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SB-37 Energy efficiency and renewable energy upgrades: on-bill repayment program.(2013-2014)

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Amended  IN  Senate  April 09, 2013
Amended  IN  Senate  March 19, 2013

CALIFORNIA LEGISLATURE— 2013–2014 REGULAR SESSION

Senate Bill No. 37


Introduced by Senator De León
(Principal coauthor: Assembly Member Eggman)
(Coauthor: Assembly Member Muratsuchi)

December 05, 2012


An act to add Sections 1940.10 and 2079.10b to the Civil Code, to amend Section 25402.9 of the Public Resources Code, and to add Chapter 7.6 (commencing with Section 2833) to Part 2 of Division 1 of the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


SB 37, as amended, De León. Energy efficiency and renewable energy upgrades: on-bill repayment program.
(1) Under existing law the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations, as defined. Existing law authorizes the commission Public Utilities Commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.
This bill would enact the California Clean Energy Consumer Access Act of 2013 and would authorize the commission to require an electrical or gas corporation with 250,000 or more service connections to develop and implement an on-bill repayment program providing financial assistance for energy efficiency, renewable energy, distributed generation, or demand response improvements by allowing for the repayment of the financial assistance to be included in the utility customer’s utility bill (on-bill repayment). The bill would provide that the on-bill repayment obligation would run with the meter, as defined. Because a violation of any part of any order, decision, rule, direction, demand, or requirement of the commission Public Utilities Commission is a crime, this bill would impose a state-mandated local program.
(2) Existing law requires sellers of property or landlords to provide specified disclosure, to prospective buyers or prospective or existing tenants, regarding the property.
This bill would additionally require sellers of property or landlords to provide to prospective buyers or prospective or existing tenants a disclosure indicating that a portion of the utility bill is subject to an on-bill repayment obligation.
(3) Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to develop, adopt, and publish an informational booklet to educate and inform homeowners, rental property owners, renters, seller sellers, brokers, and the general public about the statewide home energy rating program. Existing law requires the State Energy Resources Conservation and Development Commission to charge a fee for the booklet.
This bill would require the State Energy Resources Conservation and Development Commission to update the booklet to include information about home energy conservation and on-bill repayment program developed pursuant to (1) above. This bill would instead authorize the State Energy Resources Conservation and Development Commission to charge a fee for the booklet.
(4) 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 This act shall be known, and may be cited, as the California Clean Energy Consumer Access Act of 2013.

SEC. 2.

 (a) The Legislature finds and declares all of the following:
(1) Currently, many Californians lack access to affordable financing for onsite energy efficiency and clean energy projects.
(2) Existing clean energy programs and incentives are important but limited in that they are funded by insufficient amounts of ratepayer or taxpayer moneys, and in that existing programs reach only a small number of Californians due to restrictions in income level, credit score, project size, or property and technology specific eligibility criteria.
(3) California’s current economic condition necessitates that the Legislature engineer pioneering ways to create sustainable, green collar jobs.
(4) Since the recession began in late 2007, California has lost nearly 1.4 million jobs, including 400,000 in the construction industry alone. Investing in clean energy projects will maximize job creation and will help the state regain a sense of economic security and sustainability at a time when unemployment remains high. The state can further stimulate its economy by putting the industry segment back to work that is most in need, the construction trades.
(5) Allowing the repayment of financing of obligations for clean energy projects through the use of utility bill bills has the cobenefit of allowing for a more affordable interest rate than would be otherwise available due to the security of utility bill payments and allowing for ratepayers to see the benefits and costs of clean energy projects on the same document.
(6) By tying repayment to the utility bill, ratepayers will make payments for their upgrades on the same bill where savings are realized from the investment, resulting in a new bill that can be equal to or even less than their utility bill prior to energy upgrades.
(7) On-bill repayment is a unique clean energy incentive program because it does not rely on public funding and expands access to energy efficiency and clean technology upgrades.
(8) On-bill repayment will incentivize private investors to invest in clean energy improvements in California, will stimulate the state’s economy by creating jobs for contractors and other persons who complete new energy improvements, and will reinforce the leadership role of the state in the new energy economy, thereby attracting clean energy manufacturing facilities and related jobs to the state.
(b) It is the intent of the Legislature, in enacting this act, to allow greater access to onsite clean energy projects by allowing consumers to finance clean energy projects through their utility bills in a financing mechanism using third-party capital to repay their obligations through their utility bill using a tool called “on-bill repayment.”

