BILL ANALYSIS                                                                                                                                                                                                    ”



                                                                  AB 719
                                                                  Page  1

          Date of Hearing:   April 8, 2013

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                               Steven Bradford, Chair
                 AB 719 (Hernandez) - As Amended:  February 21, 2013
           
          SUBJECT  :   Energy Efficient Street Lights

           SUMMARY  :   This bill would require an electrical corporation to  
          replace low-efficiency light bulbs with high-efficiency light  
          bulbs in street light poles that the electrical corporation  
          owns.  
          Specifically, this bill  :  

          a)Requires electrical corporations, as part of the energy  
            efficiency targets established by the California Public  
            Utilities Commission (PUC), to replace low-efficiency light  
            bulbs with high-efficiency light bulbs in street light poles  
            that the electrical corporation owns, at the same rate as the  
            city, county, or city and county in which any of the  
            electrical corporation's street light poles are located or at  
            the highest rate of an adjacent city or county if the street  
            light poles are located in a city or county that does not own  
            any street light poles.

          b)Expresses the intent of the Legislature that this program be  
            funded through existing collection mechanisms, and that the  
            implementation of this program not result in an increase in  
            any amount collected.

           EXISTING LAW  

          1)Directs the PUC to administer cost-effective energy efficiency  
            programs funded by a nonbypassable system benefits charge  
            assessed on ratepayers to fund energy efficiency programs.  
            (Public Utilities Code 381)

          2)Requires electrical corporations to first meet its unmet  
            resource needs through all available energy efficiency and  
            demand reduction resources that are cost effective, reliable,  
            and feasible. (Public Utilities Code 454.5 (b)(9)(C)).

          3)Requires the PUC, in consultation with the California Energy  
            Commission (CEC), shall identify all potentially achievable  
            cost-effective electricity efficiency savings and establish  








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            efficiency targets for an electrical corporation to achieve.  
            (Public Utilities Code 454.55)

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           1)Author's Statement.  According to the author, "Our street  
            lights are neglected public facilities that are operating on  
            outdated energy technology with cities footing the higher  
            energy costs associated with this old technology. Corporate  
            utilities that stand by without making energy efficiency  
            retrofits, profit from the status quo when more energy is  
            consumed by their customers, at the expense of the tax payers  
            and the environment. In my district, of the 653,209 street  
            lights that the servicing utility company owns, only 16 of  
            those have been replaced with energy efficiency lighting. That  
            is less than two tens of thousandths of one percent (0.000025)  
            of their street lights. Something has to be done to provide  
            relief to our cities and counties, particularly when they are  
            making strides and efforts of their own in addressing the  
            matter."

           2)Who owns the Street Lights?  Street light poles can be owned by  
            local governments, Investor Owned Utilities (IOUs), homeowner  
            associations, or private parties. According to data provided  
            by the PUC, local government and IOUs own the following number  
            of street light poles:

                     ------------------------------------------ 
                    |Utility         | IOU owned |    Local    |
                    |                |           | Government  |
                    |                |           |    Owned    |
                    |----------------+-----------+-------------|
                    |PG&E            |  175,585  |   554,000   |
                    |----------------+-----------+-------------|
                    |SCE             |  653,209  |   115,460   |
                    |----------------+-----------+-------------|
                    |SDG&E           |  27,981   |119,469      |
                     ------------------------------------------ 

            The local government pays the energy bill for the street light  
            regardless of whether the pole is owned by the government or  
            the utility.









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            A number of cities in California have received loans and  
            grants to fund energy efficient streetlight replacements  
            through the American Recovery and Reinvestment Act of 2009  
            (AARA), administered by the California Energy Commission  
            (CEC). It is not known how many cities have converted street  
            lights without assistance or how many will be able to convert  
            assistance now that the grant program has stopped accepting  
            new applications (although some new assistance may be  
            available through revolving loan programs).

            Of the local government owned poles, roughly 20% in Pacific  
            Gas and Electric (PG&E) area have been converted, about 1% in  
            Southern California Edison's (SCE's) area have been converted,  
            and about 40% of San Diego Gas & Electric (SDG&E) area poles  
            have been converted. Very few utility-owned poles (less than  
            40 total) have been converted.

