Invariably, those in sustainable development acknowledge the greatest impact in reducing green house gasses (GHGs) will come from improvements to existing buildings. The new commercial building energy performance ordinance that we recently spent a great deal of time covering is an example of that focus.  That is not to say that intelligent new building codes are ineffective. It’s just that refurbishing the existing building stock will have a far greater impact. Just how drastic is the difference in impact, you ask? How about seven times greater for residential retrofits and two times greater for commercial?!

Just think of it from this starting point: “72% of California’s 13 million residential buildings and over 5 billion square feet of commercial structures were built before the implementation of California’s energy efficiency building code (Title 24) in the early 1980’s. This means that 3 out of 4 homes in California have never had to comply with any energy efficiency requirements whatsoever.” (Citation:

AB 758, sponsored by Assembly Member Nancy Skinner, was signed into law in October 2009 to addresses this underserved area.  Now, the program has created a need for hiring at the California Energy Commission to implement the provisions. Jobs, people. Jobs!  (Click here to see the job postings from the California Energy Commission).   I won’t get into it, but for the critics who will gripe about government jobs we can not afford, I argue, we can not afford to waste energy across our great state.  When companies waste money on energy, they don’t hire.  Further, jobs are created to fix the inefficient structures that are identified.

Now, let’s examine what the bill requires.  In summary (and using a great deal of the direct language from the bill) the bill mandates three main initiatives

First, the Energy Commission is required to establish a regulatory proceeding to develop a comprehensive program to achieve greater energy savings in the state’s existing residential and non-residential building stock.  A brief but thorough report on their progress is available here. The CEC created the Home Energy Rating System (HERS Phase II). Next is a complimentary program for commercial buildings. Further, the Energy Commission is required to report on the status of the program in the integrated energy policy report.

(If you’re reading on our home page, click “more” to read on and get links to a power point presentation from Assembly Member Skinner that has tons of great concise information.) (more…)

Governor Schwarzenegger signed AB 510 on February 26, 2010 (Click here for full text of AB 510) (Click here for press release and video). We covered the basic elements of the new law in Part 1 of our coverage last week (click here for that post). Now, we turn to some other elements of the law… some of the fine print, if you will…

The law balances the interests of utilities, customer-generators, and non-participating customers. (This balance, and the fact that there is no discernable impact to the General Fund, are likely the reasons the bill passed the Senate by a nearly unanimous vote.)    In addition to lowering the proposed cap from 10% to 5%, an example of concessions to utilities is found in Section (3)(l).  That section requires that customer-generators pay the Department of Water Resources for all charges that would otherwise be imposed on the customer had they not entered the net-metering arrangement.

Another significant concession is found in Section (5)(B).  Under that section, the utilities can use the energy provided through net-metering arrangements toward the Renewable Portfolio Requirements (outlined in Public Utilities Code Section 399.15 and 387).  Under previous net-metering law, utilities were not permitted to count net-metering toward these obligations.  Now, utilities have a chance to meet the aggressive target of generating 33% of their energy from renewables by 2020.  (The utilities are far from reaching the Renewable Portfolio Requirements of 20% of energy from renewables by 2010).  If California residents and businesses continue to install solar and wind power generation, the utilities have a chance to meet the portfolio requirements, but the current 5% cap will have to rise again.

On the consumer side, there are very reasonable concerns that net-metering raises the energy bill for non-metering customers.  To assuage those concerns, the bill establishes a rate-setting commission that will set net-metering compensation rates and provide a report detailing 1) the market effects of net-metering and co-energy metering, and 2) how the authority’s rate schedule ensures consumers who don’t enter net metering arrangements pay the same for power that customer-generators pay.

AB 510 reflects a state leading the way in establishing energy independence.  It is great legislation now because it doesn’t tap into the General Fund, and it encourages private businesses (e.g. Solar City or Renewable Funding, LLC).  The law is another step forward that keeps California as a leader in United States renewable energy generation.

AB 510 (full text here) passed both the Senate and Assembly, and Governor Schwarzenegger says he will sign the bill into law.  The bill raises the cap set on the number of homes and businesses that can take advantage of net energy metering.  Yes, there’s a cap!  The utilities don’t want “customer-generators” producing power without limit, and the government appears concerned the customers will somehow tip the “balance of power” between customer-generators and utilities (yes, that’s an energy pun).

At its core, the bill states utilities are not required to issue permits and enter agreements with “customer-generators” (residential and commercial solar and wind power producers) beyond 5% of the utilities’ aggregate customer peak power demand.  The previous cap was 2.5%.

The legislation also addresses co-energy metering.  Co-energy metering is an arrangement between publicly owned utilities and customer-generators who produce between 10kw (50kw for wind) and 1MW.  These generators are compensated based on the time of energy use and generation.

On the other hand, standard net-metering arrangements are for customer-generators who produce 3 -10kw.  The rate at which net-metering customers are compensated is either a “time of use” model such as that with the co-energy metering producers, or a “baseline” model.

A ratemaking authority (also described in the bill) sets the rates for compensating customer-generators who have an energy surplus at the end of the year and follow the baseline model. The primary goal for the rate-making authority is to set a price that ensures non-participating customers pay the same for energy they would have otherwise paid had no net-metering been used.

To its credit, the bill allows the ratemaking authority to compensate net energy producers for the value of the electricity itself, AND the value of the renewable attributes of the electricity.  This little nod allows net energy producers to receive a bonus if the renewable attributes of the energy production add indefinite or unforeseen benefits (Cap and Trade anyone?)

Congratulations (I hope not premature) to AB 510 sponsor, Assembly Member Nancy Skinner (14th District).  The bill was proposed last year as AB 560 (click here for more of that story), but it died in committee.  We’re glad to see it is on its way to the finish line this time!

Editor’s Note: Stay tuned for Part 2 of this post that will discuss other requirements and considerations in the bill. UPDATE: Click Here For Part 2


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