[California Energy Commission Letterhead]


Members of the Senate Energy, Utilities and Communications Committee
Members of the Senate Budget and Fiscal Review Committee,
Members of the Senate Appropriations Committee,
Members of the Assembly Utilities and Commerce Committee,
Members of the Assembly Budget Committee,
Members of the Assembly Appropriations Committee,
California State Capitol Building
Sacramento, California 95814

Date: January 15, 1999


Re:

California Energy Commission's Quarterly Report Regarding the Renewables Funding Program (October 1 - December 31, 1998)

 

To All Recipients:

In accordance with Public Utilities Code (PUC), Article 5, Section 445(g), the California Energy Commission (Commission) hereby submits its Quarterly Report for the Renewables Funding Program for the period October 1 to December 31, 1998. The enclosed Report provides the required "...information describing the awards submitted to the Treasurer pursuant to this article, the cumulative commitment of claims by account, the relative demand for funds by account, a forecast of future awards, and other matters the Commission determines may be of importance to the Legislature." It also provides preliminary input for the Commission's more detailed Biennial Renewable Program Report [required by PUC, Section 383.5(g)] which, in turn, will provide account-specific information and recommendations for program improvement. The 1998 Annual Account Transfers and Repayments Report, required pursuant to PUC, Section 445(f), is also enclosed, providing information regarding the cash flow in the respective accounts.

As reflected in the enclosed Quarterly Report, the Commission continues to make significant progress in implementing the Renewables Funding Program. Winning developers in the June auction for conditional funding awards from the New Resources Account, totaling $162 million, continue to send in their Project Award Packages for Commission approval. The packages provide detailed project descriptions, including anticipated construction schedules and information on required permits. To date, 17 Project Award Packages have been submitted, and 16 have been approved by the full Commission. After their Project Award Packages are approved, developers must complete five additional milestones and begin producing renewable energy before their projects can begin receiving funding. Once all 55 projects are on line, California's renewable capacity will have grown by 510 megawatts, a statewide increase of more than eight percent.

The first payments, totaling $2,452,705, were made from the Customer Credit Subaccount this quarter. This is an exciting development, and an indication of continued progress within the program. A consumer-education marketing plan will be finalized in the first quarter of 1999, which will direct funds toward expanding consumer awareness and stimulating consumer demand for renewable-energy products, including emerging renewable technologies.

As indicated in the enclosed Report, the Commission continues to increasingly support the development of the renewable-energy market and renewable technologies through its implementation of the Renewables Funding Program.

Should you have any questions or comments concerning this Report, please feel free to contact Traci Stevens, Commission Director of Governmental Affairs, at 654-4942.

_____________________________

_____________________________

MICHAL C. MOORE

JANANNE SHARPLESS

Commissioner and Presiding Member

Commissioner and Associate Member

Renewables Program Committee

Renewables Program Committee






California Energy Commission's Quarterly Report
Regarding the Renewables Funding Program

(October 1 - December 31, 1998)




Commission Seal




The California Energy Commission (Commission) is pleased to submit its Quarterly Report on the Renewables Funding Program covering the period October 1 through December 31, 19981 . The report describes the Commission's implementation activities, including information regarding awards submitted to the State Controller2 for payment, the cumulative commitment of claims by account, the relative demand for funds by account, a forecast of future awards, and related matters.

1 Public Utilities Code (PUC), Article 5, Section 445(g) requires the Commission to report to the Legislature quarterly on fiscal and programmatic aspects of the program.

2 As a procedural matter, the Commission submits awards directly to the State Controller for payment, rather than through the Treasurer. This procedure significantly streamlines the award-payment process for all participants.

