BILL ANALYSIS Ó AB 2460 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2460 (Irwin) - As Amended April 20, 2016 ----------------------------------------------------------------- |Policy |Utilities and Commerce |Vote:|10 - 3 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 AB 2460 Page 2 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. AB 2460 Page 3 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. AB 2460 Page 4 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 AB 2460 Page 5