BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 802| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 802 Author: Williams (D) Amended: 9/10/15 in Senate Vote: 21 SENATE ENERGY, U. & C. COMMITTEE: 9-0, 7/13/15 AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley, Wolk NO VOTE RECORDED: Fuller, Morrell SENATE APPROPRIATIONS COMMITTEE: 6-0, 8/27/15 AYES: Lara, Beall, Hill, Leyva, Mendoza, Nielsen NO VOTE RECORDED: Bates SENATE ENERGY, U. & C. COMMITTEE: 8-2, 9/10/15 (pursuant to Senate Rule 29.10) AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, Pavley, Wolk NOES: Fuller, Morrell NO VOTE RECORDED: McGuire SENATE APPROPRIATIONS COMMITTEE: 5-2, 9/10/15 AYES: Lara, Beall, Hill, Leyva, Mendoza NOES: Bates, Nielsen ASSEMBLY FLOOR: 74-0, 6/2/15 - See last page for vote SUBJECT: Energy efficiency SOURCE: Author DIGEST: This bill addresses three distinct energy programs. AB 802 Page 2 First, this bill expands the types and level of information the California Energy Commission (CEC) may require to be submitted to it and requires CEC to have reasonable policies and procedures to protect customer information. Second, this bill abolishes the CEC-administered "AB 1103" program of nonresidential building energy consumption disclosure and replaces it with an energy use "benchmarking" program for larger buildings. Third, this bill requires the California Public Utilities Commission (CPUC) to authorize electrical corporations or gas corporations (IOUs) to provide incentives and assistance for measures to conform a building to CEC's energy efficiency standards for existing buildings and to allow IOUs to recover in rates the reasonable costs of those incentives and assistance. ANALYSIS: Existing law: 1)Requires the CEC biennially to conduct assessments and forecasts of all aspects of energy industry supply, production, transportation, delivery and distribution, demand, and prices and to use these assessments and forecasts to develop energy policies that conserve resources, protect the environment, and protect public health and safety. (Public Resources Code §25301.) 2)Requires each electrical and gas utility to maintain records of the energy consumption of all nonresidential buildings to which it provides service. The utility must upload energy consumption data to a database upon authorization of a nonresidential building owner or operator. The owner or operator discloses the benchmarking data and ratings for the building for the most recent 12 months to a prospective buyer, lessee, or lender. This is informally known as the "AB 1103" program. (Public Resources Code §25402.10.) 3)Establishes a charge on electricity and natural gas consumption to fund cost-effective energy efficiency and conservation activities. (Public Utilities Code §§381 and 890) AB 802 Page 3 1)Requires electrical corporation plans to first meet 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)) 4)Requires the CPUC to identify all potentially achievable cost-effective electricity and natural gas efficiency savings and to establish energy efficiency procurement targets and ratepayer-funded programs for IOUs. Requires a gas corporation to first meet its unmet resource needs through all available natural gas efficiency and demand reduction resources that are cost effective, reliable, and feasible. (Public Utilities Code §§454.55 and 454.56.) 2)Requires the CEC to develop and implement a comprehensive program to achieve greater energy savings in California's existing residential and nonresidential building stock. (Public Resources Code §25943) This bill: Regarding CEC data collection and forecasts: 1) Expands the types of information the CEC, as part of its biennial energy industry assessments and forecasts, may require to be submitted to it to include individual customer historic usage and individual customer historic billing data, in a format and level of granularity specified by the CEC. 2) Requires the CEC to maintain reasonable policies and procedures to protect customer information from unauthorized disclosure. Regarding benchmarking: 3) States that building owner should have access to their buildings' energy use to improve building management and AB 802 Page 4 investment decisions, and the intent of the Legislature that the CEC create a benchmarking and disclosure program through which owners of commercial and multifamily buildings above 50,0000 square feet in gross floor area better understand their energy consumption through standardized metrics. 4) Abolishes the "AB 1103" program of nonresidential energy use disclosure. 5) Creates a new energy use benchmarking program for "covered buildings," meaning (a) any building with no residential utility accounts, or (b) any building with five or more active utility accounts, residential or nonresidential. 6) Requires, beginning January 1, 2016, a utility that sells electricity, natural gas, steam, or fuel oil to a customer for end uses addressed by the United States Environmental Protection Agency's (US EPA's) ENERGY STAR Portfolio Manager system to maintain records for 12 calendar months of the energy usage data of all buildings to which they provide service. 