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  ****