Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2460

Introduced by Assembly Member Irwin

February 19, 2016

begin delete An act to amend Section 2851 of the Public Utilities Code, relating to energy. end delete begin insert An act to amend Sections 2861, 2863, 2864, 2865, 2866, 2867, and 2867.3 of, to amend and renumber Section 2862 of, to repeal Sections 2860, 2867.1, and 2867.2 of, and to repeal and add Section 2867.4 of, the Public Utilities Code, relating to energy. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 2460, as amended, Irwin. begin delete California Solar Initiative: low-income residential housing. end delete begin insert Solar thermal systems. end insert

begin insert

The Solar Water Heating and Efficiency Act of 2007, until August 1, 2017, requires the Public Utilities Commission, if it determines that a solar water heating program is cost effective for ratepayers and in the public interest, to implement a program to promote the installation of 200,000 solar water heating systems in homes, businesses, and buildings or facilities of eligible customer classes receiving natural gas service throughout the state by 2017. The act establishes the funding cap for the program, for the collective service territories of all gas corporations, at $250,000,000. The act, until August 1, 2017, requires the governing body of each publicly owned utility providing gas service to retail end-use customers to adopt, implement, and finance a solar water heating system incentive program to encourage the installation of 200,000 solar water heating systems by 2017.

end insert begin insert

This bill would revise the program to, among other things, promote the installation of solar water systems throughout the state, set the funding cap for the program between January 1, 2017, and July 31, 2027, at $1,000,000,000, reserve 50% of the total program budget for the installation of solar water heating systems in low-income residential housing or in buildings in disadvantaged communities, and extend the operation of the program through July 31, 2027. Because a violation of any order, decision, rule, direction, demand, or requirement of the commission implementing these revisions would be a crime, this bill would impose a state-mandated local program. The bill would also require the governing body of each publicly owned utility providing gas service, until August 1, 2027, to adopt, implement, and finance a solar water heating system incentive program. Because the bill would extend the obligations of a publicly owned electric utility to adopt, implement, and finance the program, this bill would impose a state-mandated local program.

end insert begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for specified reasons.

end insert begin delete

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, as defined. Decisions of the commission adopted the California Solar Initiative. Existing law requires the commission to undertake certain steps in implementing the California Solar Initiative.

end delete begin delete

This bill would make a nonsubstantive change to the law requiring the commission to undertake certain steps in implementing the California Solar Initiative.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 2860 of the end insert begin insert Public Utilities Code end insert begin insert is
repealed. end insert

begin delete

2860.  

This article shall be known, and may be cited, as the
Solar Water Heating and Efficiency Act of 2007.

end delete

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 2861 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

2861.  

As used in this article, the following terms have the
following meanings:

begin insert

(a) “Disadvantaged community” means a community identified
by the California Environmental Protection Agency pursuant to
Section 39711 of the Health and Safety Code.

end insert begin delete

(a)

end delete

begin insert (b) end insert  “Gas customer” includes both “core” and “noncore”
customers, as those terms are used in Chapter 2.2 (commencing
with Section 328) of Part 1, that receive retail end-use gas service
within the service territory of a gas corporation.

begin delete

(b)

end delete

begin insert (c) end insert  “kW_th” begin insert or “kilowatts thermal” end insert means the begin delete kilowatt end delete begin insert unit of
measure of the equivalent end insert thermal capacity of a solar water heating
begin delete system, measured consistent with the standard established by the
SRCC. end delete begin insert system that is calculated by multiplying the aperture area
of the solar collector area of the system, expressed in square
meters, by a conversion factor of 0.7. end insert

begin delete

(c)

end delete

begin insert (d) end insert  “kWh_th” means kilowatthours thermal as measured by the
number of kilowatts thermal generated, or displaced, in an hour.

begin delete

(d)

end delete

begin insert (e) end insert  “Low-income residential housing” means either of the
following:

(1) Residential housing financed with low-income housing tax
credits, tax-exempt mortgage revenue bonds, general obligation
bonds, or local, state, or federal loans or grants, and for which the
rents of the occupants who are lower income households, as defined
in Section 50079.5 of the Health and Safety Code, do not exceed
those prescribed by deed restrictions or regulatory agreements
pursuant to the terms of the financing or financial assistance.

