BILL ANALYSIS
AB 234
Page 1
Date of Hearing: April 20, 2009
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Felipe Fuentes, Chair
AB 234 (Huffman) - As Amended: April 14, 2009
SUBJECT : Energy: water use and energy efficiency projects:
federal stimulus funds.
SUMMARY : Requires the California Energy Commission (CEC) to
direct funding received for energy efficiency measures pursuant
to the federal economic stimulus federal American Recovery and
Reinvestment Act of 2009 (ARRA) to programs that result in both
energy and water savings.
EXISTING LAW :
1) Establishes various programs to provide financial assistance
to public and private entities to improve their energy
efficiency.
2) Decision 07-12-050 the Public Utilities Commission (PUC)
approved pilot programs for the state's largest electrical and
gas corporations through which they will develop partnerships
with water agencies to undertake specific water conservation
programs and will measure the results and fund studies necessary
to understand more accurately the relationship between water
savings and the reduction of energy use.
2) Requires the PUC to provide conclusions drawn from the pilot
programs approved in Decision 07-12-050 to the legislature and
to make recommendations as to whether the electrical and gas
corporations would or could achieve cost-effective energy
efficiency improvements through water conservation programs by
March 31, 2010.
THIS BILL:
1) Requires the California Energy Commission (CEC) to coordinate
with the State Water Resources Control Board (Water Board) and
local water suppliers on the planning and implementation of
energy efficiency actions that can also result in water use
savings when using funding received pursuant to the federal
American Recovery and Reinvestment Act of 2009.
AB 234
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2) Requires the CEC, in consultation with the Water Board, to
establish criteria and priorities for partnering with the Water
Board on programs and projects that have both water and energy
efficiency benefits
3) Requires that water and energy conservation programs and
projects proceed only to the extent they do no impair the CEC's
ability to meet the federal deadlines for expenditure of federal
stimulus funds provided by the act.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, this bill would maximize
the benefits of the federal stimulus funds and provide for water
savings along with energy savings and new jobs. AB 234 requires
the CEC to coordinate with the state and local water agencies
that are best suited to develop programs for water conservation
that can also provide the required energy savings.
1) Background: The ARRA, signed into law on February 17, 2009,
was intended to stimulate the U.S. economy in the wake of the
economic downturn. The various provisions of the act are worth
approximately $787 billion, and include over $61 billion in
funding for a number of energy-related programs.
The energy-related funding available in the ARRA may be
organized into five basic categories: a) formula-based funds
that are provided directly to the state b) competitive funds for
which the state is eligible but must apply for funding c)
funding available to local governments d) funding available to
private entities e) tax credit bonds.
2) The energy-water conservation nexus: According to the CEC,
California's water infrastructure uses a tremendous amount of
energy to collect, move, and treat water; dispose of wastewater;
and power the large pumps that move water throughout the state.
Together these water-related energy uses annually account for
roughly 20 percent of the state's electricity consumption,
one-third of non-power plant natural gas consumption and about
88 million gallons of diesel fuel consumption. It is clear that
there are energy savings that can be realized through water use
efficiency programs.
3) The PUC Report: A December 2007 PUC order requires pilot
water conservation programs within the energy utilities' energy
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efficiency programs. The PUC directed the utilities to
contribute $6.4 million from their unspent energy efficiency
funds to implement the pilot projects to evaluate, measure, and
verify the embedded energy savings in specific water pilot
programs. The evaluation projects will quantify the amount of
energy needed to bring water supplies to the end-user's
facilities in order to determine the energy savings impact of
various water saving measures deployed under the pilot
programs.
The one-year pilot projects commenced July 1, 2008. After July
1, 2009, the PUC's Energy Division will evaluate the results of
the pilot projects to determine whether utility customers who
are paying for a water conservation effort see a direct benefit
in the form of reduced energy use in their own service
territory.
The PUC will then determine whether water conservation and less
energy intensive water measures should be allowed to compete for
utility energy efficiency grants and incentive funding. In order
to do this, the pilot program results must demonstrate the exact
nexus between water savings and energy savings. AB 2404 (Salas),
Chapter 240, Statutes of 2008, requires the PUC to report the
results of this pilot to the Legislature by March 31, 2010. It
is important to note that the direct benefit calculation being
done for this study evaluates whether electricity ratepayer
dollars should be used for water efficiency projects. The ARRA
funding is separate from the ratepayer dollars, although the
federal government is encouraging the leveraging of ARRA funding
with existing ratepayer programs. Since the benefits to
ratepayers in the PUC study have yet to be determined, the
committee may wish to consider adding intent language clarifying
that this policy will only apply to ARRA-funded programs, and
will not apply to other ratepayer-funded energy efficiency
programs.
4) Which energy efficiency funds are we talking about? The state
does not necessarily have a role in all of the energy-related
programs There are at least four programs for which the state
will have some role that are related to energy efficiency: the
State Energy Program (SEP), the Weatherization Assistance
Program (WEP), the Energy Efficiency and Conservation Block
Grant Program (EECBG) and the Energy Efficiency Appliance Rebate
Program. The WEP is being administered by the California
Department of Community Services Development (CSD), while the
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other three will be administered by the CEC. This bill specifies
that the CEC take certain actions regarding "funding received
for energy efficiency measures." The language in this bill is
not clear as to which energy efficiency funding is being
targeted. The committee may wish to consider adding language
that specifies which programs to which this policy will apply.
4) Is this bill premature? Since the ARRA was signed in
February, the various federal departments administrating the
energy-related funds have developed guidelines to implement
these programs. These guidelines have established certain dates
by which the states must specify how they plan on using the
funding. For example, the SEP guidelines require that the CEC
submit a comprehensive application by May 12, 2009 in order to
receive the $226 million to which it is entitled. The CEC is
currently conducting stakeholder workshops in order to determine
how best to use the funding. Since it has not yet been
determined whether or not the CEC plans on spending any money on
water efficiency programs, it may be premature to require them
to do so.
5) Does this limit flexibility? The state agencies administering
these funds will be developing guidelines regarding how best to
use the ARRA energy-efficiency money consistent with federal
requirements and our state's energy goals. By specifying certain
uses for the funds, the legislature may inadvertently prevent
the CEC from using the money in the most efficient way possible.
REGISTERED SUPPORT / OPPOSITION :
Support
GreenPlumbers
Opposition
None on file.
Analysis Prepared by : Nina Kapoor / U. & C. / (916) 319-2083