BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
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SBX1 1 - Steinberg Hearing �
Date: February 15, 2011 S
As Introduced: February 1, 2011 FISCAL B
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DESCRIPTION
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Current law establishes state goals and programs for addressing �
climate change, expanding use of renewable energy, promoting �
energy efficiency and conservation, and developing clean �
technology businesses in California.
Current law establishes California Partnership Academies (CPAs) �
as a state-school-business partnership program in which the �
Superintendent of Public Instruction (SPI) awards grants to CPAs �
that provide combined academic and occupational training �
programs to pupils in grades 10 to 12 who are at high risk of �
dropping out of school and that involve occupations relating to �
developing technologies.
Current law establishes the Green Technology Partnership �
Academies and the Goods Movement Partnership Academies as �
separate categories of CPAs that are dedicated to educating �
pupils in the emerging environmentally sound technologies, with �
funding available through the 2011-12 school year.
This bill establishes the Clean Technology and Renewable Energy �
Job Training, Career Technical Education, and Dropout Prevention �
Program in which the SPI is required to award grants to �
implement or maintain CPAs for pupils in grades 9 to 12 that �
focus on employment in clean technology businesses or renewable �
energy businesses, as defined, and that provide skilled �
workforces for the products and services for energy or water �
conservation, renewable energy, pollution reduction, or other �
technologies that improve the environment in furtherance of �
state environmental laws (Clean Technology CPAs).
Current law provides funding for operations of the California �
Energy Resources Conservation and Development Commission (CEC) �
from, among other sources, a usage-based monthly surcharge on �
electric utility customers that is deposited in the Energy �
Resources Program Account (ERPA).
This bill requires, upon appropriation by the Legislature, an �
annual allocation of $8 million from the ERPA to the SPI for �
making grants to Clean Technology CPAs, with the SPI authorized �
to use up to 5% percent of the annual allocation to pay for �
administering the program.
Current law requires the SPI to award grants to CPAs based on �
eligibility criteria that include the participating school �
having a specified percentage of pupils at high risk of dropping �
out, and specifies the amount of awards on a per pupil basis �
ranging from $900 to $1,400 per year.
This bill requires the SPI to award grants to Clean Technology �
CPAs that meet the existing at-risk pupil criteria, and the �
additional criteria established in this bill, and specifies the �
amount of awards on a per pupil basis to be $1,000 per year.
This bill requires the SPI, in consultation with the CEC, to �
review Clean Technology CPA grant applications and to review �
ongoing Clean Technology CPA programs to ensure they are �
consistent with current state energy policies and priorities.
This bill requires the CEC, in consultation with the California �
Department of Education, to develop guidelines to ensure that �
Clean Technology CPA programs receiving grants reflect current �
state energy policies and priorities as well as provide skills �
and education linked to the needs of relevant industries.
This bill provides that CEC is not required to comply with the �
public notice and comment provisions of the Administrative �
Procedures Act in adopting these guidelines but instead requires �
the CEC to provide written notice to the public of not less than �
30 days, and 15 days for amending the guidelines.
This bill authorizes the SPI to award planning grants of $15,000 �
to school districts to plan a Clean Technology CPA program prior �
to applying for a program grant.
This bill provides that its provisions shall become inoperative �
on June 30, 2017, and are repealed as of January 1, 2018.
This bill declares that it addresses the fiscal emergency �
declared by the Governor.
BACKGROUND
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CEC's Existing Programs - Over the past decade, California has �
enacted a variety of laws and policies aimed at mitigating the �
impacts of climate change, reducing greenhouse gas emissions, �
expanding use of renewable energy, increasing energy efficiency �
and conservation, and promoting the development of clean �
technology businesses in the state. The CEC administers many of �
these programs, with funding from a variety of sources. The �
CEC's overall operations are funded primarily through the ERPA, �
which is derived from a usage-based monthly surcharge on �
electricity customers at a rate determined by the CEC annually, �
but not more than $.0003 per kilowatt-hour. In November 2010, �
the CEC increased the customer surcharge to near the statutory �
limit, which is expected to generate a total of about $61.8 �
million for ERPA for the 2010-11 fiscal year, compared to about �
$53 million in 2009-10. The Governor's proposed budget for �
2011-12 includes projected revenues of more than $70 million for �
ERPA generated from the surcharge.
