BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1124| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1124 Author: Skinner (D) Amended: 6/12/12 in Senate Vote: 21 SENATE ENERGY, UTILITIES & COMMUNIC. COMM. : 12-0, 6/19/12 AYES: Padilla, Fuller, Berryhill, Corbett, De León, DeSaulnier, Emmerson, Kehoe, Pavley, Rubio, Simitian, Wright NO VOTE RECORDED: Strickland ASSEMBLY FLOOR : Not relevant SUBJECT : Landlord and tenant SOURCE : California Housing Partnership Corporation DIGEST : 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. ANALYSIS : Existing 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. Existing decisions of the California Public Utilities CONTINUED AB 1124 Page 2 Commission (PUC) 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. Existing law and PUC 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 PUC and funded by ratepayer charges, currently at about $320 million per year. Existing law requires the PUC 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. Existing 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. Background Low Income Energy Efficiency 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 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 PUC 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 PUC. CONTINUED AB 1124 Page 3 PUC Cites Habitability Requirements. In several prior ESAP decisions the PUC 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 PUC 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 PUC states that the staggering costs of upgrading these central systems could derail the PUC 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 PUC 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 CONTINUED AB 1124 Page 4 approval by the PUC. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 6/20/12) California Housing Partnership Corporation (source) Adobe Communities BRIDGE Housing Corporation Burbank Housing California Housing Consortium Century Housing Coalition for Economic Survival East Bay Housing Organizations Emerald Cities Enterprise Community Partners Global Green Mercy Housing Mid-Peninsula Housing Napa Valley Community Housing National Consumer Law Center National Housing Law Project Non-profit Housing Association of Northern California Resources for Community Development Sacramento - Yolo Mutual Housing Association San Diego Housing Federation Sheet Metal Workers Local 104 Tenderloin Neighborhood Development Corporation US Green Building Council Ward Economic Development Corporation RM:n 6/20/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED