11. Codes and Standards

Progressive increases in building and appliance efficiency standards are a critical component of achieving the State's long-term energy efficiency goals. The Commission has authorized IOU activity in this area, including giving credit for savings attributable to codes and standards advocacy and supporting the addition of new strategies to improve compliance and promote the adoption of Reach Codes.

D.09-09-047 approved a $30.4 million budget for the 2010-2012 statewide Codes and Standards program. The current program has four sub-programs:

· Building Codes, including: (1) Advocacy, (2) Extension of Advocacy, and (3) Codes and Standards Enhancement studies;³²²

· Appliance Standards including: (1) Advocacy, (2) Extension of Advocacy and (3) Codes and Standards Enhancement studies;

· Compliance Enhancement;³²³ and

· Reach Codes.³²⁴

The 2010-2012 codes and standards program is projected to account for 19% of the IOUs' total portfolio energy (kWh) savings and 17% of total demand (MW) reduction.³²⁵ Prior decisions have allowed the IOUs' codes and standards program to count verified codes and standards savings towards the achievement of the goals.³²⁶

The Phase IV Scoping Memo signaled the intent to re-shape the IOUs' programs away from shallow savings and more toward programs that achieve greater market transformation and long-term savings. Accordingly, Commission Staff proposes several changes to the codes and standards program, including the following:

· Reorientation toward an "integrated, dynamic approach," to establish a formal process that dynamically aligns planning activities across the IOU energy efficiency portfolio within the Codes and Standards program activities to prepare the market for future code adoption (i.e., improve code readiness), to ensure higher code compliance rates and advance the Strategic Plan goals toward Zero Net Energy;

· Enhanced Workforce Education and Training to ensure the proper installation, commissioning and maintenance of code compliant measures and systems;

· Marketing, education, and outreach to improve the understanding of the benefits associated with code compliance among contractors and consumers and facilitate the adoption of future more stringent codes; and

· Targeted incentives to boost the low compliance rate of targeted codes and standards.

Eight parties filed comments on Staff's proposal and two filed reply comments.

11.1. An Integrated Approach

The Staff Proposal calls for "a redesign of the statewide codes and standards program," placing it in "a central strategic position within the IOU energy efficiency portfolio."³²⁷ The proposal addresses a perceived gap in current IOU codes and standards programs, namely, the absence of an integrated process for coordinating codes and standards activities throughout all of the IOUs' programs. Staff recommends creating a formal process that dynamically integrates early planning activities within the Codes and Standards program with supporting program activities across the IOUs' portfolio to achieve the following goals:

· Maximizing code compliance with current and future codes and standards;

· Improving code readiness to all significant energy savings opportunities identified for a future code update cycle; and

· Targeting Reach Codes to achieve the Zero Net Energy goals for residential sector by 2020 and the commercial sector by 2030.

The proposal also emphasizes the importance of collaboration between the California Energy Commission, the IOUs, and this Commission to plan and coordinate the activities to achieve these goals.

11.1.1. Positions of the Parties

For the most part, the IOUs agree with the Staff Proposal on the "integrated dynamic approach." CILMT³²⁸ and DRA³²⁹ also support this recommendation. The IOUs seem to agree that the proposed recommendations should not replace existing program activities or override compliance improvement opportunities. In addition, some IOUs assert that their existing program activities indicate that:

(1) Savings from advocacy are the most cost-effective energy efficiency savings in the State;

(2) Role based trainings aimed at local governments and Title 24 consultants were developed from a rigorous needs assessment and remain a high priority; and

(3) Initial input from the best practices study and Compliance Improvement Advisory Group (CIAG) indicate that simplifying the compliance process through an automated forms and permitting processes may yield the best return on investment, and that compliance improvement activities in general will not be effective in the long run if compliance is not expected or enforced.³³⁰

SDG&E/SoCalGas further suggest adding a new statewide "Planning and Coordination Subprogram" for the purpose of identifying high-priority advocacy objectives - including those that incorporate reach codes to achieve Zero Net Energy - and for maintaining an open communications forum. The Planning and Coordination Subprogram would include the following:

· Identification of statewide codes and standards objectives;

· Bringing the Map Zero Net Energy, Integrated Energy Policy Report, AB 1109, and other policy goals into code cycle timelines;

· Establishment of base code and state and local government reach code requirements to meet policy goals;

· National building code priorities, including green building codes;

· State and federal appliance standards priorities; and

· Identification of industries to target for outreach and communications.³³¹

11.1.2. Discussion

The role of codes and standards in the technology advancement continuum was emphasized by the Commission in D.09-09-047.³³² The importance of codes and standards is also reflected in the Strategic Plan where it is highlighted as one of the policy tools critical to implementing the market transformation goals of the Strategic Plan.³³³

