BILL ANALYSIS
SB 542
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Date of Hearing: July 6, 2009
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Felipe Fuentes, Chair
SB 542 (Wiggins) - As Amended: May 28, 2009
SENATE VOTE : 30-8
SUBJECT : Solar energy and energy efficiency programs.
SUMMARY : Requires the California Public Utilities Commission
(PUC) to develop and implement a strategy to expand the
participation of multi-tenant buildings in utility energy
efficiency and solar energy programs.
EXISTING LAW :
1)Requires the investor-owned electric utilities (IOUs) to
deploy energy conservation measures as their first response
toward meeting their customers' electricity needs.
2)Establishes the California Solar Initiative (CSI), which
provides $3.3 billion in customer-provided incentives to
encourage the deployment of solar photovoltaic panels.
THIS BILL :
1)Requires the PUC to develop and implement a strategy to expand
the participation of multiunit residential and commercial
rental properties in utility energy efficiency and solar
energy programs by July 1, 2010, and to prepare and submit a
report on the program to the Legislature by that date.
2)Requires the PUC to ensure that the strategy implemented does
not result in any additional ratepayer surcharges, is funded
through existing programs or the American Recovery and
Reinvestment Act of 2009 (ARRA), and is cost effective for
utility customers.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author's office, the purpose of
this bill is to encourage the use of solar energy and energy
efficiency measures in apartments, multi-unit residential and
commercial buildings, and manufactured homes.
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1) Background : SB 1 (Murray) Chapter 132, Statutes of 2006,
created the CSI to encourage the installation of 3,000 megawatts
of solar energy in California in 10 years through customer
subsidies. Ten percent of the total budget for the CSI is set
aside for low-income programs. Most low-income residents live in
multi-tenant buildings, and the PUC has developed programs to
provide solar energy to these Californians through the
Multi-family Affordable Housing (MASH) program and a system
called virtual net metering (VNM). Due to the fact that the
low-income program will not reach that many residents of
multi-tenant buildings since only small portions of all
multi-tenant units are occupied by low-income residents, the
Commission has committed to considering using this model for
solar on all multi-tenant buildings (D.08-10-036).
After the 2001 electricity crisis California implemented
aggressive policies with respect to energy efficiency. The
Legislature authorized over $225 million in spending on new
energy efficiency and conservation programs to reduce
overall electrical demand and eliminate the threat of blackouts
in the summer of 2001. Assembly Bill 2021 (Levine), Chapter 734,
Statutes of 2006, set a statewide goal of reducing total
forecasted electricity consumption by 10 percent over the next
10 years. According to the CEC, IOUs reached 82 percent of their
AB 2021 goal for electricity and 61 percent for natural gas in
2008, and publicly-owned utilities ranged between 65-75 percent.
Most of the energy efficiency programs involve direct subsidies
to customers in the form of rebates after the customer has
purchased or installed the energy efficiency appliance or
upgrades. Other energy efficiency programs can include free give
away of energy efficiency devices, home audits, or low interest
loans to help finance upgrades.
2) Principal-agent problem : For both solar and energy efficiency
programs in the state, rebates and subsidies will cover some
percentage of the cost of the measure, and the customer is
responsible for the remainder. For owner-occupied buildings,
this can be a cost-effective investment because the customer
will recoup these costs through reduced electricity bills over
time. However in most multi-tenant buildings the building owner
does not pay the utility bill and would receive no direct
economic benefit from making energy efficiency upgrades. This
means the owner has little incentive to make energy efficiency
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upgrades because the monetary incentive does not accrue to the
entity that would be making the investment.
Due to this principal-agent problem, it may seem like this is a
sector for which solar and energy efficiency programs have not
reached multi-family buildings. However there are two compelling
arguments to be made for focusing on this sector. First,
multi-tenant buildings make up a significant portion of
California's commercial and residential property. For example,
43% of California's housing units are rentals, and the
residential sector makes up 32% of California's overall energy
demand. Multi-tenant buildings may make up an even larger
percentage of the commercial property stock. Therefore, in order
to meet California's aggressive solar and energy efficiency
goals the multi-tenant sector cannot be ignored.
The second compelling reason to find ways for the multi-tenant
sector to take advantage of these programs is that this sector
is paying for these programs. In the case of the CSI, all
ratepayers pay a separate fee on their utility bills. In the
case of energy efficiency ratepayers fund programs through the
Public Goods Charge (PGC). It seems only reasonable to look for
ways to ensure that all of the entities responsible for paying
for these programs can take advantage of them.
3) Another report : This bill requires the PUC to submit a report
to the legislature regarding the
strategy mandated by this bill. This requirement would result in
another report that would add to the long list of
already-mandated reports to the legislature on various energy
issues including the status of the CSI and energy efficiency
programs as a whole. The committee may wish to consider amending
the bill to only require the PUC to report on the status of this
strategy as part of their reports on those programs as a whole.
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation
Recolte Energy
Western Center on Law and Poverty
Opposition
SB 542
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California Public Utilities Commission (unless amended)
Analysis Prepared by : Nina Kapoor / U. & C. / (916) 319-2083