SB 746: Energy conservation contracts: alternate energy equipment: green hydrogen: Tri-Valley-San Joaquin Valley Regional Rail Authority.
- Session Year: 2023-2024
- House: Senate
- Latest Version Date: 2023-10-07
Current Status:
Passed
(2023-10-07: Chaptered by Secretary of State. Chapter 410, Statutes of 2023.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
Under existing law, a public agency, as defined, may enter into specified energy conservation contracts, including into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility, as defined, at such rates and on such terms as are approved by its governing body.
Existing law authorizes a public agency to enter into an energy service contract and related facility ground lease if the governing body finds, among other things, that the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases.
Existing law additionally authorizes a public agency to enter into a facility financing contract and a facility ground lease upon meeting certain requirements and finding that funds for the repayment of the financing or other specified contract costs are projected to be available from revenues resulting from sales of electricity or thermal energy from the facility or other sources.
Existing law authorizes a public agency to enter into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility at such rates and terms as are approved by its governing body.
This bill would authorize the Tri-Valley-San Joaquin Valley Regional Rail Authority, in addition to its authority to enter into contracts described above, to enter into energy service contracts, facility financing contracts, and contracts for the sale of specified energy resources relating to green electrolytic hydrogen, as defined, for use by the authority for purposes of financing the construction and operation of passenger rail service through the Altamont Pass Corridor.
This bill would make legislative findings and declarations as to the necessity of a special statute for the Tri-Valley-San Joaquin Valley Regional Rail Authority.
Under existing law, a public agency, as defined, may enter into specified energy conservation contracts, including into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility, as defined, at such rates and on such terms as are approved by its governing body.
Existing law authorizes a public agency to enter into an energy service contract and related facility ground lease if the governing body finds, among other things, that the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases.
Existing law additionally authorizes a public agency to enter into a facility financing contract and a facility ground lease upon meeting certain requirements and finding that funds for the repayment of the financing or other specified contract costs are projected to be available from revenues resulting from sales of electricity or thermal energy from the facility or other sources.
Existing law authorizes a public agency to enter into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility at such rates and terms as are approved by its governing body.
This bill would authorize the Tri-Valley-San Joaquin Valley Regional Rail Authority, in addition to its authority to enter into contracts described above, to enter into energy service contracts, facility financing contracts, and contracts for the sale of specified energy resources relating to green electrolytic hydrogen, as defined, for use by the authority for purposes of financing the construction and operation of passenger rail service through the Altamont Pass Corridor.
This bill would make legislative findings and declarations as to the necessity of a special statute for the Tri-Valley-San Joaquin Valley Regional Rail Authority.
Under existing law, a public agency, as defined, may enter into specified energy conservation contracts, including into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility facility, as defined, at such rates and on such terms as are approved by its governing body. Existing law defines energy conservation facility as alternate energy equipment, cogeneration equipment, or conservation measures located in public buildings or on land owned by public agencies. Existing law defines alternate energy equipment as equipment for the production or conversion of energy from alternate sources as its primary fuel source, such as solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas of less than one billion cubic feet estimated reserves per mile from an existing gas gathering line, natural gas containing 850 or fewer British thermal units per standard cubic foot, or any other source of energy, the efficient use of which will reduce the use of fossil or nuclear fuels. Existing law also defines public agency to mean the state, a county, city and county, city, district, and other specified entities.
This bill would add hydrogen to the list of examples of primary fuel sources under the definition of alternate energy equipment. The bill also would revise the definition of public agency to include a transit district.Existing law authorizes a public agency to enter into an energy service contract and related facility ground lease if the governing body finds, among other things, that the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases.
This bill would include hydrogen within the above provision referencing the anticipated cost to the public agency for thermal or electrical energy.Existing law additionally authorizes a public agency to enter into a facility financing contract and a facility ground lease upon meeting certain requirements and finding that funds for the repayment of the financing or other specified contract costs are projected to be available from revenues resulting from sales of electricity or thermal energy from the facility or other sources.
This bill would include within those provisions revenues resulting from sales of hydrogen.Existing law authorizes a public agency to enter into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility at such rates and terms as are approved by its governing body.
This bill would authorize a public agency to also enter into contracts for the sale of hydrogen.This bill would authorize the Tri-Valley-San Joaquin Valley Regional Rail Authority, in addition to its authority to enter into contracts described above, to enter into energy service contracts, facility financing contracts, and contracts for the sale of specified energy resources relating to green electrolytic hydrogen, as defined, for use by the authority for purposes of financing the construction and operation of passenger rail service through the Altamont Pass Corridor.
This bill would make legislative findings and declarations as to the necessity of a special statute for the Tri-Valley-San Joaquin Valley Regional Rail Authority.
Under existing law, a public agency, as defined, may enter into specified energy conservation contracts, including into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility at such rates and on such terms as are approved by its governing body. Existing law defines energy conservation facility as alternate energy equipment, cogeneration equipment, or conservation measures located in public buildings or on land owned by public agencies. Existing law defines alternate energy equipment as equipment for the production or conversion of energy from alternate sources as its primary fuel source, such as solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas of less than one billion cubic feet estimated reserves per mile from an existing gas gathering line, natural gas containing 850 or fewer British thermal units per standard cubic foot, or any other source of energy, the efficient use of which will reduce the use of fossil or nuclear fuels. Existing law also defines public agency to mean the state, a county, city and county, city, district, and other specified entities.
This bill would add electrolytic hydrogen to the list of examples of primary fuel sources under the definition of alternate energy equipment. The bill also would revise the definition of public agency to include a transit district.
Existing law authorizes a public agency to enter into an energy service contract and related facility ground lease if the governing body finds, among other things, that the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases.
This bill would include electrolytic hydrogen within the above provision referencing the anticipated cost to the public agency for thermal or electrical energy.
Existing law additionally authorizes a public agency to enter into a facility financing contract and a facility ground lease upon meeting certain requirements and finding that funds for the repayment of the financing or other specified contract costs are projected to be available from revenues resulting from sales of electricity or thermal energy from the facility or other sources.
This bill would include within those provisions revenues resulting from sales of electrolytic hydrogen.
Existing law authorizes a public agency to enter into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility at such rates and terms as are approved by its governing body.
This bill would authorize a public agency to also enter into contracts for the sale of electrolytic hydrogen.
Under existing law, a public agency, as defined, may enter into specified energy conservation contracts, including into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility at such rates and on such terms as are approved by its governing body. Existing law defines energy conservation facility as alternate energy equipment, cogeneration equipment, or conservation measures located in public buildings or on land owned by public agencies. Existing law defines alternate energy equipment as equipment for the production or conversion of energy from alternate sources as its primary fuel source, such as solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas of less than one billion cubic feet estimated reserves per mile from an existing gas gathering line, natural gas containing 850 or fewer British thermal units per standard cubic foot, or any other source of energy, the efficient use of which will reduce the use of fossil or nuclear fuels. Existing law also defines public agency to mean the state, a county, city and county, city, district, and other specified entities.
This bill would add electrolytic hydrogen to the list of examples of primary fuel sources under the definition of alternate energy equipment. The bill also would revise the definition of public agency to include a transit district.
Existing law authorizes a public agency to enter into an energy service contract and related facility ground lease if the governing body finds, among other things, that the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases.
This bill would include electrolytic hydrogen within the above provision referencing the anticipated cost to the public agency for thermal or electrical energy.
Existing law additionally authorizes a public agency to enter into a facility financing contract and a facility ground lease upon meeting certain requirements and finding that funds for the repayment of the financing or other specified contract costs are projected to be available from revenues resulting from sales of electricity or thermal energy from the facility or other sources.
This bill would include within those provisions revenues resulting from sales of electrolytic hydrogen.
Existing law authorizes a public agency to enter into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility at such rates and terms as are approved by its governing body.
This bill would authorize a public agency to also enter into contracts for the sale of electrolytic hydrogen.
Under existing law, a public agency, as defined, may enter into specified energy conservation contracts, including into contracts for the sale of electricity, electrical generating capacity, or thermal energy produced by the energy conservation facility at such rates and on such terms as are approved by its governing body. Existing law defines energy conservation facility as alternate energy equipment, cogeneration equipment, or conservation measures located in public buildings or on land owned by public agencies. Existing law defines alternate energy equipment as equipment for the production or conversion of energy from alternate sources as its primary fuel source, such as solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas of less than one billion cubic feet estimated reserves per mile from an existing gas gathering line, natural gas containing 850 or fewer British thermal units per standard cubic foot, or any other source of energy, the efficient use of which will reduce the use of fossil or nuclear fuels.
