BILL ANALYSIS �
AB 1918
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Date of Hearing: April 21, 2014
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 1918 (Williams) - As Amended: March 26, 2014
SUBJECT : Central heating and air cooling equipment.
SUMMARY : This bill would require the California Public
Utilities Commission (PUC) to establish an incentive program to
improve energy efficiency compliance in regards to central
heating and air cooling equipment installation. This bill would
also create a system that tracks state sales and installations
of central heating and air cooling equipment. Specifically, this
bill :
1)Requires the California Public Utilities Commission (PUC) to
establish an incentive program for contractors and local
governments that improves verification of building code
compliance and acceptance of central heating and air cooling
equipment following installation, which may include:
a) Funding for training and certification programs for
central heating and air cooling equipment installers, local
government building officials, and school building
inspectors licensed through the Division of the State
Architect.
b) Technical and financial support to establish performance
protocols necessary to verify performance compliance of
central heating and air cooling equipment.
c) Financial or other support to assist local agencies in
offsetting costs associated with employing innovative
approaches to reduce barriers in the permitting process for
heating and cooling equipment.
2)Requires the California Energy Commission (CEC) to develop a
central heating and air cooling equipment sales tracking
system in consultation with the Contractors' State License
Board, local building officials, and other stakeholders.
EXISTING LAW
1)Authorizes the State Building Standards Commission to review
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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 State Energy Resources Conservation and
Development Commission (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 requires inspections to ensure that the work
complies with regulations, including energy efficiency
regulations. (Business and Professions Code 7030)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's statement: According to the author, "California's
standards for building efficiency are recognized as leading
the nation in energy savings and serve as one of the primary
energy policy tools that resulted in the state's per capita
energy use staying almost constant over the past 30 years,
while the rest of the United States' consumption steadily
increased.
However, the effectiveness of the standards is dependent on
compliance. Violations not only threaten energy savings, they
also result in a substantial financial loss to consumers who
purchase energy efficiency goods and services, and represent
unfair competition that dramatically impacts the viability of
legitimate business.
AB 1918 is needed to ensure that reported energy savings are
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real, consumers who purchase services for home improvement are
protected, and businesses that provide energy efficiency
services are operating on a level playing field."
2)Energy efficiency of heating, ventilating, and
air-conditioning (HVAC) systems in California. Over the last
three decades, the percentage of new homes built in California
with central air-conditioning has dramatically increased -
from 25 percent in 1976 to more than 95 percent in 2007.
Coupled with a 55 percent increase in new home size over this
same time period, total peak energy demand attributed to
residential air conditioning units has increased from 5
percent in 1976 to more than 24 percent in 2006.
In response to these concerns, in 2008 the CEC and
stakeholders created an HVAC strategic plan designed to
improve energy efficiency and reduce peak energy use of
central airconditioning systems in California.<1> The plan
defined vision for the HVAC industry, investigated options to
meet the vision, and recommended actions that can achieve the
Legislatures goal of reduced peak energy use.
The report concluded that simply improving the efficiency of
new cooling would not achieve the goal of reduced peak energy
use - in part because installations often lack quality control
and thus increase HVAC energy use by 20-30 percent, regardless
of the system's rated efficiency. This lack of quality control
has been attributed to the failure of many contractors to pull
building permits and verify quality when replacing
airconditioning systems.
The CEC claims only 10% of replacement HVAC do not meet
manufacturers quality control specifications for air flow,
refrigerant charge, and the CECs duct sealing requirements.
