BILL ANALYSIS Ó
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THIRD READING
Bill No: SB 1268
Author: Pavley (D)
Amended: 5/1/12
Vote: 27
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 13-0, 4/17/12
AYES: Padilla, Fuller, Berryhill, Corbett, De León,
DeSaulnier, Emmerson, Kehoe, Pavley, Rubio, Simitian,
Strickland, Wright
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Energy: energy conservation assistance
SOURCE : Author
DIGEST : This bill extends the sunset date of the Energy
Conservation Assistance Account program to January 1, 2028,
and requires that unexpended funds on that date deriving
from bonds and the Renewable Resource Trust Fund revert to
the General Fund and that funds deriving from the American
Recovery and Reinvestment Act of 2009 revert to the Federal
Trust Fund; extends the sunset date of the Local
Jurisdiction Energy Assistance Account program to January
1, 2028; and requires that unexpended funds on that date
revert to the Petroleum Violation Escrow Account.
ANALYSIS :
Existing law:
CONTINUED
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1. Effective until January 1, 2013, establishes the Energy
Conservation Assistance Account (ECAA) program and
requires the California Energy Commission (CEC) to
administer the program and provide grants and loans at
not less than one percent interest for local
governments, public schools, hospitals, government
buildings and non-profit organizations to finance energy
efficiency projects.
2. Establishes the Local Jurisdiction Energy Assistance
Account (LJEAA) program, effective until January 1,
2016, and requires CEC to administer the program and
provide grants and loans at not less than three percent
interest for local governments, public schools,
hospitals, government buildings and non-profit
organizations to finance energy efficiency projects,
with funding from the Petroleum Violation Escrow
Account.
3. Authorizes issuance of revenue bonds to provide funding
for ECAA and LJEAA.
4. Appropriated $25 million of funds from the American
Recovery and Reinvestment Act of 2009 (ARRA) to CEC for
the ECAA program.
5. Establishes the Renewable Resources Trust Fund (RRTF) to
support renewable energy programs administered by the
CEC. Law that expired on December 31, 2011, provided
approximately $70 million per year to the RRTF from an
electric utility customer surcharge.
6. Appropriates $25 million, effective January 1, 2012, to
ECAA for making energy efficiency loans and requires
that any funds remaining in that account on January 1,
2013, revert to the RRTF.
7. Makes a unit of local government or special district
eligible for an ECAA loan.
8. Appropriates to the account $25 million of the
unencumbered balance of the $50 million from the RRTF
that was appropriated to the California Alternative
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Energy and Advanced Transportation Financing Authority
for specified purposes. Existing law reverts, on and
after January 1, 2013, the unencumbered balance of the
above $25,000,000 to the RRTF for use by the Authority.
This bill makes a joint powers authority eligible for an
ECAA loan, and requires CEC to establish the interest rate
for a LJEAA loan at not less than 1%.
This bill requires, on and after January 1, 2028, the
unencumbered balance of the $25 million appropriated to the
account from the RRTF to be available for appropriation by
the Legislature for the benefit of ratepayers.
Background
ECAA and LJEAA Loans for Energy Efficiency . ECAA, which
sunsets in 2013, was established more than 30 years ago by
the Energy Conservation Assistance Act of 1979 and is one
of the oldest of California's many programs designed to
reduce statewide energy consumption through energy
efficiency measures. The program makes low-interest loans
to cover up to 100 percent of a project with a maximum
repayment term of 15 years. A loan repayment amount cannot
exceed the estimated energy savings from a funded project.
Funding for ECAA loans has been from a variety of sources
over the years, including the General Fund and tax-exempt
revenue bonds. In 2009, ARRA provided $25 million to CEC
for ECAA loans, to supplement approximately $34 million in
ARRA funds that CEC awarded as grants to 279 small cities
and counties for energy efficiency projects. SB 679
(Pavley, 2011) appropriated an additional $25 million to
CEC for ECAA loans. That $25 million originated as
ratepayer funds deposited into the RRTF and was part of the
$50 million transferred by SB 77 (Pavley, 2010) from the
RRTF to the California Alternative Energy and Advanced
Transportation Financing Authority (CAEATFA) within the
State Treasurer's Office for a Property Assessed Clean
Energy (PACE) loan program that has since been put on hold
for residential energy efficiency loans.
The LJEAA program, which was established in 1986 and
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sunsets in 2016, is substantially similar to the ECAA
program but has funding from a one-time appropriation from
the federal Petroleum Violation Escrow Account, which was
funded by a federal settlement with oil companies for
overcharging customers in the 1970s. In addition to
different sunset dates, program differences include that
LJEAA loans are available to any "local jurisdiction"
defined to include a joint powers authority, while ECAA
loans are available to any "unit of local government" not
including a joint powers authority.
Three Separate Loan Categories . ECAA and LJEAA loans are
administered in three separate categories: Energy
Partnership Program for local governments, Bright Schools
Program for public schools, and the ECAA/ARRA program for
any loan using ARRA funds. According to CEC, these two
programs have made loans to more than 771 entities totaling
more than $267 million, with about 58% of the total loan
amount going to local governments, 12% to K-12 public
schools, 10% to public colleges, 10% to hospitals and
public care facilities, and 2% to special districts. Since
2000, the programs have provided $130 million in loan funds
for lighting (32%), LED traffic signals (6%), HVAC (27%),
renewables (18%), self-generation (13%) and other
miscellaneous improvements (4%).
Program Quality Controls . Existing law authorizes the CEC
to contract and provide grants for performing services for
eligible loan recipients, including feasibility analysis,
project design, field assistance, and operation and
training. According to CEC staff, each project applicant
gets a technical evaluation and feasibility study to ensure
that the project is realistic and has baseline information
to monitor energy savings. Inspections are conducted
during project construction, prior to payment of the final
10% of the loan, and after project completion to verify
energy savings.
Current Account Status . According to CEC, ECAA currently
has about $30 million in unrestricted accounts, with loan
applications for about $12 million now under review. CEC
staff predicts that, with additional loan applications
coming in, remaining funds are likely to be encumbered by
the end of 2012.
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FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/21/12)
League of California Cities
Natural Resources Defense Council
San Diego Gas & Electric Company
Sempra Energy Utilities
South San Joaquin Irrigation District
Southern California Gas Company
RM:mw 5/21/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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