Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. Pursuant to existing law, the commission supervises various energy efficiency and other demand-side energy management programs administered by electrical corporations, gas corporations, and 3rd party administrators, the expenses for which are collected by electrical corporations and gas corporations from their ratepayers. Existing law requires the commission to ensure that the Internet Web site for the Energy Upgrade California program be revised to include information related to demand-side management programs for small business customers.

This bill would require that the Internet Web site for the Energy Upgrade California program be revised and maintained to include information related to demand-side management programs for small business customers.

Existing law creates the Office of Small Business Advocate within the Governors Office of Business and Economic Development. Existing law establishes the duties and functions of the advocate, which include advisory participation in the consideration of all legislation and administrative regulations that affect small businesses. Existing law requires the office to include a link to the Energy Upgrade California Internet Web site on the homepage of its Internet Web site.

Existing decisions of the commission approve of steps to be undertaken with respect to statewide marketing, education, and outreach with respect to energy efficiency and other demand-side energy management programs supervised by the commission.

This bill would require the commission, in consultation with the office, to ensure that adequate marketing, education, and outreach are undertaken that is directed at small business customers to enable small business customers to fully participate in ratepayer-funded demand-side energy management programs, including specified programs that provide financial incentives, rebates, technical assistance, and support.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. Pursuant to existing law, the commission supervises various energy efficiency and other demand-side energy management programs administered by electrical corporations, gas corporations, and 3rd party administrators, the expenses for which are collected by electrical corporations and gas corporations from their ratepayers. Existing law requires the commission to ensure that the Internet Web site for the Energy Upgrade California program be revised to include information related to demand-side management programs for small business customers.

This bill would require that the Internet Web site for the Energy Upgrade California program be revised and maintained to include information related to demand-side management programs for small business customers.

Existing law creates the Office of Small Business Advocate within the Governors Office of Business and Economic Development. Existing law establishes the duties and functions of the advocate, which include advisory participation in the consideration of all legislation and administrative regulations that affect small businesses. Existing law requires the office to include a link to the Energy Upgrade California Internet Web site on the homepage of its Internet Web site.

Existing decisions of the commission approve of steps to be undertaken with respect to statewide marketing, education, and outreach with respect to energy efficiency and other demand-side energy management programs supervised by the commission.

This bill would require the commission, in consultation with the office, to ensure that adequate marketing, education, and outreach are undertaken that is directed at small business customers to enable small business customers to fully participate in ratepayer-funded demand-side energy management programs, including specified programs that provide financial incentives, rebates, technical assistance, and support.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. Pursuant to existing law, the commission supervises various energy efficiency and other demand-side energy management programs administered by electrical corporations, gas corporations, and 3rd party administrators, the expenses for which are collected by electrical corporations and gas corporations from their ratepayers. Existing law requires the commission to ensure that the Internet Web site for the Energy Upgrade California program be revised to include information related to demand-side management programs for small business customers.

This bill would require that the Internet Web site for the Energy Upgrade California program be revised and maintained to include information related to demand-side management programs for small business customers.

Existing law creates the Office of Small Business Advocate within the Governors Office of Business and Economic Development. Existing law establishes the duties and functions of the advocate, which include advisory participation in the consideration of all legislation and administrative regulations that affect small businesses. Existing law requires the office to include a link to the Energy Upgrade California Internet Web site on the homepage of its Internet Web site.

Existing decisions of the commission approve of steps to be undertaken with respect to statewide marketing, education, and outreach with respect to energy efficiency and other demand-side energy management programs supervised by the commission.

This bill would require the commission, in consultation with the office, to ensure that adequate marketing, education, and outreach are undertaken that is directed at small business customers to enable small business customers to fully participate in ratepayer-funded demand-side energy management programs, including specified programs that provide financial incentives, rebates, technical assistance, and support.

Existing law authorizes the Department of Toxic Substances Control, as part of implementing a program to provide pollution prevention training and resources to, among other entities, small business development corporations, to develop a California Green Business Program that provides support and assistance to local government programs that provide for the voluntary certification of small businesses that adopt environmentally preferable business practices, including, but not limited to, increased energy efficiency, reduced greenhouse gas emissions, promotion of water conservation, and reduced waste generation.

