BILL NUMBER: AB 723 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 20, 2011
INTRODUCED BY Assembly Member Bradford
FEBRUARY 17, 2011
An act to amend Sections 25740.5 and 25742 of the Public
Resources Code, and to amend Section 399.4 and
399.8 of the Public Utilities Code, relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
AB 723, as amended, Bradford. Energy: public goods charge.
(1) Under the Public Utilities Act (the act) , the
Public Utilities Commission (PUC) has regulatory authority over
public utilities, including electrical corporations. The
Reliable Electric Service Investments Act within the act
requires the PUC to require an electrical corporation, until January
1, 2012, to identify a separate electrical rate component, commonly
referred to as the "public goods charge," to fund energy efficiency,
renewable energy, and research, development, and demonstration
programs that enhance system reliability and provide in-state
benefits. A violation of the act is a crime.
This bill would extend this requirement to January 1,
2016 2020 , and would make other technical and
conforming changes. Because a violation of the act is a crime, this
bill would impose a state-mandated local program by extending
the application of a crime .
(2) This bill would constitute a change in state statute that
would result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
(3) The Reliable Electric Services Act states that it is the
policy of the state to administer cost-effective energy efficiency
programs and requires the commission to ensure that local and
regional interests, multifamily dwellings, and energy service
industry capabilities are incorporated into program portfolio design
and that local governments, community-based organizations, and energy
efficiency service providers are encouraged to participate in
program implementation where appropriate.
This bill would require that the commission implement various
elements and principles for the state's investments in cost-effective
energy efficiency improvements pursuant to the Reliable Electric
Services Act.
(3)
(4) The California Constitution requires the state to
reimburse local agencies and school districts for certain costs
mandated by the state. Statutory provisions establish procedures for
making that reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 399.4 of the Public
Utilities Code is amended to read:
399.4. (a) (1) In order to ensure that prudent investments in
energy efficiency continue to be made that produce cost-effective
energy savings, reduce customer demand, and contribute to the safe
and reliable operation of the electric distribution grid, it is the
policy of this state and the intent of the Legislature that the
commission shall continue to administer cost-effective energy
efficiency programs authorized pursuant to existing statutory
authority.
(2) As used in this section, the term "energy efficiency"
includes, but is not limited to, cost-effective activities to achieve
peak load reduction that improve end-use efficiency, lower customers'
bills, and reduce system needs.
(b) The commission, in evaluating energy efficiency investments
under its existing statutory authority, shall also ensure that local
and regional interests, multifamily dwellings, and energy service
industry capabilities are incorporated into program portfolio design
and that local governments, community-based organizations, and energy
efficiency service providers are encouraged to participate in
program implementation where appropriate.
(c) The commission shall implement the following elements and
principles for the state's investments in cost-effective energy
efficiency improvements pursuant to this article:
(1) That the state's investments in cost-effective energy
efficiency improvements protect ratepayers and promote reliable
electric service by doing each of the following:
(A) Ensure that moneys collected through the nonbypassable system
benefits charge authorized pursuant to this article prioritize energy
efficiency programs for low- and moderate-income customers,
customers who have higher energy usage, and customers in more extreme
cooling and heating climates, and ensure that opportunities are made
available to all ratepayer classes paying the charge.
(B) Establish measurement verification and evaluation criteria
prior to program implementation.
(C) If the commission establishes a risk-reward incentive
mechanism, align electrical corporation incentives for administering
energy efficiency activities with actual utility accomplishments.
(2) That the state's investments in cost-effective energy
efficiency improvements are undertaken so that they achieve
accountability and transparency by doing each of the following:
(A) Make data publicly available in a manner that provides
sufficient information to ascertain the total installed cost of
energy efficiency measures, the amount of expected energy savings,
the total amount of energy efficiency incentives provided, the
location where provided, the type of measures installed in each
electrical corporation's service area, the processing time for
providing incentives, and any type or cause of failure of energy
efficiency measures.
(B) Verify energy demand reductions by region and assess progress
toward energy efficiency goals, ensure that consumer information is
made publicly available to assist customers in finding reliable
contractors and energy efficiency measures, to understand the cost
and benefits of energy efficiency measures, to understand their
energy bills, and to understand the costs and benefits of various
means of financing energy efficiency measures.
(C) Make all contract bidding opportunities publicly available,
including contracts administered by electrical corporations or
third-party administrators, and ensure that small businesses and
minority-, women-, and disabled veteran-owned businesses are
considered during the contract bidding process.
(D) Ensure that all products of all consultant contracts are made
available in a timely manner on the commission's Internet Web site.
(3) That the cost-effectiveness of investments in energy
efficiency are evaluated consistent with all of the following:
(A) Retain the commission's flexibility when evaluating the
cost-effectiveness of measures installed in low-income households.
(B) Allow projects to reasonably exceed cost limitations for
measures installed in low-income households.
(C) Ensure that all energy efficiency programs are designed to
account for the benefits as well as the costs of the programs.
(4) That all of the following program design elements are
incorporated into the state's investments in cost-effective energy
efficiency improvements:
(A) Ensure that all program funds collected through the
nonbypassable system benefits charge authorized by this article are
used only to support deployment of energy efficiency measures,
training on California building health and safety codes and
regulations to ensure quality of installation, measurement, and
evaluation, cost-effectiveness analyses, and program administration.
(B) Require that all energy efficiency measures allowed to
participate in the programs maximize the reduction in electricity
demand.
(C) Ensure that total expenditures for measurement and evaluation,
cost-effectiveness, and program administration, when added together,
do not exceed 10 percent of the total funding.
(D) Ensure that third-party entities, including regional
government energy management centers, directly administer a
reasonable portion of the program.
(E) Include comprehensive approaches to maximize energy
efficiency, avoid lost opportunities, and overcome implementation
barriers.
(F) Utilize rebates, loans, interest rate reductions, or a
combination of those measures, for the installation of energy
efficiency measures.
(G) Incorporate integrated demand side management principles to
the maximum extent practicable.
(H) Establish dollar-per-kilowatt limits for individual projects
and establish maximum energy efficiency project incentives to ensure
that incentives do not exceed more than 30 percent of the installed
cost of a specific energy efficiency project, with the commission
retaining the authority to periodically reduce the total incentives
available in response to reduced installation costs or market
response that indicates that the then existing amount of available
incentives are no longer needed to encourage use of energy efficiency
measures.
(I) Ensure that projects that receive incentives funded pursuant
to this article are not also receiving incentives through other
ratepayer funded programs, including the Public Interest Research,
Development, and Demonstration Program (Chapter 7.1 (commencing with
Section 25620) of Division 15 of the Public Resources Code), the
Renewable Energy Resources Program (Chapter 8.6 (commencing with
Section 25740) of the Public Resources Code), and the California
Solar Initiative (Article 1 (commencing with Section 2851) of Chapter
9 of Part 2), in a manner that exceeds the maximum
dollar-per-kilowatt limit established pursuant to subparagraph (H).
(J) Evaluate whether to administer programs to raise public
awareness, generally, or programs targeted to particular customer
groups, to encourage implementation of energy efficiency measures,
including behavior changes that reduce energy consumption, provided
that the commission ensure that any funds expended for those programs
do not significantly reduce the funding available for encouraging
the adoption of energy efficiency measures or behavioral changes that
reduce energy consumption.
(K) Ensure that moneys collected by an electrical corporation are
not expended to provide incentives to customers outside of the
service territory of the electrical corporation.
(5) That the state's investments in cost-effective energy
efficiency improvements coordinate with the state's research,
development, and demonstration programs and building code energy
efficiency programs by doing both of the following:
(A) Ensure that moneys collected through the nonbypassable system
benefits charge to fund energy efficiency not be used to fund
research, development, and demonstration or to develop or create
amendments to the state building codes.
(B) Coordinate with the Public Interest Research, Development, and
Demonstration Program (Chapter 7.1 (commencing with Section 25620)
of Division 15 of the Public Resources Code) to identify specific
areas of research or to identify work needed to amend building codes
that can be addressed through the Public Interest Research,
Development, and Demonstration Program.
(6) (A) That program results be reported annually to the
Legislature and posted on the commission's Internet Web site for each
program administered by an electrical corporation, third-party
administrator, or local government, to include verifiable energy use
reductions achieved through the program, the number of measures
implemented, the demographics where the measures were implemented,
and the demographics of any jobs created.
