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Home My WebLink About17 Energy Efficiency /"7 Agenda Item # DATE: May 25, 2007 TO: Peter Holzmeister, General Manager,Maw er,TDPUD Stephen Hollabaugh, Assistant General g Alan Harry,Leg & Reg Manager FROM: Steven C. Gross, General Counsel and Reduction RE: AB 2021_ Energy Efficiency and Demand I have prepared this memorandum at your request as part of an on-going review of recent legislation that will affect the District's electric utility. AB 2021 is intended to ensure that all utilities in the state, both investor owned and publicly owned, aggressively invest in all achievable cost effective energy efficiency programs in order to produce cost-effective energy savings, reduce customer demand and reduce overall system costs so that the state can meet the goal of reducing electrical consumption by 10 percent over the next 10 years. This bill establishes the State Energy Resources Conservation and Development Commission ("Energy Commission") and mandates certain actions by the Energy Commission and certain actions by publicly owned utilities, including the District. AB 2021 was approved by the Governor on September 29 , A. Requirements of the Energy Commission AB 2021 requires the Energy Commission to do the following: 1. On or before November 1, 2007, and every 3 years thereafter, in a public process and in consultation with the California Public Utilities Commission, local publicly owned electric utilities and other stakeholders, to develop a statewide estimate of all potentially achievable cost-effective electricity and natural gas efficiency savings and establish statewide annual targets for energy efficiency savings and demand reduction over 10 years. 2. Prepare an integrated energy policy report that includes information for each local publicly owned electric utility, including a comparison of the public utility's annual energy efficiency targets and the public utility's actual energy efficiency savings and demand reductions. 3. Investigate options and develop ndit on a plan es in he stove ate e and on oe energy r before January 1, to decrease the peak electricity demand of, 2008, to prepare and submit to the Legislature a report on that plan. I 4. If it determines that improvements can be made in setting or meeting annual targets, to provide recommendations to the local publicly owned electric utility, the Legislature, and the Governor on those improvements. B. Requirements of Publicly Owned Utilities AB 2021 requires a local publicly owned electric utility to do the following: 1. In procuring energy to serve the load of its retail end-use customers, it shall first acquire all available energy efficiency and demand reduction resources that are cost effective, reliable and feasible. 2. On or before June 1, 2007, and every 3 years thereafter, to identify all potentially achievable cost-effective electricity efficiency savings and to establish annual targets for energy efficiency savings and demand reduction for the next 10 year period. Determinations of such savings must be made without regard to previous minimum public benefits investments. Investments to achieve energy efficiency savings and demand reduction targets are to be treated as procurement investments. The District understands that the Northern California Power Agency ("NCPA") has been working with the Energy that deadline to September 30, 20071for many ne for2007, and that the CEC has agreed to move POU's, including the District. 3. Report those targets, and the basis for establishing them, to the Energy Commission within 60 days of the date of adoption. 4. Report annually to its customers and the Energy Commission onits cost) investments in energy efficiency and demand reduction; and (b) programs, effectiveness, and expected and actual energy efficiency savings and demand reduction results. 5. Annually develop and submit a report to the Energy Commission on its: (a) sources of funding for investments in energy efficiency and demand reduction programs; (b) methodologies and assumptions used to determine cost-effectiveness; and (c) results of an independent evaluation that measures and verifies energy efficiency savings and reduction in demand achieved by its programs. C. The Law AB 2021 states in its entirety: "SECTION I. 2 (a) In order to ensure that prudent investments in energy efficiency continue to be made that produce cost-effective energy savings, reduce customer demand, reduce overall system costs, increase reliability, and increase public health and environmental benefits, it is the intent of the Legislature that all load-serving can meet he goal ofprocure reducmgll cost-effective tot 1 forecasted energy efficiency measures so that the state electrical consumption by 10 percent over the next 10 years. (b) Expanding California's energy efficiency programs will promote lower energy bills, protect public health, improve environmental quality, stimulate sustainable economic development, create new employment opportunities, and reduce reliance on imported fuels. (c) Expanding California's eprograms1 greenhouse g ameliorate as emissions.quality problems throughout the state and will also reduce harm (d) The energy savings achieved through the enactment of this act are an essential component of the state's plan to meet the Governor's greenhouse gas reduction targets established in Executive Order 5-3-05. SECTION 2. Section 25310 is added to the Public Resources Code, to read: 25310. On or before November 1, 2007, and by November 1 of every third