BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                    SB 1074

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          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,       |                    |


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          |                |     |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  

          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. 


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          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.


          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  


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            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  


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            MWs of geothermal resources yet to be discovered but likely to  

            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: