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AB-2267 California-based entities: self-generation incentive program.(2007-2008)

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AB2267:v93#DOCUMENT

Assembly Bill No. 2267
CHAPTER 537

An act to amend Sections 25620 and 25620.5 of the Public Resources Code, and to amend Section 379.6 of the Public Utilities Code, relating to energy.

[ Approved by Governor  September 28, 2008. Filed with Secretary of State  September 28, 2008. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 2267, Fuentes. California-based entities: self-generation incentive program.
(1) Existing law establishes the Public Interest Research, Development, and Demonstration Fund in the State Treasury, and provides that the money collected by the public goods charge to support cost-effective energy efficiency and conservation activities, public interest research and development not adequately provided by competitive and regulated markets, be deposited in the fund for use by the State Energy Resources Conservation and Development Commission (Energy Commission) to develop, implement, and administer the Public Interest Research, Development, and Demonstration Program to develop technologies to improve environmental quality, enhance electrical system reliability, increase efficiency of energy-using technologies, lower electrical system costs, or provide other tangible benefits.
This bill would state that public interest energy research, demonstration, and development projects should provide economic benefits for California by promoting California-based technology firms, jobs, and businesses. The bill would require the Energy Commission to give priority to California-based entities in making awards pursuant to the program. The bill would define a California-based entity.
(2) Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations and gas corporations, as defined. Existing law requires the PUC, in consultation with the Energy Commission, to administer, until January 1, 2012, a self-generation incentive program for distributed generation resources. The program is applicable to all eligible technologies, as determined by the PUC and subject to certain air emissions and efficiency standards, until January 1, 2008, except for solar technologies, which the PUC is required to administer separately, after January 1, 2007, pursuant to the California Solar Initiative. Commencing January 1, 2008, until January 1, 2012, existing law limits eligibility for nonsolar technologies to fuel cells and wind distributed generation technologies that meet or exceed emissions standards adopted by the State Air Resources Board (state board). Existing law authorizes the PUC, in administering the program, to adjust the amount of rebates, include other ultraclean and low-emission distributed generation technologies, as defined, and evaluate other public policy interests and energy efficiency and environmental interests. Pursuant to decisions of the PUC, Pacific Gas and Electric Company, Southern California Edison, and Southern California Gas Company are the program administrators throughout their respective service territories and the Center for Sustainable Energy is the program administrator for the San Diego Gas and Electric Company service territory.
The existing California Global Warming Solutions Act of 2006 requires the State Air Resources Board (state board) to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions levels in 1990, to be achieved by 2020. Existing law prohibits any load-serving entity, as defined, and any local publicly owned electric utility, as defined, from entering into a long-term financial commitment, as defined, unless any baseload generation, as defined, complies with a greenhouse gases emission performance standard. Existing law requires the commission, in consultation with the Energy Commission and the state board, to establish a greenhouse gases emission performance standard for all baseload generation of load-serving entities.
This bill would require the commission to provide from existing program funds an additional incentive of 20% for the installation of eligible distributed generation resources from a California supplier, as defined.
This bill would require the Energy Commission to update its evaluation and recommendations by November 1, 2011.
(3) This bill incorporates amendments to Section 25620 of the Public Resources Code proposed by both this bill and SB 1760, which would only become operative if both bills are enacted and become effective on or before January 1, 2009, each bill amends Section 25620 of the Public Resources Code, and this bill is enacted after SB 1760.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 (a) It is the intent of the Legislature that California’s leadership in energy efficiency and greenhouse gas emission reductions translate into economic benefits for California through job creation, workforce training and retraining, manufacturing retention and development, and the development of a green technology industry in the state by using the state’s existing investments, incentives, and support for clean and greenhouse gas emission reducing technologies and applications that assist the state in meeting its greenhouse gas emission reduction targets.
(b) It is further the intent of the Legislature that the State Air Resources Board, the State Energy Resources Conservation and Development Commission, and the Public Utilities Commission provide additional consideration, priority, or preference to projects that result in job creation and economic benefits in California in administering incentive programs for energy efficiency, including renewable energy, and the reduction of greenhouse gas emissions, to the maximum extent feasible and consistent with the provisions of law governing these incentive programs.

SEC. 3.