<2> They further state that during new construction, only 30%
of HVAC installations meet manufacturer's quality control
specifications for air flow, refrigerant charge and the CEC's
duct sealing requirements. The CEC asserts these statistics
--------------------------
<1> California Energy Commission. 2008. Strategic Plan to Reduce
the Energy Impact of Air Conditioners.
http://www.energy.ca.gov/2008publications/CEC-400-2008-010/CEC-40
0-2008-010.PDF
<2> HVAC Convener's Report. 2008.
http://www.performancealliance.org/Portals/4/Documents/CommitteeW
orkspace/AFDD/CONVENER%20HVAC%20Report%20010308.pdf
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were derived from interviews with building officials, home
energy raters (HERS), and a study of compliance rates in
residential and non-residential buildings.<3> However, the
relevant statistics in the HVAC compliance rate study could
not be located; therefore it is unknown whether the 10% and
30% compliance rates are accurate and moreover, the sample
size of these interviews could not be determined.
Consequently, it is unclear the extent to which quality
control non-compliance is an issue in regards to HVAC
installation.
Regardless, those installing HVAC systems without proper
quality control are likely less knowledgeable of and less
likely to follow building code standards. Lack of quality
control may mean permits are not pulled, and in such a case,
it is difficult to track new installations to perform
post-installation compliance inspections. When
post-installation compliance inspections cannot be completed,
energy inefficient systems may prevail, wasting energy and
money.
To address the purported non-compliance in quality control,
the HVAC strategic plan presented several recommendations. One
was to create a recognizable brand label (similar to Energy
Star) that could be used as proof of quality installation
practices. Another, the impetus for this bill, proposed to
increase the level and quality of training required of HVAC
technicians. Still another suggested reducing the cost of
pulling permits to increase the probability that contractors
will pull legally required permits.
Language in the bill declarations refer to permit
non-compliance, when the data actually refer to quality
control compliance. The author may wish to consider an
amendment that removes language related to permit compliance.
3)Title 24. Title 24 is the 24th title within the California
Code of Regulations (CCR). The CCR is divided into 28 separate
titles based on subjects or state agency jurisdiction. CCR
Title 24, published by the California Building Standards
---------------------------
<3> Statewide Codes and Standards Market Adoption and
Noncompliance Rates. 2007. Prepared for Southern California
Edison.
http://www.calmac.org/publications/Codes_and_Standards_Final_Repo
rt.pdf
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Commission, is reserved for state regulations concerning the
design and construction of buildings, associated facilities
and equipment. Title 24 is also designated the "California
Building Standards Code" by Section 18902 of the California
Health and Safety Code. The standards apply to all building
occupancies, and related features and equipment throughout the
state, contain requirements to the structural, mechanical,
electrical, and plumbing systems, and require measures for
energy conservation, green design, construction and
maintenance, fire and life safety, and accessibility.<4> Title
24 Part 6 relates to "Energy Efficiency Standards for
Residential and Nonresidential Buildings."
The CEC works closely with the Contractors State License Board
and other regulatory agencies to ensure compliance with the
Commission's regulations and standards. In a situation where
an HVAC installer does not pull the required permits, one can
report non-compliance.<5>
4)Title 24 training. The first type of incentive provided by the
bill relates to training. The CEC offers many resources to
help homeowners and building professionals comply with Title
24 standards. The Energy Standards Hotline, Online Learning
Center, Energy Videos Center, and Blueprint Newsletter all
contain relevant and valuable information. The Title 24
training section of the CEC website provides additional
educational resources and links to Title 24 classes offered by
investor- and publicly-owned utilities (IOUs and POUs)
throughout California.<6> For example, PG&E offers Title 24
training classes in San Francisco, San Jose, and Stockton.
Classes available related to HVAC include "Essentials for
Residential AC Quality Installation Contractors", "Essentials
for Small Commercial AC Quality Installation Contractors",
"HVAC System Change-Outs: Duct Testing Requirements for
Residential & Small Business", "Proper Procedures for Charging
Air Conditioners & Heat Pumps", and "Duct Installation
---------------------------
<4> CBSC. Guide to Title 24.
http://www.documents.dgs.ca.gov/bsc/Title_24/T24TrainingGuide.pdf
<5> CEC. Building Energy Efficiency Standards Enforcement.
http://www.energy.ca.gov/title24/enforcement/index.html
<6> CEC. Title 24 Training.
http://www.energy.ca.gov/title24/training/
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Standards & Diagnostic Testing".<7> Similar classes are
offered by SMUD, ConSol, San Diego Gas and Electric, and
Southern California Edison.
