STATE OF CALIFORNIA |
PUBLIC UTILITIES COMMISSIONSan Francisco | ||
M e m o r a n d u m | |||
Date: |
JUNE 27, 2005 | ||
To: |
The Commission (Meeting of June 30, 2005) | ||
From: |
Delaney L. Hunter, Director Office of Governmental Affairs (OGA) - Sacramento | ||
Subject: |
SB 769 (Simitian) Energy Reliability and Affordability Act: energy-efficient refrigeratorsAs Amended June 22, 2005 | ||
Recommendation: Support if amended.
Summary: This bill would expand existing refrigerator replacement programs for energy-inefficient refrigerators in low-income residential rental units.
Analysis: This bill targets landlord-owned refrigerators in low-income residential rental housing units in which the renter is responsible for payment of the electrical utility bill. These low-income renters have little incentive or means to purchase a replacement refrigerator. Their landlords similarly have no incentive because the electric bill is paid by the renter.
The Commission currently oversees the Low-Income Energy Efficiency (LIEE) program, which provides all feasible energy efficiency and weatherization measures to each participating low-income customer, at no cost to the low-income customer. The LIEE program currently provides for replacement of landlord-owned refrigerators, including those instances in which the tenant pays the electric utility bill. In 2004, in the over 100,000 dwelling units (a mixture of customer-owned and landlord-owned) that received LIEE services, approximately 40,000 refrigerators were replaced. The goal of this bill is to expand the existing refrigerator replacement programs by replacing a minimum of 50,000 energy-inefficient refrigerators in low-income residential rental units each year in addition to those refrigerators targeted for replacement through the current LIEE program.
It is not clear how many landlord-owned refrigerators in these low-income rental units have yet to be replaced. We are concerned that the prescriptive numeric goal specified in this bill may or may not be attainable. Although the bill does allow the Commission to adjust the targeted number of refrigerators to be replaced, it only does so in the upward direction. We would suggest that the bill be amended to make this a target goal rather than a minimum goal. We would also suggest amendments to allow the Commission to adjust the targeted number upward or downward.
The bill allows the Commission flexibility to determine whether to administer the program under existing guidelines for an electrical corporation to perform home weatherization services for low-income customers (pursuant to existing P.U. Code section 2790), or to adopt alternative guidelines and regulations to accomplish the purposes of the bill. Existing law (P.U. Code section 2790) requires that the LIEE program provide all feasible energy efficiency and weatherization measures for each eligible low-income dwelling unit. This minimizes inconveniences to the low-income families (all measures installed together rather than in piecemeal fashion), reduces administrative costs (i.e., more program funds directly benefit the low-income customers) and addresses a greater number of the low-income customers' energy-related needs (i.e., bill savings, and energy-related health, safety and comfort needs). In other words, if a visit is made to a dwelling unit to replace the refrigerator, then the other energy efficiency and weatherization measures must be provided as well. The current LIEE program is equitably deployed to be representative of each utility's housing stock-single versus multi-family dwelling units and is deployed in both customer-owned dwellings as well as rental units. However, if this requirement were to remain in place, then this bill could heavily weight the servicing of the LIEE program toward rental units in which the landlord owns the refrigerator.
The bill requires the Commission to submit a report to the Legislature each year relative to the effectiveness of the program. Existing law (P.U. Code section 382) already requires that the Commission conduct a periodic assessment of the needs of low-income electricity and gas ratepayers including the effectiveness of the weatherization and energy efficiency measures in low-income households. We would suggest amendments to have the Commission submit the report required by SB 769 on the same periodic schedule as that currently performed by the Commission pursuant to P.U. Code Section 382 (e.g, triennially rather than annually) and to decrease the amount of new information the Commission would be required to include in the report (i.e., to minimize the increase in the administrative costs of the program).
It isn't clear from the proposed bill how the program would be funded. The LIEE program is currently oversubscribed. As such, LIEE funding would not be sufficient to cover the cost of the program proposed by this bill. The bill's intent may be to provide the Commission with the flexibility to determine how to fund the program.
RECOMMENDED AMENDMENTS
The conceptual amendments we suggested in the analysis above are attached to this memorandum as a set of seven specific amendments.
