BILL ANALYSIS AB 1173 Page 1 Date of Hearing: April 27, 2009 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Felipe Fuentes, Chair AB 1173 (Huffman) - As Introduced: February 27, 2009 SUBJECT : Recycling: compact florescent lamps. SUMMARY : Prohibits retail sellers of electricity from using funds intended to promote energy efficiency efforts for compact florescent lights that do not meet specified standards. EXISTING LAW : 1)Under the California Lighting Efficiency and Toxics Reduction Act (Health and Safety Code 25210.9 and Public Resources Code 25402.5.4. et seq): a) Prohibits the manufacture, on or after January 1, 2010, of general purpose lights, as defined, for sale that contain levels of hazardous substances prohibited in the European Union (EU) pursuant to the RoHS Directive ("Restriction on the Use of Certain Hazardous Substances in Electrical and Electronic Equipment" or Directive 2002/95/EC.) b) Prohibits the sale of general purpose lights, on or after January 1, 2010, under the following circumstances: the lights would be prohibited in the EU pursuant to the RoHS Directive; the manufacturer has not provided specified information about the lights to the Department of Toxic Substances Control (DTSC); and the lights are not certified as being free of levels of hazardous substances that would prohibit their sale in California. c) Requires DTSC, in coordination with the California Integrated Waste Management Board (IWMB), to convene a task force to consider and make recommendations, on or before September 1, 2008, on the proper collection and recycling of end-of-life general purpose lights. d) Requires, on or before December 31, 2008, the California Energy Commission (CEC) to adopt minimum energy efficiency standards for all general purpose lights. Requires the regulations, along with other programs, to reduce, by 2018, AB 1173 Page 2 average statewide electrical energy consumption by not less than 50 percent from 2007 levels for indoor residential lighting and by not less than 25 percent from 2007 levels for indoor commercial and outdoor lighting. e) Authorizes the CEC to establish programs to encourage the sale of general purpose lights that meet or exceed energy efficiency standards. 1)Establishes a Public Goods Charge (PGC) that consumers pay on electricity consumption for cost-effective energy efficiency, renewable technologies, and public interest energy research. THIS BILL : 1)Makes legislative findings, including declaring the intent of the legislature to establish a system that is free and convenient for end users, for the recycling of residentially-generated fluorescent lamps. 2)Prohibits money from energy efficiency investment funds, or any other funds generated from usage-based charges on electricity distribution, that are provide to retail sellers of electricity from being distributed to any entity for compact fluorescent lamps, unless all of the following conditions exist: a) All compact fluorescent lamps purchased are Energy Star version 4.0 qualified, or the most recent version listed on the Energy Star Internet Web site, including, but not limited to, maximum allowable mercury content and a rated lifetime requirement for compact fluorescent lamps. b) The manufacturer or distributor of the compact fluorescent lamps has done either of the following: i) Implemented a comprehensive recycling program for compact fluorescent lamps; or, ii) Agreed to pay an unspecified amount for every lamp for which funding is received into a compact fluorescent lamp recycling fund. 3)Prohibits money from energy efficiency investment funds or any other funds generated from usage-based charges on electricity AB 1173 Page 3 distribution that are provided to retail sellers of electricity from being distributed to a retailer, unless the retailer has agreed to provide the public with a convenient in-store collection opportunity for the recycling of compact fluorescent lamps. FISCAL EFFECT : Unknown. COMMENTS : According to the author, AB 1173 is aimed at substantially reducing mercury emmisions from residential florescent lighting through market-based source reduction and recycling incentives. While the environmental benefits of using fluorescent lighting over incandecent lighting is clear, the current generation of fluorescent lighting contains mercury. AB 1173 will directly motivate manufacturers to reduce mercury in CFLs, while helping to establish a free and convenient program for consumers to properly dispose of fluorescent lighting. 1) Energy efficiency programs . Under the requirements of AB 1890, (Brulte) Chapter 854, Statutes of 1996, and reconfirmed in subsequent legislation, the Legislature provided for a PGC on each electric and natural gas customer's bill within each Investor Owned Utility's (IOUs) service territory to fund energy efficency programs. In 2005, the California Public Utilities Comission (PUC) expanded these programs and required the IOUs to continute to collect the PGCs but to also spend a portion of the revenue they collect for generation expenses on energy efficiency as well. Between 2006 and 2008 the IOUs spent $2.7 billion on energy efficiency programs. The Publicly Owned Utilities (POUs) are also required to collect a PGC for energy efficiency programs. 