BILL ANALYSIS                                                                                                                                                                                                    Ó          1





                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                                 ALEX PADILLA, CHAIR
          

          AB 1124 -  Skinner                                Hearing Date:  
          June 19, 2012              A
          As Amended:         June 12, 2012                 Non-FISCAL      
           B

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                                      DESCRIPTION
           
           Current law  requires California's electric utilities to first 
          meet their energy needs through all available, feasible, and 
          cost-effective energy efficiency measures before renewable and 
          conventional generation.
           
           Current decisions  of the California Public Utilities Commission 
          (CPUC) require investor-owned utilities (IOUs) to administer 
          energy efficiency programs in multi-year portfolios designed to 
          meet pre-established energy savings goals and funded by ratepayer 
          charges, currently at about $1 billion per year.

           Current law and CPUC decisions  establish the Energy Savings 
          Assistance Program (ESAP) to provide eligible low-income 
          households free weatherization and energy efficiency services 
          administered in multi-year portfolios by the IOUs as approved by 
          the CPUC and funded by ratepayer charges, currently at about $320 
          million per year.

           Current law  requires the CPUC to ensure that by December 31, 
          2020, all eligible low-income customers are given the opportunity 
          to participate in ESAP, including customers occupying apartments 
          or similar multiunit residential structures.

           Current law  requires multifamily rental housing to maintain 
          specified characteristics, including adequate heating and hot 
          water systems, in order to meet health and safety habitability 
          standards.












           This bill  provides that the law establishing multifamily 
          habitability requirements shall not be interpreted to prohibit a 
          tenant or owner of rental properties from qualifying for heating 
          and hot water system repair or replacement under a utility energy 
          efficiency program.

                                       BACKGROUND
           
          LIEE Becomes ESAP - The California Alternate Rate for Energy 
          (CARE) program provides a minimum 20 percent energy rate discount 
          to eligible low-income households earning at or below 200 percent 
          of the federal poverty level. Customers who meet the CARE 
          requirements also are eligible for the ESAP, formerly known as 
          Low Income Energy Efficiency (LIEE) program, which provides 
          no-cost weatherization and other services such as attic 
          insulation, energy efficient refrigerators, energy efficient 
          furnaces, weatherstripping, caulking, low-flow showerheads, water 
          heater blankets, and door and building envelope repairs that 
          reduce air infiltration.  
          The ESAP is administered in multi-year portfolios by the IOUs as 
          approved by the CPUC and funded by ratepayer charges, currently 
          at about $320 million per year.  A proposed decision to approve 
          the ESAP program elements for the next three-year cycle is 
          pending before the CPUC.

          CPUC Cites Habitability Requirements - In several prior ESAP 
          decisions the CPUC has denied eligibility for furnace and hot 
          water repair and replacement in rental buildings.  Advocates 
          claim that these large central systems present the primary 
          opportunity for significant energy savings in multifamily 
          buildings.  But the CPUC ruled in 2007 and 2008 that these 
          systems are the responsibility of the landlord, citing the Civil 
          Code habitability requirements (D.07-12-051 and D.08-11-031).  
          The CPUC states that the staggering costs of upgrading these 
          central systems could derail the CPUC from meeting its statutory 
          mandate to provide energy efficiency measures to all low-income 
          customers and could result in "over-subsidizing landlords." The 
          ESAP proposed decision currently pending before the CPUC also 
          concludes that these systems are the responsibility of landlords 
          and that their repair and replacement should not be funded by 
          ratepayers.

          Social Justice and Energy Efficiency - Affordable housing 
          advocates, including the sponsor of this bill, claim that energy 










          efficiency in multifamily housing is an issue of social justice 
          and equity as well as energy policy.  They claim that low-income 
          households, especially those residing in multifamily buildings, 
          represent the greatest need for energy efficiency improvements, 
          but have a very low participation rate in existing programs. 
          According to the author, more than one-third of low-income 
          households that are eligible for ESAP live in multifamily 
          buildings but get only minimal energy savings from 
          weatherstripping and limited measures suited to individual rental 
          units.  Thus, these advocates claim that existing programs are 
          leaving behind the poorest of the poor, who live in the oldest, 
          least efficient buildings and pay the highest percentage of 
          household income on energy costs.  

          Other Energy Efficiency Programs for Multifamily Housing - In 
          addition to ESAP, the larger energy efficiency programs the IOUs 
          administer include some programs for multifamily housing.  For 
          example, San Diego Gas and Electric Company and Southern 
          California Gas Company offer multifamily rebate programs for 
          common area systems including central water heaters and boilers.  
          More multifamily programs, including whole building pilot 
          programs, are pending approval by the CPUC.  

                                       COMMENTS
           
              1.   Author's Purpose  .  According to the author, this bill 
               clarifies that the habitability requirements for rental 
               housing in the Civil Code have no bearing on public policy 
               goals to increase energy efficiency in residential housing 
               and shall not be interpreted to prohibit a tenant or owner 
               of a rental property from qualifying for heating and hot 
               water system repair or replacement under ESAP.

              2.   Removing Legal Barrier  .  As stated by the sponsor, this 
               bill is "narrowly focused" to prevent the CPUC from citing 
               the Civil Code habitability requirements as a reason for 
               making rental property heating and hot water repair and 
               replacement ineligible for ESAP measures.  The bill makes no 
               change to habitability requirements.

              3.   Policy Discretion Remains with CPUC  .  Other than 
               eliminating the Civil Code habitability requirements as a 
               barrier to eligibility in ESAP, this bill makes no change to 
               law governing the ESAP and does not affect the CPUC's policy 










               discretion in administering the ESAP and establishing 
               program criteria consistent with applicable statutory 
               provisions.  

              4.   Ratepayer Impact  . To the extent this bill removes a legal 
               barrier to large central systems in rental housing eligible 
               for ESAP funds, and the CPUC exercises its discretion to 
               make them eligible, this bill could require an increase in 
               the ratepayer surcharge that funds these programs.

                                     ASSEMBLY VOTES
           
          Assembly Floor                     (54-21)
          Assembly Appropriations Committee  (12-5)
          Assembly Utilities and Commerce Committee                      
          (11-2)

                                       POSITIONS
           
           Sponsor:
           
          California Housing Partnership Corporation

           Support:
           
          BRIDGE Housing Corporation
          California Housing Consortium
          Century Housing Corporation
          Coalition for Economic Survival
          East Bay Housing Organizations
          Enterprise Community Partners
          MidPen Housing Corporation
          Napa Valley Community Housing
          National Housing Law Project
          Non-Profit Housing Association of Northern California
          San Diego Housing Federation
          Sheet Metal Worker's Local Union #104
          Ward Economic Development Corporation

           Oppose:
           
          None on file

          












          Jacqueline Kinney 
          AB 1124 Analysis
          Hearing Date:  June 19, 2012