BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       SB 1414|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  SB 1414
          Author:   Wolk (D), et al.
          Amended:  4/12/16  
          Vote:     21 

           SENATE ENERGY, U. & C. COMMITTEE:  9-1, 4/19/16
           AYES:  Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire,  
            Pavley, Wolk
           NOES:  Gaines
           NO VOTE RECORDED:  Morrell

           SENATE APPROPRIATIONS COMMITTEE:  5-1, 5/27/16
           AYES:  Lara, Beall, Hill, McGuire, Mendoza
           NOES:  Nielsen
           NO VOTE RECORDED:  Bates

           SUBJECT:   Energy


          SOURCE:    Author


          DIGEST:  This bill directs the California Energy Commission  
          (CEC) to develop a system to track central heating and air  
          cooling equipment sales and installations to verify compliance  
          with permitting and other requirements.  This bill also  
          prohibits an investor-owned utility (IOU) from paying out a  
          rebate or incentive for energy efficiency upgrades unless the  
          recipient proves closure of regulatory permitting and compliance  
          with any requirements of the state's building standards for  
          energy efficiency.

          ANALYSIS:  








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          Existing law:
          
          1)Authorizes the State Building Standards Commission to review  
            and approve building construction standards proposed by state  
            agencies, resolve conflict, duplication, and overlap in  
            construction standards, and ensure highly consistent  
            construction standards among state and local jurisdictions.   
            (Health and Safety Code §18930)

          2)Requires the CEC to adopt energy efficiency regulations  
            applicable to new construction and remodeling of residential  
            and commercial buildings.  (Public Resources Code  
            §25402(b)(1))

          3)Establishes within the Department of Consumer Affairs the  
            Contractors State License Board (CSLB) and requires the CSLB  
            to license and regulate California's construction contractors,  
            investigate complaints against licensed and unlicensed  
            contractors, issue citations, suspend or revoke licenses, and  
            seek administrative, criminal, and civil sanctions against  
            violators.  (Business and Professions Code §7000)

          4)Specifies construction work for which a contractor or building  
            owner is required to obtain a permit from local building  
            officials and requires inspections to ensure that the work  
            complies with regulations, including energy efficiency  
            regulations. (Business and Professions Code §7030)

          5)Requires any rebates or incentives offered by an IOU for an  
            energy efficiency improvement or installation of energy  
            efficient components, equipment, or appliances in buildings be  
            provided only if the recipient of the rebate or incentive  
            certifies that the improvement or installation has complied  
            with any applicable permitting requirements and, if a  
            contractor performed the installation or improvement, that the  
            contractor holds the appropriate license for the work  
            performed.  (Public Resources Code §399.4(b)(1))

          This bill:

          1)Requires CEC, in consultation with CSLB, local building  
            officials, and other stakeholders, to develop a system to  
            track central heating and air cooling equipment sales and  







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            installations, statewide, to verify compliance with  
            permitting, inspection, and equipment testing requirements.

          2)Conditions the provision of any rebate or incentive offered by  
            an IOU for energy efficiency upgrades upon the recipient  
            providing proof of permit closure and certification of  
            compliance with California's energy efficiency building  
            standards.

          Background

          California's air conditioners use a lot of energy; unpermitted  
          installations might be rampant.  Air conditioning use is common  
          in California.  Today, 95 percent of new homes built in  
          California include central air conditioning.  Our homes are  
          bigger than they once were, too.  As a result, it took seven  
          times as much energy to power California's air conditioners in  
          2008 as it did in 1970.  Much of the need to power our air  
          conditioners came at times of peak system demand, traditionally  
          the most costly, most polluting times to supply electric power.   
          Yet, according to a document jointly issued by the CEC and the  
          California Public Utilities Commission, as of 2008, fewer than  
          10 percent of HVAC [heating, ventilation, and air conditioning]  
          systems obtained legally required pre-installation local  
          building permits; 30-50 percent of new central air conditioning  
          systems were not being properly installed, leading to a 20-30  
          percent increase in peak energy needed cool the state's  
          buildings.  [California Energy Efficiency Strategic Plan January  
          2011 Update (http://www.energy.ca.gov/ab758/documents  
          /CAEnergyEfficiency StrategicPlan_Jan2011.pdf).]  The state  
          energy agencies conclude the installation of cooling systems  
          without proper permitting "represents a huge lost opportunity  
          for energy savings."  