The Strategic Plan aims to achieve its objectives by among other things, strengthening and expanding building and appliances codes and standards, and dramatically improving code compliance and enforcement. However, there are challenges relating to timing and complexity for implementing codes and standards program components. In particular, there are a limited number of Title 20 and Title 24 update cycles before California's 2020 and 2030 Zero Net Energy goals for residential and commercial new construction take effect.³³⁴

After considering all the factors impacting the codes and standards program, we are persuaded that the Staff Proposal to create an integrated dynamic approach should be developed. An integrated approach to the codes and standards program addresses the critical need for targeted and collaborative efforts with technology development leading to future codes and standards adoption. The codes and standards program should engage in Emerging Technologies Program planning activities early on so as to be able to collaborate in the development of advanced technologies and practices that could to be adopted in future codes. While the IOUs prepare Codes and Standards Enhancement studies and engage in advocacy work with the code-setting bodies, the IOUs' programs can help improve market code readiness for targeted measures.³³⁵ Pilots, demonstrations, training and outreach programs expose customers to new technologies and practices and ultimately result in higher rates of market acceptance and consequently higher rates of compliance.

Several parties, including the IOUs, CILMT, and DRA, support this part of the Staff proposal. We agree with comments asserting that existing codes and standards program activities should not be replaced, and we believe the Staff proposal will supplement (and not supplant) the current program design.

SDG&E/SoCalGas' proposal to create a statewide "Planning and Coordination Subprogram" aligns with our comprehensive codes and standards planning and coordinated implementation efforts. We therefore adopt the SDG&E/SoCalGas proposal and direct all the IOUs to include in their codes and standards program implementation plans a detailed description for such a statewide program, including program objectives, strategies, and expected outcomes, as well as program budgets.³³⁶ The subprogram plan should include an outline of the functions of each codes and standards subprogram and their roles relative to each other and other utility programs, including but not limited to, the Emerging Technology Program, incentive programs targeting retrofits and major renovations, Residential New Construction, Savings By Design, Workforce Education and Training, Marketing, Education and Outreach, Zero Net Energy pilots, and the residential Zero Net Energy Roadmap initiative directed in this decision.

11.2. Workforce Education and Training, and
Marketing and Outreach

The Staff Proposal emphasizes the importance of technical training initiatives as part of the integrated approach to prepare the workforce for quality installation and maintenance of energy efficiency measures. Such training is required for advanced technologies, systems or integrated building design and operation approaches that will likely be adopted in upcoming codes and standards as well as Reach Codes. The Staff Proposal also acknowledges that current codes and standards programs offer training to facilitate code adoption and compliance. Staff recommends that training programs be created to provide the required technical skills related to existing and upcoming codes and standards for installers (such as contractors and technicians), and coordinated with existing programs.

11.2.1. Positions of the Parties

PG&E supports the Staff Proposal to increase the coordination with Workforce Education and Training and incentive/rebates programs and suggested that these modifications could be integrated during the transition period.³³⁷ SDG&E/SoCalGas note that strong coordination between the codes and standards program, Marketing, Education and Outreach, and rebate/incentives programs would improve awareness, understanding and compliance with code.³³⁸ SCE states that funding might need to be increased if the codes and standards program is to increase integration with activities such as Workforce Education and Training, and Marketing, Education and Outreach.³³⁹

CILMT and Greenlining support the Staff proposal to investment in training for installers and urge that this proposal be implemented in the transition period.³⁴⁰ CILMT further recommends that training investments targeted to achieve codes and standards goals be aligned with existing skills upgrade mechanisms for occupations, such as continuing education requirements for architects, engineers, inspectors, and plan-checkers, and the state-certified apprenticeship journey skills upgrade requirements for certified electricians.³⁴¹

DRA supports most of the Staff Proposal recommendations on enhancing workforce education and training, and customer marketing, education and outreach.³⁴² PG&E recommends that the California Energy Commission, with expertise and support from the IOUs, should continue to lead mass marketing efforts to increase code adoption.³⁴³

11.2.2. Discussion

Effective adoption and realization of energy savings requires that the correct installation and operation of new energy technologies and systems be supported by coordinated workforce education and training. Coordinated workforce education and training can produce higher rates of compliance with new codes and standards in the market (i.e., fuller realization of the potential energy savings and demand reduction adopted by code). The IOUs and DRA support the Staff's recommendations on Workforce Education and Training targeting existing and new codes and standards as well as Reach Codes.

We direct the IOUs to propose expansion of their codes and standards programs through coordinated initiatives (resources and/or budgets) with the statewide Workforce Education and Training programs to implement this recommendation³⁴⁴. This more targeted training can be created as a new program element of the Statewide Codes and Standards Program or implemented through third-party programs. In their program implementation plans, the IOUs are directed to propose this program element as a non-resource program with the primary objective of providing technical training and certification programs for contractors and technicians. This effort should target new and/or advanced technologies that are candidates for Reach Codes and upcoming codes and standards that support the advancement of California's Zero Net Energy goals. The program activities should also prepare the workforce to provide installations and maintenance that are consistent with the Codes and Standards and Reach Codes.

