BILL ANALYSIS �
SB 585
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Date of Hearing: July 13, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 585 (Kehoe) - As Amended: July 5, 2011
Policy Committee:
UtilitiesVote:11-2
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases ratepayer funding for the California Solar
Initiative (CSI). Specifically, this bill:
1)Increases collections from investor-owned utility (IOU)
customers by up to $200 million in order to increase the
funding limit for the CSI by a like amount.
2)Directs the Public Utilities Commission (PUC) to first
allocate interest accumulated from collections from IOU
customers for the CSI program in order to fund specified
shortfalls in the nonresidential portion of the program, and
to address the remainder of the shortfall using funds
collected per (1).
3)Establishes a discount rate of 4% for CSI projects receiving
performance-based incentives.
4)Requires the PUC, within 90 days of enactment, to impose cost
caps on residential and non-residential projects under the
CSI, using national and state installed costs.
FISCAL EFFECT
1)Up to $200 million in total collections from IOU ratepayers
over several years, with about $2.4 million of this amount to
be paid by state agencies (General Fund, various special
funds, and federal funds), which represent about 1.2% of total
electricity use in the IOU territories. To the extent state
agencies are able to participate in the program due to
availability of this additional funding, they will benefit
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from the incentive payments provided under the program and the
resulting long-term energy cost savings.
2)Administrative costs to the PUC will be minor and absorbable.
COMMENTS
1)Purpose . According to the author, this bill is needed to
ensure funding is available to complete the non-residential
(commercial/industrial and governmental/non) portion of the
CSI program. Two IOUs (PG&E and San Diego Gas and Electric)
have already exhausted their available funds for this portion
and are putting all new project applications on waiting lists,
which according to the PUC, currently total about $60 million
and 69 megawatts of solar energy capacity.
According to the PUC, reasons for the funding shortfall,
currently estimated to be between $178 million and $200
million, are: (a) many installed solar energy systems have
outperformed original estimates; (b) an overestimation of the
discount rate calculation for performance based incentives
(PBI) payments, which results in higher actual cash payments
than originally calculated; and (c) the inability to use
accrued interest on program funds collected.
The program has accumulated approximately $40 million in
interest from reservation deposits (these deposits are
required for larger projects) and interest on ratepayer funds
collected for the program. Current law caps CSI expenditures
of IOU collections at $2.167 billion, so the PUC cannot use
the interest accrued or authorize additional collections from
IOU ratepayers without legislative action.
The bill contains an urgency clause, and the PUC indicates
that, upon its enactment it would immediately amend the CSI
budget and effectively open up the wait lists mentioned above
for funding.
2)CSI Rebates . The program provides rebates in two forms: (a) an
up-front one-time estimated performance payment or (b) a PBI,
which pays an incentive for every kilowatt-hour produced over
a five-year period. In order to address the time value of
money, the PUC authorized a discount rate payment of 8% for
PBI incentives. The CSI is arranged in 10 steps with higher
value incentives in the earlier steps, gradually lowering over
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the 10-year timeframe of the program.
3)Opposition . The Utility Reform Network (TURN) contends that,
since the funding shortfall is in the non-residential portion
of the CSI, the additional collections authorized in the bill
should be borne solely by non-residential utility customers.
The approach would be inconsistent with the how collections
were apportioned in the base CSI program, however.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081