This bill would declare the intent of the Legislature to enact legislation that would establish a microloan program to provide low interest loans to small businesses that make a contractual commitment to embrace sustainable business practices, including, but not limited to, low-flow toilets, energy-efficient lighting, and waste reduction.

 THIRD READING  

Bill No: AB 2831

Author:

:

Vote:

SENATE ENERGY, U. & C. COMMITTEE: 11-0, 6/19/18

AYES: Hueso, Morrell, Bradford, Cannella, Hertzberg, Hill, McGuire, Skinner, Stern, Vidak, Wiener

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/16/18

AYES: Portantino, Bates, Beall, Bradford, Hill, Nielsen, Wiener

ASSEMBLY FLOOR: 78-0, 5/30/18 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires the California Public Utilities Commission (CPUC) to ensure that adequate outreach is conducted to ensure that small business customers can fully participate in energy demand management programs.

ANALYSIS:

Existing law:

1. Defines a “small business” as an independently owned and operated business located in California that has 100 or fewer employees and annual gross receipts of $10 million or less over the previous three years. As of January 1, 2019, businesses may earn up to $15 million in gross receipts and meet the definition of a “small business” as long as they meet other criteria. (Government Code §14837(d)(1)(A))
2. Defines, as of January 1, 2019, a “small business” for the purposes of public works contracts as an independently owned and operated business located in California with 200 or fewer employees and annual gross receipts of $36 million or less over the prior three years. (Government Code §14837 (d)(1)(B))
3. Defines a “demand-side energy management program” as any public or utility program pertaining to energy efficiency, demand response, clean distributed generation, energy conservation, energy savings, or weatherization. (Public Utilities Code §323.5(a))
4. Requires the CPUC to revise the Energy Upgrade California Web site to include information regarding energy demand management programs for small business customers. (Public Utilities Code §323.5(b))
5. Requires the CPUC to direct each electrical corporation to collect revenues for energy efficiency, public interest energy research, and renewable energy development programs from ratepayers through nonbypassable charges based on the ratepayers’ energy use. (Public Utilities Code §381)
6. Requires load-serving entities (LSEs) to submit integrated resource plans (IRPs) to the CPUC to ensure that LSEs procure at least 50 percent eligible renewable energy resources by December 31, 2030, and meet the greenhouse gas (GHG) reduction targets for the electricity sector in addition to other goals. The CPUC may authorize procurement of various resources for electrical corporations, including demand-side resources, supply side resources, and resources that may be either demand-side resources or supply side resources. (Public Utilities Code §454.52)
7. Requires each LSE’s IRP to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable supply of electricity while providing optimal integration of renewable energy in a cost-effective manner, ensuring that California can meet targets for reducing GHG emissions 40 percent below 1990 levels by 2030, and preventing cost-shifting between LSEs. (Public Utilities Code §454.54)

This bill:

1. Requires the CPUC to consult with the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development to ensure that adequate marketing, education and outreach is conducted to ensure that small businesses can fully participate in ratepayer funded energy demand management programs, including financial incentives, rebates, and technical assistance, including LSEs’ IRP procurements and efforts to double energy efficiency.
2. Requires the CPUC to revise and maintain the Energy Upgrade California Web site.

Background

Prioritizing energy efficiency. In 2003, the CPUC, California Energy Commission (CEC) and California Consumer Power and Conservation Financing Authority created an Energy Action Plan to prevent energy shortages and excessive energy price spikes. This plan established California’s loading order, which created a policy prioritizing the resources deployed to support California’s energy needs. California’s loading order identified energy efficiency and demand response as the preferred mechanisms for achieving energy goals. Energy efficiency and demand response are components of demand-side energy management.

Demand management and energy efficiency. Demand-side energy management is also known as energy demand management and encompasses various strategies that a utility customer can implement to optimize and reduce energy use. These strategies can include measures that reduce energy consumption or shift energy use to non-peak times. In California, utility programs that incentivize and support demand-side management measures are collectively referred to as Energy Efficiency programs. Currently, California’s investor-owned utilities (IOUs) operate energy efficiency programs across a variety of sectors, including commercial, industrial, agricultural, and residential utility customers. These programs offer a variety of incentives to support energy efficiency measures and are regulated by the CPUC to ensure that they meet cost-effectiveness standards. IOU energy efficiency programs are funded through an additional charge on ratepayers’ bills. The CPUC estimates that this additional charge provides approximately $1 billion for energy efficiency measures annually.

