BILL NUMBER: AB 1470 AMENDED BILL TEXT AMENDED IN ASSEMBLY JUNE 1, 2007 AMENDED IN ASSEMBLY MAY 2, 2007 AMENDED IN ASSEMBLY APRIL 12, 2007 INTRODUCED BY Assembly Member Huffman ( Principal coauthor: Assembly Member Leno ) (Coauthors: Assembly MembersCarter,Beall, Carter, DeSaulnier, Laird, Maze, Wolk, and Saldana) (Coauthors: Senators Kuehl and Romero) FEBRUARY 23, 2007 An act to add the heading of Article 1 (commencing with Section 2851) to, and to add and repeal Article 2 (commencing with Section 2860) of, Chapter 9 of Part 2 of Division 1 of, the Public Utilities Code, relating to solar energy. LEGISLATIVE COUNSEL'S DIGEST AB 1470, as amended, Huffman. Solar energy: SolarHotWater Heating 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 Water Heating and Efficiency Act of 2007. The bill would make findings and declarations of the Legislature relating to the promotion of solarhotwater heating 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, after the receipt and evaluation of data on the appropriate level and type of incentives needed to promote installation of solarhotwater heating systems from a specified pilot program, to design and implement a program to incentivize the installation of 200,000 solarhotwater heating 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 solarhotwater heating systems receiving gas customer funded incentives. The commission would be required to establish conditions on those incentives. The bill would specify that, except for the SolarHotWater Heating Pilot Program in San Diego, only solar water 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 solarhotwater 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 solarhotwater heating technologies. The Energy Commission, in coordinating efforts with the commission, would be required to consider, when appropriate, coupling rebates for solarhotwater heating systems with complementary 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 moneys from the surcharge are deposited in the Gas Consumption Surcharge Fund and are 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 SolarHotWater Heating and Efficiency Act of 2007, for the service territories of the gas corporations, through a surcharge applied to gas customers in those service territories based on the amount of natural gas consumed, not to exceed $250,000,000 over the course of the 10-year program. The bill would require the commission to annually establish a surcharge rate for each class of gas customers, and would except. The bill would exempt fromthethat surcharge those gas customers participating in the California Alternate Rates for Energy (CARE) or Family Electric Rate Assistance (FERA) programs. The bill would also authorize those individual and families whose household income is at or below 300% of the federal poverty level to apply for an exemption. The bill would require a gas corporation to provide information to their ratepayers no fewer than 2 times per year regarding the availability of these exemptions . The bill would require that the program be administered by the gas corporations or 3rd party administrators, as determined by the commission, and subject to the supervision of the commission. (3) The bill would require the governing body of each publicly owned utility providing gas service to retail end-use gas customers, to adopt, implement, and finance a solarhotwater heating system incentive program meeting certain requirements. 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. 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. SolarPhotovoltaicEnergy Systems SEC. 2. 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. SolarHot WaterWater Heating Systems 2860. This article shall be known, and may be cited, as the SolarHot WaterWater Heating 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) "Gas customer" includes both "core" and "noncore" customers, as those terms are used in Chapter 2.2 (commencing with Section 328) of Part 1, that receive retail end-use gas service within the service territory of a gas corporation. (c) "kWth" means the kilowatt thermal capacity of a solarhot waterwater heating system, measured consistent with the standard established by the SRCC. (d) "kWhth" means kilowatthours thermal as measured by the number of kilowatts thermal generated , or displaced, in an hour. (e) "New Solar Homes Partnership" means the 10-year program, administered by the Energy Commission, encouraging solar energy systems in new home construction. (f) "Solar heating collector" meansthea device that is used to collect or capture heat from the sun and that is generally, but need not be, located on a roof. (g) "Solarhot waterwater 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 capturing energy from the sun to reduce natural gas consumption in a home, businesses, or any building receiving natural gas that is subject to the surcharge established pursuant to Section 2860, 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. "Solarhot waterwater heating systems" do not include solar pool heating systems. (h) "SRCC" means the SolarRateRating and Certification Corporation. 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) Solarhot waterwater heating systems represent the largest untapped natural gas saving potential remaining in California. (g) In addition to financial and energy savings, solarhot waterwater heating systems can help protect against future gas and electricity shortages and reduce our dependence on foreign sources of energy. (h) Solarhot waterwater 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 solarhot waterwater heating 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 solarhot waterwater heating systems that directly reduces demand for natural gas in homes, businesses, and government buildings. Toward that end, it is the goal ofthe Solar Hot Water and Efficiency Act of 2007this article to install at least 200,000 solarhot waterwater 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 solarhot waterwater heating system incentives created by the act should be a cost-effective investment by gas customers. Gas customers 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) After meaningful data is available and evaluated by the commission from the SolarHot Water HeaterWater Heating Pilot Project conducted by the San Diego Regional Energy Organization on the appropriate level and type of incentives needed to promote installation of solarhot waterwater heating systems, the commission shall do all of the following: (1) Design and implement a program applicable to the service territories of a gas corporation, to achieve the goal of the Legislature to promote the installation of 200,000 solarhot waterwater heating systems in homes and businesses throughout the state by 2017. (2) The program shall be administered by gas corporations or third-party administrators, as determined by the commission, and subject to the supervision of the commission. (3) The commission shall coordinate the program with the Energy Commission's New Solar Homes Partnership to achieve the goal of building zero-energy homes. (b) (1) The commission shall fund the program through the use of a surcharge applied to gas customers based upon the amount of natural gas consumed. The surcharge shall be in addition to any other charges for natural gas sold or transported for consumption in this state. (2) The