BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                    AB 2379


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          Date of Hearing:  April 6, 2016


                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                  Mike Gatto, Chair


          AB 2379  
                      (Quirk) - As Introduced February 18, 2016


          SUBJECT:  Energy:  home energy rating program:  report


          SUMMARY:  Requires the California Energy Commission's (CEC)  
          biennial energy policy report to include additional information  
          related to home energy efficiency.  Specifically, this bill  
          requires the report to include a comparison of actual energy  
          savings and the models or projections used to validate the Home  
          Energy Efficiency Rating program.


          EXISTING LAW:  


          1)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 Section 25401)


          2)Requires the CEC to adopt cost-effective energy efficiency  
            standards for appliances. (Public Resources Code Section  
            25402)













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          3)Prohibits the sale of new appliances that do not meet the  
            energy efficiency standards adopted by the CEC. (Public  
            Resources Code Section 25402(c)(2))


          4)Requires the CEC to certify compliance options for new  
            products, materials, and calculation methods in order to meet  
            the energy efficiency standards. (Public Resources Code  
            Section 25402.1(a)(2))


          5)Establishes ratepayer-funded programs to assist low-income  
            households through billing discounts and weatherization and  
            appliance replacement programs. (Public Utilities Code  
            Sections 327 and 382)


          6)Directs the California Public Utilities Commission (CPUC) to  
            administer cost-effective energy efficiency programs funded by  
            a nonbypassable system benefits charge assessed on ratepayers  
            to fund energy efficiency programs. (Public Utilities Code  
            Section 381)


          7)Requires the CPUC to report annually on its effort to identify  
            ratepayer-funded energy efficiency programs that are similar  
            to other state programs to ensure that the ratepayer-funded  
            programs complement and do not duplicate programs of other  
            state agencies (Public Utilities Code Section 747.6)
          FISCAL EFFECT: Unknown. 


          COMMENTS: 


          1)Author's Statement:  "One of the problems that we are finding,  
            [?] is that the models that are used to determine the energy  
            savings as a result of efficiency upgrades are frequently off  
            by significant margins.  As a result, the efficiency scores  











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            under [Home Energy Rating Systems] may also be inaccurate and  
            giving homeowners the wrong picture about just how efficient  
            their homes are or how much potential there is to improve a  
            home's energy efficiency.  In a California Public Utilities  
            Commission evaluation from 2010-2012, the CPUC looked at the  
            Whole House Retrofit program and determined that the 'program  
            as currently implemented is not meeting its energy savings  
            goals ? caused by a combination of factors that include [an]  
            overestimation of savings in the retrofit planning (building  
            modeling) phase.'  Additionally, the report concluded that to  
            improve the program, better energy estimating tools would be  
            needed, including more complete data on energy use. This bill  
            will improve the Home Energy Rating System by requiring a  
            comparison of the estimated and actual savings that a home  
            experiences when property owners make energy efficiency  
            improvements that are recommended under [Home Energy Rating  
            System].  As a result, we will learn through better and more  
            complete data how the models that predict energy efficiency  
            are working and be better informed about how to improve them.  
            If we invest in energy efficiency to reduce energy consumption  
            and to reduce greenhouse gas emissions, we must be sure that  
            energy efficiency upgrades are actually yielding the results  
            we expect."
          2)Energy Efficiency and Funding:  California has pursued its  
            energy demand reduction goals through two primary avenues:  
            utility-sponsored programs to reduce end-user consumption, and  
            codes and standards designed to lower the energy use of  
            buildings and appliances through energy efficiency  
            improvements.  By 2004, the CEC suggests these efforts have  
            cumulatively saved more than 40,000 gigawatt hours (GWh) of  
            electricity and 12,000 megawatts (MW) of peak electricity,  
            equivalent to 24 500-MW power plants. According to the CEC,  
            more than half of the statewide savings was from the building  
            and appliance standards, with the balance resulting from  
            programs implemented by the state's IOUs and local  
            publicly-owned utilities (POUs).  As a result of these  
            efforts, the CEC states that California's energy use per  
            capita has remained stable for more than 30 years while the  
            national per capita average has increased by 40% and is nearly  











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            double that of California. 


