BILL ANALYSIS Ó
AB 1330
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Date of Hearing: April 20, 2015
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
AB 1330
(Bloom) - As Introduced February 27, 2015
SUBJECT: Energy Efficiency Resource Standard Act
SUMMARY: This bill establishes an annual energy efficiency
resource standard. Specifically, this bill:
a)Requires each California electric utility to increase the
amount of energy efficiency resources annually to be not less
than 1.5% per year by 2020, and not less than 2% by 2025,
based on average electricity consumption of the immediately
preceding three years, measured in gigawatt-hours per year as
compared to the Energy Commission's integrated energy policy
reports and energy policy reviews made pursuant to Section
25302 of the Public Resources Code.
b)Requires each gas utility to increase the amount of energy
efficiency resources of the utility so that the total amount
of incremental energy savings achieved in any given year
amounts to not less than three-fourths of one percent of total
system natural gas consumption by 2020, and not less than one
percent of system natural gas consumption by 2025, based on
the average natural gas consumption of the immediately
preceding three years, measured in millions of therms per year
based on comparison of the Energy Commission's integrated
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energy policy reports and energy policy reviews made pursuant
to Section 25302 of the Public Resources Code.
c)Requires the California Public Utilities Commission (CPUC) to
require Pacific Gas and Electric Company, Southern California
Edison Company, and San Diego Gas and Electric Company jointly
achieve a reduction in nonemergency, event-based demand
response of seven percent by 2020 and ten percent by 2025, as
measured by the sum of their peak demands.
d)Requires that not less than 25 percent of the energy savings
of an electric utility or gas utility shall come from
disadvantaged communities identified by the California
Environmental Protection Agency pursuant to Section 39711 of
the Health and Safety Code.
e)Requires each electric utility and gas utility to file annual
reports with the California Energy Commission that analyzes
the energy savings achieved by the utility during the prior
year, divided by the energy consumption in the immediately
preceding year.
EXISTING LAW:
1)Establishes a charge on electricity and natural gas
consumption to fund cost-effective energy efficiency and
conservation activities. (Public Utilities Code §381 and 890)
6)Requires electric corporation procurement plans to first meet
its unmet resource needs through all available energy
efficiency, and demand reduction resources that are cost
effective, reliable, and feasible. (Public Utilities Code
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§454.5 (b)(9)(C))
7)Requires the CPUC to establish targets for all potentially
achievable cost-effective electricity and gas efficiency
savings. (Public Utilities Code §454.55 and 454.56)
8)Requires each local publicly owned electric utility, in
procuring energy to serve the load of its retail end-use
customers, shall first acquire all available energy efficiency
and demand reduction resources that are cost effective,
reliable, and feasible. (Public Utilities Code §9615)
9)Requires the California Energy Commission (CEC) to develop a
statewide estimate of all potentially achievable
cost-effective electricity and natural gas savings, and
establish targets for statewide annual energy efficiency
savings, and demand reduction for the next 10-year period.
(Public Resources Code §25310)
10)Requires the CEC to continuously carry out studies, technical
assessments, research projects, and data collection directed
to reducing wasteful, inefficient, unnecessary, or uneconomic
uses of energy, including improved appliance efficiency.
(Public Resources Code §25401)
11)Requires the CEC to adopt cost-effective energy and water
efficiency standards for new buildings and appliances.
(Public Resources Code §25402)
12)Prohibits the sale of new appliances that do not meet the
energy and water efficiency standards adopted by the CEC.
(Public Resources Code §25402(c)(2))
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13)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)
FISCAL EFFECT: Unknown
COMMENTS:
Author's Statement . "Establishing an energy efficiency resource
standard will be a critical component in meeting Californian's
energy needs while at the same time meeting the Governor's goals
of increasing building efficiency by 50%, increasing our
renewable portfolio to 50% by 2030, and reducing our greenhouse
gas emissions by 80% by 2050."
1)Governor's 2015 Inaugural Address calls for Energy Efficiency.
In the Governor's Inaugural Address on January 5, 2015, he
stated in his comments on reducing carbon pollutions and
limiting greenhouse gas emissions:
"In fact, we are well on our way to meeting our AB 32 goal of
reducing carbon pollution and limiting the emissions of
heat-trapping gases to 431 million tons by 2020. But now, it
is time to establish our next set of objectives for 2030 and
beyond.
