BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1079 (Bradford) - Economic development: energy management
area and plans.
Amended: July 10, 2013 Policy Vote: EU&C 9-0
Urgency: No Mandate: No
Hearing Date: August 30, 2013 Consultant:
Marie Liu
SUSPENSE FILE.
Bill Summary: AB 1079 would provide a framework for a local
government to designate an energy management area for which it
may develop an energy management plan, in collaboration with an
electrical or gas corporation, to assist with either the
stimulation of development or local manufacturing.
Fiscal Impact:
Unknown, but possibly minor and absorbable ongoing costs
from the Public Utilities Reimbursement Account (special) to
the CPUC to incorporate information from the energy
management plans into broader CPUC considerations.
Tens to hundreds of thousands in cost pressures to the
state for financing assistance from the Infrastructure and
Economic Development Bank and the California Alternative
Energy and Advanced Transportation Financing Authority.
Background: Existing law requires the California Public
Utilities Commission (CPUC) to authorize investor-owned
utilities (IOUs) to engage in economic development programs.
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 much receive
an allocation under the state's cap to issue tax-exempt private
activity bonds, set in federal law, as well as comply with
federal law's limit on eligible uses. The I-Bank is within the
Governor's Office of Business and Economic Development (Go Biz)
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The California Alternative Energy and Advanced Transportation
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.
Proposed Law: This bill would explicitly allow a local
government to collaborate with a utility to designate an energy
management area for which it may develop an energy management
plan to assist with air emission reductions, economic
development, or local manufacturing. 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 and the I-Bank.
The CPUC would be required to encourage utilities to participate
with local agencies in developing and implementing energy
management plans for energy management areas. Adoption of and
implementation progress of energy management plans must be
included in the local government's biennial report to the
Department of Housing and community Development.
This bill would explicitly make eligible a project to promote
economic development in an energy management area for funding
from the I-Bank.
Related Legislation: AB 628 (Gorell) would provide a very
similar framework for an energy management plan prepared for a
harbor or port in the state. AB 628 will also be heard by the
Senate Appropriations Committee on August 12, 2013.
Staff Comments: To the extent that energy management plans are
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developed by energy management areas, 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. However, the
likelihood of these costs being incurred are highly uncertain as
potential development of energy management plans for energy
management areas is uncertain.
The sponsor's of the bill envision using energy management plans
as a way to establish special programs, such as fixed rates, for
customers in an energy management area 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
would also put cost pressures on the funding programs with
limits. 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.
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