year thereafter, the commission in consultation with the Public Utilities Commission and local publicly owned electric utilities, in a public process that allows input from other stakeholders, shall, develop a statewide estimate of all potentially achievable cost- effective electricity and natural gas efficiency savings and establish targets for statewide annual energy efficiency savings and demand reduction for the next 10-year period. The commission shall base its estimate at least in part on information developed pursuant to Sections 454.55, 454.56, and 9615 of the Public Utilities Code. The commission shall, for each electrical corporation and each gas corporation, include in the integrated energy policy report, a comparison of the public utility's annual targets established pursuant to Sections 454.55 and 454.56, and the public utility's actual energy efficiency savings and demand reductions. SECTION 3. Section 9615 of the Public Utilities Code is amended to read: (a) Each local publicly owned electric utility, in procuring energy to serve the load of its retail end-use customers, shall first acquire all available energy efficiency and demand reduction resources that are cost effective, reliable, and feasible. (b) On or before June 1, 2007, and by June 1 of every third year thereafter, each local publicly owned electric utility shall identify all potentially achievable cost-effective electricity efficiency savings nd shall b 10-year period. A local publicly owned ish annual targets savings and demand reduction for the next 3 electric utility's determination of potentially achievable cost-effective electricity efficiency savings shall be made without regard to previous minimum investments undertaken pursuant to Section 385. A local publicly owned electric utility shall treat investments made to achieve energy efficiency savings and demand reduction targets as procurement investments. (c) Within 60 days of adopting annual targets pursuant to subdivision (b), each local publicly owned electric utility shall report those targets to the State Energy Resources Conservation and Development Commission, and the basis for establishing those targets. (d) Each local publicly owned electric utility shall report annually to its customers and to the State Energy Resources Conservation and Development Commission. The report shall contain,but is not limited to,both of the following: 1. Its investments in energy efficiency and demand reduction programs. 2. A description of programs, expenditures, cost-effectiveness, results,and expected and actual energy efficiency savings and demand reduction(e) Each local publicly owned electric utility shall also annually develop and submit to the State Energy Resources Conservation and Development Commission a report containing all of the following: 1. The sources of funding for its investments in energy efficiency and demand reduction program investments. 2. The methodologies and input assumptions used to determine cost-effectiveness. 3. The results of an independent evaluation that measures and verifies the energy efficiency savings and reduction in energy demand achieved by its energy efficiency and demand reduction programs. (f) The State Energy Resources Conservation and Development Commission shall include a summary of the information reported pursuant to subdivision (e) in the integrated energy policy report prepared pursuant to Chapter 4 (commencing with Section 25300) of Division 15 of the Public Resources Code. The State Energy Resources Conservation and Development Commission shall also include, for each local publicly owned electric utility, a comparison of the local publicly owned electric utility's annual targets established in accordance with this section, and the local publicly owned electric utility's actual energy efficiency savings and demand reductions. If the State Energy Resources Conservation and Development Commission determines that improvements can be made in either the level of a local publicly owned electric utility's annual targets to achieve all cost-effective, reliable, and feasible energy savings and demand reductions and to enable the local publicly ua t to Sect on 25310�or in meeting eaches, in the te, to achieve local publicly statewide targets established purl owned electric utility's annual targets, the State Energy Resources Conservation and 4 Development Commission shall provide recommendations to the local publicly owned electric utility, the Legislature, and the Governor on those improvements. SECTION 4. (a) The Legislature finds and declares that the use this statef air-conditioners in a hot, dry climate drives peak electricity demand in much (b) The State Energy Resources Conservation and Development Commission shall do both of the following: 1. Investigate options and develop a plan to improve the energy efficiency of, and to decrease the peak electricity demand of, air-conditioners. 2. On or before January 1, 2008, prepare and submit to the Legislature a report on the plan developed pursuant to subdivision(a), including,but not limited to, any changes in law the State Energy Resources Conservation and Development Commission recommends to implement the plan. SECTION 5. No reimbursement is required by this act pursuant to Section 6 of Article XIII B ct has the of the California Constitution because a local sufficient agency ient to pay fordtheiprogram or levehof ty to levy service charges, fees, or assessments service mandated by this act, within the meaning of Section 17556 of the Government Code." 5