BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1173
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          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,  








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               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  








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            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.









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          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  








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          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  








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            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