7. Energy Efficiency Requirements

Section 2851(a)(3) requires the Commission, in consultation with CEC, to require "reasonable and cost-effective energy efficiency improvements" as a condition of receiving solar incentives, although it allows "appropriate exemptions or limitations to accommodate the limited financial resources of low income residential housing." Consistent with this statute, Staff recommends all program applicants obtain an energy efficiency audit as part of the application process, to allow applicants to compare the costs of solar installation against the savings from energy efficiency measures.

Staff also recommends applicants enroll in an investor-owned utility (IOU) energy efficiency program, unless there is no suitable program. Staff does not recommend the Commission require participation in LIEE because it may be an undue burden to require building owners to identify LIEE eligible tenants and mandate their participation. Instead, Staff proposes that applicants be required to provide LIEE information to their tenants. Finally, staff recommends that applicants whose buildings meet Title 24 standards be exempt from the above energy efficiency requirements beyond the audit.

The Joint Solar parties and CCSE support the staff proposal for audits and participation in existing IOU EE programs, coupled with no mandate for LIEE participation. They comment that energy efficiency requirements for MASH should be consistent with the General Market CSI program, which does not currently require energy efficiency improvements before incentives are paid. DRA agrees than an energy audit should be required, as well as "all measures deemed feasible by the property owner." DRA suggests coordination with LIEE, and encouraging all eligible tenants to take part in the program. Global Green contends participation in LIEE should only be required for tenants in projects applying for Track 1B and Track 2 funds, which apply to installations that offset tenant load. LISC/NPH suggest that energy efficiency upgrade costs resulting from the audit should be allowed as part of program expenses.

In contrast, PG&E, SCE, SDG&E, and A WISH contend the Commission should require LIEE participation before paying incentives under this program. A WISH contends the energy efficiency requirements in the staff proposal are deficient because energy efficiency must be maximized before adding generation retrofits with ratepayer subsidies. PG&E comments that there should be specific integration of energy efficiency programs and low-income programs in tandem with solar incentives. PG&E suggests the Commission require the development of no cost field audits of the entire building, both tenant and common areas, as part of the LIEE program. PG&E does not agree with Staff's suggestion that applicants must enroll in a utility energy efficiency program. Global Green supports PG&E recommendations, as long as the energy efficiency activities suggested by PG&E are not paid for out of MASH funds.

SCE maintains the Commission should adopt the Program Administrators' original proposal for energy efficiency requirements. That proposal recommended coordination with LIEE programs to provide energy efficient upgrades funded from LIEE budgets, where tenants qualified. For tenants that do not meet LIEE eligibility requirements, the Program Administrators' proposal recommended coordination with utility energy efficiency programs to fund measures to reduce electricity load. In addition, the property would be required to undergo an energy efficiency audit, undertake basic weatherization, and undertake energy efficient upgrades that have up to a two-year payback before receiving solar incentives. (See Program Administrators' Proposal, 7/16/07, pp. 3-10.)

We agree with several commentors that energy efficiency investments can play an important role in affordable housing property management. Pairing solar installations with energy efficiency may help building owners realize additional cost savings, which owners could potentially pass on to tenants. Nevertheless, we do not want to apply more stringent energy efficiency requirements to the affordable housing sector than we require for low-income homeowners in our LISF program or incentive recipients in the general market CSI program. Although A WISH urges us to maximize energy efficiency prior to installation of a solar energy system, LISC/NPH suggest that the costs of energy efficiency be funded by the MASH program, which would effectively limit the MWs of solar we can fund through MASH.

We prefer at this time to adopt the same energy efficiency requirements for MASH applicants as we require for applicants to the general market CSI program. Currently, general market CSI applicants must obtain an energy efficiency audit, as described in D.06-12-033 and further delineated by the CEC in their December 2007 guidelines for solar incentive programs.14 According to the CEC Guidelines, existing residential buildings must comply with energy audit, information, and disclosure requirements, unless they have complied with Title 24 requirements for newly constructed buildings in the past three years.

If a building owner/developer receives MASH incentives, we will not require tenants to enroll in LIEE. In our view, a requirement to participate in LIEE would be difficult to enforce and places a building owner in the difficult position of asking tenants to sign up for an assistance program, or actively opt out, before the owner can receive solar incentives. It might also be a problem if building owners receive MASH funds while a building is unoccupied during refurbishment. Instead, we will require building owners to provide LIEE information to tenants to encourage their participation and we will require building owners to allow eligible and willing tenants to participate in LIEE programs to the extent feasible.

We are currently reviewing whether to augment our general market CSI energy efficiency requirements. If a Commission order modifies them at some future point, we will then consider, by further Commission order, whether to apply any revised energy efficiency requirements to MASH applicants.

14 See D.06-12-033 p. 15, and the CEC's "Guidelines for California's Solar Electric Incentive Programs Pursuant to Senate Bill 1," (CEC Guidelines) issued December 2007.

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