Background

Assembly Bill 1890 ([AB 1890] Chp. 854, Stats. 96) required California's three major investor-owned utilities to collect $540 million from their ratepayers over a four-year period (1998-2002) to help support renewable electricity-generation technologies and the development of a renewable market. As AB 1890 required, the Commission submitted its Policy Report on AB 1890 Renewables Funding (Policy Report) to the Legislature in March 1997, with recommendations for allocating and distributing these funds. Senate Bill 90 ([SB 90] Chp. 905, Stats. 97) subsequently established a Renewable Resources Trust Fund, placed the $540 million into the fund, and directed the Commission on how to distribute the fund through four distinct accounts consistent with the Policy Report. These accounts and the total funds allocated to each are:

In January 1998, consistent with SB 90, the Commission adopted overall funding guidelines, eligibility requirements, yearly allocations, and account-specific guidelines to assist participants in applying for funding from the various accounts within the Renewables Funding Program.

Renewables Funding Program Implementation

The mechanism for distributing funds varies by account, as do the implementation activities for each account. Table I highlights the Commission's implementation activities for the fourth quarter of 1998 and describes the expected funding and implementation activities for the first quarter of 1999.

Table I
Renewables Funding Program:
Fourth Quarter 1998 Program Implementation

Account, Program-Implementation and Funding
Activities:
October -- December 1998
Expected Funding and Implementation
Activities:
January -- March 1999
Existing Resources Account
  • 300 facilities registered as renewable suppliers and 200 facilities are eligible for funding as of December 31.

  • Tier 1 (biomass and solar/thermal) paid 1.5 cents/kWh, for 686 million kWh during August, September, and October.

  • Tier 2 (wind) paid from 0.78 - 1.0 cents/kWh, for 437 million kWh during August, September, and October.

  • Tier 3 (geothermal, digester and landfill gas, small hydro and municipal solid waste) paid from 0.0 - 0.76 cents/kWh, for 1,208 million kWh during August, September, and October.
  • Payments totaling $18,389,723 made this quarter.

  • Rollover of about $14.4 million as of December 31.

  • Payments for November, December, and January generation are scheduled for February 1, March 1, and March 31, 1999, respectively.

  • Estimated first quarter 1999 payments (November, December, January): $11.6 million.
New Resources Account
  • A total of 17 Project Award Packages received, 8 submitted this quarter.

  • Commission approved first two Project Award Packages on October 14.

  • Fourteen additional Project Award Packages approved on January 6.

  • No payments made during fourth quarter.
  • Submittal of most of the remaining Project Award Packages (38) expected during first quarter of 1999.

  • Construction of some projects has been completed, payments are likely to begin during first quarter.
Emerging Resources Account
  • Have received buydown-reservation requests totaling $7.5 million since program began March 20, with about $500,000 reserved this quarter.

  • Payments for installed systems totaling about $549,000 as of December 31.

  • Received 27 new reservation requests this quarter.
  • More payments to smaller systems (less than 10 kW) expected.

  • Several large projects are near completion, and should receive payments soon.

  • Payments to (5+) medium and large projects will be made after local permits are secured.
Customer-Side Account
Customer Credit Subaccount
  • Thirteen marketers are registered as renewable providers, offering 23 products containing renewable energy.

  • Four providers registered this quarter.

  • Payments totaling $2,452,705 made to providers who passed on credits to their customers.
  • Providers are expected to continue serving their customers.

  • More payments will be made as providers continue to submit invoices for funding.
Consumer Education Subaccount
  • Commission's Renewables Program Committee held a public workshop on December 7 to discuss proposed marketing plan for consumer education.
  • Marketing plan will be finalized in the first quarter of 1999, leading to implementation of a consumer education campaign.

Renewable Resources Trust Fund Expenditures

Total funds received through December 31, 1998 amount to $109.5 million for all four accounts. Total funds awarded as of the fourth quarter of 1998 amount to $52.7 million, reflecting payments (disbursements) from the Existing Resources Account, the Emerging Resources Account, and the Customer Credit Subaccount. Total funds reserved amount to $33.2 million, reflecting fund reservations (encumbrances) from the Emerging Resources Account and the New Resources Account. Table II shows a financial summary of the Renewables Resources Trust Fund, by account, as of the fourth quarter 1998.

