BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 124 - Corbett Hearing Date:
April 2, 2013 S
As Introduced: January 18, 2013 FISCAL B
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DESCRIPTION
Current law authorizes public agencies to enter into contracts
with private entities to provide electrical or thermal energy or
conservation services from alternate energy equipment or
cogeneration equipment, if the cost of the services provided
will be less than the anticipated cost to the agency. The
contracts are also exempt from competitive bidding and can be
awarded by the agency based on the experience of the contractor
and cost of the contract. (Government Code Section 4217.10 et
seq.)
This bill adds the California State University to the list of
public agencies that are eligible for the contracting exemption,
and additionally allows the contracts to be awarded if the clean
energy device or technology is manufactured or assembled in this
state.
This bill requires a state agency or the California State
University to provide a bid preference of 5% for a contract for
the purchase or installation of a clean energy device,
technology or system, through a power purchase agreement or a
direct purchase, for any bidder that certifies that the
technology has been manufactured or assembled in this state.
Current law defines cogeneration equipment and alternative
energy equipment as energy from alternate sources as its primary
fuel source including specified technologies such as solar and
wind and cogeneration equipment. This equipment forms the basis
of the contracts for electrical or thermal energy or
conservation services. (Government Code Section 4217.11)
This bill defines a clean energy device, technology or system
and includes those technologies as eligible for the basis of
electrical or thermal energy or conservation services, or bid
preferences, as proposed by this bill.
BACKGROUND
Greening of State Buildings - To shrink the state's
environmental footprint and save taxpayer dollars, the Governor
has issued an executive order directing agencies and departments
to take immediate steps to green the state's buildings, reduce
greenhouse gas emissions and improve energy efficiency. The
executive order calls for new or renovated state buildings
larger than 10,000 square feet to achieve the U.S. Green
Building Council's LEED "Silver" certification or higher and to
incorporate clean, on-site power generation, such as solar
photovoltaic, solar thermal and wind power generation and clean
back-up power supplies. The order also sets a target of zero net
energy consumption for 50% of the square footage of existing
state-owned buildings by 2025 and zero net energy consumption
from all new or renovated state buildings beginning design after
2025. The executive order specifically directs state agencies
and departments to:
Reduce greenhouse gas emissions by 10% by 2015 and 20%
by 2020, as measured against a 2010 baseline;
Reduce overall water use by 10% by 2015 and 20% by 2020,
as measured against a 2010 baseline; and
Reduce grid-based energy purchases and other
non-building, grid-based retail energy purchases by 20% by
2018, as compared to a 2003 baseline.
Bid Preferences - Bid preferences are one tool commonly used in
government procurement programs to favor particular sellers. A
typical bid preference program awards a procurement contract to
the lowest favored bidder if its bid is within a certain
percentage of the low bid from the unfavored group. The price
bid is the price the bidder is ultimately paid. However, when
evaluating the contracts, the government agency, which is
normally required to take the lowest bid, will give points to
bidders that meet specified preferences to make them more
competitive with the lowest bidder.
COMMENTS
1. Author's Purpose . California has made a strong
commitment to clean energy technology. California-made
clean energy technology creates important manufacturing
jobs in our state, causes significant investment in our
community, are made with cleaner energy than foreign-made
products, and will demonstrate California's innovative
technology. The continued success of green technology in
California depends on state policy and federal and state
incentives. Unfortunately the current system fails to fully
consider California's investments when spending tax dollars
to implement energy efficiency projects. For example,
California has installed photovoltaic solar systems on
state property including land controlled by the Department
of Corrections, Department of Mental Health and several
California State University campuses. However the
Department of General Services does not know if any of the
solar panels on state property were made in California. SB
124 supports the continued development of energy efficiency
and alternative energy in our state and protects our
financial investment in green technology.
