BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1330 (Bloom) - Energy Efficiency Resource Standard Act
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|Version: August 18, 2015 |Policy Vote: E., U., & C. 7 - 3 |
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|Urgency: No |Mandate: Yes (see staff |
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|Hearing Date: August 24, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: This bill would create an energy efficiency resource
standard for electricity and gas that would increase the amount
of energy efficiency resources available to specified targets in
2020 and 2025.
Fiscal
Impact:
Ongoing costs of $700,000 annually to the Energy Resources
Program Account (General Fund) for the CEC to adopt cost
limitations for each utility.
Ongoing cost pressures of $850,000 to the Energy Resources
Program Account (General Fund) for the CEC to collect, review,
and verify utility reports.
Annual costs of $700,000 for two years to the Energy Resources
Program Account (General Fund) for the CEC to establish peak
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demand reduction procurement goals.
Ongoing costs of approximately $420,000 annually to the Public
Utilities Reimbursement Account (special) for overseeing IOU
and CCA compliance with energy efficiency standard
requirements.
Background: IEPR report. The CEC is required to adopt an integrated energy
policy report every two years that gives an overview of major
energy trends and issues facing the state, including but not
limited to supply, demand, pricing, reliability, efficiency, and
impacts on public health and safety, the economy, resources, and
the environment.
Energy Efficient California. Energy efficiency in buildings and
equipment is used to decrease per capita electricity consumption
which reduces the state's need for new power plants and reduces
the associated environmental impacts, including GHG emissions.
Since the 1970's, California has led the nation in energy
efficiency programs. Largely as a result of the state's nearly
half a century of energy efficiency policies, per-capita energy
use has remained flat, whereas most of the country has
experienced a rise by 33 percent or greater. Energy use has
become even more critical to power homes, schools, government
and businesses. The state has adopted landmark policies to
reduce emissions of greenhouse gases (GHG), namely through the
Global Warming Solutions Act of 2006, with a portfolio of
strategies that includes furthering energy efficiency efforts.
In January 2015, Governor Brown in his State of the State
Address proposed additional goals for reducing GHG emissions in
2030 and 2050 with a three-pronged strategy that includes
doubling the energy efficiency of existing buildings.
Energy loading order. Following the 2001 energy crisis, the
Legislature codified a "loading order" of preferred energy
resources, requiring the IOUs' electricity procurement plans to
first meet unmet resources needs through all cost-effective,
reliable, and feasible energy efficiency and demand response.
The energy loading order was subsequently adopted by the state's
energy agencies and 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
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peak hours; (3) meeting new energy generation needs with
renewable resources; and (4) meeting new energy generation needs
with clean fossil-fueled generation.
Proposed Law:
Electricity: This bill would create the Energy Efficiency
Resource Standard Act (act) that would require all electrical
utilities to establish an energy efficiency resource standard to
increase the amount of energy efficiency resources funded by its
customers to at least 1.5% of its total retail sales by 2020 and
at least 2% by 2025. The total amount of energy savings would be
based on the average retail sales of electricity in the past
three years excluding the estimates sales of electricity
associated with electric vehicle charging and net, round-trip
electricity losses associated with consumer-sited energy
storage. CCAs that elect to administer energy efficiency
programs for its consumers would also be subject to this
requirement. This requirement would not apply to an electrical
utility or CCA if its average annual retail sales in the
preceding three years was less than 1,000 gigawatthours (GWH).
The CEC would be required to adopt a cost limitation for each
utility and CCA.
This bill would also require the CEC, in consultation with the
CPUC, to establish an annual procurement goal for demand
response that would be imposed on each electrical utility and
CCA by July 31, 2017. The CPUC would be required to oversee
compliance of this goal by electrical corporations. The
governing board of each POU and CCA would be responsible for
achieving its goal.
Natural gas: This act would also require that all gas utilities
to establish an energy efficiency resource standard that
increases the amount of energy efficiency resources to at least
0.75% of its total retail sales by 2020 and at least 1% by 2025.
As with the electricity requirement, the amount of incremental
savings would be determined by the average retail sales of
natural gas within its service territory in the immediately
preceding three years, excluding the sales of natural gas
associated with natural gas vehicle fueling. The CEC would be
required to adopt a cost limitation for each gas utility. The
CPUC would be responsible for overseeing the implementation of
this requirement by gas utilities. The governing board of a
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publically owned gas utility, in consultation with the CEC would
be responsible for achieving this goal.
This bill would require utilities to prioritize energy
efficiency activities under this act that benefit disadvantaged
communities.
Every electrical and gas utility would be required to annually
report to the CEC on the energy savings divided by the energy
retail sales for the prior year.
Staff
Comments: To adopt the cost limitations for each electric
utility and CCA subject to the bill, the CEC anticipates needing
5 positions to review and incorporate load forecasts for each
utility that will be used as the basis for comparison for energy
efficiency savings and to review costs of energy efficiency
programs at an annual ongoing cost of $700,000.
To collect, review, and verify the annual reports submitted by
the electrical and gas utilities, the CEC anticipates needing
six positions at an annual ongoing cost of $850,000. These
positions would be responsible for acquiring quantitative
information about benefits to disadvantaged communities and
estimates of non-energy benefits for the utility's energy
efficiency programs. Staff notes that the bill does not require
that the CEC take any action with the report, especially since
the CPUC and the governing boards are responsible for IOU and
POU compliance respectively. The bill also does not explicitly
require that the report have information about benefits to
disadvantaged communities and non-energy benefits. However, it
can be presumed that this information is desirable in the
report. As such, staff considers these costs as cost pressures.
To establish the annual procurement goal for demand response,
the CEC estimates that it would need approximately five
positions for two years at an annual cost of $700,000. Staff
notes that the CEC may also have periodic costs should it
determine that the goals need to be updated. The bill is silent
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in regard to upgrades to the goal.
The CPUC would also have costs under this bill to oversee
compliance of the bill's requirements by IOUs and CCAs. The CPUC
is currently reevaluating its costs but it had previously
estimate that it would need approximately $420,000 annually to
fund four positions for its new oversight responsibilities.
Staff notes that while the CPUC is responsible for overseeing
IOU and CCA compliance, the bill requires all utilities to file
annually with the CEC n their progress.
Staff notes that the bill is unclear on how energy efficiency is
to be measured. In §8400(d) the bill requires the EC to
determine how the energy savings goal in the chapter are to be
measured and reported. However, the bill states in §8405(a) that
the standard is to increase the amount of energy efficiency
activities, which suggests that the goal set in the bill will be
measured by the amount of the utilities' energy efficiency
budgets. Later in §8405(a), the bill requires that the amount of
incremental energy savings be determined based on the average
retail sales of electricity, which suggests that the goal is to
be measured by a reduction of energy used. Staff recommends that
the bill be clarified as to its intent on how energy efficiency
is to measured, as it is likely to impact implementation costs.
How the energy efficiency standard is measured will also impact
ratepayer impacts, which are a concern to state costs to the
extent that the state is a ratepayer itself.
This bill constitutes a state mandate as it creates a new crime.
However, under the California Constitution, costs associated
with this mandate are not reimbursable. This bill so makes
requirement of local agencies that can be recovered by service
charges or fees, which are also not reimbursable costs.
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