BILL ANALYSIS �
AB 628
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Date of Hearing: April 30, 2013
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
AB 628 (Gorell and Hall) - As Amended: April 24, 2013
SUBJECT : Energy management plans for harbor and port districts.
SUMMARY : Authorizes a harbor or port district to prepare one or more
energy management plans in order to reduce air emissions and promote
economic development. Further, this bill authorizes the financing for
harbor and port district improvements through the issuance of conduit
revenue bonds by the state. Specifically, the bill :
1)Makes findings and declarations, including, but not limited to, the
need for the state to promote the efficient use of low-cost,
low-emission energy sources in the operations of the ports and
harbors, the need to develop new businesses and retain existing
businesses within harbor and port boundaries, the value of greater
stability and certainty in the cost of energy services to these
businesses, and the optimal position that investor-owned and
publically owned utilities have in facilitating these objectives.
2)Specifies that if a harbor or port district chooses to prepare an
energy management plan it is required to include the following
elements:
a) An electric or natural gas load forecast, as specified;
b) An assessment of the role that distributed generation,
combined with accurately priced utility services, could play in
providing greater rate stability and energy cost certainty, as
specified;
c) A list of recommendations for the enhanced use of
cost-effective energy efficiency and demand-side management in
existing buildings and the inclusion of energy efficiency
measures as part of the development of new buildings;
d) A plan to reduce air emissions for vehicle use within the
district boundaries, as specified;
e) Consideration of projects that provide greater certainty of
energy costs over a period of up to 15 years for businesses
developing in the district.
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f) Other proposed actions and associated utility services that
may be implemented in connection with an energy management plan;
and
g) Proposed methods of funding the activities in the energy
management plan, including the California Infrastructure and
Economic Development Bank (I-Bank).
3)Specifies that the energy management plan is to be jointly developed
by the harbor or port district and one or more of the following:
servicing electoral corporation, gas corporation, and a local
publicly owned electric utility.
4)Requires expedited review of jointly developed elements of an energy
management plan by the California Public Utilities Commission (PUC),
as specified.
5)Requires the PUC and governing boards of local publically owned
utilities and rural electric cooperatives to encourage electric or
gas corporations to participate in developing, implementing, and
administering viable energy management plans for districts.
6)Requires projects that promote economic development in harbor or
port districts, pursuant to a specified energy management plan, to
be eligible for conduit revenue bond financing through the I-Bank.
EXISTING LAW
1)Makes findings and declarations, including, but not limited to, the
electric and natural gas utilities having a principal goal in
resource planning and investment to minimize the cost to society of
the reliable energy services, improve the environment, encourage
conservation and energy efficiency, and to encourage the diversity
of energy sources including wind, solar, and geothermal energy.
2)Creates the I-Bank, within the Business, Transportation and Housing
Agency (BTH), to promote economic revitalization, enable future
development, and encourage a healthy climate for jobs in California.
The I-Bank is authorized to offer a variety of financial
undertakings including, but not limited to, issuance of conduit
revenue bonds for financing economic development facilities.
3)Defines economic development facilities to mean real and personal
property, structures, buildings, equipment, and supporting
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components that are used to provide industrial, recreational,
research, commercial, utility, or service enterprise facilities,
community, educational, cultural, or social welfare facilities and
any parts or combinations thereof, and all facilities or
infrastructure necessary or desirable in connection therewith,
including provisions for working capital, but shall not include any
housing.
FISCAL EFFECT : Unknown
COMMENTS :
1)Framing the Policy Issues : AB 628 proposes to encourage port and
harbor districts to adopt comprehensive energy management plans by
offering an expedited PUC review of projects that flow from the
plan. Given the significance of the international trade and goods
movement network to the California economy it is important to
improve energy efficiency within port and harbor districts.
The authors believe that energy management plans can provide a
missing component to sustainable port operations. This analysis
includes additional information on energy management plans, an
analysis of how plans may provide an advantage to port and harbor
districts, background on California's trade economy, and a list of
related legislation. Suggested amendments are included in Comment
8.
2)Energy Management Plans : Energy management plans are comprehensive
strategies for monitoring, controlling, and conserving energy. This
is primarily accomplished through a systemic analysis of current
energy consumption in order to identify areas of suboptimal energy
usage. The resulting data is used to identify baseline energy usage
metrics and opportunities for cost-effective energy savings measures
through upgrades to high-efficiency equipment and systems, and
promoting efficient behaviors by workers.
