BILL ANALYSIS �
AB 723
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ASSEMBLY THIRD READING
AB 723 (Bradford)
As Introduced February 17, 2011
2/3 vote
UTILITIES & COMMERCE 10-0
APPROPRIATIONS 12-5
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|Ayes:|Bradford, Buchanan, Fong, |Ayes:|Fuentes, Blumenfield, |
| |Fuentes, Furutani, Roger | |Bradford, Charles |
| |Hern�ndez, Huffman, Ma, | |Calderon, Campos, Davis, |
| |Skinner, Swanson | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Extends the sunset date on the public goods charge
(PGC) for energy efficiency from 2012 to 2016. The electricity
PGC is a nonbypassable surcharge imposed on all retail sales to
fund public goods research, development and demonstration
(RD&D), and energy efficiency activities.
FISCAL EFFECT : According to Assembly Appropriations Committee,
this bill will result in the annual collection and expenditure
of at least $365 million from 2012 through 2016 from ratepayers
of the state's major investor-owned utilities (Pacific Gas and
Electric, Southern California Edison and San Diego Gas and
Electric) and a proportional amount from the customers of the
state's municipal electric utilities, such as the Los Angeles
Department of Water and Power.
COMMENTS :
1)Background : AB 1890 (Brulte), Chapter 854, Statutes of 1996,
deregulated the electricity industry. When AB 1890 was being
debated to deregulate the California electricity industry,
there was concern that under a perfectly competitive market
structure, the utilities would not have incentive to invest in
research, unless the research resulted in technological
breakthroughs. If the research resulted in success, there was
concern that the utility-funded research may remain
proprietary, provide the utility a competitive advantage, and
AB 723
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would not benefit all California ratepayers. On the other
hand, if a utility needed to compete for customers it might
choose to keep its costs as low as possible and not take the
risk of investing in research. To ensure research continued
to be funded to the benefit of the "public interest," AB 1890
required ratepayers to fund a variety of system reliability,
in-state benefit, and low-income customer programs at
specified levels from 1998 through 2001. This funding was
intended to ensure that these "public goods" programs
continued in the restructured electric industry.
2)The electricity PGC funds three primary programs: 1) Public
Interest Energy Research (PIER)--$62.5 million annually,
administered by the California Energy Commission (CEC); 2)
Renewable Energy Program --$65.5 million annually,
administered by CEC; and, 3) Energy Efficiency--$228 million
annually, retained by IOUs with PUC oversight. The statute
allows for these amounts to be adjusted annually at a rate
equal to the lesser of the annual growth in electric commodity
sales or inflation.
3)PIER : Utilities collect at least $62.5 million per year for
CEC to administer PIER program. SB 1250 (Perata), Chapter
512, Statutes of 2006, requires PIER to focus on: 1) advanced
electricity generation including systems that generate a dual
use from electricity; 2) climate change and the environment;
3) energy efficiency and demand-response strategies that serve
to reduce customer demand; 4) renewable energy; and, 5)
transmission and distribution of power. An additional focus
includes transportation-related research.
4)Renewable RD&D : The legislative goals of Renewable RD&D
program have been to increase the amount of electricity
generated from eligible renewable energy resources per year.
In addition, current statute requires the Renewable RD&D
program to optimize public investment and ensure that the most
cost-effective and efficient investments in renewable
resources are strongly pursued.
5)Renewable Resources Trust Fund (RRTF) : Under current law,
RRTF program is divided into three purposes with 20% of funds
allocated to the Existing Renewables program; 79% to the
Emerging Renewables Program; and, 1% to Consumer Education.
CEC also funds administrative overhead associated with its
costs related to the Renewables Portfolio Standard Program.
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6)Energy Efficiency Program (EE) : This program is authorized by
PUC and administered
by IOUs. Every year, PUC approves each utility's plan for
efficiency programs, which the utility then carries out within
its service territory. EE program objectives are to: 1)
leverage private investments in EE with ratepayer funds to
encourage a market for EE goods and services; 2) provide
customers with financial incentives and rebates to adopt EE
technologies; 3) provide information on the costs and benefits
of EE measures; 4) reduce market barriers to investments in EE
products and services; and, 5) support the creation of a
sustainable and competitive EE market.
7)Related legislation : This bill is substantially similar to AB
1303 (Williams) which aims to
extend the sunset date for PIER program and funding for the
programs funded by RRTF from 2012 to 2020.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
FN: 0001095