BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 1079 - Bradford Hearing Date:
July 2, 2013 A
As Amended: June 26, 2013 FISCAL B
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DESCRIPTION
Current law requires California's electric utilities to first
meet their energy needs through cost effective energy efficiency
measures. (Public Utilities Section 454.5)
Current decisions of the California Public Utilities Commission
(CPUC) require investor-owned utilities (IOUs) to administer
energy efficiency programs in multi-year portfolios designed to
meet pre-established energy savings goals which are funded by
ratepayer charges, currently at about $1 billion per year.
Current law establishes the Infrastructure and Economic
Development Bank (IBank) to provide financing for economic
development projects through both taxable and tax-exempt revenue
bonds. Eligible projects promote both the economic development
and conservation of natural resources for cities and counties. A
range of entities are eligible to apply for funding through the
IBank, including cities, counties, and private corporations.
(Government Code 63000 et seq.)
Current law directs the CPUC to authorize IOUs to engage in
economic development programs and further permits the recovery
of associated costs from ratepayers. (Public Utilities Code
740.4)
Current law authorizes the California Alternative Energy and
Advanced Transportation Financing Authority (CAETFA) to issue
bonds and fix fees, charges, and interest rates for loans in
order to promote the creation of manufacturing, jobs, reduction
of greenhouse gases, or reductions in air and water pollution or
energy consumption. (Public Resource Codes 26011, 26011.8)
This bill provides a framework for cities, counties, or other
local government agencies to define energy management areas in
collaboration with IOUs or publicly-owned utilities (POUs) and
to develop energy management plans for those areas. The bill
requires the plans to include assessments of current energy
consumption, energy management issues, forecasts, measureable
energy performance goals, recommendations for implementation,
short and long-term objectives and authorizes utility ownership
of alternative fuel vehicle infrastructure facilities.
This bill mandates that the CPUC approve elements of the energy
management plans that were jointly developed between a city or
county and an IOU including ownership of alternative fuel
vehicle infrastructure facilities. The CPUC would also be
required to provide expedited review of jointly developed energy
management plans.
This bill requires that energy management plans developed in
cooperation between the city or county government and the
servicing electric or gas utility be considered eligible for
funding from the IBank, CAETFA, and utility ratepayers via the
CPUC.
BACKGROUND
Energy Management Plans - Energy management plans are negotiated
plans between utility customers, local authorities, and
servicing utilities that outline a comprehensive assessment of
energy usage. The plans consider energy consumption, energy
efficiency measures, and infrastructure in order to determine a
policy and set of actions to manage the demand for energy.
Energy management plans are not currently defined in statute;
they are not explicitly authorized, nor are they prohibited.
The California Infrastructure Bank - The IBank was created to
promote the economic development of California cities and
counties by providing funding options, including tax-exempt
conduit bonds for projects that promote both economic
development and resource conservation. The IBank may also issue
loans directly to local governments, capped at $10 million per
project. Private corporations and non-profit organizations may
also qualify for certain funding opportunities. The IBank only
issues tax-exempt bonds to entities with high credit ratings and
the bonds are limited by federal tax code.
There are multiple other entities that have financing options
for infrastructure and economic development projects. These
entities include local city and county governments, California
Statewide Community Development Authority, the California
Municipal Finance Authority, and the California Association for
Local Economic Development.
CPUC Proceedings - The CPUC currently requires IOUs to submit
energy efficiency plans every two to three years for approval.
The CPUC approves the budgets and goals of the energy efficiency
plans, but does not review every element or specific project.
The IOUs develop energy efficiency goals, approved by the CPUC,
along with outreach plans for every class of ratepayers and also
work with communities and large business sectors to develop
energy management plans as called for in this bill. The CPUC may
authorize ratepayer funding of projects that pass benefits to
ratepayers including energy savings. Common energy efficiency
projects include retrofits on lighting, heating and air
conditioning systems, replacement windows, and insulation
installation.
COMMENTS
1. Author's Purpose . The author intends to permit cities
and counties to work collaboratively with utilities and
energy service companies to develop energy management areas
and to develop comprehensive plans for the energy
management area. Participating entities would be eligible
for financing options from the IBank, CAETFA, and from the
CPUC. The author intends to remove regulatory hurdles from
the process of authorizing funding for development
projects.
2. Nothing New . Cities and counties, and any other utility
customer, already have the ability to cooperate with local
utilities and/or other entities in developing an energy
management plan. In fact, the Port of Los Angeles recently
began this process. Furthermore, cities, counties, and even
private companies are already eligible to apply to the
IBank for financing. The IBank reports it has authority
under current law to finance energy management plans for
cities and counties. The IOUs regularly request approval of
energy efficiency projects at the CPUC. It is not clear
what financing option that this bill would authorize that
is not already permissible.