This bill would add hydrogen to the list of examples of primary fuel sources under the definition of alternate energy equipment.
The Tri-Valley-San Joaquin Valley Regional Rail Authority, as established in Chapter 8 (commencing with Section 132651) of Division 12.7 of the Public Utilities Code, in addition to the authority to enter into energy service contracts, facility financing contracts, and contracts for the sale of specified energy resources, as specified in Sections 4217.12 to 4217.14, inclusive, may enter into energy service contracts, facility financing contracts, and contracts for the sale of energy resources relating to green electrolytic hydrogen, as that term is defined in Section 400.2 of the Public Utilities Code, for use by the authority for purposes of financing the construction and operation of passenger rail service through the Altamont Pass Corridor.
SEC. 2.The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique nature of the Valley Link project, and the potential concerns if the exceptions made applicable to this specific project were expanded statewide.
The Tri-Valley-San Joaquin Valley Regional Rail Authority, as established in Chapter 8 (commencing with Section 132651) of Division 12.7 of the Public Utilities Code, in addition to the authority to enter into energy service contracts, facility financing contracts, and contracts for the sale of specified energy resources, as specified in Sections 4217.12 to 4217.14, inclusive, may enter into energy service contracts, facility financing contracts, and contracts for the sale of energy resources relating to green electrolytic hydrogen, as that term is defined in Section 400.2 of the Public Utilities Code, for use by the authority for purposes of financing the construction and operation of passenger rail service through the Altamont Pass Corridor.
SEC. 2.The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique nature of the Valley Link project, and the potential concerns if the exceptions made applicable to this specific project were expanded statewide.
The Tri-Valley-San Joaquin Valley Regional Rail Authority, as established in Chapter 8 (commencing with Section 132651) of Division 12.7 of the Public Utilities Code, in addition to the authority to enter into energy service contracts, facility financing contracts, and contracts for the sale of specified energy resources, as specified in Sections 4217.12 to 4217.14, inclusive, may enter into energy service contracts, facility financing contracts, and contracts for the sale of energy resources relating to green electrolytic hydrogen, as that term is defined in Section 400.2 of the Public Utilities Code, for use by the authority for purposes of financing the construction and operation of passenger rail service through the Altamont Pass Corridor.
SEC. 2.The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique nature of the Valley Link project, and the potential concerns if the exceptions made applicable to this specific project were expanded statewide.
SECTION 1.Section 4217.11 of the Government Code is amended to read:4217.11.The following terms, whenever used in this chapter, have the meanings given in this section, except where the context clearly indicates otherwise:(a)Alternate energy equipment means equipment for the production or conversion of energy from alternate sources as its primary fuel source, such as hydrogen, solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas of less than one billion cubic feet estimated reserves per mile from an existing gas gathering line, natural gas containing 850 or fewer British thermal units per standard cubic foot, or any other source of energy, the efficient use of which will reduce the use of fossil or nuclear fuels.(b)Cogeneration equipment means equipment for cogeneration, as defined in Section 216.6 of the Public Utilities Code.(c)Conservation measures means equipment, maintenance, load management techniques and equipment, or other measures to reduce energy use or make for a more efficient use of energy.(d)Conservation services means the electrical, thermal, or other energy savings resulting from conservation measures, which shall be treated as a supply of such energy.(e)Energy conservation facility means alternate energy equipment, cogeneration equipment, or conservation measures located in public buildings or on land owned by public agencies.(f)Energy service contract means a contract entered into by a public agency with any person, pursuant to which the person will provide electrical or thermal energy or conservation services to a public agency from an energy conservation facility.(g)Facility financing contract means a contract entered into by a public agency with any person whereby the person provides financing for an energy conservation facility in exchange for repayment of the financing and all costs and expenses related thereto by the public agency. A facility financing contract may provide for the person with whom the public agency contracts to provide any combination of feasibility studies for, and design and construction of, all or part of the energy conservation facility in addition to the financing and other related services, and may provide for an installment sale purchase, another form of purchase, or amortized lease of the energy conservation facility by the public agency.(h)Facility ground lease means a lease of all, or any portion of, land or a public building owned by, or under lease to, a public agency to a person in conjunction with an energy service contract or a facility financing contract. A facility ground lease may include, in addition to the land on which energy conservation facilities will be located, easements, rights-of-way, licenses, and rights of access, for the construction, use, or ownership by the person of the facility and all related utility lines not owned or controlled by the interconnecting utility, and offsite improvements related thereto. A facility ground lease may also include the addition or improvement of utility lines and equipment owned by the interconnecting utility which are necessary to permit interconnection between that utility and an energy conservation facility.(i)Person means, but is not limited to, any individual, company, corporation, partnership, limited liability company, public agency, association, proprietorship, trust, joint venture, or other entity or group of entities.(j)Public agency means the state, a county, city and county, city, district, community college district, transit district, school district, joint powers authority or other entity designated or created by a political subdivision relating to energy development projects, and any other political subdivision or public corporation in the state.(k)Public building includes any structure, building, facility, or work which a public agency is authorized to construct or use, and automobile parking lots, landscaping, and other facilities, including furnishings and equipment, incidental to the use of any structure, building, facility, or work, and also includes the site thereof, and any easements, rights-of-way appurtenant thereto, or necessary for its full use.SEC. 2.Section 4217.12 of the Government Code is amended to read:4217.12.(a)Notwithstanding any other law, a public agency may enter into an energy service contract and any necessarily related facility ground lease on terms that its governing body determines are in the best interests of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body finds:(1)That the anticipated cost to the public agency for thermal or electrical energy, including hydrogen, or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the public agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases.(2)That the difference, if any, between the fair rental value for the real property subject to the facility ground lease and the agreed rent, is anticipated to be offset by below-market energy purchases or other benefits provided under the energy service contract.(b)State agency heads may make these findings without holding a public hearing.SEC. 3.Section 4217.13 of the Government Code is amended to read:4217.13.Notwithstanding any other law, a public agency may enter into a facility financing contract and a facility ground lease on terms that its governing body determines are in the best interest of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body finds that funds for the repayment of the financing or the cost of design, construction, and operation of the energy conservation facility, or both, as required by the contract, are projected to be available from revenues resulting from sales of electricity, hydrogen, or thermal energy from the facility or from funding that otherwise would have been used for purchase of electrical, thermal, or other energy required by the public agency in the absence of the energy conservation facility, or both. State agency heads may make these findings without holding a public hearing.SEC. 4.Section 4217.14 of the Government Code is amended to read:4217.14.Notwithstanding any other law, the public agency may enter into contracts for the sale of electricity, electrical generating capacity, hydrogen, or thermal energy produced by the energy conservation facility at such rates and on such terms as are approved by its governing body. Any such contract may provide for a commitment of firm electrical capacity.The following terms, whenever used in this chapter, have the meanings given in this section, except where the context clearly indicates otherwise:
(a)Alternate energy equipment means equipment for the production or conversion of energy from alternate sources as its primary fuel source, such as electrolytic hydrogen, solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas of less than one billion cubic feet estimated reserves per mile from an existing gas gathering line, natural gas containing 850 or fewer British thermal units per standard cubic foot, or any other source of energy, the efficient use of which will reduce the use of fossil or nuclear fuels.
(b)Cogeneration equipment means equipment for cogeneration, as defined in Section 216.6 of the Public Utilities Code.
(c)Conservation measures means equipment, maintenance, load management techniques and equipment, or other measures to reduce energy use or make for a more efficient use of energy.
(d)Conservation services means the electrical, thermal, or other energy savings resulting from conservation measures, which shall be treated as a supply of such energy.
(e)Energy conservation facility means alternate energy equipment, cogeneration equipment, or conservation measures located in public buildings or on land owned by public agencies.
(f)Energy service contract means a contract entered into by a public agency with any person, pursuant to which the person will provide electrical or thermal energy or conservation services to a public agency from an energy conservation facility.