(B) The report submitted to the Legislature pursuant to this
paragraph shall be submitted in compliance with Section 9795 of the
Government Code.
SECTION 1. Section 25740.5 of the Public
Resources Code is amended to read:
25740.5. (a) The commission shall optimize public investment and
ensure that the most cost-effective and efficient investments in
renewable energy resources are vigorously pursued.
(b) The commission's long-term goal shall be a fully competitive
and self-sustaining supply of electricity generated from renewable
sources.
(c) The program objective shall be to increase, in the near term,
the quantity of California's electricity generated by in-state
renewable electricity generation facilities, while protecting system
reliability, fostering resource diversity, and obtaining the greatest
environmental benefits for California residents.
(d) An additional objective of the program shall be to identify
and support emerging renewable technologies in distributed generation
applications that have the greatest near-term commercial promise and
that merit targeted assistance.
(e) The Legislature recommends allocations among all of the
following:
(1) Rebates, buydowns, or equivalent incentives for emerging
renewable technologies.
(2) Customer education.
(3) Production incentives for reducing fuel costs, that are
confirmed to the satisfaction of the commission, at solid fuel
biomass energy facilities in order to provide demonstrable
environmental and public benefits, including improved air quality.
(4) Solar thermal generating resources that enhance the
environmental value or reliability of the electrical system and that
require financial assistance to remain economically viable, as
determined by the commission. The commission may require financial
disclosure from applicants for purposes of this paragraph.
(5) Specified fuel cell technologies, if the commission makes all
of the following findings:
(A) The specified technologies have similar or better air
pollutant characteristics than renewable technologies in the report
made pursuant to Section 25748.
(B) The specified technologies require financial assistance to
become commercially viable by reference to wholesale generation
prices.
(C) The specified technologies could contribute significantly to
the infrastructure development or other innovation required to meet
the long-term objective of a self-sustaining, competitive supply of
electricity generated from renewable sources.
(6) Existing wind-generating resources, if the commission finds
that the existing wind-generating resources are a cost-effective
source of reliable energy and environmental benefits compared with
other in-state renewable electricity generation facilities, and that
the existing wind-generating resources require financial assistance
to remain economically viable. The commission may require financial
disclosure from applicants for the purposes of this paragraph.
(f) Notwithstanding any other provision of law, moneys collected
for renewable energy pursuant to Article 15 (commencing with Section
399) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities
Code shall be transferred to the Renewable Resource Trust Fund.
Moneys collected between January 1, 2007, and January 1, 2016, shall
be used for the purposes specified in this chapter.
SEC. 2. Section 25742 of the Public Resources
Code is amended to read:
25742. (a) Twenty percent of the funds collected pursuant to the
renewable energy public goods charge shall be used for programs that
are designed to achieve fully competitive and self-sustaining
existing in-state renewable electricity generation facilities, and to
secure for the state the environmental, economic, and reliability
benefits that continued operation of those facilities will provide
during the 2007-2011 or 2012-2016 investment cycle. Eligibility for
production incentives under this section shall be limited to those
technologies found eligible for funds by the commission pursuant to
paragraphs (3), (4), and (6) of subdivision (e) of Section 25740.5.
(b) Any funds used to support in-state renewable electricity
generation facilities pursuant to this section shall be expended in
accordance with the provisions of this chapter.
(c) Facilities that are eligible to receive funding pursuant to
this section shall be registered in accordance with criteria
developed by the commission and those facilities shall not receive
payments for any electricity produced that has any of the following
characteristics:
(1) Is sold at monthly average rates equal to, or greater than,
the applicable target price, as determined by the commission.
(2) Is used onsite.
(d) (1) Existing facilities generating electricity from biomass
energy shall be eligible for funding and otherwise considered an
in-state renewable electricity generation facility only if they
report to the commission the types and quantities of biomass fuels
used.
(2) The commission shall report the types and quantities of
biomass fuels used by each facility to the Legislature in the reports
prepared pursuant to Section 25748.
(e) Each existing facility seeking an award pursuant to this
section shall be evaluated by the commission to determine the amount
of the funds being sought, the cumulative amount of funds the
facility has received previously from the commission and other state
sources, the value of any past and current federal or state tax
credits, the facility's contract price for energy and capacity, the
prices received by similar facilities, the market value of the
facility, and the likelihood that the award will make the facility
competitive and self-sustaining within the 2007-2011 or 2012-2016
investment cycle. The commission shall use this evaluation to
determine the value of an award to the public relative to other
renewable energy investment alternatives. The commission shall
compile its findings and report them to the Legislature in the
reports prepared pursuant to Section 25748.
