BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2390 (Chesbro) - Electricity: biomass: incentive programs.
Amended: August 6, 2012 Policy Vote: E,U&C 9-0
Urgency: No Mandate: No
Hearing Date: August 16, 2012 Consultant:
Bob Franzoia
SUSPENSE FILE.
Bill Summary: AB 2390 would require the California Energy
Commission to establish an incentive program to compensate
producers and collectors of biomass materials.
Fiscal Impact: Up to $300,000 to the Energy Resources Programs
Account (General Fund) annually for two commission staff.
Major costs to the General Fund annually to fund
incentives.
Likely minor costs to the General Fund annually for
Department of Forestry and Fire Protection (CalFire)
consultation.
Background: Forest biomass, generally defined as organic
vegetative material, is primarily the excess trees and shrubs
that would not be otherwise used for higher value commercial
products or needed for environmental protection values. Biomass
can be used for a variety of products, including composition
wood products, paper, compost, bedding materials, crates and
other products. It can also be used for generating electricity,
providing heat and producing biofuels.
The CalFire Internet Web site notes CalFire is working with
state agencies, the US Forest Service and a broad group of
stakeholders to develop policies and programs that support
utilization of woody biomass for energy and demonstrate
sustainable biomass harvest and utilization practices. On the
ground activities for 2012 include implementation of the final
round of Proposition 40 Funds to assist small private landowners
in the Sierra with forest improvement and wildfire hazard
reduction projects to reduce fuel loadings that pose a threat to
watershed resources and water quality. CalFire also will
provide over $350,000 in grants to landowners through the US
AB 2390 (Chesbro)
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Forest Service Cooperative Forestry Assistance Act to reduce
wildfire hazards, using biomass utilization methods. The
projects will focus on high wildfire threat areas and will
assist with delivering biomass to energy facilities with long
chip delivery distances.
Proposed Law: The incentive program is to compensate producers
and collectors of biomass materials associated with forest fuel
reduction and fire prevention activities that are delivered to
eligible biomass facilities, including community scale biomass
facilities, for use as a fuel source.
Staff Comments: The Energy Resources Programs Account
(3360-0465) is funded by a surcharge on electricity use of up to
three-tenths of a mill ($0.0003) surcharge per kilowatt hour.
(This account is considered a "mixed" account as it contains
General Funds and a small amount of special funds in the form of
permit fees). Funds in the account may be used for the program
proposed in this bill. Due to the economic recession, energy
use in the state has declined, reducing revenues into the
account. In the fall of 2010, the commission raised the
surcharge to $0.00029. The estimated account balance for
2012-13 is $15,786,000, down from $18,986,000 in 2011-12 and
$19,371,000 in 2010-11.
The administrative cost of the establishing an incentive program
will vary based on several factors. The commission administers
several grant and incentive programs and should be able to
implement this program efficiently.
This bill proposed $20 million from the commission's annual
receipts from the Electric Program Investment Charge (EPIC) be
expended annually by the commission to provide incentives. That
funding was deleted in the policy committee.
To the extent this incentive program utilizes biomass related
information already developed by CalFire, costs to the
department should be minor.