BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1330 (Bloom) - Energy efficiency
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|Version: August 9, 2016 |Policy Vote: E., U., & C. 7 - |
| | 3, E., U., & C. 6 - 2 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 16, 2016 |Consultant: Narisha Bonakdar |
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This bill meets the criteria for referral to the Suspense File.
However, it was referred to the Committee pursuant to Senate
Rule 29.10 (b), which only provides the option to (1) hold the
bill, or (2) return the bill as approved by the Committee to the
Senate floor.
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.
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, potentially significant costs, to the state as a
ratepayer. (See staff comments)
Background:
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Energy loading order. The "loading order" guides the state's
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
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allocate funds to "cost-effective" activities. The CPUC has
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 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.
Staff
Comments: This bill could result in the CPUC increasing the
amount of ratepayer funds used for energy efficiency. The state
represents approximately one to two percent of the state's
electricity use. To the extent that rates are increased to fund
energy efficiency programs, this bill will result in costs to
the state as a ratepayer.
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