(g)Facility financing contract means a contract entered into by a public agency with any person whereby the person provides financing for an energy conservation facility in exchange for repayment of the financing and all costs and expenses related thereto by the public agency. A facility financing contract may provide for the person with whom the public agency contracts to provide any combination of feasibility studies for, and design and construction of, all or part of the energy conservation facility in addition to the financing and other related services, and may provide for an installment sale purchase, another form of purchase, or amortized lease of the energy conservation facility by the public agency.
(h)Facility ground lease means a lease of all, or any portion of, land or a public building owned by, or under lease to, a public agency to a person in conjunction with an energy service contract or a facility financing contract. A facility ground lease may include, in addition to the land on which energy conservation facilities will be located, easements, rights-of-way, licenses, and rights of access, for the construction, use, or ownership by the person of the facility and all related utility lines not owned or controlled by the interconnecting utility, and offsite improvements related thereto. A facility ground lease may also include the addition or improvement of utility lines and equipment owned by the interconnecting utility which are necessary to permit interconnection between that utility and an energy conservation facility.
(i)Person means, but is not limited to, any individual, company, corporation, partnership, limited liability company, public agency, association, proprietorship, trust, joint venture, or other entity or group of entities.
(j)Public agency means the state, a county, city and county, city, district, community college district, transit district, school district, joint powers authority or other entity designated or created by a political subdivision relating to energy development projects, and any other political subdivision or public corporation in the state.
(k)Public building includes any structure, building, facility, or work which a public agency is authorized to construct or use, and automobile parking lots, landscaping, and other facilities, including furnishings and equipment, incidental to the use of any structure, building, facility, or work, and also includes the site thereof, and any easements, rights-of-way appurtenant thereto, or necessary for its full use.
SEC. 2.Section 4217.12 of the Government Code is amended to read:4217.12.(a)Notwithstanding any other law, a public agency may enter into an energy service contract and any necessarily related facility ground lease on terms that its governing body determines are in the best interests of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body finds:
(1)That the anticipated cost to the public agency for thermal or electrical energy, including electrolytic hydrogen, or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the public agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases.
(2)That the difference, if any, between the fair rental value for the real property subject to the facility ground lease and the agreed rent, is anticipated to be offset by below-market energy purchases or other benefits provided under the energy service contract.
(b)State agency heads may make these findings without holding a public hearing.
SEC. 3.Section 4217.13 of the Government Code is amended to read:4217.13.Notwithstanding any other law, a public agency may enter into a facility financing contract and a facility ground lease on terms that its governing body determines are in the best interest of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body finds that funds for the repayment of the financing or the cost of design, construction, and operation of the energy conservation facility, or both, as required by the contract, are projected to be available from revenues resulting from sales of electricity, electrolytic hydrogen, or thermal energy from the facility or from funding that otherwise would have been used for purchase of electrical, thermal, or other energy required by the public agency in the absence of the energy conservation facility, or both. State agency heads may make these findings without holding a public hearing.
SEC. 4.Section 4217.14 of the Government Code is amended to read:4217.14.Notwithstanding any other law, the public agency may enter into contracts for the sale of electricity, electrical generating capacity, electrolytic hydrogen, or thermal energy produced by the energy conservation facility at such rates and on such terms as are approved by its governing body. Any such contract may provide for a commitment of firm electrical capacity.
The following terms, whenever used in this chapter, have the meanings given in this section, except where the context clearly indicates otherwise:
(a)Alternate energy equipment means equipment for the production or conversion of energy from alternate sources as its primary fuel source, such as electrolytic hydrogen, solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas of less than one billion cubic feet estimated reserves per mile from an existing gas gathering line, natural gas containing 850 or fewer British thermal units per standard cubic foot, or any other source of energy, the efficient use of which will reduce the use of fossil or nuclear fuels.
(b)Cogeneration equipment means equipment for cogeneration, as defined in Section 216.6 of the Public Utilities Code.
(c)Conservation measures means equipment, maintenance, load management techniques and equipment, or other measures to reduce energy use or make for a more efficient use of energy.
(d)Conservation services means the electrical, thermal, or other energy savings resulting from conservation measures, which shall be treated as a supply of such energy.
(e)Energy conservation facility means alternate energy equipment, cogeneration equipment, or conservation measures located in public buildings or on land owned by public agencies.
(f)Energy service contract means a contract entered into by a public agency with any person, pursuant to which the person will provide electrical or thermal energy or conservation services to a public agency from an energy conservation facility.
(g)Facility financing contract means a contract entered into by a public agency with any person whereby the person provides financing for an energy conservation facility in exchange for repayment of the financing and all costs and expenses related thereto by the public agency. A facility financing contract may provide for the person with whom the public agency contracts to provide any combination of feasibility studies for, and design and construction of, all or part of the energy conservation facility in addition to the financing and other related services, and may provide for an installment sale purchase, another form of purchase, or amortized lease of the energy conservation facility by the public agency.
(h)Facility ground lease means a lease of all, or any portion of, land or a public building owned by, or under lease to, a public agency to a person in conjunction with an energy service contract or a facility financing contract. A facility ground lease may include, in addition to the land on which energy conservation facilities will be located, easements, rights-of-way, licenses, and rights of access, for the construction, use, or ownership by the person of the facility and all related utility lines not owned or controlled by the interconnecting utility, and offsite improvements related thereto. A facility ground lease may also include the addition or improvement of utility lines and equipment owned by the interconnecting utility which are necessary to permit interconnection between that utility and an energy conservation facility.
(i)Person means, but is not limited to, any individual, company, corporation, partnership, limited liability company, public agency, association, proprietorship, trust, joint venture, or other entity or group of entities.
(j)Public agency means the state, a county, city and county, city, district, community college district, transit district, school district, joint powers authority or other entity designated or created by a political subdivision relating to energy development projects, and any other political subdivision or public corporation in the state.
(k)Public building includes any structure, building, facility, or work which a public agency is authorized to construct or use, and automobile parking lots, landscaping, and other facilities, including furnishings and equipment, incidental to the use of any structure, building, facility, or work, and also includes the site thereof, and any easements, rights-of-way appurtenant thereto, or necessary for its full use.
SEC. 2.Section 4217.12 of the Government Code is amended to read:4217.12.(a)Notwithstanding any other provision of law, a public agency may enter into an energy service contract and any necessarily related facility ground lease on terms that its governing body determines are in the best interests of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body finds:
(1)That the anticipated cost to the public agency for thermal or electrical energy energy, including electrolytic hydrogen, or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the public agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases.
(2)That the difference, if any, between the fair rental value for the real property subject to the facility ground lease and the agreed rent, is anticipated to be offset by below-market energy purchases or other benefits provided under the energy service contract.
(b)State agency heads may make these findings without holding a public hearing.
SEC. 3.Section 4217.13 of the Government Code is amended to read:4217.13.Notwithstanding any other provision of law, a public agency may enter into a facility financing contract and a facility ground lease on terms that its governing body determines are in the best interest of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body finds that funds for the repayment of the financing or the cost of design, construction, and operation of the energy conservation facility, or both, as required by the contract, are projected to be available from revenues resulting from sales of electricity electricity, electrolytic hydrogen, or thermal energy from the facility or from funding that otherwise would have been used for purchase of electrical, thermal, or other energy required by the public agency in the absence of the energy conservation facility, or both. State agency heads may make these findings without holding a public hearing.
SEC. 4.Section 4217.14 of the Government Code is amended to read:4217.14.Notwithstanding any other provision of law, the public agency may enter into contracts for the sale of electricity, electrical generating capacity, electrolytic hydrogen, or thermal energy produced by the energy conservation facility at such rates and on such terms as are approved by its governing body. Any such contract may provide for a commitment of firm electrical capacity.
The following terms, whenever used in this chapter, have the meanings given in this section, except where the context clearly indicates otherwise:
(a)Alternate energy equipment means equipment for the production or conversion of energy from alternate sources as its primary fuel source, such as hydrogen, solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas of less than one billion cubic feet estimated reserves per mile from an existing gas gathering line, natural gas containing 850 or fewer British Thermal Units thermal units per standard cubic foot, or any other source of energy, the efficient use of which will reduce the use of fossil or nuclear fuels.
(b)Cogeneration equipment means equipment for cogeneration, as defined in Section 216.6 of the Public Utilities Code.
(c)Conservation measures means equipment, maintenance, load management techniques and equipment, or other measures to reduce energy use or make for a more efficient use of energy.
