BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 792|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
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
CONTINUED
AB 792
Page
2
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
CONTINUED
AB 792
Page
3
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 9/5/13)
Advanced Energy Economy
California Solar Energy Industries Association
Environment California
Silicon Valley Leadership Group
Solar Energy Industries Association
SunEdison
Surun
Vote Solar
OPPOSITION : (Verified 9/5/13)
California Municipal Utilities Association
Cities of Glendale, Sacramento and Torrance
League of California Cities
ARGUMENTS IN SUPPORT : The proponents write, "AB 792 provides
much needed certainty to California customers that have or are
planning investments in solar including retail businesses and
low- and middle-income homeowners by clarifying and preserving
the existing tax treatment of those investments through 2020.
Onsite solar generation is one of the few means available to
Californians to manage their electricity costs over the
long-term - solar systems are built to last for a minimum of 20
years. Investments in onsite solar generation create local jobs
and local sales and use tax revenue to California cities and the
state. In order for customers to be able to make safe long-term
investments, they need long-term policy certainty, which AB 792
will provide."
ARGUMENTS IN OPPOSITION : The League of California Cities
write in opposition, "A proposal of this type - in essence, a
CONTINUED
AB 792
Page
4
state-mandated exemption on local utility user taxes levied not
by the state, but by cities - should instead be locally
negotiated by the companies desiring the tax break with the city
councils whose cities will feel the pinch of the lost or
forgone, revenue. AB 792 undertakes a different approach, a
state restriction on municipal sovereignty, and on the authority
of local governing bodies to make such critical budgetary
decision about their own revenue streams without external
influence.
UUT's are one of the last unrestricted revenue sources of cities
- constituting 20% or more of some city General Funds. On
behalf of our members, the League is compelled to resist any
further attempts to restrict this revenue stream, for whatever
purpose."
AB:d 9/5/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED