BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 998 (De Leon) - Energy efficiency, renewable energy, and
distributed generation on-bill repayment programs.
Amended: May 2, 2012 Policy Vote: EU&C 8-4
Urgency: No Mandate: Yes
Hearing Date: May 21, 2012 Consultant: Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 998 would require the California Public
Utilities Commission (PUC) to compel large electrical
corporation and gas corporations to establish an on-bill
repayment (OBR) program for eligible energy efficiency,
renewable energy, and distributed generation investments.
Fiscal Impact: One-time minimum costs of $150,000 and ongoing
costs of $120,000 from the Public Utilities Commission Utilities
Reimbursement Account (special fund), both beginning in FY
2013-14, for a proceeding and implementation of an OBR program.
Background: Existing law requires electric utilities to first
meet their energy needs through cost-effective energy efficiency
measures before renewable and conventional generation.
Existing laws and PUC decisions establish a procedure for which
a utility must follow if a customer fails to pay charges for
utility service before disconnecting service, including:
notification, payment options, and site visits. A utility cannot
disconnect service as a result of nonpayment on debts owed to a
third party (PU §777.1 and §779.2).
Existing law requires the PUC to develop and publish an
informational booklet by July 1, 1996 to educate homeowners,
rental property owners, renters, and the general public about
the statewide home energy program. Statute does not require
updates of this booklet.
Proposed Law: This bill would require the PUC to compel
electrical and gas corporations with more than 100,000 service
connections to develop and implement an OBR program for eligible
energy efficiency, renewable energy, and distributed generation
SB 998 (De Leon)
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investments. An OBR program would allow a loan (or other
financing structure) received for such investments to be repaid
as part of the electric or gas bill. Additionally, the
obligation to pay the loan "runs with the meter," that is, the
obligation stays with the meter regardless if the customer for
that meter changes. The electrical or gas corporation would be
required to promptly remit any loan OBR payment to the entity
who granted the loan ("OBR partner"). This bill would allow
nonpayment for the loan to result in service disconnection.
The PUC would be responsible for establishing requirements and
rules for the OBR programs including: eligibility criteria,
standards to determine energy and cost saving evaluation
standards, prepayment options, and notification to new customers
to a meter which is subject to an OBR contract. The PUC may
require, if the amount paid by the customer is less than the
amount billed, that the shortage be prorated between the
electrical or gas corporation and the OBR partner. The PUC would
be required to approve OBR programs offered by the electrical or
gas corporation and provide oversight to ensure compliance with
the PUC requirements and rules.
This bill also requires the PUC to include information about
home energy conservation and OBR programs in its statewide home
energy program booklet when the booklet is next updated as state
or private resources are made available. The PUC would be
allowed to charge a fee for the informational booklet to cover
the PUC's cost in developing and publishing the information.
Staff Comments: This bill would add a new energy efficiency
program to the substantial list of existing programs that
provide financial incentives and rebates for energy efficiency
measures. However, what is different about the OBR program
proposed by this bill is that it relies on private funds instead
of ratepayer or taxpayer dollars. According to the author and
sponsors of the bill, placing the loan repayment on the utility
bill and allowing the loan to run with the meter increases the
likelihood of the loan being repaid, which encourages financial
institutions to offer the loan at a lower interest rate and
thereby increases customer access to such loans.
Staff notes that this bill offers fairly broad guidelines for
the creation of a new program, leaving much of the decisions to
the PUC, including what are eligible investments and the
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procedures for when a customer fails to fully pay the amount
billed. As a result, the PUC is expected to need to take
significant amounts of staff time to develop this program. Also,
allowing the bill to run with the meter and allowing the failure
to repay the loan to result in service disconnection are
controversial, further increasing the PUC's costs in developing
a fair OBR program. Staff believes that at a minimum this bill
will likely result in the PUC opening a standard proceeding to
create the OBR program at a one-time cost of $150,000 and
ongoing oversight and implementation costs for the workload
equivalent of 1 PY at $120,000.
This bill would also require the PUC to update its informational
booklet on the home energy program to include information about
OBR programs. While the inclusion of OBR information seems
reasonable to add to the booklet, the update does not have to
occur until there are existing resources or private resources
available for this purpose. The PUC may also charge a fee for
the booklet to pay for its costs. Staff notes that charging a
fee for this booklet is likely to diminish the ability for the
booklet to reach the general public.