BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  May 4, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2460 (Irwin) - As Amended April 20, 2016


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill extends and modifies an existing incentive program for  
          solar water heating systems administered by investor-owned  
          utilities under the supervision of the California Public  
          Utilities Commission (PUC). Specifically, this bill:  


          1)Extends, expands and modifies the existing program to promote  








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            the installation of solar thermal systems throughout the  
            state.  The original program was for solar water heating  
            systems only.



          2)Establishes a $1 billion funding cap for the program between  
            January 1, 2017, and July 31, 2027.  The previous funding cap  
            was $250 million over the first 10 years of the program.



          3)Requires 50% of the total program budget for projects in  
            low-income residential housing or in buildings in  
            disadvantaged communities, as defined by CalEnviro Screen.    
            Reserves 10% of the total program for industrial applications.



          4)Requires the governing body of each publicly-owned utility  
            providing gas service to adopt, implement, and finance a solar  
            thermal system incentive program until August 1, 2027.
          FISCAL EFFECT:


          1)This bill allocates up to $1 billion from ratepayers to fund  
            this incentive program through the year 2027,





            Currently, the program is designed to support the installation  
            of 200,000 solar water heaters by 2017 funded by up to $250  
            million in ratepayer surcharges. The current program has been  
            included in rates since 2007 and has expended $45 million of  
            the original $250 million allocated. 










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          2)Ongoing PUC annual costs of approximately $130,000 to  
            implement and administer the revised and continued program  
            through 2027 (PUC Utilities Reimbursement Account).
          COMMENTS:


          1)Purpose.  According to the author, although the enabling  
            legislation was passed in 2007, California Solar Initiative  
            (CSI) Thermal rebates were not made available until 2010. In  
            addition, it is unclear whether the PUC has authorized  
            sufficient marketing and education about this program. 





            In 2014, the State Auditor issued a report on California  
            Alternative Energy and Energy Efficiency Initiatives where it  
            stated that the California Solar Initiative Thermal Program  
            will not install enough solar water heating systems to meet  
            its goal by the time the program ends in 2017. The State  
            Auditor recommended the Legislature consider whether it wants  
            to continue authorizing the collection of ratepayers' money to  
            fund the program.





            The author intends this bill to extend the program in order to  
            give it time to work as intended, dedicate at least 50% of  
            rebates to disadvantaged communities, require the PUC to  
            review the rebate amount more frequently, and increase the  
            overall program budget.










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          2)Background.  In 2007, AB 1470 (Huffman), Chapter 536, created  
            the CSI Thermal rebate program to reduce the use of natural  
            gas in buildings through solar heating technologies. CSI  
            Thermal rebates were made available in 2010.


            According to the PUC, the current annual energy savings for  
            this program is more than 4.5 million therms, almost 1 million  
            kilowatt hours, and nearly 25 thousand tons of greenhouse gas  
            (GHG) emission reductions. The current program has paid out  
            about $45 million in incentives since 2010. The majority of  
            these funds have been used to fund commercial multifamily  
            housing and low income multifamily housing projects ($35  
            million).


            As part of the proposed action plan developed by the PUC, the  
            California Energy Commission (CEC), and the Los Angeles  
            Department of Water and Power (LADWP), reprioritizing the  
            existing solar thermal program to fund projects installable by  
            summer 2017 is recommended.  The plan notes that funds from  
            this program for low-income customers have been fully  
            utilized. This bill apportions 50% of the budget to low income  
             and disadvantaged communities.


            Solar thermal can be used to meet the needs of food, beverage,  
            textiles, paper and pulp industries. Processes like  
            sterilizing, pasteurizing, drying, hydrolyzing, distillation  
            and evaporation, and washing and cleaning do not require high  
            temperatures and could benefit from the use of solar thermal  
            technologies.





          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081








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