Existing law, the California Global Warming Solutions Act of 2006, designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. Existing law requires all moneys, except for fines and penalties, collected by the State Air Resources Board from the auction or sale of allowances as part of a market-based compliance mechanism relative to the reduction of greenhouse gas emissions to be deposited in the Greenhouse Gas Reduction Fund and to be used, upon appropriation by the Legislature, for specified purposes, including the reduction of greenhouse gas emissions associated with water use and supply. The state board is required to adopt a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020.

This bill would require the State Water Resources Control Board, in coordination with the State Energy Resources Conservation and Development Commission, the Public Utilities Commission, and the Department of Water Resources, to develop and implement a grant and low-interest loan program for water projects that result in the net reduction of water-related greenhouse gas emissions. The bill would continuously appropriate $200,000,000 annually from the Greenhouse Gas Reduction Fund to the State Water Resources Control Board to develop and implement the grant and low-interest loan program.

The California Constitution requires the reasonable and beneficial use of water. Existing law requires the Department of Water Resources and the State Water Resources Control Board to take all appropriate proceedings or actions to prevent waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion of water in this state. Existing law authorizes any public entity, as defined, that supplies water at retail or wholesale for the benefit of persons within the service area or area of jurisdiction of the public entity to, by ordinance or resolution, adopt and enforce a water conservation program to reduce the quantity of water used for the purpose of conserving the water supplies of the public entity.

This bill would require the department and the board, by ____, to prepare and submit to the Legislature a report that includes recommendations relating to drought preparedness. The bill would require the department and the board to conduct an annual survey of public and private water suppliers relating to water supply reliability in the event of a drought.

Date of Hearing: May 11, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1989

Author:(Jones) – As Amended Ver:March 30, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the State Water Resources Control Board (SWRCB) to develop and implement a low-interest loan and grant program for water projects that reduce water-related greenhouse gas (GHG) emissions in coordination with the Department of Water Resources (DWR), the California Energy Commission (CEC) and the California Public Utilities Commission (PUC).

This bill exempts guidelines adopted to implement the program from the Administrative Procedures Act (APA).

FISCAL EFFECT:

1. Cost pressures, likely in the $100 million range or more to fund the loan and grant program (Greenhouse Gas Reduction Funds, GF or other special fund.)
2. Initial increased costs of $150,000 to $300,000 for SWRCB to develop the program. Ongoing administrative costs of approximately $500,000 for every $10 million made available to the loan and grant program (Greenhouse Gas Reduction Funds, GF or other special fund.)
3. Absorbable DWR costs, however, DWR has spent about $1 million in the development and awarding of grants through the Water/Energy Technology program. This bill does not add new costs, but may be duplicative of DWR's effort.
4. Unknown potential cost increases for CEC depending on the level of participation in the loan and grant program.
5. Absorbable PUC costs.
6. Increased costs of for ARB to develop new quantification methods for water-energy activities to determine GHG reductions and co-benefits (Greenhouse Gas Reduction Funds or other special fund.) and analyze individual projects.

COMMENTS:

1. Purpose. According to the author, since the production of energy results in GHG emissions, there is an opportunity for the state to kill two birds with one stone through projects that conserve water and at the same time reduce GHG.
2. Background. According to the CEC, water-related energy use in California consumes approximately 20% of the state’s electricity and 30% of the state’s non-power plant natural gas (natural gas not used to produce electricity). The water sector uses electricity to pump, treat, transport, deliver, and heat water. The most energy-intensive uses of water in California are associated with end uses by the customer (e.g., heating, processing, and pressurizing water), and 75% of the electricity and nearly all of the natural gas use related to water in California is associated with water heating. Additionally, expected increases in groundwater pumping, water treatment, and water recycling due to drought conditions in the state, will likely increase the energy intensity of water .
3. Governor's Proposals. Executive Order B-29-15 of April 2015, directed state agencies to perform various actions to respond to severe drought conditions in the state, including directing the CEC and DWR to implement a Water/Energy Technology program to deploy technologies that achieve water and energy savings and GHG emissions reductions.

Emergency drought relief legislation, SB 103 (Budget Committee, Chapter 2, Statutes of 2014) appropriated $10 million to the California Department of Food and Agriculture (CDFA) (for water and energy efficiency projects in the agricultural sector, and $30 million to the DWR to implement a grant program to support local water-use efficiency projects and energy efficiency projects at State Water Project facilities.

