BILL ANALYSIS
AB 2614
Page 1
Date of Hearing: April 12, 2010
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2614 (Perez) - As Amended: February 19, 2010
SUBJECT : Energy: home retrofit: federal program.
SUMMARY : Requires the California Energy Commission (CEC) to
facilitate a program created by the federal government that
provide energy efficiency retrofits and workforce training in
the energy efficiency industry. Specifically, this bill :
1)Requires the CEC to facilitate any energy-related activities
or programs created by the federal government pursuant to an
expansion of the American Reinvestment and Recovery Act of
2009 (Recovery Act).
2)Upon enactment of the Retrofit for Energy and Environmental
Performance program (REEP), requires the CEC, in consultation
with the U.S. Department of Energy (DOE) to develop a program
implementing the REEP program in California.
3)Requires the CEC, in developing the program, to ensure
participation of stakeholder representing various interests
and ensure the appropriate level of governmental coordination
for efficient implementation of the program.
4)Requires the program to, among other things, to ensure that
building retrofits are properly performed, provide for
accountability, ensure the projected energy savings are
realized, and provide incentives to contractors to invest in
training and a certified workforce.
EXISTING LAW :
1)Requires the CEC 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.
2)Requires the CEC to establish criteria for adopting a
statewide home energy rating program for residential
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dwellings, and requires the 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 (CPUC),
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.
3)Requires the PUC to have each electrical corporation identify
a separate rate component to collect revenue to fund
cost-effective energy efficiency and conservation activities.
4)AB 2021 (Levine) Chapter 734, Statutes of 2006, requires all
electric and natural gas utilities to meet energy efficiency
savings targets established by the CEC and the CPUC.
5)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.
6)Requires the CPUC to impose a surcharge on all natural gas
customers to fund cost-effective energy efficiency and
conservation activities.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to have California ready to implement a program as soon as the
federal government approves the financing. California is a
leader in energy efficiency. This bill will have the CEC poised
to receive and expend federal funds as soon as they are
approved, in order to deploy the resources needed to retrofit
California's structures and foster the development of marketable
skills for California's workforce at the same time.
The author goes on to state, "In his State of the Union address,
President Obama called on Congress to pass legislation that
provides incentives to homeowners to make energy efficiency
investments. This was a reference to the Home Star Program that
the White House and a bipartisan group of Congressional leaders
had been working to develop. The federal Home Star bill
establishes an extensive national incentive and financing
program for home energy audits and retrofits. The program will
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result in direct savings to homeowners (between $200-500
annually) on their energy bills, reductions in energy
consumption and greenhouse gas emissions as well as the creation
of thousands of jobs.
"With unemployment rates in the construction sector of our
nation's economy nearing 25%, the Home Star program will help to
spur economic activity across a wide range of industry sectors -
home improvement contracting and installation, energy efficient
product manufacturing, and energy efficiency technology research
and development.
"Federal Home Star is projected to be a $6 Billion program, with
$3.6 Billion designated for the Silver Star component that
provides simple energy efficient upgrades and $1.8 Billion for
the Gold Star component that provides for more comprehensive
energy retrofits. Under this program, over 3.3 million homes
are expected to be upgraded and more than 168,000 jobs created.
"AB 2614 will ensure that California stands ready to maximize
all the tools under the Home Star Program as well as facilitate
coordination with other state and local energy efficiency
activities, particularly those administered by the California
Energy Commission and the state's public and private utilities.
Every house that is upgraded or retrofitted will mean more
dollars in a family's wallet through lower electricity bills,
more good paying service jobs for the installers and inspectors,
new manufacturing jobs for Californians, and a lessening of our
dependence on foreign oil."
1) Background: The CEC developed the Home Star proposal to
implement legislation that is included in the American Clean
Energy and Security Act passed by the House of Representatives
and in the Building Efficiency title of American Clean Energy
Leadership Act reported out by the Senate Energy and Natural
Resources Committee. Additional measures are drawn from leading
state and local programs. This program also builds on
investments made in the Recovery Act, and on executive actions
taken as a result of the Vice President's Recovery through
Retrofit Program. The Home Star initiative builds on existing
policies and initiatives that have already demonstrated
effectiveness and won widespread support from construction
contractors, building products and mechanical manufacturers,
retail sales businesses, environmental and energy efficiency
groups and labor advocates.
