BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 693|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 693
Author: Eggman (D) and Williams (D)
Amended: 9/4/15 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 8-3, 7/13/15
AYES: Hueso, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley,
Wolk
NOES: Fuller, Cannella, Morrell
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/27/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 79-0, 5/11/15 (Consent) - See last page for
vote
SUBJECT: Multifamily Affordable Housing Solar Roofs Program
SOURCE: Author
DIGEST: This bill creates the Multifamily Affordable Housing
Solar Roofs Program, to provide financial incentives for
qualified solar installations at multifamily affordable housing
properties funded from investor-owned utility's greenhouse gas
allowances.
Senate Floor Amendments of 9/4/15 provide the California Public
Utilities Commission (CPUC) the flexibility to consider
third-party administration of the Multifamily Affordable Housing
Solar Roofs Program. The amendment addresses the investor-owned
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Page 2
utilities (IOUs) preference for administering their ratepayer
funded public purpose programs, including energy efficiency and
renewable energy programs. An additional amendment allows IOUs
to count this program towards their obligations to make
investments in disadvantaged communities. There are additional
clarifying amendments regarding the expected performance of the
solar energy systems installed, a date certain by when the CPUC
must award funding, and others.
ANALYSIS:
Existing law:
1) Establishes the California Public Utilities Commission
(CPUC) and empowers it to regulate privately-owned public
utilities in California. Specifies that the Legislature may
prescribe that additional classes of private corporations or
other persons are public utilities. (Article XII of the
California Constitution; Public Utilities Code §301 et seq.)
2) Provides the CPUC regulatory authority over public
utilities, including electrical corporations and gas
corporations, as defined. Authorizes the CPUC to fix the
rates and charges for every public utility, and requires that
those rates and charges be just and reasonable. (Public
Utilities Code §§218 and 222)
3) Requires the California Air Resources Board (ARB), pursuant
to the California Global Warming Solutions Act of 2006, to
adopt rules and regulations, and consider the use of
market-based compliance mechanisms, that would reduce
greenhouse gas (GHG) emissions in the state to 1990 levels by
2020. (Health and Safety Code §§38500 to 38599)
4) Requires the CPUC, except as provided, to require all
revenues, including accrued interest, received by an
electrical corporation as a result of the direct allocation
of GHG allowances to electric utilities to be credited
directly to the residential, small business, and
emissions-intensive trade-exposed retail customers of the
electrical corporation. (Public Utilities Code §748.5)
5) Authorize the CPUC to allocate 15 percent of these revenues
for clean energy and energy efficiency projects established
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pursuant to statute that are administered by the electrical
corporation and that are not otherwise funded by another
funding source. (Public Utilities Code §748.5)
6) Requires the CPUC to establish a program for assistance to
low-income electric and gas customers, referred to as the
California Alternate Rates for Energy (CARE) program.
(Public Utilities Code §739.1)
7) Creates the California Solar Initiative (CSI) with a goal to
install solar energy systems with a generation capacity of
3,000 megawatts (MWs), to make solar energy systems a viable
mainstream option for both homes and businesses in 10 years,
and to place solar energy systems on 50 percent of new homes
in 13 years. Specifies no less than 10 percent of the
overall CSI funding is to be directed toward programs
assisting low-income households in obtaining the benefits of
solar technology. (Public Utilities Code §2852)
8) Permits the CPUC to adopt decisions that established the
Single-Family Affordable Solar Homes Program (SASH) and the
Multifamily Affordable Solar Housing Program (MASH), which
provide monetary incentives for the installation of solar
energy systems on low-income residential housing. (Public
Utilities Code §2852)
9) Extends the SASH and MASH programs until December 31, 2021,
or until budgeted funds are exhausted, whichever occurs
sooner. (Public Utilities Code §2851)
10)Establishes the Energy Efficiency Low-Income Weatherization
Program in the Department of Community Services and
Development (CSD) from the appropriation of GHG emissions
reductions allowances from non-utility funds. The program
provides for weatherization and renewable energy
installations in disadvantaged communities defined by the
California Environmental Protection Agency. (Government Code
§12087.5)
This bill:
1) Requires the CPUC to authorize $100 million annually or 10%
of funds, whichever is less, from the IOUs' cap-and-trade
allowance revenues to fund a financial assistance program for
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qualifying solar energy systems on low-income multifamily
housing properties, as defined.
2) Establishes a target of installing a minimum of 300 MWs of
renewable energy systems on multifamily affordable housing
properties by 2030.
3) Requires that qualified multifamily affordable housing
properties are a multifamily residential building of at least
five rental housing units that is low-income residential
housing.
4) Requires the funding for the program to be appropriated
annually beginning with the fiscal year commencing July 1,
2016, through the fiscal year commencing July 1, 2019.
Authorizes the CPUC to continue funding the program through
June 30, 2026. if funds are available and there is adequate
participation and interest in the program.
5) Requires the CPUC to consider the most appropriate
administration structure for the program, whether a third
party or electric utility, with not more than 10 percent of
the funds to be used for administration.