The Governor’s proposed 2016-17 budget includes $30 million in from AB 32 cap-and-trade revenues for DWR and CDFA to continue water and energy efficiency projects.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: March 29, 2016

ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE

Marc Levine, Chair

ABPCA Bill Id:AB 1989 (

Author:Jones) – As Introduced Ver:March 14, 2016

SUBJECT: Drought: water supply

SUMMARY: Requires the State Water Resources Control Board in coordination with the State Energy Resources and Conservation and Development Commission, the Public Utilities Commission, and the Department of Water Resources, to develop and implement a grant and low interest loan program to reduce water-related greenhouse gas (GHG) emissions. Specifically, this bill:

1. Continuously and annually appropriates $200 million from the greenhouse gas reduction fund (GGRF) to implement the grant and low-interest loan program.
2. Finds and declares that water and energy are connected. California’s water system accounts for 20 percent of total electricity usage and 30 percent of nonpower-related natural gas use. Saving water saves energy and potentially reduces emissions. There are opportunities to reduce water-related greenhouse gas emissions.
3. Includes but does not limit projects eligible for grant and low interest loan funding to be: local water recycling, stormwater capture, groundwater cleanup, seawater and brackish water desalination, and water conservation. Additionally includes efficient irrigation, water and wastewater plant clean energy, energy-efficient water pumps, pipe leak detection and repair, appliance water efficiency project to be funded through the grant and low interest loan program.
4. Requires projects to reduce water-related greenhouse gas emissions to be eligible.
5. Requires any public funds made available for the program to private water companies regulated by the Public Utilities Commission be used for the benefit of rate payers or the public.
6. Authorizes the State Water Resources Control Board to adopt guidelines and regulations necessary to implement the bill.

EXISTING LAW:

1. Requires the California Air Resources Board to adopt GHG emissions reduction measures to achieve a reduction in statewide GHG emissions to the 1990 level.
   
2. Requires the California Air Resources Board to prepare and approve a Scoping Plan, on or before January 1, 2009, and once every five years thereafter, for achieving the maximum technologically feasible and cost-effective reductions in GHG emissions from sources of emissions by 2020.
3. Establishes the GGRF in the State Treasury; requires all funds, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the GGRF; and, requires the Department of Finance, in consultation with the California Air Resources Board and any other relevant state agency, to develop a three-year investment plan for the GGRF.
4. Requires that the GGRF be used to facilitate GHG emissions reductions in this state. Requires that annual budget appropriations from the GGRF be consistent with the investment plan.
5. Establishes the policy of the state and the intent of the Legislature to promote all feasible means of energy and water conservation and all feasible uses of alternative energy and water supply sources.
   
6. Finds and declares that waste or unreasonable use of water imposes unnecessary and wasteful consumption of energy to deliver or furnish the water, and it is necessary, therefore, to determine the quantities of water in use throughout the state to the maximum extent that it is reasonable to do so in order to reduce energy consumption.

FISCAL EFFECT: Unknow, but the bill appropriates $200 million annually and continuously out of GGRF money.

COMMENTS: Implements a grant and low interest loan program to reduce water-related GHG emissions.

1. Author’s statement: California’s AB 32 cap-and-trade program is important in the state’s effort to reduce overall GHG emissions. Water and energy resources are connected. The pumping and movement of water accounts for 20 percent of the total electricity usage and 30 percent of non-power related natural gas consumed in the state. Since the production of energy results in GHG emissions there is an opportunity for the state to kill two birds with one stone through projects that conserve water and at the same time reduce GHG.
2. Background:

Water and energy use. According to the State Energy Resources and Conservation and Development Commission, water-related energy use in California consumes approximately 20% of the state’s electricity and 30% of the state’s non-power plant natural gas (natural gas not used to produce electricity). The water sector uses electricity to pump, treat, transport, deliver, and heat water. The State Energy Resources and Conservation and Development Commission also found that the most energy-intensive uses of water in California are associated with end uses by the customer (e.g., heating, processing, and pressurizing water), and 75% of the electricity and nearly all of the natural gas use related to water in California is associated with water heating. Additionally, expected increases in groundwater pumping, water treatment, and water recycling due to drought conditions in the state, mean the energy intensity of water will likely increase.

Executive Order. Executive Order B-29-15 of April 2015, directed state agencies to perform various actions regarding saving water to respond to severe drought conditions in the state, including directing the State Energy Resources and Conservation and Development Commission, jointly with Department of Water Resources, to implement a Water Energy Technology program to deploy innovative water management technologies that achieve water and energy savings and GHG emissions reductions. The Executive Order also directed the State Energy Resources and Conservation and Development Commission, jointly with Department of Water Resources, to implement a limited statewide appliance rebate program for inefficient appliances.

Funding for water and GHG emissions. Emergency drought relief legislation, SB 103 (Budget Committee, Chapter 2, Statutes of 2014) appropriated $10 million to the California Department of Food and Agriculture for water and energy efficiency projects in the agricultural sector, and $30 million to the Department of Water Resources to implement a grant program to support local water-use efficiency projects and energy efficiency projects at State Water Project facilities.

