Amended in Senate April 9, 2013

Amended in Senate March 19, 2013

Senate Bill No. 37

Introduced by Senator De León

(Principal coauthor: Assembly Member Eggman)

(Coauthor: Assembly Member Muratsuchi)

December 5, 2012

An act to add Sections 1940.10 and 2079.10b to the Civil Code, to amend Section 25402.9 of the Public Resources Code, and to add Chapter 7.6 (commencing with Section 2833) to Part 2 of Division 1 of the Public Utilities Code, relating to electricity.

LEGISLATIVE COUNSEL’S DIGEST

SB 37, as amended, De León. Energy efficiency and renewable energy upgrades: on-bill repayment program.

(1) Under existing law the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations, as defined. Existing law authorizes the begin delete commission end delete begin insert Public Utilities Commission end insert to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.

This bill would enact the California Clean Energy Consumer Access Act of 2013 and would authorize the commission to require an electrical or gas corporation with 250,000 or more service connections to develop and implement an on-bill repayment program providing financial assistance for energy efficiency, renewable energy, distributed generation, or demand response improvements by allowing for the repayment of the financial assistance to be included in the utility customer’s utility bill (on-bill repayment). The bill would provide that the on-bill repayment obligation would run with the meter, as defined. Because a violation of any part of any order, decision, rule, direction, demand, or requirement of the begin delete commission end delete begin insert Public Utilities Commission end insert is a crime, this bill would impose a state-mandated local program.

(2) Existing law requires sellers of property or landlords to provide specified disclosure, to prospective buyers or prospective or existing tenants, regarding the property.

This bill would additionally require sellers of property or landlords to provide to prospective buyers or prospective or existing tenants a disclosure indicating that a portion of the utility bill is subject to an on-bill repayment obligation.

(3) Existing law requires the State Energy Resources Conservation and Development Commission begin delete (Energy Commission) end delete to develop, adopt, and publish an informational booklet to educate and inform homeowners, rental property owners, renters, begin delete seller end delete begin insert sellers end insert , brokers, and the general public about the statewide home energy rating program. Existing law requires the begin insert State end insert Energy begin insert Resources Conservation and Development end insert Commission to charge a fee for the booklet.

This bill would require the begin insert State end insert Energy begin insert Resources Conservation and Development end insert Commission to update the booklet to include information about home energy conservation and on-bill repayment program developed pursuant to (1) above. This bill would instead authorize the begin insert State end insert Energy begin insert Resources Conservation and Development end insert Commission to charge a fee for the booklet.

(4) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

This act shall be known, and may be cited, as the
California Clean Energy Consumer Access Act of 2013.

SEC. 2.  

(a) The Legislature finds and declares all of the
following:

(1) Currently, many Californians lack access to affordable
financing for onsite energy efficiency and clean energy projects.

(2) Existing clean energy programs and incentives are important
but limited in that they are funded by insufficient amounts of
ratepayer or taxpayer moneys, and in that existing programs reach
only a small number of Californians due to restrictions in income
level, credit score, project size, or property and technology specific
eligibility criteria.

(3) California’s current economic condition necessitates that
the Legislature engineer pioneering ways to create sustainable,
green collar jobs.

(4) Since the recession began in late 2007, California has lost
nearly 1.4 million jobs, including 400,000 in the construction
industry alone. Investing in clean energy projects will maximize
job creation and will help the state regain a sense of economic
security and sustainability at a time when unemployment remains
high. The state can further stimulate its economy by putting the
industry segment back to work that is most in need, the construction
trades.

(5) Allowing the begin insert repayment of end insert financing begin delete of end delete begin insert obligations for end insert clean
energy projects through the begin insert use of end insert utility begin delete bill end delete begin insert bills end insert has the cobenefit
of allowing for a more affordable interest rate than would be
otherwise available due to the security of utility bill payments and
allowing for ratepayers to see the benefits and costs of clean energy
projects on the same document.

(6) By tying repayment to the utility bill, ratepayers will make
payments for their upgrades on the same bill where savings are
realized from the investment, resulting in a new bill that can be
equal to or even less than their utility bill prior to energy upgrades.

