BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1150 (Levine) - Energy:  University of California and  
          California State University partnership
          
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          |Version: July 9, 2015           |Policy Vote: ED. 8 - 0, E., U., |
          |                                |          & C. 10 - 0           |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Marie Liu           |
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          This bill meets the criteria for referral to the Suspense File. 


          Bill  
          Summary:  AB 1150 would require the California State University  
          (CSU) and request the Regents of the University of California  
          (UC) to expand its statewide institutional partnership with  
          invest-owned energy utilities (IOUs) as specified.


          Fiscal  
          Impact:  
           Cost pressures to the General Fund and various special funds  
            that fund energy efficiency and GHG emission reduction  
            programs. 
           Minor and absorbable administrative cost to the General Fund  
            to the UC and CSU to expand the statewide institutional  
            partnership as specified in the bill
           Minor and absorbable costs to the Energy Resources Control  
            Account (General Fund) to consult with UC and CSU on their  
            partnership.







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           Minor and absorbable costs to the Public Utilities  
            Reimbursement Account (special) to consult with the UC and CSU  
            on their partnership.


          Background:  The California Public Utilities Commission (CPUC) regulates  
          all aspects of IOUs including overseeing public benefit programs  
          and ensuring rates are reasonable. Existing law requires the  
          CPUC to identify all potentially-achievable and cost-effective  
          electricity and natural gas efficiency savings in order to  
          establish energy efficiency procurement targets and  
          ratepayer-funded programs for electrical and gas corporations.  
          The responsibility to meeting this target is distributed  
          proportionately amongst the state's investor-owned utilities  
          (IOUs), who administer the energy efficiency programs. These  
          programs are paid by ratepayer funds that are approved by the  
          CPUC. Currently, the IOUs are collectively approved to collect  
          approximately $1 billion for various energy efficiency measures  
          programs including financial incentives, loans, and rebates for  
          installing energy efficient appliances, lighting, windows, HVAC  
          systems, whole-house retrofits, and specialized programs aimed  
          at a variety of sectors.
          POUs are governed by their locally elected boards from the  
          service territory they represent. They are not regulated by the  
          CPUC, though it does have reporting responsibilities to the  
          California Energy Commission (CEC) for compliance with the  
          Renewable Energy Portfolio Standard requirements. Many of the  
          statutory requirements for IOUs do not apply to POUs.


          In 2004, the UC and CSU each established partnerships with  
          California's four largest IOUs to provide an energy management  
          program called the "Energy Efficiency Partnership" in order to  
          improve the energy performance of existing buildings. However,  
          six CSU and UC campuses were unable to participate in the  
          partnership given that they are within the service territory of  
          a POU. Monies that IOUs receive from ratepayers for energy  
          efficiency projects must be spent in that IOU's territory.




          Proposed Law:  
            This bill would require the CSU and encourage the UC, in  








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          consultation with the CPUC and CEC, to expand the statewide  
          institutional partnership with IOUs to include POUs that choose  
          to participate. The CEC would be required to request POUs  
          participate in this partnership.
          This bill would also require that projects under this  
          partnership be evaluated upon the CPUC's energy efficiency and  
          savings protocols and, secondarily, upon the project's effect in  
          reducing emissions of greenhouse gases (GHG). The partnership  
          would be required to utilize whole-building or whole-campus,  
          meter based verification where feasible.


          The CPUC and the CEC would be required to "authorize" the  
          existing partnership to "accommodate the potential for multiple  
          funding sources." 


          The bill would require that any future funding from the state  
          for energy efficiency or GHG-reducing projects be allocated  
          according to the partnership's existing administrative  
          framework.


          The bill would also require the CSU and the UC to report  
          annually to each IOU and participating POU on the annual  
          reduction in emissions of GHG from the expanded partnership  
          within that utility's jurisdiction. Energy savings shall utilize  
          a baseline reflecting the existing conditions prior to the  
          efficiency project.




          Staff  
          Comments:  The UC and CSU report that they would have minor and  
          absorbable costs to expand their existing partnership with the  
          IOUs to POUs that chose to participate. Staff notes that there  
          is nothing in existing law that limits POUs participation in  
          this program. 
          The bill would require the CPUC and the CEC to "authorize" the  
          existing partnership to accommodate the potential for multiple  
          funding sources. The author's intent in this provision is  
          unclear as neither the CPUC or the CEC have the authority to  
          review the existing partnership. If the CPUC or the CEC  








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          interpreted this bill as giving them such authority, it is  
          unclear the basis on which they would be reviewing the  
          partnership or what benefit such an authorization would have.  
           Staff recommends  that the bill be amended to remove the  
          requirement that the CPUC and CEC "authorize" the existing  
          partnership as it will not actually lead to any action of either  
          entity, nor would such an authorization make project eligible  
          for potential funding sources. The CEC and CPUC have not  
          estimated any costs with this section as they assume they would  
          not be taking any action as a result of this bill. 


          By suggesting that the partnership be authorized to accommodate  
          the potential for multiple funding sources, this bill appears to  
          be intending to increase the number of energy efficiency and GHG  
          emission reduction that would be eligible for funding under  
          various programs, creating cost pressures on those programs. 


          This bill would also allow all savings calculations to utilize a  
          baseline reflecting the existing conditions prior to the  
          upgrade. However, current CPUC protocols require that the energy  
          savings usually be calculated against the energy usage that the  
          building would have if it met current building code standards  
          for energy efficiency. Thus, allowing the savings calculations  
          to be based on existing conditions instead of current building  
          code standards, allows for the project to get credit for larger,  
          perhaps substantially larger, savings. If the projects are  
          calculated with a different baseline compared to other projects  
          within the IOU's or POU's jurisdiction, partnership projects  
          would receive a higher priority for funding. Staff notes that  
          this provision conflicts with an earlier requirement in the bill  
          that the project adhere to the CPUC's energy efficiency and  
          savings protocols, which do not always use existing conditions  
          as the baseline for calculating savings.  Staff recommends  that  
          this bill be amended to remove this inconsistency. 




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