(2) A residential complex in which at least 20 percent of the
total units are sold or rented to lower income households, as defined
in Section 50079.5 of the Health and Safety Code, and the housing
units targeted for lower income households are subject to a deed
restriction or affordability covenant with a public entity that ensures
that the units will be available at an affordable housing cost
meeting the requirements of Section 50052.5 of the Health and
Safety Code, or at an affordable rent meeting the requirements of
Section 50053 of the Health and Safety Code, for a period of not
less than 30 years.

begin delete

(e)

end delete

begin insert (f) end insert  “New Solar Homes Partnership” means the 10-year program,
administered by the Energy Commission, encouraging solar energy
systems in new home construction.

begin delete

(f)

end delete

begin insert (g) end insert  “Solar heating collector” means a device that is used to
collect or capture heat from the sun and that is generally, but need
not be, located on a roof.

begin delete

(g)

end delete

begin insert (h) end insert  “Solar water heating system” means a solar energy device
that has the primary purpose of reducing demand for natural gas
through water heating, space heating, or other methods of capturing
energy from the sun to reduce natural gas consumption in a home,
business, or any building or facility receiving natural gas that is
subject to the surcharge established pursuant to subdivision (b) of
Section 2863, or exempt from the surcharge pursuant to subdivision
(c) of Section 2863, and that meets or exceeds the eligibility criteria
established pursuant to Section 2864. “Solar water heating systems”
include multifamily residential, governmental, educational, and
nonprofit solar pool heating systems, but do not include
single-family residential solar pool heating systems.

begin delete

(h) “SRCC” means the Solar Rating and Certification
Corporation.

end delete

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 2862 of the end insert begin insert Public Utilities Code end insert begin insert is amended
and renumbered to read: end insert

begin delete

2862.  

The

end delete

begin insert

begin insert 2860. end insert   

end insert

begin insert (a) end insert begin insert   end insert Legislature finds and declares all of the following:

begin delete

(a)

end delete

begin insert (1) end insert  California is heavily dependent on natural begin delete gas, importing
more than 80 percent of the natural gas it consumes. end delete begin insert gas. end insert

begin delete

(b) Rising worldwide demand for natural gas and a shrinking
supply create rising and unstable prices that can harm California
consumers and the economy.

end delete begin insert

(2) The storage and delivery of natural gas relies on aging
infrastructure that is prone to leaks that can damage the
environment and imperil public health.

end insert begin delete

(c)

end delete

begin insert (3) end insert  Natural gas is a fossil fuel and a major source of global
warming pollution and the pollutants that cause air pollution,
including smog.

begin delete

(d)

end delete

begin insert (4) end insert  California’s growing population and economy will put a
strain on energy supplies and threaten the ability of the state to
meet its global warming goals unless specific steps are taken to
reduce demand and generate energy cleanly and efficiently.

begin delete

(e)

end delete

begin insert (5) end insert  Water heating for domestic and industrial use relies almost
entirely on natural gas and accounts for a significant percentage
of the state’s natural gas consumption.

begin delete

(f)

end delete

begin insert (6) end insert  Solar water heating systems represent the begin delete largest end delete begin insert major end insert
untapped natural gas saving potential begin delete remaining end delete in California.

begin delete

(g)

end delete

begin insert (7) end insert  In addition to financial and energy savings, solar water
heating systems can help protect against future gas and electricity
shortages and reduce our dependence on foreign sources of energy.

begin delete

(h)

end delete

begin insert (8) end insert  Solar water heating systems can also help preserve the
environment and protect public health by reducing air pollution,
including carbon dioxide, a leading global warming gas, and
nitrogen oxide, a precursor to smog.

begin delete

(i)

end delete

begin insert (9) end insert  Growing demand for these technologies will create jobs in
California as well as promote greater energy independence, protect
consumers from rising energy costs, and result in cleaner air.

begin insert

(10) Installing solar water heating systems in disadvantaged
communities can provide local economic benefits while advancing
the state’s clean energy goals and policies to reduce the emissions
of greenhouse gases.

end insert begin delete

(j)

end delete

begin insert (11) end insert  It is in the interest of the State of California to promote
solar water heating systems and other technologies that directly
reduce demand for natural gas in homes and businesses.

