BILL ANALYSIS
AB 51
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Date of Hearing: April 27, 2009
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Felipe Fuentes, Chair
AB 51 (Blakeslee) - As Amended: April 14, 2009
SUBJECT : Electrical corporation energy efficiency programs.
SUMMARY : Provides that at least 90% of energy efficiency
program funds expended by investor owned utilities (IOUs) are
used for the direct implementation of the energy efficiency
program.
EXISTING LAW :
1)Requires each electrical corporation to first meet its
resource needs through all available energy efficiency and
demand reduction resources that are cost effective, reliable,
and feasible, before it can procure other resources.
2)Establishes a Public Goods Charge (PGC) that consumers pay on
electricity and natural gas consumption for cost-effective
energy efficiency, renewable technologies, and public interest
energy research.
THIS BILL :
1)Provides that the IOUs must use at least of 90% of energy
efficiency program funds for direct implementation for the
energy efficiency programs.
2)Provides that "direct implementation" includes incentives and
rebates but does not include administrative, marketing, and
outreach costs.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to ensure that more ratepayer funds for energy efficiency
programs are accessible to ratepayers, while maintaining
flexibility for utilities to manage the programs at their
discretion.
1) Background : AB 1890 (Brulte), Chapter 854, Statutes of 1996,
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required electric utility ratepayers to fund a variety of system
reliability and low-income customer programs at specified levels
from 1998 through 2001 through a public goods charge (PGC).
Subsequent legislation has extended the collection of the PGC
until 2012. IOUs are required by statute to use the PGC
revenues to fund energy efficiency, renewable energy, research,
and low-income customer assistance.
In 2005 and 2006, the PUC issued decisions that required the
three major IOUs to make
significant additional investments in energy efficiency that
went beyond the PGC programs. The PUC decision required IOUs to
spend $2.7 billion over a three-year period. The decision more
than doubled the amount of funds the IOUs were required to spend
through the Legislative approved PGCs.
When the PUC approved the decisions, they anticipated that for
the years between 2006 and 2008 the three largest IOUs would
spend $2.7 billion on energy efficiency programs. The programs
would result in a 1,448 MW savings and $4.9 billion in savings
to the utility. This would be a net savings of $2.7 billion
($4.9 billion in overall savings - $2.2 billion in
expenditures).
2) How was the money spent : According to information provided by
the PUC in the 2006 - 2008 program cycle the IOUs on average
spent 12.4% of the program funds on the categories the PUC
defined as administrative costs. The IOUs spent an additional
12% of the funds on marketing and outreach. The IOUs spent
75.6% of the funds on actual energy efficiency incentives and
rebates.
In the past, this committee has generally capped allowable
administrative expenses for programs using public or ratepayer
funds at 10%.
3) If a tree falls in the forests and there is no one there : AB
51 requires that that 90% of the funds be allocated to
incentives and rebates. This allocation of the funds would
likely require the IOUs to eliminate all marketing and outreach
programs.
Marketing and outreach is not typically considered part of the
administrative expenses of energy efficiency programs. In fact,
some of the energy efficiency funds spent by the IOUs on
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marketing are actually spent on campaigns that directly promote
conservation. The Flex Your Power Campaign is an example of
using marketing funds to ask customers to conserve electricity.
The marketing funds are also used to promote the rebate
programs. Without a marketing campaign, the effectiveness of
the rebates and grants could decline since few customers will be
aware of the programs. The committee may wish to consider
amending the bill to provide that 90% of the funds be allocated
to program implementation including marketing and outreach.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Realtors
The Utility Reform Network (TURN)
Opposition
Pacific Gas and Electric (PG&E)
Sempra Energy
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083