BILL ANALYSIS                                                                                                                                                                                                    Ó          1





                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                                 ALEX PADILLA, CHAIR
          

          AB 628 -  Gorell & Hall                           Hearing Date:   
          July 2, 2013                    A
          As Amended:         May 8, 2013              FISCAL       B
                                                                        
                                                                        6
                                                                        2
                                                                        8


                                      DESCRIPTION
          
          Current law  requires California's electric utilities to first  
          meet their energy needs through cost effective energy efficiency  
          measures. (Public Utilities Section 454.5)

           Current decisions  of the California Public Utilities Commission  
          (CPUC) require investor-owned utilities (IOUs) to administer  
          energy efficiency programs in multi-year portfolios designed to  
          meet pre-established energy savings goals which are funded by  
          ratepayer charges, currently at about $1 billion per year.
           
          Current law  establishes the Infrastructure and Economic  
          Development Bank (IBank) to provide financing for economic  
          development projects through both taxable and tax-exempt revenue  
          bonds. Eligible projects promote both the economic development  
          and conservation of natural resources for cities and counties. A  
          range of entities are eligible to apply for funding through the  
          IBank, including port and harbor districts, and private  
          corporations. (Government Code 63000 et seq.)

           Current law  directs the CPUC to authorize IOUs to engage in  
          economic development programs and further permits the recovery  
          of associated costs from ratepayers. (Public Utilities Code  
          740.4)
           
          Current law  authorizes California Alternative Energy and  
          Advanced Transportation Financing Authority (CAETFA) to issue  
          bonds and fix fees, charges, and interest rates for loans in  
          order to promote the creation of manufacturing, jobs, reduction  
          of greenhouse gases, or reductions in air and water pollution or  











          energy consumption. (Public Resources Codes 26011, 26011.8)

           This bill  establishes a framework for the development of energy  
          management plans between port and harbor districts and IOUs or  
          publicly-owned utilities (POUs). The bill requires the plans to  
          include assessments of current energy consumption, energy  
          management issues, forecasts, domestic and international  
          shipping requirements related to energy usage, measureable  
          energy performance goals, recommendations for implementation,  
          short and long-term objectives and authorizes utility ownership  
          of alternative fuel vehicle infrastructure facilities. 
           
           This bill  mandates that the CPUC approve elements of the energy  
          management plans that were jointly developed between a port or  
          harbor district and an IOU including ownership of alternative  
          fuel vehicle infrastructure facilities. The CPUC would also be  
          required to provide expedited review of jointly developed energy  
          management plans. 
           
          This bill  requires that energy management plans developed in  
          cooperation between the port or harbor district and the utility  
          be considered eligible for funding from the IBank, CAETFA, and  
          utility ratepayers via the CPUC. 
           
                                     BACKGROUND
           
          Energy Management Plans - Energy management plans are negotiated  
          plans between utility customers, local authorities, and  
          servicing utilities that outline a comprehensive assessment of  
          energy usage. The plans consider energy consumption, energy  
          efficiency measures, and infrastructure in order to determine a  
          policy and set of actions to manage the demand for energy. The  
          port of Los Angeles recently announced plans to cooperate with  
          the Los Angeles Department of Water and Power (LADWP) to develop  
          an Energy Management Action Plan. Energy management plans are  
          not currently defined in statute; they are not explicitly  
          authorized, nor are they prohibited.

          The At-Berth Regulations - The California Air Resources Board  
          (CARB) has developed regulations commonly referred to as the  














          At-berth Regulations for ships at California ports.<1> The  
          regulations are being implemented in stages and began in 2010.  
          By 2014, the CARB will require that 50% of visits by container  
          and passenger ships be powered by on-shore power, or that ship  
          operators alternatively reduce 50% of emissions associated with  
          their ships at-berth. Ultimately these percentages will be  
          increased to 80% by 2020. Previously, ships visiting ports would  
          power themselves with on-board diesel generators, which are a  
          significant cause of air pollutants in port and harbor  
          districts. The CARB regulations are intended to improve the air  
          quality of these ports, but in doing so will increase demand for  
          electricity power from the local electric utility.