2. Assembled ? The contract and bid preferences proposed in
this bill are not only applicable to products manufactured
in the state but also extends to the assembly of any device
or technology in this state. Although manufacturing does
involve the assembly of products, the installation of
renewable generation is achieved with the assembly of parts
comprising solar panels and wind turbines, for example, at
the generation site in order to generate electricity and
connect to the grid. If the incentives in this bill are
also available to generation assembled at the site, the
incentives proffered to stimulate California manufacturing
would apply universally and undermine the purpose of the
incentives. In order to ensure that the contract and bid
preferences are limited to clean energy products actually
produced in manufacturing facilities in this state, the
committee should consider narrowing this definition to
strike "assembled" which would ensure that generation
facilities are excluded.
3. Clean Energy Definition . The California Alternative
Energy and Advanced Transportation Financing Authority
(CAEATFA) currently administers a manufacturing incentive
program which exempts clean energy technologies from the
sales and use tax. Last year the Legislature modified the
definition of clean energy devices and technologies
eligible for the exemption to ensure that the incentives
are consistent with the clean energy goals of other
programs such as the Renewables Portfolio Standard and Self
Generation Incentive Program. The statutory authorization
for those programs does not list eligible technologies as
this bill does but relies on the implementing agencies (the
California Energy Commission and California Public
Utilities Commission) to develop and modify the list of
eligible technologies as new technologies enter the market
and with the changing green goals of the programs.
The definitions proposed in this bill are inconsistent with
the current technologies eligible for manufacturing
incentives but are also in some ways duplicative of
definitions in existing law for alternative energy and
cogeneration equipment. To ensure that the technologies
eligible for the contract and bid preferences established
in this bill are aligned with technologies that meet the
state's clean energy goals and are eligible for incentives
in other programs, the committee should consider striking
the definitions of clean energy device, technology or
systems in this bill and alternative energy equipment in
current law and instead use the definition established for
the CAEATFA program as follows:
Clean energy device, technology or system means
devices or technologies used for a renewable
electrical generation facility, as defined in
paragraph (1) of subdivision (a) of Section 25741, a
combined heat and power system, as defined in Section
2840.2 of the Public Utilities Code, distributed
generation and energy storage technologies eligible
under the self-generation incentive program pursuant
to Section 379.6 of the Public Utilities Code, as
determined by the Public Utilities Commission, or a
facility designed for the production of renewable
fuels, the efficient use of which reduce the use of
fossil or nuclear fuels, and energy efficiency devices
or technologies that reduce the need for new electric
generation and reduce emissions of toxic and criteria
pollutants and greenhouse gases.
4. Intent Language/Executive Order . The intent language in
this bill references an executive order issued under the
prior gubernatorial administration, S-20-04 which focused
on energy efficiency for state buildings. That order has
been rescinded and in its place Governor Brown has issued a
more comprehensive direction for the greening of state
buildings in B-18-12 (as described in the background). The
author and committee may wish to consider amending this
bill to replace S-20-04 with the new B-18-12.
5. Prior Legislation . SB 175 (Corbett, 2011) proposed a 15
percent bidding preference on state contracts for the
purchase or installation of a solar photovoltaic system to
a business certifying that all of the solar cells and solar
panels installed as part of the solar photovoltaic system
have been manufactured in California. Status: Failed
passage, Assembly Business, Professions and Consumer
Protection Committee.
6. Double Referral . Should this bill be approved by the
committee, it will be re-referred to the Senate Committee
on Governmental Organization for its consideration.
POSITIONS
Sponsor:
Author
Support:
Bloom Energy
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Teamsters Public Affairs Council
Capstone Turbine Corporation
Engineers & Scientists of California, IFPTE Local 20
International Longshore and Warehouse Union
Professional & Technical Engineers, IFPTE Local 21
Solaria
Soraa
UNITE-HERE, AFL-CIO
United Food & Commercial Workers Western State Council
Utility Workers Union of America
Oppose:
California Manufacturers & Technology Association
Kellie Smith
SB 124 Analysis
Hearing Date: April 2, 2013