LEGISLATIVE HISTORY
AB 1890 (1996) added P.U. Code Sections 381 (which established a non-bypassable electric funding mechanism for energy efficiency, renewables, RD&D and low-income energy efficiency programs) and 382 (which established programs for low-income electricity customers). AB 1383 (1999) amended P.U. Code Section 2790 to require that each participant in the LIEE program receive every feasible measure.
The bill is currently scheduled to be heard in the Assembly Committee on Utilities and Commerce on Monday, June 27, 2005.
SUPPORT/OPPOSITION
Support:
Californians Against Waste
California Rural Legal Assistance Foundation
Clean Power Campaign
Environment California
Environmental Defense
Planning and Conservation League
Sierra Club California
Southern California Edison
The Utility Reform Network
Union of Concerned Scientists
Utility Consumers' Action
Western Center on Law and Poverty
San Francisco Public Utilities Commission
Global Green USA
California Housing Council, Inc.
Opposition:
Sempra Energy (unless amended)
LEGISLATIVE STAFF CONTACT
Tom Flynn, Deputy Director trf@cpuc.ca.gov
CPUC- OGA (916) 324-8689
Date: June 27, 2005
Attachments (proposed amendments)
PROPOSED AMENDMENTS TO SENATE BILL 769
AS AMENDED IN SENATE JUNE 22, 2005
Amendment 1
On page 4, line 36, strike "that have also received the Energy Star certification." and insert:
are Energy Star qualified.
Amendment 2
On page 5, line 25, strike "minimum of 50,000" and insert:
targeted number
Amendment 3
On page 5, line 37, strike "evaluate" and insert:
develop the needed plan of implementation for the Energy Reliability and Affordability Act including evaluating
Amendment 4
On page 7, line 16, strike "annually"
Amendment 5
On page 7, strike out lines 36 to 40, inclusive, on page 8, strike out lines 1 and 2.
Amendment 6
On page 8, line 5, strike out lines 5 to 7, inclusive.
Amendment 7
On page 8, line 26, strike "cost-effective"
BILL LANGUAGE:
BILL NUMBER: SB 769 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 22, 2005
AMENDED IN SENATE MAY 2, 2005
AMENDED IN SENATE APRIL 11, 2005
INTRODUCED BY Senator Simitian
FEBRUARY 22, 2005
An act to amend and repeal Section 399.4 of, and to add Section
382.5 to, the Public Utilities Code, relating to energy resources.
LEGISLATIVE COUNSEL'S DIGEST
SB 769, as amended, Simitian. Energy Reliability and
Affordability Act: energy-efficient refrigerators.
(1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including electrical
corporations. Under the Public Utilities Act, the commission requires
electrical corporations to identify a separate rate component to
fund programs that enhance system reliability and provide in-state
benefits. The funds are collected to support cost-effective energy
efficiency and conservation activities, public interest research and
development not adequately provided by competitive and regulated
markets, and renewable energy resources.
Existing law requires the commission, in evaluating energy
efficiency investments under its existing statutory authorities, to
ensure that no energy efficiency funds are used to provide incentives
for the purchase of new energy-efficient refrigerators.
This bill would delete that refrigerator purchase restriction and
would, instead, establish the Energy Reliability and Affordability
Act until January 1, 2012 , to increase energy reliability
and affordability by reducing the demand for energy by
residential customers ratepayers residing in
low-income residential rental units. The goal of the program would be
to expand existing refrigerator replacement programs by replacing a
minimum of 50,000 energy inefficient refrigerators, as defined, in
low-income residential rental units each year . The
bill would require the commission to evaluate the targeted
number of refrigerators to be replaced through the program in
consideration of certain factors, and to establish a
refrigerator replacement program to, among other things, provide
incentives to owners of limited-income
low-income rental residential units with energy-inefficient
refrigerators to replace those refrigerators with more
energy-efficient models. The bill would require the commission to
adopt guidelines and regulations to implement the act. Because a
violation of those guidelines or regulations would be a crime under
existing law, this bill would create impose a
state-mandated local program by creating new
crimes. The bill would authorize the commission to contract
with an appropriate entity to replace refrigerators pursuant to the
act.