CEC administers programs with funding from other sources as �
well, such as the Public Goods Charge, another ratepayer �
surcharge, which provides, among other funds, $62.5 million per �
year for the CEC to award as public interest energy research �
grants, with CEC administrative costs coming out of that total. �
The Public Goods Charge also provides CEC $65.5 million per year �
for administering renewable energy activities. Over the past �
two years, the CEC has administered programs with one-time funds �
under the American Recovery and Reinvestment Act (ARRA), �
including a $33 million ARRA grant for "Energy Upgrade �
California," a program CEC launched in late 2010 that includes a �
new web site portal and marketing and outreach activities �
related to energy efficiency programs and financing options, as �
well as information for the building trades and home improvement �
industry on training and required certifications.
High Demand for CPA Grants - According to the California �
Department of Education, there are currently 461 CPAs operating �
in California schools. The department receives applications for �
more CPA grants than there is funding available. The green �
technology CPA program, which has eligibility criteria similar �
to this bill, has been especially competitive. For example, �
according to department staff, the 54 school districts awarded �
green technology CPA grants were selected from among more than �
100 applications. Staff expects that the Clean Technology CPA �
program would generate even more interest and applications from �
schools and businesses seeking grants because more total funding �
is available and the program includes grade 9, as well as grades �
10 to 12. Existing funding for the green technology CPAs is �
scheduled to sunset in 2011-12.
COMMENTS
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1) Author's Purpose - According to the author, "California �
suffers from too many high school dropouts, too little �
meaningful career technical education at the middle and �
high school levels, and the lack of a skilled workforce to �
fuel the emerging green economy. California must lead in �
addressing both the problems of its youth and the �
opportunities created by the new green economy. SB 1X 1 �
offers solutions at the intersection of these two state �
priorities. Investment in these emerging careers and �
industries will drive the next phase of California's �
economic growth in a way that helps us meet the challenge �
of climate change. This investment in reducing the dropout �
rate, expanding workforce opportunities, and targeting �
climate change will create economic stimulus for clean �
energy and technology jobs in California."
2) Ratepayer Impact - The reallocation of $8 million per �
year from the ERPA to the SPI to fund Clean Technology CPAs �
potentially could impact ratepayers if it resulted in the �
CEC having insufficient funds to operate its existing �
programs and fulfill statutory requirements. CEC claims �
that the $8 million shift would result in cuts to �
unspecified core programs by the 2012-13 fiscal year. If �
CEC cannot make up for the loss from other funding streams, �
the CEC potentially could increase the ERPA surcharge on �
electricity ratepayers, although any significant increase �
would require legislation because it already is near the �
maximum rate allowed under existing law.
3) CEC Guidelines - The bill contains several provisions �
that appear aimed at ensuring that ratepayer funds are used �
only for purposes specified in the bill. The bill requires �
the SPI, in consultation with the CEC, to review Clean �
Technology CPA grant applications and to review ongoing �
Clean Technology CPA programs to ensure that they "are �
consistent with current state energy policies and �
priorities," but it does not specify timing or benchmarks �
for this program review or the consequences of this review �
to grantees. The bill also requires the CEC, in �
consultation with the SPI, to "develop guidelines to ensure �
that programs receiving grants reflect current state energy �
policies and priorities as well as provide skills and �
education linked to the needs of relevant industries." The �
bill does not specify if the SPI is required to follow �
these guidelines when awarding planning grants or when �
reviewing applications and awarding program grants, or if �
compliance with the guidelines is to be considered in the �
required "review" of the programs that receive funding.
Given that the demand for Clean Technology CPA grants is �
expected to be high, it is imperative to have clear and �
transparent eligibility criteria established prior to �
release of a Request for Applications and award of any �
grants. The bill requires applicants to meet the at-risk �
pupil criteria and to propose a CPA that focuses on �
employment in a clean technology or renewable energy �
business, which are defined with detailed examples. It is �
unclear, however, whether applicants also must fall within �
the guidelines CEC is required to adopt in order to be �
eligible for a grant. Thus, in order to ensure fairness to �
all applicants and ensure that the goals of this bill are �
met, the author and committee may wish to consider amending �
the bill to specify the following:
a) The CEC shall adopt guidelines to specify what �
Clean Technology CPA programs would be "consistent �
with current state energy policies and priorities" and �
would "provide skills and education linked to the �
needs of relevant industries."
b) The SPI shall award Clean Technology CPA �
grants only to applicants that meet these guidelines �
in addition to other eligibility criteria specified in �
the bill.
c) The SPI and CEC shall follow these guidelines, �
in addition to other eligibility criteria specified in �
the bill, when conducting the required review of the �
Clean Technology CPA programs that receive funding.
d) The SPI shall consider these guidelines when �
awarding Clean Technology CPA planning grants.