begin delete

(k)

end delete

begin insert (b) end insert  It is the intent of the Legislature to build a mainstream
market for solar water heating systems that directly reduces demand
for natural gas in homes, businesses, schools, begin delete nonprofit, end delete begin insert and
nonprofit end insert and government buildings. begin delete Toward that end, it is the
goal of this article to install at least 200,000 solar water heating
systems on homes, businesses, and other buildings or facilities of
eligible customer classes throughout the state by 2017, thereby
lowering prices and creating a self-sufficient market that will
sustain itself beyond the life of this program. end delete

begin delete

(l)

end delete

begin insert (c) end insert  It is the intent of the Legislature that the solar water heating
system incentives created by this article should be a cost-effective
investment by gas customers. Gas customers will recoup the cost
of their investment through lower begin delete prices end delete begin insert energy bills end insert as a result of
avoiding purchases of natural gas.

begin delete

(m) It is the intent of the Legislature that this article will
encourage the cost-effective deployment of solar heating systems
in both residential and commercial markets and in each end-use
application sector in a balanced manner. It is the intent of the
Legislature that the commission monitor and adjust incentives
created by this article so that they are cost-effective investments
sufficient to significantly increase markets and promote market
transformation. It is the intent of the Legislature that the
commission ensure that increased, uniform growth in each market
sector is achieved through program incentives or structure
adjustments that prevent overutilization of program resources by
any single sector.

end delete

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 2863 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

2863.  

(a)  begin delete If, after a public hearing, the commission determines
that a solar water heating program is cost effective for ratepayers
and in the public interest, the end delete begin insert By July 31, 2017, the end insert commission
shall do all of the following:

(1)  begin delete Design and implement a end delete begin insert Implement changes to the end insert program
begin insert as authorized pursuant to this section on December 31, 2016, end insert
applicable to the service territories of a gas begin delete corporation, to achieve
the goal of the Legislature to promote the installation of 200,000 end delete
begin insert corporation to promote the installation of end insert solar water heating
systems in homes, businesses, and buildings or facilities of eligible
customer classes receiving natural gas service throughout the begin delete state
by 2017. end delete begin insert state. end insert Eligible customer classes shall include single-family
and multifamily residential, commercial, industrial, governmental,
nonprofit, and primary, secondary, and postsecondary educational
customers. begin insert The commission shall implement program changes in
phases, if necessary, to enable seamless continuation of the
availability of rebates as of January 1, 2017. end insert

(2) The program shall be administered by gas corporations or
third-party administrators, as determined by the commission, and
subject to the supervision of the commission.

(3) The commission shall coordinate the program with the
Energy Commission’s begin insert programs and initiatives, including, but not
limited to, the end insert New Solar Homes begin delete Partnership end delete begin insert Partnership, end insert to
achieve the goal of building zero-energy homes.

begin delete

(4) The commission shall determine an appropriate division of
funds between solar water heating systems that are and are not
solar pool heating systems.

end delete

(b) (1) The commission shall fund the program through the use
of a surcharge applied to gas customers based upon the amount of
natural gas consumed. The surcharge shall be in addition to any
other charges for natural gas sold or transported for consumption
in this state.

(2)  begin delete The commission shall impose the surcharge at a level that
is necessary to meet the goal of installing 200,000 solar water
heating systems, or the equivalent output of 200,000 solar water
heating systems, on homes, businesses, and buildings or facilities
of eligible customer classes receiving natural gas service in
California by 2017. end delete Funding for the program established by this
article shall not, for the collective service territories of all gas
corporations, exceed begin delete two hundred fifty million dollars
($250,000,000) end delete begin insert one billion dollars ($1,000,000,000) end insert over the
course of the begin delete 10-year program. end delete begin insert period from January 1, 2017, to
July 31, 2027, inclusive. end insert

begin insert

(3) Fifty percent of the total program budget shall be reserved
for the installation of solar water heating systems in low-income
residential housing or in buildings in disadvantaged communities.
The commission may revise the percentage if the budget for other
types of customers becomes depleted.