The bill would require the commission to annually prepare and
submit to the Legislature , the Department of Finance, and
the Legislative Analyst's Office, a report containing
specified information about the effectiveness of the program, as
specified.
(2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 382.5 is added to the Public Utilities Code, to
read:
382.5.
(a) This section shall be known, and may be cited, as the Energy
Reliability and Affordability Act. The purpose of the act is to
increase energy reliability and affordability by reducing the demand
for energy by residential customers in limited-income
low-income residential rental units.
(b) The Legislature finds and declares all of the following:
(1) In California, refrigerators consume more energy than any
other household appliance and consume more energy than any other
residential use besides lighting.
(2) Replacing energy-inefficient refrigerators in
limited-income low-income residential rental
units will greatly benefit all energy consumers by reducing
peak and overall energy demand. ratepayers by reducing
overall energy demand and reducing California Alternate Rates for
Energy (CARE) program expenditures.
(3) Replacing energy-inefficient refrigerators in
limited-income low-income residential rental
units will further benefit those renters by
ratepayers by directly reducing their energy bills.
(4) Reducing energy consumption will reduce air pollution, thus
reducing public health risks, health care costs, and
environmental degradation. Decreasing improving public
health and the environment and reducing health care costs. Reducing
air pollution will increase the quality of life for all
Californians.
(5) The average first use lifespan of a refrigerator is 19 years,
and the average age of the refrigerator fleet in California is 11
years.
(6) Federal energy efficiency standards for refrigerators were set
in 1993 and 2001, with each standard requiring an additional 30
percent reduction in the appliance's energy consumption. Most
refrigerators in California do not meet current minimum federal
efficiency standards.
(6) Federal standards for refrigerators have greatly increased the
energy efficiency of new models over the past decade.
(7) The United States Department of Energy and the United States
Environmental Protection Agency established the Energy Star program
in 1992 to identify and promote energy-efficient products to reduce
greenhouse gas emissions. The Energy Star
program qualified refrigerator models that
qualified refrigerators use at least 15 percent less energy
than required by current federal energy efficiency
standards, and 40 percent less energy than the models that
meet the 2001 standard. The Energy Star program-qualified
conventional models sold in 2001. New Energy Star certified
refrigerators require about half as much energy as models
manufactured before 1993.
(8) Owners of limited-income low-income
residential rental housing units have no incentive to replace
older, energy-inefficient refrigerators because renters, rather than
the owners, typically are the responsible party for the payment of
energy bills incurred in those rental units.
(9) The public goods charge (PGC) on electricity
purchases established pursuant to Section 381 of the Public Utilities
Code was created in 1996 to support public purpose programs for
energy efficiency, low-income services, renewable energy, and
energy-related research and development.
(10) Under existing PGC programs, investor owned utilities have
replaced approximately 200,000 energy-inefficient refrigerators.
(11) The PGC is statutorily indexed to escalate with increasing
electricity sales or inflation, whichever is less.
(12) Approximately
four to five million households in California In the
service territories of California's electrical corporations,
approximately two million households have a combined household
income equivalent to, or less than, 175 percent of the federal
poverty level.
(13) Replacing 50,000 energy-inefficient refrigerators will save
____ kilowatts per year, which is approximately the amount of
kilowatts that would have prevented ____ blackouts in ____ year or
the need for ____ powerplants.
(c) As used in this section, the following terms have the
following meanings:
(1) "Certified appliance recycler" means a person or entity
engaged in the business of removing and properly managing materials
that require special handling from discarded major appliances, and
who is certified pursuant to Section 25211.4 of the Health and Safety
Code. "Certified appliance recycler" does not include a person
described in subdivision (b) of Section 25211.2 of the Health and
Safety Code.
(2) "Energy efficient refrigerators" means those refrigerator
models that meet the 2001 federal energy most
current United States Department of Energy
efficiency standard, and that have also received the Energy Star
certification.
(3) "Energy-inefficient refrigerators" means those models that do
not meet the 2001 federal energy most current
United States Department of Energy efficiency standard.