The rolling portfolio. In November 2013, the CPUC issued a rulemaking (R. 13-11-005) establishing a “rolling portfolio” process for approving utilities’ energy efficiency programs. The rolling portfolio enables the CPUC to approve long-term funding for energy efficiency programs while allowing program administrators to update the programs on an as-needed basis. Prior to establishing the rolling portfolio, the CPUC authorized energy efficiency programs on a fixed three-year basis. This fixed, triennial process created a lack of continuity for energy efficiency projects due to the “start and stop” nature of program approvals every three years.

In subsequent decisions, the CPUC clarified the process by which utilities submit proposals for ratepayer-funded energy efficiency programs through business plans. A utility’s business plan identifies its strategy for meeting the state’s energy efficiency targets, plans for programs supporting different customer sectors, and funding needed to implement the programs.

Small business participation. Small commercial entities have the potential to contribute a significant amount of energy savings from electricity. According to the CPUC, the small commercial sector has a greater electricity savings potential than the industrial and agricultural sectors and comprises more than half of the potential electricity savings from the entire commercial sector. Between 2015 and 2017, the amount of IOU energy efficiency program funding approved for small commercial entities increased from approximately 18 percent of all commercial sector funding in 2015 to approximately 89 percent of all commercial sector funding in 2017.

Barriers to participation. Despite these efforts and the small commercial sector’s potential for electricity savings, these businesses have disproportionately lower participation in utilities’ energy efficiency programs. According to Pacific Gas and Electric’s (PG&E’s) 2018-2025 Energy Efficiency Business Plan, small businesses comprise more than half of all of the utility’s commercial sector customers; however, small businesses comprised only a quarter of PG&E’s commercial energy efficiency program participants. The disparity between small and larger commercial businesses’ participation in these programs can be attributed to a number of factors. Small businesses may experience “split incentive” challenges more frequently than larger businesses because they may be more likely to rent building space rather than own commercial property. Within the commercial sector, smaller businesses may face longer payoff periods and disproportionately higher upfront investments in energy efficiency measures.

This bill requires the CPUC to consult with the Office of Small Business Advocate to ensure that adequate marketing, education and outreach is conducted to ensure that small businesses can fully participate in ratepayer funded energy demand management programs. The Office of Small Business Advocate is located within the Governor’s Office of Business and Economic Development and provides information and assistance to small businesses, including information about technical assistance, financing programs, and state agency procurement.

Energy upgrade California. The Energy Upgrade California Web site provides information about programs and strategies for energy efficiency. While the CPUC and CEC both contribute to the Web site, the CPUC is the primary administrator. Prior legislation (AB 2137, Quirk, Chapter 290, Statutes of 2014) required the CPUC to revise the Web site to include information regarding demand-side energy management for small business customers. However, the Web site continues to primarily supply information about residential energy efficiency efforts. This bill requires the CPUC to revise and maintain the Energy Upgrade California Web site to include information for small business customers regarding demand-side energy management.

Related/Prior Legislation

SB 605 (Galgiani, Chapter 673, Statutes of 2017) revised the gross receipts thresholds for the definitions of small businesses and microbusinesses. The bill, as of January 1, 2019, raises the small business gross receipt threshold from $10 million to $15 million and establishes a separate definition of small businesses for public works contracts to include businesses with gross receipts up to $36 million.

SB 618 (Bradford, Chapter 431, Statutes of 2017) required LSEs’ IRPs to contribute to a diverse and balanced portfolio of resources needed to ensure reliability, meet environmental goals, and prevent cost-shifting between LSEs.

SB 350 (De León, Chapter 547, Statutes of 2015), the Clean Energy and Pollution Reduction Act of 2015, established new energy efficiency, clean energy, clean air, and GHG reduction goals. The bill also required LSEs to submit IRPs to ensure that the electricity sector will procure at least 50 percent eligible renewable energy resources by December 31, 2030, and meet GHG emissions reduction goals.

AB 2137 (Quirk, Chapter 290, Statutes of 2014) required the CPUC to revise the Energy Upgrade California Web site to include information regarding demand-side energy management for small business customers. The bill also required the Office of Small Business Advocate to include a link to the Energy Upgrade California Web site on its homepage.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Onetime costs of $200,000 (special fund) to the CPUC to contract for the development and marketing of content directed at small businesses.
• Minor and absorbable one-time costs to Governor’s Office of Business and Economic Development to consult with the CPUC.

