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STATE OF CALIFORNIA
Public Utilities Commission
April 17, 2008
(Meeting of April 24, 2008)
Pamela Loomis, Deputy Director
Office of Governmental Affairs (OGA) - Sacramento
AB 2791 (Blakeslee)-Energy: Waste Heat and Carbon
Emissions Reduction Act
As amended: April 9, 2008
LEGISLATIVE SUBCOMMITTEE RECOMMENDATION: SUPPORT
SUMMARY OF BILL:
AB 2791 would extend the pilot program for the on-bill financing of combined heat and power (CHP) generation systems as enacted by AB 1613, by widening the scope of customer-generators to include federal, state, and local government facilities. The
AB 1613 on-bill financing pilot program was initially limited to nonprofit organizations as defined by the Internal Revenue Code.
SUMMARY OF SUPPORTING ARGUMENTS FOR RECOMMENDATION:
AB 2791 simply enlarges the scope of customer-generators eligible to participate in the AB 1613 pilot CHP generation financing program. It does not create a new program, nor does it increase the size of the AB 1613 pilot program, in MW. It is appropriate, and consistent with the State's environmental and procurement goals, to include government agencies with nonprofits for the purpose of financing these systems via on-bill savings.
SUMMARY OF SUGGESTED AMENDMENTS:
DIVISION ANALYSIS (Energy Division):
· AB 1613, the Waste Heat and Carbon Emissions Reduction Act, signed by Governor Schwartzenegger in October, 2007, enacted incentives for new customer-owned combined heat and power (CHP) systems meeting stringent efficiency and emissions standards. These incentives include a mandated investor-owned utility (IOU) tariff for the purchase of excess electricity from eligible CHP systems, and a pilot program, limited to nonprofit customers, for upfront on-bill financing of eligible CHP systems. AB 2791 would simply enlarge the scope of customers eligible for the AB 1613 pilot on-bill financing program, by including government agencies.
· AB 2791 would further the stated objective of AB 1613, which was "to reduce wasteful consumption of energy through improved residential, commercial, institutional, industrial, and manufacturer utilization of waste heat whenever it is cost effective, technologically feasible, and environmentally beneficial, ..."
AB 2791 is pending in the Assembly Appropriations Committee. The bill was passed by the Assembly Utilities and Commerce Committee (4/7/8; vote: 12-1) and the Assembly Committee on Natural Resources (4/14/08; vote: 9-0).
Support: California Clean Distributed Generation Coalition (CCDC)
Opposition: None on file.
PURA V, Office of Governmental Affairs (916) 322-8858
Director - Energy Division (415) 703-2059
Staff - Energy Division (415) 703-1873
Staff - Energy Division (415) 355-5553
BILL NUMBER: AB 2791 AMENDED
AMENDED IN ASSEMBLY APRIL 9, 2008
INTRODUCED BY Assembly Member Blakeslee
FEBRUARY 22, 2008
An act to amend Section 2842.4 of the Public Utilities Code,
relating to energy.
LEGISLATIVE COUNSEL'S DIGEST
AB 2791, as amended, Blakeslee. Energy: Waste Heat and Carbon
Emissions Reduction Act.
Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations, as defined. Existing law authorizes the PUC to fix the
rates and charges for every public utility, and requires that those
rates and charges be just and reasonable. The existing Waste Heat and
Carbon Emissions Reduction Act authorizes the PUC to require an
electrical corporation to purchase excess electricity, as defined,
from any customer of the electrical corporation that is delivered by
a combined heat and power system, as defined, that complies with the
sizing, energy efficiency, and air pollution control requirements of
the act. The act requires every electrical corporation to file a
standard tariff with the PUC for the purchase of excess electricity
from an eligible customer-generator, as defined, requires the
electrical corporation to make the tariff available to eligible
customer-generators within the service territory of the electrical
corporation upon request, and authorizes the electrical corporation
to make the terms of the tariff available in the form of a standard
contract. The existing definition of an eligible customer requires
that the customer of an electrical corporation use a combined heat
and power system with a generating capacity of not more than 20
megawatts that is in compliance with the act's requirements and be a
nonprofit organization that is exempt from taxation pursuant to a
specified provision of federal law.
This bill would define an eligible customer to require that the
customer of the electrical corporation use a combined heat and power
system with a generating capacity of not more than 20 megawatts that
is in compliance with the act's requirements and that the customer
either be a nonprofit organization that is exempt from taxation or be
a federal, state, or local government facility. The bill would
provide that an approval made by the Department of Finance for a
state agency to purchase, lease, or otherwise acquire a combined heat
and power facility financed through the pay-as-you-save program may
not be made sooner than after a specified time written notification
is provided to certain Members of the Legislature.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 2842.4 of the Public Utilities Code is amended
2842.4. (a) The commission shall, for each electrical
corporation, establish a pay-as-you-save pilot program for eligible
(b) For the purposes of this section, an "eligible customer" means
a customer of an electrical corporation that meets the following
(1) The customer uses a combined heat and power system with a
generating capacity of not more than 20 megawatts that is in
compliance with Section 2843.
(2) The customer is any of the following:
(A) A nonprofit organization described in Section 501(c) (3) of
the Internal Revenue Code (26 U.S.C. Sec. 501(c) (3)), that is exempt
from taxation under Section 501(a) of that code (26 U.S.C. Sec. 501
(B) A federal, state, or local government facility.
(c) The pilot program shall enable an eligible customer to finance
all of the upfront costs for the purchase and installation of a
combined heat and power system by repaying those costs over time
through on-bill financing at the difference between what an eligible
customer would have paid for electricity and the actual savings
derived for a period of up to 10 years.
(d) The commission shall ensure that the reasonable costs of the
electrical corporation associated with the pilot program are
(e) All costs of the pay-as-you-save program or financing
mechanisms shall be borne solely by the combined heat and power
generators that use the program or financing mechanisms, and the
commission shall ensure that the costs of the program are not shifted
to the other customers or classes of customers of the electrical
(f) Each electric corporation shall make on-bill financing
available to eligible customers until the statewide cumulative rated
generating capacity from pilot program combined heat and power
systems in the service territories of the three largest electrical
corporations in the state reaches 100 megawatts. An electrical
corporation shall only be required to participate in the pilot
program until it meets its proportionate share of the 100-megawatt
limitation, based on the percentage of its peak demand to the total
statewide peak demand within the service territories of all
(g) An approval made by the Department of Finance for a state
agency to purchase, lease, or otherwise acquire a combined heat and
power facility that would be financed through the pay-as-you-save
pilot program, may not be made sooner than 30 days after written
notification thereof is provided to the Chairperson of the Senate
Committee on Budget and Fiscal Review, the Chairperson of the
Assembly Committee on Budget, and the Chairperson of the Joint
Legislative Budget Committee, or not sooner than whatever lesser time
the Chairperson of the Joint Legislative Budget Committee may