BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1186 (Skinner) - California Global Warming Solutions Act of
2006: investor-owned utilities: school energy efficiency.
Amended: August 6, 2012 Policy Vote: E,U&C 8-3, EQ 5-2
Urgency: No Mandate: No
Hearing Date: August 6, 2012 Consultant:
Bob Franzoia
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1186 would require the Public Utilities
Commission to establish a program to award grants to K-12 public
schools for energy efficiency improvements. The PUC would be
required to direct gas and electrical corporations to implement
that program within their respective service areas.
Fiscal Impact: $250,000 in 2012-13 and 2013-14 from the Public
Utilities Reimbursement Account for a proceeding to establish a
grant program.
$115,000 annually from the Public Utilities Reimbursement
Account to award and monitor grants.
Unknown, up to $98 million annually from the Greenhouse Gas
Reduction Fund; actual revenues will not be known until
auctions have been completed.
Background: The state currently administers several multiple
energy efficiency programs, including those specifically
targeted to K-12 schools. These programs are administered by the
commission, the California Energy Commission (CEC), and the
Office of Public School Construction (OPSC).
The commission issued a decision on May 10, 2012, establishing
the parameters by which electrical corporations will design
their efficiency programs 2013-2014, and includes specific
reference toward encouraging investment in municipalities,
universities, colleges, schools, and hospitals, but does not
make specific guidance on what level of funding should be
directed to schools. Those investment plans and budgets were due
to the commission in July.
The CEC administers the Energy Conservation Assistance Act which
AB 1186 (Skinner)
Page 1
makes low interest loans for energy efficiency and renewable
energy to public schools, public hospitals and local
jurisdictions. Loans do not become due until energy cost
savings have occurred and are repaid from those cost savings.
According to the CEC, the program has issued 320 loans to
schools totaling $45.1 million.
The School Facilities Program Modernization Program provides
bond funds on a 60/40 state and local match for improvements to
educationally enhance existing school facilities. New
construction is a 50/50 match. Projects eligible under this
program include modifications such as air conditioning,
plumbing, lighting, and electrical systems. There is $267.4
million in modernization bond funding remaining with new
applications for funding in excess of that amount pending before
OPSC.
School districts are permitted to use deferred maintenance funds
for energy efficiency projects. Prior to 2009, the deferred
maintenance program provides General Funds on a 50/50 state and
local match. Since 2009, districts have been deemed in
compliance with funding requirements and have, therefore, not
needed to match the state's share. This is part of the
categorical relief provided to school districts allowing the use
of these funds for any educational purpose. The 2012 Budget
Act appropriated $313 million for deferred maintenance.
The 2012 Budget Act estimates that cap-and-trade revenues from
the first set of auctions will be $1 billion in 2012-13. Actual
revenues will not be known until the auctions have been
completed.
SB 1018 (Budget Committee) Chapter 39/2012 establishes the
Greenhouse Gas Reduction Fund and would require any money
collected by the Air Resources Board from the auction or sale of
allowances pursuant to a market-based compliance mechanism to be
deposited in the fund. It also specifies that the fund be
appropriated in the annual Budget Act and requires the
Department of Finance to submit to the Legislature a proposal
for expenditure of the fund, unless the Legislature passes a
bill before August 31, 2012, specifying a process for
establishing a long-term spending plan that includes: a)
criteria and requirements for the use of the auction proceeds,
b) establishment of program categories eligible for funding, and
AB 1186 (Skinner)
Page 2
c) the specification of the process that ARB use to develop the
strategy. SB 1018 further requires agencies expending moneys
from the fund to prepare a record describing the uses of the
funds, how they further the goals of the California Global
Warming Solutions Act of 2006 (CGWSA), including attainment of
the 2020 limit, how non-GHG emissions objectives of the CGSWA
were considered, and a description of how the agency will
document the results of the expenditure.
The commission will receive approximately 65.2 million
allowances for auction, which are scheduled for November, 2012,
February 2013 and May 2013. If the allowances are sold for
$10.00 each, the commission will have up $652 million available
to be credited directly to the residential, small business, and
emissions (energy) intensive trade expose retail customers of
the electrical corporations. The commission shall allocate up
to 15 percent of the revenues for clean energy and energy
efficiency projects established pursuant to statute that are
administered by electrical corporations and that are not
otherwise funded by another funding source.
Proposed Law: The grant program shall be for energy efficiency
improvements including, but not limited to, advanced controls,
lighting, upgrades to heating, ventilation, and air conditioning
systems, as well as hot water and kitchen appliances.
It appears the funding source for the grants is provided by SB
1018 (Budget Committee) which added Public Utilities Code 748.5
(c) to state:
The commission may allocate up to 15 percent of the revenues,
including any accrued interest, received by an electrical
corporation as a result of the direct allocation of greenhouse
gas allowances to electrical distribution utilities pursuant to
subdivision (b) of Section 95890 of Title 17 of the California
Code of Regulations, for clean energy and energy efficiency
projects established pursuant to statute that are administered
by the electrical corporation and that are not otherwise funded
by another funding source.
Staff Comments: It is unknown if the commission will require a
local match similar to the state's deferred maintenance or
modernization programs within the School Facility Program. If
there is no matching requirement, this bill would allow some
AB 1186 (Skinner)
Page 3
schools access to a major funding source which would also free
up revenue limit funding for other uses. To provide some
equity, staff recommends amending this bill to require local
matches consist with current state match requirements or reduce
state revenue limit funding to schools in this program by the
amount received from the program.
Also, it is unclear if the moneys can be used for the purposes
of this bill and not be in conflict with trailer bill language
restricting projects to those "that are not otherwise funded by
another funding source." As noted above, school energy
efficiency programs have numerous funding sources.
Recommended Amendments: In order to conform the provisions of
this bill to the potential funding source, staff recommends this
bill be amended to strike out references to gas corporations.