BILL NUMBER: SBX1 29 INTRODUCED BILL TEXT INTRODUCED BY Senators Steinberg and Pavley AUGUST 29, 2011 An act to add Article 3 (commencing with Section 25620.20) to Chapter 7.1 of Division 15 of the Public Resources Code, relating to energy. LEGISLATIVE COUNSEL'S DIGEST SB 29, as introduced, Steinberg. Energy: energy efficiency programs. (1) Under the Public Utilities Act (the act), the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations, as defined. The Reliable Electric Service Investments Act within the act requires the PUC to require an electrical corporation, until January 1, 2012, to identify a separate electrical rate component, which the PUC refers to as the "public goods charge," to fund energy efficiency, renewable energy, and research, development, and demonstration programs that enhance system reliability and provide in-state benefits. Existing law requires the PUC to order certain electrical corporations to collect and spend certain funds for public benefit programs, including cost-effective energy efficiency and conservation programs. This bill would require the PUC to fund mechanisms to finance comprehensive energy efficiency retrofits of specified building sectors. (2) The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. Governor Schwarzenegger issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on December 6, 2010. Governor Brown issued a proclamation on January 20, 2011, declaring and reaffirming that a fiscal emergency exists and stating that his proclamation supersedes the earlier proclamation for purposes of that constitutional provision. This bill would state that it addresses the fiscal emergency declared and reaffirmed by the Governor by proclamation issued on January 20, 2011, pursuant to the California Constitution. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Article 3 (commencing with Section 25620.20) is added to Chapter 7.1 of Division 7.1 of the Public Resources Code, to read: Article 3. Investment in Energy Efficiency Retrofits 25620.20. (a) The Public Utilities Commission shall implement the following elements and principles for the state's investments in energy efficiency retrofits pursuant to this article and Section 399.4 of the Public Utilities Code. (b) The Public Utilities Commission, in evaluating energy efficiency investments under its existing statutory authority, shall do all of the following: (1) Maximize in-state job development. (2) Create and expand financing mechanisms that produce long-term benefits and that can become self-sustaining over time. (3) Ensure that moneys collected by an electrical corporation are not expended to provide incentives to customers outside of the service territory of the electrical corporation. (c) Funds collected pursuant to Section 399.8 of the Public Utilities Code and allocated to energy efficiency programs, consistent with subparagraph (C) of paragraph (9) of subdivision (b) of Section 454.5 of the Public Utilities Code shall be used to invest in and leverage resources for energy efficiency retrofits. The funds used pursuant to this section shall be targeted to do any of the following: (1) Achieve the goals in subparagraph (C) of paragraph (9) of subdivision (b) of Section 454.5 of the Public Utilities Code, the scoping plan adopted pursuant to Section 38561 of the Health and Safety Code, Chapter 470 of the Statutes of 2009, Chapter 496 of the Statutes of 2010, the Public Utilities Commission's energy efficiency goals and policies, and other state energy and water efficiency policies. (2) Maximize energy savings, job creation, and economic development by establishing financing mechanisms that leverage funds provided pursuant to this chapter to the maximum extent feasible, encourage significant private investments in energy efficiency, operate in coordination with other energy efficiency and clean energy programs, and seek to achieve lasting market transformation and sustainability. (3) Provide financial assistance for comprehensive energy efficiency retrofits consistent with guidelines adopted pursuant to Chapter 470 of the Statutes of 2009 and in a manner that leverages ratepayer funds to the maximum extent feasible and is cost effective to increase investment in energy efficiency where appropriate in a manner that will ensure that the investments produce energy savings. (4) Ensure opportunities for low- and moderate-income households, including multifamily households, and economically disadvantaged communities to participate in financial investment tools for comprehensive energy efficiency retrofits, and include preferences for programs and program providers in economically disadvantaged communities in coordination with those services made available pursuant to Sections 739 and 2790 of the Public Utilities Code. (5) Coordinate with low-income energy efficiency and weatherization programs, including those administered by other state and local agencies and community-based organizations, to maximize the effectiveness and efficiency of both programs. (6) Increase participation in energy efficiency financing and implementation by independent third-party efficiency services providers, including, but not limited to, local and regional government energy offices, nonprofit organizations, community organizations such as conservation corps and youth corps, small businesses, and minority-, women-, and disabled veteran-owned businesses. (7) Coordinate with the CEIP to ensure that proven new technologies are integrated into program implementation. (8) Require independent evaluation, measurement, and verification consistent with requirements established pursuant to Chapter 470 of the Statutes of 2009 prior to implementation. (9) Improve coordination among federal, state, local, and private programs to mobilize investment in energy efficiency and efficiency retrofits, and eliminate duplication. (d) The Public Utilities Commission shall develop or authorize financing mechanisms subject to subdivision (a) that are appropriate to individual market segments in coordination with the commission. (e) The Public Utilities Commission shall establish a standard for what constitutes cost-effective energy efficiency retrofits to ensure that the benefits of energy efficiency retrofits exceed their cost. (f) The Public Utilities Commission shall ensure that the state's investments in cost-effective energy efficiency retrofits are accountable and transparent by doing each of the following: (1) Make data publicly available in a manner that provides sufficient information to ascertain the total program costs and benefits, typical installed cost of energy efficiency measures where appropriate, the amount