We agree with PG&E that the expanded marketing and outreach activities to improve code compliance should be led by the California Energy Commission. In addition to the current advocacy activities implemented through the codes and standards programs, we direct the IOUs to partner with the California Energy Commission to support their outreach/education activities to improve compliance with codes and standards.

11.3. Incentives for Codes and Standards

The Staff Proposal recommends that specific market segments receive incentives to offset the high costs inherent in the process of complying with some standards (such as the cost of obtaining a permit) and encourage measure adoption through the codes and standards program. However, the Staff Proposal cautions that such incentives should be administered on a case-by-case basis, based on pre-established criteria that are supported by a strong rationale and reviewed in the IOUs' applications.

11.3.1. Positions of the Parties

SCE is interested in the idea of offering incentives for codes and standards opportunities and requests to have additional conversations with Commission Staff regarding this matter.³⁴⁵

TURN and DRA do not support Staff's recommendation to offer incentives and rebates for compliance with existing codes.³⁴⁶ Rather, TURN and DRA support enforcement of Codes and Standards by the California Energy Commission and local governments. Moreover, while TURN supports incentives for performance that surpasses or out-performs Codes and Standards, it cautions against relying on rebates as the primary means of ensuring code compliance. DRA asserts that ratepayers should not, pay for compliance with existing requirements. Instead, DRA recommends that to the extent that there is poor compliance with existing Codes and Standards, ratepayers should support increased education and outreach, and enhanced financing to improve adoption of measures that are compliant with Codes and Standards requirements.

11.3.2. Discussion

Parties' comments on the use of incentives to support code compliance are varied. We see at least two examples in which incentives to augment codes compliance could be justified. First, for existing codes, the cost of complying with certain requirements (e.g., obtaining permits) could be a barrier in some market segments (e.g., residential HVAC). Second, for future codes to meet aggressive goals or policy mandates (such as Zero Net Energy and AB 1109), local jurisdictions which adopt reach codes become an important stepping stone and testing ground to collect data on adoption rates of new technologies. Today, less than 10% of local jurisdictions have adopted reach codes, and even within those jurisdictions data regarding compliance rates is lacking. We believe that jurisdictions that otherwise would not have adopted reach codes could be enticed to do so, if their constituents were offered financial incentives to comply with reach codes. In both examples, we see merit in exploring the possible use of incentives to augment code compliance. However, given that this would be a new approach not previously tested, we direct the IOUs to work with the California Energy Commission and Commission Staff to obtain recommendations on (a) potential local jurisdictions to target for potential reach code adoption, and (b) specific areas of low code compliance based on documented and verified compliance rates

Rather than dismiss or embrace the use of incentives on the basis of what may be considered equally compelling arguments, we believe it prudent to investigate further. The pilots referenced above should be consistent with Staff's proposed threshold criteria for using incentives set forth below:

· Existing (adopted) codes and standards with documented and verified low compliance rates and a minimum two-year gap between the date the standard has been adopted and its effective date;

· Existing (adopted) and/or new Reach Codes; and

· Future codes and standards that have yet to be adopted by the California Energy Commission but have undergone technology assessment through the Emerging Technologies Program, and for which Codes and Standards Enhancement studies have been prepared.

Once identified, the IOUs should propose a pilot program in their applications, if merited, to be conducted during the 2013-2014 period, to test the use of incentives to support code compliance. Commission Staff should evaluate the effectiveness (through pilot evaluation studies) of this approach.

11.4. Local Government Role

11.4.1. Positions of the Parties

Several Parties offer comments on the role of local government entities in codes and standards initiatives. LGSEC states that the current economy has caused severe staff reductions in planning and permitting departments and recommends that financial resources be allocated to support code compliance. CCSF asserts that local governments should play a greater role in developing and enacting reach codes and in code enforcement. CCSF also argues that the California Energy Commission rather than the IOUs should play a central role in the development of local reach codes. CCSF further recommends that during the 2013-2014 transition period, the Commission should pilot approaches that shift these code activities toward local governments and the California Energy Commission.³⁴⁷

LGSEC recommends that the Commission direct funds for codes and standards work to regional local government energy networks or individual local governments that have the core competency and relevant experience to develop and implement codes and standards. In order to gain the support of local governments for the development of new ordinances, LGSEC contends that it is critically important that financial resources be allocated to support these policy-making and implementation activities.³⁴⁸

CCSE states that instead of incentives for code compliance through the IOUs, the Commission could better achieve code compliance through direct support for local government associations and other similar actors. CCSE suggests that this could be done at the state or regional level to leverage economies of scale and encourage maximum participation from individual jurisdictions.³⁴⁹

11.4.2. Discussion

We recognize that Codes and Standards compliance enforcement can be a challenge for some local governments. The Commission has supported funding for the IOU codes and standards program to: (a) advance the adoption of more stringent code and standards through the codes and standards program advocacy work; (b) improve code compliance through the Extension of Advocacy and Compliance Enhancement Program; and (c) promote adoption of Reach Codes among local jurisdictions.

