BILL ANALYSIS �
SB 870
Page 1
( Without Reference to File )
SENATE THIRD READING
SB 870 (Padilla)
As Amended September 9, 2011
Majority vote
SENATE VOTE :39-0
NATURAL RESOURCES 5-4
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|Ayes:|Chesbro, Brownley, | | |
| |Dickinson, Monning, | | |
| |Skinner | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight, Grove, Halderman, | | |
| |Huffman | | |
| | | | |
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SUMMARY : Establishes the California Energy Innovation Program
(CEIP) for the purpose of funding energy-related research,
development, and demonstration (RD&D), contingent on reauthorization
of public goods charge (PGC) funding for RD&D. Specifically, this
bill :
1)Establishes CEIP as a successor to the California Energy
Commission's (CEC) Public Interest Energy Research Program (PIER).
CEIP's purpose is to fund RD&D projects that may lead to
technological advancement and breakthroughs to overcome the
barriers that prevent the achievement of the state's energy policy
goals.
2)Requires the CEC to convene twice-yearly meetings of a 27-plus
member coordinating council consisting of:
a) The chair of the CEC, who serves as the chair of the
council.
b) One representative each from utilities, including Pacific
Gas and Electric, Southern California Edison, San Diego Gas and
Electric, Southern California Gas, and any participating
publicly owned utility.
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c) One representative each from the Public Utilities Commission
(PUC), the Independent System Operator, the Air Resources
Board, and the PUC's Division of Ratepayer Advocates.
d) Two representatives each from the building industry,
consumer organizations, environmental organizations,
environmental justice groups, and research institutions, with
appointment divided between the Senate Rules Committee and the
Speaker of the Assembly.
e) Two representatives of clean energy businesses,
associations, or investors appointed by the Governor.
f) Two representatives of labor organizations appointed by the
Governor.
g) Two at-large members appointed by the Governor.
h) A Senator appointed by the Senate Rules Committee and an
Assembly Member appointed by the Speaker of the Assembly, who
may participate on the council to the extent participation is
not incompatible with their positions as legislators.
3)Requires the council to annually identify energy barriers for
which CEIP funding is most warranted, identify opportunities for
leveraged funding, and make recommendations to avoid duplicative
funding of projects.
4)Requires the CEC to spend CEIP funds for projects and program
implementation that results in a portfolio of awards that does all
of the following:
a) Is strategically focused and sufficiently narrow to make
advancement on the most significant barriers to achieving the
state's energy policy goals, including energy storage,
renewable energy and its integration into the electrical grid,
energy efficiency, integration of electric vehicles into the
electrical grid, accurately forecasting the availability of
renewable energy for integration into the grid, impacts of
energy generation, and other significant technological barriers
identified by the coordinating council.
b) Ensures that prior, current, and future RD&D projects are
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not unnecessarily duplicated.
c) Invests in projects of California-based entities unless
there is a unique need that can be met only by an entity based
outside of California.
d) Results in a reasonably equitable distribution of awards to
various geographic regions of California.
e) Maximizes expenditure of funds for RD&D projects and
minimizes expenditure of funds for administration and overhead
costs.
5)Permits a utility to receive CEIP funds only if it participates in
the program.
6)Requires the CEC to adopt regulations, or modify existing
regulations, for the solicitation of award applications,
evaluation of applications, and award of funds.
7)Requires the CEC, prior to awarding any CEIP funds, to establish a
process for tracking the progress and outcomes of each funded
project and terms for the state to accrue any intellectual
property interest or royalties that may derive from CEIP funding.
8)Authorizes the CEC to solicit applications and award CEIP funds
using a sealed competitive bid, interagency agreement, or sole
source method.
9)Requires uses of sealed competitive bid in all cases in which
project bids are specific enough to be evaluated against
solicitation criteria.
10)Prohibits the CEC from awarding funds through sole source or
interagency agreement for a project for which funds could be
awarded through a sealed competitive bid.
11)If an award cannot be made using competitive bid, authorizes the
CEC to award funds on a sole source basis when the cost to the
state is reasonable and the proposal is either unsolicited,
unique, or is a continuation of an existing, multi-phased project.
12)Prohibits the CEC from making a sole source award, or a sole
source or interagency agreement, unless the CEC notifies the Joint
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Legislative Budget Committee (JLBC) and relevant policy committees
at least 60 days prior to making the award, and the JLBC either
approves or does not disapprove the award with the 60 days.
13)Provides that the provisions of the section containing these
bidding requirements are severable.
14)Requires the CEC to give priority to California-based entities.
15)Requires the CEC to submit an annual report to the Legislature
describing projects awards and outcomes of previously-funded
projects.
16)Requires the CEC to establish procedures to protect confidential
or proprietary information in public reports.
17)Repeals the requirement that the natural gas surcharge collected
by PUC-regulated gas utilities natural gas public purpose
programs, be remitted to the Board of Equalization (BOE), thereby
removing the availability of these monies for redirection by the
Legislature to the General Fund.
18)Provides that existing PIER statutes apply to the expenditure of
PGC funds collected for RD&D before January 1, 2012.
19)Provides that enactment of the bill is contingent on enactment of
AB 724 (Bradford), which reauthorizes the PGC, including
dedicating $75 million per year for eight years for RD&D.
EXISTING LAW :
1)Requires electric utilities to collect until January 1, 2012 a
"nonbypassable" surcharge on bills based on electricity usage to
fund energy efficiency, renewable energy, and energy RD&D (i.e.,
the "public goods charge").
2)Establishes specific minimum annual collection amounts for the
three largest investor-owned utilities (Pacific Gas and Electric,
Southern California Edison and San Diego Gas and Electric) and
provides for adjustment according to the lesser of sales growth or
inflation:
a) $228 million for energy efficiency.
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b) $65.5 million for renewable energy.
c) $62.5 million for RD&D.
3)Provides the CEC at least $62.5 million per year to administer
PIER. Funds are allocated by the CEC according general statutory
guidelines and more specific CEC-developed investment plans. PIER
funds support investments in RD&D for energy technologies that
provide tangible benefits to the utility customers who fund the
program. Collection of ratepayer funds for these and other
purposes, and the CEC's authority to spend the funds it
administers, is authorized until 2012.
4)Requires gas utilities to collect a natural gas surcharge from
customers and remit the money to the BOE. Requires natural gas
surcharge funds be used to fund low-income assistance, energy
efficiency and conservation activities, and public interest RD&D.
FISCAL EFFECT : Unknown
COMMENTS : As part of California's experiment with electric
deregulation, AB 1890 (Brulte), Chapter 854, Statutes of 1996,
required ratepayers to fund a variety of system reliability,
in-state benefit and low-income customer programs at specified
levels from 1998 through 2001. This funding was intended to ensure
that these "public goods" programs continued (at least in the short
term) in the restructured electric industry.
Among the public goods programs established by AB 1890 was public
interest energy RD&D. Prior to awarding any of the money collected
from ratepayers, the CEC was required to submit reports to the
Legislature describing the programs it would support and the levels
of support those programs would receive. This original CEC
investment plan was adopted in 1997 and has been extended twice
since. SB 1194 (Sher), Chapter 1050, Statutes of 2000, extended
the collection of a public goods charge from ratepayers until 2012
and again required the CEC to develop investment plans for renewable
energy and public interest RD&D. This bill creates a new RD&D
program to succeed PIER, contingent on enactment of PGC funding for
this purpose, which is in AB 724, pending in the Senate.
Prior to enactment of AB 1002, (Wright), Chapter 932, Statutes of
2000, gas surcharge revenues used to fund public purpose programs
were collected and held by the gas utilities. AB 1002, in part to
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ensure that customers of non-PUC regulated gas pipeline companies
paid their fair share toward the gas public purpose programs,
required all gas surcharge monies from all companies to be remitted
to the BOE. The BOE would then return the funds to the gas
companies to carry out the public purpose programs. The 2010-11
Budget Act includes a transfer of $155 million from these natural
gas surcharge funds to the General Fund. The gas provisions of this
bill return the handling of gas surcharge funds by the utilities to
the pre-AB 1002 process, so the funds could not be appropriated to
the General Fund. The non-PUC regulated gas companies would still
remit surcharge revenues to the BOE.
The council created by this bill has an indeterminate number of
members and no provision for appointment of the non-governmental
members other than self-selection. In addition to the 27 members
designated in the bill, the bill gives a seat to any "participating"
publicly-owned utility (POU). The bill does not define
"participate," so it's conceivable that any POU contributing funds,
seeking awards, or even just showing up to a meeting could appoint
itself to the council. There are about 45 electric POUs in
California. It's not clear how the council would make decisions,
what authority it has, or what authority the CEC has over it, but to
the extent the council would have any influence over the CEC's
decisions regarding expenditure of CEIP funds, it seems
inappropriate that it could be dominated by self-appointed utility
representatives, including POUs that don't even contribute funds to
the program.
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092
FN: 0002911