Efficiency improvements can be found in many different areas.
Upgrades to existing infrastructure can be substantially
cost-effective because advances to HVAC systems, lighting,
refrigeration systems, motors, and transformers have been
significant enough in recent years that the cost of replacement of
decades-old equipment can be cost-neutral in little time. Modern
design techniques allow for new construction and renovations to be
designed to be highly energy efficient. Strategic purchasing of
energy, avoiding peak hours and choosing an appropriate rate plan
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can also yield significant energy savings. Finally, education and
institutional culture are of the utmost importance, as a successful
energy management plan takes the full commitment of the entire
organization.
3)California's Trade Economy : California's $1.9 trillion economy
naturally functions as an independent nation and is highly dependent
on industry sectors that participate within the larger global
economy. In fact, compared to other nations, California has one of
the 10 largest economies in the world, due to it being a top-tier
trade partner, a best-in-class investment location, a high quality
producer of goods and services, and the home and key access point
for a massive consumer-base. In 2012, California exported $161
billion in products to over 220 foreign countries. While California
has been significantly impacted by the recession, exports continued
to increase in almost every quarter from 2010 through 2012.
California businesses rely on fast, flexible, and reliable
manufacturing, transportation, and shipping to link national and
global supply chains to California producers, as well as bring new
products to California's retail markets. It is estimated that one
in five manufacturing jobs in California is related to trade.
Employment, business profit, and state and local tax revenue are
highly dependent on the manufacturing, trade, and goods movement
industries.
Changes in U.S. and global trade patterns since the enactment of the
North American Free Trade Agreement and the continuing development
of foreign markets place challenges on California's goods movement
logistic network. These challenges are only expected to become
greater as the rate of innovation within manufacturing,
transportation, and communication technologies get faster and the
ability of multiple geographic locations to successfully use these
technologies expands. California's historic and singular dominance
is diminishing as the state's infrastructure, particularly at our
ports of entry, fail to keep pace.
4)California Ports : Nationally, the Port of Los Angeles continued to
hold the top rank in terms of two-way trade in 2010 (valued at $237
billion). It is followed by JFK International Airport ($162
billion) and the port of Chicago ($135 billion). Data on
California's other major ports are as follows: Long Beach ($89
billion, ranked 9th); LAX ($77 billion, ranked 12th); San Francisco
International Airport ($50 billion, ranked 18th); Port of Oakland
($40 billion, ranked 25th); Otay Mesa Station ($31 billion); and
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Calexico-East ($10 billion).
5)Energy Management Plans for Ports : Port authorities can benefit
significantly from energy management plans, primarily because of
their organizational structure. Energy consumption is a significant
overhead cost for port operators, and is often treated as a fixed
cost over which port operators have little control. Many variables
can influence the cost of electricity such as time of day of use,
delivery charges, fuel fees, and which rate plan is selected. Often
times management and maintenance staff have little understanding of
how their utility costs are structured, resulting in additional
costs and fees.
One primary factor of a successful energy management plan is the
ability of it to integrate with all levels of the organization. The
port authority typically has jurisdictional control over the
operation, construction, and maintenance of the infrastructure of
the port, and can therefore exert the necessary control needed to
implement a comprehensive energy plan.
Other port authorities around the U.S. have successfully implemented
efficiency initiatives. For example, the Port Authority of New York
and New Jersey have aggregated all of their electricity accounts and
performed online reverse auctions for energy, allowing them to sell
their accounts to the lowest bidders, resulting in a reduction of
over $2.2 million in annual utility expenses. They have also
increased their efficiency through the use of advanced utility
meters and a demand response program that reduces their usage during
times of peak demand.
6)Doubling Exports in Five Years : In January 2010, the President
announced a national goal of doubling U.S. exports within five
years, setting a 2015 target for U.S. exports of $3.14 trillion. In
accomplishing this goal, the federal government will be proposing
new programs, targeting existing trade related activities, and
increasing funding and technical assistance within its current
programs.
Since the announcement of a new national goal, exports from
California were up $41 billion over 2009. For California, the
second largest exporter of products in the U.S. and the largest
receiver of foreign direct investment in the nation, this federal
goal could result in significant new economic opportunities.