Current bill language would limit training to be available to
"central heating and air cooling equipment installers, local
government building officials, and school building inspectors
licensed through the Division of the State Architect". This
may exclude additional relevant stakeholders.
The author may wish to consider an amendment that makes
training available to relevant stakeholders.
Additionally, some Title 24 funding is already available.
The author may wish to consider an amendment that would allow
for additional funding for training, as necessary.
5)Performance compliance of HVAC equipment. The second type of
incentive provided by the bill relates to equipment
performance compliance. The PUC would be directed to offer
"technical and financial support to establish performance
protocols necessary to verify performance compliance of
central heating and air cooling equipment." It is unknown
which performance metrics would be utilized, and whether
performance protocols and standards are existing and
available.
6)Permitting incentives related to HVAC installation. Various
programs exist across the state to encourage residents,
builders, and businesses to adopt more sustainable
practices.<8> Two in particular may help individuals comply
with or exceed building standards. San Diego County offers the
Green Building Program, where energy efficient projects may
qualify for a reduction in building permit and plan check fees
(by 7.5%) and expedited plan checks. San Bernardino County
provides participating builders with accelerated plan review,
priority inspections, design assistance, and may waive permit
fees. Other counties, cities, and utilities offer energy
efficiency rebates that do not directly impact permit fees or
---------------------------
<7> PG&E. Energy Education Classes.
http://www.pge.com/mybusiness/edusafety/training/pec/classes/inde
x.jsp
<8> Database of State Incentives for Renewables and Efficiency.
http://www.dsireusa.org/incentives/index.cfm?state=CA
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encourage permit compliance, but many require certified
contractors (who may be more likely to comply with code and
standards) to complete the work. Various programs are in place
to encourage permitting related to solar installations,
including some that waive permit fees or "fast-track" permits.
It is unknown the extent to which decreasing permit fees or
other barriers to permits (slow processing time, excessive
paperwork, complexity of process, etc.) will encourage more
HVAC installers to comply with permit regulations and building
codes. If an individual is concerned about other parts of the
home or business that may not be in compliance with code,
he/she may forgo permitting to prevent the discovery of other
violations.
The author may wish to consider an amendment that directs the
CEC to identify and implement methods that simplify the Title
24 compliance process. In theory this could increase
permitting compliance.
7)Incentives for IOUs versus POUs. This bill would require the
PUC to establish an incentive program related to training,
performance compliance, and permitting. This program would
likely be funded by the IOUs from ratepayer dollars. Current
language does not allow for incentives or support for POUs.
8)Programs and pilots related to increasing Title 24 compliance.
The Compliance Enhancement Subprogram (CEP) is part of the
IOUs Codes and Standards Program. One of the primary
components of the CEP is the Best Practices Pilot. The IOUs
implemented the Pilot to identify how they can help building
departments improve enforcement of Title 24, Part 6 (related
to energy efficiency standards) in their jurisdictions to
ultimately increase code compliance. A limited process
evaluation found it was difficult to quantitatively measure
the effectiveness of the Pilot, and that "the logic model does
not explain how the Pilot will ultimately increase compliance
with the energy code."<9> The evaluation provided various
recommendations to improve the process and effectiveness of
the Pilot, including (1) sharing of best practices and lessons
learned; (2) identifying profiles of jurisdictions that share
---------------------------
<9> California Statewide Codes And Standards Compliance
Enhancement Subprogram 2010-2012 Pilot Process Evaluation. 2014.
http://www.calmac.org/publications/CEP-Report_FINAL_PUBLISHED.pdf
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similar gaps in their enforcement processes and developing
stock tools and resources appropriate for those groups of
jurisdictions; and more.
