BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 363
                                                                  Page  1

          Date of Hearing:   August 19, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                    SB 363 (Hancock) - As Amended:  July 13, 2009 

          Policy Committee:                               
          UtilitiesVote:10-5

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill authorizes creation of new account for deposit of  
          funds for school energy efficiency and solar energy installation  
          projects.  Specifically, this bill:

          1)Requires the state controller, upon request of the California  
            Energy Commission (CEC), to establish the Solar School  
            Subaccount within the State Energy Conservation Assistance  
            Account (ECAA).

          2)Provides that monies in the subaccount are available upon  
            appropriation for the CEC to make loans to schools for energy  
            efficiency projects and installation of solar energy systems  
            at interest rates comparable to other loans made from ECAA  
            funds.

          3)Stipulates that loans from the subaccount, from monies  
            deposited into the subaccount from the federal American  
            Recovery and Reinvestment Act of 2009 (ARRA), shall be at an  
            interest rate that is 40% of the interest rates as determined  
            in (2).

           FISCAL EFFECT  

          Establishing the subaccount creates multi-million dollar cost  
          pressure to allocate funds from ECAA, either from ARRA or other  
          sources, to the specific activities of K-12 energy efficiency  
          projects and solar energy system installation.

           COMMENTS  









                                                                  SB 363
                                                                  Page  2

           1)Purpose  .  This bill is intended to enhance the ability of  
            school districts to access low-cost financing for energy  
            efficiency and solar energy projects.

           2)The ECAA  was created in 1979 to provide grants and loans to  
            fund energy efficiency measures in schools, hospitals, public  
            care institutions, and local government entities.  The loan  
            repayment is based on cost savings as a result of installing  
            efficiency measures.  Initially, the borrower's energy payment  
            does not decrease because the savings are used to pay back the  
            loan.  After the loan is fully repaid, the borrower entirely  
            benefits from the savings.  According to data from the CEC,  
            loans under the ECAA have averaged about $8 million over the  
            last five years.

           3)ARRA  .  California is expecting to receive $1.4 billion in ARRA  
            funds for energy-related activities.  ARRA gives preference to  
            activities that can be started and completed expeditiously,  
            including a goal of allocating at least 50% of the funds for  
            activities that can be initiated not later than June 17, 2009.  
             The energy-related funding available in the ARRA is organized  
            into five basic categories: formula-based funds that are  
            provided directly to the state, competitive funds for which  
            the state is eligible but must apply, funding available to  
            local governments, and funding available to private entities  
            and tax credit bonds.  One of the direct ARRA allocations to  
            the CEC is $220 million for the State Energy Program.  In its  
            June 2009 application to the federal Department of Energy for  
            these funds, the CEC indicated it plans to use a portion of  
            these funds to augment the ECAA.

           4)Related Legislation  .  AB 46 (Blakeslee), pending in Senate  
            Appropriations, extends the January 1, 2011 sunset date on the  
            ECAA to January 1, 2020.

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