            Energy efficiency is at the top of the "loading order," which  
            refers to a requirement that California utilities first meet  
            their energy needs through cost-effective energy efficiency  
            measures before meeting energy needs through renewable and  
            conventional generation.  The state's IOUs and the publicly  
            owned utilities administer energy efficiency programs that  
            provide financial incentives and rebates for installing energy  
            efficient appliances, lighting, windows, Heating, Ventilation  
            and Air Conditioning (HVAC) systems and other technologies or  
            measures.  The Legislative Analyst Office (LAO) reports that  
            these programs have totaled $9 billion in ratepayer funding  
            since IOUs began administering them in 1998.<1>  The CPUC  
            reports the IOUs have requested roughly $2 billion in funding  
            for energy efficiency programs in 2013-14, including HVAC,  
            lighting, government partnerships, non-residential custom  
            projects, and financing programs.  These programs are expected  
            to generate 4,670 GWh of energy savings in that cycle.


            A partial summary of funding of previous and ongoing programs  
          follows:


             a)   $1 billion per year from IOU ratepayers for programs  
               approved by the CPUC through 2014, with $220 million for  
               financing and expansion of the "Energy Upgrade California"  
               program offering residential energy efficiency incentives  
               and rebates up to $4,500 per customer.
             b)   $25 million in ratepayer funds for a "Clean Energy  
               Upgrade Financing" program required by AB 14 X1 (Skinner),  
               Chapter 9, Statutes of 2011-12 First Extraordinary Session,  
               to finance energy efficiency retrofits with loans  
               administered by the California Alternative Energy and  

             --------------------------


          <1> Roberts, T., Simbol, A., and Taylor, M. "Energy Efficiency  
          and Alternative Energy Programs", LAO, 2012  
          http://www.lao.ca.gov/laoapp/PubDetails.aspx?id=2677








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               Advanced Transportation Financing Authority (CAEATFA)  
               within the State Treasurer's Office.


             c)   $300 million per year from IOU ratepayers for free  
               energy efficiency and weatherization services for IOU  
               low-income customers approved by the CPUC.


             d)   $30 million per year in federal funding for free  
               weatherization services for low-income residents  
               administered by the California Department of Community  
               Services and Development (CDCS).


             e)   $185 million in one-time funding for free weatherization  
               services for low-income residents from the American  
               Recovery and Reinvestment Act of 2009 (ARRA) administered  
               by CDCS.


             f)   $280 million in one-time ARRA funds for energy  
               efficiency programs administered or coordinated by the  
               CEC), including Energy Upgrade California and several pilot  
               programs designed to develop best practices for energy  
               efficiency retrofits of California's buildings constructed  
               prior to adoption of Title 24 energy efficiency building  
               standards. These pilots are intended to help CEC develop a  
               comprehensive energy efficiency strategy for this old  
               building stock, as required by AB 758 (Skinner), Chapter  
               470, Statutes of 2009.


          3)AB 758 (Skinner):  Requires the CEC, in collaboration with the  
            California Public Utilities Commission (CPUC) and  
            stakeholders, to develop a program to achieve greater energy  














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            efficiency in the state's existing buildings.<2> This effort  
            is closely tied to California's Global Warming Solutions Act  
            of 2006 (AB 32 (Núñez), Chapter 488), which seeks to reduce  
            the state's greenhouse gas emissions to 1990 levels by 2020.   
            One mechanism to reduce greenhouse gas emissions is to reduce  
            energy consumption in existing homes - a goal to be met by AB  
            758. The first phase of AB 758 implementation, funded by the  
            ARRA, established state and local pilot programs supporting  
            energy efficiency upgrades.<3>
          4)Energy Upgrade California:<4>  Energy Upgrade California is a  
            statewide initiative designed to help California meet the  
            climate action and energy efficiency goals of AB 32 and AB  
            758, respectively.  By offering financial incentives to  
            homeowners who complete certain energy-saving home  
            improvements, the program guides Californians to conserve  
            energy, reduce demand on the electrical grid, and make  
            informed energy management choices.  Energy Upgrade California  
            is an alliance of the CPUC, CEC, utilities, regional energy  
            networks, local governments, businesses, and nonprofits. The  
            financial incentives are designed to reward homeowners who  
            address energy efficiency needs through a comprehensive "whole  
            house" approach.  Depending on their improvement needs and  
            budget, homeowners can choose between various incentives -  
            typically upgrades such as air sealing, attic insulation, and  
            duct sealing must be combined with upgrades to wall, floor,  
            and duct insulation and/or heating and cooling equipment.