 Section 25620 of the Public Resources Code is amended to read:

25620.
 The Legislature hereby finds and declares all of the following:
(a) It is in the best interests of the people of this state that the quality of life of its citizens be improved by providing environmentally sound, safe, reliable, and affordable energy services and products.
(b) To improve the quality of life of this state’s citizens, it is proper and appropriate for the state to undertake public interest energy research, development, and demonstration projects that are not adequately provided for by competitive and regulated energy markets.
(c) Public interest energy research, demonstration, and development projects should advance energy science or technologies of value to California citizens and should be consistent with the policies of this chapter.
(d) It is in the best interest of the people of California for the commission to positively contribute to the overall economic climate of the state within the roles and responsibilities of the commission as defined by statute, regulation, and other official government authority, including, but not limited to, providing economic benefits to California-based entities.

SEC. 3.5.

 Section 25620 of the Public Resources Code is amended to read:

25620.
 The Legislature hereby finds and declares all of the following:
(a) It is in the best interests of the people of this state that the quality of life of its citizens be improved by providing environmentally sound, safe, reliable, and affordable energy services and products.
(b) To improve the quality of life of this state’s citizens, it is proper and appropriate for the state to undertake public interest energy research, development, and demonstration projects that are not adequately provided for by competitive and regulated energy markets.
(c) Public interest energy research, demonstration, and development projects should advance energy science or technologies of value to California citizens and should be consistent with the policies of this chapter.
(d) It is in the best interest of the people of California for the commission to positively contribute to the overall economic climate of the state within the roles and responsibilities of the commission as defined by statute, regulation, and other official government authority, including, but not limited to, providing economic benefits to California-based entities.
(e) Public interest energy research, demonstration, and development projects should be coordinated with other related state programs and research needs to meet overall state policy objectives related to energy efficiency, environmental protection, greenhouse gas emission reduction, clean technology job creation, and climate change adaptation in the most efficient manner possible.

SEC. 4.

 Section 25620.5 of the Public Resources Code is amended to read:

25620.5.
 (a) The commission may solicit applications for awards, using a sealed competitive bid, competitive negotiation process, commission-issued intradepartmental master agreement, the methods for selection of professional services firms set forth in Chapter 10 (commencing with Section 4525) of Division 5 of Title 1 of the Government Code, interagency agreement, single source, or sole source method. When scoring teams are convened to review and score proposals, the scoring teams may include persons not employed by the commission, as long as employees of the state constitute no less than 50 percent of the membership of the scoring team. A person participating on a scoring team may not have any conflict of interest with respect to the proposal before the scoring team.
(b) A sealed bid method may be used when goods and services to be acquired can be described with sufficient specificity so that bids can be evaluated against specifications and criteria set forth in the solicitation for bids.
(c) The commission may use a competitive negotiation process in any of the following circumstances:
(1) Whenever the desired award is not for a fixed price.
(2) Whenever project specifications cannot be drafted in sufficient detail so as to be applicable to a sealed competitive bid.
(3) Whenever there is a need to compare the different price, quality, and structural factors of the bids submitted.
(4) Whenever there is a need to afford bidders an opportunity to revise their proposals.
(5) Whenever oral or written discussions with bidders concerning the technical and price aspects of their proposals will provide better results to the state.
(6) Whenever the price of the award is not the determining factor.
(d) The commission may establish interagency agreements.
(e) The commission may provide awards on a single source basis by choosing from among two or more parties or by soliciting multiple applications from parties capable of supplying or providing similar goods or services. The cost to the state shall be reasonable and the commission may only enter into a single source agreement with a particular party if the commission determines that it is in the state’s best interests.
(f) The commission, in accordance with subdivision (g) and in consultation with the Department of General Services, may provide awards on a sole source basis when the cost to the state is reasonable and the commission makes any of the following determinations:
(1) The proposal was unsolicited and meets the evaluation criteria of this chapter.
(2) The expertise, service, or product is unique.
(3) A competitive solicitation would frustrate obtaining necessary information, goods, or services in a timely manner.
(4) The award funds the next phase of a multiphased proposal and the existing agreement is being satisfactorily performed.
(5) When it is determined by the commission to be in the best interests of the state.
(g) The commission may not use a sole source basis for an award pursuant to subdivision (f), unless both of the following conditions are met:
(1) The commission, at least 60 days prior to taking an action pursuant to subdivision (f), notifies the Joint Legislative Budget Committee and the relevant policy committees in both houses of the Legislature, in writing, of its intent to take the proposed action.
(2) The Joint Legislative Budget Committee either approves or does not disapprove the proposed action within 60 days from the date of notification required by paragraph (1).
(h) The commission shall give priority to California-based entities in making awards pursuant to this chapter.
(i) The provisions of this section are severable. If any provision of this section or its application is held to be invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.
For purposes of this Section and Section 25620, “California-based entity” means either of the following:
A corporation or other business form organized for the transaction of business that has its headquarters in California and manufactures in California the product that qualifies for the incentive or award, or a corporation or other business form organized for the transaction of business that has an office for the transaction of business in California and substantially manufactures in California the product that qualifies for the incentive or award, or substantially develops within California the research that qualifies for the incentive or award, as determined by the agency issuing the incentive or award.

