BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1207  


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          Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 1207  
          (Hueso) - As Amended June 15, 2016


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          |             |Natural Resources              |     |7 - 0        |
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          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  


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          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.








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          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  








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            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