In the 2013-2014 transition period, we further emphasize the importance of code compliance by introducing new elements to the codes and standards program, such as training of the workforce to provide them the knowledge required for proper installation and maintenance of code compliant measures and systems, and partnering with the California Energy Commission to augment its outreach efforts to educate consumers about the benefits of code compliance. Although we acknowledge that education and training are not substitutes for enforcement, the codes and standards program activities target raising awareness and understanding regulations to provide key market actors and consumers the tools and knowledge necessary for compliance.

³²² The IOUs' Building Codes activities include codes and standards program "advocacy" activities that target the California Energy Commission and U.S. Department of Energy to influence building and appliance efficiency regulations. Extension of Advocacy efforts are carried out to improve the rate of compliance with Title 24 (building code) and Title 20 (appliance standards) primarily by providing education and training of key market actors.

³²³ The purpose of the Compliance Enhancement Program is to increase the number of customers complying with existing codes and standards through outreach, education and training activities.

³²⁴ This subprogram encourages local governments to adopt "reach codes," which are voluntary standards that go beyond minimum efficiency requirements in existing codes. They are voluntarily adopted as mandatory by local government ordinance and by other agencies, such as the California Tax Credit Allocation Committee for affordable housing. The CEC plans to incorporate reach standards into the 2013 Title 24 update by placing them as a voluntary standard in Part 11, the Green Building Standards Code.

³²⁵ Third-Quarter 2011 Compliance Filing Reports. http://eega.cpuc.ca.gov/ReportsFundShifting.aspx.

³²⁶ D.10-04-029 allowed the IOUs to count "... 100% of verified savings from pre-2006 codes and standardsadvocacy work toward achievement of the 2010-2012 goals. We clarify that this accounting is only for savings occurring within the IOU service areas" (D.10-40-29.). D.07-10-032 allowed the IOUs to count "100% of verified savings from post-2006 codes and standards advocacy work" (D.07-10-032). The IOUs did not include savings claims specific to Compliance Enhancement and Reach Codes subprograms in their 2010-2012 applications. D.10-04-029 directed Commission Staff to conduct pilot evaluations of the sub-programs.

³²⁷ Programmatic Guidance Ruling at 4.

³²⁸ CILMT Comments on Programmatic Guidance Ruling at 10.

³²⁹ DRA Comments on Programmatic Guidance Ruling at 9.

³³⁰ SDG&E/SoCalGas Comments on Programmatic Guidance Ruling at 12.

³³¹ SDG&E and SoCalGas Comments on Programmatic Guidance Ruling at 13.

³³² D.09-09-047 at 88.

³³³ Strategic Plan at 63.

³³⁴ The current Title 24 update has been delayed a year, and will take effect in 2014 instead of 2013 - leaving effectively only one more code update by which to achieve the Residential ZNE goals by 2020.

³³⁵ Activities targeting code readiness affect cost effectiveness, availability, and acceptability by the market.

³³⁶ SDG&E/SoCalGas Comments on Programmatic Guidance Ruling at 13.

³³⁷ PG&E Comments on Programmatic Guidance Ruling at 13.

³³⁸ SDG&E/SoCalGas Comments on Programmatic Guidance Ruling at 13.

³³⁹ SCE Comments on Programmatic Guidance Ruling at 12.

³⁴⁰ Greenlining Comments on Programmatic Guidance Ruling at 7.

³⁴¹ CILMT Comments on Programmatic Guidance Ruling at 11.

³⁴² DRA Comments on Programmatic Guidance Ruling at 9.

³⁴³ PG&E Comments on Programmatic Guidance Ruling at 13.

³⁴⁴ For further information, see Attachment C to this decision.

³⁴⁵ SCE Comments on Programmatic Guidance Ruling at 12.

³⁴⁶ See TURN Comments on Programmatic Guidance Ruling at 2; and DRA Comments on Programmatic Guidance Ruling at 9-10, respectively.

³⁴⁷ CCSF Comments on ALJ Ruling Regarding Program Guidance for the 2013-2014 Energy Efficiency Portfolio at 7-8.

³⁴⁸ LGSEC Comments on Programmatic Guidance Ruling at 10.

³⁴⁹ CCSE Comments on Programmatic Guidance Ruling at 15.