2) CFLs and energy efficiency programs . CFLs use about 75 percent less energy than incandescent bulbs and replacing incandescent lighting with CFLs is currently the most cost effective energy measure the IOUs pursue. Since 1999, PG&E, SDG& E and SCE have funded lighting incentive programs to provide 'pre-bates' to CFL manufacturers and distributors in order to buy down the purchase price of CFLs sold at retail. Last year, the IOUs spent approximately $60 million collectively to buy down the price of an estimated 30 million lamps. The IOUs have proposed spending about $45 million annually to subsidize fluorescent lamp purchases for the next 3 years. AB 1173 Page 4 The sponsor of this bill, Californians Against Waste (CAW) asserts that the main criteria used by the IOUs when they determine which CFL manufactures to offer subsidy money is the price of the CFL. This results in the programs promoting low-priced lamps that tend to have higher levels of mercury and do not last as long as other, higher qulity, CFLs. Mercury is an essential part of CFLs because it allows the bulb to be an efficient light source. Due to the trace amount of mercury in CFLs, the lamps are classified as a hazardous waste and it is illegal for California households to dispose of them in the trash. Currently, there is no convenient and cost-effective infrastructure in place for California residents to recycle their lamps. There are only 210 permanent and recycle-only household hazardous waste facilities in California. Most of these facilities have limited hours and few locations, which makes it inconvenient for residents to recycle CFLs. 3) What this bill does : Past efforts to create comprohinsive programs to reduce murcury in CFLs and to create disposal programs have been unsuccessful due in part to an inablity to idendify funding sources. This bill does not create a program that applies to all CFLs, but instead provides that when public or ratepayer funds are used for CFLs the CFLs should meet the highest standands. Specificly, ratepayer funds cannot be used to subsidize CFLs with high murcury content. Additionally, companies accepting ratepayer subsidies must contribute to a newly created fund to help create a recyling program for CFLs. 4) AB 1109 task force : The California Lighting Efficiency and Toxics Reduction Act (AB 1109, Huffman, Chapter 534, Statutes of 2007) requires DTSC, in coordination with CIWMB, to convene a task force to consider and make recommendations, on or before September 1, 2008, on methods of collection, recycling, education, outreach, labeling, and designations for end of life residential fluorescent lamps, which are considered hazardous waste upon disposal. Task force recommendations are incorporated into AB 1173. 5) Opposition : Stop Hidden Taxes Coalition and the California Tax Payers' Association argue that, while they applaud the effort to restrict the use of fee revenue to the recycling of compact florescent lamps, they oppose the bill because, especially in an ailing economy, taxpayers are already AB 1173 Page 5 overburdened. They also argue that the Legislature should not authorize a fee unless it knows the amount necessary to cover the costs of the program it wishes to fund and it specifies the amount of the fee in the bill. This bill, however, does not authorize a new fee and instead restricts how current funds can be expended. 6) Who does this bill apply to : The bill applies to funds that are collected by "retail sellers of electricity" but does not define "retail sellers of electricity." In some sections of code, retail sellers of electricity include both IOUs and POUs and some sections of code the term excludes POUs. Both IOUs and POUs are required to make significant investements in energy efficiency programs. The author and the committee may wish to amend the bill to clarify if the requirements apply to funds collected by IOUs, POUs or both . 7) Environmental Safety and Toxics Committee Amendments : This bill was heard in The Environmental Safety and Toxics Committee on April 21, 2009. In that committee the author agreed to the following amendments, but delayed adoption of them until the bill was heard in this committee: 1)Clarify, in Section 42420(a), that the prohibition on the use of energy efficiency investment funds is limited to the purchase and distribution of CFLs. 2)Clarify, in Section 42420(a) (1), that covered CFLs must meet the most recently established version of Energy Star guidelines for CFLs. Clarify that covered CFLs must not exceed the maximum allowable levels of mercury and must meet the rated lifetime requirement as required by the most recently established Energy Star guidelines. 3)Clarify, in Section 42420(a) (2) (A), that the recycling program must be approved by an entity, such as DTSC. 4)Clarify, in Section 42420(a) (2)(B), that the per lamp payment amount that manufacturers make to the CFL recycling fund shall be established by an entity, such as DTSC, at a level sufficient to cover the cost of a fluorescent light recycling program. 5)Establish a CFL recycling fund in the State Treasury for the AB 1173 Page 6 deposit of payments made pursuant to Section 42420(a) (2)(B). 6)Clarify that Section 42420(b) is limited to energy efficiency investment funds paid to retailers for compact fluorescent lighting programs. REGISTERED SUPPORT / OPPOSITION : Support Californians Against Waste (sponsor) The Utility Reform Network (TURN) Opposition California's Taxpayers' Association Stop Hidden Taxes Coalition Analysis Prepared by : Edward Randolph / U. & C. / (916) 319-2083