BILL NUMBER: AB 1392 AMENDED BILL TEXT AMENDED IN SENATE SEPTEMBER 10, 2011 INTRODUCED BYCommittee on Utilities and Commerce(Bradford (Chair), Fletcher (Vice Chair), Buchanan, Fong, Fuentes, Furutani, Gorell, Roger Hernández, Huffman, Ma, Nestande, Skinner, and Swanson)Assembly Members Bradford and Williams FEBRUARY 23, 2011An act to amend Section 2851 of the Public Utilities Code, relating to energy.An act to amend Section 25471 of the Public Resources Code, relating to energy, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 1392, as amended,Committee on Utilities and CommerceBradford .Energy: California Solar Initiative.Energy. Existing law authorizes the State Energy Resources Conservation and Development Commission to administer funds appropriated by the federal American Recovery and Reinvestment Act of 2009 (federal act) for the Energy Efficiency and Conservation Block Grant Program. Existing law establishes the Energy Efficient State Property Revolving Fund (fund) and continuously appropriates the moneys in the fund to the Department of General Services for loans for projects on state-owned buildings and facilities to achieve greater, long-term energy efficiency, energy conservation, and energy cost and use avoidance. This bill would, for the 2011-12 and 2012-13 fiscal years, authorize the commission to transfer an amount of money as the commission determines to be appropriate, up to a maximum of $50,000,000, from the moneys received from the federal act into the fund. By requiring the transfer of moneys into a continuously appropriated fund, this bill would make an appropriation. The bill would require the commission to provide written notice to the Controller on the amount and the timing of the transfer. The bill would require the commission to notify, in writing, the Joint Legislative Budget Committee.Under existing law, the Public Utilities Commission (CPUC) has regulatory authority over public utilities, including electrical corporations, as defined. Decisions of the CPUC adopted the California Solar Initiative. Existing law requires the CPUC to undertake certain steps in implementing the California Solar Initiative and authorizes the CPUC to develop a time-variant tariff that creates the maximum incentive for ratepayers to install solar energy systems so that the system's peak electricity production coincides with peak electricity demands and that assures that ratepayers receive due value for their contribution to the purchase of the system and customers with systems continue to have an incentive to use electricity efficiently. In developing the time-variant rate, the CPUC is authorized to exclude customers from a freeze on residential electricity rates adopted during the electricity crisis of 2000-01, which rate freeze has since been removed and replaced.This bill would delete that authorization.Vote: majority. Appropriation:noyes . Fiscal committee:noyes . State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 25471 of the Public Resources Code is amended to read: 25471. (a) There is hereby created in the State Treasury the Energy Efficient State Property Revolving Fund for the purpose of implementing this chapter. Notwithstanding Section 13340 of the Government Code, the money in this fund is continuously appropriated to the department, without regard to fiscal years, for loans for projects on state-owned buildings and facilities to achieve greater, long-term energy efficiency, energy conservation, and energy cost and use avoidance. (b) The fund shall be administered by the department. The department may use other funding sources to leverage project loans. (c) For the 2009-10 fiscal year, the sum of twenty-five million dollars ($25,000,000) shall be transferred into the Energy Efficient State Property Revolving Fund from money received by the commission pursuant to the act to be used for purposes of the federal State Energy Program. (d) (1) For the 2011-12 and 2012-13 fiscal years, the commission may transfer up to fifty million dollars ($50,000,000), in total, as the commission determines to be appropriate, into the Energy Efficient State Property Revolving Fund from money received by the commission pursuant to the act to be used for the purposes of the federal State Energy Program. (2) The commission shall provide written notice to the Controller on the amount and timing of the transfer of moneys into the fund. (3) Subject to the limitations of paragraph (1), the commission may make multiple transfers to allow for reallocating available funds from project cancellations and project savings. (4) Notwithstanding Section 9795 of the Government Code, the commission shall notify, in writing, the Joint Legislative Budget Committee when a transfer is made pursuant to this subdivision.(d)(e) The Controller shall disburse moneys in the fund for the purposes of this chapter, as authorized by the department.(e)(f) Moneys in the fund, including all interest earnings, shall be clearly delineated and distinctly accounted for in accordance with the requirements of the act.SECTION 1.Section 2851 of the Public Utilities Code is amended to read: 2851. (a) In implementing the California Solar Initiative, the commission shall do all of the following: (1) The commission shall authorize the award of monetary incentives for up to the first megawatt of alternating current generated by solar energy systems that meet the eligibility criteria established by the State Energy Resources Conservation and Development Commission pursuant to Chapter 8.8 (commencing with Section 25780) of Division 15 of the Public Resources Code. The commission shall determine the eligibility of a solar energy system, as defined in Section 25781 of the Public Resources Code, to receive monetary incentives until the time the State Energy Resources Conservation and Development Commission establishes eligibility criteria pursuant to Section 25782. Monetary incentives shall not be awarded for solar energy systems that do not meet the eligibility criteria. The incentive level authorized by the commission shall decline each year following implementation of the California Solar Initiative, at a rate of no less than an average of 7 percent per year, and shall be zero as of December 31, 2016. The commission shall adopt and publish a schedule of declining incentive levels no less than 30 days in advance of the first decline in incentive levels. The commission may develop incentives based upon the output of electricity from the system, provided those incentives are consistent with the declining incentive levels of this paragraph and the incentives apply to only the first megawatt of electricity generated by the system. (2) The commission shall adopt a performance-based incentive program so that by January 1, 2008, 100 percent of incentives for solar energy systems of 100 kilowatts or greater and at least 50 percent of incentives for solar energy systems of 30 kilowatts or greater are earned based on the actual electrical output of the solar energy systems. The commission shall encourage, and may require, performance-based incentives for solar energy systems of less than 30 kilowatts. Performance-based incentives shall decline at a rate of no less than an average of 7 percent per year. In developing the performance-based incentives, the commission may: (A) Apply performance-based incentives only to customer classes designated by the commission. (B) Design the performance-based incentives