BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1499
                                                                  Page  1

          Date of Hearing:   May 14, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                    AB 1499 (Skinner) - As Amended:  May 7, 2014 

          Policy Committee:                              Utilities and  
          Commerce     Vote:                            8-4
                        Natural Resources                     6-2

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill extends the funding and administration of the  
          Self-Generation Incentive Program (SGIP) for three years.   
          Specifically, this bill: 

          1)Requires the California Public Utilities Commission (PUC) to  
            allocate up to $83 million per year from 2015 through 2017 for  
            clean energy projects. Requires the expenditure of any unused  
            ratepayer funds before utility allowance revenues may be used.  
             

          2)Revises eligibility requirements and in-state set-asides for  
            distributed energy resource (DER) technologies.

          3)Requires the PUC to determine a capacity factor for each  
            distributed generation (DG) and energy storage system.  
            Requires the PUC to update its greenhouse gas (GHG) reduction  
            criteria.

          4)Requires the PUC to evaluate SGIP based on specified  
            performance measures

           FISCAL EFFECT  

          1)By extending PUC's authority to collect funds until 2017,  
            there will be an additional $249 million collected from  
            utility ratepayers to support SGIP.

          2)Increased PUC administrative costs of over $1 million for  
            additional program requirements.  Currently, approximately 7%  








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            of SGIP funds are budgeted for administration.

           COMMENTS  

           1)Purpose.   According to the author, continuing the  
            authorization of SGIP will help California meet goals for  
            clean air and GHG emissions, reduced electricity demand, and  
            enhance markets for preferred resources.  SGIP is also the  
            only incentive program for energy storage projects, which play  
            a critical role in increasing the reliability of our  
            electrical system and integrating renewable energy resources.

           2)Background.  In 2001, the PUC established SGIP to offer  
            customer rebates for renewable and DG.  SGIP has been extended  
            and/or modified at by at least six bills since then.  Over the  
            last 13 years, SGIP has offered rebates for installation of  
            solar, wind, fuel cell, and certain renewable and fossil fuel  
            combustion projects meeting specified emissions and efficiency  
            standards.  

            In 2006, AB 2778 (Lieber) extended SGIP for wind and fuel  
            cells until 2012, but excluded combustion projects.  In 2009,  
            SB 412 (Kehoe) extended SGIP collection through 2011, modified  
            eligibility to include fossil fuel projects that reduce GHG  
            emissions, and required the PUC to administer the program  
            until 2016 (the additional time was allotted to spend a $200  
            million surplus accumulated from prior years). 

            The program was suspended by a PUC ruling issued February 10,  
            2011, which froze applications received on or after January 1,  
            2011.  The reason for the suspension was that a rush of awards  
            and applications, mostly from a single vendor (Bloom Energy),  
            had nearly exhausted both the current budget and the  
            accumulated surplus, leaving less funding than expected for  
            future awards under SB 412.  Later in 2011, the PUC adopted a  
            decision implementing SB 412 and reinstated the program.   At  
            the same time, the PUC made "advanced energy storage" (e.g.,  
            battery) systems eligible for SGIP incentives.

            In 2011, AB 1150 (V. Manuel P�rez) allowed the PUC to fund  
            SGIP for an additional three years.  Under AB 1150, the PUC  
            may authorize the utilities to collect up to $83 million per  
            year from their customers through December 31, 2014.  However,  
            AB 1150 maintained the January 1, 2016 sunset on the program,  
            at which time the PUC must provide repayment of all  








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            unallocated funds to reduce ratepayer costs.

           3)Similar Legislation.   AB 1624 (Gordon), also pending in this  
            committee, extends SGIP funding authorization for seven years.  
             Unlike this bill, AB 1624 shifts the funding source from  
            ratepayer funds to AB 32 cap-and-trade utility allowances and  
            reduces the level of funding provided in the last four years.


           Analysis Prepared by  :    Jennifer Galehouse / APPR. / (916)  
          319-2081