BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 35 - Pavley Hearing Date:
April 16, 2013 S
As Introduced: December 4, 2012 FISCAL B
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DESCRIPTION
Current law requires that all new public buildings be designed,
constructed, and equipped with all energy efficiency measures,
materials and devices that are feasible and cost-effective and
that existing buildings, when renovated or remodeled be
retrofitted to meet Green Building Codes. (Government Codes
15814.30, 15814.31)
Current law requires that the University of California (UC),
California State University (CSU), and California Community
Colleges (CCC) submit to the Legislature on or before November
30 of each year a comprehensive five-year capital outlay plan
that includes the needs and priorities of the segments.
(Education Code 67501)
Current law requires the CCC to encourage the construction of
community college sustainable green buildings that implement
energy efficiency, sustainable building concepts, and renewable
solar electric, fuel cell, and other technologies. (Education
Code 81623)
Current law requires the Chancellor of the CCCs to establish an
advisory committee to develop a Statewide Energy Management
Program to assist community college districts to achieve energy
independence. (Education Code 81624)
Current law establishes the Clean Energy Job Creation Fund to
fund projects that create jobs in California improving energy
efficiency and expanding clean energy generation. Up to $550
million is available in fiscal years 2013-14, 2014-15, 2015-16,
2016-17, and 2017-18, the source of which is increased state
corporate tax revenues. (Proposition 39)
Current law establishes the Greenhouse Gas Reduction Fund in the
State Treasury and requires all moneys, except for fines and
penalties, collected pursuant to a market-based mechanism be
deposited in the fund. (Government Code �16428.8)
Current Executive Order directs state agencies to implement a
variety of actions to reduce electricity usage in state
buildings 20 percent by 2015. (S-20-04)
This bill requires the CSU and CCC, and requests the UC, to
establish a special subcommittee to develop and administer a
"Systemwide Energy Solutions Action Plan" that provides a
near-and long-term strategy for energy savings projects which
are defined as a measure program, activity, or expenditures that
results in energy savings, greenhouse gas emissions reduction,
and budgetary savings through investments in clean energy.
BACKGROUND
Proposition 39 - This ballot initiative was approved by voters
at the November, 2012 election. Titled the California Clean
Energy Jobs Act of 2012, it requires most multistate businesses
to determine their California taxable income using a single
sales factor method. (Previously, state law allowed such
businesses to pick one of two different methods to determine the
amount of taxable income associated with California and taxable
by the state.) This change has the effect of increasing state
corporate tax revenue.
For a five-year period (2013-14 through 2017-18), Proposition 39
requires that half of the annual revenue raised from the
measure, up to $550 million, be transferred to a new Clean
Energy Job Creation Fund to support projects intended to improve
energy efficiency and expand the use of alternative energy.
"Moneys in the fund shall be available for appropriation for the
purpose of funding projects that create jobs in California
improving energy efficiency and expanding clean energy
generation." Proposition 39 specifically requires that the funds
maximize energy and job benefits by supporting:
Energy efficiency retrofits and alternative energy
projects in public schools, colleges, universities, and
other public facilities;
Financial and technical assistance for energy retrofits;
and
Job training and workforce development programs related
to energy efficiency and alternative energy.
Proposition 39 also requires that funded programs be coordinated
with the California Energy Commission (CEC) and California
Public Utilities Commission (CPUC) in order to avoid duplication
and leverage existing energy efficiency and alternative energy
efforts. In addition, Proposition 39 states that the funding is
to be appropriated only to agencies with established expertise
in managing energy projects and programs.
Governor's Proposed Budget - The Governor appropriates $450
million of Proposition 39 revenues the 2013-14 fiscal year for a
K-14 education energy efficiency program in order to satisfy the
energy efficiency requirements of Proposition 39 that commence
in that year. Of this amount, the Governor appropriates $400.5
million to the California Department of Education (CDE) for
allocation to K-12 school districts, charter schools and county
offices of education and $49.5 million to the CCC for allocation
to community college districts. The Governor requires CDE and
CCC to allocate these funds on a per student basis.