7) Requires, beginning January 1, 2017, a utility to provide aggregated energy usage data to the owner or operator of a covered building, within four weeks of the owner or operator's request. 8) Authorizes CEC to specify additional information a utility must deliver to allow benchmarking of a covered building. 9) Declares the building owner and utility shall not have liability for any use or disclosure by others of usage information delivered as required by this bill. 10)Directs CEC to adopt regulations governing the delivery to CEC of benchmarking results, which are distinct from aggregate energy usage data, and for the public disclosure of AB 802 Page 5 the benchmarking results 11)States that the reasonable cost of an IOU to deliver information as required by this bill are recoverable in rates and that the reasonable costs of a local publicly owned utility in disclosing electrical usage data pursuant to this bill may be considered "cost-effective demand-side management services to promote energy efficiency and energy conservation" and thereby reimbursable by the utility's general fund. Regarding energy efficiency measures for existing buildings: 12)Requires the CPUC, by September 1, 2016, to authorize an IOU to provide incentives for the cost of energy efficiency programs based on all estimated energy savings, including energy savings from bringing existing buildings into compliance with mandatory energy efficiency codes for existing buildings issued by the CEC, and authorizes an IOU to recover the costs in rates. States that the energy efficiency measures described above may include savings and reductions from measures to conform a building with existing energy efficiency regulation, as well as certain operational, behavioral, and retrocommissioning activities. 13)States that the CPUC may adjust the energy efficiency procurement targets to reflect energy efficiency savings achieved in meeting or exceeding mandatory energy efficiency codes for existing buildings. 14)Authorizes the IOUs, effective January 1, 2016, to provide the financial incentives and assistance described above for "high opportunity projects or programs." Background CEC assessments and forecast: expanded authority. Statute requires CEC to prepare a biennial integrated energy policy AB 802 Page 6 report, known as the IEPR, that contains an assessment and forecast of major energy trends and issues facing the state's electricity, natural gas and transportation fuel sectors. Statute directs the CEC to use the IEPR assessments and forecasts to develop energy policies that conserve resources, protect the environment, ensure reliable, secure, and diverse energy supplies, enhance the state's economy and protect public health and safety. Statute specifically authorizes CEC to require submission of demand forecasts, resource plans, market assessments, and related outlooks. This bill expands the specific types of information CEC may compel entities to provide it to include individual customer historic electric or gas service usage, or both, and individual customer historic billing data, in a format and level of granularity specified by the commission. Death to benchmarking. Long live benchmarking. Benchmarking compares the energy consumption per square foot of floor space for comparable classes of buildings. It is a tool for understanding the relative energy efficiency of buildings. Under current law, CEC administers the Nonresidential Building Energy Use Program, a benchmarking and public disclosure program more commonly known as the AB 1103 program. Under the program, an owner or operator of a large commercial building must disclose energy consumption data to a prospective buyer, lessee or lender. IOUs are required to disclose the necessary data for the rankings by uploading it to the US EPA's ENERGY STAR Portfolio Manager. This bill replaces the AB 1103 program with a new energy use benchmarking and public disclosure program. Under this new program, a utility must maintain energy usage data for all buildings to which it provides service for at least the most recent 12 complete calendar months. The utility would need to provide the benchmark data to a building owner or operator within four weeks of request, and the CEC would develop regulations to govern delivery of benchmark data to the commission and the public disclosure of such data. This bill includes language that states the intent of the Legislature that the CEC create a benchmarking and disclosure program through which owners of commercial and multifamily buildings 50,000 square feet and larger will better understand their energy consumption through standardized energy use metrics. AB 802 Page 7 Energy efficiency atop the load. The "loading order" guides the state's energy policies and decisions according to the following order of priority: (1) decreasing energy 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 CEC and CPUC - and its principles guide all energy programs. Consistent with the loading order, statute requires both electrical and gas 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 these targets, the IOUs (and, in some cases, community choice aggregators) 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 sector-specific efforts. Setting the bar high. According to existing CPUC rules, each IOU claims credit for