LEGISLATIVE SUBCOMMITTEE RECOMMENDATION: SUPPORT WITH TECHNICAL AMENDMENTS
SUMMARY OF BILL:
This bill would establish the Solar Hot Water and Efficiency Act of 2007. Directs the Commission to establish a 10-year, statewide incentive program to encourage the installation of 500,000 solar water heating systems to offset natural gas usage for water and space heating. The incentives would be funded by establishing a surcharge on certain natural gas customers.
SUMMARY OF SUPPORTING ARGUMENTS FOR RECOMMENDATION:
The Commission has long supported incentives for solar thermal technologies. The Commission sought to offer incentives for solar thermal in the California Solar Initiative (CSI) but was preempted by SB 1 of 2006. The Commission is also co-sponsoring AB 1064 (Lieber) that would deem solar thermal technologies eligible for rebates through the Self-Generation Incentive Program.
SUMMARY OF SUGGESTED AMENDMENTS (if any):
1. Clarify the funding source and funding mechanism. Section 902 should clarify whether the proposed solar-thermal program budget is $100 million annually, or whether the total amount collected by the surcharge for all gas programs is $100 million.
2. Similar to the amendment described above, §2863(c) should clarify whether the $100 million is to fund all programs established under this surcharge, or if the $100 million is the maximum budget for the solar incentives established by AB 1470.
3. §2861(b) utilizes a definition of kWth consistent with the standard established by the International Energy Agency (IEA). The bill be amended to allow the CPUC the flexibility to set a standard similar, but not identical to, the IEA standard.
4. §2866 should be consistent with the low-income housing standards under proposed SB 324, which expands the definition of low-income residential housing for the California Solar Initiative ("CSI") to include residential housing occupied by individuals eligible for the California Alternative Rates for Energy ("CARE") and the Low-Income Energy Efficiency ("LIEE") programs. As a result, LIEE and CARE participants would be eligible to receive loans and incentives to help finance solar energy installations.
DIVISION ANALYSIS (Energy Division):
· This bill adds Section 902 and Sections 2860-2867.3 to the Public Utilities Code to create the Solar Hot Water and Efficiency Act of 2007.
· This bill would require the Commission to develop and fund a new statewide program until 2018 to offer performance-based incentives for solar water heating and other natural gas displacing devices.
· The bill seeks to establish a program similar to the CSI and SB 1 for solar heating systems.
· Specifically, the bill:
o Requires the Commission to fund the program through the use of a surcharge on natural gas customers.
o States legislative intent regarding the ills of our natural gas dependence, global warming and the need to install more solar water heating systems.
o States legislative intent to create a program that will install at least 500,000 solar heating systems on homes, businesses and government buildings by 2017, "thereby lowering prices and creating a self-sufficient market."
o Requires that the program by administered by the Commission.
o Requires the Commission to coordinate with the Energy Commission's New Solar Homes Partnership to achieve the goal of building zero energy homes.
o Requires the Commission to establish the surcharge on natural gas customers by July 1, 2008.
o Prohibits the surcharge from being imposed on CARE and FREA participants.
o Requires the Commission, in consultation with the Energy Commission to establish eligibility criteria for solar heating systems.
o Requires the Commission to establish conditions on the incentives relative to system installation, energy efficiency improvements and rating standards for the systems.
o Requires the Commission to provide at least 10 percent of the program's funds for the installation of solar heating systems on affordable housing projects.
o Requires the program incentives to decline over time and be paid on the basis of actual system performance.
o Requires the Commission to consider federal tax credits and other rebates when determining the appropriate rebate amount.
o Directs the Energy Commission to coordinate with the Commission to consider combining solar heating system rebates with rebates for other energy efficiency technologies.
o Requires the Commission to report on the program's effectiveness by July 1, 2010.
o States that solar heating technologies shall not be eligible for CSI incentives unless the system also displaces electricity.
· Solar heating systems use energy from the sun to heat water, reducing the amount of energy needed for both water and space heating. Up to 90% of the solar energy that lands on a roof can be absorbed by a collector, heating liquid that is then pumped into a storage tank. This in turn reduces or eliminates the need for conventional fuel - which in California, is primarily natural gas.
· Installing a solar heating system on an existing home costs $5,000-$6,000, and at current prices, is typically expected to pay for itself within 10 years. Upfront costs have prevented many consumers from installing these systems. A statewide incentive program would increase public awareness and offer economically beneficial incentives to natural gas ratepayers.
· In addition to providing cost savings, the widespread use of these technologies decreases demand for fossil fuels, thereby helping to improve public health, mitigate climate change, and stabilize energy prices for all ratepayers.