          The CARB identifies three types of incentives for compliance  
          with the at-berth regulations: 

                 Emission credits that can be accumulated and used by  
               fleets complying with the equivalent emissions reduction  
               option; 
                 Proposition 1B (2006) funding available to reduce  
               emissions from goods-movement activities; and
                 Carl Moyer funding available to reduce emissions of  
               diesel emissions.

          The California Infrastructure Bank - The IBank was created to  
          promote the economic development of California cities and  
          counties by providing funding options, including tax-exempt  
          conduit bonds for projects that promote both economic  
          development and resource conservation. The IBank may also issue  
          loans directly to local governments, capped at $10 million per  
          project. Private corporations and non-profit organizations may  
          also qualify for certain funding opportunities. The IBank only  
          issues tax-exempt bonds to entities with high credit ratings and  
          the bonds are limited by federal tax code.  

          There are multiple other entities that have financing options  
          for infrastructure and economic development projects. These  
          entities include local city and county governments, California  
          Statewide Community Development Authority, the California  
          Municipal Finance Authority, and the California Association for  
          ---------------------------
          <1>See http://www.arb.ca.gov/ports/shorepower/shorepower.htm and  

            
          http://wpci.iaphworldports.org/data/docs/onshore-power-supply/library/1266571852_shorepowerfactsheet.pdf









          Local Economic Development. 

          CPUC proceedings - The CPUC currently requires IOUs to submit  
          energy efficiency plans every two to three years for approval.  
          The CPUC approves the budgets and goals of the energy efficiency  
          plans, but does not review every element or specific project.  
          The IOUs develop energy efficiency goals, approved by the CPUC,  
          along with outreach plans for every class of ratepayers and also  
          work with communities and large business sectors to develop  
          energy management plans as called for in this bill. The CPUC may  
          authorize ratepayer funding of projects that pass benefits to  
          ratepayers including energy savings. Common energy efficiency  
          projects include retrofits on lighting, heating and air  
          conditioning systems, replacement windows, and insulation  
          installation.

                                       COMMENTS

             1.   Author's Purpose  . The author intends to permit port and  
               harbor districts to work collaboratively with utilities and  
               energy service companies to develop comprehensive energy  
               management plans for the district. Participating entities  
               would be eligible for financing options from the IBank,  
               CAETFA, and from the CPUC. 

              2.   Nothing New  .  Port and harbor districts, and any other  
               utility customer, already have the ability to cooperate  
               with local utilities and/or other entities in developing an  
               energy management plan. In fact, the Port of Los Angeles  
               recently began this process. Furthermore, ports, harbors,  
               and even private companies are already eligible to apply to  
               the IBank for financing. The IBank reports it has authority  
               under current law to finance energy management plans for  
               port districts. The IOUs regularly request approval of  
               energy efficiency projects at the CPUC. It is not clear  
               what financing option that this bill would authorize that  
               is not already permissible.

              3.   Utility Ownership Mandate  . Among the items listed in the  
               proposed energy management plans are measures to be taken  
               that may provide for replacement of vehicles with  
               low-emission alternatives, development of infrastructure,  
               and may include utility ownership or operation of those  
               facilities. The CPUC previously denied utility ownership of  










               natural gas refueling facilities.<2> These elements of the  
               plan, combined with the mandate that the CPUC shall not  
               limit the role of the IOUs in the developed plan would  
               essentially mandate that the CPUC expand the role of the  
               IOUs into the transportation market place, where they  
               currently do not operate. 

               In the past, the CPUC has been skeptical of attempts by the  
               IOUs to expand their business into transportation  
               infrastructure, citing concerns over monopolistic behavior.  
               In November, 2011, Southern California Gas Company  
               (SoCalGas) filed an application with the CPUC to offer a  
               new tariff to meet natural gas compression needs of  
               non-residential customers for end-use applications. The  
               application stated that the company will not own, operate,  
               or maintain facilities nor conduct business operations  
               beyond the point of service delivery. The CPUC found that  
               SoCalGas was not seeking to open retail natural gas vehicle  
               refueling facilities, which it had previously ruled  
               against. With this limitation, the CPUC authorized SoCalGas  
               to file a Compression Services Tariff that offers  
               compressed natural gas services to non-residential  
               customers.<3> That ruling by the CPUC is currently being  
               appealed.