Table II
Renewable Resources Trust Fund
Current Funding and Expenditures for the Quarter Ending December 31, 1998
($ millions)

 
Existing Resources Account
New Resources Account3
Emerging Resources Account
Customer Resources Account
Program Total4
Available Funds
62.415
26.280
10.950
9.8551
109.504
Disbursements
(49.709)
0.000
(0.549)
(2.453)
(52.711)
Current Balance
12.706
26.280
10.401
7.402
56.793
Encumbrances
0.000
(26.280)
(6.915)5
0.000
(33.195)
Unexpended Funds
12.706
0.000
3.486
7.402M
23.598

3 The Commission conditionally allocated $162 million at its June 5, 1998 auction for future incentive payments. Funds are encumbered for projects following their Project Award Package approval.

4 Program Totals include $4,146 in voluntary contributions.

5 Reservation requests granted (but not yet paid) since the March 20 start-up of the Buydown Program.

The three investor-owned utilities continue deposits into the Fund with payments current to December 31, 1998. The program design has a built-in, two-month processing period for payments to eligible energy in several accounts. As reflected by Table II, payments were made from the Existing Resources Account for electricity produced through October 1998, claims were paid to systems through the Buydown Program in the Emerging Resources Account, and the first payments were made from the Customer Resources Account to providers of renewable energy. Encumbrances (reservations) were made from the Emerging Resources Account for systems participating in the Buydown Program, and from the New Resources Account for the 16 projects with approved Project Award Packages. Funding to these first projects will eventually total $52.6 million; funds from the New Resources Account will continue to be reserved as they become available.

The Buydown Program has accepted 195 reservations since it began on March 20, 1998, including 27 new reservation requests in the fourth quarter. These encumbrances and $549,000 in payments to eligible facilities represent cumulative program operations through December 1998. Reservations are made up to 12 months in advance, so disbursements from the Emerging Resources Account are expected to increase in the first quarter of 1999.

Commission program staff for the New Resources Account have received a total of 17 Project Award Packages from winners in the June auction for conditional funding awards; so far, the Commission has approved 16. The Commission approved the first two Project Award Packages at its October 14 Business Meeting following a public hearing on October 2. The Commission approved 14 additional Project Award Packages at its January 6, 1999 Business Meeting following a December 18 public hearing. After the Commission approves their Project Award Packages, winning bidders must complete project construction and begin producing electricity in order to receive their awards. No payments from the New Resources Account occurred in the fourth quarter, since none of the projects with approved Project Award Packages have started producing electricity. However, some projects are almost ready to go on-line, and payment requests may be received soon.

The first disbursements were made from the Customer Credit Subaccount this quarter. Payments totaling $2,452,705 were made to registered providers who had purchased eligible renewable generation and passed the customer credits on to their consumers. Four new providers registered this quarter, bringing the total to 13. A revision to the Customer Credit Subaccount Guidebook in October allows wholesalers to participate in the program, although they do not receive funds directly. To date, one wholesaler has registered. A revision to the definition of "customer," approved by the Commission at its January 6, 1999 Business Meeting, is expected to stimulate the market by creating an incentive for cities and other large consumers to purchase renewable energy.

At this time, there have been no disbursements from the Consumer Education Subaccount funds. The Renewables Program Committee conducted a public workshop on December 7 to discuss its proposed consumer marketing plan, which is in the last stages of development. When finalized in the first quarter of 1999, the plan will guide the allocation and administration of the available funds.

In summary, the Commission continues to make excellent progress in implementing the Renewables Funding Program. We expect program disbursements of the Renewable Resource Trust Fund to increase in the first quarter of 1999.

Respectfully submitted,

_____________________________

_____________________________

MICHAL C. MOORE

JANANNE SHARPLESS

Commissioner and Presiding Member

Commissioner and Associate Member

Renewables Program Committee

Renewables Program Committee




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