November 30, 2015

Two Laws Set an Aggressive Energy Course for California

California is a bellwether state in environmental and energy matters. The most recent illustration is the promulgation of Assembly Bill 802 and The Clean Energy and Pollution Reduction Act of 2015.

The impact will be felt on two deeply related fronts: The laws mean that the amount of electricity generated from renewables will accelerate more aggressively between now and 2030 and, beginning on January 1, 2017, disclosure laws on energy use in non-residential buildings will change to enable collected data to more effectively aid in the creation of efficiency programs.

LegTrack offers a good rundown of the new laws.

The Clean Energy and Pollution Reduction Act of 2015: SB 350 mandates that that half of the electricity generated and sold to retail customers be from renewables by Dec. 31, 2030. It requires that the State Energy Resources Conservation and Development Commission set annual targets that will result in a doubling of efficiency and savings in electrical and natural gas usage by Jan. 1, 2030. SB 350 also mandates that the electrical industry by reestablished into an Independent System Operator structure.

The key to the new law is an increase in the amount of energy derived from renewables. The law firm of Perkins Coie LLP traces the growth of renewables in California writes that the level of energy from renewables is set forth in the Renewables Portfolio Standard (RPS) which is overseen by the California Public Utilities Commission (CPUC). The proportion of electricity from renewables and the dates by which the stated level must be attained both have shifted since its original enactment in 2002. The latest requirement – raising the level from 33 percent to 50 percent by 2030 – is set forth in SB 350.

SB 350 also sets a new overall course. Austin Whitman, the Director of Regulatory Affairs for FirstFuel Software, posted at commentary earlier this month at Energy Manager Today that noted the importance of the new approach:

…By treating energy efficiency and renewable energy as two parts of the clean energy equation, SB350 uniquely and smartly presents a single, coordinated roadmap to simultaneously decrease energy consumption, cut costs and reduce greenhouse gas emissions.

Assembly Bill 802: The State Energy Resources Conservation and Development Commission, in consultation with the Public Utilities Commission, will be required to conduct assessments and forecasts of energy industry “supply, production, transportation, delivery, distribution, demand, and prices.”

The findings will be used to develop and evaluate energy policies and programs. Utilities will be required to maintain records of all buildings in their footprints for the most recent year. Beginning on Jan. 1, 2017, this and/or other authorized information will be available to those authorized under the act. By Sept. 1, 2016, the Public Utilities Commission will authorize electric and gas companies to provide incentives, rebates and technical assistance to increase building efficiency. Costs for those programs could be included in rates.

At his website, Allen Matkins provides background on AB 802. It replaces AB 1103, which will remain in effect until the end of the year. Both bills are aimed at compelling utilities to track and make available energy usage data on non-residential buildings.

AB 1103, however, “has been plagued with implementation problems” since it was enacted in 2007. A key problem, Matkins writes, is that it is difficult or even impossible under AB 1103 for tenants to get the authorizations necessary to compel utilities to provide the data. AB 802 is an effort to alleviate this and other problems.

The bottom line is that the two bills represent significant changes to how energy is generated, distributed and managed in the state.

 In response to questions posed by Energy Manager Today, Chris Busch, the Director of Research for Energy Innovation, lauded the new laws. Busch, the lead author (Erica Lew and Joe DiStefano are the other authors) of a study entitled “Moving California Forward,” wrote that the laws are important. “There may be one or two states that have higher RPS [Renewables Portfolio Standard] targets, but for a large state the size of CA to commit to a minimum of 50% renewable energy is very important,” he wrote.

Clearly, there is a strategy in place: Drive renewables and encourage creativity and entrepreneurship. Intelligent Utility suggeated that the laws do a good job of enabling utilities and their customers to take advantage of technologies that weren’t available under the older statutes:

By allowing utilities to pair meter data with data analytics to find and measure savings, Assembly Bill 802 empowers customers to reduce usage in their energy system as a whole, rather than focusing narrowly on replacement of equipment. Customers will be able to better track how they reduce energy waste in commercial buildings, as well as at home, and be incentivized for doing so.

While Busch is satisfied that the state has taken a big step forward, he suggests that much work remains:
“These bills don’t really affect smart growth in the sense of driving more focused, less sprawling, more walkable, more transit oriented that is the topic of our report,” he wrote. “One weakness of these bills is California needs to work toward a policy framework that optimizes the electricity system. The 50% by 2030 RPS is a great step, but on its own will not motivate the type of system optimization needed for the most economically beneficial approach to building out our modern, low-carbon electricity system.”

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