3. Utility Ownership Mandate . Among the items listed in the
proposed energy management plans are measures to be taken
that may provide for replacement of vehicles with
low-emission alternatives, development of infrastructure,
and may include utility ownership or operation of those
facilities. The CPUC previously denied utility ownership of
natural gas refueling facilities.<1> These elements of the
plan, combined with the mandate that the CPUC shall not
limit the role of the IOUs in the developed plan would
essentially mandate that the CPUC expand the role of the
IOUs into the transportation market place, where they
currently do not operate.
In the past, the CPUC has been skeptical of attempts by the
IOUs to expand their business into transportation
infrastructure, citing concerns over monopolistic behavior.
In November, 2011, Southern California Gas Company
(SoCalGas) filed an application with the CPUC to offer a
new tariff to meet natural gas compression needs of
non-residential customers for end-use applications. The
application stated that the company will not own, operate,
or maintain facilities nor conduct business operations
beyond the point of service delivery. The CPUC found that
SoCalGas was not seeking to open retail natural gas vehicle
refueling facilities, which it had previously ruled
against. With this limitation, the CPUC authorized SoCalGas
to file a Compression Services Tariff that offers
compressed natural gas services to non-residential
customers.<2> That ruling by the CPUC is currently being
appealed.
Clean Energy is a private firm that owns and operates
natural gas refueling stations, and is a party in the
appeal to CPUC Decision 12-12-037. Clean Energy argues that
passing this bill could prejudice or interfere with the
CPUC appeal process, and that the bill authorizes IOUs to
expand into the transportation sector where private
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<1> D.95-11-035
<2> D.12-12-037
enterprises already operate.
Another item included in the energy management plan is
essentially an indefinite list of "other proposed actions
and associated utility services." This item opens the door
to any number of actions proposed by the utilities, and
which the CPUC would be required to approve. To ensure that
this bill does not mandate utility programs not reviewed
and permitted by the CPUC, the committee may wish to
consider striking the provisions for utility ownership of
alternative fuel infrastructure facilities and the open
ended list of other actions developed between the parties.
4. CPUC Authority . This bill appears to interfere with the
CPUC process for approval of IOU budgets, goals, and
activities. This process normally begins when the IOU files
an application with the CPUC for a given project or a
general rate case. The CPUC then holds an extensive review
and vetting process that incorporates input from
stakeholders including ratepayer advocacy groups. This bill
would require the CPUC to provide an "expedited review" of
energy management plans that were developed in cooperation
with local governments. By expediting review ratepayer
groups and other stakeholders would be limited in their
ability to review and comment on the request. Expedited
reviews would typically only be considered at the CPUC if
there is urgency for the proceeding. The CPUC is not
staffed to review and comment on energy management plans
between utilities and their customers since this planning
is normally done at the local level as part of the IOU's
energy efficiency programs.
This bill would also restrict the authority of the CPUC by
stating that it shall not limit the role of the utilities
in the developed energy management plans. The repercussions
of this are not clear, and depend on the specifics of the
energy management plan for each energy management area. The
CPUC is responsible for regulating IOUs and has the
expertise to determine if the electric or gas corporation
has overstepped in its role in the energy management plan.
This limitation mandates that the CPUC approve elements in
the energy management plan, regardless of whether the
plan's activities are appropriate for an IOU to provide and
even if the CPUC had previously denied that authority to
the IOUs. To ensure this bill does not limit the authority
or duties of the CPUC, the committee may wish to consider
an amendment that strikes subdivision (f) from the bill
which provides for expedited plan review and restricts the
ability to limit the IOU's role in plan activities.
5. Technical Amendments :
a. To ensure proper maintenance of the codes,
move intent language in 7083.1 to an uncodified
section.
b. For consistency, strike "air pollution" on
page 5, line 8, and insert "air emissions."
ASSEMBLY VOTES
Assembly Floor (77-0)
Assembly Appropriations Committee (17-0)
Assembly Jobs, Economic Development, and the Economy(9-0)
POSITIONS
Sponsor:
San Diego Gas and Electric Company
Support:
Barrio Planners, Inc.
California Association of Enterprise Zones
California Black Chamber of Commerce
California Manufacturers & Technology Association
Chula Vista Chamber of Commerce
City of Pasadena
City of Santa Clarita
City of Taft
Clean Energy
Congress of California Seniors
CONNECT
County of San Bernardino
Economic Development Corporation
El Monte/South El Monte Chamber of Commerce
Inland Action
Inland Empire Economic Partnership
Jerry Gaines, Los Angeles County Workforce Investment Board
Jess Van Deventer, Sweetwater Authority Board Member
Jim Unger, Hornblower Cruises & Events
Kings County Economic Development Corporation
League of California Cities
Los Angeles Area Chamber of Commerce
Los Angeles County Business Federation
National City Chamber of Commerce
San Diego Port Tenants Association
San Diego Regional Economic Development Corporation
South County Economic Development Council
Southern California Gas Company
Westside Council of Chambers of Commerce
An Individual
Oppose:
Clean Energy
Kyle Hiner
AB 1079 Analysis
Hearing Date: July 2, 2013