of expected energy savings over the life of the retrofit measure or program compared to the incentive and other expenditures incurred, the geographic distribution of projects where appropriate, the type of measures deployed in each electrical corporation's service area, and the performance of energy efficiency measures for the utility service area individually or collectively as appropriate. (2) Verify energy demand reductions by region and assess progress toward energy efficiency goals, ensure that consumer information is made publicly available to assist customers in finding reliable contractors and energy efficiency measures, to understand the cost and benefits of energy efficiency measures, to understand their energy bills, and to understand the costs and benefits of various means of financing energy efficiency measures. (3) Make all contract bidding opportunities publicly available, including contracts administered by electrical corporations or third-party administrators, and ensure that small businesses and minority-, women-, and disabled veteran-owned businesses are afforded full opportunities to participate during the contract bidding process. (4) Ensure that major products of all consultant contracts of the Public Utilities Commission are made available in a timely manner on the Public Utilities Commission's Internet Web site. (g) The Public Utilities Commission shall, in coordination with the commission and pursuant to Chapter 470 of the Statutes of 2009, adopt measurable goals and performance standards for each building sector and financing mechanism. Financial assistance shall be limited to no more than the amount necessary to finance energy efficiency improvements without exceeding the value of the savings over the life of the energy efficiency improvements. The Public Utilities Commission shall adopt performance-based standards for financial investment tools to ensure that recipients are provided accurate information regarding the costs and benefits of the financial assistance. (h) The Public Utilities Commission shall convene a stakeholder advisory committee no fewer than two times annually to provide technical and strategic guidance for the development and administration of energy efficiency financing programs developed pursuant to this section. The committee shall include representatives of the investor-owned utilities, the commission, energy efficiency investors, technology companies, building industry, installers, local governments, commercial real estate industry, labor, diverse environmental groups, including environmental justice groups, commercial building owners and managers, the office of the Treasurer, the California Public Employees' Retirement System, and other entities, as appropriate. (i) The Public Utilities Commission shall authorize funding in a manner that provides opportunities for all customer sectors to participate, including, but not limited to, residential single family and multifamily, commercial and small business, agriculture and food processing, public buildings owned by state or local governments or special assessment and school districts, and industrial entities. (1) In developing and expanding financial investment tools for energy efficiency retrofits in commercial buildings, the Public Utilities Commission should consider the unique challenges related to energy retrofits in commercial buildings, including length of payback, access to capital, allocation of costs between tenants and owners, and related issues. Programs and methods that should be considered include, but are not limited to, revolving loans, low-interest loans, loan-loss reserves, loan guarantees, interest rate buy-down, property-secured financing, on-bill financing or repayment, grants, use of the California Infrastructure and Economic Development Bank, the California Alternative Energy Transportation Financing Authority, or other appropriate financing mechanisms. (2) The Public Utilities Commission shall analyze and determine the most effective means to increase cost-effective investment in residential energy efficiency retrofits, including local and regional, public and private, financing mechanisms to reduce the cost of capital and leverage public funds to the maximum extent practicable. This evaluation shall be used to prioritize the adoption of financial investment tools for residential energy efficiency retrofits pursuant to Section 399.8 of the Public Utilities Code and other provisions as appropriate. This evaluation shall consider revolving loans, low-interest loans, loan-loss reserves, loan guarantees, interest rate buy-down, property-secured financing, on-bill financing or repayment, grants, use of the California Infrastructure and Economic Development Bank, the California Alternative Energy Transportation Financing Authority, or other appropriate financing mechanisms. (3) The Public Utilities Commission shall evaluate and authorize funding mechanisms to finance comprehensive energy efficiency retrofits of public buildings. This evaluation shall be used to prioritize the adoption of financial investment tools for public building energy efficiency retrofits pursuant to Section 399.8 of the Public Utilities Code and other provisions as appropriate. This evaluation shall consider financial investment tools such as on-bill financing and repayment, loan-loss reserves, regional municipal financing programs, revolving loan funds, performance guarantees, use of the California Infrastructure and Economic Development Bank, and other measures that leverage funds provided pursuant to this article to the maximum extent possible. (j) The Public Utilities Commission shall encourage local government participation in, and administration of, public building retrofit financing programs. For purposes of this subdivision, local governments include local and regional energy offices, joint powers authorities, special assessment districts, local government councils and associations, and other local government entities. The Public Utilities Commission shall coordinate with the office of the Treasurer, the commission, electrical corporations, and local governments to identify the most appropriate and suitable local and regional government administrators. (k) Funds collected pursuant to Section 399.8 of the Public Utilities Code and allocated for energy efficiency that are subject to the requirements of this section shall be supervised by the Public Utilities Commission. SEC. 2. This act addresses the fiscal emergency declared and reaffirmed by the Governor by proclamation on January 20, 2011, pursuant to subdivision (f) of Section 10 of Article IV of the California Constitution.