BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 585 (Kehoe)
Hearing Date: 05/26/2011 Amended: 03/29/2011
Consultant: Brendan McCarthy Policy Vote: EU&C 10-1
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BILL SUMMARY: SB 585, an urgency measure, authorizes the use of
interest earnings on ratepayer funds and the collection of
additional ratepayer funds to support the California Solar
Initiative.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Program oversight Absorbable within existing
resourcesSpecial *
Increased electricity costs $2,400 over the next several
years Various
to state agencies
Incentive payments to state Unknown revenues Various
agencies
* Public Utilities Commission Utilities Reimbursement Account.
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Under current law, the California Solar Initiative, the Public
Utilities Commission is required to oversee a program to support
the installation of 3,000 megawatts of solar photovoltaic
systems. Total program expenditures are capped at $3.3 billion
over ten years, including $2.2 billion in ratepayer funds to be
collected and expended by the state's investor owned utilities
for projects in their respective service territories. For small
solar photovoltaic projects, incentive payments are paid to the
customer upfront based on the project's capacity. For larger
projects, incentive payments are made over five years based on
actual electricity production. For both large and small project
classes, the incentives are designed to decline step-wise as the
number of approved projects grows.
In the summer of 2010, the Public Utilities Commission reported
that there would be insufficient funding available to meet the
program goals for installation of solar photovoltaic projects in
the non-residential sector. Specifically, the Commission
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anticipates a shortfall of roughly $200 million in available
funds.
The Commission indicated that the shortfall was due to
uncertainties over how much actual electricity production would
take place over time, larger than anticipated participation by
government and non-profit customers (which receive a larger
subsidy under the program because they are not eligible for
federal tax incentives), and a relatively high interest rate
paid on incentives that were paid over time for large projects.
SB 585 authorizes the Public Utilities Commission to allocate
interest earned on funds already collected from investor owned
utility ratepayers and thereafter to increase collections from
investor owned utility ratepayers to make up the shortfall in
the non-residential sector.
This bill is an urgency measure.
The Public Utilities Commission indicates that any costs to
oversee the additional collections and expenditures can be
accommodated within existing resources.
The Public Utilities Commission indicates that there is about
$40 million in interest earned on funds collected from
ratepayers by the investor owned utilities and that an
additional $160 million in new ratepayer funds will have to be
collected to fully fund the remainder of the program.
State agencies, as electricity consumers, will share in the
ratepayer costs imposed by the bill. State agencies make up
about 1.2 percent of total electricity use in the investor owned
utility territories. Therefore, the cost to state agencies over
the next several years will be about $2.4 million.
State agencies may participate in the California Solar
Initiative. To the extent that state agencies receive support
under the program, such incentives will offset state costs under
the bill. The extent to which state agencies will receive
funding for projects from the additional collections authorized
under the bill is unknown.
As proposed to be amended by the author, the discount rate
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applied to incentive payments made over time will be reduced.