BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1414| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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: SB 1414 Page 2 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 SB 1414 Page 3 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 SB 1414 Page 4 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. SB 1414 Page 5 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 SB 1414 Page 6 5/28/16 16:46:12 **** END ****