BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 864
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          Date of Hearing:   May 11, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   AB 864 (Huffman) - As Amended:  April 28, 2011 

          Policy Committee:                              
          UtilitiesVote:13-0

          Urgency:     No                   State Mandated Local Program: 
          Yes    Reimbursable:              No

           SUMMARY  

          This bill modifies the Public Utility Commission's (PUC's) Self 
          Generation Incentive Program (SGIP) as follows:

          1)Increases the allowable capacity of distributed generation 
            (DG) projects for SGIP eligibility from five megawatts (MW) up 
            to 10 MW, but limits SGIP incentive payments for such projects 
            to 5 MW of capacity.

          2)Limits incentive payments to DG resources with a capacity of 3 
            MW unless the particular DG technology meets 
            cost-effectiveness rules established by the commission.

          3)Requires incentive payments made for DG resources greater than 
            3 MW and up to 5 MW to be based on a declining payment 
            schedule as determine by the PUC.

           FISCAL EFFECT  

          Costs will be minor and absorbable for the PUC to modify SGIP 
          program parameters per this bill.

           COMMENTS  

           Background and Purpose  . AB 970 (Ducheny)/ Chapter 329 of 2000 
          established the SGIP to encourage investment in new, 
          environmentally superior electricity generation.  Originally, 
          this program was designed to complement the California Energy 
          Commission's Emerging Renewables Program by providing incentive 
          funding to larger renewable and non-renewable DG units up to the 
          first 1 MW of capacity.  In 2008, a PUC decision increased the 








                                                                  AB 864
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          incentive cap to 3 MW on a pilot basis, contingent on available 
          budget, while retaining the overall 5 MW size cap. 

          At present, SGIP provides subsidies for up to 50% of the project 
          cost for the installation of DG technologies, no greater than 
          3MW, on a utility customer's premises and requires projects to 
          be sized to meet a customer's onsite-load up to a maximum of 5 
          MW. Within that 3 MW capped incentive program, participants 
          receive their incentives on a declining structure for the 
          portion of a system over 1 MW in order to account for economies 
          of scale. 

          The SGIP is funded at a level of $83 million each year, 
          collected from ratepayers, until December 31, 2011. According to 
          the author, there are electricity consumers who have the 
          potential to install projects using eligible technologies larger 
          than 5 MW, and such larger projects will provide greater 
          greenhouse gas (GHG) reduction benefits.  


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