PROGRAM BACKGROUND:
Although this bill would create a new program, the Commission sought to offer incentives for solar thermal in the California Solar Initiative (CSI) but was preempted by SB 1 of 2006.
The Commission recently approved a solar water heating incentive pilot program within the California Solar Initiative for customers in San Diego Gas and Electric's service territory. The purpose of the program is to determine the cost-effectiveness and benefits of offering incentives for solar water heaters.
SB 1 allows the Commission to provide incentives for solar thermal devices that produce electricity, up to a total budget of $100.8 million.
LEGISLATIVE HISTORY:
SB 1 (Murray) of 2006 precluded funding solar heating devices from the CSI.
FISCAL IMPACT:
· To complete the workload associated wit this bill, the Commission would require one PURA V, one PURA III and one PURA I to:
o Establish a program funding mechanism
o Establish eligibility requirements for solar heating systems, such as design, installation, and energy output standards.
o Establish metering and monitoring criteria and approve associated technologies.
o Establish appropriate energy efficiency standards
o Set rating standards for equipment and components.
o Explore feasibility of a loan or loan guarantee program.
o Establish all the above criteria for a low-income solar program.
o Provide a report to the Legislature by July 1, 2010 regarding program cost effectiveness.
The total fiscal impact would be $236,514 per year.
STATUS:
The bill is set for hearing in the Assembly Utilities and Commerce Committee on April 9th. The bill has also been referred to the Assembly Natural Resources Committee.
SUPPORT/OPPOSITION:
Environment California (Sponsor)
STAFF CONTACTS:
Bryan Crabb brd@cpuc.ca.gov
Office of Governmental Affairs (916) 322-8858
Sean Gallagher shg@cpuc.ca.gov
Energy Division (415) 703-2059
Energy Division (415) 355-5495
Date: April 3, 2007
DLH:cdl
BILL LANGUAGE:
BILL NUMBER: AB 1470 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Huffman
(Principal coauthor: Assembly Member Smyth)
FEBRUARY 23, 2007
An act to add the heading of Article 1 (commencing with Section
2851) to, and to add and repeal Section 902 of, and Article 2
(commencing with Section 2860) of, Chapter 9 of Part 2 of Division 1
of, the Public Utilities Code, relating to solar energy, and making
an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 1470, as introduced, Huffman. Solar energy: Solar Hot Water and
Efficiency Act of 2007.
(1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including gas
corporations. The commission is required to implement elements of the
California Solar Initiative, which modifies the self-generation
incentive program for distributed generation resources and provides
incentives to customer-side photovoltaics and solar thermal electric
projects under one megawatt. The commission is required to award
monetary incentives for up to the first megawatt of alternating
current generated by solar energy systems that meet the eligibility
criteria established by the State Energy Resources Conservation and
Development Commission (Energy Commission). The commission is
required to adopt a performance-based incentive program for solar
energy photovoltaic systems and is authorized to award monetary
incentives for solar thermal and solar water heating devices in a
total amount up to $100,800,000.
This bill would establish the Solar Heating and Efficiency Act of
2007. The bill would make findings and declarations of the
Legislature relating to the promotion of solar hot water systems and
other technologies that reduce natural gas demand. The bill would
define several terms for purposes of the act. The bill would require
the commission to create and administer, not later than July 1, 2008,
a program to incentivize the installation of 500,000 solar thermal
systems in homes and businesses throughout the state by 2017.
The bill would require the commission, in consultation with the
Energy Commission and interested members of the public, to establish
eligibility criteria for the solar heating systems receiving
ratepayer funded incentives not later than July 1, 2008. The
commission would be required to establish conditions on those
incentives. The bill would specify that only solar heating
technologies that displace electricity are eligible for a portion of
California Solar Initiative funds, as determined by the commission.
The commission would be required to allocate not less than 10% of the
overall funds for installation of solar heating systems for
specified affordable housing projects and specify that no moneys be
diverted from any existing programs for low-income ratepayers. The
bill would specify that the consumer rebates decline over time and be
structured to reduce the cost of solar heating technologies. The
Energy Commission, in coordinating efforts with the commission, would
be required to consider coupling rebates for solar heating systems
with complimentary energy efficient technologies. The commission
would be required to report to the Legislature, not later than July
1, 2010, on the effectiveness of the program. The bill would repeal
these provisions on August 1, 2018.
(2) Existing law establishes a surcharge on all natural gas
consumed in the state to fund certain low-income assistance programs,
cost-effective energy efficiency and conservation activities, and
public interest research and development. Existing law requires a
public utility gas corporation, as defined, to collect the surcharge
from natural gas consumers, as specified. The money from the
surcharge is deposited in the Gas Consumption Surcharge Fund and is
continuously appropriated to specified entities, including to the
commission, or to an entity designated by the commission, to fund
low-income assistance programs, cost-effective energy efficiency and
conservation activities, and public interest research and development
not adequately provided by the competitive and regulated markets.
