BILL ANALYSIS                                                                                                                                                                                                    Ó          1





                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                                 ALEX PADILLA, CHAIR
          

          SB 343 -  De León                                 Hearing Date:  
          May 3, 2011                S
          As Amended:         April 25, 2011           FISCAL       B
                                                                           
            
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                                      DESCRIPTION
          
           Current law  sets targets for the state's utilities, in procuring 
          energy, to first meet their resource needs through 
          cost-effective energy efficiency and demand reduction resources 
          before renewable and conventional generation.

           Current law  that sunsets January 1, 2012, requires the CPUC to 
          require each investor owned utility (IOU) to assess as a 
          ratepayer surcharge, commonly known as the Public Goods Charge 
          (PGC), $228 million per year for energy efficiency and 
          conservation activities, $65.5 million for renewable energy, and 
          $62.5 million per year for research, development and 
          demonstration.

           Current law  requires the $65.5 million of the PGC for renewable 
          energy to be deposited into the Renewable Resources Trust Fund 
          (RRTF) for renewable energy resources programs administered by 
          the California Energy Resources Conservation and Development 
          Commission (CEC).
           
           This bill  would require the CEC to expend, upon appropriation by 
          the Legislature, an unspecified amount of the funding in the 
          Emerging Renewable Resources Account of the RRTF for energy 
          efficiency retrofits for commercial buildings.

           Current law  requires publicly owned utilities (POUs) to collect 
          a PGC and gives them discretion to use it to fund programs for 
          any or all of energy efficiency, renewable energy, energy 
          research, and rate discounts and other services for low-income 











          customers.

           This bill  would require each POU to dedicate a portion of funds 
          collected for energy efficiency to a program for energy 
          efficiency retrofits for commercial buildings.

           Current law  requires the CPUC, by December 31, 2020, to ensure 
          that low-income customers eligible for reduced rates are given 
          the opportunity to participate in low-income energy efficiency 
          programs, including customers occupying apartments or similar 
          multiunit residential structures, and requires IOUs to make all 
          reasonable efforts to coordinate ratepayer-funded programs with 
          other energy efficiency programs.   

           This bill  would require IOUs to dedicate an unspecified portion 
          of the moneys collected for low-income energy efficiency to a 
          program of grants to be made available on a competitive basis to 
          community-based organizations (CBOs) for purposes of energy 
          efficiency retrofits.

           This bill  would require the CPUC to open a new proceeding or 
          expand the scope of an existing proceeding to consider 
          establishment of a program by electrical and gas corporations to 
          provide on-bill financing for energy efficiency retrofits. 

                                      BACKGROUND
           
          Commercial Buildings - Commercial buildings consume more 
          electricity than any other end-use in California and provide a 
          major opportunity for achieving energy savings, especially old 
          buildings that do not meet the state's Title 24 energy 
          efficiency standards first adopted in 1982.  AB 758 (Skinner, 
          2011) required the CEC, by March 1, 2010, to open a proceeding 
          to develop a comprehensive program to achieve greater energy 
          savings in the state's residential and nonresidential building 
          stock.  To date, the CEC has authorized pilot programs, 
          including commercial building retrofits, to determine how best 
          to achieve cost-effective savings. Information from CEC states 
          that its plan will incorporate the commercial building energy 
          use disclosure requirements mandated by AB 1103 (Saldana, 2007), 
          for which implementing regulations are pending, as well as a 
          system of energy assessments and ratings for commercial 
          buildings that are being developed.   In September 2009, the 
          CPUC opened a proceeding to investigate the ability of utilities 










          to provide energy efficiency financing options to implement the 
          CEC's AB 758 program, as required by that legislation 
          (D.09-09-047). The CPUC expects a comprehensive energy 
          efficiency financing report to be released by the end of June.

          PGC for Energy Efficiency - The $228 million in PGC funds for 
          energy efficiency is retained by the IOUs and is the base of the 
          budgets for their energy efficiency programs approved in 
          three-year cycles by the CPUC and supplemented with funding from 
          rates.  The IOUs' total annual energy efficiency program cost is 
          about $1 billion.  According to the CPUC, about 29 percent of 
          IOU energy efficiency budgets for the 2010-2012 program cycle 
          are for commercial buildings with a variety of offerings for 
          whole-building retrofits.   

