BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 51
                                                                  Page  1

          Date of Hearing:   May 20, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                    AB 51 (Blakeslee) - As Amended:  May 5, 2009 

          Policy Committee:                               
          UtilitiesVote:13-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill requires the Public Utilities Commission (PUC) to  
          limit to 10% the administrative costs of energy efficiency  
          programs funded and operated by the investor-owned utilities  
          (IOUs).  For this purpose, administrative costs include  
          personnel and overhead, but not marketing, outreach, and program  
          evaluation.

           FISCAL EFFECT  

          The PUC will incur one-time costs of $200,000 for a database  
          consultant and ongoing costs of $180,000 for two positions.  

          The energy efficiency programs are adopted by the PUC in  
          three-year cycles, and funding for the current 2009-11 cycle was  
          approved in a 2008 decision.  The commission indicates that this  
          bill, which would become effective January 1, 2010, would  
          require  reopening this proceeding, and that the utilities would  
          likely have to renegotiate many of the 250 contracts with third  
          party implementers and local governments.  In addition, an IT  
          consultant would be needed to update the database used to track  
          program results and expenditures and one staff position would be  
          required to audit for compliance with the administrative cost  
          cap. [Public Utilities Reimbursement Account]

           COMMENTS  

           Background and Purpose  . AB 1890 (Brulte)/Chapter 854 of 1996,  
          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).   








                                                                  AB 51
                                                                  Page  2

          Subsequent legislation extended the PGC until 2012.  IOUs are  
          required to use PGC revenues to fund energy efficiency,  
          renewable energy, research, and low-income customer assistance.   


          In 2005 and 2006, the PUC issued decisions requiring the three  
          major IOUs to make  
          additional investments in energy efficiency beyond the PGC  
          programs-$2.7 billion over three years.  According to the PUC,  
          from 2006 through 2008, the IOUs on average spent 12.4% of the  
          program funds on the categories the PUC defined as  
          administrative costs, 12% on marketing and outreach, and 75.6%  
          on actual energy efficiency incentives and rebates.  This bill  
          would cap administrative costs going forward to 10% of program  
          expenditures, which is similar to administrative cost  
          limitations placed on many state agency programs.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081