BILL ANALYSIS �
AB 2339
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Date of Hearing: April 26, 2012
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2339 (Williams) - As Introduced: February 24, 2012
SUBJECT : Energy: geothermal heat pumps
SUMMARY : Requires the Public Utilities Commission (PUC), in
consultation with the California Energy Commission (CEC), the
Air Resources Board (ARB), electrical corporations, and the
geothermal and solar thermal industries, to evaluate policies
and adopt rules to overcome barriers to the widespread use of
geothermal and solar thermal technologies.
EXISTING LAW :
1)Establishes several natural gas public purpose programs,
including a low-income rate assistance program, a research and
development program, and energy efficiency programs, which are
funded by a surcharge on natural gas bills of customers of
pipelines regulated by the PUC.
2)Establishes subsidy programs for the installation of solar
photovoltaic (PV) systems administered by the PUC and CEC.
These programs, known collectively as the California Solar
Initiative (CSI), are to provide $3.2 billion in subsidies
over 10 years in the form of rebates for the installation of
photovoltaic projects. CSI authorizes the PUC to award $101
million in subsidies for solar thermal and solar water heating
devices.
3)Establishes the Solar Hot Water and Efficiency Act of 2007 to
fund the installation of 200,000 solar hot water systems in
California by 2017.
4)Establishes the Self Generation Incentive Program (SGIP)
within PUC to incentivize clean, renewable distributed
generation resources.
5)Under the Renewables Portfolio Standard (RPS), requires
investor-owned utilities, publicly-owned utilities, and
specified other retail sellers of electricity to achieve the
following energy portfolio targets:
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a) 20 percent on average from January 1, 2011 to December
31, 2013;
b) 25 percent by December 31, 2016; and,
c) 33 percent by December 31, 2020 and each year
thereafter.
6)Requires ARB, pursuant to AB 32, to adopt a statewide
greenhouse gas (GHG) emissions limit equivalent to 1990 levels
by 2020 and adopt regulations to achieve maximum
technologically feasible and cost-effective GHG emission
reductions.
7)Requires CEC to adopt an integrated energy policy report
(IEPR) every two years. The objective of the IEPR is to
evaluate market trends and develop energy policies that will
"conserve resources, protect the environment, ensure energy
reliability, enhance the state's economy, and protect public
health and safety." The IEPR includes "progress toward
statewide renewable energy targets and issues facing future
renewable development; efforts to increase energy efficiency
in existing and new buildings; progress by utilities in
achieving energy efficiency targets and potential; improving
coordination among the state's energy agencies; streamlining
power plant licensing processes; results of preliminary
forecasts of electricity, natural gas, and transportation fuel
supply and demand; future energy infrastructure needs; the
need for research and development efforts to support statewide
energy policies; and, issues facing California's nuclear power
plants."
THIS BILL : Requires PUC, in consultation with ARB, electrical
corporations, and the geothermal heat pump and distributed solar
thermal heating and cooling industries, to "evaluate policies
sufficient to overcome barriers to the widespread use of
geothermal and solar heating and cooling technologies."
Requires PUC, by July 1, 2013, to adopt rules that address:
1)The technological advances that are needed to ensure the
consideration of geothermal heat pumps and solar thermal
heating and cooling in state policy, and what role the state
should take to support these technologies;
2)The benefits and costs to ratepayers;
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3)The existing statutory and permit requirements that will
impact the widespread use of geothermal heat pumps and solar
thermal heating and cooling technologies, and any recommended
changes to any existing legal impediments;
4)The impact of widespread use of geothermal heat pump and solar
thermal heating and cooling technologies on achieving the
state's AB 32 requirements and RPS requirements.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's statement : According to the U.S. Department of
Energy, nearly 40% of all U.S. emissions of carbon dioxide are
the results of using energy to heat, cool, and provide hot
water to buildings. Additionally, more than 70% of average
energy demand for a typical single family home is to meet
heating and cooling needs.
Geothermal heat pumps and solar heating and cooling technologies
can play an important role in reducing electricity demand and
increasing efficiency within the built environment.
Additionally, the potential for employment and job growth is
yet untapped as California seriously underutilizes these
technologies. There should be a state effort to identify and
address why such readily available, efficient, and cost
effective technologies are underutilized in California when
they can save consider able amounts of energy used for heating
and cooling.
2)Background : The PUC established the SGIP in 2001 to offer
incentives for renewable and "super clean" distributed
generation resources. The SGIP has offered rebates for
installation of photovoltaics, wind, fuel cells, and, until
2008, certain renewable and fossil fuel combustion resources
meeting specified emissions and efficiency standards. In
2006, the CPUC adopted the California Solar Initiative (CSI),
which established a much larger rebate program for
photovoltaic technologies. As a consequence, solar was
severed from the SGIP, leaving a much smaller program. In
2009, SB 412 (Chapter 182, Kehoe) extended the program through
2016. In early 2010, PUC held a workshop to allow parties to
introduce proposed technologies for inclusion in SGIP.
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Currently, the program is available to wind turbines, waste
heat to power technologies, pressure reduction turbines,
conventional combined heat and power technologies (as
specified), advanced energy storage, biogas, and fuel cells.
New technologies may be added, pursuant to a decision by the
PUC in September 2011.
Last year, the CEC released a fact sheet, Overcoming Barriers to
Ground Source Heat Pumps in California, which identified the
primary barriers as "little awareness of ground source heat
pumps by consumers, industry, and government and high first
costs. Compared to other states, California also has
significant regulatory barriers, which include inconsistent
permitting, confused work classifications and fee schedules,
aggressive licensing requirements, and gaps of knowledge in
local jurisdictions."
3)Renewable or Efficiency? Technologies like geothermal heat
pumps or solar heating can displace electricity rather than
generate electricity. Because they do not generate
electricity, they are not eligible for the RPS, which is
measured by electricity sales.
When CEC and PUC determine eligibility for standards and
incentive programs, they do cost effectiveness evaluations.
The PUC has multiple cost effectiveness methodologies,
including ones for energy efficiency and self-generation.
According to PUC, there is inadequate information relating to
the cost-effectiveness of geothermal heat pumps.
4)Suggested amendments : The bill would have the PUC evaluate
policies and adopt rules to "overcome barriers" to geothermal
and solar thermal heating and cooling. As noted above, solar
thermal heating is currently eligible for incentives through
the CSI and Solar Hot Water and Efficiency Act. The committee
may wish to amend the bill to limit the bill to geothermal
heat pumps.
This bill requires the PUC to adopt rules to address identified
barriers. However, the PUC does not have the authority to
adopt rules that apply to other state entities. The CEC has
already looked into the issues facing geothermal heat pumps in
California. The committee may wish to amend the bill to
require CEC, in consultation with the state entities included
in the bill and "other stakeholders," to evaluate policies
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(rather than adopting rules) that would accomplish the goals
stated in the bill. Because geothermal heat pumps do not
generate electricity, they are not included in RPS, the
committee may wish to amend the bill to remove the reference
to RPS, and instead ask CEC to consider geothermal heat pumps'
impact on achieving the state's energy efficiency goals.
The author intends to amend the bill to clarify that "geothermal
ground loop technologies" are included.
5)Double Referral . This bill passed out of the Assembly
Utilities and Commerce Committee on April 16 with a vote of
12-1.
REGISTERED SUPPORT / OPPOSITION :
Support
Air Connection
California Geothermal Heat Pump Association (sponsor)
California Groundwater Association
ClimateMaster
Colorado Geo Energy and Heat Pump Association
Crystal Air
Desert GeoExhange
Energy Control, Inc.
Enertech Global, LLC
Environmental Defense Center
Gaia Geothermal, LLC
Geothermal National & International Initiative
Ground Source Energy NW
HeatSpring Learning Institute
Martin Energetics
Medline Engineering Corporation
Plumas-Sierra Rural Electric Cooperative
WaterFurnace Renewable Energy
Opposition
California Public Utilities Commission
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Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092