BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 802 (Williams) - Public utilities: energy efficiency savings.
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|Version: September 4, 2015 |Policy Vote: E., U., & C. 8 - 2 |
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|Urgency: No |Mandate: No |
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|Hearing Date: September 10, |Consultant: Marie Liu |
|2015 | |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 802 would: (1) expand the information the
California Energy Commission (CEC) may collect for the purpose
of its energy industry assessments and forecasts; (2) change the
disclosure requirements for building energy consumption to
create a "benchmarking" program; and (3) require the California
Public Utilities Commission (CPUC) to authorize an electrical or
gas corporation to recover in rates financial incentives and
support given for energy efficiency projects to bring an
existing building into conformity with Title 24 building code
standards or that produce multiyear savings.
Fiscal
Impact:
Ongoing costs of $1.7 million to the Energy Resources Program
Account (General Fund) for additional workload and contracts
to implement the new benchmarking program and to incorporate
additional energy efficiency information into the CEC's
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assessments and forecasts.
Unknown costs, but at least $900,000 to the Public Utilities
Reimbursement Account (special), for additional staff at the
CPUC to oversee, evaluate, and review the energy efficiency
program and to provide an expedited authorization of high
opportunity projects.
Unknown costs, but potentially in the millions of dollars, to
the General Fund and various special funds to the state as a
ratepayer of investor-owned utilities for additional energy
efficiency program costs.
Background: Existing law requires the CEC to prepare a biennial integrated
energy policy report (IEPR) that contains an assessment and
forecast of major energy trends and issues facing the state's
electricity, natural gas, and transportation fuel sectors. This
report is used to develop energy policies. To develop the IEPR,
existing law gives the CEC broad authority to require the
submission of various types of information to obtain the
necessary data for it to perform the assessments and forecasts
necessary.
Existing law establishes a benchmarking and public disclosure
program, known as the "AB 1103 program," whereby a commercial
building owner must disclose energy consumption data provided by
the utility to a prospective buyer, lessee, or lender.
Existing law requires that the state's energy needs first be met
by increasing energy efficiency under the "loading order."
Consistent with the loading order, existing law requires
electric and gas investor-owned utilities (IOUs) to meet unmet
resources with all available energy efficiency and demand
reduction that is cost-effective, reliable, and feasible. To
achieve these targets, the IOUs administer energy efficiency
programs with ratepayer funds approved by the CPUC. Currently,
ratepayers pay for approximately $1 billion for financial
incentives, loans, and rebates for installing energy efficient
appliances, lighting, windows, HVAC systems, whole-house
retrofits, and sector-specific efforts.
Under the CPUC's existing rules, the IOU's energy savings is
calculated against a baseline, which is based on (1) "natural
occurring savings," (2) standard industry practice, and (3)
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Title 24 energy efficiency standards for existing buildings.
Thus, when the energy efficiency project involves an existing
building, the actual energy efficiency savings could actually be
higher, perhaps substantially higher, than the savings over the
baseline.
Title 24 of the California Code of Regulations establishes
building standards for energy efficiency. They were first
adopted in 1978 and are currently updated approximately every
three years. The standards are developed by the CEC and are
applied when a building permit is issued.
Proposed Law:
This bill has three main sections. First, this bill would
expand the types of information that the CEC can require to be
submitted to it as necessary for the purpose of developing the
IPER. The CEC would be required to maintain policies and
procedures to protect consumer information from authorized
disclosure of the information it receives.
Second, this bill would change the requirements for the
reporting of energy consumption data for the purpose of
establishing benchmarks. Specifically, this bill would repeal
the AB 1103 program and instead would direct the CEC to adopt
regulations to require the utilities to provide energy usage
information for covered buildings to the building owner or to
the CEC for public disclosure. Covered buildings would mean a
building with no residential utility accounts or five or more
active utility accounts, residential or nonresidential. The
regulations would cover situations in which the benchmarking
results can be publically disclosed. The cost to the utility to
deliver usage data would be recoverable from the ratepayers. The
CEC would be authorized, but not required, to also adopt
regulations regarding how an owner of a non-covered building can
receive customer usage data, either aggregated or on an
individual basis.
Third, this bill would additionally require the CPUC in a
separate or existing proceeding, by September 1, 2016, to
authorize an electrical or gas corporation to recover in rates
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the costs from financial incentives and support given to
customers to increase the energy efficiency of existing
buildings based on all estimated energy savings and energy usage
reductions, including those savings or reductions that are a
result of brining an existing building into compliance with the
requirements of Title 24 building code standards, and activities
that are expected to produce multiyear savings. The utilities'
costs to provide such incentives and supports would.be
recoverable from the ratepayers. The CPUC would be explicitly
authorized to adjust energy efficiency goals or targets as a
result of this change.
This bill would also authorize electrical and gas utilities to
implement financial incentives for "high opportunity projects or
programs" effective January 1, 2016 with "expedited
authorization" from the CPUC.
Staff
Comments: To create the new benchmarking reporting program by
this bill, the CEC estimates that it would need 3 PYs at a cost
of $473,000 and a $500,000 contract ongoing. Additionally, this
bill would require the CEC to dramatically increase the amount
of information that can be incorporated into the state's
forecasting and assessments, including the IEPR report. At this
time, the CEC estimate that it will need 5 PYs ongoing at an
annual cost of $734,000.
Staff notes that this bill would eliminate the AB 1103 program,
which should create savings to offset the costs of the new
benchmarking program. However, the CEC never received positions
to implement the AB 1103 program and has been using redirected
positions. Therefore, the CEC does not anticipate any savings
from the elimination of the program.
This bill will also result in new costs to the CPUC to oversee,
and potentially approve ratepayer funding for, a large number
energy efficiency projects that bring existing buildings up to
existing building standards codes that would be allowed as a
result of this bill. Currently, the CPUC oversees an annual
energy efficiency budget of approximately $1 billion. Allowing
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below-code projects will very conservatively increase this
budget by 50%. The CPUC estimates that such an increase in the
energy efficiency program budget will necessitate a minimum of
seven new positions at an ongoing annual cost of $900,000.The
new positions would be required to alter many of its documents,
databases, and studies that are used to guide energy efficiency
policy within the CPUC. Additionally, the CPUC anticipates
needing to review a large number of new efficiency pilot
programs. Staff notes that recent amendments delete a provision
a provision that stated the CPUC is not required to increase
funding for energy efficiency programs as a result of the bill.
Thus increases to the energy efficiency budget can be reasonably
expected should this bill pass.
This bill also requires the CPUC to provide "expedited
authorization" of "high opportunity projects." These are
undefined terms. Depending on how the CPUC intends on
implementing an expedited authorization process, it may have
additional costs.
The state is a ratepayer of electricity and gas. To the extent
that the additional energy efficiency budget results in
increased ratepayer costs, this bill would have additional costs
to the state. These costs are unknown and would depend on the
extent to which the CPUC approves ratepayer funds to be used for
energy efficiency projects that bring existing building up to
code. Billions of dollars are currently being spent to bring
existing buildings up to code as a result of natural equipment
turnover and building renovations. Furthermore, the benchmarking
disclosures in this bill are expected to dramatically increase
interest in "to-code" projects as well as availability of
non-ratepayer financing of those projects. Making ratepayer
funds available for these efficiency projects are likely to
supplant private investments that may otherwise occur on the
natural. Staff notes that it is unclear how the CPUC will
determine whether the energy savings achieved through the
authorized programs will count toward a IOU's goals and targets,
and therefore are should be paid by the ratepayers.
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