California Assembly Bill AB44 Amended / Bill

 BILL NUMBER: AB 44AMENDED BILL TEXT AMENDED IN SENATE JUNE 3, 2010 AMENDED IN ASSEMBLY JUNE 1, 2009 AMENDED IN ASSEMBLY MARCH 31, 2009 AMENDED IN ASSEMBLY MARCH 18, 2009 INTRODUCED BY Assembly Member Blakeslee (Coauthor: Assembly Member Harkey) (Coauthor: Senator Benoit) DECEMBER 1, 2008  An act to amend Section 454.5 of, to add Section 454.35 to, and to add Chapter 7.7 (commencing with Section 2835) to Part 2 of Division 1 of, the Public Utilities Code, relating to energy.   An act to amend Section 5898.20 of the Streets and Highways Code, relating to public improvements.  LEGISLATIVE COUNSEL'S DIGEST AB 44, as amended, Blakeslee.  Energy storage facilities.   Improvement Act of 1911: contractual assessments.   Existing law, the Improvement Act of 1911, authorizes the legislative body of any public agency, as defined, to determine that it would be convenient, advantageous, and in the public interest to designate an area within the public agency, as specified, within which authorized public agency officials and property owners may enter into voluntary contractual assessments to finance the installation of distributed generation renewable energy sources or energy or water efficiency improvements that are permanently fixed to real property, as specified. Existing law requires the legislative body to make these determinations by adopting a resolution indicating its intention to do so and requires that the resolution include specified information and directs an appropriate public agency official to prepare a prescribed report.   This bill would define the term "permanently fixed," for purposes of financing the installation of distributed generation renewable energy sources, to include systems that are attached to specified types of real property pursuant to an electricity purchase agreement between the owner of the system and the owner of the assessed property, if the agreement satisfies prescribed criteria.   This bill would also require the legislative body of a public agency to establish criteria to ensure that a real property owner is guaranteed the electricity from a distributed generation renewable energy source in the event that the owner of the system files for bankruptcy, as specified. The bill would also require the legislative body of the public agency to make a finding that an electricity purchase agreement funded with a contractual assessment is structured to provide protections to the property owner in the event of a bankruptcy of the owner of the system, as specified.   (1) Under existing law, the Public Utilities Commission is vested with regulatory authority over public utilities, including electrical corporations, and the commission is authorized to fix the rates and charges for every public utility. Existing law authorizes the commission to approve an increase of 1/2 of 1% to 1% in the rate of return otherwise allowed an electrical corporation for investment by the corporation in generation facilities using renewable resources.   This bill would authorize the commission, after a hearing, to approve a similar increase in the rate of return for investment by a corporation in energy storage systems, as defined, that (A) are used and useful, (B) have costs of construction and operation over their useful life that are less than other facilities that provide load shifting, voltage support, and scheduling and shaping services for intermittent renewable energy resources, and (C) perform any of 4 specified purposes.   (2) The existing Public Utilities Act requires the commission to review and adopt a procurement plan for each electrical corporation in accordance with specified elements, incentive mechanisms, and objectives. The elements, among other things, require that the plan include a showing that the electrical corporation will, in order to fulfill its unmet resource needs, until a 20% renewable resources portfolio is achieved, procure renewable energy resources with the goal of ensuring that at least an additional 1% per year of the electricity sold by the electrical corporation is generated from eligible renewable energy resources, provided sufficient funds are made available to cover certain above-market costs.   This bill would require that an electrical corporation's proposed procurement plan include a showing that the electrical corporation will, in order to fulfill its unmet resource needs, procure resources from eligible renewable energy resources in an amount sufficient to meet its procurement requirements pursuant to the renewables portfolio standard established pursuant to the California Renewables Portfolio Standard Program. The bill would add a requirement that the procurement plan include a showing that the electrical corporation will incorporate cost-effective, reliable, and feasible energy storage systems, both centralized and distributed, that reduce emissions of greenhouse gases, or reduce demand for peak electrical generation, or improve the reliable operation of the electrical grid.   (3) Under existing law, a violation of the Public Utilities Act or an order, decision, rule, direction, demand, or requirement of the commission is a crime. Because certain of the provisions of this bill are within the act and require action by the commission to implement its requirements, a violation of these provisions would impose a state-mandated local program by creating a new crime.   The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.   This bill would provide that no reimbursement is required by this act for a specified reason.  Vote: majority. Appropriation: no. Fiscal committee:  yes   no  . State-mandated local program:  yes   no  . THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Section 5898.20 of the   Streets and Highways Code  is amended to read:  5898.20. (a) (1) The legislative body of any public agency may determine that it would be convenient and advantageous to designate an area within the public agency, which may encompass the entire public agency or a lesser portion, within which authorized public agency officials and property owners may enter into voluntary contractual assessments for public improvements and to make financing arrangements pursuant to this chapter. (2) The legislative body of any public agency may also determine that it would be convenient, advantageous, and in the public interest to designate an area within the public agency, which may encompass the entire public agency or a lesser portion, within which authorized public agency officials and property owners may enter into voluntary contractual assessments