California Legislature Provides Key to Unlock Efficiency Savings in Buildings, Makes Benchmarking a Reality

Not only will California's commercial building benchmarking program finally be implemented under legislation passed by the California Legislature last week, but it will be expanded to cover large multifamily housing, making California the first state in the country with a benchmarking program spanning both sectors. It will also provide owners of residential and commercial buildings with their total energy usage information, enabling them to make smart energy efficiency and renewable investments to improve building performance.

That's good news for owners and tenants, alike, because it will lead to increased comfort, lower utility bills, and more. Large commercial and residential building owners will be able to compare their buildings' energy use to similar buildings while cities, utilities, owners, businesses, and residents can more easily identify opportunities for saving energy.

This explains why the benchmarking provisions of AB 802 (sponsored by Assembly Member Das Williams) were supported by a broad coalition of stakeholders led by NRDC and the California Energy Commission (which has long supported data transparency and statewide benchmarking, as evidenced in its recently approved Existing Building Action Plan). The bill is expected to be signed into law by Governor Jerry Brown.

As explained further here, AB 802 also enables the California Public Utilities Commission and utilities to provide incentives to customers who improve their buildings up to current building code and beyond.

Effective and expanded statewide benchmarking

Although California has had a commercial benchmarking program on the books since 2007 to provide a building's basic efficiency score to its buyer, the program has yet to be fully implemented. The primary barrier was the inability of owners to receive whole-building energy usage information from their utility. The requirement to share a benchmarking rating (e.g. an ENERGY STAR® score of 1-100) upon the sale of a building was also viewed as cumbersome and coming too late in the process to sufficiently inform the marketplace. Meanwhile, city benchmarking programs, such as that in San Francisco, also faced serious implementation challenges due to building owners' inability to access monthly energy usage.

AB 802 addresses these barriers by providing clear legal and regulatory authority to utilities and building owners. It further expands the benchmarking program to large residential properties (sixteen utility accounts and above) and eliminates the point of sale requirement. Instead, benchmarking ratings will be shared publicly on an annual basis, enabling incentives to be appropriately directed to inefficient buildings while vastly improving information in the marketplace. See New York City's database as an example. The public scores are expected to encourage owners to make their buildings more energy efficient to appeal to prospective buyers and tenants, as well.

According to the U.S. Environmental Protection Agency, buildings that benchmark their own monthly energy use have reduced it by an average of 7 percent, with the greatest savings among the most inefficient performers. This not only reduces utility bills, but also pollution, including greenhouse gas emissions from electricity generation.

California's benchmarking program will now join a long list of successful programs, including those in the District of Columbia; Austin, Texas; Washington state; New York City; Philadelphia; Boston; Minneapolis; Chicago; Atlanta; and Portland, Oregon; among others.

Whole-building energy usage transparency

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AB 802 also removes a key barrier that building owners with separately metered tenants faced for years. Without access to whole-building energy usage information, they lacked the data necessary to assess and finance efficiency investments, manage the energy usage of their buildings, and properly size investments in renewable energy, such as solar panels.

Improved conditions for tenants

Whole-building energy use reflects how a building is performing as a system, and without that information, it was difficult for owners to make decisions to improve their buildings' efficiency. But when efficiency improves, it results in better property conditions for tenants and more affordable energy expenses.

New opportunities in affordable, multifamily housing

For affordable multifamily buildings in particular, whole-building energy usage information is critical and often a prerequisite to participating in financing, grant, and incentive programs. It is also necessary for the U.S. Department of Housing and Urban Development (HUD) to accurately calculate utility allowances to offset costs for subsidized housing residents. For this reason, the HUD secretary wrote an open letter urging utilities to improve access to aggregated usage information in order to save taxpayer funds and give owners more incentives to invest in efficiency repairs.

Protecting tenant privacy

By only requiring the sharing of "whole-building energy usage information," AB 802 ensures tenants' individual energy use information is protected. The whole-building monthly total is an anonymous, blended total of five or more residential accounts or three or more commercial accounts. For individual usage information to be shared, tenants must provide consent to the building owner or utility directly.

Although a building owner can already read energy usage directly from a tenant's meter if there is reason to do so, obtaining the total from the utility adds data integrity, speed, and automation because the utility system obtains and stores meter information in a database.

Meeting California's climate goals

Investments in building retrofits and renewable energy are expected to expand thanks to AB 802. Building owners with separately-metered tenants will finally have the data to evaluate the payback and performance of energy investments, and lenders will have the information to determine the extent to which they can provide financing. Providing comparative ratings across the building sector will also encourage owners to upgrade the efficiency of their buildings to appeal to prospective buyers and tenants.

All of these steps will help meet Governor Brown's goal and a recent legislative mandate (SB 350) to double statewide energy efficiency savings. And that's good news for all of us.

About the Authors

Maria Stamas

Project Attorney, Energy & Climate programs

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