BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



           ------------------------------------------------------------ 
          |SENATE RULES COMMITTEE            |                   SB 454|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
          |(916) 651-1520         Fax: (916) |                         |
          |327-4478                          |                         |
           ------------------------------------------------------------ 
           
                                         
                                 THIRD READING


          Bill No:  SB 454
          Author:   Pavley (D)
          Amended:  5/31/11
          Vote:     21

           
           SENATE ENERGY, UTILITIES & COMM. COMMITTEE  :  8-2, 04/05/11
          AYES:  Padilla, Corbett, De León, DeSaulnier, Pavley, 
            Rubio, Simitian, Wright
          NOES:  Fuller, Berryhill
          NO VOTE RECORDED:  Strickland

           SENATE BUS, PROF & ECON DEVELOP. COMMITTEE :  6-3, 05/02/11
          AYES:  Price, Corbett, Correa, Hernandez, Negrete McLeod, 
            Vargas
          NOES:  Emmerson, Walters, Wyland

           SENATE APPROPRIATIONS COMMITTEE  :  6-2, 05/26/11
          AYES:  Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
          NOES:  Walters, Runner
          NO VOTE RECORDED:  Emmerson


           SUBJECT  :    Energy efficiency standards:  enforcement

           SOURCE  :     Natural Resources Defense Council
                      State Building Construction Trades Council, 
          AFL-CIO


           DIGEST  :    This bill authorizes the California Energy 
          Commission (CEC) to establish an administrative enforcement 
          process to enforce appliance efficiency standard.  This 
                                                           CONTINUED





                                                                SB 454
                                                                Page 
          2

          bill provides for the assessment of civil penalties by the 
          commission for a violation of the standards.   This bill 
          requires the penalties collected to be deposited in the 
          Appliance Efficiency Enforcement Subaccount, which this 
          bill would establish in the Energy Resources Program 
          Account, and authorizes the commission to expend the moneys 
          in the subaccount, up appropriation by the Legislature, as 
          specified.  This bill requires the court, upon granting of 
          relief for a violation of the standards, to award the 
          commission the reasonable costs incurred by the commission 
          in investigating and prosecuting the action, as specified.  


           ANALYSIS  :    Existing law:

          1.Requires the CEC to adopt energy efficiency regulations 
            applicable to new construction and remodeling of 
            residential and commercial buildings.

          2.Requires the CEC to adopt regulations that specify energy 
            efficiency standards required of appliances sold in 
            California.

          3.Establishes within the Contractors State License Board 
            (CSLB) and requires the CSLB to license and regulate 
            California's construction contractors, investigate 
            complaints against licensed and unlicensed contractors, 
            issue citations, suspend or revoke licenses, and seek 
            administrative, criminal, and civil sanctions against 
            violators.

          4.Specifies construction work for which a contractor or 
            building owner is required to obtain a permit from local 
            building officials and get required inspections to ensure 
            that the work complies with regulations, including energy 
            efficiency regulations.

          5.Provides that, if the CEC finds any actual or imminent 
            violation of the provisions of law relating to CEC's 
            authority or operations, the Attorney General is required 
            to petition a court to enjoin the violation. 

          6.Requires the Public Utilities Commission (PUC) to 
            administer cost-effective energy efficiency programs.







                                                                SB 454
                                                                Page 
          3


          This bill: 

          1.Provides that, if the CEC finds that a violation of the 
            building or appliance regulations has occurred or is 
            threatening to occur, the CEC may, or the Attorney 
            General upon the request of the CEC shall, petition a 
            court to enjoin the violation and authorizes the court to 
            enjoin the violation or assess a civil penalty. 
           
           2.Authorizes the CEC to adopt regulations to establish an 
            administrative enforcement process to assess civil 
            penalties for violations of the energy efficiency 
            building and appliance regulations.

          3.Authorizes a court in a civil action and the CEC in an 
            administrative enforcement action to impose a civil 
            penalty of up to $2,500 for each violation of energy 
            efficiency building and appliance regulations and would 
            require consideration of specified factors when assessing 
            the amount of the penalty.

          4.Requires that penalties resulting from an action brought 
            by the Attorney General be deposited into the General 
            Fund and penalties resulting from an action brought by 
            the CEC be deposited into the Energy Resources Program 
            Account for the CEC to use for education and enforcement 
            of energy efficiency building and appliance regulations.

          5.Requires a court to award to the CEC the reasonable costs 
            of investigating and prosecuting a civil action for 
            violation of energy efficiency building and appliance 
            regulations.

