The Final Review

Update on Progressive California Energy Benchmarking Law

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Energy benchmarking is being adopted by a growing number of cities. Now, California will have the first statewide energy benchmarking program for both commercial and multi-family residential buildings. The legislation mandating the California program, California Assembly Bill 802 (AB 802), was passed in 2015. The California Energy Commission (Commission) is currently developing the rules that will implement California’s energy benchmarking program.

green_lightbulb.pngHistory of California Energy Benchmarking Laws

California adopted a prior energy benchmarking and disclosure program, California Assembly Bill 1103 (AB1103), in 2007. The law required owners and operators of nonresidential buildings to disclose a building’s energy information and the prior year’s energy efficiency rating to potential buyers, lessees, or lenders. The building’s energy rating was generated using the Environmental Protection Agency’s ENERGY STAR Portfolio Manager.

The implementation of AB 1103 was problematic. Given the way the law was drafted, building owners and operators had difficulty obtaining their energy use data from the utilities. Before the energy data was released, the building owner or operator needed to obtain authorization for each individual tenant, a very cumbersome and time-consuming process. Ultimately, AB 1103 was repealed in 2015, and the law was no longer effective after January 1, 2016. AB 802 was designed, in part, to overcome some of the earlier benchmarking program’s shortcomings.

Several cities in California, including Los Angeles and San Francisco, also have their own building energy benchmarking ordinances. Some of these ordinances impose additional requirements to those mandated by AB 802.

Requirements of the New Energy Benchmarking Law

AB 802, signed into law on October 8, 2015, amends parts of the California Public Resources Code and adds a new version of Section 25402.10. Any building with at least 50,000 square feet gross floor area falls under AB 802’s benchmarking requirements if it is a nonresidential building or a residential building with five or more active utility accounts.

The new law requires the state’s electrical and gas utilities to provide building owners and operators with their entire building’s aggregated energy use data from the prior year if the building has three or more active accounts (five accounts for a residential building), eliminating the earlier practice of requiring approval from each tenant no matter how many accounts in the building. Tenant consent is still necessary for commercial buildings with one or two tenants, but once consent is provided, the utility must share the aggregated building data.

Although residential buildings with less than five active utility accounts are not “covered buildings” for purposes of AB 802, the Commission may still adopt regulations requiring the utility to provide a building with aggregated energy use data if the tenant grants permission.

AB 802 requires that the building’s energy data be available to the general public, a significant change from the earlier law that only required the disclosure of a building’s energy data during a transaction. The belief is that with energy data available to building owners and the public, building owners will have more information and better incentives for improving their building’s energy efficiency.

The new law requires the Commission to develop regulations implementing AB 802. For example, the Commission must decide what type of information will be collected and how the benchmarking data will be publicly disclosed. The law also states that the Commission should look into the possibility of utilities providing financing to assist their customers with implementing the energy benchmarking program.

Current Status of the California Energy Commission Rulemaking

Since AB 802 was adopted, the Commission has been holding a series of pre-rulemaking public workshops as well as accepting oral and written comments on the benchmarking rules under development. All submitted comments are shared on Commission’s Rulemaking Proceeding Docket # 15-OIR-05.

The Commission is hoping to submit a draft rule to the California Office of Administrative Law (OAL) by late February. Once the proposed rule is published in the California Regulatory Notice Register shortly after it is submitted to OAL, it will open a 45-day public comment period.

The timing of the final rule’s promulgation will depend on the nature of the comments the Commission receives. However, the Commission is expecting the rule will go into effect sometime between this coming fall and early next year. Commercial buildings will be the first group required to undertake reporting starting in mid-2018.

We will monitor the progress of the California energy benchmarking rulemaking. You can also sign up to receive updates on the rulemaking directly from the Commission.

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