6) Requires that systems installed under the incentive program
be primarily used to offset electrical usage by low-income
tenants.
7) Requires that tenants participating in the program receive
utility bill credits, such as through the use of virtual net
metering or other tariffs established by the CPUC.
8) Requires the CPUC to establish local hiring requirements for
the program to provide economic development benefits to
disadvantaged communities.
9) Requires the CPUC to submit an assessment of the program to
the Legislature by July 30 of each year, beginning in 2020,
and every third year thereafter.
10)Requires that if any funds remain uncommitted for three
years, those funds must be credited to ratepayers.
11)Requires the CPUC to include an update of the program in its
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annual workplan report to the Legislature.
12)Authorizes investor-owned electric utilities to count the
adoption and implementation of the program towards their
obligations to ensure that specific alternatives are designed
for growth among residential customers in disadvantaged
communities.
Background
IOUs' GHG allowance revenues. With the passage of the Global
Warming Solutions Act of 2006, the ARB has implemented
regulations to achieve the goal of reducing GHG emissions to
1990 levels by 2020. Under the GHG Cap-and-Trade Regulation,
ARB allocates GHG emissions allowances to capped sectors,
including electric IOUs. ARB requires IOUs to sell these
allowances at ARB's quarterly allowance auctions, and requires
that all proceeds be used for ratepayer benefit, subject to CPUC
oversight.
In 2012, the Legislature adopted budget trailer language in SB
1018, which further restricted the CPUC's discretion related to
the use of the funds. Specifically, SB 1018, requires that
revenues from the GHG allowances be credited back to
residential, small business and emissions-intensive
trade-exposed businesses (businesses that are most at risk for
moving their activities out of California because they aren't
able to pass the costs on). Under CPUC Decision 12-12-033, the
CPUC allows the three large electric utilities to allocate
allowance proceeds to temporarily offset GHG costs from
residential rates. As such, all remaining funds, less any
proceeds used for approved clean energy and energy efficiency
projects, are distributed to residential customers as the
California Climate Credit. Each utility calculates the
semi-annual residential California Climate Credit by dividing
the total amount of revenues forecast to be available for the
Climate Credit by the number of eligible households (and then
dividing by two because the credit is distributed twice a year).
Since residential customers are the last to be compensated, the
amount of revenue they received is reduced when clean energy and
energy efficiency projects are funded with these funds. Among
the three largest IOUs in the state, the semi-annual climate
credit is roughly $26-40 per ratepayer, depending on the
utility.
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By appropriating $100 million annually from the roughly $1
billion in annual allowance revenues, AB 693 will reduce the
funding available, by about 10 percent, for the climate credit
and other clean energy and energy efficiency projects.
Currently, San Diego Gas and Electric has submitted an
application to the CPUC to fund its proposed 22 year, $100
million electric vehicle charging pilot program with allowance
proceeds. Additionally, individual climate credits could be
reduced from nine to 20 percent, or roughly $2-6 less per $30
semi-annual credit.
Virtual Net Energy Metering. VNM is an arrangement of rates and
terms that enables a multi-meter property owner to allocate a
solar system's energy credits to other tenants. Historically,
multi-tenant building with individual electric meters for each
tenant faced difficulties installing distributed solar systems
because of the problem of assigning the benefits of the
generation to each occupant. A system could easily be connected
to a common area load or to an individual tenant, but if it was
connected directly to multiple loads, there would be no way of
ensuring equitable distribution of the generation. Some tenants
would benefit more than others. Installing multiple systems,
one for each tenant or load in the building, is cost
prohibitive. However, VNM allows participants to install a
single solar system to cover the electricity load of both common
and tenant areas connected at the same service delivery point.
The electricity does not flow directly to any tenant meter, but
rather it feeds directly back onto the grid. The participating
utility then allocates the kilowatt hours from the energy
produced by the solar photovoltaic generating system to both the
building owner's and tenants' individual utility accounts, based
on a pre-arranged allocation agreement. The intent of VNM is to
help low-income multifamily residents receive direct benefits of
the building's solar system, rather than having all of the
benefits going to the building owner.
Net Energy Metering (NEM) 2.0. The NEM program supports onsite
solar installations up to 1 MW designed to offset a portion, or
all, of the customer's electric load. A 2013 report by the CPUC
on the costs and benefits of the NEM program suggested that NEM
generation resulted in a net cost to ratepayers. However, the
report also noted that the costs of NEM are largely a function
of retail rates designs. With the passage of AB 327 (Perea,
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Chapter 611, Statutes of 2013) the CPUC is undergoing rate
reform of utilities, as well as, a new proceeding to reform the
NEM program with the intent to better level the playing field
between participants and non-participants. By encouraging the
installation of renewable energy technologies and therefore
increasing the number of customers enrolled in NEM, AB 693 has
the potential to impact non-participant ratepayers.
More of the same? There are existing programs that provide
solar and weatherization services to low-income residents.
