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 bill. 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, 2020. 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 program. 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.