(d)Conservation services means the electrical, thermal, or other energy savings resulting from conservation measures, which shall be treated as a supply of such energy.
(e)Energy conservation facility means alternate energy equipment, cogeneration equipment, or conservation measures located in public buildings or on land owned by public agencies.
(f)Energy service contract means a contract entered into by a public agency with any person, pursuant to which the person will provide electrical or thermal energy or conservation services to a public agency from an energy conservation facility.
(g)Facility financing contract means a contract entered into by a public agency with any person whereby the person provides financing for an energy conservation facility in exchange for repayment of the financing and all costs and expenses related thereto by the public agency. A facility financing contract may provide for the person with whom the public agency contracts to provide any combination of feasibility studies for, and design and construction of, all or part of the energy conservation facility in addition to the financing and other related services, and may provide for an installment sale purchase, another form of purchase, or amortized lease of the energy conservation facility by the public agency.
(h)Facility ground lease means a lease of all, or any portion of, land or a public building owned by, or under lease to, a public agency to a person in conjunction with an energy service contract or a facility financing contract. A facility ground lease may include, in addition to the land on which energy conservation facilities will be located, easements, rights-of-way, licenses, and rights of access, for the construction, use, or ownership by the person of the facility and all related utility lines not owned or controlled by the interconnecting utility, and offsite improvements related thereto. A facility ground lease may also include the addition or improvement of utility lines and equipment owned by the interconnecting utility which are necessary to permit interconnection between that utility and an energy conservation facility.
(i)Person means, but is not limited to, any individual, company, corporation, partnership, limited liability company, public agency, association, proprietorship, trust, joint venture, or other entity or group of entities.
(j)Public agency means the state, a county, city and county, city, district, community college district, school district, joint powers authority or other entity designated or created by a political subdivision relating to energy development projects, and any other political subdivision or public corporation in the state.
(k)Public building includes any structure, building, facility, or work which a public agency is authorized to construct or use, and automobile parking lots, landscaping, and other facilities, including furnishings and equipment, incidental to the use of any structure, building, facility, or work, and also includes the site thereof, and any easements, rights-of-way appurtenant thereto, or necessary for its full use.
|
Date
|
Status
|
|---|---|
| Oct 7, 2023 | Chaptered by Secretary of State. Chapter 410, Statutes of 2023. |
| Oct 7, 2023 | Approved by the Governor. |
| Sep 13, 2023 | Enrolled and presented to the Governor at 4 p.m. |
| Sep 7, 2023 | Assembly amendments concurred in. (Ayes 40. Noes 0. Page 2478.) Ordered to engrossing and enrolling. |
| Sep 5, 2023 | Ordered to special consent calendar. |
| Aug 31, 2023 | In Senate. Concurrence in Assembly amendments pending. |
| Aug 31, 2023 | Read third time. Passed. (Ayes 79. Noes 0. Page 2866.) Ordered to the Senate. |
| Aug 24, 2023 | Read second time. Ordered to consent calendar. |
| Aug 23, 2023 | From committee: Do pass. Ordered to consent calendar. (Ayes 15. Noes 0.) (August 23). |
| Jun 15, 2023 | Read second time and amended. Re-referred to Com. on APPR. |
| Jun 14, 2023 | From committee: Do pass as amended and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 13. Noes 0.) (June 14). |
| May 26, 2023 | Referred to Com. on U. & E. |
| May 23, 2023 | In Assembly. Read first time. Held at Desk. |
| May 22, 2023 | Read third time. Passed. (Ayes 40. Noes 0. Page 1213.) Ordered to the Assembly. |
| May 9, 2023 | Read second time. Ordered to third reading. |
| May 8, 2023 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8. |
| May 1, 2023 | Set for hearing May 8. |
| Apr 25, 2023 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 17. Noes 0. Page 871.) (April 24). Re-referred to Com. on APPR. |
| Apr 12, 2023 | Set for hearing April 24. |
| Apr 10, 2023 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on E., U. & C. |
| Mar 20, 2023 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on E., U. & C. |
| Mar 1, 2023 | Referred to Com. on E., U. & C. |
| Feb 21, 2023 | From printer. May be acted upon on or after March 20. |
| Feb 17, 2023 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 7, 2023 | Special Consent SB746 Eggman et al. | Senate Floor |
Passed |
|
| Aug 31, 2023 | SB 746 Eggman Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Aug 23, 2023 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 14, 2023 | Do pass as amended, and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Utilities and Energy |
Passed |
|
| May 22, 2023 | Senate 3rd Reading SB746 Eggman | Senate Floor |
Passed |
|
| Apr 24, 2023 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Energy, Utilities and Communications |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| California Hydrogen Coalition | ** Support | |
| California State Association Of Electrical Workers | ** Support | |
| California State Pipe Trades Council | ** Support | |
| Coalition of California Utility Employees | ** Support | |
| San Joaquin Valley Policy Council | ** Support | |
| San Joaquin Valley Regional Policy Council | ** Support | |
| San Joaquin Valley Regional Policy Council | * Support | Apr 24, 2023 |
| State Building and Construction Trades Council | * Support | Apr 24, 2023 |
| Tri Valley San Joaquin Valley Regional Rail Authority | ** Support | |
| Tri-Valley Cities of Dublin, Livermore, Pleasanton, San Ramon and the Town of Danville | ** Support | |
| Tri-Valley-San Joaquin Valley Regional Rail Authority | ** Support |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 746 |
UNFINISHED BUSINESS
Bill No: SB 746
Author: Eggman (D), et al.
Amended: 6/15/23
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 17-0, 4/24/23
AYES: Bradford, Ashby, Becker, Caballero, Dodd, Durazo, Eggman, Gonzalez, Grove, McGuire, Min, Newman, Rubio, Seyarto, Skinner, Stern, Wilk
NO VOTE RECORDED: Dahle
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 40-0, 5/22/23
AYES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
ASSEMBLY FLOOR: 79-0, 8/31/23 (Consent) - See last page for vote
SUBJECT: Energy conservation contracts: alternate energy equipment: green hydrogen: Tri-Valley-San Joaquin Valley Regional Rail Authority
SOURCE: Tri-Valley San Joaquin Valley Regional Rail Authority
DIGEST:
This bill authorizes the Tri-Valley San Joaquin Valley Regional Rail Authority to enter into contracts related to green electrolytic hydrogen.
Assembly Amendments
narrow the bill to only allow the Tri-Valley San Joaquin Valley Regional Rail Authority to enter into contracts related to green electrolytic hydrogen.
ANALYSIS:
Existing law:
- Defines various types of contracts that a public agency may enter into for the purposes of developing alternative energy resources, including energy service contracts, facility financing contracts, and facility leasing contracts. (Government Code §4217.11)
- Defines “alternative energy equipment” as equipment for the production or conversation of energy from alternate sources as its primary fuel, including solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas meeting specified standards or any other source of energy that reduces the use of fossil or nuclear fuels. (Government Code §4217.11)
- Defines a “public agency” as the state, county, city, city and county, district, community college district, school district, joint powers authority, or other entity designated or created by a political subdivision relating to energy development projects. (Government Code §4217.11)
- Authorizes a public agency to enter into an energy service contract or facility financing contract after making specified findings about the cost and energy savings achieved by the contracts and holding a public hearing. Existing law specifies that cost findings for facility financing must include a determination as to whether sales of the energy generated by the financed facility will cover the cost of the facility’s construction and operation. (Government Code §4217.12-4217.13)
- Authorizes public agencies to enter into contracts for the sale of electricity, electric generation capacity, or thermal energy produced by an energy conservation facility. (Government Code §4217.14)
- Specifies that existing law authorizing public energy service contracts is intended to be construed to provide the greatest flexibility to public agencies in structuring agreements to maximize economic benefits. (Government Code §4217.18)
- Defines green electrolytic hydrogen as hydrogen gas produced through electrolysis. Existing law specifies that green electrolytic hydrogen does not include hydrogen gas manufactured using steam reforming or any other conversion technology that produces hydrogen from a fossil fuel feedstock. (Public Utilities Code §400.2)
This bill authorizes the Tri-Valley San Joaquin Valley Regional Rail authority to enter into energy contract related to green electrolytic hydrogen for the purposes of financing the construction and operation of passenger rail service through the Altamont Pass Corridor.
