BILL ANALYSIS Ó
AB 39
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 39 (Skinner) - As Amended: April 24, 2013
SUBJECT : Proposition 39: implementation.
SUMMARY : Assembly Bill 39 establishes guidelines for how to
implement the Proposition 39 initiative passed in November 2012.
Specifically, this bill :
1)Requires the California Energy Commission (CEC) to administer
grants, loans or other financial and technical assistance to
K-12 and community colleges recipients for eligible energy
efficiency, clean energy or other energy system improvement
projects.
2)Specifies allocation of funds to K-12, community colleges, and
public universities and facilities as follows:
a) Prior to the 2016-17 fiscal year, allocates 25% of the
revenue to public elementary or secondary schools or
community colleges for low-interest or no-interest
revolving loans or for loan loss reserves for eligible
projects and technical assistance for facilities at
b) Commencing with the 2016-17 fiscal year allocates 25% of
the revenues to low-interest or no-interest revolving loans
or for loan loss reserves for eligible projects and
technical assistance for facilities at public elementary or
secondary schools, community colleges, public universities,
or other public buildings.
c) Funds remaining in account after the 2017-18 fiscal year
would be available for loans in future years.
1)Requires the CEC to ensure that each region of the state
receives a share reasonably equivalent to its proportion of
statewide average daily attendance (ADA).
2)Requires K-14 applicants to propose projects to the CEC, in
consultation with the California Department of Education (CDE)
and consider the following factors:
a) Potential for energy demand reduction.
b) Proportion of students receiving free and reduced-price
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meals.
c) School facilities' age.
d) Whether facilities have been modernized recently.
e) Whether facilities are operated year-round.
f) School facilities' rating from Energy Star or another
energy rating system.
g) Ability to facilitate matriculation into certified
apprenticeship programs.
3)Requires K-14 recipients to report energy and cost savings to
the CEC according to a schedule and in a manner established by
the CEC.
4)Requires the CEC to ensure that adequate energy audit,
measurement and verification procedures are employed to ensure
funded projects result in energy savings and greenhouse gas
(GHG) reductions.
5)Requires the Fund to be available, upon appropriation by the
Legislature, to support:
a) Energy-related job training and workforce development by
the California Conservation Corps or other specified
workforce development programs.
b) Property Assessed Clean Energy financing (PACE) or
similar programs.
6)Requires all recipients to submit a specified report to the
Citizen Oversight Board (COB) within one year, and requires
the COB to report this information to the Legislature and the
public annually.
7)Establishes related definitions, findings and declarations.
EXISTING LAW
1)Establishes the Clean Energy Job Creation Act to create
good-paying energy efficiency and clean jobs in California;
put California to work repairing and updating schools and
public buildings to improve efficiency and make clean energy
improvements; promote new private sector job creation through
energy efficiency improvements in commercial and residential
buildings; achieve maximum job creation and energy benefits;
and supplement, complement, and leverage existing energy
efficiency and clean energy programs. (Public Resources Code
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26201)
2)Allocates up to $550 million to the Job Creation Fund in
fiscal years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18.
(Public Resources Code 26205)
3)Creates the Clean Energy Job Creation Fund to improve energy
efficiency and expand clean energy generation, including all
of the following:
a) Public schools, Universities, and Colleges: Energy
efficiency retrofits and clean energy installations, along
with related improvements and repairs that contribute to
reduced operating costs and improved health and safety
conditions
b) Other public buildings and facilities: Financial and
technical assistance including revolving loan funds,
reduced interest loans, or other financial assistance for
cost-effective energy efficiency retrofits and clean energy
installations on public facilities.
c) Job training and workforce development: Funding to the
California Conservation Corps, Certified Community
Conservation Corps, YouthBuild, and other existing
workforce development programs to train and employ
disadvantaged youth, veterans, and others on energy
efficiency and clean energy projects.
d) Public-private partnerships: Assistance to local
governments in establishing and implementing PACE programs
or similar financial and technical assistance for
cost-effective retrofits that include repayment
requirements. Funding shall be prioritized to maximize job
creation, energy savings, and geographical and economic
equity. Where feasible, repayment revenues shall be used to
create revolving loan funds or similar ongoing financial
assistance programs to continue job creation benefits.
