BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  SB 1198|
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                                 THIRD READING


          Bill No:  SB 1198
          Author:   Huff (R), et al
          Amended:  4/27/10
          Vote:     21

           
           SENATE ENERGY, U.&C. COMMITTEE  :  6-4, 4/20/10
          AYES:  Padilla, Dutton, Kehoe, Oropeza, Strickland, Wright
          NOES:  Corbett, Florez, Lowenthal, Simitian
          NO VOTE RECORDED:  Cox

           SENATE APPROPRIATIONS COMMITTEE  :  5-4, 5/10/10 (FAIL)
          AYES:  Cox, Price, Walters, Wyland, Yee
          NOES:  Kehoe, Alquist, Leno, Wolk
          NO VOTE RECORDED:  Corbett, Denham

           SENATE APPROPRIATIONS COMMITTEE  :  6-4, 5/17/10
          AYES:  Cox, Denham, Walters, Wolk, Wyland, Yee
          NOES:  Kehoe, Alquist, Corbett, Leno
          NO VOTE RECORDED:  Price


           SUBJECT  :    Energy:  regulation

           SOURCE  :     Consumer Electronics Association


           DIGEST  :    This bill prevents the California Energy  
          Commission from implementing existing television product  
          labeling regulations before July 1, 2011.  In addition, the  
          regulations shall only be effective until the Federal Trade  
          Commission issues a federal labeling rule.

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           ANALYSIS  :    The Warren-Alquist State Energy Resources  
          Conservation and Development Act requires the State Energy  
          Resources Conservation and Development Commission  
          (California Energy Commission [CEC]) to adopt those  
          regulations that are necessary to carry out the Act.

          The Act also requires the CEC, after one or more public  
          hearings, to prescribe, by regulation, standards for  
          minimum levels of operating efficiency and prescribe other  
          measures, such as energy and water consumption labeling not  
          preempted by federal labeling law, to promote the use of  
          energy and water efficient appliances that do not result in  
          any added total costs for consumers over the designed life  
          of the appliances concerned.

          In November 2009, the CEC adopted energy efficiency  
          standards for new televisions beginning in 2011 and 2013.   
          (These standards have not yet been approved by the Office  
          of Administrative Law.)  The Tier 1 standards will reduce  
          energy use of new televisions by approximately 33 percent,  
          starting in 2011.  The Tier 2 standards will reduce total  
          energy use of new televisions by an average of 49 percent,  
          starting in 2013.  In addition, beginning in 2011,  
          televisions sold in the state must be permanently marked  
          with information on the television's electricity  
          consumption.

          This bill provides that the television product labeling  
          regulations adopted by the CEC would not be effective until  
          July 1, 2011, and if the United States Federal Trade  
          Commission (FTC) fails to issue a final labeling rule for  
          those products as of July 1, 2011.  This bill further  
          provides that those regulations will remain in effect only  
          until the FTC issues a final labeling rule for television  
          products.

           Background  

           Energy Efficiency .  California has pursued its energy  
          demand reduction goals through two primary avenues -  
          utility-sponsored programs to reduce end-user consumption,  
          and codes and standards designed to lower the energy use of  
          buildings and appliances.  By 2004, these efforts had  
          cumulatively saved more than 40,000 gigawatt hours (GWh) of  







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          electricity and 12,000 megawatts (MW) of peak electricity,  
          equivalent to 24 500-MW power plants.  More than half of  
          the statewide savings has come from the building and  
          appliance standards, with the balance resulting from  
          programs implemented by the state's investor owned  
          utilities and local publicly owned utilities.  As a result  
          of these efforts California's energy use per capita has  
          remained stable for more than 30 years while the national  
          per capita average has steadily increased and is nearly  
          double that of California. 

           CEC Appliance Standards  .  California's Appliance Efficiency  
          Regulations were established in 1976 in response to a  
          legislative mandate to reduce California's energy  
          consumption.  The regulations are updated periodically to  
          allow consideration and possible incorporation of new  
          energy efficiency technologies and methods. 

          The Appliance Efficiency Regulations include standards for  
          both federally-regulated appliances and  
          non-federally-regulated appliances.  Twenty-three  
          categories of appliances are included in the scope of these  
          regulations which include commercial and residential  
          products including water heaters, clothes washers,  
          dishwashers, traffic signals, lighting and heath and air  
          conditioning systems.  The standards within these  
          regulations apply to appliances that are sold or offered  
          for sale in California, except those sold wholesale in  
          California for final retail sale outside the state and  
          those designed and sold exclusively for use in recreational  
          vehicles or other mobile equipment.