Background
Energy service contracts provide local governments with broad authority to contract for energy services. Existing law authorizes local governments to enter into energy service contracts as part of broader state policy to encourage energy savings and reduced fossil fuel use by local governments. These contracts are intended to provide local agencies with favorable financing terms for energy conservation projects by allowing these agencies to justify upfront expenditures on energy conservation projects through projected energy savings and avoided costs. Many local governments have used these contracts to facilitate energy efficient building retrofits and on-site generation. For example, Alameda County has used energy service contracts to establish multiple large-scale solar installations at various public facilities in the County. The County also established energy services contracts for the installation of components and upgrades to the fuel cell and microgrid energy system at the Santa Rita Jail.
Bill aims to allow transit districts to enter into hydrogen energy service contracts. To address the limited public transit options and growth of commuters traveling between the San Joaquin Valley and the Bay Area, the Legislature passed AB 758 (Eggman, Chapter 747, Statutes of 2017) to create the Tri-Valley San Joaquin Valley Regional Rail Authority and tasked the authority with overseeing the creation of connecting service between the Bay Area Rapid Transit (BART) and Altamont Corridor Express (ACE). This project is known as Valley Link. In 2022, the Tri-Valley San Joaquin Valley Regional Rail Authority purchased a parcel of land in the city of Tracy and entered into an agreement with Linde Engineering to plan the development of an electrolytic hydrogen facility that can provide power for the Valley Link rail system and also fuel other hydrogen fuel cell transit vehicles and trucks. This bill authorizes the transit authority administering the Valley Link project to enter into contracts related to green electrolytic hydrogen for the purposes of supporting Valley Link rail service through the Altamont Pass Corridor.
Bill provides a narrow authority to one agency to establish energy service contracts for green electrolytic hydrogen. Existing law generally provides local governments with broad discretion to select different types resources for energy service contracts by specifying that local government authority to create these contracts is intended to be construed to provide local agencies with maximum flexibility to structure these agreements to maximize local economic benefits. While existing law indicates that energy service contracts are intended to support alternative energy projects, existing law’s definition of resources constituting alternative energy projects is broad and encompasses certain natural gas resources and any energy resource that can reduce the use of nuclear energy and fossil fuels. As a result, it is possible that existing law may already allow local governments to enter into hydrogen energy service contracts where local governments can demonstrate that these projects limit fossil fuel and nuclear energy use.
This bill provides a new, narrow authorization for the Tri-Valley San Joaquin Valley Regional Rail Authority to enter into contracts related to green electrolytic hydrogen. However, this bill does not modify existing law that may already permit local governments to enter into contracts for hydrogen energy services. As a result, it is not clear that this bill limits energy service contracts for hydrogen to only green electrolytic hydrogen in all cases, and it is not clear that the Tri-Valley San Joaquin Valley Regional Rail Authority is the only local entity that may enter into contracts for hydrogen services.
Related/Prior Legislation
AB 758 (Eggman, Chapter 747, Statutes of 2017) established the Tri-Valley San Joaquin Valley Regional Rail Authority to administer the development of a connection between BART and the ACE in the Tri-Valley region.
SB 840 (Committee on Budget and Fiscal Review, Chapter 341, Statutes of 2016), among other provisions, authorized the Department of General Services (DGS) or another state or local agency that intends to enter into an energy retrofit contract to establish a pool of qualified energy service companies. The bill allowed until January 1, 2020, DGS and other state agencies to establish pools of qualified energy service companies that have made certain skilled and trained workforce commitments.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 8/31/23)
Tri-Valley San Joaquin Valley Regional Rail Authority (source)
California Hydrogen Coalition
California State Association of Electrical Workers
California State Pipe Trades Council
Coalition of California Utility Employees
San Joaquin Valley Regional Policy Council
OPPOSITION: (8/31/23)
None received
ARGUMENTS IN SUPPORT: According to the author:
SB 746 will allow transit districts to engage in energy conservation moving us towards our goals as a state to reduce emissions, while also providing clean and efficient transportation to the people of California. SB 746 will also have a catalytic effect on the Valley Link Rail project, which will ultimately provide a rail connection among Stockton, Lathrop, Tracy and Dublin/Pleasanton. As part of that project, Valley Link intends to establish a hydrogen fuel generation facility in the City of Tracy. Ultimately the Valley Link train will be powered by hydrogen and even sooner will be able to
provide a source of hydrogen fuel for buses and commercial trucks moving through the Tri-Valley/San Joaquin corridor.
ASSEMBLY FLOOR: 79-0, 8/31/23
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO VOTE RECORDED: McCarty
Prepared by: Sarah Smith / E., U. & C. / (916) 651-4107
8/31/23 16:18:10
**** END ****
Date of Hearing: August 23, 2023
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Chris Holden, Chair
SBPCA Bill Id:SB 746
Author:(Eggman) – As Amended Ver:June 15, 2023
Policy Committee: | Utilities and Energy | Vote: | 13 - 0 |
|
| ||
|
|
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill authorizes the Tri-Valley-San Joaquin Valley Rail Authority to enter into energy service contracts, facility financing contracts and contracts for the sale of energy resources relating to “green electrolytic hydrogen” for use by the authority to finance the construction and operation of passenger rail service through the Altamont Pass Corridor.
FISCAL EFFECT:
Negligible state costs, if any.
COMMENTS:
The Altamont Pass connects the San Francisco Bay Area with the San Joaquin Valley. The pass has suffered congestion for years, which only worsened during the first decades of this century, as more people worked in the Bay Area but lived in the valley and travelled over the pass to get from one to the other. Transportation planners expect traffic over the pass to increase in the coming decades.
In response, the Legislature authorized creation of the Tri-Valley-San Joaquin Valley Regional Rail Authority for the purposes of planning, developing and delivering transit connectivity between the Bay Area Rapid Transit District’s (BART’s) transit system and the Altamont Corridor Express (ACE) commuter rail service. (See AB 758 (Eggman), Chapter 747, Statutes of 2017.) This effort is known as the Valley Link Project.
State law permits a public agency to enter into certain types of energy-related contracts to encourage energy savings and reduce fossil fuel use. Generally, such a contract may address energy financing of an energy production or conservation facility in a building or on land owned by the agency; energy services purchased by the public agency from another entity that owns an energy facility in a building or on land owned by the agency; or the sale by the public agency of an energy product generated by a facility in a building or on land owned by the agency. Statute requires any such contract “be less than the anticipated marginal cost to the public agency of thermal, electrical or other energy that would have been consumed by the public agency in the absence of those purchases.”
Of direct interest to this bill, the policy that the public agency contracting rules described above is supposed to advance is expressed in Public Resources Code (PRC) section 25008. This code section lists several “resources and processes” that may be used to substitute for traditional energy and water supplies. According to PRC section 25008, those resources and processes include, “but are not limited to,” cogeneration, biomass, wind, geothermal, vapor compression, water reclamation and solar technologies. This list of examples does not include hydrogen.
The rail authority, as part of the Valley Link Project, plans to produce on its property hydrogen using renewable energy resources—the result of which is often referred to as green electrolytic hydrogen—and use and sell the hydrogen, consistent with existing law. However, the rail authority is concerned its ability to enter into contracts for the use and sale of any such hydrogen is questionable, because statute does not list hydrogen of any type among the examples of “resources and processes” described above. The rail authority, therefore, wants to make explicit in statute its authority to enter into contracts for the use and sale of green electrolytic hydrogen the authority produces on its property. As the author explains:
The hydrogen fuel facility planned for in the Valley Link project…is critical to the success of the larger Valley Link train project, as the train will be powered by hydrogen produced at the facility and the selling of hydrogen fuel to commercial trucks and transit buses will help subsidize the operation costs of the rail service. SB 746 provides the necessary authorization for transit districts to carry out these kinds of projects.
Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081
Date of Hearing: June 14, 2023
ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY
Eduardo Garcia, Chair
SBPCA Bill Id:SB 746
Author:(Eggman) – As Amended Ver:April 10, 2023
SENATE VOTE: 40-0
SUBJECT: Energy conservation contracts: alternate energy equipment: hydrogen
SUMMARY: This bill adds hydrogen to the list of alternative energy resources for which a local agency can enter into a service contract, and adds transit districts to the list of local agencies authorized to enter into those contracts.
