Amended in Assembly August 12, 2014

Senate Bill No. 874

Introduced by Committee on Budget and Fiscal Review

January 9, 2014

begin delete An act relating to the Budget Act of 2014. end delete begin insert An act to amend end insert begin insert Section 5956.10 of the Government Code, to amend Section 50661 of the Health and Safety Code, to amend Section 25416 of the Public Resources Code, to amend Section 379.6 of the Public Utilities Code, and to amend Sections 62 and 193 of Chapter 35 of the Statutes of 2014, relating to public resources, and making an appropriation therefor, to take effect immediately, bill related to the budget. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 874, as amended, Committee on Budget and Fiscal Review. begin delete Budget Act of 2014. end delete begin insert Public resources. end insert

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(1) Existing law authorizes a governmental agency to solicit proposals and enter into agreements with private entities for the design, construction, or reconstruction of, and to lease to private entities, specified types of fee-producing infrastructure projects. Existing law prohibits a state agency or specified governmental agencies from using this authorization to design, construct, finance, or operate a state project, as specified.

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This bill would specify that a state project, for these purposes, does not include a governmental agency project financed through the State Water Pollution Control Revolving Fund or the Safe Drinking Water State Revolving Fund.

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(2) Existing law creates the Housing Rehabilitation Loan Fund and continuously appropriates moneys in the fund for, among other purposes, making specified deferred payment housing rehabilitation loans. Prior to June 20, 2014, existing law authorized, to the extent no other funding sources were available, $10,000,000 in the fund to be used by the department for the purpose of providing housing rental-related subsidies to persons rendered homeless, or at risk of becoming homeless, due to unemployment, underemployment, or other economic hardship resulting from the state of emergency proclaimed by the Governor based on drought conditions.

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This bill would, to the extent no other funding sources are available, reauthorize that $10,000,000 in the fund to be used by the department for the above-stated purposes.

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(3) The Energy Conservation Assistance Act of 1979 establishes the State Energy Conservation Assistance Account, a continuously appropriated account, that is administered by the State Energy Resources Conservation and Development Commission to provide grants and loans to various public entities to maximize energy use savings in existing and planned buildings and facilities. Existing law, the Budget Act of 2014, transfers, upon order of the Director of Finance, moneys from the Greenhouse Gas Reduction Fund to the account for those purposes.

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This bill would create a continuously appropriated subaccount within the State Energy Conservation Assistance Count to track the award and repayment of loans made with moneys transferred from the Greenhouse Gas Reduction Fund, as specified. The bill would authorize moneys in the subaccount to be used for loans only for projects in buildings owned and operated by a state agency or entity, including, without limitation, the University of California and California State University.

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(4) Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, as defined. Existing law requires the Public Utilities Commission to require the administration, until January 1, 2021, of a self-generation incentive program for distributed generation resources. Existing law limits eligibility for incentives under the self-generation incentive program to distributed energy resources that the Public Utilities Commission, in consultation with the State Air Resources Board, determines will achieve reductions in emissions of greenhouse gases pursuant to the California Global Warming Solutions Act of 2006.

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This bill would modify the eligibility requirements for incentives under the self-generation incentive program, as specified. The bill also would modify the performance measures used in Public Utilities Commission’s evaluation of the overall success and impact of the self-generation incentive program, as specified.

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(5) Existing law, the Budget Act of 2014, appropriates the unencumbered balance of specified moneys appropriated in the Budget Act of 2003 for the State Department of Public Health to the State Water Resources Control Board for encumbrance or expenditure until June 30, 2016, for the purposes of providing grants of up to $500,000 per project for public water systems to address drought-related drinking water emergencies or threatened emergencies.

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This bill would make those moneys available for liquidation until June 30, 2018.

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This bill also would make conforming changes.

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(6) The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act requires the state board to adopt a statewide greenhouse gas emissions limit, as defined, to be achieved by 2020, equivalent to the statewide greenhouse gas emissions levels in 1990. Existing law authorizes the state board to adopt a schedule of fees to be paid by the sources of greenhouse gas emissions regulated pursuant to the act and requires those fees to be deposited in the Cost of Implementation Account. The act requires the state board to prepare and approve a scoping plan for achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions. The act requires the scoping plan to be updated at least once every 5 years.

