BILL ANALYSIS Ó AB 1150 Page 1 Date of Hearing: May 11, 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 Page 2 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. AB 1150 Page 3 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