end insert begin delete

(3)

end delete

begin insert (4) end insert  The commission shall annually establish a surcharge rate
for each class of gas customers. Any gas customer participating
in the California Alternate Rates for Energy (CARE) or Family
Electric Rate Assistance (FERA) programs shall be exempt from
paying any surcharge imposed to fund the program designed and
implemented pursuant to this article.

begin delete

(4)

end delete

begin insert (5) end insert  Any surcharge imposed to fund the program designed and
implemented pursuant to this article shall not be imposed upon the
portion of any gas customer’s procurement of natural gas that is
used or employed for a purpose that Section 896 excludes from
being categorized as the consumption of natural gas.

begin delete

(5)

end delete

begin insert (6) end insert  The gas corporation or other person or entity providing
revenue cycle services, as defined in Section 328.1, shall be
responsible for collecting the surcharge.

(c) Funds shall be allocated begin delete for the benefit of gas customers end delete begin insert in
the form of customer rebates end insert to promote utilization of solar water
heating systems.

begin insert

(1) On and after January 1, 2017, the rebate amount shall be
consistent with the amount the commission established for the
calendar year 2016 until revised by the commission pursuant to
paragraph (2).

end insert begin insert

(2) Beginning in 2017, and every two years thereafter, the
commission shall consider revisions to the rebate amount, taking
into account the cost of installing solar water heating systems and
the price of natural gas to end-use customers.

end insert begin insert

(3) The commission shall ensure that a cap on the maximum
rebate amount does not unreasonably impair the ability of
industrial customers to participate in the program.

end insert

(d) In designing and implementing the program required by this
article, no moneys shall be diverted from any existing programs
for low-income ratepayers or cost-effective energy efficiency
programs.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 2864 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

2864.  

(a) The commission, in consultation with the Energy
Commission and interested members of the public, shall establish
eligibility criteria for solar water heating systems receiving gas
customer funded incentives pursuant to this article. The criteria
should specify and include all of the following:

(1) Design, installation, and energy output or displacement
standards. To be eligible for rebate funding, a residential solar
water heating system shall be certified by an accredited listing
agency in accordance with standards adopted by the commission.
Solar collectors used in systems for multifamily residential,
commercial, government, nonprofit, educational, or industrial
water heating shall be certified by an accredited listing agency in
accordance with standards adopted by the commission. Energy
output of collectors and systems shall be determined in accordance
with procedures set forth by the listing agency, and shall be based
on testing results from accredited testing laboratories.

(2)  begin delete Require end delete begin insert A requirement end insert that solar water heating system
components are new and unused, and have not previously been
placed in service in any other location or for any other application.

(3)  begin delete Require end delete begin insert A requirement end insert that solar water heating collectors
have a warranty of not less than 10 years to protect against defects
and undue degradation.

(4)  begin delete Require end delete begin insert A requirement end insert that solar water heating systems are
in buildings or facilities connected to a natural gas utility’s
distribution system within the state.

(5)  begin delete Require end delete begin insert A requirement end insert that solar water heating systems have
meters or other kWh_th measuring devices in place to monitor and
measure the system’s performance and the quantity of energy
generated or displaced by the system. begin delete The criteria shall require
meters for systems with a capacity for displacing over 30 kW end delete _{begin delete th end delete} begin delete .
The criteria may require meters for systems with a capacity of 30
kW end delete _{begin delete th end delete} begin delete or smaller. end delete begin insert The cost of monitoring the system shall not exceed
2 percent of the system cost. end insert

(6)  begin delete Require end delete begin insert A requirement end insert that solar water heating systems are
installed in conformity with the manufacturer’s specifications and
all applicable codes and standards.

(b) Gas customer funded incentives shall not be made for a solar
water heating system that does not meet the eligibility criteria.

(c) The commission may adopt consensus solar standards
applicable to products or systems as developed by accredited
standards developers.

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 2865 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

2865.  

(a) The commission shall establish conditions on gas
customer funded incentives pursuant to this article. The conditions
shall require both of the following:

(1) Appropriate siting and high-quality installation of the solar
water heating system based on installation guidelines that maximize
the performance of the system and prevent qualified systems from
being inefficiently or inappropriately installed. The conditions
shall not impact housing designs or densities presently authorized
by a city, county, or city and county. The goal of this paragraph
is to achieve efficient installation of solar water heating systems
and promote the greatest energy production or displacement per
gas customer dollar.