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This bill would appropriate $529,000 from the Cost of Implementation Account to the Secretary of the Natural Resources Agency for the purpose of implementing elements of the scoping plan adopted by the State Air Resources Board.

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(7) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

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This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2014.

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Vote: majority. Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 5956.10 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

5956.10.  

begin insert (a) end insert begin insert   end insert Notwithstanding any begin insert other end insert provision of this
chapter, neither the state or any state agency begin delete may end delete begin insert shall end insert directly or
indirectly use the authority in this begin delete chapter, end delete begin insert chapter end insert nor begin delete may end delete begin insert shall end insert
any governmental begin delete agency end delete begin insert agency, end insert as defined in Section 5956.3,
use the authority in this begin delete chapter, end delete begin insert chapter end insert to design, construct,
finance, or operate a state project. For purposes of this section, a
state project includes any of the following:

begin delete

(a)

end delete

begin insert (1) end insert  Toll roads on state highways.

begin delete

(b)

end delete

begin insert (2) end insert  State water projects.

begin delete

(c)

end delete

begin insert (3) end insert  State park and recreation projects.

begin delete

(d)

end delete

begin insert (4) end insert  State financed projects.

begin insert (b) end insert begin insert   end insert These limitations shall not prohibit the state, any state
agency, or any governmental begin delete agency end delete begin insert agency, end insert as defined in Section
5956.3, from utilizing authorizations contained in other provisions
of law.

begin insert

(c) For purposes of this section, a state project does not include
a governmental agency project financed through the State Water
Pollution Control Revolving Fund, established pursuant to Section
13477 of the Water Code, or the Safe Drinking Water State
Revolving Fund, established pursuant to Section 116760.30 of the
Health and Safety Code.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 50661 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

50661.  

(a)  There is hereby created in the State Treasury the
Housing Rehabilitation Loan Fund. All interest or other increments
resulting from the investment of moneys in the Housing
Rehabilitation Loan Fund shall be deposited in the fund,
notwithstanding Section 16305.7 of the Government Code.
Notwithstanding Section 13340 of the Government Code, all
money in the fund is continuously appropriated to the department
for the following purposes:

(1)  For making deferred-payment rehabilitation loans for
financing all or a portion of the cost of rehabilitating existing
housing to meet rehabilitation standards as provided in this chapter.

(2)  For making deferred payment loans as provided in Sections
50668.5, 50669, and 50670.

(3)  For making deferred payment loans pursuant to Sections
50662.5 and 50671.

(4)  Subject to the restrictions of Section 53131, if applicable,
for administrative expenses of the department made pursuant to
this chapter, Article 3 (commencing with Section 50693) of Chapter
7.5, and Chapter 10 (commencing with Section 50775).

(5)  For related administrative costs of nonprofit corporations
and local public entities contracting with the department pursuant
to Section 50663 in an amount, if any, as determined by the
department, to enable the entities and corporations to implement
a program pursuant to this chapter. The department shall ensure
that not less than 20 percent of the funds loaned pursuant to this
chapter shall be allocated to rural areas. For purposes of this begin delete chapter end delete
begin insert chapter, end insert “rural area” shall have the same meaning as in Section
50199.21.

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(6) To the extent no other funding sources are available, ten
million dollars ($10,000,000), as provided in Section 4 of Chapter
3 of the Statutes of 2014, may be used for the purposes of Section
34085.

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(b)  There shall be paid into the fund the following:

(1)  Any moneys appropriated and made available by the
Legislature for purposes of the fund.

(2)  Any moneys that the department receives in repayment of
loans made from the fund, including any interest thereon.

(3)  Any other moneys that may be made available to the
department for the purposes of this chapter from any other source
or sources.

(4)  Moneys transferred or deposited to the fund pursuant to
Sections 50661.5 and 50778.

(c)  Notwithstanding any other begin delete provision of end delete law, any interest or
other increment earned by the investment or deposit of moneys
appropriated by subdivision (b) of Section 3 of Chapter 2 of the
Statutes of the 1987-88 First Extraordinary Session, or Section 7
of Chapter 4 of the Statutes of the 1987-88 First Extraordinary
Session, shall be deposited in a special account in the Housing
Rehabilitation Loan Fund and shall be used exclusively for
purposes of Sections 50662.5 and 50671.

