BILL ANALYSIS �
AB 1850
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Date of Hearing: April 23, 2012
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1850 (Calderon) - As Amended: March 29, 2012
SUBJECT : Energy: appliance efficiency
SUMMARY : Makes various changes to the requirements relating to
the adoption of energy efficiency standards for appliances by
the California Energy Commission's (CEC).
EXISTING LAW :
1)Requires CEC to adopt regulations describing the standards for
minimum levels of energy efficiency for appliances using a
significant amount of energy.
2)Establishes that CEC require the use of product labeling, not
preempted by federal law, in order to promote the use of
energy efficient appliances so long as it does not result in
added cost for consumers.
3)Authorizes CEC to adopt an administrative enforcement process,
including civil penalties, for violations of its appliance
efficiency standards.
THIS BILL :
1)Prohibits CEC from adopting appliance efficiency standards
unless it finds that less restrictive, non-regulatory, or
regulatory alternatives are not feasible. Specifies that CEC
shall prescribe the standards only if it finds that these
standards do not harm employment, competition, consumer
choice, or product innovation and utility, and if the
standards do not "significantly" affect retail prices and do
not burden small- and medium-sized businesses, competition,
and interstate and intrastate commerce.
2)Specifies that the CEC may prescribe other cost-effective
measures if they are "technologically feasible," that are
"designed to minimize compliance burdens."
3)Specifies that efficiency standards go into effect not sooner
than two years (as opposed to one year in current law) after
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adoption or revision.
4)Requires that CEC determine the expertise, objectivity, and
independence of consultants retained for purposes of
developing the standards
5)States that when determining cost-effectiveness over the
life-cycle of an appliance for standards that become effective
on or after January 1, 2013, CEC shall use "interest rates
that are applicable to consumer financing and shall use the
average life of the product before replacement.
6)Requires CEC, before adopting standards for consumer
electronics and information technology equipment, to conduct
an additional analysis that evaluates the need and priority
for those standards, prioritizes standards with a payback of
three years or less, and takes into account whether or not
payback is measured under the applicable test procedures, the
energy use of those products, and their functions that
decrease energy use through activities such as Internet
commerce, online meetings, telework, and the use of smart grid
technology. Requires CEC to makes specific findings that the
standards do not burden or adversely impact these functions or
activities.
7)In addition to sales information, requires CEC to treat
confidential or proprietary business information as
confidential and specifies that this information is not a
public record.
8)Requires CEC to "rely on the most current data available, and
wherever feasible, rely on data no older than one year prior
to the commencement of the formal rulemaking."
FISCAL EFFECT : Unknown
COMMENTS :
1)Background : The Warren-Alquist State Energy Resources
Conservation Act establishes that CEC adopt regulations
describing the standards for minimum levels of efficiency for
appliances that use a significant amount of energy or water.
These regulations include standards for both
federally-regulated appliances and non-federally-regulated
residential and commercial appliances including water heaters,
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clothes washers, dishwashers, traffic signals, lighting, and
heat and air conditioning systems to be sold in California.
Regulations adopted by CEC in this manner aim to achieve
significant energy savings state-wide that are feasible,
attainable, and do not result in added costs to the consumer
for the estimated lifetime of the regulated appliance.
Prior to January 1 of this year, CEC did not have the
authority to establish administrative civil penalties for
violations of appliance efficiency standards. Chapter 591,
Statutes of 2011 (SB 454, Pavley) authorized CEC to establish
an administrative enforcement process. A 2009 survey of
appliance efficiency standards compliance conducted by the
Heschong Mahone Group for CEC found that approximately half of
the appliances sold in California have not been properly
certified as meeting the standards.
2)This Bill : According to the author, "AB 1850 seeks to improve
the regulatory framework supporting energy efficiency with
respect to CEC and its focus on energy efficiency through
appliance efficiency standards. CEC's authority regarding
appliance efficiency standards has not changed significantly
in more than 30 years, but the energy-using product and
equipment landscape certainly has." The author states that
this bill provides "needed checks and balances, flexibility,
policy choice opportunities, and needed consideration of
economic impacts for today's competitive marketplace."
3)Arguments in Support : Supporters of this bill state that CEC
recently announced its intention to establish "additional and
questionable" standards for several product and equipment
categories, including game consoles, computers, servers, and
displays. They go on to say, "as we work together to advance
energy efficiency, we must improve the appliance efficiency
standards process while avoiding additional, unnecessary
layers of regulation that hamper California businesses in a
challenging economy."
4)Arguments in Opposition : Opponents of this bill point out
that appliance efficiency standards can only be adopted after
they have undergone "an extensive public process and only if
they deliver demonstrable energy savings and pass strict cost
effectiveness tests. These standards have saved Californians
nearly $30 billion since 1990." They list four reasons for
their opposition:
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a) The bill shifts focus from standards to voluntary
programs.
b) The bill requires CEC to use customer financing rates in
determining cost effectiveness, which assumes that
consumers purchase appliances on credit and pay credit card
interest rates. This would "grossly inflate the
incremental cost of CEC's proposed energy saving
standards." No other agency uses this method for
determining cost effectiveness.
c) The bill doubles the time between adoption and effective
date for standards, from one year to two years.
d) The bill directs CEC to give priority to products that
have a maximum allowable pay back of 3 years or less.
However, many large appliances with much longer useful
lives have the greatest potential for energy savings over
the life of the product.
REGISTERED SUPPORT / OPPOSITION :
Support
California Retailers Association
Consumer Electronics Association
Custom Electronic Design & Installation Association
CTIA - The Wireless Association
National Electrical Manufacturers Association
Power Tool Institute
Satellite Broadcasting & Communications Association
Telecommunications Industry Association
Toy Industry Association
Opposition
American Lung Association in California
Blue Green Alliance
Breathe California
Natural Resources Defense Council
Sierra Club California
Seventh Generation Advisors
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Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092