(4) "Energy Star" means those models of refrigerators that are
certified through the United States Department of Energy/United
States Environmental Protection Agency Energy Star program.
(5) "Limited "Low income"
means those individuals and households who qualify for assistance
under the California Alternative Rates for Energy (CARE)
program established pursuant to Section 739.1 of the Public Utilities
Code, including those persons whose household income does not exceed
175 percent of the federal poverty guidelines. For disabled and
senior citizens, the income eligibility guidelines are set at 200
percent of the federal poverty level. low-income
energy efficiency program guidelines established by the commission.
(6) "Owner of a limited-income residential rental unit
"Low-income energy efficiency" or "LIEE" programs
means the energy efficiency and expenditure reducing programs for
low-income electricity ratepayers established pursuant to Section
382.
(7) "Owner of a low-income residential
rental unit " means the owner of record of any property
leased to a limited-income occupied by a
low-income individual or household for residential purposes.
(d) (1) The goal of the program established by
The goal of the program established pursuant to this
section is to reduce energy consumption by replacing
expand existing refrigerator replacement programs by
replacing a minimum of 50,000 energy-inefficient refrigerators
in limited-income low-income
residential rental units each year, utilizing revenues
collected pursuant to this section, in addition to those
refrigerators previously replaced using funds from the public goods
charge established pursuant to Sections 381, 382, and 399.8.
(2) To accomplish
this goal, the commission shall establish a refrigerator replacement
program, which shall do all of the following: in
addition to those refrigerators targeted for replacement through the
current LIEE program. These refrigerators shall be replaced
consistent with the guidelines for the LIEE program established
pursuant to Section 382.
(e) The commission shall evaluate the targeted number of
refrigerators to be replaced through the Energy Reliability and
Affordability Act, concurrent with energy efficiency potential
assessments, and may adjust upward the targeted number of
refrigerators to be replaced through evaluations of CARE program
expenditures avoided, bill defaults avoided, other cost avoidance
benefits, the cost effectiveness of reducing overall energy demand,
and the cost effectiveness of reducing the energy bills of low-income
ratepayers and other factors the commission determines are material.
The refrigerator program adopted by the commission pursuant to this
act shall do all of the following:
(A)
(1) Provide sufficient incentives to owners
of limited-income low-income
residential rental units with energy-inefficient refrigerators to
replace those refrigerators with energy-efficient models.
(B) Provide rebates or other financial incentives that are
(2) Require that incentives are only
made available to owners of limited-income
low-income residential rental units upon the
proof of purchase of the energy-efficient refrigerator and
proof that the inefficient refrigerator is in the control of a
certified appliance recycler.
(C) Require that any replacement refrigerator to be in
(3) Require that all replaced
inefficient refrigerators are operating condition.
(D) Require that any replacement refrigerators meet or exceed 2001
energy efficiency standards and meet or exceed the United States
Department of Energy/United States Environmental Protection Agency
Energy Star standards for refrigerators.
(E) Prohibit any refrigerator exchanged as part of this program
from being refurbished or reused, but permit the recycling of metal
and other parts of the exchanged refrigerator.
(4) Require that all replacement refrigerators are energy
efficient refrigerators.
(5) Prohibit any inefficient refrigerator replaced as part of this
program from being refurbished or reused.
(6) Require the recycling of all recyclable components of all
replaced inefficient refrigerators and the capture and proper
management of chlorofluorocarbons, oils, and other materials harmful
to human health and to the environment.
(F)
(7) Prioritize the replacement of the least
efficient refrigerators consistent with the existing low-income
energy efficiency refrigerator replacement program guidelines .
(e)
(f) The commission shall adopt guidelines
and regulations to accomplish the purposes of this section.
(f) The commission may contract with an appropriate entity to
replace refrigerators pursuant to this section.
(g) The commission shall consider cost effectiveness when adopting
guidelines or regulations for the program, but shall give higher
priority to reducing the energy costs borne by persons who can least
afford high energy prices bills .
(h) The commission may administer the program under the guidelines
for an electrical or gas corporation to perform home weatherization
services for low-income customers adopted pursuant to Section 2790,
or pursuant to the guidelines and regulations adopted pursuant to
subdivision (f).