(7) On-bill repayment is a unique clean energy incentive
program because it does not rely on public funding and expands
access to energy efficiency and clean technology upgrades.

(8) On-bill repayment will incentivize private investors to invest
in clean energy improvements in California, will stimulate the
state’s economy by creating jobs for contractors and other persons
who complete new energy improvements, and will reinforce the
leadership role of the state in the new energy economy, thereby
attracting clean energy manufacturing facilities and related jobs
to the state.

(b) It is the intent of the Legislature, in enacting this act, to allow
greater access to onsite clean energy projects begin delete by allowing
consumers to finance clean energy projects through their utility
bills in a financing mechanism end delete begin insert using third end insert begin insert -party capital to repay
their obligations through their utility bill using a tool end insert called
“on-bill repayment.”

SEC. 3.  

Section 1940.10 is added to the Civil Code, to read:

1940.10.  

(a) A property owner that authorizes a project
financed by the OBR program pursuant to Chapter 7.6
(commencing with Section 2833) of Part 2 of Division 1 of the
Public Utilities Code shall provide to an existing tenant who is
responsible, directly or indirectly through the provisions of the
applicable lease, for paying all or a portion of the cost of utility
service that is subject to an OBR obligation, the disclosure made
available to the property owner pursuant to Section 2833.3 of the
Public Utilities Code.

(b) Prior to the signing of a lease or rental agreement, an owner,
or the agent of an owner of any premises with respect to which
utility service is subject to an OBR obligation that will be paid by
the tenant, whether directly or indirectly through the provisions
of the applicable lease, shall provide a prospective tenant with the
disclosure that was provided to the owner pursuant to Section
2833.3 of the Public Utilities Code.

(c) A lease shall not be invalidated solely because of the failure
to comply with this section.

(d) For the purposes of this section, the following terms have
the following meanings:

(1) “OBR program” has the same meaning as that set forth in
Section 2833 of the Public Utilities Code.

(2) “OBR obligation” has the same meaning as that set forth in
Section 2833 of the Public Utilities Code.

SEC. 4.  

Section 2079.10b is added to the Civil Code, to read:

2079.10b.  

(a) Every seller of real property subject to an OBR
obligation that runs with the meter, pursuant to Chapter 7.6
(commencing with Section 2833) of Part 2 of Division 1 of the
Public Utilities Code, shall deliver to the buyer of the property the
disclosure that was provided to the seller begin insert pursuant to end insert Section
2833.3 of the Public Utilities Code.

(b) Upon delivery of the disclosure form to the buyer of real
property, the seller or agent is not required to provide additional
information relative to the OBR obligation and the information in
the disclosure form is deemed adequate to inform the buyer about
the existence of the OBR obligation and the OBR repayment charge
that will run with the meter pursuant to Section 2833.3 of the Public
Utilities Code.

begin insert

(c) The notice shall further state that unless fully satisfied prior
to the sale or transfer of the property, the OBR obligation survives
changes in ownership, tenancy, or meter account responsibility
and, until fully satisfied, constitutes an obligation of the person
responsible for the meter account pursuant to Section 2833.8 of
the Public Utilities Code.

end insert begin delete

(c)

end delete

begin insert (d) end insert  For the purposes of this section, the following terms have
the following meanings:

(1) “OBR obligation” has the same meaning as that set forth in
Section 2833 of the Public Utilities Code.

(2) “OBR repayment charge” has the same meaning as that set
forth in Section 2833 of the Public Utilities Code.

(3) “Runs with meter” has the same meaning as that set forth
in Section 2833 of the Public Utilities Code.

SEC. 5.  

Section 25402.9 of the Public Resources Code is
amended to read:

25402.9.  

(a) On or before July 1, 1996, the commission shall
develop, adopt, and publish an informational booklet to educate
and inform homeowners, rental property owners, renters, sellers,
brokers, and the general public about the statewide home energy
rating program adopted pursuant to Section 25942.

