BILL ANALYSIS AB 51 Page 1 ASSEMBLY THIRD READING AB 51 (Blakeslee) As Amended June 1, 2009 Majority vote UTILITIES AND COMMERCE 13-0 APPROPRIATIONS 15-0 ----------------------------------------------------------------- |Ayes:|Fuentes, Tom Berryhill, |Ayes:|De Leon, Nielsen, | | |Blakeslee, Buchanan, | |Ammiano, | | |Carter, Fong, Furutani, | |Charles Calderon, Davis, | | |Huffman, Krekorian, | |Fuentes, Hall, Harkey, | | |Skinner, Smyth, Swanson, | |John A. Perez, Price, | | |Torrico | |Skinner, Solorio, Audra | | | | |Strickland, Torlakson, | | | | |Krekorian | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : Requires the Public Utilities Commission (PUC) to limit to 10% the administrative costs of energy efficiency programs funded and operated by the investor-owned utilities (IOUs). For this purpose, administrative costs include personnel and overhead, but not marketing, outreach, and program evaluation. EXISTING LAW : 1)Requires each electrical corporation to first meet its resource needs through all available energy efficiency and demand reduction resources that are cost effective, reliable, and feasible, before it can procure other resources. 2)Establishes a Public Goods Charge (PGC) that consumers pay on electricity and natural gas consumption for cost-effective energy efficiency, renewable technologies, and public interest energy research. FISCAL EFFECT : According to the Assembly Appropriations Committee, PUC will incur one-time costs of $200,000 in 2010-11 for a database consultant and ongoing costs of $80,000 for one position. COMMENTS : According to the author, the purpose of this bill is to ensure that more ratepayer funds for energy efficiency programs are accessible to ratepayers, while maintaining flexibility for AB 51 Page 2 utilities to manage the programs at their discretion. PUC rules required IOUs to spend $2.7 billion for energy efficiency programs over a three-year period. When PUC approved these programs, they anticipated that the programs would result in a 1,448 MW savings and $4.9 billion in savings to the utility. This would be a net savings of $2.7 billion ($4.9 billion in overall savings - $2.2 billion in expenditures). According to information provided by PUC in the 2006 - 2008 program cycle IOUs on average spent 12.4% of the program funds on the categories PUC defined as administrative costs. IOUs spent an additional 12% of the funds on marketing and outreach. IOUs spent 75.6% of the funds on actual energy efficiency incentives and rebates. In the past, this committee has generally capped allowable administrative expenses for programs using public or ratepayer funds at 10%. Analysis Prepared by : Edward Randolph / U. & C. / (916) 319-2083 FN: 0001254