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