This bill would require the commission to fund the program of the
Solar Hot Water and Efficiency Act of 2007 through a surcharge
applied to persons consuming natural gas in the state that has been
transported by an interstate pipeline, except those participating in
certain existing programs for low-income ratepayers, not to exceed
$100,000,000 in its entirety. Because this bill would increase the
amount of money deposited in the Gas Consumption Surcharge Fund and
make the money available to the commission for the purposes of the
act, it would make an appropriation. The bill would repeal these
provisions on August 1, 2018.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 902 is added to the Public Utilities Code, to
read:
902. (a) The commission shall fund the program established in the
Solar Hot Water and Efficiency Act of 2007, pursuant to Article 2
(commencing with Section 2860) of Chapter 9 of Part 2, through the
use of a surcharge applied to persons consuming natural gas in this
state that has been transported by an interstate pipeline. This fund
shall not exceed one hundred million dollars ($100,000,000).
(b) Funds shall be allocated for the benefit of persons paying the
surcharge and the promotion of solar hot water systems and other
technologies that reduce natural gas consumption and global warming
pollution.
(c) This section shall remain in effect until August 1, 2018, and
as of that date is repealed unless a later enacted statute extends or
repeals that date.
SEC. 2. The heading of Article 1 (commencing with Section 2851) is
added to Chapter 9 of Part 2 of Division 1 of the Public Utilities
Code, to read:
Article 1. Solar Photovoltaic Systems
SEC. 3. Article 2 (commencing with Section 2860) is added to
Chapter 9 of Part 2 of Division 1 of the Public Utilities Code, to
read:
Article 2. Solar Thermal Systems
2860. This article shall be known, and may be cited, as the Solar
Hot Water and Efficiency Act of 2007.
2861. As used in this article, the following terms have the
following meanings:
(a) "Energy Commission" means the State Energy Resources
Conservation and Development Commission.
(b) "kWth" means the kilowatt thermal capacity of a solar heating
collector consistent with the standard established by the
International Energy Agency's Solar Heating and Cooling Program.
(c) "kWhth" means kilowatthours thermal as measured by the number
of kilowatts thermal generated in an hour.
(d) "New Solar Homes Partnership" means the 10-year program
encouraging solar energy systems in new home construction.
(e) "Solar heating system" means a solar energy device that has
the primary purpose of reducing demand for natural gas through water
heating, space heating, or other methods of reducing natural gas
consumption in a home, businesses, or any building receiving natural
gas that is subject to the surcharge established pursuant to Section
902, or exempt from the surcharge pursuant to subdivision (c) of
Section 2863, and that meets or exceeds the eligibility criteria
established pursuant to Section 2864.
2862. The Legislature finds and declares all of the following:
(a) California is heavily dependent on natural gas, importing more
than 80 percent of the natural gas it consumes.
(b) Rising worldwide demand for natural gas and a shrinking supply
create rising and unstable prices that can harm California consumers
and the economy.
(c) Natural gas is a fossil fuel and a major source of global
warming pollution and the pollutants that cause air pollution,
including smog.
(d) California's growing population and economy will put a strain
on energy supplies and threaten the ability of the state to meet its
global warming goals unless specific steps are taken to reduce demand
and generate energy cleanly and efficiently.
(e) Water heating for domestic and industrial use relies almost
entirely on natural gas and accounts for a significant percentage of
the state's natural gas consumption.
(f) Solar water heating systems represent the largest untapped
natural gas saving potential remaining in California.
(g) In addition to financial and energy savings, solar heating
systems can help protect against future gas and electricity shortages
and reduce our dependence on foreign sources of energy.
(h) Solar heating systems can also help preserve the environment
and protect public health by reducing air pollution, including carbon
dioxide, a leading global warming gas, and nitrogen oxide, a
precursor to smog.
(i) Growing demand for these technologies will create jobs in
California as well as promote greater energy independence, protect
consumers from rising energy costs and result in cleaner air.
(j) It is in the interest of the State of California to promote
solar hot water systems and other technologies that directly reduce
demand for natural gas in homes and businesses.
(k) It is the intent of the Legislature to build a mainstream
market for solar heating systems that directly reduces demand for
natural gas in homes, businesses, and government buildings. Toward
that end, it is the goal of the Solar Hot Water and Efficiency Act of
2007 to install at least 500,000 solar heating systems on homes,
businesses, and government buildings throughout the state by 2017,
thereby lowering prices and creating a self-sufficient market that
will sustain itself beyond the life of this program.
