How California's Unprecedented Public Benchmarking Law Can Yield Even More Benefits for Customers

Second in a Two-Part Series

When Governor Jerry Brown signed AB 802 in early October, California became the first state in the nation with a requirement to increase the transparency of comparative energy ratings or benchmark scores for large commercial and multi-family properties.

As I highlighted in Part 1, AB 802 addresses the previous commercial benchmarking law's largest barrier: access to whole-building energy consumption information. Aside from its stand-alone benefits, better access to whole-building data enabled the Legislature to expand statewide benchmarking requirements to large multi-family residential buildings--those over 16 units--as well.

Buildings represent the second-largest source of California's greenhouse gas emissions, and reducing their energy usage through energy efficiency directly mitigates their environmental impact. Increasing the transparency of buildings' energy usage--if done well--can drive more retrofits and help owners better manage how their buildings use energy. This in turn increases the comfort of residents' living conditions while reducing utility bills.

Keep reading for the facts on what this law's new benchmarking provisions means and why it's good for Californians.

Legislative Changes to California's Benchmarking Program

AB 802 repealed California's previous commercial building time-of-sale benchmarking law, which was only triggered upon the sale of a building. The new, expanded program now covers the residential sector and will likely require benchmarking to occur annually. The details of this expanded program will be determined by the California Energy Commission through an already launched rulemaking.

As described in Part I, California's previous commercial benchmarking law had very low compliance due to building owners' inability to access whole-building data. Because it will take time for utilities to upgrade their information sharing services (now required by January 1, 2017), AB 802's benchmarking provisions will not fully go into effect until that time as well. Meanwhile, building owners can continue to benchmark properties on their own, or if required to do so by local ordinances.

Legislature Provides Broad Terms for Benchmarking Program - Details To Be Determined by Energy Commission

The legislature left a number of programmatic details to the California Energy Commission, and getting these details right will be critical to the overall success of the program. Here are some of the questions the California Energy Commission will decide by regulation this year:

• How energy usage data specific to benchmarking will be collected
  • Some options include the Environmental Protection Agency's (EPA) Portfolio Manager tool or a separate database set up by the Commission

• Who will deliver the benchmarking data
  • Requirements can be put on the building owner, utility, third parties or a combination of the above

• What benchmarking information and comparative rating will be shared with the California Energy Commission and the public
  • It's possible that more granular data will be shared directly with the Commission and a subset released to the public. The Commission will also decide on the type of benchmarking score it requires. Some options include: a building's energy usage intensity (energy usage per square foot), monthly kWh and therm usage, and an energy star score (a comparative building rating from 1-100) calculated via the EPA's portfolio manager.

• What schedule the public disclosure will follow and any exemptions
  • The only legally binding exemption applies to mandatory benchmarking disclosure for multifamily buildings with less than 16 units. However, these owners can comply on a voluntary basis.

• How benchmarking data will be publicly disclosed
  • Public disclosure could consist of a public website or other electronic or physical building labeling systems. Chicago in particular has developed a great web-based data visualization tool.

• Other programmatic terms to facilitate an effective program
  • Some of these terms could include: establishing training resources for owners; providing for continual data analysis; and adopting mechanisms to make ratings actionable for owners, for example by sending them building performance scorecards with a list of applicable efficiency offerings.

• Whether and to what extent to establish enforcement provisions
  • The Commission has authority to institute civil fines of up to $2,000 for non-compliance.

Fortunately, we have numerous lessons and successes to draw on from existing city-wide benchmarking programs, such as those in: New York, Chicago, Philadelphia and San Francisco.

With these existing policies in mind, NRDC, as part of the California Benchmarking Collaborative, has filed specific recommendations on each of these questions.

A Well-designed Benchmarking Program Will Result in Numerous Benefits

If the California Energy Commission adopts the right programmatic details, here are some of the many benefits we can expect:

• Transforming the Real Estate and Rental Markets to Appropriately Value Energy Efficient Buildings
  • Increasing the transparency of buildings' energy usage (and corresponding utility bills), empowers renters and buyers to select more efficient buildings. This further increases building occupancy rates and real estate values.

• Increasing Energy Awareness and Engagement, and More Jobs
  • Benchmarking requirements can draw owners' attention to energy efficiency, resulting in behavioral and operational changes that bring immediate and low-cost energy reductions.
  • With increased engagement, large-scale benchmarking programs can spur the creation of green jobs, including trained workers for energy audits, retro-commissioning of base building systems (identifying less than optimal performance of a facility's equipment), and installation of upgraded systems and equipment.

• Spending Public Funds Responsibly; Directing Efficiency Incentives to Buildings that Need It Most
  • With public benchmarking information, utilities, local governments, government agencies, clean energy companies and others can best direct limited public funding to the most inefficient buildings. Currently these groups lack sufficiently robust comparative metrics (this includes utilities that lack data on building characteristics such as square footage).
  • Over time, research analyses can be conducted with the collected data to identify whether specific policy interventions resulted in actual energy reductions.

• Increased Investments in Building Retrofits that Lead to Improved Comfort and Lower Utility Bills
  • If done well, benchmarking programs can lead to actionable changes in building equipment, operations, and consumption--which in turn reduce energy usage, lower utility bills, and improve the comfort of residents' living environments.
  • Some proven methods to create actionable changes include: releasing benchmarking results in a number of different formats, such as through data visualization websites, and sending tailored building performance scorecards that link owners to available clean energy programs.

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Thanks to AB 802, California is once again poised to lead the nation with a successful public benchmarking program, one that transforms the building market towards increased efficiency and drives the retrofits needed for the state to meet its clean energy and climate targets on time.