BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 793 Hearing Date: 6/30/2015
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|Author: |Quirk |
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|Version: |6/9/2015 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Jay Dickenson |
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SUBJECT: Energy efficiency
DIGEST: This bill furthers the adoption of "energy management
technology" - meaning a product, service, or software that
allows a customer to better understand and manage energy use in
the customer's home - through mandatory education efforts,
monetary awards and inclusion of such technology in home
weatherization programs for low-income electric or gas utility
customers.
ANALYSIS:
Existing law:
1)Requires an electrical corporation to first meet its unmet
resource needs through all available energy efficiency and
demand reduction resources that are cost effective, reliable,
and feasible. (Public Utilities Code §454.5 (b)(9)(C))
2)Requires the California Public Utilities Commission (CPUC) to
establish energy efficiency targets for electrical and gas
corporations. (Public Utilities Code §§454.55 and 454.56)
3)Requires electric and gas corporations to provide
weatherization assistance to low-income customers and
specifies that weatherization may include attic insulation,
caulking, weatherstripping, a low-flow showerhead, water
heater blanket, and door and building envelope repairs to
reduce air infiltration. (Public Utilities Code §2790 (a),
(b))
AB 793 (Quirk) PageB of?
4)Specifies that weatherization may also include other building
conservation measures, energy-efficient appliances, and energy
education programs determined by the commission to be feasible
and considering the cost effectiveness of the measures as a
whole and the policy of reducing energy-related hardships
facing low-income households. (Public Utilities Code §2790
(c))
This bill:
1)Adds energy management technology (EMT) to the list of things
that may also be considered as weatherization, if determined
by the CPUC to be feasible.
2)Directs the CPUC to require an energy efficiency program
administrator, as part of an existing statewide education and
outreach program, to (a) develop and implement, by June 30,
2016, a plan to educate residential and business customer how
to better understand and control their use of electricity or
gas, and (b) develop a program, by January 1, 2017, to provide
incentives to residential or small or medium business
customers who acquire EMT for use in the customer's home or
business.
3)Requires each energy efficiency program administrator to
report annually to the CPUC on actual energy savings resulting
from the education plan and incentive program.
4)Requires the CPUC to authorize an energy efficiency program
administrator to count all energy savings achieved pursuant to
the education plan and incentive program toward the overall
energy efficiency goals established by the CPUC.
5)Requires the CPUC, every three years, to evaluate the
education plan and incentive program and determine whether
they should continue.
Background
Energy management technology. EMT, as used in this bill, refers
to a broad range of products, services, or software that allows
a customer to better understand and manage energy use in their
home or place of business. Based on supporting documents
provided by this bill's proponents, such technology seems to
have in common the ability to allow a customer to read his or
AB 793 (Quirk) PageC of?
her energy usage in real time or near real time through,
generally, communication with a home or business's smart meter.
Bill proponents contend that such technologies have the
potential to allow customers to better understand and manage
their energy usage, thereby leading to reductions in energy use.
These proponents note that, to date, adoption of such
technologies, especially by residential and smaller business
customers, has been very limited.
The author's office and many bill supporters blame this current
low level of adoption of EMT on a lack of education and
outreach. The author seeks to remedy this situation by (1)
including EMT among the measures and products that might be
included in the weatherization services the CPUC requires
electric and gas utilities to provide to low-income customers,
and (2) requiring energy efficiency program administrators to
implement an EMT education and outreach plan, coupled with a
rebate program, within the existing energy efficiency program,
for customers who purchase EMT devices. Both the existing
weatherization program and the existing energy efficiency
program are described below.
Weatherization services for low-income customers. In keeping
with statute, the CPUC created the Energy Savings Assistance
Program by which the IOUs provide no-cost weatherization
services to low-income households who meet the California
Alternate Rates for Energy, known as CARE<1> income guidelines.
Services provided include attic insulation, energy efficient
refrigerators, energy efficient furnaces, weatherstripping,
caulking, low-flow showerheads, waterheater blankets, and door
and building envelope repairs which reduce air infiltration.