                                       COMMENTS
           
              1.   Author's Purpose  .  According to the author, the intent 
               of this bill it to require that a portion of all funding 
               for energy efficiency under existing programs be dedicated 
               to energy efficiency retrofits for commercial buildings.  

              2.   Commercial Energy Efficiency Retrofits  . This bill would 
               require the CEC to dedicate an unspecified amount of 
               funding in the Emerging Renewable Resources Account in the 
               RRTF to a program for energy efficiency retrofits for 
               commercial buildings. The Emerging Renewables program, for 
               which this account is intended, is for fostering the 
               development of wind and fuel cell technologies in 
               distributed applications and not for energy efficiency.  
               The author indicates that the intent of the bill is to 
               provide CEC discretion to develop and administer this new 
               program upon appropriation of RRTF funds for this purpose.  
               Current law requiring the PGC that funds the RRTF sunsets 
               on January 1, 2012. 


              3.   Energy Efficiency Grants for CBOs  .  This bill appears to 
               require that IOUs dedicate an unspecified portion of the 
               moneys collected for low-income energy efficiency programs 
               to a program of grants to be made available on a 
               competitive basis to CBOs for purposes of energy efficiency 
               retrofits.   The Low-Income Energy Efficiency (LIEE) 
               program, recently renamed the Energy Savings Assistance 










               Program (ESAP), currently offers eligible residents no-cost 
               weatherization services that include 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.  IOUs choose weatherization 
               contractors through a competitive process.  In addition, 
               IOUs already use CBOs as an effective means to implement 
               energy efficiency programs that are part of their 
               portfolios approved by the CPUC, especially to reach 
               populations where culture and language may present a 
               challenge.  The CPUC has given IOUs discretion to 
               administer these programs and select contractors that best 
               meet the needs of their service territories.  If it is the 
               author's intent to make energy efficiency retrofits part of 
               the no-cost services available under ESAP, then the author 
               and committee may wish to consider amending the bill to 
               require each IOU to identify and develop a plan for 
               offering ESAP-eligible customers energy efficiency 
               retrofits, in coordination with their energy efficiency 
               portfolios, which may include contracting with CBOs. 


              4.   POUs and Energy Efficiency  .  This bill requires the POUs 
               to dedicate a portion of funds they collect for energy 
               efficiency for retrofits for commercial buildings.  Current 
               law gives POUs discretion to spend their PGC on any of the 
               four program areas identified, one of which is energy 
               efficiency.  No other law requires POUs to collect funding 
               specifically for energy efficiency.  To achieve his 
               intended purpose, the author has indicated he would accept 
               a technical amendment to clarify that the bill would 
               require POUs to dedicate a portion of PGC funds for energy 
               efficiency retrofits for commercial buildings.  

               The California Municipal Utilities Association (CMUA) 
               argues that POUs should retain flexibility to determine how 
               their PGC funds are spent based on the needs of their 
               service territories. CMUA also claims that this bill is 
               unnecessary because POUs already are making investments in 
               energy efficiency upgrades for commercial buildings.  POU 
               reports to the CEC on their energy efficiency expenditures 
               indicate that not all POUs spend PGC funds on energy 
               efficiency.  











              5.   On-Bill Financing  .  On-bill financing is a way to 
               finance energy efficiency upgrades without incurring any 
               up-front costs.  A utility provides customers with 
               unsecured loans that cover 100 percent of equipment and 
               installation costs (minus rebates and other incentives) at 
               0 percent interest.  Customers then re-pay the loans 
               through charges added to their regular utility bills.  IOUs 
               currently offer on-bill financing as part of their energy 
               efficiency portfolios approved by the CPUC.  In addition, 
               on-bill financing is being reviewed in the pending CPUC 
               proceeding opened in response to AB 758.  Thus, the author 
               has indicated that he would like to amend the bill to 
               delete the provisions requiring the CPUC to open a 
               proceeding on on-bill financing.

                                       POSITIONS
           
           Sponsor:
           
          Author

           Support:
           
          None on file

           Oppose:
           
          California Municipal Utilities Association

          













































          Jackie Kinney
          SB 343 Analysis
          Hearing Date:  May 3, 2011