(2) Appropriate energy efficiency improvements in the new or
existing home or facility where the solar water heating system is
installed.

(b) The commission shall set rating standards for equipment,
components, and systems to ensure reasonable performance and
shall develop begin delete standards end delete begin insert procedures end insert that provide for compliance
with the minimum ratings.

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 2866 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

begin delete

2866.  

 (a) The commission shall provide not less than 10
percent of the overall funds for installation of solar water heating
systems on low-income residential housing.

(b)

end delete

begin insert

begin insert 2866. end insert   

end insert

begin insert (a) end insert  The commission may establish a grant program or
a revolving loan or loan guarantee program for low-income
residential housing consistent with the requirements of Chapter
5.3 (commencing with Section 25425) of Division 15 of the Public
Resources Code. begin delete All end delete begin insert Notwithstanding Section 2867.4, all end insert loans
outstanding as of August 1, begin delete 2018, end delete begin insert 2027, end insert shall continue to be repaid
in a manner that is consistent with the terms and conditions of the
program adopted and implemented by the commission pursuant
to this subdivision, until repaid in full.

begin delete

(c)

end delete

begin insert (b) end insert  The commission may extend eligibility for funding pursuant
to this section to include residential housing occupied by ratepayers
participating in a commission approved and supervised gas
corporation Low-Income Energy Efficiency (LIEE) program and
who either:

(1) Occupy a single-family home.

(2) Occupy at least 50 percent of all units in a multifamily
dwelling structure.

begin delete

(d)

end delete

begin insert (c) end insert  The commission shall ensure that lower income households,
as defined in Section 50079.5 of the Health and Safety Code, and,
if the commission expands the program pursuant to subdivision
begin delete (c), end delete begin insert (b), end insert ratepayers participating in a LIEE program, that receive
gas service at residential housing with a solar water heating system
receiving incentives pursuant to subdivision (a), benefit from the
installation of the solar water heating systems through reduced or
lowered energy costs.

begin delete

(e) No later than January 1, 2010, the

end delete

begin insert (d) end insert begin insert   end insert begin insert The end insert commission shall do all of the following to implement
the requirements of this section:

(1) Maximize incentives to properties that are committed to
continuously serving the needs of lower income households, as
defined in Section 50079.5 of the Health and Safety Code, and, if
the commission expands the program pursuant to subdivision begin delete (c), end delete
begin insert (b), end insert ratepayers participating in a LIEE program.

(2) Establish conditions on the installation of solar water heating
systems that ensure properties on which solar water heating systems
are installed under subdivision (a) remain low-income residential
properties for at least 10 years from the time of installation,
including property ownership restrictions and income rental
protections, and appropriate enforcement of these conditions.

begin delete

(f) All moneys set aside for the purpose of funding the
installation of solar water heating systems on low-income
residential housing that are unexpended and unencumbered on
August 1, 2018, and all moneys thereafter repaid pursuant to
subdivision (b), except to the extent that those moneys are
encumbered pursuant to this section, shall be utilized to augment
cost-effective energy efficiency measures in low-income residential
housing that benefit ratepayers.

end delete

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 2867 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

2867.  

(a)  begin delete The end delete begin insert Consistent with subdivision (c) of Section 2863,
the commission shall consider reductions over time in end insert rebates
provided through begin delete this program shall decline over time. They end delete begin insert the
program. The rebate end insert shall be structured so as to drive down the
cost of the solar water heating technologies, and be paid out on a
performance-based incentive basis so that incentives are earned
based on the actual energy savings, or on predicted energy savings
as established by the commission.

(b) The commission shall consider federal tax credits and other
incentives available for this technology when determining the
appropriate rebate amount.

(c) The commission shall consider the impact of rebates for
solar water heating systems pursuant to this article on existing
incentive programs for energy efficiency technology.

(d) In coordination with the commission, the Energy
Commission shall consider, when appropriate, coupling rebates
for solar water heating systems with complementary energy
efficiency technologies, including, but not limited to, efficient hot
water heating tanks and tankless or on demand hot water systems
that can be installed in addition to the solar water heating system.