to finance the installation of distributed generation renewable energy sources or energy or water efficiency improvements that are permanently fixed to real property pursuant to this chapter. (b) The legislative body shall make these determinations by adopting a resolution indicating its intention to do so. The resolution of intention shall include a statement that the public agency proposes to make voluntary contractual assessment financing available to property owners, shall identify the kinds of public works, distributed generation renewable energy sources, or energy or water efficiency improvements that may be financed, shall describe the boundaries of the area within which voluntary contractual assessments may be entered into, and shall briefly describe the proposed arrangements for financing the program, including a brief description of criteria for determining the creditworthiness of a property owner. The resolution of intention shall state that it is in the public interest to finance the installation of distributed generation renewable energy sources or energy or water efficiency improvements, or both, pursuant to paragraph (2) of subdivision (a), if applicable. The resolution shall state that a public hearing should be held at which interested persons may object to or inquire about the proposed program or any of its particulars, and shall state the time and place of the hearing. The resolution shall direct an appropriate public agency official to prepare a report pursuant to Section 5898.22 and to enter into consultations with the county auditor's office or county controller's office in order to reach agreement on what additional fees, if any, will be charged to the city or county for incorporating the proposed voluntary contractual assessments into the assessments of the general taxes of the city or county on real property. (c) As used in this chapter, each of the following terms shall have the following meaning: (1) "Efficiency improvements" means permanent improvements fixed to residential, commercial, industrial, agricultural, or other real property. (2) "Legislative body" means the governing body of a public agency. (3) (A) For the purpose of financing the installation of water efficiency improvements, "public agency" means a city, county, city and county, municipal utility district, community services district, sanitary district, sanitation district, or water district, as defined in Section 20200 of the Water Code. The definition of "city" in Section 5005 shall not apply to this subparagraph. (B) For the purpose of financing the installation of distributed generation renewable energy sources or energy efficiency improvements, "public agency" means a county, city, city and county, or a municipal utility district, an irrigation district, or public utility district that owns and operates an electric distribution system. The definition of "city" in Section 5005 shall not apply to this subparagraph. (C) For the purpose of financing the public improvements, "public agency" means a city as defined in Section 5005.  (4) For the purpose of financing the installation of distributed generation renewable energy sources, "permanently fixed" includes, but is not limited to, systems attached to a residential, commercial, industrial, agricultural, or other real property pursuant to an electricity purchase agreement between the owner of the system and the owner of the assessed property, if the electricity purchase agreement contains all of the following provisions:   (A) The attached system is an eligible renewable energy resource pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code).   (B) The term of the electricity purchase agreement is at least as long as the term of the related assessment contract.   (C) The owner of the attached system agrees to install, maintain, and monitor the system for the entire term of the electricity purchase agreement.   (D) The owner of the attached system is not permitted to remove the system prior to completion of the term of the contractual assessment lien.   (E) After installation, the electricity is purchased by a single payment using the funds from the contractual assessment program.   (F) The right to receive the electricity from the system is tied to the ownership of the assessed real property and is required to be automatically transferred with the title to the real property whether the title is transferred by voluntary sale or judicial or nonjudicial foreclosure or by any other means.   (G) The system shall provide electricity to the assessed property and to no other property or location.   (H) The property owner, and all successors in interest to the real property, shall not use the electricity generated from the system for any location other than the assessed property.   (I) The electricity purchase agreement identifies the public agency that is a party to the assessment contract on the real property as a third-party beneficiary of the electricity purchase agreement until the assessment lien on the property has been fully paid and, only until that time, prohibits amendments to the electricity purchase agreement without the consent of the public agency.   (J) The property owner is guaranteed, pursuant to criteria adopted by the legislative body of a public agency as required by subdivision (d), the electric power from the system.   (d) The legislative body of the public agency shall establish criteria to ensure that a real property owner is guaranteed the electricity from a distributed generation renewable energy source in the event that the owner of the system files for bankruptcy, to the extent permitted by federal law, prior to authorizing public agency officials and property owners to enter into voluntary contractual assessments for financing the installation of distributed generation renewable energy sources attached to a residential, commercial, industrial, agricultural, or other real property pursuant to a contract that meets the provisions of paragraph (4) of subdivision (c).   (e) The legislative body of the public agency shall make a finding that any electricity purchase agreement funded with a contractual assessment under this chapter is structured, to the extent permitted by federal law, to provide protections to the property owner in the event of a bankruptcy of the owner of the system. The protections may include, but need not be limited to, the use of a special purpose entity or other adequate security as required by the legislative body.  All matter omitted in this version of the bill appears in the bill as amended in the Assembly, June 1, 2009. (JR11)