BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1150
                                                                  Page  1

          Date of Hearing:   May 18, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                AB 1150 (V. Manuel Perez) - As Amended:  May 11, 2011 

          Policy Committee:                              
          UtilitiesVote:12-0
                        Natural Resources                       6-2

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:               

           SUMMARY  

          This bill extends the sunset on the Public Utility Commission's 
          (PUC's) Self-Generation Incentive Program (SGIP) and requires 
          the commission to evaluate the program to achieve specified 
          goals. Specifically, this bill:

          1)Extends, by three years (through 2014), the PUC's authority to 
            collect $83 million annually from ratepayers for the SGIP 
            program, and requires the commission to administer the program 
            for an additional two years, until January 1, 2018.

          2)Authorizes the PUC to increase the annual collection in an 
            appropriate amount consistent with, but not limited to, the 
            annual rate of inflation.

          3)Replaces the current emission reduction criteria for SGIP 
            eligibility by instead requiring projects to comply with 
            applicable Air Resources Board certification standards or air 
            district permitting requirements, and requires such projects 
            to be maintained to continually meet those standards or 
            requirements.

          4)Requires, rather than authorizes, the PUC to periodically 
            evaluate the SGIP to adjust program design elements to achieve 
            eight specified goals, including equitably distributing 
            rebates to all eligible technologies and program participants 
            and promoting geographic distribution of projects.

          5)Requires the PUC, for any incentive payment received on the 
            basis of using a renewable fuel, to require confirmation of 








                                                                  AB 1150
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            delivery of that fuel to the project or to the California 
            pipeline system for the life of the project.

          6)Requires the PUC to transition the SGIP to performance-based 
            incentives, with payments earned based on actual electrical 
            output of the distributed energy resource.

           FISCAL EFFECT  

          Extends the PUC's annual SGIP administrative costs of $230,000 
          (for the equivalent of two positions) for two additional years. 
          In addition, the commission could require up to two additional 
          positions ($240,000) for up to modify the program as prescribed 
          in the bill, including transitioning to a performance-based 
          incentive structure. ÝPublic Utilities Reimbursement Account]

           COMMENTS  


           1)Purpose  . According to the author, "AB 1150 will permit the 
            extension of a vital program for incentivizing the development 
            of distributive on-site renewable energy facilities. These are 
            needed to meet increasing statewide demand for electricity, to 
            reduce peak demand pressures on the grid and help meet 
            California public policy goals of reducing greenhouse gas 
            emissions and increase the supply of clean renewable energy."

           
          2)Background  . The PUC established the SGIP in 2001, pursuant to 
            energy crisis legislation, AB 970 (Ducheny), to offer 
            incentives for renewable and "super clean" distributed 
            generation resources. SGIP has been extended and/or modified 
            by at least five bills since then. Over the last 10 years, the 
            SGIP has offered rebates for installation of solar, wind, fuel 
            cell, and, until 2008, certain renewable and fossil fuel 
            combustion resources meeting specified emissions and 
            efficiency standards. As of late 2010, SGIP had committed $865 
            million for 1489 projects totaling 437 megawatts (MW) 
            capacity. In 2006, when the PUC adopted the California Solar 
            Initiative, which established a rebate program for 
            photovoltaic technologies, solar was severed from the SGIP and 
            annual funding for the program was reduced from $125 million 
            to $83 million since 2007. SGIP provides upfront payments, 
            varying by the particular technology, to offset the cost of 
            capital investment.








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          3)The most  recent amendments  are described in (3) through (6) of 
            the above Summary. These amendments also reduced, from five 
            additional years to three additional years, the PUC's 
            authority to continue collecting $83 million annually in 
            ratepayer funds for the program. 

           4)Prior Legislation  . SB 412 (Kehoe)/Chapter 182 of 2009, 
            extended the SGIP sunset date through January 1, 2016, limited 
            funding to $83 million annually through 2011, and expanded the 
            eligible resources to include all self-generation technologies 
            that the PUC determines will support the state's goals for the 
            reduction of emissions of greenhouse gases and that meet 
            specified efficiency standards. The PUC is in the process of 
            implementing SB 412, and last month released a staff proposal 
            outlining program eligibility and rebate levels.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081