          5)Energy assessments and ratings:  An energy assessment examines  
            energy saving opportunities in a particular building, in order  
            to define potential upgrades.  Ratings are used to compare the  
            energy efficiency of one building to others based on standard  
            assumptions of occupant behavior.  A variety of software tools  
          ---------------------------


          <2> California Energy Commission. Comprehensive Energy  
          Efficiency Program for Existing Buildings.  
          http://www.energy.ca.gov/ab758
          <3> California Energy Commission. AB 758 Pilots.  
          http://www.energy.ca.gov/ab758/pilot-programs.html
          <4> Energy Upgrade California.  http://energyupgradeca.org/en/  








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            are available to perform assessments and ratings, and some  
            contractors have created proprietary in-house tools.  These  
            methods involve inputting information about a building into a  
            building energy simulation program and running the program to  
            predict energy use.  Examples of modeling software that  
            estimate energy usage include EnergyPro, Home Energy Saver  
            (HES), and Home Energy Efficient Design (HEED). 


          6)Both anecdotal evidence and controlled studies have raised  
            concerns about the accuracy of energy analysis software.<5>  
            Generally, it has been observed that software-based energy  
            analysis of inefficient existing homes tends to over-predict  
            pre-retrofit energy use and retrofit energy savings. For  
            example, a recent report found that modeling software  
            consistently overestimated the energy use of each home.<6>  
            Modeled pre-retrofit annual energy use was compared with  
            actual billing data for 30 jobs, showing: 


             a)   Mean modeled total annual use was 40% greater than  
               billed use.
             b)   Mean modeled annual kilowatt hour use was 56-68% greater  
               than billed use.


             c)   Mean modeled annual gas use was 39-43% greater than  
               billed use.


            The same study found that estimates prepared by the EnergyPro  
            and eQUEST software were significantly different from each  
            other and overestimated energy use. 

            --------------------------
          <5> National Renewable Energy Laboratory. Assessing and  
          Improving the Accuracy of Energy Analysis for Residential  
          Buildings  http://www.nrel.gov/docs/fy11osti/50865.pdf  
          <6> 2010-2012 PG&E and SCE Whole House Retrofit Program Process  
          Evaluation Study.










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            Another study compared software-based energy use projections  
            for 192 existing homes to actual energy bills and calculated  
            the percent errors.<7> SIMPLE had a mean absolute percent  
            error of 25.1%, compared to HES-Full with 33.4%, REM/Rate with  
            43.7%, and HES-Mid with 96.6%.  In other words, SIMPLE  
            predicted energy use on average within plus or minus 25.1% of  
            actual use.


            It has been recommended that a study compare model results to  
            pre- and post-upgrade utility bills.  This could determine the  
            accuracy of each software program relative to the particular  
            measure, and establish the steps needed to calibrate the  
            models to the actual use.  The National Renewable Energy  
            Laboratory has begun to identify, investigate, and correct  
            input and software issues.<8> 


            The CEC agrees that "simulation results should be calibrated  
            to actual energy usage to help homeowners understand how their  
            investment will likely affect their energy use if their  
            occupant behavior remains the same after improvements are  
            installed."<9>


          7)Consumer Protection:  Homeowners are encouraged to address  
            energy efficiency depending on their improvement needs.   
          ---------------------------
          <7> Energy Trust of Oregon. Energy Performance Score 2008 Pilot.  
           http://www.earthadvantage.org/assets/documents/EPSPilotReport_200 
          8.pdf  
          <8> National Renewable Energy Laboratory. Assessing and  
          Improving the Accuracy of Energy Analysis for Residential  
          Buildings  http://www.nrel.gov/docs/fy11osti/50865.pdf  
          <9> California Energy Commission. Comprehensive Energy  
          Efficiency Program For Existing Buildings Scoping Report, August  
          2012.  
           http://www.energy.ca.gov/2012publications/CEC-400-2012-015/CEC-40 
          0-2012-015.pdf  










