BILL ANALYSIS                                                                                                                                                                                                    



                                                                    SB 1074  


                                                                    Page  1





          Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 1074  
          (Hueso) - As Amended June 20, 2016


           ----------------------------------------------------------------- 
          |Policy       |Utilities and Commerce         |Vote:|14 - 0       |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
           ----------------------------------------------------------------- 


          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:  This bill appropriates $13 million to the California  
          Energy Commission (CEC) from the American Recovery and  
          Reinvestment Act of 2009 (ARRA) in the Federal Trust Fund, and  
          allocates $2.5 million, for the 2016-17 fiscal year and annually  
          thereafter, to be expended towards specified projects, including  
          geothermal brine treatment projects.  Specifically, this bill: 


          1)Appropriates $13 million, for the 2016-17 to CEC from ARRA in  
            the Federal Trust Fund.
          2)Allocates $2.5 million of the $13 million appropriated to the  
            CEC for 2016-17 fiscal, from ARRA in the Federal Trust Fund,  
            to be expended towards specified projects (see #4).










                                                                    SB 1074  


                                                                    Page  2





          3)Continuously appropriates $2.5 million annually for 2017-18  
            and each year thereafter, until all moneys in the Federal  
            Trust Fund derived from ARRA has been encumbered or expended. 


          4)Provides eligible projects are those that recover lithium,  
            metals, agricultural products, and other beneficial minerals  
            from highly mineralized geothermal brines at an existing  
            geothermal facility that is in a disadvantaged community and  
            provides local employment opportunities. 


          5)Requires the CEC to issue a competitive solicitation for  
            specified projects no later than February 1, 2017. 


          FISCAL EFFECT:


          1)One-time appropriation of $13 million (Federal Trust Fund).





          2)Continuous annual appropriations of $2.5 million (Federal  
            Trust Fund) until funds have been encumbered or expended.



          3)Increased CEC costs of approximately $150,000 (GF or special  
            fund) to fund one staff position. This position would conduct  
            a competitive solicitation and manage grants for the  
            geothermal project. The bill does not identify a funding  
            source for these costs. 



          The recently adopted budget included CEC's Budget Change  








                                                                    SB 1074  


                                                                    Page  3





          Proposal related to this program. The adopted proposal requested  
          $13 million in federal fund expenditure authority for 2016-17,  
          and ongoing federal fund expenditure authority of $2.5 million  
          for 2017-18 through 2026-27 to finance a competitive grant  
          program to facilitate more effective use of local government  
          knowledge and conduct energy efficiency improvements in existing  
          buildings.


          


          COMMENTS:


          1)Purpose.    According the author, it is in the state's  
            interest to fund select projects for mineral extraction from  
            geothermal brines.  Geothermal brine is the waste stream of  
            the geothermal power production cycle and because it is high  
            in corrosive minerals, it is considered a nuisance.  The  
            geothermal brine produced by Salton Sea geothermal resources  
            is highly mineralized and corrosive.  Extraction of these  
            minerals from the brine is one of the most significant costs  
            of geothermal development in the Salton Sea. This bill  
            provides the incentives to help offset the costs of geothermal  
            production.


          2)Background.  In February 2009, the United States Congress  
            passed ARRA which contained funding for science, engineering,  
            research, and infrastructure development.  States were given  
            discretionary funding through ARRA to development and fund  
            projects to promote economic growth.  Through ARRA, the CEC  
            administered over $314 million in energy efficiency and  
            renewable energy programs.  When ARRA ended in 2013, over $30  
            million remained throughout various programs.  


          3)California's Geothermal Industry. Geothermal energy is a form  








                                                                    SB 1074 


                                                                    Page  4





            of renewable energy that is generated by drilling into  
            underground hot water reservoirs, such as geysers and hot  
            springs, releasing the hot water as steam to the surface in  
            order to produce electricity. Unlike solar and wind energy,  
            which are considered intermittent renewables because they are  
            dependent upon the weather to generate energy, geothermal  
            power plants are considered base load facilities because they  
            are able to operate 24 hours per day, 7 days per week,  
            regardless of weather conditions. 


          


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