BILL ANALYSIS
SB 412
Page 1
SENATE THIRD READING
SB 412 (Kehoe)
As Amended August 17, 2009
Majority vote
SENATE VOTE : 37-0
UTILITIES & COMMERCE 13-0 NATURAL
RESOURCES 9-0
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|Ayes:|Fuentes, Tom Berryhill, |Ayes:|Skinner, Gilmore, |
| |Buchanan, Carter, Fong, | |Brownley, Chesbro, De |
| |Fuller, Huffman, | |Leon, Hill, Huffman, |
| |Krekorian, Skinner, | |Knight, Logue |
| |Smyth, Swanson, | | |
| |Caballero, Villines | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 15-0
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|Ayes:|De Leon, Conway, Ammiano, | | |
| |Charles Calderon, Coto, | | |
| |Davis, Fuentes, Hall, | | |
| |Miller, John A. Perez, | | |
| |Skinner, Solorio, Audra | | |
| |Strickland, Torlakson, | | |
| |Hill | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Extends the sunset date of the self-generation
incentive program (SGIP) through January 1, 2016, restricts the
amount the California Public Utilities Commission (PUC) can
direct the utilities to collect, and expands the eligible
resources to include all self-generation technologies PUC
determines will support the state's goals for the reduction of
emissions of greenhouse gases, that meet specified efficiency
standards.
EXISTING LAW :
SB 412
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1)Authorizes PUC to administer SGIP to provide rebates for fuel
cells and wind distributed generation (DG) technologies
through 2012.
2)Restricts SGIP-eligible technologies to wind and fuel cell DG
technologies that meet or exceed specific emissions standards.
FISCAL EFFECT : Continued annual costs for PUC to disburse
collected funds and administer the SGIP for up to four years
beyond the current January 1, 2012 sunset date. PUC indicates
that annual administrative costs are currently $125,000 for the
equivalent of 1.25 positions. [Public Utilities Reimbursement
Account]
COMMENTS : As a result of the energy crisis in an effort to
expedite generation and fend off rolling blackouts, the
Legislature passed AB 970 (Ducheny), Chapter 329, Statutes of
2000, to encourage investment in new, environmentally superior
electricity generation. As a result, the PUC established SGIP to
provide subsidies for up to 50% of the project cost for the
installation of specified DG technologies that generate
electricity on a utility customer's premises. This can equate
to up to $1 million per customer for the installation of large
on-site electrical generating units of up to 5 megawatts (MW).
These units are intended to provide electricity to the
individual customer that owns the generator. Because this was a
quick fix in response to the energy crisis, the bill had a
sunset date of January 1, 2004.
Subsequent legislation extended the sunset date and prescribed
more strict eligibility requirements. AB 1685 (Leno), Chapter
894, Statutes of 2003, extended the sunset date to 2008, and
imposed more strict air emission allowances for the fossil-fuel
based microturbines. AB 2778 (Lieber), Chapter 617, Statutes of
2006, further extended the sunset of SGIP from January 1, 2008,
to January 1, 2012, and transferred solar energy technologies
from SGIP to the California Solar Initiative. AB 2778 retained
the sunset date of January 1, 2008, for fossil-fuel based
technologies; however, after that date only certain wind and
fuel cell technologies qualify.
In 2007, AB 1064 (Lieber) was introduced with similar provisions
to extend fossil-fuel technologies through 2012. AB 1064 was
SB 412
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ultimately held in the Senate Energy and Communications
committee.
Last year, SB 1012 (Kehoe) was substantially similar to this
bill except that it extended the SGIP through 2012. SB 1012
failed passage in the Assembly.
The Legislature has been cautious about expanding eligible
technologies until they are satisfied that the program renders
cost-effective benefits. When the program was in its infancy,
the Legislature required PUC to report on the cost-effectiveness
of SGIP. In September 2005, PUC issued SGIP Preliminary Cost
Effectiveness Evaluation Report which measures the costs and
benefits of SGIP during 2004. The Report concluded that SGIP is
cost-effective for participants only (owners and operators of
the generation facilities.
AB 2778 required CEC, in consultation with PUC and ARB, to
perform a cost-benefit evaluation of providing ratepayer funded
subsidies to natural gas and fossil-fuel fired DG through SGIP,
and to include recommendations for certain program changes by
November 1, 2008. This report concluded that photovoltaics
rendered the greatest greenhouse gas reductions. It also
concludes that, "The Energy Commission believes that ultra-clean
and low-emission DG technologies using non-renewable and
renewable fuels should be reinstated, especially those
technologies used in CHP applications." In addition, CEC
states, "Eligibility for SGIP should be based on the overall
efficiency and performance of systems, regardless of fuel type."
To follow up with the recommendation, it concludes with, "CPUC
should develop an incentive structure for SGIP projects that
meet specific targets for environmental, transmission and
distribution, and economic benefits."
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083
FN: 0002356