(d)  Notwithstanding any other begin delete provision of end delete law, effective with
the date of the act adding this subdivision, appropriations
authorized by the Budget Act of 1996 for support of the
Department of Housing and Community Development from the
California Disaster Housing Repair Fund and the California
Homeownership Assistance Fund shall instead be authorized for
expenditure from the Housing Rehabilitation Loan Fund.

(e) Effective July 1, 2014, the California Housing Trust Fund
in the State Treasury is abolished and any remaining balance,
assets, liabilities, and encumbrances shall be transferred to, and
become part of, the Housing Rehabilitation Loan Fund.
Notwithstanding Section 13340 of the Government Code, all
transferred amounts are continuously appropriated to the
department for the purpose of satisfying any liabilities and
encumbrances and the purposes specified in this section.

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begin insert SEC. 3. end insert   

end insert

begin insert Section 25416 of the end insert begin insert Public Resources Code end insert begin insert is
amended to read: end insert

25416.  

(a) The State Energy Conservation Assistance Account
is hereby created in the General Fund. Notwithstanding Section
13340 of the Government Code, the account is continuously
appropriated to the commission without regard to fiscal year.

(b) The money in the account shall consist of all begin delete money end delete begin insert moneys end insert
authorized or required to be deposited in the account by the
Legislature and all begin delete money end delete begin insert moneys end insert received by the commission
pursuant to Sections 25414 and 25415.

(c) The begin delete money end delete begin insert moneys end insert in the account shall be disbursed by the
Controller for the purposes of this chapter as authorized by the
commission.

(d) The commission may contract and provide grants for services
to be performed for eligible institutions. Services may include, but
are not limited to, feasibility analysis, project design, field
assistance, and operation and training. The amount expended for
those services begin delete may end delete begin insert shall end insert not exceed 10 percent of the
unencumbered balance of the account as determined by the
commission on July 1 of each year.

(e) The commission may make grants to eligible institutions for
innovative projects and programs. Except as provided in
subdivision (d), the amount expended for grants begin delete may end delete begin insert shall end insert not
exceed 5 percent of the annual unencumbered balance in the
account as determined by the commission on July 1 of each fiscal
year.

(f) The commission may charge a fee for the services provided
under subdivision (d).

(g) Notwithstanding any other begin delete provision of end delete law, the Controller
may use the State Energy Conservation Assistance Account for
loans to the General Fund as provided in Sections 16310 and 16381
of the Government Code.

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(h) (1) A subaccount is hereby created within the State Energy
Conservation Assistance Account to track the award and repayment
of loans, including principal, interest, and interest earnings on or
accruing to the subaccount, made with moneys transferred to the
account from the Greenhouse Gas Reduction Fund, created
pursuant to Section 16428.8 of the Government Code.
Notwithstanding Section 13340 of the Government Code, the
subaccount is hereby continuously appropriated to the commission
without regard to fiscal year.

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(2) Moneys deposited in the subaccount may be used for loans
only for projects in buildings owned and operated by a state agency
or entity, including, without limitation, the University of California
and California State University.

end insert begin insert

(3) Notwithstanding Section 39718 of the Health and Safety
Code, a repayment of a loan made pursuant to this chapter with
moneys transferred from the Greenhouse Gas Reduction Fund
shall be deposited in the subaccount and shall be available for a
loan made to an entity eligible for these moneys pursuant to this
subdivision.

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begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 379.6 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

379.6.  

(a) (1)  It is the intent of the Legislature that the
self-generation incentive program increase deployment of
distributed generation and energy storage systems to facilitate the
integration of those resources into the electrical grid, improve
efficiency and reliability of the distribution and transmission
system, and reduce emissions of greenhouse gases, peak demand,
and ratepayer costs. It is the further intent of the Legislature that
the commission, in future proceedings, provide for an equitable
distribution of the costs and benefits of the program.

(2)  The commission, in consultation with the Energy
Commission, may authorize the annual collection of not more than
the amount authorized for the self-generation incentive program
in the 2008 calendar year, through December 31, 2019. The
commission shall require the administration of the program for
distributed energy resources originally established pursuant to
Chapter 329 of the Statutes of 2000 until January 1, 2021. On
January 1, 2021, the commission shall provide repayment of all
unallocated funds collected pursuant to this section to reduce
ratepayer costs.