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 2867.1 of the end insert begin insert Public Utilities Code end insert begin insert is repealed. end insert

begin delete

2867.1.  

(a) Not later than July 1, 2010, the commission shall
report to the Legislature as to the effectiveness of the program and
make recommendations as to any changes that should be made to
the program. This report shall include justification for the size of
the rebate program in terms of total available incentive moneys as
well as the anticipated benefits of the program in its entirety. To
facilitate the understanding of how solar water heating systems
compare with other clean energy and energy efficiency
technologies, all documents related to and rebates provided by this
program shall be measured in both kWh_th and therms of natural
gas saved.

(b) Not later than February 1, 2014, the commission shall
complete a review of whether the rebate levels established by the
commission will be sufficient to spur investment to reach the
program goal of installing 200,000 solar water heating systems in
homes, businesses, and other buildings or facilities receiving
natural gas service throughout the state by 2017, and shall report
to the Legislature on the results of its review. The report submitted
pursuant to this subdivision shall be submitted in compliance with
Section 9795 of the Government Code.

end delete

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 2867.2 of the end insert begin insert Public Utilities Code end insert begin insert is
repealed. end insert

begin delete

2867.2.  

Except for the Solar Water Heating Pilot Program in
San Diego, solar water heating technologies shall not be eligible
for California Solar Initiative (CSI) funds, pursuant to Section
2851, unless they also displace electricity, in which case only the
electricity displacing portion of the technology may be eligible
under the CSI program, as determined by the commission.

end delete

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 2867.3 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

2867.3.  

begin delete In order to further the state goal of encouraging the
installation of 200,000 solar water heaters by 2017, the end delete begin insert The end insert
governing body of each publicly owned utility providing gas
service to retail end-use gas customers shall, after a public
proceeding, adopt, implement, and finance a solar water heating
system incentive program that does all the following:

(a) Ensures that any solar water heating system receiving
monetary incentives complies with eligibility criteria adopted by
the governing body. The eligibility criteria shall include those
elements contained in paragraphs (1) to (6), inclusive, of
subdivision (a) of Section 2864.

(b) Includes minimum ratings and standards for equipment,
components, and systems to ensure reasonable performance and
compliance with the minimum ratings and standards.

(c) Includes an element that addresses the installation of solar
water heating systems on low-income residential housing. If
deemed appropriate in consultation with the California Tax Credit
Allocation Committee, the governing board may establish a grant
program or a revolving loan or loan guarantee program for
low-income residential housing consistent with the requirements
of Chapter 5.3 (commencing with Section 25425) of Division 15
of the Public Resources Code.

begin insert

begin insert SEC. 12. end insert   

end insert

begin insert Section 2867.4 of the end insert begin insert Public Utilities Code end insert begin insert is
repealed. end insert

begin delete

2867.4.  

This article shall remain in effect only until August 1,
2018, and as of that date is repealed, unless a later enacted statute,
that is enacted before August 1, 2018, deletes or extends that date.

end delete

begin insert

begin insert SEC. 13. end insert   

end insert

begin insert Section 2867.4 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 2867.4. end insert   

This article shall become inoperative on August 1,
2027, and, as of January 1, 2028, is repealed, unless a later
enacted statute, that becomes operative on or before January 1,
2028, deletes or extends the dates on which it becomes inoperative
and is repealed.

end insert

begin insert

begin insert SEC. 14. end insert   

end insert begin insert

No reimbursement is required by this act pursuant
to Section 6 of Article XIII B of the California Constitution because
a local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act or because costs that may be
incurred by a local agency or school district will be incurred
because this act creates a new crime or infraction, eliminates a
crime or infraction, or changes the penalty for a crime or
infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.

end insert

begin delete

SECTION 1.  

Section 2851 of the Public Utilities Code is
amended to read:

2851.  

