BILL ANALYSIS Ó SB 1074 Page 1 SENATE THIRD READING SB 1074 (Hueso) As Amended June 20, 2016 Majority vote SENATE VOTE: 29-9 ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Utilities |14-0 |Gatto, Patterson, | | | | |Burke, Chávez, Dahle, | | | | |Cristina Garcia, | | | | |Eduardo Garcia, | | | | |Hadley, | | | | | | | | | | | | | | |Roger Hernández, | | | | |Obernolte, Quirk, | | | | |Santiago, Ting, | | | | |Williams | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |15-0 |Gonzalez, Bigelow, | | | | |Bloom, Bonilla, | | | | |Bonta, Chang, Eggman, | | | | |Eduardo Garcia, | | SB 1074 Page 2 | | |Jones, Obernolte, | | | | |Quirk, Santiago, | | | | |Weber, Wood, McCarty | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: 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 fiscal year, to the CEC from the ARRA in the Federal Trust Fund for specified purposes. 2)Allocates $2.5 million of the $13 million appropriated to the CEC for the 2016-17 fiscal year, from the ARRA in the Federal Trust Fund, to be expended towards specified projects. 3)Allocates $2.5 million annually for the 2017-18 fiscal year and each fiscal year thereafter, until all moneys in the Federal Trust Fund derived from the ARRA has been encumbered or expend to be continuously appropriated to the CEC for specified purposes. 4)Authorizes projects to 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 to receive specified funds. SB 1074 Page 3 5)Requires the CEC to issue a competitive solicitation for specified projects no later than February 1, 2017. FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill would have a one-time appropriation of $13 million. In addition, this bill would have a continuous annual appropriation of $2.5 million until funds have been encumbered or expended. Furthermore, this bill would have increased CEC costs of approximately $150,000 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 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)Author's Statement: According to the author, "It is in the state's interest to fund select projects for mineral extraction from geothermal brines. Such activity can make geothermal energy production more cost effective, and near-zero carbon-free electricity, such as geothermal energy production, is needed to reduce greenhouse gas emissions [?] 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 cost of geothermal development in the Salton Sea. The state has the potential to help commercialize domestic mineral mining from geothermal brine, which will produce lithium and manganese dioxide necessary for electric battery SB 1074 Page 4 manufacturing, thereby transforming an economic cost into an economic benefit." 2)Background: In February 2009, the United States Congress passed the ARRA which contained extensive funding for science, engineering, research, and infrastructure development. Through the ARRA, the CEC administered over $314 million in energy efficiency and renewable energy programs. When the ARRA ended in 2013, there remained over $30 million throughout various programs. As part of its evaluation of the remaining programs established through ARRA funds, the CEC determined that certain programs were underperforming and is seeking to reevaluate how the remaining funds should be utilized. 3)California's Geothermal Industry: Geothermal energy is a form 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, seven days per week, regardless of weather conditions. In 2015, geothermal energy produced 11,994 gigawatt-hours (GWh) of electricity in California. Combined with another 700 GWh of geothermal power imported from outside the state, and geothermal energy accounted for 6.14% of the states' total system power. In addition, there are 44 operating geothermal power plants in California with an installed capacity of 2,716 megawatts, including the world's largest geothermal field, the Geysers, contains 22 power plants that draw steam from more than 350 wells. An estimate by the United States Geological Survey suggests that California's geothermal resources could provide 800 to 4,600 MWs, with an additional 3,000 to 25,000 SB 1074 Page 5 MWs of geothermal resources yet to be discovered but likely to exist. This bill appropriates $13 million to the CEC from the 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. Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083 FN: 0004092