Another initiative, the Building Department Title 24 Training
and Process Improvement Program, was created to help "bridge
the gap from efficiency policy to successful, ontheground
compliance."<10> Seven building departments (from Berkeley,
Chula Vista, Irvine, Kern County, Oakland, San Diego, and West
Sacramento) participated in the program, sharing their
perspectives on Title 24 enforcement. Best practices and gaps
in the Title 24 enforcement process were identified; many of
the best practices were because of a Title 24 "champion"
mentality or process improvement at the local building
department, while the majority of gaps were because of a lack
of training or problems with documentation. In accordance with
the findings, pilot tools were selected for development and
implementation, including those related to process
improvement, training courses, and a marketing campaign
designed to increase permit compliance.
9)HVAC sales in California. According to the 2009 US Energy
Information Administration (EIA) Residential Energy
Consumption Survey, about 6.9 million Californians use air
conditioning equipment, while about 800,000 have it but do not
use it.<11> About 5 million use central air conditioning and 2
million use window or wall units. An estimated 900,000 have
but do not use central air or window/wall units.
It is unknown how these numbers compare to HVAC permits
pulled. To perform such a comparison, one would likely be
required to gather permit data from hundreds if not thousands
of sources (cities, counties, etc.).
The author states that "knowing how many units are sold and
who is purchasing HVAC units will help quantify the problem as
well as create a tool for targeted enforcement." It is unclear
how a state-wide HVAC sales tracking system will encourage
permit compliance or help identify unpermitted HVAC
--------------------------
<10> Title 24 Part 6 Best Practices Program.
http://energydesignresources.com/media/17556825/t24-bd-bpp-report
.pdf
<11> US Energy Information Administration 2009 Residential
Energy Consumption Survey.
http://www.eia.gov/consumption/residential/data/2009/
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installations. This also directly conflicts with the Section 1
of the bill which assumes there is a problem.
At this time the purpose and usefulness of the tracking system
is not fully developed. The Committee would like to work with
the author when a purpose and scope is identified to establish
a means to accomplish the purpose.
The author may wish to consider an amendment that removes
language related to a state-wide HVAC sales tracking system.
10)Previous legislation. AB 834 (Williams, 2013-2014) would have
expanded the CEC's administrative civil penalty enforcement
authority to include energy efficiency and water efficiency
standards for buildings. The bill was gut and amended in July
of 2013 in the Senate. SB 454 (Pavley, 2011-2012) took a
similar approach, and the language was amended out of the
bill. With a lack of support for increased enforcement, the
author is trying an incentive-based approach in this bill.
11)Support and opposition. Supporters claim the bill would
develop a process and dedicate resources to provide
information and training to allow schools to ensure HVAC
systems are properly permitted and operating as efficiently as
advertised. Other supporters state installation of HVAC
systems in existing dwellings without a building permit has
simply skyrocketed in recent years, and that there can be
serious health and safety risks associated with the
installation of these systems in absence of qualified
oversight and inspection by the local building code authority.
They further assert that there is a high probability that
non-permitted HVAC installations are being done in violation
of the CEC 's energy efficiency standards. Yet others state
improving compliance with the building energy standards'
requirements for replacement heating and cooling equipment
will reduce energy use.
12)Suggested amendments.
SECTION 1. The Legislature finds and declares all of the
following:
(a) California's building energy efficiency standards are
recognized as leading the nation in energy savings. They are
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an important component of the state's programs to manage its
energy consumption, conserve natural resources, and improve
the quality of life for all its citizens.
(b) Heating and cooling buildings is one of the largest
electricity end uses in the state and is also the single
largest contributor to peak electricity demand, comprising up
to 30 percent of total demand in the hot summer months.
(c) In the 2008 Strategic Plan to Reduce the Energy Impact of
Air Conditioners, the State Energy Resources Conservation and
Development Commission identified that a heating, ventilation,
and air conditioning system (HVAC) can increase energy use by
20 or 30 percent if it is poorly installed regardless of its
efficiency rating.
