BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          AB 1330 (Bloom) - Energy efficiency
          
           ----------------------------------------------------------------- 
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Version: June 15, 2016          |Policy Vote: E., U., & C. 7 -   |
          |                                |          3, E., U., & C. 6 - 2 |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Urgency: No                     |Mandate: No                     |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Hearing Date: August 1, 2016    |Consultant: Narisha Bonakdar    |
          |                                |                                |
           ----------------------------------------------------------------- 
          
          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  AB 1330 requires the California Public Utilities  
          Commission (CPUC) to ensure that sufficient monies are available  
          for electrical and gas corporations to meet efficiency targets.   
          The bill also requires the CPUC to increase available moneys up  
          to 20 percent per year until the moneys available for energy  
          efficiency savings and demand reduction doubles from the amount  
          authorized on January 1, 2016.


          Fiscal  
          Impact:  
           Unknown, likely minor, costs (Utilities Reimbursement Account)  
            to the CPUC to determine the amount of ratepayer funds  
            necessary to meet energy efficiency targets. 
           Unknown, but significant, cost to the state as a ratepayer for  
            utilities. (See staff comments)

          Background:  
          Energy loading order.  The "loading order" guides the state's  







          AB 1330 (Bloom)                                        Page 1 of  
          ?
          
          
          energy policies and decisions according to the following order  
          of priority:  (1) decreasing energy 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 California Energy Commission  
          (CEC) and CPUC-and its principles guide all energy programs.


          Energy efficiency funded programs.  Consistent with the loading  
          order, statute requires both electrical and gas investor owned  
          utilities (IOU) to meet unmet resource needs with all available  
          energy efficiency and demand reduction that is cost-effective,  
          reliable, and feasible.  The CPUC uses these criteria to  
          establish energy efficiency targets for the IOUs.  To achieve  
          these targets, the IOUs (and, in some cases, community choice  
          aggregators) administer energy efficiency programs with  
          ratepayer funds approved by the CPUC.  Currently funded at about  
          $1 billion per year, the programs include a portfolio of  
          financial incentives, loans, and rebates for installing energy  
          efficient appliances, lighting, windows, HVAC systems,  
          whole-house retrofits, and sector-specific efforts.  


          Doubling energy efficiency savings.  SB 350 (De León, Chapter  
          547, Statutes of 2015), enacted the Clean Energy and Pollution  
          Reduction Act of 2015, which established targets to increase  
          retail sales of renewable electricity to 50 percent by 2030 and  
          double energy efficiency savings in electricity and natural gas  
          uses by 2030.  Under the statute, the CEC, in consultation with  
          the CPUC and local publicly owned utilities, must establish  
          annual targets for statewide energy efficiency savings and  
          demand reduction that will achieve a cumulative doubling of  
          statewide energy efficiency savings in electricity and natural  
          gas by January 1, 2030.  The targets must be established through  
          a public process.  In furtherance of that effort, the targets  
          must be established by 
          November 1, 2017.  

          Cost-effectiveness. Over the past 10-plus years, the CPUC has  
          increased energy efficiency budgets.  This ramp-up in spending  
          comports with Public Utilities Code §381's mandate that the CPUC  
          allocate funds to "cost-effective" activities.  The CPUC has  








          AB 1330 (Bloom)                                        Page 2 of  
          ?
          
          
          applied this approach across an IOU's portfolio of programs,  
          rather than each individual program.  As such, programs that are  
          not cost-effective, including "non-resource" programs (e.g.,  
          workforce education and training), are funded so long as the  
          overall portfolio is cost-effective.


          Current process.  Currently, the CPUC approves a 10-year  
          authorization of funding for IOU energy efficiency and demand  
          reduction investments, known as a rolling portfolio.  Rolling  
          portfolios represent a 10-year authorization for activities,  
          with annual reviews of progress and effectiveness, and annual  
          updates/true ups needed for specific aspects of the portfolio  
          (savings estimates, goals, evaluation results) through a formal  
          filing with the CPUC via a public and stakeholder process.  The  
          rolling portfolio mechanism was adopted to smooth out the  
          start-stop nature of a three-year authorization, revision,  
          re-adoption by the CPUC.  The CPUC is currently in its first  
          year of implementing rolling portfolios and still learning about  
          how to improve the effort. 




          Proposed Law:  
            This bill:
          1)Requires the CPUC to ensure that sufficient monies are  
            available to electrical and gas corporations to meet the  
            efficiency targets established for electrical and gas  
            corporations.


          2)Requires the CPUC, if it finds that additional monies are  
            necessary, to increase available monies up to 20 percent per  
            year until the monies available for energy efficiency savings  
            and demand reduction doubles from the amount authorized on  
            January 1, 2016.




          Staff  
          Comments:  This bill could result in the CPUC increasing the  
          amount of ratepayer funds used for energy efficiency up to an  








          AB 1330 (Bloom)                                        Page 3 of  
          ?
          
          
          additional one billion dollars (to nearly two billion dollars)  
          within as little as five years. The state represents  
          approximately one to two percent of the state's electricity use.  

          Staff notes that the CPUC already has the authority to increase  
          the amount of funding for energy efficiency programs. This bill  
          is likely intended to significantly increase the amount  
          invested. 



          





                                      -- END --