          This bill attempts to provide a method for filling this  
          information gap.  This bill requires CEC, in consultation with  
          CSLB, local building officials, and other stakeholders, to  
          develop a system to track central heating and air cooling  
          equipment sales and installations, statewide.  This bill  
          explicitly state's the purpose of the system to be developed by  
          CEC:  to verify compliance with permitting, inspection, and  
          equipment testing requirements.

          Rebates for bad actors?  Current law makes certain requirements  







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          of any rebate or incentive offered by an IOU for energy  
          efficiency upgrades.  One common type of project for which IOUs  
          offer rebates or incentives is HVAC installation.  Relevant to  
          this bill, current law requires that, before an IOU provide a  
          recipient with the rebate or incentive, the recipient certify  
          (1) the improvement or installation complies with any applicable  
          permitting requirements and (2) if a contractor performed the  
          installation or improvement, that the contractor holds the  
          appropriate license for the work performed.  This bill modifies  
          this process in that it newly requires an applicant for an IOU  
          rebate or incentive, in addition to the certification described  
          above, (1) to provide proof of closure of the permit for the  
          project and (2) to certify that the project or installation  
          complies with any specifications or requirements in Title 24 of  
          the California building code (the code section that includes the  
          CEC's building energy efficiency standards).

          Related/Prior Legislation
          
          AB 1918 (Williams, 2014) would have required the CEC, along with  
          stakeholders, to identify and implement methods to simplify  
          processes and procedures related to compliance with Title 24  
          energy efficiency building standards.  It also would have  
          required CPUC to design an enforcement program to provide  
          technical and financial assistance to local governments to  
          improve HVAC compliance with the permitting process.  The bill  
          died in the Senate Appropriations Committee.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee:


           Unknown, but significant, one-time costs (Energy Resources  
            Programs Account) to the CEC develop the tracking system.


           Ongoing costs of $1.3 million (Energy Resources Programs  
            Account) to the CEC for staff and system maintenance.









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          SUPPORT:   (Verified5/27/16)


          Building Owners & Managers Association of California
          California Apartment Association
          California Building Industry Association
          California Building Officials
          California Business Properties Association
          California Retailers Association
          California State Pipe Trades Council
          Center for Sustainable Energy
          International Council of Shopping Centers
          NAIOP of California, the Commercial Real Estate Association
          Sierra Club California
          The Utility Reform Network
          U.S. Green Building Council, California
          Western States Council of Sheet Metal Workers


          OPPOSITION:   (Verified5/27/16)


          Pacific Gas and Electric Company
          San Diego Gas & Electric Company
          Silver Shield Heating & Air Conditioning
          Southern California Gas Company

          ARGUMENTS IN SUPPORT:   According to the author, "Program  
          Administrators (PAs) of energy efficiency programs funded by the  
          ratepayers of California's three IOUs do not currently require  
          program participants to demonstrate proof of code compliance to  
          be eligible for ratepayer incentives. PAs also claim a large  
          portion of their energy efficiency savings from code compliance.  
          Research shows that code compliance is low and that the full  
          energy efficiency savings from code are not being captured.   
          This requirement would close this loop and ensure that ratepayer  
          funds are spent on code-compliant projects."

          ARGUMENTS IN OPPOSITION:Representatives of the IOUs contend this  
          bill adds unknown, but potentially significant, administrative  
          complexity and cost to the energy efficiency rebate programs.


          Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107







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          5/28/16 16:46:12


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