BILL ANALYSIS
AB 2014
Page 1
Date of Hearing: May 3, 2010
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2014 (Torrico) - As Amended: April 8, 2010
SUBJECT : Income taxes: credits: energy efficient homes
SUMMARY : Authorizes homeowners to receive a tax credit for
costs associated with a home energy audit and home improvements
made pursuant to the audit.
EXISTING LAW :
1)Requires the California Energy Commission (CEC) to establish
criteria for adopting a statewide home energy rating program
for residential dwellings, and requires CEC to adopt the
program in consultation with representatives of the Department
of Real Estate, the Department of Housing and Community
Development, the California Public Utilities Commission (PUC),
investor-owned and municipal utilities, cities and counties,
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.
2)Requires PUC to have each electrical corporation identify a
separate rate component to collect revenue to fund
cost-effective energy efficiency and conservation activities.
3)Requires all electric utilities, in procuring energy, to first
acquire all available energy efficiency and demand reduction
resources that are cost effective, reliable, and feasible.
4)Requires PUC to impose a surcharge on all natural gas
customers to fund cost-effective energy efficiency and
conservation activities.
5)Requires CEC to establish a regulatory proceeding to develop
and implement a comprehensive program to achieve energy
savings in existing residential and commercial building stock
that fall significantly below the current Title 24 building
standards.
THIS BILL :
AB 2014
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1)On and after January 1, 2010, allows a tax credit for an
energy audit of a taxpayer's principal residence and energy
efficiency improvements recommended in the audit.
2)Specifies that the credit is 50 percent of the qualified costs
or $1,500, whichever is less.
3)Defines "qualified costs" as costs incurred for the repair,
rehabilitation, or improvement of a qualified principal
residence in compliance with the recommendations of the energy
audit.
4)If the credit exceeds the taxpayers "net tax" (as defined in
RTC 17039), allows the excess to be carried over into future
years.
FISCAL EFFECT : Unknown
COMMENTS : According to the author, this bill is intended to
"encourage energy audits and improvements to existing building
stock that will help reduce greenhouse gas (GHG) emissions. In
addition, this bill will help create much needed jobs in the
energy efficiency, green construction, and the home improvement
fields."
California's actions on building energy efficiency : State
energy policy prioritizes energy efficiency to reduce energy
usage, which diminishes the need for new power plants and
transmission lines. Energy efficiency measures are an
inexpensive alternative to investment in infrastructure and
reduce the proliferation of GHG emissions.
The state's Energy Action Plan (prepared by CEC and PUC) and the
Integrated Energy Policy Report (prepared by CEC) encourage the
state to meet energy efficiency goals. These reports also call
for the combination of on-site energy generation (such as solar
photovoltaics) and energy efficient buildings to reduce overall
energy usage so that newly constructed buildings are zero net
energy by 2020 for the residential sector and by 2030 for the
commercial sector.
The Climate Action Team's report, Climate Action Team Report to
the Governor and the Legislature, identifies strategies to
reduce GHG emissions that include continued implementation of
AB 2014
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the Green Building Initiative and energy efficiency standards
for state buildings. The report indicates that every dollar
spent on energy efficiency provides about two dollars in
benefits. The AB 32 Scoping Plan, approved in December 2008,
includes zero net energy goals for new and existing homes and
commercial buildings. However, the Plan states that these goals
should be "percent of zero net energy" targets. The Plan also
notes that retrofitting existing residential and commercial
buildings would achieve substantial GHG emission reductions.
The Legislature directed CEC to develop a statewide estimate of
all potentially achievable cost-effective electricity and
natural gas efficiency savings and establish statewide annual
targets for energy efficiency savings and demand reduction over
10 years (AB 2021, Levine, Chapter 734, Statutes of 2006). To
complement the legislative directives CEC, in its Integrated
Energy Policy Report, strongly supports capturing all
cost-effective efficiency savings potential and recommends
pursuing legislation that would require energy audits and
cost-effective levels of efficiency improvements at the time of
sale of a building. In addition, CEC's Report on Energy
Efficiency in Existing Buildings recommends "Time of Sale
Information Disclosure," which would require the disclosure of
home energy ratings when a house is sold. Both recommendations
are based on CEC's evaluation of the potential savings achieved
if cost-effective energy efficiency measures were applied to
existing buildings: 9 percent of statewide electricity
consumption, 11 percent of peak demand, and 5 percent of natural
gas consumption.
Pursuant to AB 758 (Skinner), Chapter 470, Statutes of 2009,
CEC is required to develop and implement a comprehensive program
to achieve greater energy savings in existing residential and
nonresidential building stock, including energy assessments,
cost-effective energy efficiency improvements, financing
options, public outreach, and education efforts.
CEC has also adopted Phase II of the Home Energy Rating System
(HERS) Program by regulation to provide energy efficiency
ratings for existing and newly constructed residential
buildings. The CEC states that the regulations establish a
systematic process for whole-house energy ratings to provide
homeowners with energy efficiency information about their homes.
The ratings also evaluate the cost-effectiveness of options to
achieve greatest possible energy efficiency gains.
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Suggested amendments : This bill does not establish standards
for the energy audit. In order to ensure consistent and
effective auditing, the committee may wish to amend the bill to
specify that the energy audit qualifying for a tax credit
complies with Phase II of the CEC's Home Energy Ratings System
Program. Because energy audits do not include requirements, the
committee may also wish to amend the bill to strike out "made
toward bringing the qualified principal residence in compliance
with the recommendations of" on page 2, lines 31 and 32, and
inserting "recommended by."
The findings section in this bill contains an incorrect
reference for AB 32 (Nunez), Chapter 488, Statutes of 2006. The
committee may wish to amend the bill to strike out page 2, lines
3 to 6, and insert:
The Legislature recently passed AB 32 (Nunez), Chapter 488,
Statutes of 2006, landmark environmental legislation that
requires California to reduce greenhouse gas emissions to
1990 levels by 2020.
Double referred : This bill is double referred and should it
pass out of this committee, it will be referred to the Assembly
Committee on Revenue and Taxation.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092