           3)Who's motivated to convert Street Lights?  Generally it is the  
            entity paying the energy bill that has a motivation to reduce  
            energy consumption. In this situation, the pole is owned by  
            the utility and the local government pays the energy bill. As  
            a result, local governments are motivated to find ways to  
            reduce energy usage and save money. 

            The author suggests that utilities lack an incentive,  
            particularly for IOUs, to pursue street light efficiency  
            improvements. The PUC-approved rated schedule for PG&E and SCE  
            owned street and highway lighting requires the customer to pay  
            100% of the conversion cost of High Pressure Sodium Vapor  
            (HPSV) to Light Emitting Diode (LED).
             
             Currently, local governments are eligible for ratepayer-funded  
            rebates to help reduce street light conversion costs. The PUC  
            has not allowed utilities to be eligible for ratepayer-funded  
            rebates for this purpose.

            PG&E is proposing to replace up to 160,000 non-decorative  
            utility-owned streetlights in its 2014 General Rate Case. PG&E  
            is proposing that the costs for the program through an  
            adjustment in the facility charge for customers who elect to  
            participate in and benefit from the program. PG&E estimates  
            replacing HSPV with LEDs will saving 52.8 million  
            kilowatt-hours annually, reduce customer energy bills (which  
            includes the cost of the facility charge), and improve  
            reliability through fewer streetlight burnouts.








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           4)New Technologies May or May not Meet the Service Requirements  
            for Street Lights.  High Pressure Sodium Vapor (HPSV) lights  
            are the predominant type of street light technology. Energy  
            efficiency opportunities for improving street lights can be  
            accomplished via induction lights or light-emitting diode  
            lights. Depending on models and usage, induction lights can  
            reduce energy consumption by 10 to 50 percent and last up to  
            four times longer than HPSV lights. Light Emitting Diode (LED)  
            lights can reduce energy consumption by up to 50 percent and  
            last twice as long as HSPV lights.

            LED lighting systems do not have established standards  
            therefore there may be financial risks with purchasing  
            currently-available technology that does not deliver the type  
            and level of lighting necessary to provide similar level of  
            lighting services that were provided by the HSPV technology.  
            According to a 2011 report by the Rensselaer Polytechnic  
            Institute's Lighting Research Center which tested various  
            streetlight technologies against design criteria specified by  
            the American National Standards Institute (ANSI), the tested  
            LED streetlights required from 3% to 92% more poles per mile  
            than the base case to meet the ANSI standard. Pole  
            configuration (staggered vs. single sided). The study found  
            that with the additional poles necessary to achieve equivalent  
            lighting the net energy consumption would increase an average  
            of 51% to 41% more per mile. Rensselaer estimated that an  
            incentive range of $250 to $1550 per streetlight in addition  
            to a volume discount for an LED with a life of 25, 000 hours  
            or longer or an induction streetlight would be needed to  
            achieve a lower life-cycle cost per mile than the study's base  
            case. As lighting technologies improve, it is likely these  
            issues will be addressed.

            Alternatively, or in addition, control technologies could help  
            reduce street light energy consumption by dimming or turning  
            off the lamp during certain specified time periods.

           5)Street Lights Perform a Service  . Communities use street lights  
            to provide a public benefit. Examples of public benefit  
            include providing enhanced visibility at intersections where  
            vehicles might encounter pedestrians or to deter criminals who  
            benefit from the cover of darkness. According to the U.S.  
            Department of Justice, it street lighting is not always that  
            straightforward and some crime-prevention experts hypothesize  








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            that street light can sometimes increase crime (nighttime as  
            well as daytime). For purposes of safety, the U.S. Department  
            of Justice, in its report on "Improving Street Lighting to  
            Reduce Crime in Residential Areas," they describe several  
            considerations for police to consider for specific lighting  
            improvement projects: 

               a.     Product life
               b.     Energy Efficiency
               c.     Color rendering (the perceived color of an object), 
               d.     Optical Control (direction of light distribution)
               e.     Brightness (of the object and the light emanating  
                 from the lamp)
               f.     Vertical illumination (the measure of light  
                 delivered at a sufficient height from the ground so that  
                 people can see the faces of other pedestrians) and 
               g.     Glare.

           6)Who pays for the conversion?  The bill intends that streetlight  
            conversions of utility-owned poles be funded through existing  
            mechanisms without increasing collections from ratepayers. The  
            existing mechanisms are ratepayer-funded energy efficiency  
            programs. The PUC has established collections from ratepayers  
            of approximately $1 billion annually for the current energy  
            efficiency programs. 

