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 SB 1340 (KEHOE) Page 2 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 SB 1340 (KEHOE) Page 3 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 SB 1340 (KEHOE) Page 4 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.