BILL ANALYSIS Ó SB 1207 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1207 (Hueso) - As Amended June 15, 2016 ----------------------------------------------------------------- |Policy |Utilities and Commerce |Vote:|15 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Natural Resources | |7 - 0 | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill extends the sunset on the Energy Conservation Assistance Account (ECAA) program from January 1, 2018 to January 1, 2028. Additionally, this bill clarifies the California Energy Commission's (CEC) authority to pledge SB 1207 Page 2 collateral and enter into agreements pledging collateral to secure the repayment of bonds or other borrowings by the IBank. FISCAL EFFECT: 1)With the extension of the ECAA sunset, approximately $2.1 million will flow back to the ECAA rather than the GF. 2)Extending the Sunset will continue the CEC's administrative costs which are about $2.5 million annually (ECAA). The ECAA revolving fund loan program is self-sustaining. As loans are repaid, those repayments provide resources to fund additional eligible projects. If the program is not extended, new loans would not be issued and interest income would decrease over time. COMMENTS: 1)Purpose. According to the author, for over three decades, ECAA has funded more than 840 loans and has not had a single default. The author contends this program has allowed local government, school districts, and hospitals to install new lighting systems, efficient pumps and motors, automated energy management system, 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. SB 1207 Page 3 2)ECAA. The ECAA was created in 1979 and currently provides low- and no-interest loans to fund energy efficiency measures in schools, universities, hospitals, public care institutions, and local government entities. The loan repayment is based on cost savings as a result of installing efficiency measures. Initially, the borrower's energy payment does not decrease because the savings are used to pay back the loan. After the loan is fully repaid, the borrower entirely benefits from the savings. To date, the ECAA program has issued over $392 million in loans to 851 applicants. 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 and SB 679 (Pavley, Chapter 597, Statutes of 2011) appropriated an additional $25 million to the program. ECAA has received five legislative extensions since its enactment in 1979. The most recent extension was SB 1268 (Pavley, Chapter 615, Statutes of 2012). 3)IBank. The IBank was established in 1994 to finance public infrastructure and economic development projects in California communities through various activities including leveraging existing public programs and funds to attract private sector investment. The 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. The 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 financial assistance for public clean energy projects and private commercial and industrial building retrofits. The SB 1207 Page 4 CLEEN Center utilizes IBank's access to capital markets for clean energy and energy efficiency projects through its Statewide Energy Efficiency Program (SWEEP). This bill clarifies CEC's authority to pledge collateral to secure the bonds issued to raise capital for the CLEEN Center. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081