(b) In the development of the booklet, the commission shall
consult with representatives of the Department of Real Estate, the
Department of Housing and Community Development, the Public
Utilities Commission, investor-owned and municipal utilities,
cities and counties, real estate licensees, home builders, mortgage
lenders, home appraisers and inspectors, home energy rating
organizations, contractors who provide home energy services,
consumer groups, and environmental groups.

(c) The commission shall update the booklet developed pursuant
to subdivision (a) to include information about home energy
conservation and on-bill repayment programs developed and
implemented pursuant to Chapter 7.6 (commencing with Section
2833) of Part 2 of Division 1 of the Public Utilities Code.

(d) The commission may charge a fee for the informational
booklet to recover its costs under subdivision (a).

SEC. 6.  

Chapter 7.6 (commencing with Section 2833) is added
to Part 2 of Division 1 of the Public Utilities Code, to read:

 

Chapter  7.6. California Clean Energy Consumers Access
Act of 2013

 

2833.  

For the purposes of this chapter, the following the terms
have the following meanings:

(a) “Bill neutrality” means a utility customer’s annual payments
of OBR repayment charges set at an amount that is less than or
equal to the projected annual electric and gas energy savings arising
from the OBR improvements in a methodology to be determined
by the commission pursuant to Section 2833.1.

(b) “Incurring customer” means the utility customer of record
during the billing period during which any OBR repayment charge
becomes due and payable.

(c) “OBR agreement” means a written agreement executed by,
and among, a utility customer, an OBR partner or its agent, and a
utility or its agent, governing the terms of an OBR obligation.

(d) “OBR improvement” means an eligible energy improvement
financed through an OBR obligation.

(e) “OBR obligation” means an obligation to repay a financing
provided to a utility customer begin insert by an OBR partner end insert pursuant to an
on-bill repayment program begin insert approved by the commission end insert .

(f) “OBR partner” means a person or entity providing financing
for eligible energy improvements pursuant to an on-bill repayment
program. OBR partners include, but are not limited to, banks,
savings and loan institutions, credit unions, project developers, or
independent solar energy producers, as defined in Section 2868.
Financing may be provided in the form of a loan, lease, power
purchase agreement, energy service agreement, or other financing
structure approved by the commission.

(g) “On-bill repayment program” or “OBR program” means a
program, which may include one or more pilot test programs,
approved by the commission that enables begin delete building owners or
occupants to arrange, by an OBR agreement, for the financing of
eligible energy improvements that is repaid through charges to be
included as a portion of utility bills for utility service to the
premises served by the improvements end delete begin insert financing of eligible energy
improvements to be repaid through charges to be associated with
the same utility account or accounts where savings are anticipated
to be realized as a result of the improvements end insert .

(h) “OBR repayment charge” means a charge, constituting
repayment of all or a portion of any OBR obligation, that is
included on a utility bill in accordance with a commission-approved
utility tariff.

(i) “Run with the meter” means all of the following:

(1) The OBR obligation, for so long as any portion of the OBR
obligation remains outstanding prior to the sale or transfer of the
applicable real property, survives a change in ownership, tenancy,
or meter account responsibility.

(2) The OBR obligation, for so long as any portion of the OBR
obligation remains outstanding, at all times constitutes an
obligation of the utility customer of record with respect to the
premises served by the OBR improvements to repay.

(3) Arrears in OBR repayment charges outstanding prior to the
sale or transfer of the applicable real property remain the
responsibility of the incurring customer, unless expressly assumed
by a subsequent customer or third party.

(4) The exemption from restrictions on a utility’s right to
terminate service pursuant to Section 2833.11 applies to the
subsequent utility customer for as long as any portion of the OBR
obligation remains outstanding.

(j) “Utility” means an electrical corporation or gas corporation
that develops, or is required to develop, an on-bill repayment
program.

2833.1.  

(a) The commission may require an electrical
corporation or gas corporation with 250,000 or more service
connections in the state to develop and implement one or more
on-bill repayment programs for eligible energy efficiency,
renewable energy, distributed generation, begin insert energy storage, end insert or
demand response improvements.

(b) A utility shall not implement the on-bill repayment program
without the express approval of the commission.

(c) The commission shall supervise on-bill repayment programs
to ensure that the programs are administered in compliance with
the terms approved by the commission.