(Public Resources Code 26205)
1) Establishes criteria for expenditures from the funds:
a) Existing state and local government agencies, with
expertise in managing energy projects and programs shall
provide project selection and oversight.
b) All projects awarded funds are to be based on
in-state job creation and energy benefits for each
project type.
c) All projects must be cost effective and may include
consideration of non-energy benefits, such as health and
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safety.
d) All project contracts must include project
specifications, costs, and projected energy savings.
e) All projects shall be subject to audit.
f) Program overhead costs shall not exceed 4 percent of
total funding.
g) Funds can only be appropriated only to agencies with
established expertise in managing energy projects and
programs.
h) All programs must be coordinated with the CEC and
the California Public Utilities Commission (PUC) to avoid
duplication and maximize leverage of existing energy
efficiency and clean energy efforts.
i) Eligible expenditures include costs associated with
technical assistance, and with reducing project costs and
delays, such as development and implementation of
processes that reduce the costs of design, permitting or
financing, or other barriers to project completion and
job creation. (Public Resources Code 26206)
1) Creates a COB comprised of three members appointed by
the Treasurer, three members by the Controller, and three
members by the Attorney General. Each appointing office
shall appoint one member with expertise in building
construction and design, financial transactions and
cost-effectiveness, and expertise in energy efficiency and
clean energy. The CEC and PUC each serve as ex office
members.
The duties of the board include:
a) An annual review of all expenditures
b) And annual independent audit of the fund and a
selection of projects completed
c) A publicly available accounting of expenditures
d) An annual evaluation of the program to be provided
to the Legislature
(Public Resources Code 26210)
FISCAL EFFECT : Unknown
COMMENTS:
1)Author's Statemen t. "With the passage of Proposition 39, the
voters of California established a path forward for schools
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and clean energy jobs. For the next 5 years, Prop 39 provides
up to $550,000,000 annually to the Clean Energy Job Creation
Fund for public buildings like schools and colleges. Prop 39's
funds will allow the state to reduce utility bills at public
schools and over the next five years, Prop 39 could lead to
thousands of clean energy jobs that can't be outsourced.
"In California, 70% of K-12 public school classrooms are over
25 years old. Combined, schools account for approximately 10%
of all commercial energy consumption, which costs taxpayers
$700 million a year - more than was spent on books or
supplies. The savings from more efficient buildings will give
schools flexibility to pay for student learning, rather than
utility bills. Retrofits at Oakland Unified School District,
Murrieta Valley Unified School District and Antelope Valley
High School District, saw annual savings of $100,000,
$420,000, and $303,000 respectively."
2)School Lunch Index. According the bill, the CEC is to take
several factors into consideration, including but not limited
to the "proportion of students receiving free and
reduced-price meals." The intent of this provision is to
identify and prioritize those schools that may have higher
enrollment of students from low income households. According
to the California Department of Education's (CDE) 2013-14
eligibility criteria, a four-person household with an annual
income at or below 130% of Federal Poverty Guidelines. For
example, a 4-person household with annual income of up to
$30,615 is eligible for school free school meals, snacks, and
milk.
In February 2013, the California State Senate Office of
Oversight and Outcomes published a report titled, " Food
Fight: Small team of state examiners no match for schools that
divert student meal funds." In this report the Senate Office
found that in cases that seldom receive any public attention,
the CDE has ordered eight districts to repay nearly $170
million to student meal programs.
3)Setting Expectations . Schools have varying levels of expertise
in evaluating various packages of energy efficiency and clean
energy improvements. The vendors presenting these options are
not required to use consistent assumptions regarding
electricity and gas rates. Nor are they required to use
consistent assumptions with regard to projected energy rate
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escalation or potential demand reduction and cost savings. A
school district recently entered into a $7 million loan based
on the premise that PG&E rates would escalate 5% per year. A
review of PG&E's A-10 rates (one of several possible tariffs
that a school could be using) shows that PG&E's A-10 rates
were 12.941 cents in 2008, 14.867 cents in 2010, 14.574 cents
in 2011, 14.430 cents in 2011, and are presently 14.671 cents
per kilowatt-hour.
A recent report provided by the Contractors State License
Board, shows that in 2012 it received approximately 2000
complaints against Heating and Air Conditioning, Glaziers,
Insulation, and Solar Contractors. The majority of these
complaints were for failure to meet trade standards,
permitting violations, failure to comply with regulations, and
contract violations. These particular items relate to quality
control and are critical to ensuring a successful outcome.
Schools and other entities receiving funds through this
program may not have sufficient expertise to identify waste,
fraud, or abuse when negotiating contracts involving new,
advanced technology. The bill currently provides funding for a
technical assistance for
For these reasons the author may wish to consider an amendment
to require the CEC to establish standard criteria to be used
in evaluating all contracts, loan limits for technology
improvements, and, qualifications of contractors to construct
or install improvements.
The commission shall establish criteria applicable to all
contracts, including but not limited to:
a) Standard methods for estimating energy benefits,
including reasonable assumptions for current and future
costs of energy.
b) Existing qualifications, licensing and certifications
for contractors applicable to the occupations that perform
the work.
c) Limits for grants or loans for each type of eligible
improvement.
1)Tracking Results . According to a Legislative Analyst's Office
(LAO) report released December 19, 2012, titled, "Energy
Efficiency and Alternative Energy Programs," California
currently maintains over a dozen major programs that are
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intended to support the development of energy efficiency and
alternative energy in the state. Over the past 10 to 15 years,
the state has spent a combined total of roughly $15 billion on
such efforts, the vast majority of which has been funded by
utility ratepayers. The LAO went on to recommend that the
Legislature develop a comprehensive strategy for meeting the
state's energy efficiency and alternative energy objectives.
In the interest of ensuring that the results of Prop 39 meet
expectations, the author may wish to consider directing the
CEC to establish a public database to allow tracking of the
program, including but not limited to the location of the
school, energy consumption prior to the improvements, energy
consumption following the improvements, types of improvements,
and total cost.
26234. (d) The commission shall maintain a public database of
the eligible entities that receive grants, loans, or other
financial assistance through this program. The database shall
include relevant metrics, to be determined by the commission,
for electric, gas, and cost savings of the projects.
(d) (e)
2)Coordinating with Overlapping and Similar Programs . Throughout
California, state gas and electric utilities administer
programs to help utility customers improve energy efficiency
and reduce energy usage. In addition, some local governments
in California offer incentives for clean energy improvements.
For example, the City and County of San Francisco administers
a program for solar photovoltaic installations. (The San
Francisco program limits the total incentives to no more than
95% of the total project costs).
Most projects qualify for federal energy efficiency and/or
solar or other renewable energy tax credits. Some school
projects may also qualify for federal energy efficiency and/or
solar or other renewable energy tax credits. These tax credits
could provide as much as a 30% reduction in the total cost of
the improvement.
CDE's School Nutrition Program provides reimbursement to
schools for energy expenses related to the school lunch
program. If the energy bill is reduced as a result of the Prop
39 funds then the CEC should work with the CDE to ensure that
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schools are properly claiming their reduced expenses.
The author may wish to consider an amendment to ensure that
all grants, loans and financial assistance applications
provide information on incentives applied for and that the
grants, loans, and financial assistance are adjusted so that
the net amount of the grant or loan is reduced by the value of
any and all incentives or support from federal, state, local,
utility, or other programs.
(h) Any incentives, available from federal, state, and local
government or from public utilities or other sources used by
the entity awarded a grant, loan, or financial assistance,
shall be used to reduce the amount of the grant awarded.
(h) (i)
3)Incorporate the Loading Order. State policies and programs
typically incorporate "the Loading Order" in recognition that
energy efficiency and demand response are the least-costly of
the various ways to improve energy use at a site. In the
loading order, on-site renewable generation follows energy
efficiency and demand response.
The author may wish to include a provision in this bill that
requires recipients of grants, loans, and financial assistance
to first implement all cost-effective energy efficiency and
demand response improvements prior to any on-site clean energy
generation improvements.
26230. (e)(2) Any eligible institution applying to the
commission for a grant, loan, or financial assistance to
install solely a clean energy technology shall demonstrate to
the commission that the institution has implemented all
cost-effective energy efficiency and demand response
improvements.
(2) (3)
4)Reporting and Job Creation. This bill requires grant
recipients to provide a report to the COB on the number of
jobs created no later than one year after receiving assistance
from the Job Creation Fund.
According to an analysis published by the Energy Resources
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Group at the University of California, Berkeley, of 15 job
creation studies, job studies use a variety of ways to
calculate job creation. They note that it is important to
define employment terms because there is often confusion about
types of jobs and job years because referring to 'jobs'
created without duration can be misleading. . One-job year is
full time employment for one year.
In addition, is it important to define whether the estimate of
jobs created refers to direct jobs, indirect jobs, or induced
jobs. For purposes of Clean Jobs Program jobs created is
likely to mean direct jobs. including those jobs created in
the design, construction/installation, project management,
operation and maintenance. Indirect jobs would be those
created through suppliers while induced jobs would be those
created due to expenditures in the general economy.