Statute governing this program is worded strangely in that it
---------------------------
<1> According to the CPUC program web page
(http://www.cpuc.ca.gov/PUC/energy/Low+Income/care.htm),
customers are CARE-eligible if their household income falls
below certain defined amounts. Customers may also be eligible
for CARE if they are enrolled in public assistance programs such
as Medicaid/Medi-Cal, Women, Infants and Children Program (WIC),
Healthy Families A & B, National School Lunch's Free Lunch
Program (NSL), Food Stamps/SNAP, Low Income Home Energy
Assistance Program (LIHEAP), Head Start Income Eligible (Tribal
Only), Supplemental Security Income (SSI), Bureau of Indian
Affairs General Assistance, and Temporary Assistance for Needy
Families (TANF) or Tribal TANF.
AB 793 (Quirk) PageD of?
lists measures and technologies that may be included, when
feasible, as weatherization, and then separately lists
additional measures and technologies that may also be included
as weatherization, if determined by the CPUC to be feasible,
taking into consideration cost-effectiveness of the measures as
a whole and the policy of reducing energy-related hardships
facing low-income households. This bill adds EMT to the list of
measures and technologies that may also be included as
weatherization, if it determined by CPUC to meet the specified
standards.
Energy utility energy efficiency programs. The "loading order"
guides the state's energy policies and decisions according to
the following order of priority: (1) decreasing electricity
demand by increasing energy efficiency; (2) responding to energy
demand by reducing energy usage during peak hours; (3) meeting
new energy generation needs with renewable resources; and (4)
meeting new energy generation needs with clean fossil-fueled
generation. This policy has been adopted by the energy agencies
- the California Energy Commission and CPUC - and its principles
guide all energy programs.
Consistent with the loading order, statute requires both
electric and gas investor-owned utilities (IOUs) to meet unmet
resource needs with all available energy efficiency and demand
reduction that is cost-effective, reliable and feasible. The
CPUC uses these criteria to establish energy efficiency targets
for the IOUs. To achieve those targets, the IOUs (and, in some
cases, community choice aggregators (CCAs) such as Sonoma Clean
Power) administer energy efficiency programs with ratepayer
funds approved by the CPUC. Currently funded at about $1
billion per year, the programs include a portfolio of financial
incentives, loans, and rebates for installing energy efficient
appliances, lighting, windows, HVAC systems, whole-house
retrofits, and specialized programs aimed at a variety of
sectors. According to existing CPUC rules, each IOU claims
credit for energy savings from the energy efficiency measures
resulting from its program. The CPUC evaluates the claimed
energy savings and, after adjustment, authorizes financial
rewards for the IOUs.
This bill requires the energy efficiency program administrators
- IOUs and CCAs - to implement programs, within the existing
energy efficiency programs, to provide incentives to a
residential or small- or medium-sized business customer who
AB 793 (Quirk) PageE of?
acquires EMT for use in the customer's home or place of
business. In addition, the bill requires the energy efficiency
program administrators to implement a plan to educate
residential and business customers to better understand and
control their use of electricity or gas. The plan is to
include, where applicable, notification of the incentives for
EMT described above.
Size matters. As mentioned above, the bill requires energy
efficiency program administrators to offer incentives for EMT
and to implement a related education plan. However, the bill
includes a minor discrepancy. Whereas the bill provisions
relating to the EMT incentive program refer to "residential or
small or medium business customers," the provisions relating to
the education plan refer to "residential customers and business
customers." The author and committee may wish to rectify this
discrepancy by amending the bill to, in both instances, refer to
small and medium business customers, as shown in the proposed
amendments at the close of this analysis.
Bundling education. The bill directs the CPUC to require an
energy efficiency program administrator to implement the
education plan and the EMT incentive subprogram, both as part of
an "existing statewide education and outreach program." It is
not clear to what existing education and outreach program the
bill refers, though, it seems likely the author contemplates
Energy Upgrade California. In any case, it seems appropriate to
allow the energy efficiency program administrators to administer
their outreach and education efforts to their own customers.
Therefore, the author and committee may wish to amend the bill
to remove language requiring the actions of energy efficiency
program administrators be part of an existing statewide
education and outreach program, as shown in the proposed
amendments at the close of this analysis.
That said, it makes sense to consolidate energy use management
outreach efforts, to the extent practicable. The CPUC, pursuant
to recently enacted statute, is conducting proceedings that may
result in significant changes to the rate structures to which
the customers of the IOUs are subject. The CPUC indicates that
it is likely to require an education and outreach program for
IOU customers to communicate those changes, as well as ways for
customers to adapt to them through more effective energy use
management. It is reasonable to expect EMT to be integral to
such an effort, at least in some instances; and certainly, EMT
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will be inherent to potential customer adaptation to rate
structure changes. Therefore, the author and committee may wish
to amend the bill to explicitly authorize the CPUC to require
that the plan to educate residential and business customers to
better understand and control their use of electricity and gas
be integrated into any education campaign required by the CPUC
rate redesign decision as reflected in R.12-06-013 or subsequent
decision, as shown in the proposed amendments at the close of
this analysis.
