BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 802


                                                                    Page  1





          Date of Hearing:  May 6, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          802 (Williams) - As Amended May 1, 2015


           ----------------------------------------------------------------- 
          |Policy       |Utilities and Commerce         |Vote:|15-0         |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |-------------+-------------------------------+-----+-------------|
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |-------------+-------------------------------+-----+-------------|
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
           ----------------------------------------------------------------- 


          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill requires the Public Utilities Commission (PUC) to  








                                                                     AB 802


                                                                    Page  2





          authorize electrical or gas corporations to recover the  
          reasonable costs of energy efficiency programs in their rates.   
          Specifically, this bill:  


          1)Requires the PUC to authorize the inclusion of reasonable  
            costs for energy efficiency incentive or rebate programs for  
            existing buildings in a separate or existing proceeding by  
            July 1, 2016.


          2)Requires the PUC to authorize electrical and gas corporations  
            to count all energy savings achieved toward overall energy  
            efficiency goals or targets established by the PUC.


          3)Authorizes the PUC to adjust the energy efficiency goals and  
            targets of electrical and gas corporations to reflect the  
            energy savings achieved in meeting or exceeding energy  
            efficiency requirements in existing buildings.


          FISCAL EFFECT:


          1)Increased annual costs to the PUC (special fund) in the range  
            of $1.4 million to $2.8 million for staffing to provide  
            oversight, evaluation and the review of energy efficiency  
            programs.


            This bill may result in a substantial shift in the way the PUC  
            calculates energy efficiency savings and may require staff to  
            alter documents, databases, and studies including the Energy  
            Efficiency Policy Manual, the California Energy Efficiency  
            Evaluation Protocols, the Database for Energy Efficiency  
            Resources, and the Potential & Goals study.










                                                                     AB 802


                                                                    Page  3





          2)Potential increased customer rates offset by potential energy  
            reductions.
            The CPUC establishes the budgets for the ratepayer funded  
            incentive programs.  This bill does not require an increase in  
            those budgets, thus a rate increase is not guaranteed.   
            Instead, the PUC could incorporate the provisions of this bill  
            into the existing program portfolio and reduce or de-fund less  
            productive programs.











          COMMENTS:


          1)Purpose.  According to the author, current policy leads to a  
            large pool of stranded energy efficiency savings potential  
            because program administrators can only target energy savings  
            attributable to the installation of equipment above current  
            code levels.   This bill will allow electrical and gas  
            corporations to provide incentives for any improvements and  
            count all savings that show up at the meter as decreased use,  
            including savings achieved by process changes and maintenance.  
             



          1)Background.  Two recently completed studies in the PG&E  
            service area found that the savings potential for bringing a  
            building to current code standards are higher than the  
            potential savings from above-code only programs.  One study  
            found that as much as 75% of potential savings were stranded  








                                                                     AB 802


                                                                    Page  4





            under current policies. The second study found similar  
            results: 71% of the total potential electric savings, equating  
            to 781 gigawatt hours (GWh), were below-code, while the  
            remainder was above-code.
             


             Under the current code baseline rules, in most cases, investor  
            owned utilities (IOUs) can only offer an incentive for the  
            portion of savings that occurs from code to super-efficient.  





            Pacific Gas & Electric (PG&E) found that this is particularly  
            challenging for schools receiving funding under Proposition  
            39, which also adopts the above-code approach to funding  
            energy efficiency improvements at schools:  





            PG&E found through a 2006 survey of existing site conditions  
            at 19 schools; two of the 19 schools are more efficient than  
            code, while the remainder range from slightly less efficient  
            to significantly less efficient.    The survey also found  
            least efficient schools are poor candidates for investor owned  
            utility programs because the majority of the savings potential  
            cannot be counted or receive incentives, leaving these schools  
            with a significant investment of their own before they could  
            benefit from incentive assistance.














                                                                     AB 802


                                                                    Page  5







          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081