Toward that end, I propose three ambitious goals to be
accomplished within the next 15 years:
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Increase from one-third to 50 percent our
electricity derived from renewable sources;
Reduce today's petroleum use in cars and trucks by
up to 50 percent;
Double the efficiency of existing buildings and make
heating fuels cleaner."
1)California Ratepayer-funded Energy Efficiency. The CPUC
regulates ratepayer-funded energy efficiency programs. The
CPUC works with the investor-owned utilities, other program
administrators, and vendors to develop programs and measures
to transform technology markets within California using
ratepayer funds. The program requires that the portfolio of
activities be cost effective. The 2013-2014 energy efficiency
program budgets are slightly more than $2 billion. This does
not include additional funding to support low income
households, which includes a billing discount and no-cost
energy efficiency improvements and appliances for qualified
low income households.
Ratepayer-funded energy efficiency budgets are used to provide
incentives to encourage energy efficiency improvements over
and above current state energy efficiency regulations, conduct
research on areas where state efficiency standards can be
increased, measure and evaluate results, marketing and
outreach; government partnerships, and financing programs.
California's publicly owned utilities administer similar
programs also funded by their ratepayers.
2)California Energy Commission Energy Efficiency Programs. The
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CEC researches and ultimately adopts and enforces state
standards for building and appliance efficiency. The CEC
establishes first that its requirements are cost effective
before the requirements take effect. In some limited areas,
the CEC is preempted from establishing standards if the
Federal government has already enacted standards.
3)Will AB 1330 require more than Current Energy Efficiency
Goals? It is a challenge to identify California's energy
efficiency goals. As a result, it is not entirely clear
whether the requirements of AB 1330 are in addition to
inclusive of current state energy efficiency programs and
initiatives. It is also not clear whether AB 1330 will
require that the goals be met with cost-effective energy
efficiency investments.
In a recent filing in the CPUC's Integrated Demand Side
Resource Planning Proceeding, the Natural Resources Defense
Counsel (NRDC) described CPUC current practice with respect to
setting energy efficiency goals:
The efficiency incorporated into procurement planning is
determined in a different proceeding - the general
efficiency proceeding - based on an efficiency potential
study that considers how much efficiency is available above
what would happen anyway (aka "incremental" to business as
usual). The Commission then determines how much the
utilities would be responsible for reaching and sets that
as their goals, which are then integrated into procurement
planning.
The current goals are based on the "mid-scenario" in the
potential study, which by definition means the
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"high-scenario" identified more efficiency (which is
therefore "incremental" to the procurement assumptions).
Furthermore, the utilities are held responsible to meet
these efficiency goals no matter what other efficiency
efforts they take."
In the CEC's Integrated Energy Policy Report (IEPR), the CEC
energy demand forecast "consists of two parts: a baseline
forecast, which includes energy efficiency savings from
initiatives already in place or approved, and a forecast of
future energy efficiency savings, referred to as additional
achievable energy efficiency (AAEE) savings. Combinations of
the two parts yield a "managed" forecast for resource planning
purposes."<1>
The author may wish to consider clarifying that the standard
is a minimum and inclusive of all current energy efficiency
programs, and that the Energy Commission should establish cost
containment, if necessary, for each retail seller of
electricity or natural gas.
4)Demand Response (DR). AB 1330 establishes a requirement to
procure nonemergency, event-based demand response of seven
percent by 2020 and ten percent by 2025, as measured by the
sum of their peak demands. Demand response is end-use
electric customers reducing their electricity usage in a given
time period, or shifting that usage to another time period, in
---------------------------
<1> CALIFORNIA ENERGY DEMAND UPDATED FORECAST, 2015-2025,
http://www.energy.ca.gov/2014publications/CEC-200-2014-009/CEC-20
0-2014-009-CMF.pdf
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response to a price signal, a financial incentive, an
environmental condition, or a reliability signal.
The CPUC currently authorizes the investor owned utilities to
offer a variety of DR programs, including, but not limited to,
critical peak pricing, peak day pricing, 'smart rate'
discounts, 'smart air conditioning' discounts, Summer Savings,
Flex Alert, a DR aggregator program, demand bidding program,
base interruptible program, and more.