(d) Permits are required for the replacement of heating and
cooling equipment and a code official must verify installation
in compliance with the building energy efficiency standards.
The effectiveness of the building energy efficiency standards
is dependent upon the conscientious efforts of licensed
contractors in California to follow these permitting
requirements to build buildings and install components and
equipment in compliance with the standards which deliver
cost-effective energy savings to consumers.
(e) However, the State Energy Resources Conservation and
Development Commission estimates that less than 10 percent of
replacement HVAC work is performed with the proper building
permits. This underground activity denies state and local
governments license and building permit revenue and diminishes
the ability of state and local agencies to provide enforcement
services intended to protect consumers. These practices
particularly damage and diminish the potential for
conscientious compliance with the building energy efficiency
standards, as these illegal installations undermine those who
attempt to comply with the law by following the permitting
requirements.
(f) These violations result in a substantial financial loss to
consumers who purchase energy efficiency goods and services,
and represent unfair competition that dramatically impacts the
economic viability of legitimate businesses. It is critical
for California to maintain a business climate favorable to
legitimate competition, so that conscientious contractors,
manufacturers, distributors, retailers, home energy rating
system raters, and other businesses are able to sustain their
businesses against unfair competition.
( g e ) California building codes are updated regularly,
necessitating more training and education for building
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officials performing permitting, plan checking, and
inspections. Providing this education in tandem with
incentives for beyond-code performance will motivate both
local building departments and contractors to prioritize
energy efficiency performance in their day-to-day operations.
( h f ) In an effort to increase permitted activity, some local
jurisdictions have adopted practices that make it easier to
obtain permits or have implemented pilot programs to educate
and train local building staff. It is in California's best
interest to facilitate the adoption of demonstrated best
practices for local building departments across the state to
undertake to maximize compliance with building codes.
SEC. 2. Section 25402.12 is added to the Public Resources
Code, to read:
25402.12. The commission, in consultation with the
Contractors' State License Board, local building officials,
and other stakeholders, shall develop a system to track
central heating and air cooling equipment sales and
installations in the state. Any system developed by the
commission shall be adopted by regulation following one or
more public hearings. The commission, in consultation with the
Contractors' State License Board, local building officials,
and other stakeholders, shall identify and implement methods
to simplify processes and procedures related to energy
efficiency standard compliance.
SEC. 3 2 . Section 381.3 is added to the Public Utilities Code,
to read:
381.3. By January 1, 2016, the commission, in an existing
proceeding, shall establish an incentive program for
contractors and local governments to improve the verification
of building code compliance and acceptance of central heating
and air cooling equipment following installation. The
incentives may include, but are not limited to, all of the
following:
(a) Funding Additional funding, as necessary, for training and
certification programs for central heating and air cooling
equipment installers, local government building officials,
contractors, builders, and school building inspectors licensed
through the Division of the State Architect.
(b) Technical and financial support to establish performance
protocols necessary to verify performance compliance of
central heating and air cooling equipment.
(c) Financial or other support to assist local agencies in
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offsetting costs associated with employing innovative
approaches to reduce barriers in the permitting process for
heating and cooling equipment, for example, expediting the
permitting process and measures to achieve greater compliance
with state and local building permit requirements.
REGISTERED SUPPORT / OPPOSITION :
Support
California Building Industry Association (CBIA)
California State Council of Electrical Workers
California State Pipe Trades Council
Coalition for Adequate School Housing (C.A.S.H.)
Joint Committee on Energy and Environmental Policy
Natural Resources Defense Council (NRDC) (Co-Sponsor)
USGBC California (Co-Sponsor)
Western States Council of the Sheet Metal Workers
Opposition
None on file
Analysis Prepared by : Brandon Gaytan / U. & C. / (916)
319-2083