BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 471  


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          Date of Hearing:  August 26, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          SB 471  
          (Pavley) - As Amended August 17, 2015


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill explicitly allows reductions of greenhouse gas (GHG)  
          emissions associated with the water sector, including water use,  
          supply and treatment, to be eligible for funding from AB 32 cap  
          and trade revenues. Specifically, this bill:








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          1)Requires the California Energy Commission (CEC), in  
            cooperation with the State Water Resources Control Board  
            (SWRCB), Air Resources Board (ARB), the Public Utilities  
            Commission (PUC), and the Department of Water Resources (DWR),  
            to study water-related energy use in California, as specified.  
             


          2)Requires the State Water Resources Control Board (SWRCB), in  
            cooperation with CEC, ARB, PUC, and DWR, to develop a grant  
            and loan program, upon appropriation of Greenhouse Gas  
            Reduction Funds (GGRF), to fund projects that result in  
            water-related GHG emission reductions.  Authorizes SWRCB to  
            adopt guidelines and regulations necessary to implement the  
            bill.  

          3)Requires that any public funds made available for the program  
            to private water companies regulated by the PUC be used for  
            the benefit of ratepayers or the public.  

          FISCAL EFFECT:


          1)Annual cost pressures of approximately $10 million to fund a  
            grant and loan program at SWRCB, including $500,000 for  
            administration (GGRF).


          2)Increased one-time costs of $315,000 and ongoing costs of  
            $175,000 for ARB to provide assistance to CEC and develop  
            methodology to quantify GHG reductions (GGRF).


          3)Unknown increased ongoing costs for DWR to provide assistance  
            to CEC, likely in the $50,000 to $250,000 range (GGRF).










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          4)Increased ongoing annual costs of $100,000 for the PUC to  
            provide assistance to the CEC.
          COMMENTS:


          1)Rationale.  Existing law allows GGRF to be used for the  
            reduction of GHG emissions associated with water use and  
            supply.  Although, it is possible that water treatment would  
            also be considered an eligible use as it is an integral part  
            of urban water use and often requires significant amounts of  
            electricity, this bill ensures water treatment projects are  
            eligible for GGRF.


          2)Background.  Under the California Global Warming Solutions Act  
            of 2006 (AB 32, Chapter 488, Statutes of 2006) the Air  
            Resources Board (ARB) is required to determine the 1990  
            statewide greenhouse gas (GHG) emissions level, to approve a  
            statewide GHG emissions limit equivalent to that level that  
            will be achieved by 2020, and to adopt GHG emissions  
            reductions measures by regulation. ARB is authorized to  
            include the use of market-based mechanisms to comply with the  
            regulations. All monies, except for fines and penalties,  
            collected pursuant to a market-based mechanism are deposited  
            in the Greenhouse Gas Reduction Fund (GGRF).


            Existing law requires the GGRF to be used only to facilitate  
          the achievement of reductions                                 of  
          GHG emissions and lists a non-exclusive list of eligible project  
          purposes including                                             
          funding to reduce GHG emissions associated with water use and  
          supply.











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          3)Funding for water and GHG emissions.  Emergency drought relief  
            legislation, SB 103 (Budget Committee, Chapter 2, Statutes of  
            2014) appropriated $10 million to the California Department of  
            Food and Agriculture (CDFA) for water and energy efficiency  
            projects in the agricultural sector, and $30 million to DWR to  
            implement a grant program to support local water-use  
            efficiency projects and energy efficiency projects at State  
            Water Project facilities. If this bill is enacted, there will  
            be three entities competing for GGRF water project funds.



          The 2014-15 Budget allocates $832 million in GGRF revenues to a  
            variety of transportation, energy, and resources programs  
            aimed at reducing GHG emissions.  Various agencies are in the  
            process of implementing this funding.  The budget agreement  
            specifies how the state will allocate most cap-and-trade  
            auction revenues in 2015-16 and beyond.  For all future  
            revenues, the legislation appropriates 25% for the state's  
            high-speed rail project, 20% for affordable housing and  
            sustainable communities grants, 10% to intercity capital rail  
            projects, and 5% for low-carbon transit operations.  The  
            remaining 40% is available for annual appropriation by the  
            Legislature, but has not yet been appropriated for the 2015-16  
            Fiscal Year.

          Of that 40% available for annual appropriation, the Governor's  
            proposed 2015-16 cap-and-trade expenditures would appropriate  
            $60 million to DWR and CDFA for water and energy efficiency  
            projects, $30 million to CEC and DWR for rebates to replace  
            inefficient appliances, and $30 million to CEC and DWR for the  
            Water and Energy Technology Program.  













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