The CPUC recently opened a proceeding to examine Integrated
Demand Side Management (ISDM) to more effectively coordinate
certain electric vehicle, DR, distributed generation, energy
efficiency, distributed energy storage, marketing education
and outreach, smart grid, rate design, and water-energy
issues.
The CPUC intends to enable the utilities, other
administrators, and electric market actors to offer a wide
portfolio of demand modifying technologies that may be best
tailored to the specific characteristics of individual
customers. (Demand-side management resources include DR as
well as energy efficiency, distributed generation and storage,
smart grid, water-energy measures, electric vehicle hardware,
and innovative rate design.)
Ultimately the CPUC may propose goals and potential,
cost-effectiveness methods, funding levels and sources, and
marketing/outreach/education programs, and a shareholder
incentive mechanism.
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It is unclear the extent to which the DR provisions in AB 1330
are over and above existing programs or how the goal in AB
1330 interacts with existing programs.
The author may wish to strike the language related to DR and
replace it with language specifying that the CPUC and publicly
owned utilities shall establish and report on an annual target
for demand response.
5)Requires not less than 25% of energy savings by a utility to
occur in disadvantaged communities. Current CPUC-authorized
programs provide free energy efficiency upgrades of appliances
and certain building components for low-income households.
This provision in AB 1330 may assist with directing energy
efficiency assistance to non-residential customers in
disadvantaged communities, particularly small food markets,
community centers, homeless shelters, etc.
Poverty is one of the components used in determining whether a
region should be considered a disadvantaged community.<2>
The CPUC recently issued a report showing that low income
households typically use less energy than higher income
households: "the combined usage of households in moderate
[income] and high [income] areas is almost four times larger
in the summer (five times larger in the winter) than the
--------------------------
--------------------------
<2> http://oehha.ca.gov/ej/pdf/042313CalEnviroScreen1.pdf
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combined summer usage in very low and low income areas." <3>
If low income households use less energy than moderate and
high income households, it is unclear whether 25% of energy
savings can be obtained in disadvantaged communities.
The author may wish to consider an amendment to specify that
all energy savings first occur in disadvantaged communities.
6)Clarifying amendments.
The author may wish to:
Define "energy savings" as a reduction in use of
electricity or natural gas.
Replace electricity utility with retail seller of
electricity to include non-utility electricity providers.
Insert "its" in Section 8045 to clarify that the
percentage goals apply to each retail seller of
electricity's service area rather than a statewide goal.
Clarify that the standard is based on sales rather than
consumption.
--------------------------
<3>
http://www.cpuc.ca.gov/NR/rdonlyres/8AEF5361-FC3B-4518-A88A-72E30
10263A4/0/PPDComparativeAnalysisofUtilityServicesRatesinCAFinal2.
pdf
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Strike "and energy policy reviews" to remove ambiguity.
Strike "nonemergency" in Section 8047 to clarify the
requirements of this section.
1)Related Legislation.
AB 802 (Williams, 2015) requires the CPUC to consider total
energy savings in evaluating the cost effectiveness of energy
efficiency measures.
SB 350 (De León, 2015) requires the CEC to adopt an update to
its existing buildings program in furtherance of achieving a
doubling of energy efficiency in buildings, by
January 1, 2030.
SB 723 (Pavley, 2015) requires the CPUC to address energy
efficiency implementation at United States Armed Forces bases
and facilities.
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SB 1414 (Wolk, Chapter 627, Statutes of 2014) requires the
CPUC to specify methods that allow demand response to be
included in electricity resource adequacy requirements.
2)Suggested Amendments.
SECTION 1. Chapter 7 (commencing with Section 8400) is added
to Division 4.1 of the Public Utilities Code, to read:
CHAPTER 7. Energy Efficiency
8400. (a) This chapter shall be known, and may be cited, as
the Energy Efficiency Resource Standard Act.
(b) The commission, in consultation with the Energy
Commission, shall be responsible for supervising the
implementation of this chapter by electrical corporations and
gas corporations.
(c) The governing board of each local publicly owned electric
utility and local publicly owned gas utility, in consultation
with the Energy Commission, shall be responsible for the
implementation of this chapter by the utility.