(a) In implementing the California Solar Initiative, the
commission shall do all of the following:

(1) (A) The commission shall authorize the award of monetary
incentives for up to the first megawatt of alternating current
generated by solar energy systems that meet the eligibility criteria
established by the Energy Commission pursuant to Chapter 8.8
(commencing with Section 25780) of Division 15 of the Public
Resources Code. The commission shall determine the eligibility
of a solar energy system, as defined in Section 25781 of the Public
Resources Code, to receive monetary incentives until the time the
Energy Commission establishes eligibility criteria pursuant to
Section 25782. Monetary incentives shall not be awarded for solar
energy systems that do not meet the eligibility criteria. The
incentive level authorized by the commission shall decline each
year following implementation of the California Solar Initiative,
at a rate of no less than an average of 7 percent per year, and,
except as provided in subparagraph (B), shall be zero as of
December 31, 2016. The commission shall adopt and publish a
schedule of declining incentive levels no less than 30 days in
advance of the first decline in incentive levels. The commission
may develop incentives based upon the electricity generated by
the system, provided those incentives are consistent with the
declining incentive levels of this paragraph and the incentives
apply to only the first megawatt of electricity generated by the
system.

(B) The incentive level for the installation of a solar energy
system pursuant to Section 2852 shall be zero as of December 31,
2021.

(2) The commission shall adopt a performance-based incentive
program so that by January 1, 2008, 100 percent of incentives for
solar energy systems of 100 kilowatts or greater and at least 50
percent of incentives for solar energy systems of 30 kilowatts or
greater are earned based on the actual electrical output of the solar
energy systems. The commission shall encourage, and may require,
performance-based incentives for solar energy systems of less than
30 kilowatts. Performance-based incentives shall decline at a rate
of no less than an average of 7 percent per year. In developing the
performance-based incentives, the commission may:

(A) Apply performance-based incentives only to customer
classes designated by the commission.

(B) Design the performance-based incentives so that customers
may receive a higher level of incentives than under incentives
based on installed electrical capacity.

(C) Develop financing options that help offset the installation
costs of the solar energy system, provided that this financing is
ultimately repaid in full by the consumer or through the application
of the performance-based rebates.

(3) By January 1, 2008, the commission, in consultation with
the Energy Commission, shall require reasonable and cost-effective
energy efficiency improvements in existing buildings as a condition
of providing incentives for eligible solar energy systems, with
appropriate exemptions or limitations to accommodate the limited
financial resources of low-income residential housing.

(4) Notwithstanding subdivision (g) of Section 2827, the
commission may develop a time-variant tariff that creates the
maximum incentive for ratepayers to install solar energy systems
so that the system’s peak electricity production coincides with
California’s peak electricity demands and that ensures that
ratepayers receive due value for their contribution to the purchase
of solar energy systems and customers with solar energy systems
continue to have an incentive to use electricity efficiently. In
developing the time-variant tariff, the commission may exclude
customers participating in the tariff from the rate cap for residential
customers for existing baseline quantities or usage by those
customers of up to 130 percent of existing baseline quantities, as
required by Section 739.9. Nothing in this paragraph authorizes
the commission to require time-variant pricing for ratepayers
without a solar energy system.

(b) Notwithstanding subdivision (a), in implementing the
California Solar Initiative, the commission may authorize the award
of monetary incentives for solar thermal and solar water heating
devices, in a total amount up to one hundred million eight hundred
thousand dollars ($100,800,000).

(c) (1) In implementing the California Solar Initiative, the
commission shall not allocate more than fifty million dollars
($50,000,000) to research, development, and demonstration that
explores solar technologies and other distributed generation
technologies that employ or could employ solar energy for
generation or storage of electricity or to offset natural gas usage.
Any program that allocates additional moneys to research,
development, and demonstration shall be developed in
collaboration with the Energy Commission to ensure there is no
duplication of efforts, and adopted by the commission through a
rulemaking or other appropriate public proceeding. Any grant
awarded by the commission for research, development, and
demonstration shall be approved by the full commission at a public
meeting. This subdivision does not prohibit the commission from
continuing to allocate moneys to research, development, and
demonstration pursuant to the self-generation incentive program
for distributed generation resources originally established pursuant
to Chapter 329 of the Statutes of 2000, as modified pursuant to
Section 379.6.

(2) The Legislature finds and declares that a program that
provides a stable source of monetary incentives for eligible solar
energy systems will encourage private investment sufficient to
make solar technologies cost effective.

(d) (1) The commission shall not impose any charge upon the
consumption of natural gas, or upon natural gas ratepayers, to fund
the California Solar Initiative.