EXISTING LAW:
- Establishes that it is the policy of the state to use available resources at state facilities which can substitute for traditional energy supplies or produce electricity at its facilities when use or production will reduce long-term energy expenditures, and that the energy produced may be reserved by the state to meet state facility needs or may be sold to state or non-state purchasers. (Public Resources Code § 25008)
- Defines “alternative energy equipment” as equipment for the production or conversation of energy from alternate sources as its primary fuel, including solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas meeting specified standards or any other source of energy that reduces the use of fossil or nuclear fuels. (Government Code § 4217.11)
- Defines a “public agency” for the purposes of energy development projects as the state, county, city, city and county, district, community college district, school district, joint powers authority, or other entity designated or created by a political subdivision. (Government Code § 4217.11)
- Specifies the types of contracts that a public agency may enter into for the purposes of developing alternative energy resources, including energy service contracts, facility financing contracts, and facility leasing contracts. (Government Code § 4217.11)
- Authorizes a public agency to enter into an energy service contract or facility financing contract after making specified findings about the cost and energy savings achieved by the contracts and holding a public hearing. Existing law specifies that cost findings for facility financing must include a determination as to whether sales of the energy generated by the financed facility will cover the cost of the facility’s construction and operation. (Government Code §§ 4217.12-4217.13)
- Authorizes public agencies to enter into contracts for the sale of electricity, electric generation capacity, or thermal energy produced by an energy conservation facility. (Government Code § 4217.14)
- Specifies that existing law authorizing public energy service contracts is intended to be construed to provide the greatest flexibility to public agencies in structuring agreements to maximize economic benefits. (Government Code § 4217.18)
- Establishes the Tri-Valley-San Joaquin Valley Regional Rail Authority for purposes of planning, developing, delivering, and operating cost-effective and responsive transit connectivity, between the Bay Area Rapid Transit (BART) system and the Altamont Corridor Express (ACE) commuter rail service. (Public Utilities Code § 132652)
FISCAL EFFECT: Unknown. Pursuant to Senate Rule 28.8, this bill did not receive a hearing in the Senate Committee on Appropriations due to a determination that any state costs of the bill are not significant.
BACKGROUND:
Contracting for Energy – Existing law authorizes public agencies to enter into specified types of contracts as part of broader state policy to encourage energy savings and reduced fossil fuel use by local governments. These contracts fall into three categories:
- Facility financing contracts, which enable public agencies to secure financing for the development of energy production or conservation facilities in public buildings or on land owned by the public agency.
- Energy service contracts, which allow public agencies to purchase specified energy generation or conservation services from facilities located in public buildings or on land owned by public agencies.
- Contracts for the sale of energy, through which a public agency is permitted to sell energy produced at energy conservation facilities in public buildings or on land owned by public agencies. To whom this energy may be sold is not specified in statute.
These contracts are collectively intended to provide local agencies with favorable financing terms for energy conservation or generation projects by allowing these agencies to justify upfront expenditures on energy conservation projects through projected energy saving, avoided costs, and profit from the sale of energy. Local governments have used these contracts to facilitate energy efficient building retrofits and on-site generation. For example, Alameda County has used energy service contracts to establish multiple large-scale solar installations at various public facilities in the County. The County also established energy services contracts for the installation of components and upgrades to the fuel cell and microgrid energy system at the Santa Rita Jail.[1]
The Valley Link Project – The Altamont Pass Corridor connects the San Joaquin Valley to the Tri-Valley region of the Bay Area. More than 86,000 commuters travel this route on a daily basis and that figure is expected to increase substantially in the coming decades.[2] To address the limited public transit options and growth of commuters traveling between the San Joaquin Valley and the Bay Area, the Legislature passed AB 758 (Eggman, Chapter 747, Statutes of 2017) to create the Tri-Valley-San Joaquin Valley Regional Rail Authority and tasked the authority with overseeing the creation of connecting service between the Bay Area Rapid Transit (BART) District and Altamont Corridor Express (ACE). This project is still in the development phase. In 2022, the Tri-Valley-San Joaquin Valley Regional Rail Authority purchased a parcel of land in the city of Tracy, issued a feasibility study for the train corridor, and entered into an agreement with Linde Engineering to plan for the development of an electrolytic hydrogen facility to provide power for the Valley Link rail system as well as provide hydrogen fuel to fuel cell transit vehicles and trucks.[3],[4]
Hydrogeneralization – Hydrogen has been considered the “swiss army knife” of decarbonization technologies; praised for its touted zero-greenhouse gas (GHG) emission profile and its potential to replace fossil fuels in most applications relatively easily. However, there are many types of hydrogen with varying degrees of climate benefit.
The varieties of hydrogen are generally categorized according to the type of feedstock (what material is used to make the hydrogen) and the production method (what is done to break apart the feedstock into hydrogen), each of which play a significant role in determining the lifecycle emissions associated with hydrogen use. Some notable feedstocks of hydrogen include biomass, coal, natural gas, and water. These feedstocks are broken down through one of a variety of thermochemical processes, which vary and can generate different types and amounts of emissions, to generate hydrogen. In every process, energy is needed in order to process the feedstock into hydrogen. Some processes rely on clean resources exclusively for their power, while others are less selective. The combinations of feedstocks and processes result in a multitude of hydrogen products. A simplified color spectrum has been adopted to describe these hydrogen products, though the definitions are neither universally agreed upon nor rigorous.
- “Gray (or brown) hydrogen” is produced from a natural gas feedstock and whatever energy is cheapest, via natural gas steam methane reforming. The vast majority of hydrogen currently used in the United States comes from this process. While relatively inexpensive and efficient, it generates carbon dioxide and other pollutants in amounts depending on the energy source used.
- “Blue hydrogen” employs the same process as gray hydrogen, but the carbon dioxide emitted from steam methane reforming is captured and stored, lessening the GHG impact of this process.
- “Green hydrogen” is produced using only renewable feedstock – such as biomass, renewable natural gas, or water – and typically (but not always) relies on renewable electricity to generate the hydrogen. Less than 0.1% of hydrogen production globally comes from water electrolysis. In the future, policymakers should approach the “green” hydrogen label with caution, as new definitions for green hydrogen are developed, and may not always include electrolytic production with no carbon release.
- “Green electrolytic hydrogen” is a specific type of green hydrogen which uses water as the feedstock and renewable electricity to split the water in order to generate hydrogen. Green electrolytic hydrogen is currently the only type of hydrogen defined in the Public Utilities Code (Public Utilities Code § 400.2). However, its statutory definition does not specify that renewable electricity must be used to split the water, making it only partially “green” in the traditional sense.
Any conversation about hydrogen is heavily dependent upon the precise definition of the type of hydrogen being discussed. With such a wide variety of definitions, each with a unique emissions profile, it is easy to misunderstand or misascribe the potential for climate benefits when discussing hydrogen.
COMMENTS:
- Author’s Statement. According to the author, “The hydrogen fuel facility planned for in the Valley Link project (SB 758, Eggman, statutes of 2017) is critical to the success of the larger Valley Link train project, as the train will be powered by hydrogen produced at the facility and the selling of hydrogen fuel to commercial trucks and transit buses will help subsidize the operation costs of the rail service. SB 746 provides the necessary authorization for transit districts to carry out these kinds of projects.”
- Types of Hydrogen. This bill provides local agencies with broad discretion over contracts for different types of hydrogen production, and does not specify a definition of the type nor color of hydrogen that would be eligible. As a result, this bill provides broad discretion to local agencies to propose projects to produce hydrogen from a wide range of feedstocks and energy sources. While this discretion may reflect existing law regarding energy service contracts which provide local agencies with maximum flexibility to structure these agreements to their benefit, the impact of statutorily authorizing all local governments and transit agencies to contract for or own various hydrogen production projects with varying degrees of GHG benefits is unclear.
