BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1414|
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UNFINISHED BUSINESS
Bill No: SB 1414
Author: Wolk (D), et al.
Amended: 8/19/16
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
SENATE FLOOR: 30-9, 5/31/16
AYES: Allen, Anderson, Beall, Block, Cannella, De León,
Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill,
Hueso, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza,
Mitchell, Monning, Moorlach, Nguyen, Pan, Pavley, Roth,
Wieckowski, Wolk
NOES: Bates, Berryhill, Fuller, Gaines, Huff, Morrell,
Nielsen, Stone, Vidak
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR: 79-1, 8/23/16 - See last page for vote
SUBJECT: Energy
SOURCE: Author
DIGEST: This bill directs the California Energy Commission
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(CEC) to approve a plan that will promote the installation of
central air conditioning and heat pumps in compliance with Part
6 of Title 24 of the California Code of Regulations, and
authorizes the CEC to adopt regulations consistent with the
approved plan. 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.
Assembly Amendments delete the requirement that CEC develop a
system to track central heating and air cooling equipment sales
and installations to verify compliance with permitting and other
requirements and instead require CEC to approve a plan and
authorize CEC to adopt regulations, as described above.
ANALYSIS:
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
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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)Directs CEC, in consultation with CSLB, local building
officials, and other stakeholders, to approve a plan that will
promote the installation of central air conditioning and heat
pumps in compliance with Part 6 of Title 24 of the California
Code of Regulations, and authorizes the CEC to adopt
regulations consistent with the approved plan.
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
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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 to capitalize on this
opportunity for energy savings. This bill directs CEC, in
consultation with CSLB, local building officials, and other
stakeholders, to approve a plan to promote the installation of
central air conditioning and heat pumps in compliance with Part
6 of Title 24 of the California Code of Regulations. The bill
also authorizes CEC to adopt regulations in keeping with the
approved plan.
Rebates for bad actors? Current law makes certain requirements
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 may provide
a recipient with the rebate or incentive, the recipient must
certify (a) the improvement or installation complies with any
applicable permitting requirements and (b) if a contractor
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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, (a) to provide proof of closure of the permit
for the project and (b) 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).
A project or upgrade that receives incentives from an IOU
because of energy efficient characteristics of the project or
upgrade should comply with the CEC's building energy efficiency
standards: energy efficiency is the rationale for the
incentive. And it is not burdensome for an applicant to
self-certify that the project or upgrade complies with CEC's
standards: this mirrors the exiting process for self-certifying
that a qualified contractor performed the work. This bill,
however, introduces a new aspect to the rebate or incentive
procedure - proof that the permit for a project has been closed.
HVAC installation requires a permit by a local building permit
agency. Upon approval, an HVAC installation receives a permit
from the local agency. That permit remains "open" until the
completed project is inspected by a certified technician, who
confirms the HVAC system is installed properly, at which point
the permit is said to be closed.
As noted above, the author's office has provided evidence that
many HVAC systems are installed without a permit. According to
the author's evidence, many permits for HVAC installations
remain "open," meaning the local building permit agency has no
confirmation the installation underwent final inspection to
ensure performance. This bill seeks to better ensure that
entities seeking IOU energy efficiency rebates or incentives for
HVAC installations undergo final inspection for performance, as
reflected in proof of a permit's closure.
Requiring proof of permit closure makes sense. It is
inappropriate for the IOUs to provide energy efficiency rebates
- paid for by IOU ratepayers - for improperly permitted energy
efficiency projects. The requirement is also consistent with a
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recent recommendation by the Little Hoover Commission (LHC),
that administrators of tax-payer-funded rebate programs require
applicants provide proof that legal requirements have been met
before awarding rebates. [Level the Playing Field: Put
California's Underground Economy Out of Business, LHC, March
2015.] The rationale behind the LHC recommendation applies just
as well to ratepayer-funded rebate programs.
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 the California Public Utilities Commission (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 Committee
on Appropriations.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Committee on Appropriations:
Increases CEC costs of approximately $650,000 for the first
two years, then annual costs of approximately $400,000 per
year to prepare and implement the plan (special fund).
Increases CPUC costs of approximately $150,000 per year
(special fund).
SUPPORT: (Verified8/23/16)
Air-conditioning and Refrigeration Contractors Association
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Air-conditioning Sheet Metal Association
Building Owners & Managers Association of California
California Apartment Association
California Building Industry Association
California Building Officials
California Business Properties Association
California Chapters of the National Electrical Contractors
Association
California Legislative Council of the Plumbing, Heating & Piping
Industry
California Retailers Association
California State Pipe Trades Council
Center for Sustainable Energy
Environmental Defense Fund
International Council of Shopping Centers
NAIOP of California, the Commercial Real Estate Association
Retail Industry Leaders Association
Sierra Club California
The Utility Reform Network
U.S. Green Building Council, California
Western States Council of Sheet Metal Workers
OPPOSITION: (Verified8/23/16)
None received
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."
ASSEMBLY FLOOR: 79-1, 8/23/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
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Page 8
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez,
Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,
Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes,
McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
NOES: Gallagher
Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
8/23/16 20:03:03
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