SUPPORT: (Verified 8/16/18)

None received

OPPOSITION: (Verified 8/16/18)

None received

ARGUMENTS IN SUPPORT: According to the author, “Small businesses are essential for both California’s economy, as well as for the State’s goals of sustainability and energy efficiency. AB 2831 will ensure that small businesses have more opportunities and access to existing energy efficiency upgrades and retrofits.”

ASSEMBLY FLOOR: 78-0, 5/30/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

Prepared by:

8/18/18 13:55:31

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 2831 (Limón) - Small business customers: demand-side energy management programs

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

This bill would require the California Public Utilities Commission (CPUC), in consultation with the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development (Go Biz), to ensure adequate marketing, education, and outreach is directed at small business customers to enable them to fully participate in ratepayer-funded demand-side energy management programs.

Fiscal Impact:

• Onetime costs of $200,000 (special fund) to the CPUC to contract for the development and marketing of content directed at small businesses.
• Minor and absorbable one-time costs to Go Biz to consult with the CPUC.

Background:

The CPUC designs and oversees energy efficiency and similar programs funded by billions of dollars collected from utility ratepayers. Generally, the CPUC evaluates these programs in terms of cost-effectiveness, that is, how much energy savings are achieved by each dollar spent. The author intends this bill to ensure small businesses have more opportunities and access to existing programs to facilitate and encourage energy efficiency upgrades and retrofits. The author contends small businesses currently participate in these programs at a lower rate than do larger businesses, which have resources to enable such participation. The author also notes that small business are ratepayers; as such, they too should directly benefit from the programs they help pay for.

Proposed Law:

This bill would:

1. Require the CPUC to consult with the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development to ensure that adequate marketing, education and outreach is conducted to ensure that small businesses can fully participate in ratepayer funded energy demand management programs, including financial incentives, rebates, and technical assistance, including LSEs’ IRP procurements and efforts to double energy efficiency.
2. Require the CPUC to revise and maintain the Energy Upgrade California website.

Related Legislation:

SB 605 (Galgiani, Chapter 673, Statutes of 2017) revised the gross receipts thresholds for the definitions of small businesses and microbusinesses. The bill, as of January 1, 2019, raises the small business gross receipt threshold from $10 million to $15 million and establishes a separate definition of small businesses for public works contracts to include businesses with gross receipts up to $36 million.

SB 618 (Bradford, Chapter 431, Statutes of 2017) requires LSEs’ IRPs to contribute to a diverse and balanced portfolio of resources needed to ensure reliability, meet environmental goals, and prevent cost-shifting between LSEs.

-- END --

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 6/19/18

SUBJECT:

DIGEST: This bill requires the California Public Utilities Commission (CPUC) to ensure that adequate outreach is conducted to ensure that small business customers can fully participate in energy demand management programs.

ANALYSIS:

Existing law:

1. Defines a “small business” as an independently owned and operated business located in California that has 100 or fewer employees and annual gross receipts of $10 million or less over the previous three years. As of January 1, 2019, businesses may earn up to $15 million in gross receipts and meet the definition of a “small business” as long as they meet other criteria. (Government Code §14837(d)(1)(A))
2. As of January 1, 2019, defines a “small business” for the purposes of public works contracts as an independently owned and operated business located in California with 200 or fewer employees and annual gross receipts of $36 million or less over the prior three years. (Government Code §14837 (d)(1)(B))
3. Defines a “demand-side energy management program” as any public or utility program pertaining to energy efficiency, demand response, clean distributed generation, energy conservation, energy savings, or weatherization. (Public Utilities Code §323.5(a))
4. Requires the CPUC to revise the Energy Upgrade California website to include information regarding energy demand management programs for small business customers. (Public Utilities Code §323.5(b))
5. Requires the CPUC to direct each electrical corporation to collect revenues for energy efficiency, public interest energy research, and renewable energy development programs from ratepayers through nonbypassable charges based on the ratepayers’ energy use. (Public Utilities Code §381)
6. Requires load-serving entities (LSEs) to submit integrated resource plans (IRPs) to the CPUC to ensure that LSEs procure at least 50 percent eligible renewable energy resources by December 31, 2030 and meet the greenhouse gas (GHG) reduction targets for the electricity sector in addition to other goals. The CPUC may authorize procurement of various resources for electrical corporations, including demand-side resources, supply side resources, and resources that may be either demand-side resources or supply side resources. (Public Utilities Code §454.52)
7. Requires each LSE’s IRP to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable supply of electricity while providing optimal integration of renewable energy in a cost-effective manner, ensuring that California can meet targets for reducing GHG emissions 40 percent below 1990 levels by 2030, and preventing cost-shifting between LSEs. (Public Utilities Code §454.54)