(d) The Energy Commission shall, in a public stakeholder
engagement process, determine how the energy savings goals of
this chapter are measured and reported.
8401. For purposes of this chapter, the following terms have
the following meanings:
(a) "Electric utility" means an electrical corporation or
local publicly owned electric utility serving retail end-use
customers in California.
(b) "Gas utility" means a gas corporation or local publicly
owned gas utility serving retail end-use customers in
California.
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(c) "Energy savings" means a reduction in electricity use in
kilowatthours or in fossil fuel use in thermal unit(s).
8405. (a) Each electric utility retail seller of electricity
shall establish an energy efficiency resource standard that
shall increase the minimum amount of energy efficiency
resources, inclusive of all of its current energy efficiency
activities, of the utility so that the total amount of
incremental energy savings achieved in any given year amounts
to not less than 11/2 percent of its total system electricity
consumption by 2020, and not less than 2 percent of its total
electricity consumption retail sales by 2025. The total
amount of incremental energy savings shall be determined based
upon the average electricity consumption retail sales of
electricity of the immediately preceding three years, measured
in gigawatthours per year based on comparison of the Energy
Commission's integrated energy policy reports and energy
policy reviews made pursuant to Section 25302 of the Public
Resources Code.
(b) The Energy Commission, in consultation with the
commission, shall adopt a cost limitation, as necessary, for
each retail seller of electricity, for meeting the
requirements of this section.
8406. The commission shall establish an annual specified
percentage of peak demand that shall be achieved through
event-based demand response and require that Pacific Gas and
Electric Company, Southern California Edison Company, and San
Diego Gas and Electric Company jointly achieve a reduction in
nonemergency, event-based demand response of 7 percent by 2020
and 10 percent by 2025, as measured by the sum of their peak
demands. retail sellers of electricity achieve that annual
percentage.
8410. Each gas utility shall establish an energy efficiency
resource standard that shall increase the minimum amount of
energy efficiency resources, inclusive of all of its current
energy efficiency activities , of the utility so that the total
amount of incremental energy savings achieved in any given
year amounts to not less than three-fourths of 1 percent of
its total system natural gas consumption by 2020, and not less
than 1 percent of its system retail natural gas consumption
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sales by 2025. The total amount of incremental energy savings
shall be determined based upon the average retail natural gas
consumption sales of the immediately preceding three years,
measured in millions of therms per year based on comparison of
the Energy Commission's integrated energy policy reports and
energy policy reviews made pursuant to Section 25302 of the
Public Resources Code.
8415. (a) Not less than 25 percent of All the energy savings
of an electric utility or gas utility shall first come from
disadvantaged communities identified by the California
Environmental Protection Agency pursuant to Section 39711 of
the Health and Safety Code.
(b) Each electric utility and gas utility shall annually file
with the Energy Commission, a report that analyses the energy
savings achieved by the utility during the prior year, divided
by the energy consumption in the immediately preceding year.
3)Support/Opposition.
The sponsors of AB 1330 state that this "standard would save
more than $10 billion dollars in utility bills over the period
2015 through 2030, and that it would save on the order of 33
MMT of carbon over the same period. It is a tangible way to
actually measure efficiency's progress toward reducing
emissions."
TURN supports AB 1330 and expresses concern about how it fits
into current statute which requires procuring all potentially
achievable cost effective electric and natural gas savings.
EDF suggests an amendment to the DR provisions to require that
DR be available to shift demand at times when there is an
abundance of solar and avoid renewable curtailment.
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The Northern California Power Agency and the California
Municipal Utility Association opposes AB 1330 because energy
savings are customer driven; load is not growing consistent
with improving efficiency; and concerns regarding
over-generation of electricity during peak periods of the day.
The Independent Energy Producers oppose establishing a
carve-out for demand response.
REGISTERED SUPPORT / OPPOSITION:
Support
Bloom
California Energy Efficiency Industry Council (sponsor)
Center for Sustainable Energy (if amended)
Environmental Defense Fund (if amended)
Natural Resources Defense Counsel (if amended)
TURN (if amended)
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Opposition
California Municipal Utilities Association
Independent Energy Producers
Northern California Power Agency
Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083