The Governor proposes to continue energy efficiency funding for
K-12 schools and community colleges at $500 million for four
additional years, from 2014-15 through 2017-18. This assumes
$1.0 billion in total Proposition 39 revenues, with half
provided for energy efficiency per the proposition during this
timeframe. The Governor's proposal is limited to these four
years, since Proposition 39 does not require energy efficiency
funding beyond 2017-18.
Loading Order - The state's energy "loading order" guides the
state's energy policies and decisions according to the following
order of priority: (1) decreasing electricity demand by
increasing energy efficiency; (2) responding to energy demand by
reducing energy usage during peak hours; (3) meeting new energy
generation needs with renewable resources; and (4) meeting new
energy generation needs with clean fossil-fueled generation.
This policy has been adopted by the energy agencies - the CEC
and CPUC - and its principles guide all energy programs.
COMMENTS
1. Author's Purpose . The author intends that colleges and
universities pursue energy efficiency retrofits, clean
energy installations, and other energy system improvements
to reduce costs and achieve energy and environmental
benefits. She opines that the "state must do everything it
can to reduce costs and invest in improved affordability
and access and that campuses benefiting from this program
will likely see an appreciable reduction in energy-related
costs over both the short- and long-term."
2. Funding of Plans . The author is considering a number of
options to fund the plans required in this bill including
funds from Proposition 39 which includes among the eligible
entities universities and colleges. However, the
Governor's Proposed Budget allocates all Proposition 39
funds to K-12 and the community colleges and excludes UC
and CSU. Another possible funding source is revenue from
the Air Resources Board's cap and trade auctions which are
expected to result in $200 million in the current year and
$400 million in revenue in the 2013-14 fiscal year. Thus
far the Governor has proposed that all but $100 million of
those funds be used to offset General Fund costs of
existing greenhouse gas mitigation activities. The ARB's
experience with cap and trade auctions is new and actual
revenues are unknown.
3. Energy Planning . The segments have each made
substantial investments in energy efficiency and generation
projects such as solar and combined heat and power over the
years. For community colleges, some funding has come from
local school bonds; all three segments have also used funds
from statewide school bonds to fund those efforts.
Consequently planning for these expenditures is not new to
the segments.
In addition to the capital outlay planning processes
already in place, this bill requires the segments to
establish subcommittees with specified participants to
develop through a public process, and administer, energy
action plans. It is not clear whether the segment's energy
planning will be improved by the process established in
this bill or whether it will conflict with the current
capital outlay requirements of the budget process.
However, should this bill be adopted by the committee, it
will be referred to the Senate Education Committee which
will consider the best planning structure for this effort.
Consequently, this analysis does not discuss issues
concerning the process required by the higher education
segments to develop those plans or the interplay with the
current capital outlay process established long utilized to
approve and fund infrastructure projects. It should be
noted however that the segments have done extensive work to
develop sustainable building plans and as a result the
subcommittee process required in this bill may be
duplicative of the existing processes.
4. Critical Planning Elements . Whatever planning process
is used by the segments, there are basic policies that
should be followed to ensure that goals and projects are
consistent with the state's broader energy goals. The
author and committee should consider the following
amendments to achieve those goals:
a) Page 3, strike lines 36-38 requires consultation
with the CEC and CPUC. The agencies do establish policy
for energy efficiency but are not generally staffed to
provide consultation on the development of energy plans.
All gas and electric corporations (investor-owned
utilities) and some publicly owned utilities have energy
efficiency outreach programs with engineers on staff to
evaluate projects impacts, cost-effectiveness, and energy
load impacts. The utilities can ensure that
consideration is given to all project impacts on the
myriad charges of the utilities, that the segments take
advantage of all rebates and available funding sources to
offset their costs, that they are aware of all impacts of
interconnecting to the utilities, and that the plans are
sound. Instead, the segments should be required to have
any plans and projects reviewed by the gas and electric
utilities in their region.