          6.Provides that a person is deemed to be in violation of 
            the energy efficiency building regulations if the person 
            does work subject to those regulations and is an 
            unlicensed contractor or fails to obtain a required 
            permit. 

          7.Prohibits a public utility from issuing rebates or 
            incentives for energy efficiency improvements unless the 
            recipient of the rebate or incentive certifies that a 
            licensed contractor was used, as appropriate, and the 







                                                                SB 454
                                                                Page 
          4

            applicable permitting requirements were followed, for the 
            improvement or installation

           Background  

           Energy Efficiency Programs  

          Energy efficiency is the top priority in California's 
          policies to achieve energy savings and reduce greenhouse 
          gas emissions.  The state's Title 24 energy efficiency 
          building regulations, which are updated every three years, 
          specify requirements relating to lighting, insulation, 
          windows, heating, ventilation, and air conditioning 
          systems, and other construction details designed to reduce 
          energy consumption and lower energy bills for consumers.  
          The state's Title 20 energy efficiency appliance 
          regulations specify energy use standards for most major 
          household and commercial appliances that must be met in 
          order to be sold in California.  Numerous programs 
          administered by the CEC, PUC, investor-owned utilities 
          (IOUs), publicly owned utilities and local government 
          agencies offer consumers incentives or rebates to purchase 
          energy efficiency appliances and construct or install 
          energy efficient devices or technologies in residential and 
          commercial buildings.

          The PUC has approved a $3.1 billion portfolio of energy 
          efficiency programs administered by the IOUs for 2010-12 
          funded by a ratepayer surcharge.  This investment is 
          expected to produce cost-effective energy savings of 10,000 
          GWh of electricity, 1,982 peak MW, and 200 million therms 
          of natural gas, the equivalent of avoiding nearly four 500 
          megawatt power plants.  The IOUs administer these programs 
          under the PUC's Risk/Reward Incentive Mechanism and can 
          earn shareholder bonuses or be penalized for the amount of 
          verified energy savings achieved.  For the first three-year 
          program cycle, the PUC awarded the IOUs more than $200 
          million in shareholder bonuses, although the IOUs' claimed 
          energy savings and the PUC's evaluation, measurement and 
          verification (EM&V) of those savings faced substantial 
          challenges.

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







                                                                SB 454
                                                                Page 
          5


          According to Senate Appropriations Committee:


                                          Fiscal Impact (in 
          thousands)



           Major Provisions                        2011-12      
           2012-13   2013-14   Fund
           Enforcement of building              $75          $150 $150 
              General*
             standards
          Enforcement of building              $150         $150 $150 
                 General*
             standards
          *Energy Resources Program Account

          Senate Appropriations staff estimates that the Energy 
          Commission will need on additional position to coordinate 
          enforcement activities with the Contractors State License 
          Board and on additional position to develop regulations and 
          implement an administrative enforcement program.  The 
          Contractors State License Board indicates that any costs 
          under the bill would be absorbable.  Staff also notes that 
          the tax that supports Energy Resources Program is near its 
          statutory maximum and that the fund has a structural 
          deficit which will necessitate future program cuts or an 
          increase in the tax's statutory maximum.  

           SUPPORT  :   (Verified  5/26/11)

          Natural Resources Defense Council (co-source) 
          State Building Construction Trades Council, AFL-CIO 
          (co-source) 
          Apollo Alliance
          California Energy Efficiency Industry Council (if amended)
          CA League of Conservation Voters
          Environmental Defense Fund
          Osram Sylvania
          Sierra Club California

           ARGUMENTS IN SUPPORT  :    According to the author's office, 







                                                                SB 454
                                                                Page 
          6

          this bill will increase compliance with the state's energy 
          efficiency regulations for buildings and appliances with 
          better enforcement against building contractors who are 
          unlicensed and do not obtain required building permits and 
          against manufacturers who sell appliances that are not 
          certified as meeting the appliance regulations.  The author 
          claims that this will level the playing field in the 
          building industry, ensure that contractors who violate the 
          law do not have an unfair advantage over law-abiding 
          contractors, and help ensure that California realizes the 
          energy savings that compliance with these regulations are 
          designed to achieve.  The author claims that the CSLB "does 
          not have energy efficiency expertise" and, therefore, the 
          CEC, as the agency that adopted the energy efficiency 
          building and appliance regulations, should have authority 
          to enforce the regulations and impose civil penalties.


          RM:rm  5/31/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

                                ****  END  ****