In order to ensure consistent, comparative results, the author
may wish to amend the bill to define what is expected in terms
of how job creation is to be calculated.
26250.(a)(1) For purposes of reporting job creation, the
person or entity shall report both the number of direct
full-time jobs created and the job-years for each job created.
In addition, the bill proposes that the report be submitted
"no later than one year" after receiving assistance from this
program. In order to measure demand reduction it may be
necessary to wait until at least one year has elapsed so that
variations in energy consumption due to weather and time of
year can be accounted for.
The author may wish to amend the bill to require that the
report be due no later than 90 days after one year has
elapsed.
26250. (a) No sooner later than one year but no later than
fifteen months after a person or entity receives a grant,
loan, or other assistance from the Job Creation Fund, the
person or entity shall submit a report to the Citizens
Oversight Board created pursuant to Chapter 3 (commencing with
Section 26210) of Division 16.3 containing the following
information, to the extent applicable:
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5)Definition of Public Building. This bill currently references
a statute in the Government Code for a definition of a "public
building."
The author may wish to incorporate the definition of a public
building into this section of the code.
26225 (f) "Public buildings" has the same meaning as in
subdivision (k) of Section 4217.11 of the Government Code.
includes a structure, building, facility, or work which a
public agency is authorized to construct or use, and
automobile parking lots, landscaping, and other facilities,
including furnishings and equipment, incidental to the use of
any structure, building, facility, or work, and also includes
the site thereof, and any easements, rights-of-way appurtenant
thereto, or necessary for its full use.
6)Related Legislation.
AB 114 (Salas) requires the Employment Development Department,
using funds made available from the Clean Energy Job Creation
Fund for job training and workforce development purposes, to
administer grants, no-interest loans, or other financial
assistance for allocation to existing workforce development
programs for the purposes of creating green energy jobs in
California.
AB 239 (Hagman) requires the Office of Public School
Construction, in consultation with the CEC and the PUC, to
expend moneys to fund a zero-interest revolving loan program
and a grant program for school districts to perform energy
efficiency retrofit or clean energy installation projects at
public schools.
AB 293 (Allen) requires the CEC, in consultation with the PUC
and other state agencies it deems appropriate, to develop a
program to award funding, on a competitive basis, for the
purposes established by Proposition 39, and requires a report
to the Legislature on the progress, applicants and
disbursement of funds and to make recommendations to improve
allocation of these funds by July 1, 2016.
SB 39 (De Leon, 2013) establish a competitive grant program to
provide assistance to K-12 school districts for the purpose of
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energy efficiency upgrade projects and a financing program by
evaluating the potential to fund energy efficiency projects
for K-12 schools, California Community Colleges (CCC) and
campuses of the University of California (UC) and the
California State University (CSU), through matching funds,
low-interest loans, or other financing methods.
SB 64 (Corbett) designates the California Energy Commission as
the lead agency to establish a grant program to distribute
Proposition 39 funds to school districts cities and counties
for energy efficiency and clean energy technology in school
and municipal facilities.
SB 729 (Fuller) states the intent of the Legislature to enact
legislation to implement the provisions of Proposition 39.
AB 1186 (Skinner, 2012) was vetoed by Governor Brown. The
Governor stated, in his veto message, "Though well intended,
it jumps the gun by establishing a program before we are
ready."
REGISTERED SUPPORT / OPPOSITION :
Support
Albany Unified School District
California Church IMPACT
California Energy Efficiency Industry Council
California School Boards Association (CSBA) (if amended)
California Special Districts Association (CSDA) (if amended)
California State Association of Counties (CSAC) (if amended)
California State Association of Electrical Workers
California State Pipe Trades Council
City of Albany
City of El Cerrito
City of Emeryville
City of Oakland
Coalition for Adequate School Housing (C.A.S.H.)
County School Facilities Consortium (CSFC)
Emery Unified School District
Environment California
Environmental Defense Fund
League of California Cities (LCC) (if amended)
Metropolitan Education District
Oakland Unified School District
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School Energy Coalition (SEC)
Small School Districts' Association (SSDA)
Solar Energy Industries Association
South Coast Air Quality Management District (SCAQMD)
TerraVerde Renewable Partners
TRANE
Western States Council of Sheet Metal Workers
Opposition
None on file.
Analysis Prepared by : Sue Kateley / U. & C. / (916) 319-2083