BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 412|
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UNFINISHED BUSINESS
Bill No: SB 412
Author: Kehoe (D) et al
Amended: 9/1/09
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
SENATE FLOOR : 37-0, 6/1/09
AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,
Cedillo, Cogdill, Corbett, Correa, Cox, Denham,
DeSaulnier, Ducheny, Dutton, Florez, Hancock, Harman,
Hollingsworth, Huff, Kehoe, Leno, Liu, Lowenthal,
Maldonado, Oropeza, Padilla, Pavley, Romero, Runner,
Simitian, Steinberg, Strickland, Wiggins, Wolk, Wright,
Wyland, Yee
NO VOTE RECORDED: Negrete McLeod, Walters, Vacancy
ASSEMBLY FLOOR : 71-3, 9/3/09 - See last page for vote
SUBJECT : Electricity: self-generation incentive program
SOURCE : Author
CONTINUED
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DIGEST : This bill 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.
Assembly Amendments allow the PUC to authorize the annual
collection of not more than the amount authorized for the
SGIP in the 2008 calendar year, through December 31, 2011,
rather than requiring the PUC to collect funding, as it
left the Senate. Amendments also extended the SGIP to
January 1, 2016 and required the PUC to provide repayment
of all unexpended funds collected to reduce ratepayer
costs.
ANALYSIS : Existing law requires the PUC to administer
the 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 with the passage
of AB 2778 (Lieber).
According to the PUC 270 MW of distributed generation was
complete and online by the end of 2007. Note that this
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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%)
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
-------------------------------------------------------
|Residentia| $ 0.25 | $ 0.16 | $ 0.36 |
|l | | | |
|----------+--------------+--------------+--------------|
|Commercial| $ 0.72 | $ 0.46 | $ 1.03 |
| | | | |
|----------+--------------+--------------+--------------|
|Industrial| $ 106.38 | $ 64.94 |$ |
| | | |142.19 |
| | | | |
-------------------------------------------------------
The average monthly gas bill impact for the SGIP is:
PG&E SGE SDG&E
-------------------------------------------------------
|Residentia| $ 0.14 | $ 0.17 | $ 0.27 |
|l | | | |
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|----------+--------------+--------------+--------------|
|Commercial| $ 1.05 | $ 1.35 | $ 3.04 |
| | | | |
|----------+--------------+--------------+--------------|
|Industrial| $ 211.32 | $ 2.79 |$ |
| | | |3.04 |
| | | | |
-------------------------------------------------------
Prior Legislation
In 2007, AB 1064 (Lieber) was introduced with similar
provisions to extend fossil-fuel technologies through 2012.
AB 1064 was 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
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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."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
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)
SUPPORT : (Verified 9/4/09)
Blue Point Energy LLC.
California Baptists University
California Clean DG Coalition
California Manufacturers & Technology Association
California Pipe Trades Council
Capstone
Caterpillar California Counsel
DE Solutions
Engine Manufacturers Association
EPS Corp
Hawthorne Machinery Co.
HOLT of California
Industrial Environmental Association
Nong Shim Food, Inc.
Northstar Power
Onsite Energy
Pierce College
QUALCOMM
Quinn Power Systems
Regatta Solutions
SDP Energy
Sempra Energy
SMUD
Solar Turbine
Water and Energy Management Co. Inc.
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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 :
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Beall, Bill Berryhill, Tom
Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, De La Torre, De Leon, Emmerson, Eng,
Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani,
Gaines, Galgiani, Garrick, Gilmore, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Krekorian, Lieu, Bonnie Lowenthal, Ma, Mendoza, Miller,
Monning, Nava, Nestande, Nielsen, John A. Perez, V.
Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass
NOES: Anderson, Logue, Niello
NO VOTE RECORDED: Davis, DeVore, Duvall, Hagman, Harkey,
Vacancy
DLW:nl 9/4/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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