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
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          |Author:    |Levine                                               |
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          |Version:   |5/14/2015    As Amended                              |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Nidia Bautista                                       |
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          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  







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            (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.









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          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  








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          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)
            








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          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."
          
          

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