(h)
(i) The commission shall annually prepare
and submit to the Legislature , the Department of Finance,
and the Legislative Analyst's Office a report containing
a report, which may be included in the assessment required in
Section 382, incorporating all of the following information:
(1) The number of rental units in the state that have had
refrigerators which refrigerators have been
replaced pursuant to this section.
(2) The remaining number of eligible units in the state that are
in need of refrigerator replacement.
(3) The energy savings per participating household.
(4) The energy savings for the program as a whole.
(5) A map indicating areas where refrigerator replacements have
occurred and other areas where refrigerator replacements have not
occurred.
(6) A description of the administrative and programmatic costs for
each refrigerator replaced.
(7) A description of outreach and education expenditures.
(8) An outreach and education plan for the following fiscal year.
(2) The average age of the refrigerators replaced pursuant to this
section.
(3) An estimate of the remaining number of eligible rental units
that are in need of refrigerator replacement in the service
territories of the electrical corporations.
(4) An estimate of the energy savings per participating household.
(5) An estimate of the energy savings for the program as a whole.
(6) A diagram indicating the general areas where refrigerator
replacements have occurred and areas targeted for future refrigerator
replacement.
(7) An assessment of the administrative and programmatic costs of
the program designed pursuant to this section.
(8) An estimate of the CARE program funds saved as a result of the
program.
(9) A description of any recommended program modifications for the
following fiscal year. (j) This section shall remain in effect
only until January 1, 2012, and as of that date is repealed, unless
a later enacted statute, that is enacted before January 1, 2012,
deletes or extends that date.
SEC. 2. Section 399.4 of the Public Utilities Code, as added by
Section 4 of Chapter 1050 of the Statutes of 2000, is amended to
read:
399.4.
(a) (1) In order to ensure that prudent investments in energy
efficiency continue to be made that produce cost-effective energy
savings, reduce customer demand, and contribute to the safe and
reliable operation of the electric distribution grid, it is the
policy of this state and the intent of the Legislature that the
commission shall continue to administer cost-effective energy
efficiency programs authorized pursuant to existing statutory
authority.
(2) As used in this section, the term "energy efficiency"
includes, but is not limited to, cost-effective activities to achieve
peak load reduction that improve end-use efficiency, lower customers'
bills, and reduce system needs.
(b) The commission, in evaluating energy efficiency investments
under its existing statutory authorities, shall also ensure that
local and regional interests, multifamily dwellings, and energy
service industry capabilities are incorporated into program portfolio
design and that local governments, community-based organizations,
and energy efficiency service providers are encouraged to participate
in program implementation where appropriate.
SEC. 3. Section 399.4 of the Public Utilities Code,
as added by Section 4 of Chapter 1051 of the Statutes of 2000, is
repealed.
399.4.
(a) (1) In order to ensure that prudent investments in energy
efficiency continue to be made that produce cost-effective energy
savings, reduce customer demand, and contribute to the safe and
reliable operation of the electric distribution grid, it is the
policy of this state and the intent of the Legislature that the
commission shall continue to administer cost-effective energy
efficiency programs authorized pursuant to existing statutory
authority.
(2) As used in this section, the term "energy efficiency"
includes, but is not limited to, cost-effective activities to achieve
peak load reduction that improve end-use efficiency, lower customers'
bills, and reduce system needs.
(b) The commission, in evaluating energy efficiency investments
under its existing statutory authorities, shall also ensure both of
the following:
(1) That local and regional interests, multifamily dwellings, and
energy service industry capabilities are incorporated into program
portfolio design and that local governments, community-based
organizations, and energy efficiency service providers are encouraged
to participate in program implementation where appropriate.
(2) That no energy efficiency funds are used to provide incentives
for the purchase of new energy-efficient refrigerators.
SEC. 3. Section 339.4 of the Public Utilities Code, as added by
Section 4 of Chapter 1050 of the Statutes of 2000, is repealed.
SEC. 4.
No reimbursement is required by this act pursuant to Section 6 of
Article XIII B of the California Constitution because the only costs
that may be incurred by a local agency or school district will be
incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIII B of the California Constitution.