(2) Notwithstanding any other provision of law, any charge
imposed to fund the program adopted and implemented pursuant
to this section shall be imposed upon all customers not participating
in the California Alternate Rates for Energy (CARE) or family
electric rate assistance (FERA) programs, including those
residential customers subject to the rate limitation specified in
Section 739.9 for existing baseline quantities or usage up to 130
percent of existing baseline quantities of electricity.

(3) The costs of the program adopted and implemented pursuant
to this section shall not be recovered from customers participating
in the California Alternate Rates for Energy or CARE program
established pursuant to Section 739.1, except to the extent that
program costs are recovered out of the nonbypassable system
benefits charge authorized pursuant to Section 399.8.

(e) Except as provided in subdivision (f), in implementing the
California Solar Initiative, the commission shall ensure that the
total cost over the duration of the program does not exceed three
billion five hundred fifty million eight hundred thousand dollars
($3,550,800,000). Except as provided in subdivision (f), financial
components of the California Solar Initiative shall consist of the
following:

(1) Programs under the supervision of the commission funded
by charges collected from customers of San Diego Gas and Electric
Company, Southern California Edison Company, and Pacific Gas
and Electric Company. Except as provided in subdivision (f), the
total cost over the duration of these programs shall not exceed two
billion three hundred sixty-six million eight hundred thousand
dollars ($2,366,800,000) and includes moneys collected directly
into a tracking account for support of the California Solar Initiative.

(2) Programs adopted, implemented, and financed in the amount
of seven hundred eighty-four million dollars ($784,000,000), by
charges collected by local publicly owned electric utilities pursuant
to Section 2854. Nothing in this subdivision shall give the
commission power and jurisdiction with respect to a local publicly
owned electric utility or its customers.

(3) (A) Programs for the installation of solar energy systems
on new construction (New Solar Homes Partnership Program),
administered by the Energy Commission, and funded by charges
in the amount of four hundred million dollars ($400,000,000),
collected from customers of San Diego Gas and Electric Company,
Southern California Edison Company, and Pacific Gas and Electric
Company. If the commission is notified by the Energy Commission
that funding available pursuant to Section 25751 of the Public
Resources Code for the New Solar Homes Partnership Program
and any other funding for the purposes of this paragraph have been
exhausted, the commission may require an electrical corporation
to continue administration of the program pursuant to the guidelines
established for the program by the Energy Commission, until the
funding limit authorized by this paragraph has been reached. The
commission may determine whether a third party, including the
Energy Commission, should administer the utility’s continuation
of the New Solar Homes Partnership Program. The commission,
in consultation with the Energy Commission, shall supervise the
administration of the continuation of the New Solar Homes
Partnership Program by an electrical corporation or third-party
administrator. After the exhaustion of funds, the Energy
Commission shall notify the Joint Legislative Budget Committee
30 days prior to the continuation of the program. This subparagraph
shall become inoperative on June 1, 2018.

(B) If the commission requires a continuation of the program
pursuant to subparagraph (A), any funding made available pursuant
to the continuation program shall be encumbered through the
issuance of rebate reservations by no later than June 1, 2018, and
disbursed by no later than December 31, 2021.

(4) The changes made to this subdivision by Chapter 39 of the
Statutes of 2012 do not authorize the levy of a charge or any
increase in the amount collected pursuant to any existing charge,
nor do the changes add to, or detract from, the commission’s
existing authority to levy or increase charges.

(f) Upon the expenditure or reservation in any electrical
corporation’s service territory of the amount specified in paragraph
(1) of subdivision (e) for low-income residential housing programs
pursuant to subdivision (c) of Section 2852, the commission shall
authorize the continued collection of the charge for the purposes
of Section 2852. The commission shall ensure that the total amount
collected pursuant to this subdivision does not exceed one hundred
eight million dollars ($108,000,000). Upon approval by the
commission, an electrical corporation may use amounts collected
pursuant to subdivision (e) for purposes of funding the general
market portion of the California Solar Initiative, that remain
unspent and unencumbered after December 31, 2016, to reduce
the electrical corporation’s portion of the total amount collected
pursuant to this subdivision.

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