BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 412|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 412
Author: Kehoe (D) et al
Amended: 5/28/09
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 10-1, 4/21/09
AYES: Padilla, Calderon, Corbett, Cox, Kehoe, Lowenthal,
Simitian, Strickland, Wiggins, Wright
NOES: Benoit
SENATE APPROPRIATIONS COMMITTEE : 11-0, 5/28/09
AYES: Kehoe, Cox, Corbett, Denham, DeSaulnier, Hancock,
Leno, Oropeza, Runner, Wyland, Yee
NO VOTE RECORDED: Walters, Wolk
SUBJECT : Electricity: self-generation incentive program
SOURCE : Author
DIGEST : This bill requires the Public Utilities
Commission (PUC) to require the collection of funding for
the self-generation incentive program for nonsolar
distributed generation resources through December 31, 2011,
and requires the commission to extend the administration of
the program until all funds collected for the program have
been allocated as incentives. The bill limits the
eligibility for incentives pursuant to the program to
distributed generation resources that the commission
determines will support the state's goals for the reduction
of emissions of greenhouse gases pursuant to the California
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Global Warming Solutions Act of 2006. The bill requires
that combined heat and power units meet certain efficiency
and emissions requirements, including the greenhouse gases
emission performance standard, to receive incentives. The
bill requires the PUC to ensure that distributed generation
resources are made available in the program for all
ratepayers. The bill prohibits recovery of the costs of
the program from ratepayers that participate in the
California Alternative Rates for Energy (CARE) program.
The bill deletes the authorization for the PUC, in
administering the program, to include other ultraclean and
low-emission distributed generation technologies.
ANALYSIS : Existing law requires the PUC to administer
the Self-Generation Incentive Program (SGIP) for fuel cells
and wind distributed generation technologies through 2012.
Background
SGIP History . During the 2000-01 energy crisis the PUC was
directed to create a program of incentives for renewable
and super clean, gas-fired distributed generation resources
to reduce electricity demand. As a result, the PUC
established the SGIP in March 2001 which has offered
rebates for installation of technologies such as
photovoltaics, wind, fuel cells, waste gas, and ultra-clean
and low emission gas-fired distributed generation (combined
heat and power, CHP). Legislation adopted in 2004
eliminated CHP from the program as of January 1, 2008. In
2006 photovoltaic incentives were moved out of the SGIP to
the California Solar Initiative (CSI) effective January 1,
2007. Beginning in 2008 only fuel cell and wind
technologies are eligible for incentives.
According to the PUC 270 MW of distributed generation was
complete and online by the end of 2007. Note that this
includes photovoltaics that, as of 1/1/07 are out of the
SGIP and funded separately as part of the California Solar
Initiative (CSI). Through 2007 installed capacity under
SGIP was:
Fossil fuel (CHP) 145.6 MW (54%)
Renewable fuel CHP 11.8 MW ( 4%)
Non-Renewable Fuel Cells 6.3 MW ( 2%)
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Renewable Fuel Cells .8 MW (>0%)
Photovoltaic 104.6 MW (39%)
Wind 1.6 MW (>0%)
SGIP Funding . For 2009 SGIP will provide $83 million of
financial assistance for the installation of wind and fuel
cells. Incentive payments are $1.50 per watt for wind
turbines, $4.50 for biogas fuel cells, and $2.50 for
natural gas. The maximum size for eligible technologies is
5 MW in capacity; incentives are capped at 3 MW of
installed capacity for fuel cells and wind turbines.
The program is funded by a charge on all ratepayers which
is reflected in the distribution charges paid in each
billing. The PUC reports that the average monthly electric
bill impact for the SGIP is:
PG&E SCE SDG&E
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|Residentia| $ 0.25 | $ 0.16 | $ 0.36 |
|l | | | |
|----------+--------------+--------------+--------------|
|Commercial| $ 0.72 | $ 0.46 | $ 1.03 |
| | | | |
|----------+--------------+--------------+--------------|
|Industrial| $ 106.38 | $ 64.94 |$ |
| | | |142.19 |
| | | | |
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The average monthly gas bill impact for the SGIP is:
PG&E SGE SDG&E
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|Residentia| $ 0.14 | $ 0.17 | $ 0.27 |
|l | | | |
|----------+--------------+--------------+--------------|
|Commercial| $ 1.05 | $ 1.35 | $ 3.04 |
| | | | |
|----------+--------------+--------------+--------------|
|Industrial| $ 211.32 | $ 2.79 |$ |
| | | |3.04 |
| | | | |
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
Regulatory oversight of Up to
$50Up to $50 Special *
the program
* Public Utilities Commission Utilities Reimbursement
Account
SUPPORT : (Verified 5/29/09)
BluePoint Energy LLC
California Baptist University
California Clean DG Coalition
California Manufacturers and Technology Association
Capstone Turbine Corporation
Caterpillar California Counsel
DE Solutions, Inc.
Engine Manufacturers Association
EPS Corp.
Hawthorne Machinery Co.
Holt of California
Industrial Environmental Association
Nong Shim Foods, Inc.
Northstar Power
Onsite Energy Company
Pierce College
QUALCOMM
Quinn Power Systems
SDP Energy
Sempra Energy
SMUD
Water and Energy Management Co. Inc.
OPPOSITION : (Verified 5/29/09)
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The Utility Reform Network
ARGUMENTS IN SUPPORT : According to the author's office,
"As originally structured the PUC had the broad authority
to establish a program for "renewable distributed
generation resources." The author is proposing to return
this authority to the PUC and eliminate specific
technologies and permit the inclusion of any technologies
that meet the state's GHG goals. This would be new
criteria for the program which was designed during the
energy crisis to bring as much new generation to the grid
as soon as possible. The author opines that the
legislature should set broad energy and environmental goals
but place the selection of individual technologies in a
forum where a thorough analysis can be done for technical
viability, commercial readiness, cost and environmental
impacts, and overall value for distributed generation
incentives."
ARGUMENTS IN OPPOSITION : The Utility Reform Network
(TURN) writes in opposition to this bill expressing concern
that the SGIP primarily benefits commercial and industrial
customers since the technologies available under the
program are generally not used in a residential setting.
In response the author has directed the PUC to ensure that
technologies are made available in the program for all
ratepayers but TURN still argues that "the funding for the
SGIP program should be collected in direct proportion from
the customer classes that utilize the incentives" which the
PUC does not do for any other ratepayer program. All
surcharges are assessed across the board regardless of
direct benefit to the ratepayer class. For example, large
business is assessed to support low-income residential
ratepayers and the CSI program yet they receive little or
no direct benefit. It would be a slippery slope to start
carving out surcharges based on direct benefit. PUC
programs are generally thought to have a broader, indirect
benefit for all ratepayers which warrant charges across all
rate classes.
DLW:nl 5/29/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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