(3) The commission shall administer solar technologies
separately, pursuant to the California Solar Initiative adopted by
the commission in Decisions 05-12-044 and 06-01-024, as modified
by Article 1 (commencing with Section 2851) of Chapter 9 of Part
2 of Division 1 of this code and Chapter 8.8 (commencing with
Section 25780) of Division 15 of the Public Resources Code.

(b) (1) Eligibility for incentives under the self-generation
incentive program shall be limited to distributed energy resources
that the commission, in consultation with the State Air Resources
Board, determines will achieve reductions in emissions of
greenhouse gases pursuant to the California Global Warming
Solutions Act of 2006 (Division 25.5 (commencing with Section
38500) of the Health and Safety Code).

(2) On or before July 1, 2015, the commission shall update the
factor for avoided greenhouse gas emissions based on the most
recent data available to the State Air Resources Board for
greenhouse gas emissions from electricity sales in the
self-generation incentive program administrators’ service areas as
well as current estimates of greenhouse gas emissions over the
useful life of the distributed energy resource, including
consideration of the effects of the California Renewables Portfolio
Standard.

(c) Eligibility for the funding of any combustion-operated
distributed generation projects using fossil fuel is subject to all of
the following conditions:

(1)  An oxides of nitrogen (NO_x) emissions rate standard of 0.07
pounds per megawatthour and a minimum efficiency of 60 percent,
or any other NO_x emissions rate and minimum efficiency standard
adopted by the State Air Resources Board. A minimum efficiency
of 60 percent shall be measured as useful energy output divided
by fuel input. The efficiency determination shall be based on 100
percent load.

(2) Combined heat and power units that meet the 60-percent
efficiency standard may take a credit to meet the applicable NO_x
emissions standard of 0.07 pounds per megawatthour. Credit shall
be at the rate of one megawatthour for each 3,400,000 British
thermal units (Btus) of heat recovered.

(3) The customer receiving incentives shall adequately maintain
and service the combined heat and power units so that during
operation the system continues to meet or exceed the efficiency
and emissions standards established pursuant to paragraphs (1)
and (2).

(4) Notwithstanding paragraph (1), a project that does not meet
the applicable NO_x emissions standard is eligible if it meets both
of the following requirements:

(A) The project operates solely on waste gas. The commission
shall require a customer that applies for an incentive pursuant to
this paragraph to provide an affidavit or other form of proof that
specifies that the project shall be operated solely on waste gas.
Incentives awarded pursuant to this paragraph shall be subject to
refund and shall be refunded by the recipient to the extent the
project does not operate on waste gas. As used in this paragraph,
“waste gas” means natural gas that is generated as a byproduct of
petroleum production operations and is not eligible for delivery
to the utility pipeline system.

(B) The air quality management district or air pollution control
district, in issuing a permit to operate the project, determines that
operation of the project will produce an onsite net air emissions
begin delete benefit, end delete begin insert benefit end insert compared to permitted onsite emissions if the
project does not operate. The commission shall require the
customer to secure the permit prior to receiving incentives.

(d) In determining the eligibility for the self-generation incentive
program, minimum system efficiency shall be determined either
by calculating electrical and process heat efficiency as set forth in
Section 216.6, or by calculating overall electrical efficiency.

(e) Eligibility for incentives under the program shall be limited
to distributed energy resource technologies that the commission
determines meet all of the following requirements:

(1) The distributed energy resource technology is capable of
reducing demand from the grid by offsetting begin insert or shifting end insert some or
all of the customer’s onsite energy begin delete load, including, but not limited
to, peak electric demand. end delete begin insert load. end insert

(2) The distributed energy resource technology is commercially
available.

(3) The distributed energy resource technology safely utilizes
the existing transmission and distribution system.

(4) The distributed energy resource technology improves air
quality by reducing criteria air pollutants.

(f) Recipients of the self-generation incentive program funds
shall provide relevant data to the commission and the State Air
Resources Board, upon request, and shall be subject to onsite
inspection to verify equipment operation and performance,
including capacity, thermal output, and usage to verify criteria air
pollutant and greenhouse gas emissions performance.

