BILL ANALYSIS Ó
SB 585
Page 1
SENATE THIRD READING
SB 585 (Kehoe)
As Amended July 5, 2011
2/3 vote. Urgency
SENATE VOTE :28-11
UTILITIES & COMMERCE 11-2
APPROPRIATIONS 11-5
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|Ayes:|Bradford, Fletcher, |Ayes:|Fuentes, Blumenfield, |
| |Buchanan, Fong, Furutani, | |Bradford, Charles |
| |Roger Hernández, | |Calderon, Campos, Davis, |
| |Williams, Ma, Skinner, | |Dickinson, Hall, Hill, |
| |Swanson, Valadao | |Lara, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Beth Gaines, Knight |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : This bill will allow the California Public Utilities
Commission (PUC) to authorize investor owned utilities (IOU) to
continue to collect funds from ratepayers so that a funding
shortfall within the California Solar Initiative (CSI) can be
addressed. Specifically, this bill :
1)Increases collections from IOU customers by up to $200 million
in order to increase the funding limit for the CSI by a like
amount.
2)Directs the PUC to first allocate interest accumulated from
collections from IOU customers for CSI program in order to
fund specified shortfalls in the nonresidential portion of the
program, and to address the remainder of the shortfall using
funds collected per 1).
3)Establishes a discount rate of 4% for CSI projects receiving
performance-based incentives.
4)Requires PUC, within 90 days of enactment, to impose cost caps
on residential and non-residential projects under CSI, using
national and state installed costs.
SB 585
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FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Up to $200 million in total collections from IOU ratepayers
over several years, with about $2.4 million of this amount to
be paid by state agencies (General Fund, various special
funds, and federal funds), which represent about 1.2% of total
electricity use in IOU territories. To the extent state
agencies are able to participate in the program due to
availability of this additional funding, they will benefit
from the incentive payments provided under the program and the
resulting long-term energy cost savings.
2)Administrative costs to PUC will be minor and absorbable.
COMMENTS :
Purpose . According to the author, this bill is needed to ensure
funding is available to complete the non-residential
(commercial/industrial and governmental/non-profit) portion of
the CSI program. Two IOUs (Pacific Gas & Electric and San Diego
Gas and Electric) have already exhausted their available funds
for this portion of the program.
According to PUC the funding shortfall is currently estimated to
be between $178 million and $200 million and the shortfall was
caused because: 1) many installed solar energy systems have
outperformed original estimates; and, 2) PUC did not correctly
estimate the effect of the discount rate calculation for
performance based incentives (PBI) payments, which results in
higher actual cash payments than originally estimated.
The program has accumulated approximately $40 million in
interest from reservation deposits (these deposits are required
for larger projects) and interest on ratepayer funds collected
for the program. Current law caps CSI expenditures of IOU
collections at $2.167 billion, so PUC cannot use the interest
accrued or authorize additional collections from IOU ratepayers
without legislative action.
The bill contains an urgency clause, and PUC indicates that,
upon its enactment it would immediately amend CSI budget and
effectively open up the wait-lists mentioned above for funding.
SB 585
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CSI rebates . The program provides rebates in two forms: 1) an
up-front one-time estimated performance payment; or, 2) a PBI,
which pays an incentive for every kilowatt-hour produced over a
five-year period. In order to address the time value of money,
PUC authorized a discount rate payment of 8% for PBI incentives.
CSI is arranged in 10 steps with higher value incentives in the
earlier steps, gradually lowering over the 10-year timeframe of
the program. The majority of the projects installed on
commercial and non-profit properties are owned by third party
investors. These third party investors receive the rebates (not
the property owner) as well the federal and state tax benefits
that accrue to the projects. In addition, the third party owner
will charge either a monthly fee or a per kilowatt-hour
generation charge in order to 'monetize' the benefits of the
customer's net metering billing arrangement with their
electricity service provider.
Opposition . The Utility Reform Network (TURN) opposes this bill
because the funding shortfall, which is in commercial program,
will be borne by not only commercial ratepayers but also by
residential and other ratepayers. TURN believes the additional
collections authorized in the bill should be borne solely by
non-residential utility customers.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083
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