BILL ANALYSIS Ó AB 628 Page 1 Date of Hearing: April 22, 2013 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Steven Bradford, Chair AB 628 (Gorell) - As Proposed to be Amended: April 1, 2013 SUBJECT : Energy management plan for harbor and port districts. SUMMARY : Authorizes a harbor or port district in collaboration with an investor owned utility (IOU) or publicly owned electric utility (POU), serving the district, to prepare one or more energy management plans (Plan). Specifically, this bill : 1)Specifies the Plan should include recommendations to reduce air emissions and promote economic development through the addition of new businesses and the retention of existing businesses in the district, and other specified provisions. 2)Requires the California Public Utilities Commission (PUC) to provide expedited review and to encourage IOUs to participate jointly with districts in developing and administering viable Plans. 3)Requires the POU and rural electric cooperatives governing boards to encourage joint participation with local agencies and gas corporations in developing, implementing, and administering a viable Plan. 4)States Plan shall address the development of projects that provide greater certainty of energy costs over a period of up to 15 years for businesses developing in the district and shall consider applying to the California Infrastructure and Economic Development Bank. 5)Requires the Plan propose methods to fund identified activities. 6)Authorizes funding from potential sources such as utility ratepayer-funded programs, the California Infrastructure Bank, the California Alternative Energy and Advanced Transportation Financing Authority. EXISTING LAW : 1)Requires the California Infrastructure and Economic AB 628 Page 2 Development Bank to establish criteria, priorities, and guidelines for the selection of projects to receive assistance from the bank. (Government Code 63040) 2)Requires that projects that receive assistance from the bank, among other things, facilitate effective and efficient use of existing and future public resources so as to promote both economic development and conservation of natural resources. (Government Code 63041) 3)Requires the State Energy Resources Conservation and Development Commission to adopt energy conservation standards to reduce wasteful, uneconomic, inefficient, or unnecessary consumption of energy, and to implement various programs to provide financial assistance to specified entities for energy efficient improvements. (Public Resources Code 25401) 4)Requires electric and gas corporations regulated by the Public Utilities Commission to identify separate nonbypassable rates components to collect revenues to fund cost-effective energy efficiency and conservation activities. (Public Utilities Code 381 and 890) 5)Allows the PUC to authorize public utilities to engage in programs to encourage economic development including Community marketing and development, including: technical assistance to support technology transfer, market research, site inventories, industrial and commercial expansion and relocation assistance, business retention and recruitment, and management assistance, without discriminatory rates, for the purpose of attracting or benefiting specific industries or business entities, except that incentives may be provided for the benefit of industries or business entities whose facilities are located within the boundaries of enterprise zones, economic incentive areas, recycling market development zones, or federal rural enterprise communities (Public Utilities Code 740.4) 6)Establishes the intent of the Legislature that the PUC allow rate recovery of expenses and rate discounts supporting economic development programs within the geographic area served by any public utility to the extent the utility incurring or proposing to incur those expenses and rate discounts demonstrates that the ratepayers of the public utility will derive a benefit from those programs. (Public Utilities Code 740.4 (h)) AB 628 Page 3 FISCAL EFFECT : Unknown. COMMENTS : According to the author, "California ports are an essential contributor to the state's economy. Port activities employ more than half-a-million people in California and generate an estimated $7 billion in state and local tax revenue annually. But increasing competition along the North American coast and Mexican Ports are threatening to attract business away from California. The trend will increase after the expansion of the Panama Canal in 2014. In order to maintain California's competitive edge, AB 628 will help stabilize energy supply and costs for all ports statewide. This is an important economic tool to help achieve business and environmental objectives." 1)California's ports : California's ports are a key component in the state's economy. There are eleven publicly-owned commercial ports throughout California. International trade is a major force in California's economy, currently accounting for nearly 25 percent of the state's economy. With major port facilities in the San Francisco and Los Angeles areas, California is a major gateway for products entering and leaving the United States. According to the California Marine and Intermodal Transportation System Advisory Council (CalMITSAC), in 2007, more than 40% of the total containerized cargo entering the United States, arrived at California ports; and almost 30% of the nation's exports flowed through ports in the Golden State. California's ports also provide non-cargo related services and facilities, such as passenger cruise line services, restaurant and hotel accommodations, entertainment, and tourist attractions. In addition to the vast economic benefits driven by a robust port industry, there are environmental implications associated with the port services. The ports have long been a focus as a source of air emissions and California has implemented a number of plans to address port air emissions. At the same time, rising energy costs represents an important fact in the competitive operation of the ports and port businesses. 2)Need for an energy management plan : The bill recognizes the nexus between supply and cost of energy, business development, and environmental management in port and harbor districts. In light of this issue, AB 628 authorizes a port or harbor district to develop and implement a AB 628 Page 4 Plan jointly with the serving electric or gas utilities in order to reduce energy use, reduce unhealthy air emissions, promote economic development and the addition of new businesses, and the retention of existing businesses in that district. At a minimum, the Plan would include - An electric or natural gas load forecast. Consideration of the role that distributed generation and accurately priced utility services could play in providing greater rate stability and energy cost certainty. Proposed actions for the enhanced use of cost effective energy efficiency and demand side management in existing and new building in the port or harbor district. A plan to reduce air emissions for vehicle use within district boundaries, including vehicles used for movement of commercial products. In this context, proposed actions may include replacement of vehicles with lower emitting alternatives and development of infrastructure to aid in the refueling of alternative fuel vehicles, and may provide for utility ownership or operation of such facilities to provide services within the district. Other actions and associated utility services to implement the Plan. The desired outcome of such a Plan would involve a harbor or port district and the serving utility to identify programs administered by the utility to facilitate economic development and energy efficiency, among other things. The PUC would then be required the conduct expedited review of the Plan to ensure prompt implementation and encourage collaboration by the utilities and districts in developing and administering a Plan. Upon review and approval by the PUC a special tariff could be established for these facilities to implement the Plan. In the case of the POUs, the governing boards are required to encourage joint participation with local agencies and gas corporations in developing and administering a Plan. 1)Who pays for the plan? : The bill requires the Plan propose methods to fund identified activities. Several funding sources are authorized to facilitate implementation of a Plan such as utility ratepayer-funded programs, the California Infrastructure and Economic Development Bank, and the California Alternative Energy and Advanced Transportation Financing Authority. AB 628 Page 5 2)Technical amendment : This bill's Section 63045.1 conflicts with Section 63045.1 in AB 1079 (Bradford). The committee may wish make an amendment to renumber 63045.1 to 63045.2 in this bill to resolve this conflict. REGISTERED SUPPORT / OPPOSITION : Support Chula Vista Chamber of Commerce Jess E. Van Deventer, Member, Sweetwater Authority Board Jim Unger, Board Member of the San Diego Port Tenants Association Ron Morrison, Mayor, City of National City San Diego Gas & Electric (SDG&E) Southern California Gas Company Opposition None on file. Analysis Prepared by : DaVina Flemings / U. & C. / (916) 319-2083