energy savings from the portfolio of energy efficiency measures in its energy efficiency program. The CPUC evaluates the claimed energy savings and, after adjustment, authorizes financial rewards for the IOU. The CPUC measures claimed savings against a baseline, which the CPUC generally defines as comprised of three factors: (1) "naturally occurring savings," (2) standard industry practice and (3) the CEC's Title 24 energy efficiency standards for existing buildings. The CPUC sets the baseline at this level to avoid "free ridership," that is, credit for energy savings that would have occurred absent the IOUs' programs. Currently, the CPUC assumes that measures to bring an existing building into compliance with CEC's energy efficiency standards would have occurred absent the IOUs' energy efficiency programs. Some parties complain the CPUC-established baseline of energy efficiency measures prevents realization of additional, cost-effective energy savings. This is because the baseline AB 802 Page 8 prevents the IOUs from receiving ratepayer monies for encouraging energy-saving building measures that fall below CEC's energy efficiency building standards. In fact, Pacific Gas and Electric (PG&E) reports the results of two studies - both commissioned by PG&E and, as yet, not reviewed by an independent third party - that show that most potential cost-effective energy efficiency savings are represented by projects that are below the CEC's building code standards. Proponents contend that the most cost-effective energy efficiency projects are those below the energy efficiency building standards. High opportunity projects or programs. This bill authorizes IOUs, effective January 1, 2016, to provide financial incentives and other assistance for below-code high opportunity projects or programs. This bill, however, does not define or further describe high opportunity projects and programs. Related Legislation SB 350 (De León, 2015) enacts the Clean Energy and Pollution Reduction Act of 2015. The bill is currently under consideration by the Assembly Floor. AB 531 (Saldana, Chapter 323, Statutes of 2009) gave the CEC authority to set a schedule for compliance with the requirements of AB 1103. AB 1103 (Saldana, Chapter 533, Statutes of 2007) required utilities to maintain records of energy consumption of all nonresidential buildings to which they provide service and to upload this data to US EPA ENERGY STAR Portfolio Manager. The bill also required the owner or operator of a nonresidential building to disclose the Portfolio Manager benchmarking data and ratings for the building to a prospective buyer, lessee, or lender. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: Ongoing costs of $1.7 million to the Energy Resources Program Account (General Fund) for additional workload and contracts AB 802 Page 9 to implement the new benchmarking program and to incorporate additional energy efficiency information into the CEC's 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. SUPPORT: (Verified9/10/15) Bay Area Regional Energy Network Building Owners and Managers Association of California California Building Industry Association California Business Properties Association California Energy Efficiency Industry Council California Housing Partnership Corporation California State Association of Electrical Workers California State Council of Laborers California State Pipe Trades Council Center for Sustainable Energy City of Berkeley Mayor, Tom Bates Clean Power Campaign Coalition of California Utility Employees Commercial Real Estate Development Association EnerNOC, Inc. Institute of Heating & Air Conditioning Industries, Inc. Institute of Market Transformation International Council of Shopping Centers Mission:data Coalition National Association of Energy Service companies Natural Resources Defense Council Pacific Gas and Electric Company San Diego Gas & Electric Company Sempra Energy Utilities Southern California Edison Southern California Gas TechNet AB 802 Page 10 The Utility Reform Network Union of Concerned Scientists Western States Council of Sheet Metal Workers OPPOSITION: (Verified9/10/15) California Municipal Utilities Association ARGUMENTS IN SUPPORT: The author and proponents contend the benchmarking program created by this bill will allow for better management of building energy efficiency. PG&E, Sempra Energy Utilities and Southern California Gas and Electric write in support of the energy efficiency components of this bill, contending the state will be unable to achieve its energy efficiency goals unless the IOUs are able to provide incentives and receive credit for projects to bring existing buildings up to the CEC's energy efficiency standards for existing buildings. ARGUMENTS IN OPPOSITION: The CMUA expresses opposition to the benchmarking provisions of this bill, which CMUA describe as violating the customer's ownership right of energy use information. ASSEMBLY FLOOR: 74-0, 6/2/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, McCarty, Medina, Melendez, Mullin, Nazarian, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Brough, Chang, Chávez, Grove, Mayes, Obernolte Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107 9/10/15 23:15:31 AB 802 Page 11 **** END ****