so that customers may receive a higher level of incentives than under incentives based on installed electrical capacity. (C) Develop financing options that help offset the installation costs of the solar energy system, provided that this financing is ultimately repaid in full by the consumer or through the application of the performance-based rebates. (3) By January 1, 2008, the commission, in consultation with the State Energy Resources Conservation and Development Commission, shall require reasonable and cost-effective energy efficiency improvements in existing buildings as a condition of providing incentives for eligible solar energy systems, with appropriate exemptions or limitations to accommodate the limited financial resources of low-income residential housing. (4) Notwithstanding subdivision (g) of Section 2827, the commission may develop a time-variant tariff that creates the maximum incentive for ratepayers to install solar energy systems so that the system's peak electricity production coincides with California's peak electricity demands and that assures that ratepayers receive due value for their contribution to the purchase of solar energy systems and customers with solar energy systems continue to have an incentive to use electricity efficiently. Nothing in this paragraph authorizes the commission to require time-variant pricing for ratepayers without a solar energy system. (b) Notwithstanding subdivision (a), in implementing the California Solar Initiative, the commission may authorize the award of monetary incentives for solar thermal and solar water heating devices, in a total amount up to one hundred million eight hundred thousand dollars ($100,800,000). (c) (1) In implementing the California Solar Initiative, the commission shall not allocate more than fifty million dollars ($50,000,000) to research, development, and demonstration that explores solar technologies and other distributed generation technologies that employ or could employ solar energy for generation or storage of electricity or to offset natural gas usage. Any program that allocates additional moneys to research, development, and demonstration shall be developed in collaboration with the Energy Commission to ensure there is no duplication of efforts, and adopted by the commission through a rulemaking or other appropriate public proceeding. Any grant awarded by the commission for research, development, and demonstration shall be approved by the full commission at a public meeting. This subdivision does not prohibit the commission from continuing to allocate moneys to research, development, and demonstration pursuant to the self-generation incentive program for distributed generation resources originally established pursuant to Chapter 329 of the Statutes of 2000, as modified pursuant to Section 379.6. (2) The Legislature finds and declares that a program that provides a stable source of monetary incentives for eligible solar energy systems will encourage private investment sufficient to make solar technologies cost effective. (3) On or before June 30, 2009, and by June 30th of every year thereafter, the commission shall submit to the Legislature an assessment of the success of the California Solar Initiative program. That assessment shall include the number of residential and commercial sites that have installed solar thermal devices for which an award was made pursuant to subdivision (b) and the dollar value of the award, the number of residential and commercial sites that have installed solar energy systems, the electrical generating capacity of the installed solar energy systems, the cost of the program, total electrical system benefits, including the effect on electrical service rates, environmental benefits, how the program affects the operation and reliability of the electrical grid, how the program has affected peak demand for electricity, the progress made toward reaching the goals of the program, whether the program is on schedule to meet the program goals, and recommendations for improving the program to meet its goals. If the commission allocates additional moneys to research, development, and demonstration that explores solar technologies and other distributed generation technologies pursuant to paragraph (1), the commission shall include in the assessment submitted to the Legislature, a description of the program, a summary of each award made or project funded pursuant to the program, including the intended purposes to be achieved by the particular award or project, and the results of each award or project. (d) (1) The commission shall not impose any charge upon the consumption of natural gas, or upon natural gas ratepayers, to fund the California Solar Initiative. (2) Notwithstanding any other provision of law, any charge imposed to fund the program adopted and implemented pursuant to this section shall be imposed upon all customers not participating in the California Alternate Rates for Energy (CARE) or family electric rate assistance (FERA) programs as provided in paragraph (2), including those residential customers subject to the rate cap required by Section 80110 of the Water Code for existing baseline quantities or usage up to 130 percent of existing baseline quantities of electricity. (3) The costs of the program adopted and implemented pursuant to this section may not be recovered from customers participating in the California Alternate Rates for Energy or CARE program established pursuant to Section 739.1, except to the extent that program costs are recovered out of the nonbypassable system benefits charge authorized pursuant to Section 399.8. (e) In implementing the California Solar Initiative, the commission shall ensure that the total cost over the duration of the program does not exceed three billion three hundred fifty million eight hundred thousand dollars ($3,350,800,000). The financial components of the California Solar Initiative shall consist of the following: (1) Programs under the supervision of the commission funded by charges collected from customers of San Diego Gas and Electric Company, Southern California Edison Company, and Pacific Gas and Electric Company. The total cost over the duration of these programs shall not exceed two billion one hundred sixty-six million eight hundred thousand dollars ($2,166,800,000) and includes moneys collected directly into a tracking account for support of the California Solar Initiative and moneys collected into other accounts that are used to further the goals of the California Solar Initiative. (2) Programs adopted, implemented, and financed in the amount of seven hundred eighty-four million dollars ($784,000,000), by charges collected by local publicly owned electric utilities pursuant to Section 387.5. Nothing in this subdivision shall give the commission power and jurisdiction with respect to a local publicly owned electric utility or its customers. (3) Programs for the installation of solar energy systems on new construction, administered by the State Energy Resources Conservation and Development Commission pursuant to Chapter 8.6 (commencing with Section 25740) of Division 15 of the Public Resources Code, and funded by nonbypassable charges in the amount of four hundred million dollars ($400,000,000), collected from customers of San Diego Gas and Electric Company, Southern California Edison Company, and Pacific Gas and Electric Company pursuant to Article 15 (commencing with Section 399).