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The Home Star Energy Retrofit Act of 2010 (S.3177) was
introduced in the Senate on March 25, 2010. This program is
endorsed by the President's Economic Recovery Advisory Board.
S.3177 calls for an extensive national incentive and financing
program for home energy retrofits. In addition to providing
incentives for American homeowners to undertake energy-saving
upgrades, the bill intends to stimulate the home improvement
contracting and energy efficiency industries, as well as,
research and development of energy efficient technologies. This
is an initiative to create jobs in existing industries by
providing strong short-term incentives for energy efficiency
improvements in residential buildings. According to the Home
Star program, this has the potential to jumpstart our economic
recovery by boosting demand for energy efficiency products and
installation services.
The Home Star program is intended to help middle-class families
save hundreds of dollars a year in energy costs while improving
the comfort and value of their homes. In addition, the program
is intended to reduce the dependence on oil and support the
development of an energy efficiency services sector in our
economy.
The program is intended to result in the creation of tens of
thousands of jobs while achieving substantial reductions in
energy use - the equivalent of the entire output of three
coal-fired power plants each year. Consumers in the program are
anticipated to save between $200 - $500 per year in energy
costs, while improving the comfort and value of their homes.
Key components of the Home Star Program include:
(A) Rebates delivered directly to consumers: Like the Cash
for Clunkers program, consumers or homeowners would be
eligible for direct Home Star rebates at the point of sale
for a variety of energy-saving investments in their homes.
A broad array of vendors, from small independent building
material dealers, large national home improvement chains,
energy efficiency installation professionals and utility
energy efficiency programs (including rural utilities)
would market the rebates, provide them directly to
consumers and then be reimbursed by the federal government.
Home Star provides two types of consumer incentives: $1,000
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- $1,500 Silver Star Rebates. Homeowners looking to have
simple upgrades performed in their homes would be eligible
for 50% rebates up to $1,000 - $1,500 for doing any of a
straightforward set of upgrades, including: insulation,
duct sealing, water heaters, HVAC units, windows, roofing
and doors, or $250 per appliance. Under Silver Star,
homeowners can chose a combination of upgrades for rebates
up to a maximum of $3,000 per home. Rebates would be
limited to the most energy efficient categories of
upgrades-focusing on products made primarily in the United
States and installed by certified contractors. The
legislation, if implemented at the federal and state level,
will utilize existing standards for qualifying products at
a level sufficient to significantly increase consumers
demand for highly energy efficient building materials and
mechanical systems.
(B) $3,000 Gold Star Rebates: Homeowners interested in more
comprehensive energy retrofits would be eligible for a
$3,000 rebate for a whole home energy audit and subsequent
retrofit tailored to achieve a 20% energy savings in their
homes. Homeowners could receive additional rebate amounts
for energy savings in excess of 20%. Gold Star would build
on existing whole home retrofit programs, similar to the
U.S. Environmental Protection Agency's Home Performance
with Energy Star program. According to the Home Star
Program, this performance path represents the future of
home efficiency: state-of-the-art building science is used
to identify problems, present solutions and deliver
verifiable energy savings, generating confidence among
homeowners and investors alike. The technology-neutral
approach is based on performance, not specific products, so
market forces will direct funds to solutions that achieve
the best results.
2) Oversight of installations : The program would require that
contractors be certified to perform efficiency installations.
Independent quality assurance providers would conduct field
audits after work is completed to ensure proper installation so
consumers receive energy savings from their upgrades. States
would oversee the implementation of quality assurance to ensure
that the program was moving the industry toward more robust
standards and comprehensive energy retrofit practices.
3) Financing : The program would include support to State and
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local governments to provide financing options for consumers
seeking to make efficiency investments in their homes. This
will help ensure that consumers can afford to make these
investments.
If enacted, estimated program costs at the federal level would
be $9.6 billion and should be allocated to Home Star during the
first year. Of that amount, $3 billion should be set aside for
Gold Star incentives. While Home Star is envisioned as a
time-limited program, the Gold Star path is suggested to be
continued beyond the first year as a bridge to permanent
residential energy efficiency programs established by existing
federal energy and climate legislation.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Crystal Quezada/ U. & C. / (916)
319-2083