One little word. As written, the bill states that an energy
efficiency program administrator "shall" allow third parties or
local governments to apply for incentives on behalf of
customers. Currently, the CPUC can allow or require an
administrator to allow third parties or local governments to
apply for incentives on behalf of customers. To maintain this
authority, the author and committee may wish to amend the bill
to replace the word "shall" with the word "may," as shown in the
proposed amendments at the close of this analysis.
Stick with what we've got. This bill prescribes methods by
which the program administrator is to establish the incentive
amounts for the EMT subprogram that differ considerably from
established methods by which program administrators establish
incentive amounts for the energy efficiency program. However,
there is no obvious rationale why a novel method is needed.
Therefore, the author and committee may wish to consider
amending the bill to direct the energy efficiency program
administrators to establish subprogram incentive amounts based
on current CPUC savings estimation and savings baseline policies
or upon any new policies adopted by the commission in a related,
ongoing rulemaking, R.13-11-005, as shown in the proposed
amendments at the close of this analysis.
Similarly, the bill requires the CPUC to authorize an energy
efficiency program administrator to count all energy savings
achieved pursuant to the education plan and incentive
subprogram. This requirement departs from existing practice, by
which energy efficiency program administrators claim energy
savings from energy efficiency measures and the CPUC assesses
and adjusts those claims. It is not clear why a novel approach
is needed for crediting EMT savings. Therefore, the author and
committee may wish to amend the bill to direct the CPUC to
evaluate all energy efficiency program administrator energy
efficiency claims achieved pursuant to the education plan and
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EMT incentive subprogram consistent with current CPUC-adopted
evaluation protocols, as shown in the proposed amendments at the
close of this analysis.
Consider a pilot. The EMT incentive subprogram required by this
bill differs considerably from the existing energy efficiency
programs offered by the IOUs and CCAs. This will be true even
if the author and committee should choose to amend the bill
consistent with the recommendations in this analysis. For
example, the CPUC and program administrators have well
established, though oftentimes contested, methods for assessing
energy savings from energy efficiency incentive programs, in
which, very often, the energy usage of one consumer product is
compared to the energy usage of an alternative, more-efficient
alternative product (washing machine "A" versus washing machine
"B") under given conditions. Measuring the energy savings of
EMT is considerably different. EMT may allow for better energy
usage management, which may lead to energy use savings.
However, an assessment of those savings is not simply a
comparison of EMT "A" to EMT "B." The CPUC might want to
exercise its existing authority, in implementing this bill, to
establish an EMT incentive program pilot to allow for
identification and resolution of such issues.
Prior/Related Legislation
AB 802 (Williams) directs the CPUC to change is its calculation
of savings from an energy efficiency project so as to allow IOUs
to recover in rates the cost energy efficiency savings to bring
an existing building up to code. The bill passed the Assembly
on a vote of 74-0 and is currently awaiting consideration by
this committee.
AB 1330 (Bloom) establishes an annual energy efficiency resource
standard for every retail seller of electricity and every gas
utility. The bill passed the Assembly on a vote of 46-29 and is
currently awaiting consideration by this committee.
SB 350 (De Leon) requires the California Energy Commission to
adopt and periodically update a program to achieve a doubling of
the energy efficiency of buildings by January 1, 2030. The bill
passed the Senate on a vote of 24-14 and is scheduled to be
hearing by the Assembly Committee on Utilities and Commerce on
July 6.
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FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
ASSEMBLY VOTES:
Assembly Floor (77-0)
Assembly Appropriations Committee (17-0)
Assembly Utilities and Commerce Committee (14-0)
SUPPORT:
Center for Sustainable Energy, if amended
Clean Power Campaign
Environmental Defense Fund
Marin Clean Energy
Mission:data Coalition
Office of Ratepayer Advocates
Sierra Club California
TechNet
CONCERNS:
The Utility Reform Network
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: The education plan required by this
bill, and deployment of EMT that the bill incentivizes, will
arm residential and business customers with a better
understanding of their energy usage. This will allow them to
make informed decisions on how to optimize their energy
consumption and reduce their bills. Customer will be able to
monitor their electricity usage and costs in real-time or near
real-time, allowing them to adjust their usage instantaneously
in response to changes in prices or system reliability events.
