BILL ANALYSIS AB 758 Page 1 Date of Hearing: April 20, 2009 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Felipe Fuentes, Chair AB 758 (Skinner) - As Amended: April 14, 2009 SUBJECT : Energy: energy audit. SUMMARY : Requires the California Energy Commission (CEC) to develop an energy efficiency program for existing residential and commercial buildings. EXISTING LAW : 1)Requires the CEC to establish criteria for adopting a statewide home energy rating program for residential dwellings, and requires the CEC to adopt the program in consultation with representatives of the Department of Real Estate, the Department of Housing and Community Development, the California Public Utilities Commission (PUC), investor-owned and municipal utilities, cities and counties, real estate licensees, home builders, mortgage lenders, home appraisers and inspectors, home energy rating organizations, contractors who provide home energy services, consumer groups, and environmental groups. 2)Requires the PUC to have each electrical corporation identify a separate rate component to collect revenue to fund cost-effective energy efficiency and conservation activities. 3)AB 2021 (Levine) Chapter 734, Statutes of 2006, requires all electric and natural gas utilities to meet energy efficiency savings targets established by the CEC and the PUC. 4)Requires all electric utilities, in procuring energy, to first acquire all available energy efficiency and demand reduction resources that are cost effective, reliable, and feasible. 5)Requires the PUC to impose a surcharge on all natural gas customers to fund cost-effective energy efficiency and conservation activities. THIS BILL : 1)Requires the CEC to establish a regulatory proceeding to AB 758 Page 2 develop and implement a comprehensive program to achieve energy savings in existing residential and commercial building stock that fall significantly below the current Title 24 building standards. 2)Requires the CEC to coordinate with the PUC and consult with the Department of Real Estate, the Department of Housing and Community Development, investor-owned and publicly owned utilities, and other groups the CEC deems appropriate to develop and implement the program. 3)Requires the CEC to consider various items when developing the program, including a method to inform and educate the public about the need for an energy efficiency program, and the most effective way to report the audit results to the building owner. 4)Requires the PUC to open a proceeding to investigate the ability of electrical corporations to provide various energy efficiency financing options to their customers for the comprehensive energy efficiency program. 5)Requires the PUC, after specified conditions, to authorize each electrical corporation to provide a number of low- or no-cost energy efficiency audits, and requires the PUC to provide an annual report to the Legislature and the CEC. 6)Requires local publicly owned electric utilities to implement an energy efficiency program and report annually to its customers and the CEC specified information about the program. FISCAL EFFECT : Unknown. COMMENTS : According to the author, the purpose of this bill is to capture energy savings in existing buildings. 1) Why energy efficiency : State energy policy prioritizes energy efficiency to reduce energy usage which diminishes the need for new power plants and transmission lines. Energy efficiency measures are an inexpensive alternative to investment in infrastructure, and reduces the proliferation of greenhouse gas (GHG) emissions. To reduce energy usage in existing buildings, the CEC and most of the utilities provide information on energy-efficiency AB 758 Page 3 do-it-yourself audits. The CEC issued a booklet directed at homebuyers that provides information about home energy audits and rating programs and markets this information through home warranty company websites. Many of the recommendations require nominal expenses that render large savings. Some low-cost examples include replacing incandescent light bulbs with compact fluorescent ones, using motion sensor controls for exterior lighting, and caulking, sealing, or applying weatherstrip to seams, cracks, and openings to the outside around windows and doors. The Legislature directed the CEC to develop a statewide estimate of all potentially achievable cost-effective electricity and natural gas efficiency savings and establish statewide annual targets for energy efficiency savings and demand reduction over 10 years (AB 2021, Levine, Chapter 734, Statutes of 2006). To complement the legislative directives the CEC, in its Integrated Energy Policy Report, strongly supports capturing all cost-effective efficiency savings potential and recommends pursuing legislation that would require energy audits and cost-effective levels of efficiency improvements at the time of sale of a building. In addition, the CEC's Report on Energy Efficiency in Existing Buildings recommends "Time of Sale Information Disclosure" where California should begin requiring the disclosure of home energy ratings when a house is sold. Both recommendations are based on the CEC evaluation of the potential savings achieved if cost-effective energy efficiency measures were applied to existing buildings: 9% of statewide electricity consumption, 11% of peak demand, and 5% of natural gas consumption. On November 21, 2007, the Building Industry Association held a Climate Change Task Force, at which a consultant presented a report that determined that 31% of California's electricity is used in housing, and 28% of GHG emissions are attributable to the energy used for residential and commercial buildings. Of the 28%, existing housing constitutes 99% of the GHG emissions. The same entity provided a Retrofit Study and calculated that single-family homes built before 1960 constitute 37% of GHG emissions. Those built during the 1970s contribute 20%. These figures gradually decrease by decade and those built during the naughts (2000s), only contribute about 8% of GHG emissions. 2) Bigger and Bolder energy efficiency efforts : The PUC, through its "Big Bold Energy Efficiency Strategies," is AB 758 Page 4 considering three programs designed to move all new residential and commercial construction to a zero net-energy standard so that the energy the building consumes is offset by the amount of energy it produces. The goal of this program is to reach zero net-energy consumption in residential construction by 2020 and in commercial construction by 2030. To promote energy and water efficiency, the Governor signed an Executive Order (S-20-04) creating the Green Building Initiative for both public and private buildings. This initiative sets goals to reduce electricity use and create more energy-efficient structures throughout the state. 3) AB 2678 (Nunez) : Last year, AB 2678 (Nunez), when heard in this committee, required the CEC to establish an ongoing proceeding to develop requirements for time-of-sale energy-efficiency audits for residential and commercial buildings. Due to the complex nature of imposing an additional significant requirement on realtors and lending institutions at the time of sale of residential and commercial buildings, this bill was amended and struck the required time-of-sale audits. AB 2678 was held in Senate Appropriations Committee. AB 758 includes a provision that ensures that energy audits for residential buildings are not required as a condition of sale and do not unreasonably or unnecessarily affect the home purchasing process or the ability for individuals to rent housing. However, the author would like to retain the authority to use time-of-sale as a trigger for a comprehensive audit, but not prevent a transfer of title if the work isn't complete. The bill includes a provision that states that a transfer of property subject to this program shall not be invalidated solely because of the failure of a person to comply with a provision of the program. REGISTERED SUPPORT / OPPOSITION : Support Breathe California Global Green USA (sponsor) The Utility Reform Network (TURN) Opposition AB 758 Page 5 None on file. Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083