               Clean Energy is a private firm that owns and operates  
               natural gas refueling stations, and is a party in the  
               appeal to CPUC Decision 12-12-037. Clean Energy argues that  
               passing this bill could prejudice or interfere with the  
               CPUC appeal process, and that the bill authorizes IOUs to  
               expand into the transportation sector where private  
               enterprises already operate. 

               Another item included in the energy management plan is  
               essentially an indefinite list of "other proposed actions  
               and associated utility services." This item opens the door  
               to any number of actions proposed by the utilities, and  
               which the CPUC would be required to approve. To ensure that  
               this bill does not mandate utility programs not reviewed  
               and permitted by the CPUC, the committee may wish to  
               consider striking the provisions for utility ownership of  
               alternative fuel infrastructure facilities and the open  
               -------------------------
          <2> D.95-11-035
          <3> D.12-12-037









               ended list of other actions developed between the parties.

              4.   CPUC Authority  . This bill appears to interfere with the  
               CPUC process for approval of IOU budgets, goals, and  
               activities. This process normally begins when the IOU files  
               an application with the CPUC for a given project or a  
               general rate case. The CPUC then holds an extensive review  
               and vetting process that incorporates input from  
               stakeholders including ratepayer advocacy groups. This bill  
               would require the CPUC to provide an "expedited review" of  
               energy management plans that were developed in cooperation  
               with port and harbor districts. By expediting review  
               ratepayer groups and other stakeholders would be limited in  
               their ability to review and comment on the request.  
               Expedited reviews would typically only be considered at the  
               CPUC if there is urgency for the proceeding.

               This bill would also restrict the authority of the CPUC by  
               stating that it shall not limit the role of the utilities  
               in the developed energy management plans. The repercussions  
               of this are not clear, and depend on the specifics of the  
               energy management plan for each port or harbor district.  
               The CPUC is responsible for regulating IOUs and has the  
               expertise to determine if the electric or gas corporation  
               has overstepped in its role in the energy management plan.  
               This limitation mandates that the CPUC approve elements in  
               the energy management plan, regardless of whether the  
               plan's activities are appropriate for an IOU to provide and  
               even if the CPUC had previously denied that authority to  
               the IOUs. To ensure this bill does not limit the authority  
               or duties of the CPUC, the committee may wish to consider  
               an amendment that strikes subdivision (d) from the bill  
               which provides for expedited plan review and restricts the  
               ability to limit the IOU's role in plan activities.
                
             5.   Technical amendments: 

                   a.        To ensure proper maintenance of the codes,  
                    move intent language in 25990 to an uncodified  
                    section.  
                   b.        For consistency, strike "air pollution" on  
                    page 4, line 31, and insert "air emissions."  
                   c.        At page 5, line 30, strike "63050" and insert  
                    "63000."  










           

                                    ASSEMBLY VOTES
           
          Assembly Floor                                (77-0)
          Assembly Appropriations Committee             (17-0)
          Assembly Jobs, Economic Development, and the Economy(9-0)
          Assembly Utilities and Commerce Committee     (14-0)

                                       POSITIONS
           
           Sponsor:
           
          Southern California Gas Company

           Support:
           
          California Asian Pacific Chamber of Commerce
          California Manufacturers & Technology Association
          Chula Vista Chamber of Commerce
          Congress of California Seniors
          CONNECT
          El Monte/South El Monte Chamber of Commerce
          Jess Van Deventer, Sweetwater Authority Board Member
          Jim Unger, Hornblower Cruises & Events
          National City Chamber of Commerce
          Ron Morrison, National City Mayor
          San Diego Gas & Electric Company
          San Diego Port Tenants Association
          San Diego Regional Economic Development Corporation
          South County Economic Development Council
          3 Individuals

           Oppose:
           
          Clean Energy

          Kyle Hiner 
          AB 628 Analysis
          Hearing Date:  July 2, 2013