b) Page 4, lines 4-7, the segments are requested to
"consider" different project types including projects
that "result in quick energy costs savings" in four years
and those that are "longer." The savings from all
projects when properly installed are immediate. The
author may have intended to distinguish between what are
commonly referred to as "deep energy retrofits" which
would involve addressing all energy efficiency upgrades
of a building (e.g. HVAC, windows, insulation) as
distinguished from lighting replacement across an entire
campus which might be considered a low-risk, high return
investment. The results of an investment such as
lighting are easily quantified and the upgrades are tried
and true measures which generally don't require an
investment grade audit of a facility and can be
dispatched more quickly than the work required to
implement a deep energy retrofit of a building. The
language in this section is confusing and inconsistent
with state and industry energy policies and should be
stricken. The appropriate standards for the projects
should be those which are first consistent with the
state's loading order and are also cost effective.
Additionally the segments should be required to follow
these policies as a condition of state funding.
c) Page 4, strike lines 8-10 to conform to the
amendment in comment (a) since consultation with the
utilities will be required.
1. Direct Electricity Purchases . Since the state's attempt
to deregulate electricity in the 1990s, the CSU and UC have
been authorized to serve some of its electric load by
purchasing as much as one-third of its electricity in a
program commonly referred to as Direct Access (DA).
The energy service providers that supply electricity under
this program are required to conform to the Renewables
Portfolio Standard. However, the remaining electricity
purchases by ESPs for the UC and CSU are served by
short-term electricity purchases made by the ESPs on the
market which are exempt from the state's GHG emissions
performance standards for baseload generation. If the UC
and CSU are committed to reducing their GHG emissions, and
for the UC, being 100% GHG free, they can likely make
greater headway in those goals if they address the GHG
content of DA purchases. The author and committee may want
to consider requiring that the UC and CSU energy plans
include the "greening" of the DA electricity purchases.
2. Double Referral . Should this bill be approved by the
committee, it will be re-referred to the Senate Committee
on Education for its consideration.
3. Related Legislation . The following bills have also been
introduced in the current legislative session establish
parameters for the funding of programs authorized by
Proposition 39.
SB 39 (De Leon) - Requires the Office of Public School
Construction to establish a school district assistance
program to distribute grants, on a competitive basis, for
energy efficiency upgrade projects pursuant to Proposition
39. Status: Set for hearing in the Senate Education
Committee April 17, 2013.
SB 64 (Corbett) - Requires the CEC to develop and
administer programs consistent with Proposition 39 to
provide financial assistance to school districts, cities,
and counties for low risk, high-return energy efficiency or
clean energy technology projects. Status: Set in Senate
Energy, Utilities & Communications Committee April 16,
2013.
SB 729 (Fuller) - States the intent of the Legislature to
enact legislation to implement the California Clean Energy
Jobs Act. Status: Senate Rules Committee.
AB 29 (Williams) - Allocates $152 million in five
consecutive fiscal years to the CEC to administer grants,
loans, or other financial assistance for the UC, CSU, and
CCC to reduce energy demand and consumption. Status: Set
for hearing in Assembly Natural Resources Committee April
15, 2013.
AB 39 (Skinner) - Directs the CEC to develop and provide
grants, loans, or other financial assistance to K-12
schools and community colleges to improve energy
efficiency, installing clean energy technology, or make
energy system improvements; provide low-interest or
no-interest loans from a revolving loan fund to schools,
colleges and public buildings; and provide funds for job
training and workforce development. Status: Set for
hearing in Assembly Natural Resources Committee April 15,
2013.
AB 114 (Salas) - Directs the Labor and Workforce
Development Agency to award grants to eligible entities for
projects to provide job training on energy efficiency and
clean energy projects that are located in economically
disadvantaged communities. Status: Set for hearing in
Assembly Natural Resources Committee April 15, 2013.
AB 239 (Hagman) - Requires the Office of Public School
Construction to fund a zero-interest revolving loan program
and a grant program for school districts to perform energy
efficiency retrofit or clean energy installation projects
at public schools. Status: Set for hearing in Assembly
Natural Resources Committee April 15, 2013.
POSITIONS
Sponsor:
Author
Support:
California Energy Efficiency Industry Council
University of California, if amended
Oppose:
None on file
Kellie Smith
SB 35 Analysis
Hearing Date: April 16, 2013