This bill:

1. Requires the CPUC to consult with the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development to ensure that adequate marketing, education and outreach is conducted to ensure that small businesses can fully participate in ratepayer funded energy demand management programs, including financial incentives, rebates, and technical assistance, including LSEs’ IRP procurements and efforts to double energy efficiency.
2. Requires the CPUC to revise and maintain the Energy Upgrade California website.

Background

Prioritizing energy efficiency. In 2003, the CPUC, California Energy Commission (CEC) and California Consumer Power and Conservation Financing Authority created an Energy Action Plan to prevent energy shortages and excessive energy price spikes. This plan established California’s loading order, which created a policy prioritizing the resources deployed to support California’s energy needs. California’s loading order identified energy efficiency and demand response as the preferred mechanisms for achieving energy goals. Energy efficiency and demand response are components of demand-side energy management.

Demand management and energy efficiency. Demand-side energy management is also known as energy demand management and encompasses various strategies that a utility customer can implement to optimize and reduce energy use. These strategies can include measures that reduce energy consumption or shift energy use to non-peak times. In California, utility programs that incentivize and support demand-side management measures are collectively referred to as Energy Efficiency programs. Currently, California’s investor-owned utilities (IOUs) operate energy efficiency programs across a variety of sectors, including commercial, industrial, agricultural, and residential utility customers. These programs offer a variety of incentives to support energy efficiency measures and are regulated by the CPUC to ensure that they meet cost-effectiveness standards. IOU energy efficiency programs are funded through an additional charge on ratepayers’ bills. The CPUC estimates that this additional charge provides approximately $1 billion for energy efficiency measures annually.

The rolling portfolio. In November 2013, the CPUC issued a rulemaking (R. 13-11-005) establishing a “rolling portfolio” process for approving utilities’ energy efficiency programs. The rolling portfolio enables the CPUC to approve long-term funding for energy efficiency programs while allowing program administrators to update the programs on an as-needed basis. Prior to establishing the rolling portfolio, the CPUC authorized energy efficiency programs on a fixed three-year basis. This fixed, triennial process created a lack of continuity for energy efficiency projects due to the “start and stop” nature of program approvals every three years.

In subsequent decisions, the CPUC clarified the process by which utilities submit proposals for ratepayer-funded energy efficiency programs through business plans. A utility’s business plan identifies its strategy for meeting the state’s energy efficiency targets, plans for programs supporting different customer sectors, and funding needed to implement the programs.

Small business participation. Small commercial entities have the potential to contribute a significant amount of energy savings from electricity. According to the CPUC, the small commercial sector has a greater electricity savings potential than the industrial and agricultural sectors and comprises more than half of the potential electricity savings from the entire commercial sector. Between 2015 and 2017, the amount of IOU energy efficiency program funding approved for small commercial entities increased from approximately 18 percent of all commercial sector funding in 2015 to approximately 89 percent of all commercial sector funding in 2017.

Barriers to participation. Despite these efforts and the small commercial sector’s potential for electricity savings, these businesses have disproportionately lower participation in utilities’ energy efficiency programs. According to Pacific Gas and Electric’s (PG&E’s) 2018-2025 Energy Efficiency Business Plan, small businesses comprise more than half of all of the utility’s commercial sector customers; however, small businesses comprised only a quarter of PG&E’s commercial energy efficiency program participants. The disparity between small and larger commercial businesses’ participation in these programs can be attributed to a number of factors. Small businesses may experience “split incentive” challenges more frequently than larger businesses because they may be more likely to rent building space rather than own commercial property. Within the commercial sector, smaller businesses may face longer payoff periods and disproportionately higher upfront investments in energy efficiency measures.

