BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 39 (Skinner) - Energy: conservation: financial assistance. Amended: June 24, 2013 Policy Vote: EU&C 9-2 Urgency: No Mandate: No Hearing Date: August 30, 2013 Consultant: Marie Liu SUSPENSE FILE. Bill Summary: AB 39 extends the sunset date of the Energy Conservation Assistance Account (ECAA) program from 2018 until 2020. Fiscal Impact: Annual costs in the low millions of dollars to ECAA (special/General) for the administration of the program for two years. Delayed revision of at least $70 million of non-federal and non-bond monies in ECAA to the General Fund. Background: The ECAA program was established more than 30 years ago by the California Energy Commission (CEC) to reduce statewide energy consumption through energy efficiency programs. The program makes low interest loans to cover up to 100% of a project with a maximum repayment term of 15 years. A loan repayment amount cannot exceed the estimated energy savings from a funded program. Funding for ECAA has come from the General Fund, bonds, and the American Recovery and Reinvestment Act of 2009 (ARRA). The 2013-14 Budget Act recently appropriated an additional $28 million for 2013-14 to the ECAA program as a result of Proposition 39 revenues. The ECAA program sunsets on January 1, 2018. At that time, all funds in the ECAA Account that were not precedes of bonds or ARRA (unrestricted), revert to the General Fund. Bond funds, once all bond obligations have been satisfied, also revert to the General Fund. Remaining ARRA funds revert to the Federal Trust Fund. Proposed Law: This bill extends the sunset date of the ECAA program from 2018 to 2020. AB 39 (Skinner) Page 1 Staff Comments: ECAA is a continuously appropriated account. Therefore, an extension of the program is also an extension of the appropriation. Extending the sunset of the program also extends the administrative costs of the program by two years. Currently, the CEC is budgeted for $786,000 in positions and administration. The addition of the Proposition 39 funds, however, will increase the administrative costs of the program dramatically starting next year. This year's Proposition 39 appropriation included $3.8 million in administrative costs, but the necessary administrative costs of the Proposition 39 in the future is uncertain as the Proposition 39 program has yet to be fully developed. However the total administration of the ECAA program in including Proposition 39 funds in 2018 will likely be in the low millions of dollars. This bill also delays the revision of funds back to the General Fund that is scheduled to happen at the end of the program. How much is ultimately returned to the General Fund at the end of the program, and on what schedule, depends on the terms of the loans made up to the sunset date. Of the existing monies in ECAA, there is $17.4 million in outstanding loans from ARRA monies, $88.4 million from bond monies, and $44.4 million in unrestricted monies. Only the unrestricted monies, and possibly some of the bond monies, will revert to the General Fund at the end of the program. The amount of outstanding loans in 2018 will be significantly higher due to this year's $28 million appropriation of Proposition 39 revenues that will be given out as low- and no-interest loans to schools and future possible Proposition 39 appropriations.