BILL ANALYSIS                                                                                                                                                                                                    






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: SB 1340
          SENATOR ALAN LOWENTHAL, CHAIRMAN               AUTHOR:  kehOe
                                                         VERSION: 2/19/10
          Analysis by: Carrie Cornwell                   FISCAL:  yes
          Hearing date: April 6, 2010








          SUBJECT:

          AB 118: Alternative and Renewable Fuels and Vehicle Technology  
          Program

          DESCRIPTION:

          This bill makes the costs of homeowners' electrical work needed  
          to fuel electric vehicles eligible for subsidies under the  
          California Energy Commission's Alternative and Renewable Fuel  
          and Vehicle Technology Program. 

          ANALYSIS:

          AB 118 (N??ez), Chapter 750, Statutes of 2007, created the  
          Alternative and Renewable Fuel and Vehicle Technology Program,  
          which the California Energy Commission (CEC) administers to  
          provide, upon appropriation by the Legislature, grants,  
          revolving loans, loan guarantees, loans, or other appropriate  
          funding measures to public agencies, vehicle consortia,  
          businesses, consumers, recreational boaters, and academic  
          institutions to develop and deploy innovative technologies that  
          transform California fuel and vehicle types to help attain the  
          state's climate change policies. 

          Funding of approximately $120 million annually for this program  
          comes from additional fees on vehicle registrations, special  
          identification plates for various vehicles, and vessel  
          registrations, plus $10 million annually from the Public  
          Interest Research, Development, and Demonstration Fund, which is  
          derived from a portion of electric utility rates.

          The CEC, through a competitive process, allocates these funds to  




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          alternative fuel and vehicle technology projects. To set  
          priorities for the allocation of funds, the CEC must develop an  
          investment plan in consultation with a wide array of  
          stakeholders. The CEC adopted its first investment plan at its  
          April 22, 2009 meeting. It is now in the process of updating  
          that plan for 2010, which the CEC plans to adopt in the summer. 

          Due to some borrowing of AB 118 funds and the supplemental funds  
          that the American Recovery and Reinvestment Act (ARRA, the  
          federal stimulus program) provides, last year the CEC awarded  
          only about $57 million to alternative fuel and vehicle  
          technology projects. Among the ARRA- and AB 118-funded projects  
          is the installation of over four thousand new electric vehicle  
          charging stations. 

          Existing law makes the following projects eligible for funding  
          under the Alternative and Renewable Fuel and Vehicle Technology  
          Program: 

               Alternative and renewable fuel infrastructure, fueling  
              stations, and equipment.
               Projects to develop and improve vehicle technology that  
              provide for better fuel efficiency and lower greenhouse gas  
              emissions.
               Alternative and renewable fuel projects to develop,  
              improve, demonstrate, deploy, produce, and commercialize  
              alternative and renewable fuels, plus reduce the overall  
              carbon footprint of these fuels.
               Vehicle retrofit projects to create higher fuel  
              efficiencies.
               Infrastructure projects that promote alternative and  
              renewable fuel infrastructure development for existing  
              fleets, public transit, and existing transportation  
              corridors. 
               Workforce training programs related to alternative fuels  
              and vehicle technology.
               Block grants administered by not-for-profit technology  
              consortia for specified purposes.
               Analyses and assessments performed by state agencies to  
              determine the impacts of increasing the use of low-carbon  
              transportation fuels and technologies.

           This bill  adds to the projects that are eligible for funding  
          under the alternative fuel and vehicle technology program from  
          the CEC "a program that provides funding for homeowners who  
          purchase an electric vehicle to offset costs associated with  




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          modifying electrical sources to include an in-home electric  
          vehicle charging station."
          
          COMMENTS:

           1.Purpose  . The author notes that state policies on greenhouse  
            gas reductions and clean alternative fuels and technologies  
            currently emphasize the importance of electric vehicle  
            technology, and that using ARRA funds the CEC is already  
            actively engaged in upgrading over 4,000 previous electric  
            vehicle charging stations throughout the state. Additionally,  
            the U.S. Department of Energy has awarded contracts nationwide  
            under ARRA that include funding for in-home and public  
            charging stations. 

            The author also points out that major auto manufacturers will  
            be introducing new electric vehicles and plug-in electric  
            vehicles in the fall of 2010 and early 2011, and as consumers  
            seek to purchase these vehicles many will require electrical  
            improvements at their homes. Costs for these improvements can  
            range from a few hundred dollars to several thousand dollars.  
            Despite the air quality and energy efficiency benefits of the  
            technology, many potential electric vehicle purchasers may be  
            dissuaded from buying an electric-drive vehicle if it  
            additionally requires hundreds of dollars of initial costs at  
            their homes. This bill gives clear legislative authority for  
            the CEC to design an AB 118-funded program that helps to  
            off-set these costs.

           2.Already an eligible use of AB 118 funds  . Given that AB 118  
            provides that alternative and renewable fuel infrastructure,  
            fueling stations, and equipment are eligible for funding from  
            CEC from the Alternative and Renewable Fuel and Vehicle  
            Technology Program, it is unclear how this bill changes  
            existing law, if at all. The CEC's investment plan for its  
            fuel and vehicle technology program calls for spending $176  
            million on electric-drive, hydrogen, ethanol, renewable diesel  
            and biodiesel, natural gas, and propane fuel technologies with  
            largest the portion of funding going to electric-drive  
            projects. CEC staff indicates that they anticipate that home  
            electric charging will be the focus of future AB 118  
            investments.

           3.The elusive electric car  . In its recent report, Climate Change  
            Challenges, Vehicle Emissions and Public Health in California,  
            the Public Policy Institute of California concludes that  




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            increasing the use of battery-electric vehicles provides the  
            greatest public health benefit per unit of GHG emission  
            reduction" among the possible alternative fueling and vehicle  
            technologies on the horizon.  The report also notes, however,  
            that electric vehicles involve "high cost and uncertainty"  
            because they "depend on technological breakthroughs and  
            broader market penetration to reduce cost and meet performance  
            targets." This bill attempts to address some of those high  
            costs and market penetration issues with a subsidy from the  
            CEC.
          
           4.Double-referral  . The Rules Committee referred this bill to  
            both the Transportation and Housing Committee and to the  
            Environmental Quality Committee. Therefore, if this bill  
            passes this committee, it will be referred to the Committee on  
            Environmental Quality.
          
          POSITIONS:  (Communicated to the Committee before noon on  
          Wednesday, 
                     March 31, 2010)

               SUPPORT:  None received.

               OPPOSED:  None received.