This bill requires the CPUC to consult with the Office of Small Business Advocate to ensure that adequate marketing, education and outreach is conducted to ensure that small businesses can fully participate in ratepayer funded energy demand management programs. The Office of Small Business Advocate is located within the Governor’s Office of Business and Economic Development and provides information and assistance to small businesses, including information about technical assistance, financing programs, and state agency procurement.

Energy upgrade California. The Energy Upgrade California website provides information about programs and strategies for energy efficiency. While the CPUC and CEC both contribute to the website, the CPUC is the primary administrator. Prior legislation (AB 2137, Quirk, Chapter 290, Statutes of 2014) required the CPUC to revise the website to include information regarding demand-side energy management for small business customers. However, the website continues to primarily supply information about residential energy efficiency efforts. This bill requires the CPUC to revise and maintain the Energy Upgrade California website to include information for small business customers regarding demand-side energy management.

Prior/Related Legislation

SB 605 (Galgiani, Chapter 673, Statutes of 2017) revised the gross receipts thresholds for the definitions of small businesses and microbusinesses. The bill, as of January 1, 2019, raises the small business gross receipt threshold from $10 million to $15 million and establishes a separate definition of small businesses for public works contracts to include businesses with gross receipts up to $36 million.

SB 618 (Bradford, Chapter 431, Statutes of 2017) requires LSEs’ IRPs to contribute to a diverse and balanced portfolio of resources needed to ensure reliability, meet environmental goals, and prevent cost-shifting between LSEs.

SB 350 (De León, Chapter 547, Statutes of 2015), the Clean Energy and Pollution Reduction Act of 2015, established new energy efficiency, clean energy, clean air, and GHG reduction goals. The bill also required LSEs to submit IRPs to ensure that the electricity sector will procure at least 50 percent eligible renewable energy resources by December 31, 2030, and meet GHG emissions reduction goals.

AB 2137 (Quirk, Chapter 290, Statutes of 2014) required the CPUC to revise the Energy Upgrade California website to include information regarding demand-side energy management for small business customers. The bill also required the Office of Small Business Advocate to include a link to the Energy Upgrade California website on its homepage.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

None received

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: According to the author:

“Small businesses are essential for both California’s economy, as well as for the State’s goals of sustainability and energy efficiency. AB 2831 will ensure that small businesses have more opportunities and access to existing energy efficiency upgrades and retrofits.”

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2831

Author:(Limón)

As Amended Ver:April 25, 2018

Majority vote

SUMMARY: Requires the California Public Utilities Commission (CPUC), in consultation with the Office of Small Business Advocate within the Governor's Office of Business and Economic Development, to ensure that adequate marketing, education, and outreach are undertaken to enable small business customers to fully participate in demand-side energy management programs.

FISCAL EFFECT: One-time special-fund costs of $150,000 to $200,000 to the CPUC to contract for the development and marketing of content directed at small business.

COMMENTS: The author is concerned that the energy efficiency programs in the IOU regions of the state, which are funded by a surcharge on the bills of all customers, do not adequately reach small business. Although top of the loading order, the energy efficiency program, now commonly referred to as the Rolling Portfolio, has been funded at less than $1 billion a year for more than ten years. Load has continued to grow as has the population, the program is stretched thin. One way to characterize decisions of the CPUC on energy efficiency is that they are ensuring that the funds are targeted at the most significant savings. Another perspective is that CPUC decisions put up administrative barriers to access limited funds as a means of rationing. A recent decision of the CPUC recognized that some businesses are hard-to-reach and in some way requires the program administrators to ensure the energy efficiency business plans address the needs of these hard-to-reach markets. The CPUC found that some business customers "do not have easy access to program information or generally do not participate in energy efficiency programs due to a combination of language, business size, geographic, and lease (split incentive) barriers." It is not clear how this action will affect the implementation of energy efficiency programs at this point.

Analysis Prepared by: Kellie Smith / U. & E. / (916) 319-2083 FN: 0003121

Date of Hearing: May 9, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2831

Author:(Limón) – As Amended Ver:April 25, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the California Public Utilities Commission (CPUC), in consultation with the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development (Go Biz), to ensure adequate marketing, education, and outreach is directed at small business customers to enable them to fully participate in ratepayer-funded demand-side energy management programs.