            The ratepayer funds have been allocated to specific programs  
            for residential, commercial, industrial, agriculture, and  
            local government energy efficiency improvements. In order to  
            protect the ratepayer dollars used to fund these programs,  
            they must be cost-effective. According to AB 719, the program  
            is not to cause an increase to existing funding mechanisms.  
            This would result in reduced funding for some currently funded  
            programs or future programs.  

           7)Unintended Consequences?  Because AB 719 does not require the  
            street light owner (the IOU) to fund any of the costs for the  
            lighting retrofit, AB 719 could establish a precedent for this  
            level of ratepayer funding for other energy efficiency  
            programs. In addition, it would set a precedent for using  
            ratepayer funds for energy efficiency improvements at/on  
            utility-owned facilities. 

            Through the current energy efficiency programs, utilities also  
            receive an incentive for achieving energy efficiency goals. AB  








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            719 could result in IOU shareholders receiving 100% funding  
            for these conversions and an additional incentive for the  
            deemed savings for these conversions.

           8)Proposed Amendments.  To address the issues of reducing demand  
            for electricity and reducing electricity costs paid by local  
            governments for utility owned streetlights, without impacting  
            other ratepayers, the author may wish to amend the bill to  
            allow local governments to voluntarily elect to a new rate  
            plan that will 1) fund the energy efficiency improvements over  
            time through the tariff remitted by the local government, 2)  
            achieve lower electricity bills, and 3) be eligible for  
            ratepayer-funded rebates to help offset the cost of the  
            improvement. Additionally, the author may wish to set a  
            deadline by which the new rate plans are filed at the PUC by  
            the IOUs.

            384.5. (a) It is the intent of the Legislature that  the  
            program created by this section be funded through existing  
            collection mechanisms for the purposes of achieving  
            cost-effective electricity savings and establishing energy  
            efficiency targets, and that the implementation of this  
            program not result in an increase in any amount collected for  
            these purposes   utility owned street light poles, whose  
            electricity use is paid by local governments, are converted to  
            use cost-effective technology that reduces electricity  
            consumption so that a city, county, or  city and county will  
            achieve lower utility bills for the electricity used by these  
            street lights poles. The commission shall order, by March 1,  
            2014, electrical corporations to submit a tariff to be used,  
            at the discretion of the local government, to fund energy  
            efficiency improvements in street lights pole owned by the  
            electrical corporations to ensure reduced energy consumption  
            and lower electricity bills for local governments who are the  
            streetlight customers covered by these tariffs.
             (b)  As part of the energy efficiency targets created pursuant  
            to Section 454.55, an electrical corporation shall, for street  
            light poles the electrical corporation owns, implement a  
            program targeting the replacement of low-efficiency light  
            bulbs with high-efficiency light bulbs.   The tariff shall be  
            designed to allow local governments to remit the cost of the  
            improvement through the tariff over time, result in lower  
            energy consumption and lower energy bills, without shifting  
            costs to non-participating ratepayers.   
            (c) (1) For street light poles owned by an electrical  








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            corporation, the electrical corporation shall install  
            high-efficiency light bulbs in those street light poles at the  
            same rate that the city, county, or city and county in which  
            those street light poles are located has installed  
            high-efficiency light bulbs.   The conversion performed pursuant  
            to the tariff submitted pursuant to subdivision (a) shall be  
            eligible for any rebate or incentives available through  
            ratepayer funded programs intended to increase energy  
            efficiency.   
            (2) For street light poles located in a city, county, or city  
            and county that do not own any street lighting infrastructure,  
            the electrical corporation shall install high-efficiency light  
            bulbs in those street light poles owned by the electrical  
            corporation at the rate of installation of an adjacent city or  
            county with the highest rate of installation.
           
           9)Related Legislation.  AB 1235 (HernŠndez, 2011- 2012) was  
            amended in the Senate and was not heard.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Sierra Club California

          Opposition 
           
          San Diego Gas & Electric (SDG&E)
          Southern California Edison (SCE) (unless amended)
          Pacific Gas and Electric (PG&E)
           
          Analysis Prepared by  :    Susan Kateley / U. & C. / (916)  
          319-2083