- Marginal Cost Requirement. Per statute, energy service contracts are required to be cost-negative, meaning that “the energy savings over a reasonable period of time generated by the project will be equal to or greater than the project costs.”[5] These cost assessments, as well as determining what constitutes a reasonable period of time, are conducted by the public agency entering into the contract, giving the agency significant discretion in how the assessment is conducted.[6]
The addition of hydrogen as a specified energy source, both in statute and in a specific project, introduces potential ambiguity to this required cost assessment. The assessment requires the energy contracted for to be less than what the local government’s energy cost would have been in the absence of the contracted purchases. However, if an energy service contract is seeking to develop a hydrogen project, would the cost of the contracted hydrogen be compared to the cost of hydrogen purchased elsewhere, or to the cost of other potential sources of energy which could conceivably achieve a similar result (e.g., diesel or electricity)? Hydrogen has historically been expensive to produce,[7] so the point of comparison for determining the marginal cost is critical for project eligibility. Since statute seems to grant the public agencies with ultimate discretion in calculating the baseline for energy savings, it seems possible that on-site hydrogen facilities could meet this requirement despite their current expense and energy usage.
A feasibility study on plans to produce hydrogen associated with the Valley Link project “showed the on-site electrolytic hydrogen production facility to be feasible with significant potential for developing positive cash flow to drive down Valley Link rider costs.”[8] One development option listed—which would include large amounts of solar generation and energy from the grid alongside battery storage to supply energy for the electrolytic hydrogen production—projected that the hydrogen generation process would require substantial upfront investment but would be cost-negative overall within 14 years, largely through the sale of excess hydrogen.[9] For this reason, the timeframe considered in the marginal cost assessment will be an important factor in determining whether a project satisfies the requirements for an energy service contract.
- Local Project, Statewide Implications? The objective of this bill, as expressed by the author, is to secure a fuel source and funding mechanism for a specific project: The Valley Link project, operated by Tri-Valley-San Joaquin Valley Regional Rail Authority. This bill would expand an existing framework for public agencies, adding hydrogen as an energy source and enabling transit agencies statewide to participate in the program. This would represent a significant expansion of this program and substantially expand the availability of land owned by public agencies for hydrogen development statewide. Simultaneously, this bill also expands the eligible agencies who can access this program. Taken together, the expansion of both the type of agency and the energy sources available under this program provides greater uncertainty as to the potential benefits or consequences of these projects. As such, the author and committee may wish to consider amendments to strike the current bill language and add language allowing a single transit district, the Tri-Valley-San Joaquin Valley Regional Rail Authority, to enter into facility financing contracts, energy service contracts, and contracts for the sale of energy, with the additional specification that electrolytic hydrogen may be used as the energy source on this specific project.
- Prior Legislation.
AB 758 (Eggman), established the Tri-Valley-San Joaquin Valley Regional Rail Authority to administer the development of a connection between BART and the ACE in the Tri-Valley region. Status: Chapter 747, Statutes of 2017.
SB 840 (Committee on Budget and Fiscal Review), among other provisions, authorized the Department of General Services (DGS) or another state or local agency that intends to enter into an energy retrofit contract to establish a pool of qualified energy service companies. The bill allowed until January 1, 2020, DGS and other state agencies to establish pools of qualified energy service companies that have made certain skilled and trained workforce commitments. Status: Chapter 341, Statutes of 2016.
REGISTERED SUPPORT / OPPOSITION:
Support
Tri-Valley-San Joaquin Valley Regional Rail Authority (sponsor)
California Hydrogen Coalition
California State Association of Electrical Workers
California State Pipe Trades Council
Coalition of California Utility Employees
San Joaquin Valley Policy Council
Tri-valley Cities of Dublin, Livermore, Pleasanton, San Ramon, and Town of Danville
Opposition
None on file.
Analysis Prepared by: Samuel Mahanes / U. & E. / (916) 319-2083
The Atlantic; “The World's Greenest Jail?”; November 2013; https://www.theatlantic.com/technology/archive/2013/11/the-worlds-greenest-jail/281021/ ↑
Tri-Valley-San Joaquin Valley Regional Rail Authority; “Valley Link – Project Feasibility Report”; October 2019 ↑
Zen Clean Energy Solutions; “Valley Link Hydrogen Production and Energy Farm Feasibility Study”; September 2022 ↑
Metro Magazine; “Calif.’s Valley Link Enters Strategic Collaboration with Linde Engineering”; December 2022; https://www.metro-magazine.com/10189064/calif-s-valley-link-enters-strategic-collaboration-with-linde-engineering ↑
Pg. 2; City of Tewntynine Palms; “Infrastructure Modernization Program Staff Report”; August 2018 ↑
City of Tewntynine Palms; “Infrastructure Modernization Program Staff Report”; August 2018 ↑
Utility Dive; “California coalition aims to make hydrogen power cost-competitive by 2030”; May 2021; https://www.utilitydive.com/news/california-coalition-aims-to-make-hydrogen-power-cost-competitive-by-2030/600239/ ↑
Pg. 68; Zen Clean Energy Solutions; “Valley Link Hydrogen Production and Energy Farm Feasibility Study”; September 2022 ↑
Pg. 56; Zen Clean Energy Solutions; “Valley Link Hydrogen Production and Energy Farm Feasibility Study”; September 2022 ↑
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 746 |
THIRD READING
Bill No: SB 746
Author: Eggman (D)
Amended: 4/10/23
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 17-0, 4/24/23
AYES: Bradford, Ashby, Becker, Caballero, Dodd, Durazo, Eggman, Gonzalez, Grove, McGuire, Min, Newman, Rubio, Seyarto, Skinner, Stern, Wilk
NO VOTE RECORDED: Dahle
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Energy conservation contracts: alternate energy equipment: hydrogen
SOURCE: Tri-Valley San Joaquin Valley Regional Rail Authority
DIGEST:
This bill adds hydrogen to the list of alternative energy resources for which a local agencies can enter into a service contract and adds transit districts to the list of local agencies authorized to enter into those contracts.
ANALYSIS:
Existing law:
- Defines various types of contracts that a public agency may enter into for the purposes of developing alternative energy resources, including energy service contracts, facility financing contracts, and facility leasing contracts. (Government Code §4217.11)
- Defines “alternative energy equipment” as equipment for the production or conversation of energy from alternate sources as its primary fuel, including solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas meeting specified standards or any other source of energy that reduces the use of fossil or nuclear fuels. (Government Code §4217.11)
- Defines a “public agency” as the state, county, city, city and county, district, community college district, school district, joint powers authority, or other entity designated or created by a political subdivision relating to energy development projects. (Government Code §4217.11)
- Authorizes a public agency to enter into an energy service contract or facility financing contract after making specified findings about the cost and energy savings achieved by the contracts and holding a public hearing. Existing law specifies that cost findings for facility financing must include a determination as to whether sales of the energy generated by the financed facility will cover the cost of the facility’s construction and operation. (Government Code §4217.12-4217.13)
- Authorizes public agencies to enter into contracts for the sale of electricity, electric generation capacity, or thermal energy produced by an energy conservation facility. (Government Code §4217.14)
- Specifies that existing law authorizing public energy service contracts is intended to be construed to provide the greatest flexibility to public agencies in structuring agreements to maximize economic benefits. (Government Code §4217.18)
This bill:
- Adds hydrogen to the list of alternative energy resources for which local agencies can enter into energy service contracts.
- Adds transit districts to the list of public agencies that may enter into energy service contracts.
Background
Energy service contracts. Existing law authorizes local governments to enter into energy service contracts as part of broader state policy to encourage energy savings and reduced fossil fuel use by local governments. These contracts are intended to provide local agencies with favorable financing terms for energy conservation projects by allowing these agencies to justify upfront expenditures on energy conservation projects through projected energy savings and avoided costs. Many local governments have used these contracts to facilitate energy efficient building retrofits and on-site generation. For example, Alameda County has used energy service contracts to establish multiple large-scale solar installations at various public facilities in the County. The County also established energy services contracts for the installation of components and upgrades to the fuel cell and microgrid energy system at the Santa Rita Jail.
Bill aims to allow transit districts to enter into hydrogen energy service contracts. To address the limited public transit options and growth of commuters traveling between the San Joaquin Valley and the Bay Area, the Legislature passed AB 758 (Eggman, Chapter 747, Statutes of 2017) to create the Tri-Valley San Joaquin Valley Regional Rail Authority and tasked the authority with overseeing the creation of connecting service between the Bay Area Rapid Transit (BART) and Altamont Corridor Express (ACE). This project is known as Valley Link.
In 2022, the Tri-Valley San Joaquin Valley Regional Rail Authority purchased a parcel of land in the city of Tracy and entered into an agreement with Linde Engineering to plan the development of an electrolytic hydrogen facility that can provide power for the Valley Link rail system and also fuel other hydrogen fuel cell transit vehicles and trucks. While it is not clear that existing law would prohibit a transit district from entering into an energy service contract, this bill would clarify that these districts can enter into these contracts, and this bill would add hydrogen to the list of alternative energy resources for which the contracts can be established.