4) Transparent Process for Adopting Guidelines - The bill �
exempts the CEC, in its development of these guidelines, �
from complying with the public notice and comment �
requirements of the Administrative Procedures Act (APA). �
The bill requires instead that CEC provide written notice �
to the public of not less than 30 days when adopting the �
guidelines, and 15 days for amending the guidelines, but it �
does not specify the manner or content of that public �
notice or what opportunity, if any, the public has to �
provide input.
The APA is applicable to the adoption of any agency �
regulation, and calling a regulation another name such as a �
"guideline" does not make the APA requirements inapplicable �
if the guideline establishes a standard of general �
application to an open class, such as eligibility criteria �
for a grant. If it is the author's intent that the �
guidelines CEC is required to adopt are eligibility �
criteria applicable to the award of Clean Technology CPA �
grants, then they would be regulations subject to the APA �
unless expressly exempt by statute.
There are a number of reasons why it would be beneficial to �
have these CEC guidelines adopted through the public notice �
and comment provisions of the APA rather than be exempt �
from the APA. First, the standard specified in the bill �
that CPA programs be "consistent with current state energy �
policies and priorities" is very broad and subject to many �
interpretations as to how it would be applicable when �
awarding grants. Second, guidelines that govern funding for �
public school programs is not an area traditionally within �
CEC's expertise, making the need for public input �
essential. Third, the demand for Clean Technology CPA �
grants is expected to be high, and establishing eligibility �
criteria with a process that is as open and transparent as �
possible will enhance public confidence in the fairness of �
awards. Finally, if an agency believes that the public �
notice and comment procedures under the APA take too long, �
they can adopt emergency regulations to be effective in as �
little as 15 to 20 days, with the emergency standard �
typically met by specifying it in the statute. In this �
case, the author indicates that the first Clean Technology �
CPA grants would be awarded for the 2012-13 school year, �
with a Request for Proposals likely issued in January 2012. �
Thus, in order to ensure an open and transparent process �
for adopting guidelines that affect the eligibility of an �
applicant for a Clean Technology CPA grant, the author and �
committee may wish to consider amending the bill to specify �
that the CEC shall comply with the APA when adopting these �
guidelines but may adopt them as emergency regulations.
5) Multifamily Housing - The bill defines clean technology �
businesses eligible for a Clean Technology CPA grant as �
including a business that focuses on retrofitting and �
installing water and energy conservation technologies in �
existing homes, among other buildings, to improve �
efficiency, including the use of energy and water �
management technologies and control systems. The reference �
to "existing homes" could mean both single-family homes and �
multifamily housing. However, some stakeholders claim that �
the state's energy efficiency programs frequently are �
tailored to single-family households and that retrofitting �
heating and cooling systems in large multifamily buildings �
is limited because of program barriers and a scarcity of �
contractors certified to work on multifamily buildings. �
Given the likely overlap of communities in multifamily �
housing and the schools with at-risk students that Clean �
Technology CPAs are intending to benefit, it would seem �
appropriate to clarify that businesses that focus on �
improving energy efficiency in multifamily housing are �
covered by the bill. Thus, the author and committee may �
wish to consider amending the bill on page 5, line 5 to �
include multifamily housing.
6) Related Legislation - This bill is identical to SB 148 �
(Steinberg) in the 2010-11 Regular Session. This bill is �
substantially similar to SB 675 (Steinberg 2010), which �
would have allocated funds from the ERPA to the California �
Department of Education for developing and maintaining �
programs that focus on training and employment in clean �
technology and renewable energy industries. SB 675 was �
vetoed by the Governor.
AB 2855 (Hancock), Chapter 685, Statutes of 2008, �
established, commencing with the 2009-10 school year, the �
Green Technology Partnership Academies and the Goods �
Movement Partnership Academies as two new categories of �
CPAs.
AB 519 (Assembly Budget Committee) Chapter 757, Statutes of �
2008, appropriated $12 million from the Public Interest �
Research and Development and Demonstration Fund, generated �
by the Public Goods Charge electric ratepayer surcharge, �
for transfer to green technology partnership academies.
7) Double Referral - This bill has been double referred to �
the Senate Committee on Education, which will be heard on �
Wednesday, February 16th in room 112 at 9:30 a.m.
POSITIONS
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Sponsor:
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Author
Support:
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California Energy Efficiency Industry Council
Environmental Defense Fund
Large-Scale Solar Association
Pacific Gas and Electric Company
Riverside County School Superintendents' Association
Union of Concerned Scientists
Oppose:
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None on file
Jacqueline Kinney
SBX1 1 Analysis
Hearing Date: February 15, 2011
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