BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2581 (Bradford) - Energy: appliance standards: public domain
computer program: home energy rating: energy efficiency program
for appliances.
Amended: August 11, 2014 Policy Vote: EU&C 7-3
Urgency: No Mandate: No
Hearing Date: August 14, 2014 Consultant:
Marie Liu
SUSPENSE. AS AMENDED.
Bill Summary (as approved on August 14, 2014): AB 2581 would
make various changes to the requirements regarding appliance
standards, modeling of building energy efficiencies, and
modeling of predicted energy efficiency savings.
Fiscal Impact (as approved on August 14, 2014):
One-time costs of $150,000 then ongoing costs of $75,000
from the Energy Resources Programs Account (General) to
allow electronic labeling.
Ongoing costs of approximately $1 million for staff and
contracts from the Energy Resources Programs Account
(General) to continuously improve modeling accuracy of
energy assessment tools.
Background: Existing law requires the CEC to adopt regulatory
standards for minimum levels of operating efficiency for energy
and water intensive appliances. The CEC may also enact
regulations to prescribe cost-effective measures including
incentive programs, fleet averaging, and energy and water
consumption labeling to promote the use of energy and water
efficient appliances. The CEC is required to notify the
Legislature of its intention to adopt or amend a standard at
least one year in advance.
Section 25402.1 of the Public Resources Code requires the CEC to
develop a public domain computer program that will enable
contractors, builders, architects, engineering, and government
officials to estimate the energy consumed by residential and
nonresidential buildings. This program, known as the Public
Domain Compliance Software, is used to demonstrate compliance
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with building energy efficiency standards.
Section 25942 of the Public Resources Code requires the CEC to
adopt criteria for adopting a statewide home energy rating
program for residential dwellings. Home energy rating services
must in compliance with the program criteria. In response to
this requirement, the CEC developed the Home Energy Rating
System (HERS) program. HERS providers use software (often Energy
Pro, which is CEC approved) to estimate the energy savings that
will occur in any given building as a result of efficiency
upgrades.
The CPUC runs a number of programs that provide incentives to
customers to take energy efficiency actions including rebates
for purchases of energy efficient appliances. The effectiveness
of such programs can be analyzed from several perspectives, one
of which is how much of the energy savings achieved under a
program was a direct result of the program and how much would
have occurred regardless of the program. This is known as the
net to gross ratio. A net to gross ratio of 0.8 would mean that
80% of the savings were a direct result of the program.
Proposed Law: This bill has four main parts.
1.Appliance Standards: This bill would:
a. Require that the CEC consider the most current data
available and consider data no older than one year prior
to the commencement of a rulemaking proceeding when
adopting or amending an appliance standard.
b. Allow a manufacture to use electronic labeling, as
appropriate, to satisfy any labeling requirement
prescribed by the CEC.
c. Allow the CEC to consider voluntary agreements in
its planning and when developing regulations.
d. Require the CEC to adopt a process to repeal or
suspend enforcement, of an efficiency standard that is
duplicative or inconsistent with federal or state law.
2.Public Domain Computer Program: This bill would require that
the program be available at least six months prior to the
effective date of adopted or updated building energy
efficiency standards. Prior to the CEC's approval of the
program, the CEC would be required to perform preliminary
tests using common examples of residential and nonresidential
buildings to ensure usability. The results of the preliminary
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tests would be required to be publically available.
3.Home Energy Rating Program for residential buildings : This
bill would require that the CEC routinely adjust any energy
assessment tools used by the CEC for existing single-family
residential dwellings and multifamily residential dwellings
with up to four units. The CEC would also be required to
notify customers of the assumptions used in creating the
energy assessment tools.
4.Energy Efficiency Incentives: This bill would require the CPUC
to develop a program by January 1, 2016 that would provide
incentives to an electrical corporation that adopts a program
to reduce electrical demand from indoor appliances. In order
for an electrical corporation to receive the incentives, the
program must maintain a net to gross ratio of 0.8 for a
minimum of 36 consecutive months. The CPUC would further be
required to update its cost-effectiveness tools to account for
long-term benefits and costs.
Staff Comments: Appliance standards : This bill would require
that the most current data available be considered when adopting
a new energy standard, including data that is less than a year
old from when the rulemaking process begins. Under current
practice, the Energy Commission begins researching proposed
energy efficiency standards well before beginning the formal
rulemaking process. This allows the Energy Commission to begin
the rulemaking process with a fairly well developed proposal. In
many cases, development of proposed standards can take months or
years before a formal standard is proposed for adoption.
Implementing the data requirement in this bill would necessitate
the CEC to incur additional workload to consider additional more
recent data for standards that have a long development time.
Implementing this requirement is also likely to require
significant workload to identify all the most current data and
then to manage and analyze the likely large amount of data.
Staff notes that the CEC currently collects large amounts of
information regarding products being sold, the energy use of
those products, and the latest information on potential energy
efficiency improvements to those products. Some of this data are
proprietary industry data and the state much purchase the data
to analyze it. The additional workload resulting from the data
requirements in this bill is likely to result in approximately
$500,000 in additional annual costs. The CEC may also have
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additional costs to procure recent data.
The bill would require the CEC to allow electric labeling to
fulfill any labeling requirement if the CEC found such labeling
to be appropriate. To implement this provision, the CEC would
have one-time costs of approximately $150,000 to develop
criteria to determine when electronic labeling is appropriate
and to expand its existing database with information on
electronic labels. Staff estimates ongoing costs of
approximately $75,000 would necessary to apply the criteria to
specific electronics and for increased enforcement and tracking
workload.
Public Domain Computer Program : The changes proposed by the bill
are consistent with CEC's current practice and therefore will
not result in additional costs.
Home Energy Rating Program for residential buildings : This bill
would require that energy assessment tools used by the CEC are
routinely adjusted to improve the tools accuracy in estimating
anticipated energy savings. To make such adjustments, the CEC
will need to regularly obtain energy usage data from
single-family and multi-family buildings that have received an
assessment using the CEC tools in order to compare estimated
energy usage with actual usage. Any differences would result in
modifying the assessment tools. The CEC anticipates needing
approximately $500,000 in contract costs for data collection and
analysis assistance plus approximately $500,000 in additional
staff to continuously improve modeling accuracy.
Energy Efficiency Incentives : To create the new incentive
program, the CPUC would incur approximately $200,000 in one-time
costs for a proceeding on a 12-month timeline, and then ongoing
costs of approximately $175,000 for program implementation
including calculation of the net to gross ratio and to update
cost-effectiveness tools. Presumably this incentive program
would be funded by ratepayers. The state, as a ratepayer itself,
will be responsible for a portion of these costs. This amount is
unknown as it depends on the scope and size of the incentive
program.
Staff notes that this bill creates a new energy efficiency
incentive program that would be structured different than
existing programs in that the incentives would be provided to
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the electrical corporation and not to the consumer. The bill
does not specify whether the provided incentives to an
electrical corporation would be to the benefit of the investors
of the utility, or whether the incentives would somehow be
directed back towards its customers. Staff also notes that the
CPUC has existing incentive programs for indoor appliance
efficiency.
Committee Amendments: Delete the creation of the incentive
program in Section 4.