Bill provides local agencies with broad discretion over contracts for different types of hydrogen. Currently, state law does not include a definition of renewable or green hydrogen. This bill does not establish a new hydrogen definition or limit the types of hydrogen projects for which an energy service contract can be established. As a result, this bill provides broad discretion to local agencies to propose projects with a wide range of feedstocks and attributes. This broad discretion may reflect existing law regarding energy service contracts which specifies that local government authority to create these contracts is intended to be construed to provide local agencies with maximum flexibility to structure these agreements to maximize local economic benefits.
Prior/Related Legislation
AB 758 (Eggman, Chapter 747, Statutes of 2017) established the Tri-Valley San Joaquin Valley Regional Rail Authority to administer the development of a connection between BART and the ACE in the Tri-Valley region.
SB 840 (Committee on Budget and Fiscal Review, Chapter 341, Statutes of 2016) among other provisions, authorized the Department of General Services (DGS) or another state or local agency that intends to enter into an energy retrofit contract to establish a pool of qualified energy service companies. The bill allowed until January 1, 2020, DGS and other state agencies to establish pools of qualified energy service companies that have made certain skilled and trained workforce commitments.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
SUPPORT: (Verified 5/8/23)
Tri-Valley San Joaquin Valley Regional Rail Authority (source)
California Hydrogen Coalition
California State Association of Electrical Workers
California State Pipe Trades Council
Coalition of California Utility Employees
San Joaquin Valley Regional Policy Council
OPPOSITION: (Verified 5/8/23)
None received
ARGUMENTS IN SUPPORT: According to the author:
SB 746 will allow transit districts to engage in energy conservation moving us towards our goals as a state to reduce emissions, while also providing clean and efficient transportation to the people of California. SB 746 will also have a catalytic effect on the Valley Link Rail project, which will ultimately provide a rail connection among Stockton, Lathrop, Tracy and Dublin/Pleasanton. As part of that project, Valley Link intends to establish a hydrogen fuel generation facility in the City of Tracy. Ultimately the Valley Link train will be powered by hydrogen and even sooner will be able to
provide a source of hydrogen fuel for buses and commercial trucks moving through the Tri-Valley/San Joaquin corridor.
Prepared by: Sarah Smith / E., U. & C. / (916) 651-4107
5/10/23 15:34:56
**** END ****
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Steven Bradford, Chair
2023 - 2024 Regular
Bill No: Hearing Date: 4/24/2023
Author: | |||
Version: | Amended | ||
Urgency: | Fiscal: | ||
Consultant: | |||
SUBJECT:
DIGEST: This bill adds hydrogen to the list of alternative energy resources for which a local agencies can enter into a service contract and adds transit districts to the list of local agencies authorized to enter into those contracts.
ANALYSIS:
Existing law:
- Defines various types of contracts that a public agency may enter into for the purposes of developing alternative energy resources, including energy service contracts, facility financing contracts, and facility leasing contracts. (Government Code §4217.11)
- Defines “alternative energy equipment” as equipment for the production or conversation of energy from alternate sources as its primary fuel, including solar, biomass, wind, geothermal, hydroelectricity under 30 megawatts, remote natural gas meeting specified standards or any other source of energy that reduces the use of fossil or nuclear fuels. (Government Code §4217.11)
- Defines a “public agency” as the state, county, city, city and county, district, community college district, school district, joint powers authority, or other entity designated or created by a political subdivision relating to energy development projects. (Government Code §4217.11)
- Authorizes a public agency to enter into an energy service contract or facility financing contract after making specified findings about the cost and energy savings achieved by the contracts and holding a public hearing. Existing law specifies that cost findings for facility financing must include a determination as to whether sales of the energy generated by the financed facility will cover the cost of the facility’s construction and operation. (Government Code §4217.12-4217.13)
- Authorizes public agencies to enter into contracts for the sale of electricity, electric generation capacity, or thermal energy produced by an energy conservation facility. (Government Code §4217.14)
- Specifies that existing law authorizing public energy service contracts is intended to be construed to provide the greatest flexibility to public agencies in structuring agreements to maximize economic benefits. (Government Code §4217.18)
This bill:
- Adds hydrogen to the list of alternative energy resources for which local agencies can enter into energy service contracts.
- Adds transit districts to the list of public agencies that may enter into energy service contracts.
Background
Energy service contracts. Existing law authorizes local governments to enter into energy service contracts as part of broader state policy to encourage energy savings and reduced fossil fuel use by local governments. These contracts are intended to provide local agencies with favorable financing terms for energy conservation projects by allowing these agencies to justify upfront expenditures on energy conservation projects through projected energy savings and avoided costs. Many local governments have used these contracts to facilitate energy efficient building retrofits and on-site generation. For example, Alameda County has used energy service contracts to establish multiple large-scale solar installations at various public facilities in the County. The County also established energy services contracts for the installation of components and upgrades to the fuel cell and microgrid energy system at the Santa Rita Jail.
Bill aims to allow transit districts to enter into hydrogen energy service contracts. To address the limited public transit options and growth of commuters traveling between the San Joaquin Valley and the Bay Area, the Legislature passed AB 758 (Eggman, Chapter 747, Statutes of 2017) to create the Tri-Valley San Joaquin Valley Regional Rail Authority and tasked the authority with overseeing the creation of connecting service between the Bay Area Rapid Transit (BART) and Altamont Corridor Express (ACE). This project is known as Valley Link.
In 2022, the Tri-Valley San Joaquin Valley Regional Rail Authority purchased a parcel of land in the city of Tracy and entered into an agreement with Linde Engineering to plan the development of an electrolytic hydrogen facility that can provide power for the Valley Link rail system and also fuel other hydrogen fuel cell transit vehicles and trucks. While it is not clear that existing law would prohibit a transit district from entering into an energy service contract, this bill would clarify that these districts can enter into these contracts, and this bill would add hydrogen to the list of alternative energy resources for which the contracts can be established.
Bill provides local agencies with broad discretion over contracts for different types of hydrogen. Currently, state law does not include a definition of renewable or green hydrogen. This bill does not establish a new hydrogen definition or limit the types of hydrogen projects for which an energy service contract can be established. As a result, this bill provides broad discretion to local agencies to propose projects with a wide range of feedstocks and attributes. This broad discretion may reflect existing law regarding energy service contracts which specifies that local government authority to create these contracts is intended to be construed to provide local agencies with maximum flexibility to structure these agreements to maximize local economic benefits.
Prior/Related Legislation
AB 758 (Eggman, Chapter 747, Statutes of 2017) established the Tri-Valley San Joaquin Valley Regional Rail Authority to administer the development of a connection between BART and the ACE in the Tri-Valley region.
SB 840 (Committee on Budget and Fiscal Review, Chapter 341, Statutes of 2016) among other provisions, authorized the Department of General Services (DGS) or another state or local agency that intends to enter into an energy retrofit contract to establish a pool of qualified energy service companies. The bill allowed until January 1, 2020, DGS and other state agencies to establish pools of qualified energy service companies that have made certain skilled and trained workforce commitments.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
SUPPORT:
Tri-Valley San Joaquin Valley Regional Rail Authority, Sponsor
California Hydrogen Coalition
California State Association of Electrical Workers
California State Pipe Trades Council
Coalition of California Utility Employees
San Joaquin Valley Regional Policy Council
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: According to the author:
SB 746 will allow transit districts to engage in energy conservation moving us towards our goals as a state to reduce emissions, while also providing clean and efficient transportation to the people of California. SB 746 will also have a catalytic effect on the Valley Link Rail project, which will ultimately provide a rail connection among Stockton, Lathrop, Tracy and Dublin/Pleasanton. As part of that project, Valley Link intends to establish a hydrogen fuel generation facility in the City of Tracy. Ultimately the Valley Link train will be powered by hydrogen and even sooner will be able to provide a source of hydrogen fuel for buses and commercial trucks moving through the Tri-Valley/San Joaquin corridor.
-- END --
Discussed in Hearing
54SEC
Senate Floor
5MIN
Senate Standing Committee on Energy, Utilities and Communications
Bill Author
Bill Co-Author(s):
