Energy efficiency: financing options: custom agricultural and industrial efficiency projects., the official text

An act to amend Section 381.2 of the Public Utilities Code, relating to energy.

LEGISLATIVE COUNSEL'S DIGEST

Existing law vests the Public Utilities Commission (PUC) with regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to establish a regulatory proceeding to develop and implement a comprehensive program to achieve greater energy savings in California’s existing residential and nonresidential building stock. Existing law requires the PUC to investigate the ability of electrical corporations and gas corporations to provide various energy efficiency financing options to their customers for the purpose of implementing the program developed by the Energy Commission. Existing law imposes requirements for custom projects and other custom programs for industrial, agricultural, commercial, residential, and public sector customers. Existing law requires the PUC to develop and maintain rules for custom energy efficiency projects that include eligibility criteria or metrics for determining if a project is eligible for funding.
This bill would delete the requirement on the PUC to develop and maintain those rules, and would instead require the commission, as part of the approval of the next Tier 2 advice letters submitted after January 1, 2027, by program administrators for mid-cycle review pursuant to a specific commission decision, to revise the rules adopted for custom agricultural and industrial efficiency projects to replace the commission’s ex ante review process with a process that ensures the provision of incentives pursuant to these provisions for custom agricultural and industrial efficiency projects, as specified.
Under existing law, a violation of an order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because a violation of a PUC action implementing this bill’s requirements would be a crime, the bill would impose a state-mandated local program.
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.

The people of the State of California do enact as follows:

SECTION 1.
Section 381.2 of the Public Utilities Code is amended to read:
381.2.
(a) (1) The commission shall investigate the ability of electrical corporations and gas corporations to provide various energy efficiency financing options to their customers for the purpose of implementing the program developed pursuant to Section 25943 of the Public Resources Code.
(2) It is the intent of the Legislature that the commission implement this section by establishing applicable rules, within a reasonable period of time and in an open process, that are clear and operate on a prospective basis.
(3) It is the intent of the Legislature that the commission implement this section in a cost-effective and time-efficient manner.
(b) Recognizing the already underway 2015 commission work to adopt efficiency potential and goals, the Energy Commission work on its 2015 energy demand forecast, and the need to determine how to incorporate meter-based performance into determinations of goals, portfolio cost-effectiveness, and authorized budgets, the commission, in a separate or existing proceeding, shall, by September 1, 2016, authorize electrical corporations or gas corporations to provide financial incentives, rebates, technical assistance, and support to their customers to increase the energy efficiency of existing buildings based on all estimated energy savings and energy usage reductions, taking into consideration the overall reduction in normalized metered energy consumption as a measure of energy savings. Those programs shall include energy usage reductions resulting from the adoption of a measure or installation of equipment required for modifications to existing buildings to bring them into conformity with, or to cause them to exceed, the requirements of Title 24 of the California Code of Regulations, as well as operational, behavioral, and retrocommissioning activities reasonably expected to produce multiyear savings. The commission shall authorize an electrical corporation or gas corporation to count all energy savings achieved through the authorized programs created by this subdivision toward overall energy efficiency goals or targets established by the commission. The commission may adjust the energy efficiency goals or targets of an electrical corporation or gas corporation to reflect this change in savings estimation consistent with this subdivision and subdivision (d).
(c) Effective January 1, 2016, electrical corporations and gas corporations may implement subdivision (b) for high opportunity projects or programs. The commission shall provide expedited authorization of high opportunity projects and programs to apply the savings baseline provisions in subdivision (b).
(d) In furtherance of subdivision (b), the commission, in consultation with the Energy Commission, shall consider all of the following:
(1) The results of any interagency baseline assessment.
(2) Any available results from electrical corporation and gas corporation baseline pilot studies ordered in commission Decision 14-10-046 (October 24, 2014), Decision Establishing Energy Efficiency Savings Goals and Approving 2015 Energy Efficiency Programs and Budgets.
(3) Information necessary to ensure consistency with the energy forecast and planning functions of the Energy Commission and the Independent System Operator.
(e) The commission may direct electrical corporations and gas corporations to make filings that are necessary to ensure coordination with the energy forecast and planning functions of the Energy Commission and the Independent System Operator.
(f) The commission shall prioritize energy efficiency activities consistent with Sections 454.55 and 454.56.
(g) (1) This subdivision imposes the operative requirements pursuant to this section for custom projects and other custom programs for industrial, agricultural, commercial, residential, and public sector customers. This subdivision applies only to those programs and projects.
(A) The commission shall authorize electrical corporations and gas corporations to provide financial incentives, rebates, technical assistance, and support to their customers to increase the energy efficiency of industrial, agricultural, commercial, residential, and public sector customers based on nationally recognized measurement and verification standards, such as the International Performance Measurement and Verification Protocol.
(B) All energy savings achieved through the programs authorized pursuant to this subdivision shall count toward the overall energy efficiency goals or targets established by the commission for an electrical corporation, gas corporation, or program administrator.
(C) The commission may adjust the energy efficiency goals or targets of an electrical corporation or gas corporation to reflect a change in the forecast energy savings consistent with this subdivision and subdivision (d).
(2) (A) As part of the approval of the next Tier 2 advice letters submitted after January 1, 2027, by program administrators for mid-cycle review pursuant to commission Decision 21-05-031 (May 20, 2021), Assessment of Energy Efficiency Potential and Goals and Modification of Portfolio Approval and Oversight Process, the commission shall revise the rules adopted for custom agricultural and industrial efficiency projects to replace the commission’s ex ante review process with a process that ensures the provision of incentives pursuant to this section for custom agricultural and industrial efficiency projects that exceed existing California Building Standards Code requirements and provide measurable benefits to the electrical grid.
(B) The commission shall not adopt any project approval criteria for custom agricultural and industrial efficiency projects beyond those criteria specified in this section.
(C) For purposes of this paragraph, “benefits to the electrical grid” include avoided transmission and distribution costs or reductions in peak load demands that support reductions in utility costs.
(D) This paragraph shall not result in cost shifts between rate classes.
(3) (A) The commission shall review and circulate for public review and comment statewide eligibility criteria or metrics at least 30 days before changes, including posting on the commission’s internet website.
(B) After the initial 30-day period for public review and comment, any changes to the initial proposed eligibility criteria or metrics shall be circulated for public review for not less than 15 days prior to final adoption.
(C) Once eligibility criteria or metrics are adopted, any proposed revision shall be circulated for public review and comment for not less than 30 days before a revision. For these purposes, grammatical corrections or other nonsubstantive modifications are not a revision and may be made when the need for the correction or modification is discovered.
(D) Statewide eligibility criteria or metrics shall operate only on a prospective basis, shall be applied uniformly and consistently by each electrical corporation and gas corporation, and shall not be applied retroactively to any pending or approved applications.
(E) Any delay in the adoption of eligibility criteria or metrics past July 1, 2019, shall not be the basis for denial of any application nor a basis to suspend the program.
(4) (A) The rules adopted by the commission for custom energy efficiency projects shall require each electrical corporation and gas corporation to maintain a custom measure project archive. The commission shall develop and maintain requirements for what information is to be included in the custom measure project archive, including information required to support the applications of customers’ custom energy efficiency projects.
(B) (i) Upon being notified of the filing of a new application, or that a proposed project has moved from the preapplication stage to the application stage, the commission shall make a determination of whether the application has been selected for review within 15 days and notify the electrical corporation or gas corporation of its decision to review.
(ii) The electrical corporation or gas corporation shall make the project application supporting documentation available to the commission for review within 15 business days of the commission review selection date. The commission shall develop and maintain requirements for what information is to be included in the custom measure project archive for those customer projects selected for review.
(iii) The commission shall, within 15 days of the submission of a project to the custom measure project archive, promptly notify an electrical corporation or gas corporation of any deficiency in the information supporting an application.
(iv) The review of a proposed project shall be concluded within 30 business days from the date when a project’s documentation is received by the commission, unless the commission determines it was provided incomplete or inaccurate supporting information from the electrical corporation or gas corporation, and notifies the electrical corporation and gas corporation of the need for additional review time. The 30 business days shall restart from the time complete and accurate documentation, as noted in the notification of deficiencies, is submitted by the electrical corporation or gas corporation. The electrical corporation or gas corporation shall notify the customer applicant within 48 hours of any delays as a result of incomplete or inaccurate supporting project information, or if the commission needs additional review time.
(C) The commission shall notify the electrical corporation or gas corporation of the specific deficiencies in the information supporting an application, including each basis as to why the project is inconsistent with the eligibility criteria and metrics, which may include failure to adequately define the project, make specific recommendations for the conditions under which the project would be approved, and, if the application fails to adequately define the project, identify aspects of the project that require further definition.
(D) If, as a result of the review, the commission rejects the proposed project or requests modification of the project, the commission shall notify the electrical corporation or gas corporation of the reasons for the rejection or request for modification, including each basis as to why the project is rejected or modification is requested, and make specific recommendations for the conditions under which the project would be approved. The electrical corporation or gas corporation shall promptly inform the applicant as to the reasons why the project was rejected and the specific recommendations for the conditions under which the project would be approved.
(E) The commission shall not reject a proposed project or request modification of a project on the basis of inconsistency with eligibility criteria or metrics that were not in effect at the time the project application was submitted.
(F) If any party to the project is unsatisfied with the commission’s directions for the project, a dispute resolution process may be initiated by that party. The commission shall adopt rules for the conduct of the dispute resolution process.
(G) If a project is not selected by the commission for review within the period determined pursuant to subparagraph (B), or if a project has not received written direction from the commission within the period specified in clause (iv) of subparagraph (B), the commission shall be deemed to have waived review of the project and the project may proceed as if it had been approved by the commission, but the project is subject to the review of the electrical corporation or gas corporation.
(5) (A) For projects that were not reviewed and did not receive written documentation, as specified in subparagraph (G) of paragraph (4), an electrical corporation or gas corporation may rely on its project application review process to determine the forecast energy savings values for the project based on rules adopted by the commission, and base the final customer incentive payment and contractor pay-for-performance payment on postinstallation measurement and verification results.
(B) The commission may employ postinstallation review of a project to determine if the project was carried out consistent with the application.

SEC. 2.
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.