BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 585|
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UNFINISHED BUSINESS
Bill No: SB 585
Author: Kehoe (D)
Amended: 8/18/11
Vote: 27 - Urgency
SENATE ENERGY, UTIL. & COMM. COMMITTEE : 10-1, 4/05/11
AYES: Padilla, Fuller, Berryhill, Corbett, De León,
DeSaulnier, Pavley, Rubio, Simitian, Strickland
NOES: Wright
SENATE APPROPRIATIONS COMMITTEE : 6-2, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Runner
NO VOTE RECORDED: Emmerson
SENATE FLOOR : 28-11, 6/2/11
AYES: Alquist, Berryhill, Calderon, Cannella, Corbett, De
León, DeSaulnier, Evans, Fuller, Hancock, Harman,
Hernandez, Kehoe, Leno, Lieu, Liu, Lowenthal, Negrete
McLeod, Padilla, Pavley, Price, Rubio, Simitian,
Steinberg, Strickland, Vargas, Wolk, Yee
NOES: Anderson, Blakeslee, Correa, Dutton, Emmerson,
Gaines, Huff, La Malfa, Walters, Wright, Wyland
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR : 55-19, 8/25/11 - See last page for vote
SUBJECT : Energy: solar energy systems: funding
SOURCE : California Solar Energy Industry Association
Solar Alliance
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DIGEST : This bill allows the Public Utilities Commission
to authorize investor owned utilities to continue to
collect funds from ratepayers so that a funding shortfall
within the California Solar Initiative can be addressed.
Assembly Amendments (1) clarify that accrued interest shall
be expended prior to collecting additional ratepayer funds,
(2) increases the cost limit to $3,550,800,000 and make a
corresponding increase in the monetary limit imposed on
programs funded by charges collected from customers of the
state's three largest electrical corporations, (3) increase
the total cost of programs under the supervision of the
Public Utilities Commission (PUC) from $2,166,800,000 to
$2,366,800,000, (4) require the PUC, within 90 days of the
enactment of the bill, to establish and impose project cost
caps for residential and nonresidential projects under the
California Solar Initiative, based on national and state
installed cost data, and (5) require the PUC, before
collecting additional ratepayer funds to fund certain
program shortfalls.
ANALYSIS :
Existing law
1.Establishes the CSI, a $3.3 billion program which
provides incentives for the installation of solar
photovoltaic (PV) systems for customers of the state's
investor-owned utilities (IOUs) and publicly owned
utilities (POUs).
2.Requires the PUC, in implementing the CSI, to adopt
incentive payments that decline not less than an average
of 7% per year which shall be zero as of December 31,
2016 and to adopt performance-based incentives (e.g.
payments based on the amount of electricity produced) all
PV systems over 100 kilowatts (kW) and for half of all
systems over 30 kW.
This bill:
1. Increases the total cost of the CSI program from
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$3,350,800,000 to $3,550,800,000.
2. Increases collections from IOU customers by up to $200
million in order to increase the funding limit for the
CSI by a like amount.
3. Clarifies that accrued interest shall be expended prior
to collecting additional ratepayer funds.
4. 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 above.
5. Establishes a discount rate of four percent for CSI
projects receiving performance-based incentives.
6. 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.
Background
California Solar Initiative (CSI)
Effective in 2007, the CSI calls for the installation of
3,000 megawatts (MW) of new, solar-produced electricity by
2016. Targeted expenditures under the CSI, funded by
ratepayers, are $3.3 billion over ten years, distributed
among three distinct program components:
1.IOUs - $2.167 million/1940 MW for existing residential
homes, as well as existing and new commercial,
industrial, government, non-profit, and agricultural
properties;
2.New Solar Homes Partnership, $400 million/360 MW,
administered by the California Energy Commission and
funded by the Public Goods Charge for new residential
homes; and
3.POUs $784 million/700 MW.
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In July 2010, the PUC reported that "three years into the
state's 10-year solar program, California is already 42
percent of the way towards its general market program goal
in the territories of the IOUs. This figure included both
projects already installed and those holding reservations
for incentives and in the process of being installed. As of
last summer, California had over 600 MW of solar connected
to the electric grid at nearly 65,000 customer sites. Of
the 598 MW of capacity installed in investor-owned utility
territories, 342 MW were installed under the CSI Program at
31,000 sites, as well as 256 MW installed through other
programs."