2833.2.  

(a) The commission shall establish requirements to
be met by each utility in the utility’s on-bill repayment programs
that are submitted to the commission for approval, including, but
not limited to, eligibility criteria for types of improvements and
projects, the establishment of energy and cost savings evaluation
standards, requirements that prevent increases in expected
disconnection rates, prepayment options, rules that prohibit the
unauthorized removal from the property of an OBR improvement,
a methodology to determine bill neutrality, and project inspection
services or requirements.

(b) The commission shall limit technologies eligible to be
financed through OBR obligations to those that will achieve
reductions of greenhouse gases as defined in the California Global
Warming Solutions Act of 2006 (Division 25.5 (commencing with
Section 38500) of the Health and Safety Code).

(c) The commission shall ensure the on-bill repayment program
includes all of the following program elements:

(1) (A) For two years from the initial approval of the program
by the commission, all on-bill repayment programs shall require
bill neutrality.

(B) Two years after the initial approval, the commission shall
evaluate the success of projects financed through on-bill repayment
to date. If the commission determines that the requirement for bill
neutrality has unnecessarily limited the types of projects that may
be financed through the program, the commission may limit the
application of the bill neutrality requirement.

(C) Notwithstanding subparagraph (B), the bill neutrality
requirement shall apply, at all times, in cases where a portion of
the OBR repayment charges are expected to be paid by one or
more tenants on the property, whether directly or indirectly.

begin insert

(D) The commission may include changes in the expected
operating and maintenance costs in calculating bill neutrality.

end insert

(2) A requirement that an OBR obligation shall not be put in
place without authorization by all owners of the fee interest in the
property where the premises served by the OBR improvements is
located.

(3)  begin insert (A) end insert begin insert   end insert Consumer protections for begin delete low-income end delete residential
customers, including protections to prevent increases in the
expected number of service terminations, such as targeted use of
a commission-approved loan loss reserve in lieu of service
termination, and, including, at all times, a requirement for bill
neutrality for lower income households.

begin insert

(B) The commission may include changes in the expected
operating and maintenance costs in calculating bill neutrality.

end insert

(4) A requirement that the OBR partner implement consumer
protections, loan eligibility, and credit determinations.

(5) A requirement that the OBR partner provide the utility or
its agent with a copy of all financing documents associated with
an OBR obligation.

(6) A requirement that the OBR repayment charge be listed by
the utility as a separate line item on the customer’s bill from the
utility.

(7) A requirement that the on-bill repayment charge collected
by the utility or its agents be remitted to the OBR partner pursuant
to a timeframe determined by the commission.

begin insert

(d) The commission shall consider, before the next energy
efficiency program cycle, opportunities to coordinate OBR with
ongoing efforts with participants in existing programs to support
careers in energy efficiency, particularly for minorities, women,
and other disadvantaged communities. This includes coordination
with efforts to improve workforce diversity, job quality, and the
collection of data on workforce outcomes.

end insert

2833.3.  

The OBR program shall develop all of the following:

(a) A description of OBR programs and OBR obligations that
would be included in the informational booklet developed pursuant
to Section 25402.9 of the Public Resources Code.

(b) A standard disclosure required by Section 2079.10b of the
Civil Code to be available for use by a seller of real property that
is served by OBR improvements that is provided begin insert by the OBR
partners or its agent end insert free of charge to the seller upon request.

(c) A standard disclosure required by Section 1940.10 of the
Civil Code to be available for use by a lessor of real property that
is served by OBR improvements that is provided begin insert by the OBR
partners or its agent end insert free of charge to the lessor upon request.

2833.4.  

(a) If the amount paid by the utility customer is less
than the amount billed to the customer on the utility bill, for a
utility customer account to which an OBR obligation is in effect,
the commission shall adopt one of the following methods for
allocation of the payment:

(1) Allocate the payment in the following order of priority:

(A) Beginning with the earliest billing period in which an
arrearage exists, allocate to the utility in respect of the outstanding
arrearage in all charges other than OBR repayment charges (such
charges, the non-OBR charges) accrued during that billing period.
Upon the satisfaction of that arrearage, allocation to the OBR
partner in respect of the outstanding arrearage in the OBR
repayment charges accrued during that billing period.

