BILL ANALYSIS Ó 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