SEC. 3. SEC. 2. Section 399.8 of the
Public Utilities Code is amended to read:
399.8. (a) In order to ensure that the citizens of this state
continue to receive safe, reliable, affordable, and environmentally
sustainable electric service, it is the policy of this state and the
intent of the Legislature that prudent investments in energy
efficiency, renewable energy, and research, development and
demonstration shall continue to be made.
(b) (1) Every customer of an electrical corporation shall pay a
nonbypassable system benefits charge authorized pursuant to this
article. The system benefits charge shall fund energy efficiency,
renewable energy, and research, development and demonstration.
(2) Local publicly owned electric utilities shall continue to
collect and administer system benefits charges pursuant to Section
385.
(c) (1) The commission shall require each electrical corporation
to identify a separate rate component to collect revenues to fund
energy efficiency, renewable energy, and research, development and
demonstration programs authorized pursuant to this section beginning
January 1, 2002, and ending January 1, 2016
2020 . The rate component shall be a nonbypassable element of
the local distribution service and collected on the basis of usage.
(2) This rate component shall not exceed, for any tariff schedule,
the level of the rate component that was used to recover funds
authorized pursuant to Section 381 on January 1, 2000. If the amounts
specified in paragraph (1) of subdivision (d) are not recovered
fully in any year, the commission shall reset the rate component to
restore the unrecovered balance, provided that the rate component
shall not exceed, for any tariff schedule, the level of the rate
component that was used to recover funds authorized pursuant to
Section 381 on January 1, 2000. Pending restoration, any annual
shortfalls shall be allocated pro rata among the three funding
categories in the proportions established in paragraph (1) of
subdivision (d).
(d) The commission shall order San Diego Gas and Electric Company,
Southern California Edison Company, and Pacific Gas and Electric
Company to collect these funds commencing on January 1, 2002, as
follows:
(1) Two hundred twenty-eight million dollars ($228,000,000) per
year in total for energy efficiency and conservation activities,
sixty-five million five hundred thousand dollars ($65,500,000) in
total per year for renewable energy, and sixty-two million five
hundred thousand dollars ($62,500,000) in total per year for
research, development and demonstration. The funds for energy
efficiency and conservation activities shall continue to be allocated
in proportions established for the year 2000.
(2) The amounts shall be adjusted annually at a rate equal to the
lesser of the annual growth in electric commodity sales or inflation,
as defined by the gross domestic product deflator.
(e) The commission shall ensure that each electrical corporation
allocates funds transferred by the Energy Commission pursuant to
subdivision (b) of Section 25743 in a manner that maximizes the
economic benefit to all customer classes that funded the New
Renewable Resources Account.
(f) The commission and the Energy Commission shall retain and
continue their oversight responsibilities as set forth in Sections
381 and 384, and Chapter 7.1 (commencing with Section 25620) and
Chapter 8.6 (commencing with Section 25740) of Division 15 of the
Public Resources Code.
(g) An applicant for the Large Nonresidential Standard Performance
Contract Program funded pursuant to paragraph (1) of subdivision (b)
and an electrical corporation shall promptly attempt to resolve
disputes that arise related to the program's guidelines and
parameters prior to entering into a program agreement. The applicant
shall provide the electrical corporation with written notice of any
dispute. Within 10 business days after receipt of the notice, the
parties shall meet to resolve the dispute. If the dispute is not
resolved within 10 business days after the date of the meeting, the
electrical corporation shall notify the applicant of his or her right
to file a complaint with the commission, which complaint shall
describe the grounds for the complaint, injury, and relief sought.
The commission shall issue its findings in response to a filed
complaint within 30 business days of the date of receipt of the
complaint. Prior to issuance of its findings, the commission shall
provide a copy of the complaint to the electrical corporation, which
shall provide a response to the complaint to the commission within
five business days of the date of receipt. During the dispute period,
the amount of estimated financial incentives shall be held in
reserve until the dispute is resolved.
SEC. 4. SEC. 3. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.