(g) In administering the self-generation incentive program, the
commission shall determine a capacity factor for each distributed
generation system energy resource technology in the program.

(h) (1) In administering the self-generation incentive program,
the commission may adjust the amount of rebates and evaluate
other public policy interests, including, but not limited to,
ratepayers, energy efficiency, peak load reduction, load
management, and environmental interests.

(2) The commission shall consider the relative amount and the
cost of greenhouse gas begin delete emission end delete begin insert emissions end insert reductions, peak demand
reductions, system reliability benefits, and other measurable factors
when allocating program funds between eligible technologies.

(i) The commission shall ensure that distributed generation
resources are made available in the program for all ratepayers.

(j) In administering the self-generation incentive program, the
commission shall provide an additional incentive of 20 percent
from existing program funds for the installation of eligible
distributed generation resources manufactured in California.

(k) The costs of the program adopted and implemented pursuant
to this section shall not be recovered from customers participating
in the California Alternate Rates for Energy (CARE) program.

(l) The commission shall evaluate the overall success and impact
of the self-generation incentive program based on the following
performance measures:

(1) The amount of reductions of emissions of greenhouse gases.

(2) The amount of reductions of emissions of criteria air
pollutants measured in terms of avoided emissions and reductions
of criteria air pollutants represented by emissions credits secured
for project approval.

(3) The amount of energy reductions measured in energy value.

(4) The amount of reductions of begin delete aggregate noncoincident end delete
customer peak demand.

(5) The ratio of the electricity generated by distributed energy
resource begin insert generation end insert projects receiving incentives from the program
to the electricity capable of being produced by those distributed
energy resource projects, commonly known as a capacity factor.

(6) The value to the electrical transmission and distribution
system measured in avoided costs of transmission and distribution
upgrades and replacement.

(7) The ability to improve onsite electricity reliability as
compared to onsite electricity reliability before the self-generation
incentive program technology was placed in service.

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begin insert SEC. 5. end insert   

end insert

begin insert Section 62 of Chapter 35 of the Statutes of 2014 is
amended to read: end insert

Sec. 62.  

It is the intent of the Legislature that the reorganization
and transfer made by Sections 63 to 127, inclusive, Section 181,
begin delete and end delete begin insert Section 182, end insert Sections 187 to begin delete 190 end delete begin insert 191 end insert , inclusive, begin insert and Section
193 end insert of this act be carried out in a manner to preserve state primacy
under the federal Safe Drinking Water Act and that the terms of
this act shall be liberally construed to achieve this purpose.

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 193 of Chapter 35 of the Statutes of 2014 is
amended to read: end insert

Sec. 193.  

Notwithstanding any other law, the begin delete unencumbered end delete
balance of the appropriation provided for in Item 4265-111-0001
of Chapter 2 of the Statutes of 2014, for the purposes specified in
Provision 3 of that item, is hereby appropriated to the State Water
Resources Control Board, as of June 30, 2014. begin delete This fund end delete begin insert These
funds end insert shall be available for encumbrance or expenditure until June
30, 2016, begin insert and available for liquidation until June 30, 2018, end insert for
purposes consistent with subdivisions (a) and (c) of Section 75021
of the Public Resources Code for grants pursuant to the Public
Water System Drought Emergency Funding Guidelines adopted
by the State Department of Public Health on March 28, 2014, for
public water systems to address drought-related drinking water
emergencies. The State Water Resources Control Board shall make
every effort to use other funds available to address drinking water
emergencies, including federal funds made available for the begin delete drought end delete
begin insert drought, end insert prior to using the funds specified in this section.

begin insert

begin insert SEC. 7. end insert   

end insert begin insert

The sum of five hundred twenty-nine thousand dollars
($529,000) is hereby appropriated from the Cost of Implementation
Account, established pursuant to Section 16428.95 of the
Government Code, to the Secretary of the Natural Resources
Agency for the purpose of implementing elements of the scoping
plan adopted by the State Air Resources Board pursuant to Section
38561 of the Health and Safety Code.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert begin insert

This act is a bill providing for appropriations related
to the Budget Bill within the meaning of subdivision (e) of Section
12 of Article IV of the California Constitution, has been identified
as related to the budget in the Budget Bill, and shall take effect
immediately.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact statutory
changes relating to the Budget Act of 2014.

end delete