FISCAL EFFECT:

1. One-time special-fund costs of $150,000 to $200,000 to the CPUC to contract for the development and marketing of content directed at small business.
2. Minor and absorbable one-time costs to Go Biz to consult with the CPUC.

COMMENTS:

1. Purpose. The author intends this bill to ensure small businesses have more opportunities and access to existing programs to facilitate and encourage energy efficiency upgrades and retrofits. The author contends small businesses currently participate in these programs at a lower rate than do larger businesses, which have resources to enable such participation. The author also notes that small business are ratepayers; as such, they too should directly benefit from the programs they help pay for.
2. Energy and Equity. The CPUC designs and oversees energy efficiency and similar programs funded by billions of dollars collected from utility ratepayers. Generally, the CPUC evaluates these programs in terms of cost-effectiveness, that is, how much energy savings are achieved by each dollar spent. Arguably, spending program dollars on small business is, in most cases, less cost-effective than could otherwise be achieved. This is because larger customers can use program dollars to implement large-scale energy efficiency and related measures that, in themselves, are more cost-effective in terms of energy saved per program dollar spent. The author, however, is not making a cost-effectiveness argument. Rather, the author believes it is unfair to, in practice, exclude or discourage small business participation in these programs. In addition, the author contends it is important to support small businesses, which the author describes as essential to California’s economy.

It is likely the outreach required by this bill will occur through the existing Energy Upgrade California program. It is unclear how effectively the outreach will encourage small-business participation in energy efficiency and related programs.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: April 18, 2018

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Chris Holden, Chair

ABPCA Bill Id:AB 2831 (

Author:Limón) – As Amended Ver:April 3, 2018

SUBJECT: Small business customers: demand-side energy management programs

SUMMARY: Requires the California Public Utilities Commission (CPUC), in consultation with the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development, to ensure that adequate marketing, education, and outreach are undertaken to enable small business customers to fully participate in demand-side energy management programs.

EXISTING LAW:

1. Defines “demand-side energy management programs” as all energy efficiency, demand-side response, clean distributed generation, energy conservation, energy savings, or weatherization programs of the state or a local government, electrical or gas corporations (IOUs), or a local publicly owned electric or gas utility. (Public Utilities Code § 323.5)
   
2. Defines “small business” as an independently owned and operated business that is not dominant in its field of operation, has the principal office and officers located and domiciled in California, has 100 or fewer employees, and average annual gross receipts of $10 million or less over the previous three years, or is a manufacturer with 100 or fewer employees. (Government Code § 14837)
   
3. Requires the CPUC to identify all potential achievable cost-effective electricity and natural gas efficiency savings and “establish efficiency targets” for IOUs to achieve. (Public Utilities Code §§ 454.55, 454.56)
   
4. Establishes a charge on electricity and natural gas consumption to fund cost-effective energy efficiency and conservation activities. (Public Utilities Code §§ 381, 890)
   
5. Requires the CPUC, by September 1, 2016, to authorize an IOU to provide incentives for the cost of energy efficiency programs based on all estimated energy savings, including energy savings from bringing existing buildings into compliance with mandatory energy efficiency codes for existing buildings issued by the CEC, and authorizes an IOU to recover the costs in rates. Directs the CPUC to allow an IOU to take into consideration the overall reduction in normalized metered energy consumption as a measure of energy savings of the IOU’s energy efficiency program. States that the CPUC may adjust the energy efficiency procurement targets to reflect energy efficiency savings achieved in meeting or exceeding mandatory energy efficiency codes for existing buildings. (Public Utilities Code § 381.2)
   

FISCAL EFFECT: This bill is keyed fiscal and will be referred to the Appropriations Committee for its review of the fiscal effect of this bill. It is important to note however that the Appropriations Committee limits its analysis to the impact on overall state agency impacts and cannot assess the impacts of policy on the costs of electricity or gas service to ratepayers.

BACKGROUND:

The CPUC oversees programs and market mechanisms to help customers manage their energy use. Customers have a wide range of “distributed energy resources” (DERs) to choose from which can also referred to as demand-side management. DERs are distribution-connected distributed generation resources such as energy efficiency, demand response, customer generation (e.g. rooftop solar), energy storage, alternative fuel vehicles (e.g. electric vehicles), and water-energy conservation. A portfolio of DER solutions is available to customers through programs, tariffs, and procurements run directly by the utilities and third-party implementers.