The 2014-15 Budget agreement specifies how the state will allocate most cap-and-trade auction revenues in 2015-16 and beyond. For all future revenues, the legislation appropriates 25% for the state’s high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to intercity capital rail projects, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature.

Of that 40% available for annual appropriation, the Governor’s proposed 2016-17 cap-and-trade expenditures would appropriate $30 million to the Department of Water Resources and the California Department of Food and Agriculture for water and energy efficiency projects, $60 million to the State Energy Resources and Conservation and Development Commission and the Department of Water Resources for rebates to replace inefficient appliances, and the Water and Energy Technology Program, as described in the Executive Order.

Drought funding. In response to California's ongoing drought, AB 91 (Budget Committee), Chapter 1, Statutes of 2015 allocated just over $1 billion for drought-related activities. Among other things, the bill:

• 1. Accelerates a $131.7 million appropriation to the State Water Resources Control Board to fund water recycling projects, including feasibility studies, demonstration projects, and larger scale water recycling projects.
  2. Accelerates a $20 million appropriation from the GGRF to the Department of Water Resources for state and local water use efficiency programs that reduce GHG emissions.
  3. Appropriates $10 million from the GGRF to the California Department of Food and Agriculture for agricultural water efficiency projects that reduce GHG emissions.

Suggested Committee Amendments: Assembly policy committees have not made it a practice to move bills through policy committee that make single purpose GGRF appropriations.

The committee may wish to remove the continuous and annual $200 million appropriation that is currently in the bill.

1. Prior and Related Legislation:
2. AB 32 (Núñez, Pavely) Chapter 488, Statues of 2006, establishes the requirement to reduce GHG emissions and put in place the mechanism to achieve that requirement
3. SB 471 (Pavely) 2015, held in Assembly Appropriations was very similar to this bill, but did not make a GGRF appropriation.
4. SB 551 (Wolk) 2015, held in Assembly Appropriations would have established a state policy recognizing and addressing the nexus between water and energy.

REGISTERED SUPPORT / OPPOSITION:

Support

None on File

Opposition

None on File

Analysis Prepared by: Ryan Ojakian / W., P., & W. / (916) 319-2096

Date of Hearing: March 29, 2016

ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE

Marc Levine, Chair

ABPCA Bill Id:AB 1989 (

Author:Jones) – As Introduced Ver:March 14, 2016

SUBJECT: Drought: water supply

SUMMARY: Requires the State Water Resources Control Board in coordination with the State Energy Resources and Conservation and Development Commission, the Public Utilities Commission, and the Department of Water Resources, to develop and implement a grant and low interest loan program to reduce water-related greenhouse gas (GHG) emissions. Specifically, this bill:

1. Continuously and annually appropriates $200 million from the greenhouse gas reduction fund (GGRF) to implement the grant and low-interest loan program.
2. Finds and declares that water and energy are connected. California’s water system accounts for 20 percent of total electricity usage and 30 percent of nonpower-related natural gas use. Saving water saves energy and potentially reduces emissions. There are opportunities to reduce water-related greenhouse gas emissions.
3. Includes but does not limit projects eligible for grant and low interest loan funding to be: local water recycling, stormwater capture, groundwater cleanup, seawater and brackish water desalination, and water conservation. Additionally includes efficient irrigation, water and wastewater plant clean energy, energy-efficient water pumps, pipe leak detection and repair, appliance water efficiency project to be funded through the grant and low interest loan program.
4. Requires projects to reduce water-related greenhouse gas emissions to be eligible.
5. Requires any public funds made available for the program to private water companies regulated by the Public Utilities Commission be used for the benefit of rate payers or the public.
6. Authorizes the State Water Resources Control Board to adopt guidelines and regulations necessary to implement the bill.

EXISTING LAW:

1. Requires the California Air Resources Board to adopt GHG emissions reduction measures to achieve a reduction in statewide GHG emissions to the 1990 level.
   
2. Requires the California Air Resources Board to prepare and approve a Scoping Plan, on or before January 1, 2009, and once every five years thereafter, for achieving the maximum technologically feasible and cost-effective reductions in GHG emissions from sources of emissions by 2020.
3. Establishes the GGRF in the State Treasury; requires all funds, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the GGRF; and, requires the Department of Finance, in consultation with the California Air Resources Board and any other relevant state agency, to develop a three-year investment plan for the GGRF.
4. Requires that the GGRF be used to facilitate GHG emissions reductions in this state. Requires that annual budget appropriations from the GGRF be consistent with the investment plan.
5. Establishes the policy of the state and the intent of the Legislature to promote all feasible means of energy and water conservation and all feasible uses of alternative energy and water supply sources.
   
