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 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.


                                      -- END --
          











          AB 793 (Quirk)                                         PageL of?