BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chairman
46 (Blakeslee)
Hearing Date: 08/17/2009 Amended: 07/15/2009
Consultant: Brendan McCarthy Policy Vote: EU&C 11-0
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BILL SUMMARY:
This bill extends the sunset of the Energy Conservation
Assistance Account program and the Local Jurisdiction Energy
Assistance Account program until 2020. These two programs
provide loans to local governments and other public agencies to
fund energy conservation projects. The bill also removes a
member of the California Energy Commission from the membership
of the SAFE-BIDCO board.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Lost loan repayments to About $80 million over the
next decade General
the General Fund
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense file.
Under current law, funds in the Energy Conservation Assistance
Account (ECAA) are used to provide loans to schools, hospitals,
and local governments. The loans are used to finance energy
conservation projects. The savings generated by the energy
conservation projects are used to repay the loan, typically over
ten years. After that, the borrower keeps the savings. This
program is set to sunset on January 1, 2011. The ECAA was funded
by a series of appropriations from the General Fund over the
last thirty years totaling about $80 million. The last
appropriation from the General Fund was made in 2001. Currently,
repayments of previous loans are used to fund new loans. In
2008, new loans totaling about $5.7 million were made.
This bill extends the sunset of the program to January 1, 2020.
Under current law, any remaining balance in the fund or future
repayments from loans made from the fund will revert to the
General Fund upon the sunset of the program. Because loans made
from this program have a payback period of ten years, committee
staff expects that over the next ten years, about $80 million
would flow back into the General Fund in the absence of this
bill.
Under current law, the Energy Commission operates a similar
program known as the Local Jurisdiction Energy Assistance
Account (LJEA) program. Under the LJEA program, the Energy
Commission provides loans to local governments for energy
conservation projects, small power production systems, and to
improve the efficiency of local transportation systems. Loans
are repaid over ten years, typically using the savings from
measures implemented with loan funds. Initial funding of about
$40 million
AB 46 (Blakeslee)
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for the LJEA came from the proceeds of a lawsuit by the federal
government against oil producers in the 1970s. Over the last
five years, there has been only one loan made from the LJEA, in
the amount of $650,000. This program is also set to sunset on
January 1, 2011.
This bill extends the sunset of this program until January 1,
2020.
Under current law, upon expiration of the program, remaining
funds and future repayments shall be deposited in the federal
trust fund and will be available for purposes authorized by the
federal government pursuant to the settlement agreement with the
oil companies. (In general, federal law allows these funds to be
used for low income weatherization, state energy conservation
programs, energy conservation for schools and hospitals, and low
income energy assistance.) Therefore, if the sunset is not
extended for this program, the remaining funds must still be
used for programs that have similar purposes as the LJEA
program.
According to the Energy Commission, the process for approving
loans and providing funds under both of these programs is
lengthy; therefore the programs need to be extended this year if
loans are to continue uninterrupted.
Under current law, the State Assistance Fund for Enterprise,
Business, and Industrial Development Corporation (SAFE-BIDCO)
administers several state and federal loan and loan guarantee
programs for small businesses. The board of SAFE-BIDCO is made
up of six members of the public, a member of the Governor's
cabinet, and a member of the California Energy Commission. This
bill would remove the member of the Energy Commission from the
SAFE-BIDCO board.