BILL ANALYSIS                                                                                                                                                                                                    



                                                                            



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                                    THIRD READING


          Bill No:  AB 792
          Author:   Mullin (D), et al.
          Amended:  8/29/13 in Senate
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  7-0, 7/3/13
          AYES:  Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu

           ASSEMBLY FLOOR  :  Not relevant


           SUBJECT  :    Utility user tax:  exemption:  distributed  
          generation systems

           SOURCE  :     Author


           DIGEST  :    This bill, until January 1, 2020, exempts from a  
          utility users tax (UUT), the consumption of electricity  
          generated by a distributed clean energy resource, as defined,  
          for use by a single consumer, or the customer's tenants.

           Senate Floor Amendments  of 8/29/13 expand the types of  
          electricity generation systems that qualify for a UUT exemption,  
          impose a January 1, 2020 sunset date on the tax exemption, and  
          make other clarifying changes.

           ANALYSIS  :    The California Constitution allows a city, with the  
          consent of the local voters, to govern its "municipal affairs"  
          by adopting a charter.  The constitutional municipal affairs  
          doctrine allows charter cities to levy taxes which are not  
          preempted by the state or federal governments.  66 charter  
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          cities levy a UUT.

          A general law city can impose only those taxes that are allowed  
          by state statutes.  However, the Government Code allows all  
          general law cities to levy any tax which may be levied by any  
          charter city unless a different general law limits or prohibits  
          such a tax.  87 general law cities levy a UUT.

          This bill, until January 1, 2020, exempts from any UUT imposed  
          by a local jurisdiction, a customer's consumption of electricity  
          generated by a clean energy resource, as defined, for the  
          exclusive use of a single customer, or the customer's tenants.

          This bill specifies that it does not exempt, from a UUT, any  
          electricity or gas that is not from a "clean energy resource"  
          and is provided to a customer by an electrical corporation,  
          publicly owned utility, electrical cooperative, or irrigation  
          district.

          This bill defines "local jurisdiction" as any city, county, city  
          and county, including any charter city, county, or city and  
          county, district, or public or municipal corporation.  Defines  
          "clean energy resource" as devices or technologies used for a  
          renewable electrical generation facility or other technologies  
          that meet specified emissions and electrical efficiency  
          standards, as defined in state law.

           Comments
           
          Access to solar electricity is critical to California's  
          achieving its clean energy and greenhouse gas emission goals,  
          while also enabling more homeowners to reduce their electricity  
          bills.  Solar distributed generation is one of the  
          fastest-growing markets in California.  Industry participants  
          estimate that more than 150,000 customers in California  
          self-supply some or all of their electricity using solar  
          distributed generation, and that more than 43,000 Californians  
          are employed by firms that are involved in the market for solar  
          distributed generation.  Uncertainty about the potential  
          application of UUTs to electricity from distributed generation  
          systems poses a threat to continued growth of this dynamic  
          distributed solar generation market.  Applying a UUT to  
          third-party power purchase agreement financing would greatly  
          disadvantage this business model.  An internal analysis  

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          conducted by SunEdison found that applying a 7.5% UUT to would  
          make 15% of solar projects financially unviable for SunEdison's  
          customers.  By eliminating uncertainty about the application of  
          local UUT ordinances to renewable distributed generation and  
          ensuring consistent treatment for all customers, this bill will  
          enable the renewable distributed generation industry to continue  
          to grow throughout California.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   Local:  
           No

           SUPPORT  :   (Verified  8/30/13)

          California Solar Energy Industries Association
          Environment California
          Silicon Valley Leadership Group
          Solar Energy Industries Association
          SunEdison
          Surun
          Vote Solar


          AB:d  8/30/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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