           Pending CEC Television Standards  .  The CEC has adopted  
          energy efficiency standards for new televisions offered for  
          sale in California beginning in 2011 and 2013.  Currently,  
          statewide TV energy consumption is estimated to be 6,360  
          million kilowatt hours (kWh) per year, or roughly two  
          percent of California's gross system electricity usage.   
          This percentage is expected to increase as the current  
          stock (mostly analog cathode ray tubes) is replaced by the  
          newer and larger TV types.  There are many "large-screen"  
          digital televisions on the market that use 500 or more kWh  
          per year, as much energy as many new refrigerators.  








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          The first television standard (Tier 1) will take effect  
          January 1, 2011, and reduce energy consumption by average  
          of 33 percent.  The second measure (Tier 2) will take  
          effect in 2013 and, in conjunction with Tier 1, reduce  
          energy consumption by an average of 49 percent.

          Televisions sold in California, starting January 1, 2011,  
          will also be required to be permanently marked with the on  
          mode power consumption in watts and list the same data in  
          any publication website, document or retail display that is  
          used for selling the product.  The regulation package  
          specifies July 1, 2010, but the CEC reports that this was a  
          typographical error that will be changed to January 1, 2011  
          at the Office of Administrative Law (OAL).  
          The proposed regulations will generate an estimated 6,515  
          GWh in energy savings annually after all existing stock is  
          replaced.  The overall energy cost savings to consumers for  
          California is expected to be approximately $8.1 billion.   
          The estimated total value of this regulation is  
          approximately $8.7 billion, which is the sum of energy cost  
          savings from the proposed standards and savings in avoided  
          construction cost of a $615 million natural gas power  
          plant.

          The regulation package has been adopted by the CEC but has  
          not yet been submitted to the OAL for approval.  Submission  
          is anticipated in two to four weeks.

           Pending FTC Television Labeling Requirement  .  The FTC's  
          Appliance Labeling Rules require energy disclosures for a  
          variety of covered products, including home appliances,  
          lighting, and plumbing products.  The Rule requires most  
          covered products to have, at the point of sale, yellow  
          EnergyGuide labels containing estimated annual operating  
          cost information based on Department of Energy test  
          procedures.  The label information must also appear in  
          catalogs and on Internet sites offering the products for  
          sale.

          The FTC has proposed to extend the labeling rule to  
          televisions.  Each television would be required to have  
          specific information consistent with EnergyGuide labels for  
          other products including annual energy costs based on a  
          uniform electricity rate of 11-cents per kWh, an on-mode  







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          usage rate of five hours per day and 19 hours per day in  
          standby mode to calculate annual cost and energy  
          consumption information.  The label would also have  
          comparative information to other televisions grouped by  
          screen size. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee:

                           Fiscal Impact (in thousands)

             Major Provisions            2010-11    2011-12    2012-13   Fund  

            Regulation implementation          Minor costs       
            General*

            * Energy Resources Program Account

           SUPPORT  :   (Verified  5/18/10)

          Consumer Electronics Association (source)
          California Retailers Association
          Consumer Electronics Retailers Association
          Custom Electronic Design & Installation Association
          Mitsubishi Electric
          Plasma Display Coalition
          Sharp

           ARGUMENTS IN SUPPORT  :    The bill's sponsor, the Consumer  
          Electronics Association, states:  "Specifically, SB 1198  
          would delay implementation of the CEC's television energy  
          use labeling requirement until July 1, 2011, to allow the  
          Federal Trade Commission (FTC) time to develop and adopt  
          its own energy efficiency labeling rule.  Prior to the  
          CEC's rulemaking, the Federal government enacted  
          legislation mandating energy use disclosure requirements  
          for certain electronics products, including televisions.   
          In order to implement this legislation, the FTC initiated a  
          rulemaking in early 2009, and they have been working with a  
          variety of stakeholders to craft regulations.  In March  
          2010, the FTC issued a notice of proposed rulemaking that  
          includes specific energy use disclosure and labeling  







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          requirements for televisions.  If the FTC rulemaking is  
          adopted, it would supersede California's recently adopted  
          regulations.  As adopted, the CEC's regulations would apply  
          to televisions sold in California after January 1, 2011.   
          SB 1198 would specify that California's television energy  
          use regulations would become effective July 1, 2011, in the  
          event that the FTC has not successfully adopted its own  
          regulation by this date.  The FTC's process has been  
          informed by significant stakeholder input, as well as the  
          agency's own experience successfully operating the existing  
          EnergyGuide labeling program for EnergyStar appliances."   
          They believe it will be beneficial to California consumers,  
          manufacturers, retailers, and others for California to  
          permit a reasonable amount of time for the Federal process  
          to unfold.


          DLW:mw  5/19/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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