BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          AB 628 (Gorell) - Energy management plans for harbor and port  
          districts. 
          
          Amended: August 12, 2013        Policy Vote: EU&C 9-0
          Urgency: No                     Mandate: No
          Hearing Date: August 30, 2013                     Consultant:  
          Marie Liu     
          
          SUSPENSE FILE.
          
          
          Bill Summary: AB 628 would provide a framework for a harbor and  
          port district (district) to develop an energy management plan,  
          in collaboration with an electrical or gas corporation, in order  
          to reduce air emissions and promote economic development of the  
          district. 

          Fiscal Impact: 
              Annual costs up to $50,000 from the Public Utilities  
              Reimbursement Account (special) to the CPUC to incorporate  
              information from the energy management plans into broader  
              CPUC considerations.
              Tens to hundreds of thousands in cost pressures to the  
              state for financing assistance from the Infrastructure and  
              Economic Development Bank and the California Alternative  
              Energy and Advanced Transportation Financing Authority.

          Background: Existing law requires the California Public  
          Utilities Commission (CPUC) to authorize investor-owned  
          utilities (IOUs) to engage in economic development programs and  
          further permits the recovery of associated costs from ratepayers  
          (PUC §740.4)

          The Infrastructure and Economic Development Bank (I-Bank)  
          supports economic development through its authority to issue  
          bonds, make loans, and provide credit enhancements. I-Bank  
          issues tax-exempt private activity industrial development  
          conduit bonds, where a manufacturer that meets minimum credit  
          standards applies to the I-Bank to issue bonds on its behalf,  
          among other forms of financial assistance. I-Bank must receive  
          an allocation under the state's bond cap to issue tax-exempt  
          private activity bonds, set in federal law, and must comply with  








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          the federal law on eligible uses. The I-Bank is within the  
          Governor's Office of Business and Economic Development (Go Biz)

          The California Alternative Energy and Advanced Transportation  
          Financing Authority (CAEATFA) provides financing through conduit  
          or revenue bonds, loan guarantees, loan loss reserves, and a  
          sales and use tax exemption for facilities that use alternative  
          energy sources and technologies and advanced manufacturing.  
          CAEATFA's board is composed of the Treasurer, Controller,  
          Director of Finance, Chairperson of the Energy Commission, and  
          President of the CPUC. CAEATFA is bound by state and federal law  
          regarding tax-exempt private activity bonds, similar to the  
          I-Bank.

          The California Maritime Infrastructure Bank and Authority  
          (CMIBA) is a joint powers agency that was formed for the purpose  
          of establishing an infrastructure fund for pooled financing of  
          port or harbor infrastructure. The CMIBA can make loans,  
          purchase bonds, enhance the credit of an agency for the purpose  
          of financing port or harbor infrastructure. 

          Proposed Law: This bill would provide a framework for a district  
          to collaborate with a utility to develop an energy management  
          plan to assist with air emission reductions and economic  
          development. At a minimum, the energy management plan would be  
          required to include elements including an assessment of current  
          energy consumption, an electric or natural gas load forecast,  
          consideration of the potential role of distributed generation,  
          an assessment of technologies that reduce energy consumption,  
          and proposed actions to achieve 1-year, 3-year, 5-year, 10-year,  
          and 15-year objectivities for implementing the plan. The plan  
          must also include proposed methods to fund the activities  
          included in the plan, including funding from CAEATFA, the  
          I-Bank, and the CMIBA.

          The CPUC would be required to encourage utilities to participate  
          with local agencies in developing and implementing energy  
          management plans for energy management areas. The CPUC would  
          also be authorized to offer technical assistance in the  
          preparation of the energy management plan.

          This bill would explicitly make a project to promote economic  
          development in a harbor and port district, which implements an  
          energy management plan, eligible for funding from the I-Bank.








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          Related Legislation: AB 1079 (Bradford) would provide a very  
          similar framework for an energy management plan prepared for an  
          energy management area. AB 1079 will also be heard by the Senate  
          Appropriations Committee on August 12, 2013.

          Staff Comments: To the extent that energy management plans are  
          developed by districts, the plans might result in additional  
          information that would need to be considered by the CPUC in  
          future proceedings on issues such as energy-efficiency, demand  
          response, or distributed generation portfolio. This additional  
          data for the CPUC's consideration may result in up to 0.5 of a  
          Public Utilities Regulatory Analyst III at an annual cost of  
          approximately $50,000 from the Public Utilities Commission  
          Utilities Reimbursement Account. 

          The author envisions utilities using energy management plans as  
          a way to establish special programs, such as fixed rates, for  
          the ports and keep the subsidy of such special programs within  
          the same class of ratepayers. Staff notes that language  
          regarding the CPUC's approval of energy management plans if the  
          plan involves special programs was deleted as part of this  
          bill's hearing in the Senate Energy, Utilities, and Commerce  
          Committee. There is no language in the bill that requires CPUC  
          approval of these plans.

          This bill explicitly makes eligible projects consistent with the  
          energy management plan eligible for funding from the I-Bank.  
          However, the I-Bank is already authorized to issue bonds for  
          financing economic development projects. 

          Under this bill, the energy management plan must include a  
          proposal on how the projects under the plan will be funded and  
          requires the plan to include funding from the I-Bank, CAEATFA,  
          and the CMIBA for financial support. Depending on the scope of  
          the projects as well as the type of assistance received from  
          each of these entities, the impact to the state can be in the  
          tens to hundreds of thousands of dollars in lost GF revenues and  
          cost pressures on the capped funding programs. According to the  
          author's staff, the intent was to encourage consideration of  
          funding from these sources, not to require funding.

          Proposed Author Amendments: The author has proposed to delete  
          references to the state funding entities and to remove recent  








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          amendments regarding independent energy providers as these are  
          newly defined entities with uncertain implications.