BILL ANALYSIS Ķ SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS Senator Ben Hueso, Chair 2015 - 2016 Regular Bill No: AB 1150 Hearing Date: 6/30/2015 ----------------------------------------------------------------- |Author: |Levine | |-----------+-----------------------------------------------------| |Version: |5/14/2015 As Amended | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Nidia Bautista | | | | ----------------------------------------------------------------- SUBJECT: Energy: University of California and California State University partnership DIGEST: This bill requests the Regents of the University of California (UC) and requires the California State University (CSU), in consultation with the California Energy Commission (CEC) and the California Public Utilities Commission (CPUC), to expand their partnership with the investor-owned utilities (IOU) to include those publicly-owned utilities (POU) that choose to participate. ANALYSIS: Existing law: 1)Establishes the UC as a public trust, administered by the Regents and provides that statutes related to UC are applicable only to the extent that the UC Regents make such provisions applicable. (California Constitution, Article IX, §9) 2)Confers upon the CSU Trustees the powers, duties, and functions with respect to the management, administration, and control of the CSU system. (Education Code §66606) 3)Requires the CEC to develop and administer a series of programs to provide cost-effective energy efficiency and conservation contracts, grants, and loans to eligible entities. Additional financial assistance is available through IOUs, as required by the CPUC. (Public Resources Code §25410-25474) 4)Requires POUs to encourage energy savings and greenhouse gas AB 1150 (Levine) Page 2 of ? (GHG) emissions reductions in existing residential and non-residential buildings, while taking into consideration the effect of the program on rates, reliability, and financial resources. (Public Utilities Code §9503) This bill: 1) Requests the Regents of the UC and requires the CSU, in consultation with the CEC and the CPUC, to expand their statewide institutional partnership with the IOUs to include those POU that chose to participate. 2) Requires UC and CSU campuses, as a condition of participation, to report to their respective utilities the annual reduction of GHG emissions from the partnership. Background In 2004, the UC and the CSU each established partnerships with California's four largest IOUs (Pacific Gas & Electric, San Diego Gas & Electric, Southern California Edison and Southern California Gas) to provide an energy management program and improve the energy performance of existing buildings. As a result of this partnership, UC has achieved an annual savings of 373 million kilowatt-hours (electricity), and 18.7 million therms-per-year (gas) through 2014. In total, the UC has received $63.6 million in incentives from utilities. However, six CSU and UC campuses are unable to participate in the Energy Efficiency Partnership (Partnership) given that they are located within the service territory of a POU. Those campuses include: UC at Los Angeles, UC at Riverside, UC Davis Medical Center, and California State University campuses at Los Angeles, Northridge and Sacramento. State energy loading order. The state's energy "loading order" guides the state's energy policies and decisions according to the following order of priority: (1) decreasing electricity 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. AB 1150 (Levine) Page 3 of ? Investor-Owned Utilities vs. Publicly-Owned Utilities. CPUC regulates all aspects of IOUs including overseeing public benefit programs and ensuring rates are reasonable. POUs are governed by their locally elected boards from the service territory they represent. POUs represent roughly a quarter of the state's electricity through 35, mostly small and mid-sized local agencies. While IOUs are required to use a portion of ratepayer funds for projects that comply with CPUC requirements, the CPUC can not make such requirements of POUs. UC adopts carbon neutrality goal. In November 2013, UC President Janet Napolitano announced the Carbon Neutrality Initiative, which commits UC to emitting net zero GHG from its buildings and vehicle fleet by 2025. UC has noted that it will need bold steps to expand its energy efficiency efforts and dramatically increase its use of energy from renewable resources. Greenhouse Gas Reduction Funds (GGRF). The state budget adopted in June 2014 included an allocation of $20 million to the CEC from the GGRF in order to finance energy efficiency retrofits and clean energy projects in state buildings, including the UC and CSU campuses. The Governor's proposed budget for the 2015-16 fiscal year includes funding for the same purpose to the Department of General Services (DGS). According to the CEC, the initial funding from the 2014-15 budget has not been awarded in anticipation of the Administration's desire to move the funding to DGS. The Legislature and Governor have held off allocations of this budget cycle's allocation of funding from the GGRF until later this session. Is this bill necessary? POUs are not currently prevented from working with their respective CSU and UC campuses to address energy efficiency. This bill will request, but not require, POUs to participate in the Partnership. Therefore, POUs will need to decide whether incentive programs for these campuses are to the benefit of the ratepayers in their respective territories. Energy Savings vs. Greenhouse Gas Emissions. This bill alters the goal of the existing Partnership from specific energy savings requirements based on project type to focus on GHG emissions reductions. With the passage of the Global Warming Solutions Act of 2006 (AB 32, Nuņez/Pavley), California adopted a goal to reduce GHG emissions to 1990 levels by 2020. In his 2015 State-of-the-State speech, Governor Brown announced the need to further advance California's efforts towards a 2030 and 2050 AB 1150 (Levine) Page 4 of ? target. However, as it relates to energy efficiency, a project that provides the most energy savings may or may not provide the most GHG emissions reductions. The CPUC provides guidance and requirements over the IOUs public benefit programs, including energy efficiency programs, such as the Partnership. The goal of reducing GHG emissions is clearly of importance to the state. However, a given project's energy savings is still important factor in calculating and prioritizing among energy efficiency projects. In order to ensure consistency with CPUC efforts, the author and committee may wish to amend the bill to include the goal of energy savings achieved in a manner consistent with the CPUC's evaluation protocols for IOU ratepayer programs. Prior/Related Legislation AB 1959 (Skinner, 2014) would have required the CEC to develop a financial assistance program for energy efficiency projects on the UC and CSU campuses. The bill died in the Senate Committee on Appropriations. SB 35 (Pavley, 2013) would have established the Higher Education Energy Solutions Fund to fund energy retrofits at UCs, CSUs and California Community Colleges (CCC) and required each entity to establish a system-wide energy action plan. The bill was subsequently amended and chaptered with unrelated language. AB 29 (Williams, 2013) would have allocated $152 million in five consecutive fiscal years to the CEC to administer grants, loans, or other financial assistance for the UC, CSU, and CCC to reduce energy demand and consumption. The bill was held in Assembly Committee on Utilities and Commerce. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No PRIOR VOTES : Senate Education Committee (8-0) Assembly Floor (76-0) Assembly Appropriations Committee (15-0) Assembly Higher Education Committee (12-0) AB 1150 (Levine) Page 5 of ? SUPPORT: University of California (source) California State University Sierra Club California OPPOSITION: None received ARGUMENTS IN SUPPORT: According to the UC, the sponsor of the bill: "Under AB 1150, UC facilities served by POUs will be able to participate in the partnership program, provided that the partnership remains in compliance with existing CPUC requirements for IOU ratepayer resources. AB 1150 enters the expanded partnership program into statute and establishes clear roles for all parties involved. This formalization will break down silos between the state's energy agencies, producing significant efficiencies across all participating UC programs and facilitating the exchange of information among our campuses." -- END --