SEC. 5.

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

379.6.
 (a) (1) The commission, in consultation with the State Energy Resources Conservation and Development Commission, shall administer, until January 1, 2012, the self-generation incentive program for distributed generation resources originally established pursuant to Chapter 329 of the Statutes of 2000.
(2) Except as provided in paragraph (3), the extension of the program pursuant to Chapter 894 of the Statutes of 2003, as amended by Chapter 675 of the Statutes of 2004 and Chapter 22 of the Statutes of 2005, shall apply to all eligible technologies, as determined by the commission, until January 1, 2008.
(3) The commission shall administer solar technologies separately, after January 1, 2007, pursuant to the California Solar Initiative adopted by the commission in Decision 06-01-024.
(b) Commencing January 1, 2008, until January 1, 2012, eligibility for the program pursuant to paragraphs (1) and (2) of subdivision (a) shall be limited to fuel cells and wind distributed generation technologies that meet or exceed the emissions standards required under the distributed generation certification program requirements of Article 3 (commencing with Section 94200) of Subchapter 8 of Chapter 1 of Division 3 of Title 17 of the California Code of Regulations.
(c) Eligibility for the self-generation incentive program’s level 3 incentive category shall be subject to the following conditions:
(1) Commencing January 1, 2007, all combustion-operated distributed generation projects using fossil fuel shall meet an oxides of nitrogen (NOx) emissions rate standard of 0.07 pounds per megawatthour and a minimum efficiency of 60 percent. 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 NOx emissions standard of 0.07 pounds per megawatthour. Credit shall be at the rate of one megawatthour for each 3.4 million British thermal units (Btus) of heat recovered.
(3) Notwithstanding paragraph (1), a project that does not meet the applicable NOx 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 benefit, 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 218.5, or by calculating overall electrical efficiency.
(e) In administering the self-generation incentive program, the commission may adjust the amount of rebates, include other ultraclean and low-emission distributed generation technologies, as defined in Section 353.2, and evaluate other public policy interests, including, but not limited to, ratepayers, and energy efficiency and environmental interests.
(f) On or before November 1, 2008, the State Energy Resources Conservation and Development Commission, in consultation with the commission and the State Air Resources Board, shall evaluate the costs and benefits, including air pollution, efficiency, and transmission and distribution system improvements, of providing ratepayer subsidies for renewable and fossil fuel “ultraclean and low-emission distributed generation,” as defined in Section 353.2, as part of the integrated energy policy report adopted pursuant to Chapter 4 (commencing with Section 25300) of Division 15 of the Public Resources Code. The State Energy Resources Conservation and Development Commission shall include recommendations for changes in the eligibility of technologies and fuels under the program, and whether the level of subsidy should be adjusted, after considering its conclusions on costs and benefits pursuant to this subdivision.
(g) (1) 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 from a California supplier.
(2) “California supplier” as used in this subdivision means any sole proprietorship, partnership, joint venture, corporation, or other business entity that manufactures eligible distributed generation resources in California and that meets either of the following criteria:
(A) The owners or policymaking officers are domiciled in California and the permanent principal office, or place of business from which the supplier’s trade is directed or managed, is located in California.
(B) A business or corporation, including those owned by, or under common control of, a corporation, that meets all of the following criteria continuously during the five years prior to providing eligible distributed generation resources to a self-generation incentive program recipient:
(i) Owns and operates a manufacturing facility located in California that builds or manufactures eligible distributed generation resources.
(ii) Is licensed by the state to conduct business within the state.
(iii) Employs California residents for work within the state.
(3) For purposes of qualifying as a California supplier, a distribution or sales management office or facility does not qualify as a manufacturing facility.

SEC. 5.5.

 Section 3.5 of this bill incorporates amendments to Section 25620 of the Public Resources Code proposed by both this bill and SB 1760. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2009, (2) each bill amends Section 25620 of the Public Resources Code, and (3) this bill is enacted after SB 1760, in which case Section 3 of this bill shall not become operative.

SEC. 6.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.