(B) Upon the satisfaction of arrearage pursuant to subparagraph
(A), the remaining amount of the payment, if any, shall be allocated
to the arrearages accrued in subsequent billing periods pursuant
to subparagraph (A), with the arrearage accruing from any earlier
billing period being satisfied before the arrearages accruing from
subsequent billing begin delete period end delete begin insert periods end insert . With respect to any billing
period, allocation shall be made first to the utility in respect of all
non-OBR charges, and, after satisfaction of the arrearage in
non-OBR charges accruing in such billing period, to the OBR
partner in respect of the arrearage in OBR repayment charges
accruing in such billing period.

(C) Upon the satisfaction of all prior arrearages accruing from
prior billing periods, the remaining payment, if any, shall be
allocated first to the utility in respect of the non-OBR charge in
the current billing period. Upon the satisfaction of that charge,
allocation shall be made to the OBR partner in respect of the OBR
repayment charge in the current billing period.

(2) Allocate the payment to the utility and the OBR partner on
a pro rata basis, in proportion to the non-OBR charge and OBR
repayment charge due and owing during the applicable billing
period, with arrearages from the earlier billing period being
satisfied first, followed by arrearages from subsequent billing
periods, which shall be addressed in chronological order, followed
by charges that are due and owing during the current billing period.

(b) Any arrearage in payment for a billing period shall be
included in subsequent billing periods until it is paid in full.

(c) In the event of an arrearage in payment, the full amount of
the arrearage constitutes a failure to pay for electric or gas service
and shall be treated consistent with the rules established by the
commission for a customer’s failure to pay for service.

2833.5.  

With respect to a utility account that has been closed
and in which begin insert an end insert arrearage begin delete exist end delete begin insert exists end insert , including begin insert an end insert arrearage with
respect to OBR repayment charges, the commission begin delete may end delete begin insert shall end insert
adopt rules providing that after a begin insert reasonable end insert period of time to be
determined by the commission, the share of total arrearage that is
attributable to the OBR obligation begin delete may end delete begin insert shall end insert be deemed, as of a
date certain begin insert that is no later than 90 days after the closing of the
account end insert , to be an obligation owed directly to the OBR partner and
not to the utility.

2833.6.  

(a) An OBR obligation shall run with the meter unless
the commission has determined that it is not reasonable for the
applicable category of OBR obligation to run with the meter.

(b)  Acceptance of electric or gas service to premises that are
served by OBR improvements, and to which an OBR obligation
is outstanding, following submission of an application for that
service, operates as an acceptance of the OBR obligation associated
with electric or gas service, as applicable, to the extent that OBR
repayment charges accrue during the period of electric or gas
service and an assumption of the contractual rights and obligations
of the OBR agreement for the duration of receipt of that service.

(c)  Acceptance of electric or gas service does not operate as an
assumption of any past due OBR repayment charges incurred prior
to the commencement of that service by the person or entity that
subsequently becomes the customer of record.

2833.7.  

(a) The commission shall authorize a utility to recover
all prudently incurred actual costs, net of any fees charged to a
customer, OBR partner, contractor, or other third party, of
establishing and administering the on-bill repayment program.

(b) The commission shall approve a utility’s request for cost
recovery of actual costs for all judgments, settlements, costs, and
expenses, including attorney’s fees, and other liabilities paid or
incurred by or imposed upon the utility in carrying out required
activities under an OBR program pursuant to public or private
enforcement of federal laws governing consumer lending, credit,
debt collection, and servicing.

(c) Utilities, to the extent they are carrying out required activities
pursuant to an on-bill repayment program, shall not be responsible
for lending, underwriting, and credit determinations, and are not
subject to the California Finance Lenders Law (Division 9
(commencing with Section 22000) of the Financial Code), the
California Financial begin insert Information end insert Privacy Act (Division 1.4
(commencing with Section 4050) of the Financial Code), or the
Rosenthal Fair Debt Collection Practices Act (Title 1.6C
(commencing with Section 1788) of Part 2 of Division 3 of the
Civil Code).