Specifically the SASH and the MASH programs, and the Low-income
Weatherization program at the CSD.
The Low-Income Weatherization program is funded from the state's
Greenhouse Gas Reductions Fund (GGRF), with $25 million from the
2014-15 Budget directed to renewable energy projects for
low-income residents in disadvantaged communities. The Budget
directed $75 million to the CSD for weatherization and renewable
projects working with their network of local organizations and
government agencies. The Legislature has not taken action on
the 2015-16 GGRF budget, however, the Governor has proposed more
funding for this program and both the Assembly and Senate have
included this program in their respective GGRF Funding Plans.
The passage of the CSI, capped program spending to reach one
million solar roofs to $2.5 billion of ratepayer funds over a 10
year period for solar incentives with some funding available for
projects for low-income residents. In 2007, in response to
legislation, the CPUC issued a decision which established $108
million SASH incentive program for low-income homeowners. In
October 2009, the CPUC established a $108 million MASH incentive
program for affordable housing developments. In 2013, the
Legislature extended the programs to 2021 and authorized $108
million in new funding for both programs. MASH currently has a
wait list of projects and is closed to new applicants, pending
approval of the updated MASH program details.
Providing benefits to tenants. The current programs provide the
greatest incentives to property owners in order to incentivize
their participation in installing a solar energy project. AB 693
is intended to help tenants realize the benefits of renewable
energy installations. AB 693 proposes to use many of the MASH
elements, including utilizing VNM tariffs or other tariffs to
provide tenants with financial credits on their utilities bills.
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The MASH program provides for two approaches with VNM, one for
individual metered properties where each rental property has its
own meter and one for master-metered, such as mobile home parks.
Unlike MASH, AB 693 makes the affordable housing installs
exclusively available to individual metered properties.
Administration. AB 693 allows the CPUC to determine the best
approach for administering the program. If the CPUC determines a
third-party administrator is the best fit, this bill requires a
competitive bidding process. If the CPUC determines an electric
utility should administer, the administration requires a
proceeding to determine the specifics of the administration.
Prior Legislation
SB 862 (Chapter 36, Statutes of 2014) Committee on Budget: GHG
emission reduction. Appropriates funding from the sale of GHG
emissions allowances, including establishing a low-income
weatherization and renewable energy program at the CSD.
AB 217 (Bradford/De León, Chapter 609, Statutes of 2013)
extended the low-income programs of the CSI from 2016 until
2021, authorizes the collection of an additional $108 million
for these programs, and adds additional standards to the
program, as specified.
SB 1 (Murray, Chapter 132, Statutes of 2006) established the
electric portion of the CSI with a 10-year budget of $2.2
billion collected from ratepayers.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
Ongoing costs of $558,000 from the Public Utilities
Reimbursement Account (special fund) for CPUC to oversee the
contract to administer the program and to annually assess the
success of the program.
Cost pressures of up to $100 million annually (General Fund)
to fund the program after 2020 if no additional Cap-and-trade
allocations are given to the electric utilities.
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Unknown lost revenues to the state, as an electric ratepayer
(General Fund and various special funds), for reduced credits
from the sale of Cap-and-trade auction revenues allocated to
electrical corporations.
SUPPORT: (Verified9/4/15)
Asian Pacific Environmental Network
Audubon California
California Environmental Justice Alliance
California Housing Partnership Corporation
California League of Conservation Voter
California Solar Energy Industries Association
California's Multifamily Affordable Solar Homes Coalition
Catholic Charities, Diocese of Stockton
Center Coast Alliance United for a Sustainable Economy
Center for Community Action and Environmental Justice
Center on Race, Poverty & the Environment
Climate Action Campaign
Coalition for Clean Air
Communities for a Better Environment
Community Advancement
Environment California
Environmental Health Coalition
Everyday Energy
Multifamily Affordable Solar Homes Coalition
Non-Profit Housing Association of Northern California
Pacoima Beautiful
San Diego Housing Federation
Sierra Club California
SolarCity
Southern California Edison
Sungevity
The Utility Reform Network
Union of Concerned Scientists
US Green Building Council California
Vote Solar
OPPOSITION: (Verified9/4/15)
CalTax
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ARGUMENTS IN SUPPORT: According to supporters, the program goal
is to create a million solar renters and provide direct economic
benefits to tenants. Low-income renters have largely been
bypassed by the growth of solar in California's residential
markets because of split incentive barriers. Solar CARE will
demonstrate that solar investments to underserved low-income
markets can be made while providing an equivalent ratepayer
benefit through reductions in CARE outlays.
ARGUMENTS IN OPPOSITION:CalTax states it is opposed to this bill
because "it distorts the nature of a regulatory fee." CalTax
further states: "Pending litigation will determine if the
auction component of the cap-and-trade program constitutes an
illegal tax."
ASSEMBLY FLOOR: 79-0, 5/11/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood
NO VOTE RECORDED: Atkins
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
9/8/15 21:47:11
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