California has already received nearly $4 million in federal funds
to administer a state export assistance program for small
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businesses. In the President's 2013 State of the Union address he
announced the development of a new trade agreement with the European
Union. To the extent the national goal is even partially realized,
California ports could face even greater pressure to perform. AB
628 will assist California in meeting this national goal.
7)California Infrastructure and Economic Development Bank : The I-Bank
was established in 1994 to promote economic revitalization, enable
future development, and encourage a healthy climate for jobs in
California. The I-Bank administers two categories of programs: 1)
The Infrastructure State Revolving Fund which provides direct
low-cost financing to public agencies for a variety of public
infrastructure projects; and 2) Bond financed programs which provide
financing for manufacturing companies, nonprofit organizations,
public agencies and other eligible entities. There is no commitment
of the I-Bank or state funds for any of the category #2 conduit
revenue bonds. Even in the case of default, the state is not
liable.
Since its inception, the I-Bank has loaned over $400 million to
local agencies, developing a high-level of expertise in the
financing of public infrastructure. The I-Bank also serves as the
state's only general purpose financing authority with broad
statutory powers to issue revenue bonds. Over $30 billion in
conduit revenue bonds have been issued by the I-Bank since 2000.
Effective July 1, 2013 the I-Bank will be administered through the
Governor's Office of Business and Economic Development (GO-Biz),
pursuant to the 2012 Governor's Reorganization Plan.
AB 628 would state that projects that come from the energy
management plan would be eligible for conduit bond financing through
the I-Bank. Technical amendments are proposed in Comment 8 to
expand the code reference to include all of the I-Bank financing
programs.
8)Implementing Amendments : This measure calls for the development of
energy management plans for the purpose of supporting the
development and expansion of businesses within the district,
creating more certainty in energy costs, and improving the
environment. Below is a list of technical and implementing
amendments.
a) Modify the energy management plan requirement by:
i) Adding an assessment of the current energy consumption
within the zone by energy source and user;
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ii) Setting short, mid and long term goals for projects and
actions;
iii) Address how the Energy Commission can assist in
developing, implementing, and/or funding the projects in the
plan.
iv) Identify government and nongovernmental impediments to
implementing projects and actions;
b) Clarify the meaning of prohibiting the PUC from limiting the
role of utilities who jointly developed recommendations.
c) Make technical corrections to the I-Bank provisions and expand
the program to reference all I-Bank financing options.
d) Require the districts to engage business and industry-related
partners to identify innovations in process and technologies that
may impact domestic and international logistical networks.
e) Require districts to engage small business technical
assistance providers and business and industry-related partners
in identifying energy efficiency opportunities, public education
activities, and the development of funding options and packages.
f) Add energy management plan-related definitions to Chapter 2 of
the Public Resources Code.
g) Clarify that ports established by municipalities are covered
under the bill.
9)Related Legislation : The following is a list of related
legislation.
a) AB 886 (Allen) Trade Tax Credit : This bill authorizes a $500
million tax credit program for exporters and importers who make
prescribed increases in cargo tonnage or value, net increases in
the number of qualified full-time employees hired in California,
or capital investment in a cargo facility. Status: Pending in
the Assembly Committee on Revenue and Taxation.
b) AB 1081 (Medina) Goods Movement-Related Infrastructure : This
bill requires goods movement-related infrastructure to be
included within the state five-year infrastructure plan and
international trade and foreign investment strategy. Status:
Scheduled to be heard in the Assembly Committee on Transportation
on April 29, 2013.
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c) SB 810 (Price) Trade Tax Credit : This bill authorizes a $500
million tax credit program for exporters and importers who make
prescribed increases in cargo tonnage or value, net increases in
the number of qualified full-time employees hired in California,
or capital investment in a cargo facility. Status: Pending in
the Senate Committee on Transportation and Housing.
10)Double Referral : This measure was referred to two policy
committees by the Assembly Committee on Rules. On April 22, 2013,
AB 628 was heard and passed by the Assembly Committee on Utilities
and Commerce on a 14-0 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
California Manufacturers & Technology Association
California Pacific Chamber of Commerce
Chula Vista Chamber of Commerce
Mayor, City of National City
Three individuals
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090