BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1207| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 1207 Author: Hueso (D) Introduced:2/18/16 Vote: 27 SENATE ENERGY, U. & C. COMMITTEE: 9-0, 3/29/16 AYES: Hueso, Morrell, Cannella, Gaines, Hill, Lara, Leyva, McGuire, Wolk NO VOTE RECORDED: Hertzberg, Pavley SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen SUBJECT: Energy: conservation: financial assistance SOURCE: Author DIGEST: This bill extends by ten years the sunset on Energy Conservation Assistance Account (ECAA) program. ANALYSIS: Existing law establishes the ECAA loan program to fund energy efficiency improvements at facilities used by local governments. Sunsets the program as of January 1, 2018, and requires that unexpended funds in ECAA as of January 1, 2018, and thereafter revert to the General Fund. (Public Resources Code § 25410 et seq) This bill extends the sunset date on the ECAA program from January 1, 2018, to January 1, 2028. Background SB 1207 Page 2 ECAA program loans to local governments for energy efficiency. The ECAA program, which sunsets in 2018, was established more than 30 years ago by the Energy Conservation Assistance Act of 1979. It is one of the oldest of California's many programs designed to reduce statewide energy consumption through energy efficiency measures. The program makes low-interest loans to cover up to 100 percent of a project with a maximum repayment term of 15 years. A loan repayment amount cannot exceed the estimated energy savings from a funded project. A variety of sources have funded ECAA over the years, including the General Fund and tax-exempt revenue bonds. In 2009, the American Recovery and Reinvestment Act (ARRA) provided $25 million to California Energy Commission (CEC) for ECAA loans to supplement about $34 million in ARRA funds that the CEC awarded to 279 small cities and counties for energy efficiency projects. SB 679 (Pavley, Chapter 597, Statutes of 2011) appropriated an additional $25 million to CEC for ECAA loans that originated as ratepayer funds deposited into the Renewable Resource Trust Fund (RRTF). The $25 million was part of $50 million transferred by SB 77 (Pavley, Chapter 15, Statutes of 2010) from the RRTF to the California Alternative Energy and Advanced Transportation Financing Authority within the State Treasurer's Office for a Property Assessed Clean Energy (PACE) loan program that has since been put on hold for residential energy efficiency loans. More recently, Proposition 39 - the Clean Energy Jobs Act program - has provided funding to the ECAA program for zero-percent-interest loans for public schools. According to the CEC, since 1979 the CEC has lent more than $383 million to various local agencies throughout the state to fund energy efficiency improvements. Those loans have gone to more than 840 recipients, as follows, based on total loan amounts: about 58 percent to local governments, 23 percent to K-12 public schools, 10 percent to public colleges, 7 percent to public care facilities and hospitals, and 2 percent to special districts. ECAA has received five legislative extensions since its enactment in 1979. The most recent sunset extension was SB 1268 (Pavley, Chapter 615, Statutes of 2012). The CEC reports that, despite this long record of lending, the ECAA program has never experienced a default on loan repayment. SB 1207 Page 3 Prior/Related Legislation SB 1268 (Pavley, Chapter 615, Statutes of 2012) extended the ECAA program sunset from January 2013 to January 2018. FISCAL EFFECT: Appropriation: Yes Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee, the extension of the sunset to 2028 will result in the following fiscal impacts: Up to $2.8 million will flow back to ECAA, rather than to the General Fund absent the extension. The continuation of approximately $1.7 million annually (ECAA) for administration costs, plus bond administrative costs of approximately $75,000 annually. SUPPORT: (Verified5/27/16) School Energy Coalition OPPOSITION: (Verified5/27/16) None received ARGUMENTS IN SUPPORT: According to the author, this bill will extend ECAA until January 1, 2028, thereby ensuring that these beneficial programs can continue to help California meet its energy usage goals and save taxpayer funds. Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107 5/28/16 17:15:12 **** END **** SB 1207 Page 4