BILL ANALYSIS �
AB 1624
Page 1
Date of Hearing: May 14, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1624 (Gordon) - As Amended: May 7, 2014
Policy Committee: Utilities and
Commerce Vote: 11-0
Natural Resources 9-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill extends the authorization of the Self-Generation
Incentive Program (SGIP) for seven years and changes the funding
source to AB 32 cap-and-trade utility allowances. Specifically,
this bill:
1)Requires the California Public Utilities Commission (PUC) to
allocate up to $83 million per year from 2015 through 2021
from utility allowance revenues that may be allocated by the
PUC for clean energy projects. Requires the expenditure of any
unused ratepayer funds before utility allowance revenues may
be used. Requires the PUC to reduce annual funding by 10% in
each of the last four years (2018-2021).
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 SGIP until 2021, there will be up to an
additional $506 million expended from AB 32 cap-and trade
utilities allowances to support SGIP.
AB 1624
Page 2
2)Increased PUC administrative costs of over $1 million for
additional program requirements. Currently, approximately 7%
of SGIP funds are budgeted for administration.
COMMENTS
1)Purpose. According to the author, this bill extends a program
for incentivizing the development of distributed on-site
renewable energy facilities. These facilities are needed to
meet increasing statewide demand for electricity, to reduce
peak demand pressures on the grid and help meet California
public policy goals of reducing GHG emissions and increase the
supply of clean renewable energy.
Additionally, this bill provides a variety of performance
measures/metrics to ensure that California's utility
ratepayers benefit from continuation of the SGIP.
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.
AB 1624
Page 3
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
unallocated funds to reduce ratepayer costs.
3)Utility Allowance Revenues. Under the California Global
Warming Solutions Act (AB 32), the Air Resources Board (ARB)
has adopted a cap-and-trade program that applies to major
sources of GHG emissions, including electric utilities. Under
the cap-and-trade regulation, ARB allocates allowances to
electric utilities to lessen the impacts of AB 32
implementation on ratepayers. ARB requires electric utilities
to auction their allowances each year to generate revenue for
the benefit of ratepayers. Fifteen percent of the auction
revenues maybe allocated for clean energy and energy
efficiency projects. The remaining 85% is credited directly
to residential, small business and other specified electric
utility customers.
4)Similar Legislation. AB 1499 (Skinner), also pending in this
committee, extends SGIP funding and administration for three
years. Unlike this bill, AB 1499 does not shift the funding
source from ratepayer funds to utility allowances or reduce
the level of funding provided in the last four years.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081