2833.8.  

(a) For each OBR obligation, the OBR partner or its
agent shall record in the county recorder’s office of a county in
which the property is located, a begin delete notice, with respect to the real
property on which the premises served by the OBR improvements
are situated, of the existence of the OBR obligation and stating the end delete
begin insert “Notice of On-Bill Repayment Obligation” with a prominent
header on the document that reads “On-Bill Repayment
Obligation” in 14-point type and contains the assessor’s parcel
number, owners of record of the affected property, the legal
description of the affected property, the street address of the
affected property, end insert total amount of the OBR obligation, the term
of the OBR obligation, and that the OBR obligation is being repaid
through a charge on an electric or gas service provided to the
property. The notice shall further state that it is being begin delete filed end delete begin insert recorded end insert
pursuant to this section and, unless fully satisfied prior to the sale
or transfer of the property, the OBR obligation shall survive
changes in ownership, tenancy, or meter account responsibility
and, until fully satisfied, shall constitute the obligation of the person
responsible for the meter account. The notice begin delete shall end delete begin insert does end insert not
constitute a begin delete mortgage or deed of trust and shall not create any
security interest or lien end delete begin insert title defect, lien, or encumbrance end insert on the
property. begin delete Upon end delete

begin insert (b) end insert begin insert   end insert begin insert Upon end insert satisfaction of the OBR obligation, the OBR partner
or its agent shall begin delete promptly end delete record a begin delete notice of repayment or a
termination of notice end delete begin insert “Termination of Notice of On-Bill Repayment
Obligation end insert begin insert ” within 10 days of receipt of full payment end insert .

begin delete

(b) The county recorder shall record the notices in the same
book in which the deeds are recorded.

end delete

2833.9.  

The commission and the utility shall not provide a
forum to adjudicate disputes arising from this chapter. If a dispute
arises between the customer and the OBR partner regarding the
customer’s obligation to pay the OBR obligation, the utility shall
not be responsible in any respect relating to the disputes and shall
handle funds collected from the customer in accordance with the
program rules.

2833.10.  

The commission shall begin insert , with public notice and an
opportunity for public comment, end insert periodically evaluate on-bill
repayment programs and may suspend or modify part or all of a
program if it finds that the program does not meet commission
requirements or goals. Suspension begin insert or modification of part or all
of the program end insert shall not affect the OBR obligations that exist at
the time of the suspension begin insert or modification end insert .

2833.11.  

Subdivision (e) of Section 777.1 and subdivision (a)
of Section 779.2 do not apply to delinquency in OBR repayment
charges.

begin insert

begin insert 2833.12. end insert   

(a) In lieu of waiving disconnect protections for
third-party financing as provided in Section 2833.11, the
commission shall develop, to the extent feasible and cost effective,
a loan-loss reserve program or loan guarantee program as part
of the on-bill repayment program for providing energy efficiency
programs to residential customers. The program shall be directed
to residential customers who experience disproportionate bill
impacts from summer cooling and other demands on the electrical
system that cause excessive usage and potentially significant bill
impacts.

(b) Notwithstanding subdivision (a), but consistent with
paragraph (3) of subdivision (c) of Section 2833.2, the commission
may determine that Section 2833.11 applies in either of the
following circumstances:

(1) A customer or project is not covered by a loan-loss reserve
program or a loan guarantee program established in subdivision
(a).

(2) A customer elects to waive the provisions of subdivision (a).

end insert

begin delete 2833.12. end delete
begin insert 2833.13. end insert   

(a) This chapter does not require that the on-bill
repayment programs be identical and the commission may vary
program elements for each utility based upon each utility’s
individual circumstances.

(b)  This chapter does not limit the authority of the commission
to approve and supervise separate on-bill repayment programs
with different features for different categories of customers,
including single-family residential, multifamily residential,
industrial, governmental, commercial, and other categories of
customers that the commission determines to be appropriate.
Utilities shall not implement on-bill repayment programs without
the express approval of the commission.

SEC. 7.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.