BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1198| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 1198 Author: Huff (R), et al Amended: 6/30/10 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 SENATE FLOOR : 24-9, 6/1/10 AYES: Aanestad, Ashburn, Calderon, Cedillo, Cogdill, Correa, Cox, Denham, Ducheny, Dutton, Florez, Harman, Hollingsworth, Huff, Negrete McLeod, Padilla, Price, Romero, Runner, Strickland, Wolk, Wright, Wyland, Yee NOES: Alquist, Corbett, DeSaulnier, Hancock, Leno, Liu, Lowenthal, Pavley, Simitian NO VOTE RECORDED: Kehoe, Oropeza, Steinberg, Walters, Wiggins, Vacancy, Vacancy ASSEMBLY FLOOR : 69-3, 8/18/10 - See last page for vote CONTINUED SB 1198 Page 2 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 if a Federal Trade Commission labeling rule for television products is not effective on or before July 1, 2011. Assembly Amendments make clarifying changes. 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 delays implementation of CEC's television energy efficiency labeling regulations until July 1, 2011, and CONTINUED SB 1198 Page 3 makes CEC regulations effective July 1, 2011 if a Federal Trade Commission (FTC) labeling rule for televisions is not effective by that date, and continues the CEC regulations in effect until FTC final labeling rule is effective. 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 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. CONTINUED SB 1198 Page 4 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. 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, CONTINUED SB 1198 Page 5 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 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 8/4/10) (per Assembly Energy and Commerce Committee analysis and Assembly Appropriations Committee analysis) Consumer Electronics Association (source) California Retailers Association Consumer Electronics Retailers Association Custom Electronic Design & Installation Association Mitsubishi Electric Plasma Display Coalition Sharp CONTINUED SB 1198 Page 6 OPPOSITION : (Verified 8/4/10) (per Assembly Energy and Commerce Committee analysis and Assembly Appropriations Committee analysis) California Energy Commission 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 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. ARGUMENTS IN OPPOSITION : The CEC believes that the FTC labels could be misleading. By conveying operating costs in dollars, compared with the CEC labels that convey power consumption, the commission argues that Californians could be misled into believing a television is cheaper to operate than it really is due to different energy rate structures across the country. The CEC states this bill dilutes CEC's CONTINUED SB 1198 Page 7 standards because the federal standards are almost always less stringent that California's. ASSEMBLY FLOOR : AYES: Adams, Anderson, Arambula, Bass, Beall, Bill Berryhill, Tom Berryhill, Block, Blumenfield, Bradford, Buchanan, Caballero, Carter, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Eng, Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick, Gatto, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Lieu, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nestande, Niello, Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Torrico, Tran, Villines, John A. Perez NOES: Ammiano, Feuer, Nava NO VOTE RECORDED: Blakeslee, Brownley, Charles Calderon, Chesbro, Evans, Logue, Yamada, Vacancy DLW:mw 8/18/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED