriation from the General Fund was made in 2001. Currently,  
          repayments of previous loans are used to fund new loans. In  
          2008, new loans totaling about $5.7 million were made.


          This bill extends the sunset of the program to January 1, 2020. 

          Under current law, any remaining balance in the fund or future  
          repayments from loans made from the fund will revert to the  
          General Fund upon the sunset of the program. Because loans made  
          from this program have a payback period of ten years, committee  
          staff expects that over the next ten years, about $80 million  
          would flow back into the General Fund in the absence of this  

          Under current law, the Energy Commission operates a similar  
          program known as the Local Jurisdiction Energy Assistance  
          Account (LJEA) program. Under the LJEA program, the Energy  
          Commission provides loans to local governments for energy  
          conservation projects, small power production systems, and to  
          improve the efficiency of local transportation systems. Loans  
          are repaid over ten years, typically using the savings from  
          measures implemented with loan funds. Initial funding of about  
          $40 million 
          AB 46 (Blakeslee)
          Page 2

          for the LJEA came from the proceeds of a lawsuit by the federal  
          government against oil producers in the 1970s. Over the last  
          five years, there has been only one loan made from the LJEA, in  
          the amount of $650,000. This program is also set to sunset on  
          January 1, 2011.

          This bill extends the sunset of this program until January 1,  

          Under current law, upon expiration of the program, remaining  
          funds and future repayments shall be deposited in the federal  
          trust fund and will be available for purposes authorized by the  
          federal government pursuant to the settlement agreement with the  
          oil companies. (In general, federal law allows these funds to be  
          used for low income weatherization, state energy conservation  
          programs, energy conservation for schools and hospitals, and low  
          income energy assistance.) Therefore, if the sunset is not  
          extended for this program, the remaining funds must still be  
          used for programs that have similar purposes as the LJEA  

          According to the Energy Commission, the process for approving  
          loans and providing funds under both of these programs is  
          lengthy; therefore the programs need to be extended this year if  


          loans are to continue uninterrupted.

          Under current law, the State Assistance Fund for Enterprise,  
          Business, and Industrial Development Corporation (SAFE-BIDCO)  
          administers several state and federal loan and loan guarantee  
          programs for small businesses. The board of SAFE-BIDCO is made  
          up of six members of the public, a member of the Governor's  
          cabinet, and a member of the California Energy Commission. This  
          bill would remove the member of the Energy Commission from the  
          SAFE-BIDCO board.