This will increase overall energy efficiency, alleviate pressure
on the system's energy grid, and help reduce Greenhouse Gas
emissions by reducing the need for gas-fired "peaker" plants to
AB 793 (Quirk) PageI of?
meet high demand.
ARGUMENTS IN OPPOSITION: None received.
MOCK UP OF PROPOSED AMENDMENTS:
SECTION 1.
Section 2790 of the Public Utilities Code is amended to read:
2790
(a) The commission shall require an electrical or gas
corporation to perform home weatherization services for
low-income customers, as determined by the commission under
Section 739, if the commission determines that a significant
need for those services exists in the corporation's service
territory, taking into consideration both the cost-effectiveness
of the services and the policy of reducing the hardships facing
low-income households.
(b) (1) For purposes of this section, "weatherization" may
include, where feasible, any of the following measures for any
dwelling unit:
(A) Attic insulation.
(B) Caulking.
(C) Weatherstripping.
(D) Low flow showerhead.
(E) Waterheater blanket.
(F) Door and building envelope repairs that reduce air
infiltration.
(2) The commission shall direct any electrical or gas
corporation to provide as many of these measures as are feasible
for each eligible low-income dwelling unit.
(c) "Weatherization" may also include other building
conservation measures, energy management technology,
energy-efficient appliances, and energy education programs
determined by the commission to be feasible, taking into
consideration for all measures both the cost-effectiveness of
the measures as a whole and the policy of reducing
energy-related hardships facing low-income households.
(d) Weatherization programs shall use the needs assessment
AB 793 (Quirk) PageJ of?
pursuant to Section 382.1 to maximize efficiency of delivery.
(e) For purposes of this section, "energy management technology"
may include a product, service, or software that allows a
customer to better understand and manage energy use in the
customer's home.
SEC. 2.
Section 8365 is added to the Public Utilities Code, to read:
8365.
(a) The commission shall require an energy efficiency program
administrator , as part of an existing statewide education and
outreach program, to do the following:
(1) Develop and implement a plan by June 30, 2016, to educate
residential customers and small and medium business customers to
better understand and control their use of electricity or gas.
The plan shall include, where applicable, notification of the
incentive program developed pursuant to paragraph (2). The plan
shall identify the role of energy efficiency program
administrators and the statewide marketing administrator,
demonstrate how efforts will be coordinated, demonstrate how
duplicative costs and redundancies will be avoided, and consider
existing educational and outreach efforts. The statewide
marketing administrator shall be responsible for coordinating
these efforts . The commission may require that the plan be
integrated into any education campaign required in R.12-06-013.
(2) Develop a program no later than January 1, 2017, within the
energy efficiency program administrators demand-side management
programs authorized by the commission, to provide incentives to
a residential or small or medium business customer who acquires
energy management technology for use in the customer's home or
place of business. The energy efficiency program administrator
shall may allow third parties or local governments to apply for
incentives on behalf of customers. The energy efficiency program
administrator shall work with third parties, local governments,
AB 793 (Quirk) PageK of?
and other interested parties in developing the program. The
energy efficiency program administrator shall establish
incentive amounts based on current commission savings estimation
and savings baseline policies or any new policies adopted in
rulemaking R.13-11-005. all estimated or, where available,
actual energy savings and energy usage reductions from
installation or implementation of energy management
technologies, taking into consideration the overall reduction in
normalized metered energy consumption as a measure of energy
savings.
(3) Annually report to the commission on actual customer savings
resulting from the education plan and the incentive program
established pursuant to this section. The commission shall
evaluate authorize an energy efficiency program administrator to
count all program administrator energy savings claims achieved
pursuant to the education plan and incentive program in a manner
consistent with the current commission-adopted evaluation
protocols. toward overall energy efficiency goals or targets
established by the commission. Every three years, the commission
shall evaluate the effectiveness of the education plan and the
incentive program to determine whether they should continue.
(b) For purposes of this section, "energy management technology"
may include a product, service, or software that allows a
customer to better understand and manage electricity energy use
in the customers home or place of business.
SEC. 3.
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 XIIIB of the
California Constitution.
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