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. AS AMENDED. 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 (as approved on August 30, 2013): 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. 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 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 AB 628 (Gorell) Page 1 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. 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 AB 628 (Gorell) Page 2 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 amendments regarding independent energy providers as these are newly defined entities with uncertain implications. Committee Amendments: Delete references to the state funding AB 628 (Gorell) Page 3 entities, remove recent amendments regarding independent energy providers, and add Community Choice Aggregators.