BILL ANALYSIS Ó
SB 1207
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Date of Hearing: June 30, 2016
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
SB
1207 (Hueso) - As Amended June 15, 2016
SENATE VOTE: 38-0
SUBJECT: Energy: conservation: financial assistance
SUMMARY: Extends the sunset on the Energy Conservation
Assistance Account (ECAA), administered by the California Energy
Commission (CEC), from January 1, 2018 to January 1, 2028.
EXISTING LAW:
1)Establishes ECAA to provide grants and loans to local
governments and public institutions to maximize energy use
savings, including technical assistance, demonstrations, and
identification and implementation of cost-effective energy
efficiency measures and programs in existing or planned
buildings or facilities.
2)Sunsets ECAA on January 1, 2018, and reverts unexpended funds
to the General Fund after that date.
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3)Authorizes CEC to borrow money for the purpose of obtaining
funds to make specified loans from the proceeds of revenue
bonds issued by the California Economic Development Financing
Authority, California Infrastructure and Economic Development
Bank (IBank), and the California Consumer Power and
Conservation Financing Authority.
4)Authorizes CEC to pledge to provide collateral in connection
with the borrowing of money, loans, or the principal and
interest payments on loans, as specified.
THIS BILL:
1)Extends the sunset on ECAA from 2018 to 2028.
2)Clarifies CEC's authority to pledge collateral to secure the
repayment of bonds or other borrowings by the IBank.
3)Clarifies that CEC's authority to enter into pledge agreements
setting forth the terms and conditions pursuant to which CEC
is pledging loans or the principal and interest payment on
loans includes the pledging of loans or the principal and
interest payment on loans as collateral to secure the
repayment of bonds or other borrowings by IBank.
FISCAL EFFECT: According to the Senate Appropriations
Committee, the extension of the sunset will result in the
following fiscal impacts:
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1)Up to $2.8 million will flow back to the ECAA rather than to
the General Fund absent the extension.
2)The continuation of approximately $1.7 million annually (ECAA)
for administration costs, plus bond administrative costs of
approximately $75,000 annually.
COMMENTS:
1)ECAA. The ECAA program was established by the Energy
Conservation Assistance Act of 1979. The program awards
low-interest loans to cities, counties, public school
districts, special districts, public hospitals and care
facilities, and public colleges and universities to cover up
to 100% of energy efficiency project costs with a maximum
repayment term of 15 years. A loan repayment amount cannot
exceed the estimated energy savings from a funded project.
Funding for ECAA loans has come from a variety of sources over
the years, including the General Fund and tax-exempt revenue
bonds. In 2009, American Recovery and Reinvestment Act (ARRA)
provided $25 million to CEC for ECAA loans to supplement about
$34 million in ARRA funds that the CEC used to award grants 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). That $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 for a Property
Assessed Clean Energy loan program that has since been put on
hold for residential energy efficiency loans. More recently,
Proposition 39, the Clean Energy Jobs Act, has provided
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funding to the ECAA program for zero percent interest loans
for public schools.
According to 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: about 58% to local governments; 23% to
K-12 public schools; 10% to public colleges; 7% to public care
facilities and hospitals; and, 2% to special districts. From
March 1, 2000 to March 31, 2016, the energy efficiency
improvements have saved these entities more than an estimated
$37 million per year in energy costs and have reduced
greenhouse gas (GHG) emissions by approximately 122,000 tons
per year. Despite of its long history, the ECAA program has
never experienced a default on loan repayment.
ECAA has received five legislative extensions since its
enactment in 1979. SB 1268 (Pavley, Chapter 615, Statutes of
2012) enacted the most recent sunset extension from January 1,
2013 to January 1, 2018.
2)IBank. The IBank was established in 1994 to finance public
infrastructure and economic development that promote "a
healthy climate for jobs, contribute to a strong economy, and
improve the quality of life in California communities." IBank
is located within the Governor's Office of Business and
Economic Development (GO-Biz) and is governed by a five-member
Board of Directors. IBank has broad authority to issue
tax-exempt and taxable revenue bonds, provide financing to
public agencies, provide credit enhancements, acquire or lease
facilities, and leverage state and federal funds.
IBank established the California Lending for Energy and
Environmental Needs Center (CLEEN Center) in August, 2015 to
help the state meet GHG emissions reduction goals by offering
"practical and sustainable solutions via leveraged, risk
adjusted, financial assistance" for public clean energy
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projects and private commercial and industrial building
retrofits. According to GO-Biz, the CLEEN Center utilizes
IBank's access to capital markets for clean energy and energy
efficiency projects and will help drive energy related
projects for state and local governments in California through
the Statewide Energy Efficiency Program (SWEEP), established
within the CLEEN Center, which provides financing to state and
local governments for approved energy efficiency and clean
energy projects, such as generation, distribution,
transmission and storage of electrical energy, energy
conservation measures, environmental mitigation measures, and
water treatment and distribution.
This bill would clarify CEC's authority to pledge collateral to
secure the bonds issued to raise capital for the CLEEN Center.
3)Author's statement:
For over three decades, ECAA has funded more than 840 loans
and has not had a single default. This program has allowed
local government, school districts, and hospitals to
install new lighting systems, efficient pumps and motors,
automated energy management systems; replace heating and
air conditioning, and much more.
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.
4)Double Referral. This bill was heard by the Assembly
Utilities and Commerce Committee on June 29th.
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REGISTERED SUPPORT / OPPOSITION:
Support
East Bay Municipal Utility District
School Energy Coalition
Opposition
None on file
Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916)
319-2092