commission shall impose the surcharge at a level that is necessary to meet the goal of installing 200,000 solarhot waterwater heating systems , or the equivalent output of 200,000 solar water heating systems, on homes and businesses in California by 2017. Funding for the program established by this article shall not, for the collective service territories of all gas corporations, exceed two hundred fifty million dollars ($250,000,000) over the course of the 10-year program. (3) The commission shall annually establish a surcharge rate for each class of gas customers.Any surcharge imposed to fund the program designed and implemented pursuant to this article shall not be imposed upon a gas customer whose household income is below 300 percent of the federal poverty level.Any gas customer participating in the California Alternate Rates for Energy (CARE) or Family Electric Rate Assistance (FERA) programs shall be exempt from paying any surcharge imposed to fund the program designed and implemented pursuant to this article. Additionally, individuals and families whose household income is at or below 300 percent of the federal poverty level may apply for an exemption from paying any surcharge designed and implemented pursuant to this article. Gas corporations shall provide information to their ratepayers no fewer than two times per year regarding the availability of these exemptions. (4) Any surcharge imposed to fund the program designed and implemented pursuant to this article shall not be imposed upon the portion of any gas customer's procurement of natural gas that is used or employed for a purpose that Section 896 excludes from being categorized as the consumption of natural gas.(4)(5) The gas corporation or other person or entity providing revenue cycle services, as defined in Section 328.1, shall be responsible for collecting the surcharge. (c) Funds shall be allocated for the benefit of gas customers to promote utilization of solarhot waterwater heating systems. (d) In designing and implementing the program required by this article, no moneys shall be diverted from any existing programs for low-income ratepayers or cost-effective energy efficiency programs. 2864. (a) The commission, in consultation with the Energy Commission and interested members of the public, shall establish eligibility criteria for solarhot waterwater heating systems receiving gas customer funded incentives pursuant to this article. The criteria should specify and include all of the following: (1) Design, installation, and energy output or displacement standards. To be eligible for rebate funding, asolar hot waterresidential solar water heating system shall, at a minimum, have a SRCC OG-300 Solar Water Heating System Certification. Solar collectors used in systems for multifamily residential, commercial, or industrial water heating shall, at a minimum, have a SRCC OG-100 Solar Water Heating System Certification. (2) Require that solarhot waterwater 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 solarhot waterwater heating collectors have a warranty of not less than 10 years to protect against defects and undue degradation. (4) Require that solarhot waterwater heating systems are in buildings connected to a natural gas utility's distribution system within the state. (5) Require that solarhot waterwater heating systems have meters or other kWhth measuring devices in place to monitor and measure the system's performance and the quantity of energy generated or displaced by the system. The criteria shall require meters for systems displacing over 30 kWh th . The criteria may require meters for systems 30 kWh th or smaller. (6) Require that solarhot waterwater heating systems are installed in conformity with the manufacturer's specifications and all applicable codes and standards. (b) No gas customer funded incentives shall be made for a solarhot waterwater heating system that does not meet the eligibility criteria. 2865. (a) The commission shall establish conditions on gas customer funded incentives pursuant to this article. The conditions shall require both of the following: (1) Appropriate siting and high-quality installation of the solarhot waterwater 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 solarhot waterwater heating systems and promote the greatest energy production or displacement per gas customer dollar. (2) Appropriate energy efficiency improvements in the new or existing home or commercial structure where the solar hot water system is installed. (b) The commission shall set rating standards for equipment, components, and systems to ensure 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 solarhot waterwater heating systems on low-income and affordable housing projects undertaken pursuant to Section 50052.5, 50053, 50079.5, 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 solarhot waterwater heating technologies, and be paid out on a performance-based incentive basis so that incentives are earned based on the actual energy savings , or on predicted energy savings as established by the commission . (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 when appropriate, consider coupling rebates for solarhot waterwater heating systems with complementary 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 solarhot waterwater 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. This report shall include justification for the size of the rebate program in terms of total available incentive moneys as well as the anticipated benefits of the program in its entirety. To facilitate the understanding of how solarhot waterwater heating systems 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. Except for the SolarHot WaterWater Heating Pilot Program in San Diego, solarhot waterwater 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. In order to further the state goal of encouraging the installation of 200,000 solarhotwater heaters by 2017, the governing body of each publicly owned utility providing gas service to retail end-use gas customers shall adopt, implement, and finance a solarhot waterwater heating system incentive program that does all the following: (a) Relies upon meaningful data from the SolarHot Water HeaterWater Heating Pilot Project conducted by the San Diego Regional Energy Organization on the appropriate level and type of incentives needed to promote installation of solarhot waterwater heating systems. (b) Ensures that any solarhot waterwater heating system receiving monetary incentives complies with the eligibility criteria equivalent to those established by the commission, in consultation with the Energy Commission and interested members of the public, pursuant to Section 2864. (c) Includes conditions for the receipt of monetary incentives for solarhot waterwater heating systems consistent with those adopted by the commission pursuant to subdivision (a) of Section 2865. (d) Includes minimum ratings for equipment, components, and systems consistent with those adopted by the commission pursuant to subdivision (b) of Section 2865. (e) Provides that not less than 10 percent of the overall funds be used for installation of solarhot waterwater heating systems on low-income and 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 governing board 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. 2867.4. This article 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.