6. Finds and declares that waste or unreasonable use of water imposes unnecessary and wasteful consumption of energy to deliver or furnish the water, and it is necessary, therefore, to determine the quantities of water in use throughout the state to the maximum extent that it is reasonable to do so in order to reduce energy consumption.

FISCAL EFFECT: Unknow, but the bill appropriates $200 million annually and continuously out of GGRF money.

COMMENTS: Implements a grant and low interest loan program to reduce water-related GHG emissions.

1. Author’s statement: California’s AB 32 cap-and-trade program is important in the state’s effort to reduce overall GHG emissions. Water and energy resources are connected. The pumping and movement of water accounts for 20 percent of the total electricity usage and 30 percent of non-power related natural gas consumed in the state. Since the production of energy results in GHG emissions there is an opportunity for the state to kill two birds with one stone through projects that conserve water and at the same time reduce GHG.
2. Background:

Water and energy use. According to the State Energy Resources and Conservation and Development Commission, water-related energy use in California consumes approximately 20% of the state’s electricity and 30% of the state’s non-power plant natural gas (natural gas not used to produce electricity). The water sector uses electricity to pump, treat, transport, deliver, and heat water. The State Energy Resources and Conservation and Development Commission also found that the most energy-intensive uses of water in California are associated with end uses by the customer (e.g., heating, processing, and pressurizing water), and 75% of the electricity and nearly all of the natural gas use related to water in California is associated with water heating. Additionally, expected increases in groundwater pumping, water treatment, and water recycling due to drought conditions in the state, mean the energy intensity of water will likely increase.

Executive Order. Executive Order B-29-15 of April 2015, directed state agencies to perform various actions regarding saving water to respond to severe drought conditions in the state, including directing the State Energy Resources and Conservation and Development Commission, jointly with Department of Water Resources, to implement a Water Energy Technology program to deploy innovative water management technologies that achieve water and energy savings and GHG emissions reductions. The Executive Order also directed the State Energy Resources and Conservation and Development Commission, jointly with Department of Water Resources, to implement a limited statewide appliance rebate program for inefficient appliances.

Funding for water and GHG emissions. Emergency drought relief legislation, SB 103 (Budget Committee, Chapter 2, Statutes of 2014) appropriated $10 million to the California Department of Food and Agriculture for water and energy efficiency projects in the agricultural sector, and $30 million to the Department of Water Resources to implement a grant program to support local water-use efficiency projects and energy efficiency projects at State Water Project facilities.

The 2014-15 Budget agreement specifies how the state will allocate most cap-and-trade auction revenues in 2015-16 and beyond. For all future revenues, the legislation appropriates 25% for the state’s high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to intercity capital rail projects, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature.

Of that 40% available for annual appropriation, the Governor’s proposed 2016-17 cap-and-trade expenditures would appropriate $30 million to the Department of Water Resources and the California Department of Food and Agriculture for water and energy efficiency projects, $60 million to the State Energy Resources and Conservation and Development Commission and the Department of Water Resources for rebates to replace inefficient appliances, and the Water and Energy Technology Program, as described in the Executive Order.

Drought funding. In response to California's ongoing drought, AB 91 (Budget Committee), Chapter 1, Statutes of 2015 allocated just over $1 billion for drought-related activities. Among other things, the bill:

• 1. Accelerates a $131.7 million appropriation to the State Water Resources Control Board to fund water recycling projects, including feasibility studies, demonstration projects, and larger scale water recycling projects.
  2. Accelerates a $20 million appropriation from the GGRF to the Department of Water Resources for state and local water use efficiency programs that reduce GHG emissions.
  3. Appropriates $10 million from the GGRF to the California Department of Food and Agriculture for agricultural water efficiency projects that reduce GHG emissions.

Suggested Committee Amendments: Assembly policy committees have not made it a practice to move bills through policy committee that make single purpose GGRF appropriations.

The committee may wish to remove the continuous and annual $200 million appropriation that is currently in the bill.

1. Prior and Related Legislation:
2. AB 32 (Núñez, Pavely) Chapter 488, Statues of 2006, establishes the requirement to reduce GHG emissions and put in place the mechanism to achieve that requirement
3. SB 471 (Pavely) 2015, held in Assembly Appropriations was very similar to this bill, but did make a GGRF appropriation.
4. SB 551 (Wolk) 2015, held in Assembly Appropriations would have established a state policy recognizing and addressing the nexus between water and energy.

REGISTERED SUPPORT / OPPOSITION:

Support

None on File

Opposition

None on File

Analysis Prepared by: Ryan Ojakian / W., P., & W. / (916) 319-2096