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.