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 ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: July 9, 2015 |Policy Vote: ED. 8 - 0, E., U., | | | & C. 10 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- 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. AB 1150 (Levine) Page 1 of ? 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 AB 1150 (Levine) Page 2 of ? 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 AB 1150 (Levine) Page 3 of ? 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. -- END -- AB 1150 (Levine) Page 4 of ?