Comments
According to the author's office, funding for
non-residential incentives in the CSI's 10-tier'd,
performance based declining incentive program, is exhausted
in two IOU service territories - PG&E & SDG&E. At the
eighth tier incentives make up about 5% of the total costs
for non-residential solar installation. SB 585 is needed
to ensure that the goals of the program are met and seeks
to provide a means to identify additional funding for that
purpose.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
Program oversight Absorbable within existing
resources Special*
Increased electricity $2,400 over the next
several years Various
costs to state agencies
Incentive payments Unknown revenues Various
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to state agencies
* Public Utilities Commission Utilities Reimbursement
Account
SUPPORT : (Verified 8/25/11)
California Solar Energy Industry Association (co-source)
Solar Alliance (co-source)
AEE Solar, Inc.
Applied Metals
California Association of School Business Officials
Clean Tech San Diego
Clean Water Action
Clovis Unified School District
Coalition for Adequate School Housing
Fowler Unified School District
Kings Canyon Unified School District
KyotoUSA
Mainstream Energy Corp.
REC Solar, Inc.
Public Utilities Commission San Diego Gas and Electric (if
amended)
School Innovations & Advocacy
Sharp Solar Electricity
Silicon Valley Leadership Group
SolarCity
Solaria Corporation
SPG Solar Inc.
TerraVerde Renewable Partners
The Vote Solar Initiative
OPPOSITION : (Verified 8/25/11)
California Chamber of Commerce
The Utility Reform Network (unless amended)
ARGUMENTS IN SUPPORT : The Silicon Valley Leadership
Group states they support this bill "which authorizes the
extension of collection of ratepayer funding for a
shortfall in funding to private and public sector solar
projects as part of the California Solar Initiative. ? The
California Solar Initiative has funded nearly 80,000 solar
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projects making California the leading state for solar
installations across the country. CSI has led to
employment, business growth, and has helped to reduce the
cost of solar energy systems from $10/W in 2007 to $8.56/W
in December 2010 for systems under 10kW. Addressing the
shortfall in funding for private and public sector projects
will help to continue the success of this program."
The PUC states this bill "allows the PUC to fully fund the
CSI program's budget shortfall. The CSI program is very
popular, and is helping to create a strong solar industry
in California. The CSI program is a key component in the
State's ability to achieve reduced greenhouse gas emissions
through the use of clean, distributed technology. The
proposed bill is a reasonable effort to increase funding
for this worthwhile effort. The bill will allow the
State's ratepayers to reap the benefits of the most
cost-effective phase of the program where they will
stimulate the most MWs of solar installations for the least
incentive payment."
The Clean Water Action states "SB 585 is critical to the
growth of renewable energy in California. In light of the
pending commitment to achieve a 30% renewable portfolio,
passage of SB 585 will be critical to help meet that
requirement. This is the time to further diversify the
sources and location of energy in order to build a safe and
sustainable system. California must reduce dependence on
energy sources that threaten oceans with oil spills,
require enormous amounts of water for cooling or put our
citizens at risk of radiation exposure."
ARGUMENTS IN OPPOSITION : The California Chamber of
Commerce states, "SB 585 seeks to increase the funding for
the CSI program by $200,000,000 to compensate for budget
shortfalls. Extending this tax on ratepayers could be
harmful for businesses and industries that use large
amounts of electricity and that may not benefit from the
programs that the tax would finance. While there may be
debate as to whether or not the CSI is a tax, this 'charge'
on electricity ratepayers subsidizes one specific group and
does not come back to all who pay into it. We are not
commenting on CSI and the project it funds, however we need
to evaluate the priorities of the state's spending. At a
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time when the state significantly reduced funding to
courts, reduced support for its higher education system and
with the prospect of further reductions to education if tax
revenues do not materialize, it is inappropriate to
consider programs that continue a tax without it being
prioritized within the state's comprehensive spending plan.
Moreover, SB 585 will result in higher electricity charges
when we should be looking at ever possible cost reduction
on business that could result in hiring more employees."
ASSEMBLY FLOOR : 55-19, 8/25/11
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bradford, Brownley,
Buchanan, Butler, Charles Calderon, Campos, Carter,
Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fletcher,
Fong, Fuentes, Furutani, Galgiani, Gatto, Gordon, Hall,
Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman,
Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning,
Nestande, Pan, Perea, V. Manuel Pérez, Portantino,
Skinner, Smyth, Solorio, Swanson, Torres, Wieckowski,
Williams, Yamada, John A. Pérez
NOES: Conway, Donnelly, Beth Gaines, Garrick, Grove,
Hagman, Halderman, Harkey, Jeffries, Jones, Knight,
Logue, Mansoor, Miller, Morrell, Nielsen, Norby, Silva,
Wagner
NO VOTE RECORDED: Achadjian, Bonilla, Cook, Gorell, Olsen,
Valadao
RM:mw 8/26/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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