BILL ANALYSIS
AB 1536
Page 1
Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1536 (Blakeslee) - As Amended: May 6, 2009
Policy Committee:
UtilitiesVote:15-0
Natural Resources 6-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill expands eligibility under the Self-Generation
Incentive Program (SGIP), limits program funding, and renames
the program. Specifically, this bill:
1)Renames the SGIP as the Clean Technology Incentive Program
(CTIP).
2)Declares that the purpose of the program is to deploy
distributed generation (DG) technologies determined by the
Public Utilities Commission (PUC) to require ratepayer
subsidies to achieve commercialization, and to benefit
ratepayers commensurate with the subsidies provided.
3)Makes eligibility for CTIP funding energy storage facilities
using emerging technologies and meeting other specified
criteria, including that the facilities store energy from an
eligible renewable resource.
4)Limits annual program spending to $75 million.
FISCAL EFFECT
Minor absorbable costs for the PUC to implement the program
modifications.
COMMENTS
1)SGIP Background . AB 970 (Ducheny)/Chapter 329 of 2000,
AB 1536
Page 2
required the PUC to initiate certain load control and DG
program activities. In implementing that legislation, the PUC
issued a decision to create the Self-Generation Incentive
Program (SGIP) and funded the program through a rate increase
of $125 million for the first four years. Generation
technologies supported by the SGIP included photovoltaic
(solar) systems, microturbines, fuel cells, small and large
gas turbines, and wind turbines. The SGIP provides rebates for
such systems sized up to 5 megawatts (MW). Incentives vary by
technology and fuel type.
AB 1685 (Leno)/Chapter 894 of 2003, extended the SGIP until
January 1, 2008 and required that combustion-operated DG
projects meet specific emissions targets in order to qualify
for program rebates. AB 2778 (Lieber)/Chapter 617 of 2006,
transferred the solar technologies from the SGIP to the PUC's
California Solar Initiative and extended the SGIP sunset from
January 2008 to January 2012, but only for fuel cell and wind
DG technologies.
According to the Assembly Natural Resources Committee analysis
of AB 1536, the SGIP is a
"program with a reputation for spending hundreds of millions
of dollars on subsidies for distributed generation projects
without much discipline or attention to providing commensurate
ratepayer benefits? [a]ny program that grants the PUC
authority to spend unlimited sums of ratepayer funds should be
accompanied by clear definitions of its purposes and
mechanisms for accountability."
Amendments adopted by the Natural Resources Committee
specifically state the program's purpose and limit program
funding to $75 million annually.
2)Energy Storage Facilities . Current law requires all retail
sellers of electricity, by 2010, to meet at least 20% of the
retail sales using electricity from renewable resources-the
Renewable Portfolio Standard (RPS). Legislation has been
introduced to increase the RPS goal to 33% by 2020. It is
believed this higher goal can only be met through heavy
reliance on wind and solar energy, however, both of these
AB 1536
Page 3
energy sources are intermittent. This intermittency could
create reliability problems for the electricity grid, since
solar and wind energy cannot be counted on to be available at
the same time there is demand for electricity.
One way to resolve this reliability issue would be energy
storage devices, which convert electricity into some other
form of energy so it can be stored and converted back to
electricity at a later point. Batteries are the most common
form of energy storage device currently in use, however, there
are no commercially available batteries that can
cost-effectively store the large amounts of electricity
produced by large scale wind farms or solar facilities.
Another form of electricity storage already in use in
California is pumped storage, where water is pumped up into a
reservoir at night and then released through turbines during
the daytime to produce electricity. Additionally, research is
underway to develop storage devices using compressed air,
flywheels, and fuel cells.
In a 2008 report on the SGIP, the California Energy Commission
(CEC) recommended that the SGIP provide incentives for energy
storage technologies, which provide capacity benefits.
3)Related Legislation . AB 44 (Blakeslee), pending on this
committee's Suspense file, requires the PUC to develop a
time-variant tariff providing incentives for the application
of energy storage facilities and authorizes the PUC to approve
an increase of 0.5% to 1% in the rate-of-return otherwise
allowed an investor-owned utility for investments in energy
storage facilities meeting specified requirements.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081