(l) It is the intent of the Legislature that the solar heating
incentives created by the act should be a cost-effective investment
by consumers of natural gas. Consumers of natural gas will recoup the
cost of their investment through lower prices as a result of
avoiding purchases of natural gas, and benefit from additional system
stability and pollution reduction benefits.
2863. (a) In order to achieve the goals of the Legislature, the
commission shall, not later than July 1, 2008, create a program to
promote the installation of 500,000 solar thermal systems in homes
and business throughout the state by 2017.
(b) The program shall be supervised or administered by the
commission. The commission shall coordinate with the Energy
Commission's New Solar Homes Partnership to achieve the goal of
building zero-energy homes.
(c) Not later than July 1, 2008, the commission shall establish a
surcharge pursuant to Section 902, not to exceed one hundred million
dollars ($100,000,000) in its entirety. In establishing the program
required by this section, no moneys shall be diverted from any
existing programs for low-income ratepayers. Any surcharge imposed to
fund the program adopted and implemented pursuant to this section
shall be imposed upon all customers not participating in the
California Alternate Rates for Energy (CARE) or family electric rate
assistance (FERA) programs.
2864. (a) Not later than July 1, 2008, the commission, in
consultation with the Energy Commission, and interested members of
the public, shall establish eligibility criteria for solar heating
systems receiving ratepayer funded incentives. The criteria should
specify and include all of the following:
(1) Design, installation, and energy output or displacement
standards.
(2) Require that solar heating system components are new and
unused, and have not previously been placed in service in any other
location or for any other application.
(3) Require that solar heating systems have a warranty of not less
than 10 years to protect against defects and undue degradation.
(4) Require that solar energy systems are in buildings connected
to a natural gas utility's distribution system within the state.
(5) Require that solar heating systems have meters or other kWth
measuring devices in place to monitor and measure the system's
performance and the quantity of energy generated or displaced by the
system.
(6) Require that solar energy systems are installed in conformity
with the manufacturer's specifications and all applicable codes and
standards.
(b) Upon establishment of eligibility criteria pursuant to this
section, no ratepayer funded incentives shall be made for a solar
energy system that does not meet the eligibility criteria.
2865. (a) The commission shall establish conditions on ratepayer
funded incentives. The conditions shall require both of the
following:
(1) Appropriate siting and high quality installation of the solar
heating system based on installation guidelines that maximize the
performance of the system and prevent qualified systems from being
inefficiently or inappropriately installed. The conditions shall not
impact housing designs or densities presently authorized by a city,
county, or city and county. The goal of this paragraph is to achieve
efficient installation of solar heating systems and promote the
greatest energy production or displacement per ratepayer dollar.
(2) Appropriate energy efficiency improvements in the new or
existing home or commercial structure where the solar heating system
is installed.
(b) The commission shall set rating standards for equipment,
components, and systems to assure reasonable performance and shall
develop standards that provide for compliance with the minimum
ratings.
2866. The commission shall provide not less than 10 percent of
the overall funds for installation of solar heating systems on
affordable housing projects undertaken pursuant to Section 50052.5,
50053, or 50199.14 of the Health and Safety Code. If deemed
appropriate in consultation with the California Tax Credit Allocation
Committee, the commission may establish a grant program or a
revolving loan or loan guarantee program for affordable housing
projects consistent with the requirements of Chapter 5.3 (commencing
with Section 25425) of Division 15 of the Public Resources Code.
2867. (a) The rebates provided through this program shall decline
over time. They shall be structured so as to drive down the cost of
the solar heating technologies, and be paid out on a performance
based incentive basis so that incentives are earned based on the
actual energy savings.
(b) The commission shall consider federal tax credits and other
incentives available for this technology when determining the
appropriate rebate amount.
(c) In coordinating with the commission, the Energy Commission
shall consider coupling rebates for solar heating systems with
complimentary energy efficiency technologies, including, but not
limited to, efficient hot water heating tanks and tankless or on
demand hot water systems that can be installed in addition to the
solar heating system.
2867.1. Not later than July 1, 2010, the commission shall report
to the Legislature as to the effectiveness of the program and make
recommendations as to any changes that should be made to the program.
To facilitate the understanding of how solar heating devices compare
with other clean energy and energy efficiency technologies, all
documents related to and rebates provided by this program shall be
measured in both kWhth and therms of natural gas saved.
2867.2. Solar heating technologies shall not be eligible for
California Solar Initiative (CSI) funds, pursuant to Section 2851,
unless they also displace electricity, in which case only the
electricity displacing portion of the technology may be eligible
under the CSI program, as determined by the commission.
2867.3. This part shall remain in effect only until August 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before August 1, 2018, deletes or extends
that date.
