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 ----------------------------------------------------------------- |Author: |Quirk | |-----------+-----------------------------------------------------| |Version: |6/9/2015 As Amended | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Jay Dickenson | | | | ----------------------------------------------------------------- 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 AB 793 (Quirk) PageF of? 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 AB 793 (Quirk) PageG of? 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. AB 793 (Quirk) PageH of? 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 administratorshallmay 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 evaluateauthorize an energy efficiency program administrator to countall 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 manageelectricityenergy 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. -- END -- AB 793 (Quirk) PageL of?