The CPUC has directed the utilities to provide ways of making energy management decisions easier for customers. A 2007 CPUC decision specifically directed the utilities to “integrate customer demand-side programs, such as energy efficiency, self-generation, advanced metering, and demand response, in a coherent and efficient manner."

The CPUC develops policy for these activities through proceedings dedicated to each individual DER (e.g., energy efficiency or demand response), as well as proceedings involving multiple DERs. The Energy Upgrade California website has tips, services, and programs to help customers save energy and water. It is geared toward residential customers but the same services are generally available to small business customers as well.

The foundational demand-side program for customers is energy efficiency and is commonly referred to as the Rolling Portfolio. California’s commitment to energy efficiency has resulted in many different efficiency programs across the state. The programs span a variety of sectors encompassing residential homes and commercial buildings, large and small appliances, lighting and HVAC, industrial manufacturers, and agriculture. Within those sectors, efficiency programs may use any number of different tools: financial incentives and rebates, research and development for energy efficiency technologies, financing mechanisms, codes and standards development, education and public outreach, marketing, and others. Each of these programs helps California be more energy efficient, and collectively, these programs result in significant reductions in California’s greenhouse gas emissions (GHG). In total, energy efficiency is expected to make up 15 percent of the state’s GHG emission reduction targets.

The investor-owned utility (IOU) programs are funded by a charge on the bills of electricity and gas customers, which provides over $1 billion per year to fund IOU energy efficiency programs. These publicly-funded energy efficiency programs are usually administered by the state’s four IOUs: Pacific Gas and Electric Company, Southern California Edison, San Diego Gas & Electric, and Southern California Gas Company. Some programs are administered by Marin Clean Energy or through two “Regional Energy Networks” in the Bay Area and Southern California. All of the programs administered by these different entities are regulated by the CPUC to ensure they are meeting the goals and cost-effectiveness metrics the CPUC is statutorily required to set for the IOU efficiency portfolios.

COMMENTS:

1. Author’s Statement. The author submits that small businesses are essential for both California’s economy, as well as for the State’s goals of sustainability and energy efficiency. AB 2831 will ensure that small businesses have more opportunities and access to existing energy efficiency upgrades and retrofits.
2. Demand Exceeds Supply. The author is concerned that the energy efficiency programs in the IOU regions of the state which are funded by a surcharge on the bills of all customers do not adequately reach small business. Although top of the loading order, the program, now commonly referred to as the Rolling Portfolio, has been funded at less than $1 billion a year for more than ten years. Load has continued to grow as has the population, the program is stretched thin. One way to characterize decisions of the CPUC on energy efficiency is that they are ensuring that the funds are targeted at the most significant savings. Another perspective is that CPUC decisions put up administrative barriers to access limited funds as a means of rationing.
   
   A recent decision of the CPUC recognized that some businesses are hard-to-reach and in some way requires the program administrators to ensure the energy efficiency business plans address the needs of these hard-to-reach markets. They found that some business customers “do not have easy access to program information or generally do not participate in energy efficiency programs due to a combination of language, business size, geographic, and lease (split incentive) barriers.” ^[1] It is not clear how this action will affect the implementation of energy efficiency programs at this point.
3. Technical Amendments. The bill cross references Public Utilities Code § 381.2 at page 4, line 5. This section relates to a specialized mechanism to track efficiency savings. The committee may wish to consider amendments to this bill to strike the cross-reference to 381.2 and instead add Public Utilities Code sections 454.54 and 454.55 which control the bulk of energy efficiency program mandates and funding for electric and gas programs.

Additionally, an amendment is made at page 3, line 13, which strikes “revised” and adds “maintained.” This provision requires the CPUC to ensure that the Energy Upgrade California program website includes information for small businesses. A quick review of the site shows that it continues to be primarily directed at residential customers. Although the website now references business successes with anecdotal reports on energy demand management efforts, it still doesn’t include program resources for small businesses so it is arguable whether this mandate has been met. The committee may wish to amend the bill to retain the mandate to “revise” the website by adding “revised and maintained.”

REGISTERED SUPPORT / OPPOSITION:

Support

None on file.

Opposition

None on file.

Analysis Prepared by: Kellie Smith / U. & E. /

1. See “Decision Addressing Energy Efficiency Business Plans” at http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M212/K763/212763072.PDF ↑