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            However, projected energy savings compared to actual energy  
            bills studied had a margin of error of roughly 25%.   
            Therefore, consumers are likely investing in home improvements  
            to increase energy efficiency without accurate information  
            regarding the actual impact on their energy bill.  This  
            discrepancy between projected and actual energy savings could  
            have an exacerbated negative financial impact on households  
            that are middle and lower income.  The state is also a  
            consumer when government subsidies and other financial  
            incentives are invested in energy efficiency home  
            improvements.  To ensure consumers and the state are  
            appropriately investing finances in energy efficiency  
            projects, it is important to have accurate information on  
            actual energy savings resulting from these projects.
             


          8)Measuring Savings vs. Consumption: The bill requires the  
            California Energy Commission's (CEC) biennial energy policy  
            report to include a comparison of actual energy savings and  
            the models or projections used to validate the Home Energy  
            Efficiency Rating program. 



          9)Suggested Amendments: 



            It may be difficult to measure energy savings with validity  
            considering energy consumption fluctuates based on various  
            factors independent of energy efficiency technologies in a  
            home such as climate changes, changes in family life, or  
            changes in time spent in the home.   
















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             The author may wish to consider an amendment that would  
            require the CEC to include in their biennial report a  
            comparison of the models or projections used to qualify the  
            rating program to actual energy consumption as opposed to  
            actual savings to better define what is being measured.  


            SECTION 1.
            Section 25942 of the Public Resources Code is amended to read:

            25942.
             (a) On or before July 1, 1995, the commission shall establish  
            criteria for adopting a statewide home energy rating program  
            for residential dwellings. The program criteria shall include,  
            but are not limited to, all of the following elements:
            (1) Consistent, accurate, and uniform ratings based on a  
            single statewide rating scale.
            (2) Reasonable estimates of potential utility bill savings,  
            and reliable recommendations on cost-effective measures to  
            improve energy efficiency.
            (3) Training and certification procedures for home raters and  
            quality assurance procedures to promote accurate ratings and  
            to protect consumers.
            (4) In coordination with home energy rating service  
            organization databases, procedures to establish a centralized,  
            publicly accessible, database that includes a uniform  
            reporting system for information on residential dwellings,  
            excluding proprietary information, needed to facilitate the  
            program. There shall be no public access to information in the  
            database concerning specific dwellings without the owner's or  
            occupant's permission.
            (5) Labeling procedures that will meet the needs of home  
            buyers, homeowners, renters, the real estate industry, and  
            mortgage lenders with an interest in home energy ratings.
            (b) The commission shall adopt the program pursuant to  
            subdivision (a) in consultation with representatives of the  
            Department of Real Estate, the Department of Housing and  
            Community Development, the Public Utilities Commission,  
            investor-owned and municipal utilities, cities and counties,  











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            real estate licensees, home builders, mortgage lenders, home  
            appraisers and inspectors, home energy rating organizations,  
            contractors who provide home energy services, consumer groups,  
            and environmental groups.
            (c) On and after January 1, 1996, no home energy rating  
            services may be performed in this state unless the services  
            have been certified, if such a certification program is  
            available, by the commission to be in compliance with the  
            program criteria specified in subdivision (a) and, in  
            addition, are in conformity with any other applicable element  
            of the program.
            (d) On or before July 1, 1996, the commission shall consult  
            with the agencies and organizations described in subdivision  
            (b), to facilitate a public information program to inform  
            homeowners, rental property owners, renters, sellers, and  
            others of the existence of the statewide home energy rating  
            program adopted by the commission.
            (e) The commission shall, as part of the integrated energy  
            policy report prepared pursuant to Section 25302, report on  
            the progress made to implement a statewide home energy rating  
            program. The report shall include an evaluation of the energy  
            savings attributable to the program, a comparison of actual  
            energy  savings   consumption  and the models or projections used  
            to qualify the rating program, and a recommendation concerning  
            which means and methods will be most efficient and  
            cost-effective to induce home energy ratings for residential  
            dwellings.

          REGISTERED SUPPORT / OPPOSITION:




          Support




          None on file. 











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          Opposition




          None on file. 




          Analysis Prepared by:Darion Johnston / U. & C. / (916) 319-2083