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Legislative Analyst's OfficeAnalysis of the 2002-03 Budget Bill |
The California Consumer Power and Conservation Financing Authority (hereafter referred to as the California Power Authority, or CPA) was created by Chapter 10x, Statutes of 2001 (SB 6x, Burton), to assure a reliable supply of power to Californians at just and reasonable rates, including planning for a prudent energy reserve. The CPA was also created to encourage energy efficiency, conservation, and the use of renewable resources.
In order to meet these goals, the CPA is authorized to purchase, lease, or build new power plants to supplement private and public sector power supplies. It may also finance energy conservation programs and renewable energy projects. The financing for these projects is provided by $5 billion in revenue bonding authority, with any bonds issued being secured by the revenues generated from the specific projects being financed by the CPA. In addition, the CPA has also been given the authority to finance natural gas transportation and storage projects that have been recommended by the California Public Utilities Commission, as well as provide financing to retrofit old and inefficient power plants.
We withhold recommendation on the proposed expenditure of $5.5 million loaned from the General Fund to support CPA start-up activities. Furthermore, we recommend that the CPA report before budget hearings on specific projects and financing arrangements supporting its financial plan, including the planned repayment of its General Fund loan.
Proposed Budget. The CPA was provided a $10 million General Fund loan to be allocated upon notification of the Legislature in the 2001-02 Budget Act. To date, $4.5 million has been allocated to the CPA for current-year expenditures. The budget proposes to allocate the remaining balance, $5.5 million, in the budget year.
Plan for Repayment Needed. Since the CPA was established last fall, it has been working on what its role will be in the state's electricity market. It has also been working on its statutorily mandated Energy Resource Investment Plan (ERIP) that is due to the Legislature in mid-February. A draft of its ERIP has been released and summarizes a financial plan over the next four years. However, few details are available regarding specific projects or financing arrangements that support this plan, including the planned repayment of the state in the budget year. Therefore, we withhold recommendation on the $5.5 million proposed in the budget year until supporting documentation of the CPA's financial plan is received and reviewed.