SEC. 3.

 Section 1940.10 is added to the Civil Code, to read:

1940.10.
 (a) A property owner that authorizes a project financed by the OBR program pursuant to Chapter 7.6 (commencing with Section 2833) of Part 2 of Division 1 of the Public Utilities Code shall provide to an existing tenant who is responsible, directly or indirectly through the provisions of the applicable lease, for paying all or a portion of the cost of utility service that is subject to an OBR obligation, the disclosure made available to the property owner pursuant to Section 2833.3 of the Public Utilities Code.
(b) Prior to the signing of a lease or rental agreement, an owner, or the agent of an owner of any premises with respect to which utility service is subject to an OBR obligation that will be paid by the tenant, whether directly or indirectly through the provisions of the applicable lease, shall provide a prospective tenant with the disclosure that was provided to the owner pursuant to Section 2833.3 of the Public Utilities Code.
(c) A lease shall not be invalidated solely because of the failure to comply with this section.
(d) For the purposes of this section, the following terms have the following meanings:
(1) “OBR program” has the same meaning as that set forth in Section 2833 of the Public Utilities Code.
(2) “OBR obligation” has the same meaning as that set forth in Section 2833 of the Public Utilities Code.

SEC. 4.

 Section 2079.10b is added to the Civil Code, to read:

2079.10b.
 (a) Every seller of real property subject to an OBR obligation that runs with the meter, pursuant to Chapter 7.6 (commencing with Section 2833) of Part 2 of Division 1 of the Public Utilities Code, shall deliver to the buyer of the property the disclosure that was provided to the seller pursuant to Section 2833.3 of the Public Utilities Code.
(b) Upon delivery of the disclosure form to the buyer of real property, the seller or agent is not required to provide additional information relative to the OBR obligation and the information in the disclosure form is deemed adequate to inform the buyer about the existence of the OBR obligation and the OBR repayment charge that will run with the meter pursuant to Section 2833.3 of the Public Utilities Code.
(c) The notice shall further state that unless fully satisfied prior to the sale or transfer of the property, the OBR obligation survives changes in ownership, tenancy, or meter account responsibility and, until fully satisfied, constitutes an obligation of the person responsible for the meter account pursuant to Section 2833.8 of the Public Utilities Code.

(c)

(d) For the purposes of this section, the following terms have the following meanings:
(1) “OBR obligation” has the same meaning as that set forth in Section 2833 of the Public Utilities Code.
(2) “OBR repayment charge” has the same meaning as that set forth in Section 2833 of the Public Utilities Code.
(3) “Runs with meter” has the same meaning as that set forth in Section 2833 of the Public Utilities Code.

SEC. 5.

 Section 25402.9 of the Public Resources Code is amended to read:

25402.9.
 (a) On or before July 1, 1996, the commission shall develop, adopt, and publish an informational booklet to educate and inform homeowners, rental property owners, renters, sellers, brokers, and the general public about the statewide home energy rating program adopted pursuant to Section 25942.
(b) In the development of the booklet, the commission shall consult with representatives of the Department of Real Estate, the Department of Housing and Community Development, the Public Utilities Commission, investor-owned and municipal utilities, cities and counties, real estate licensees, home builders, mortgage lenders, home appraisers and inspectors, home energy rating organizations, contractors who provide home energy services, consumer groups, and environmental groups.
(c) The commission shall update the booklet developed pursuant to subdivision (a) to include information about home energy conservation and on-bill repayment programs developed and implemented pursuant to Chapter 7.6 (commencing with Section 2833) of Part 2 of Division 1 of the Public Utilities Code.
(d) The commission may charge a fee for the informational booklet to recover its costs under subdivision (a).

SEC. 6.

 Chapter 7.6 (commencing with Section 2833) is added to Part 2 of Division 1 of the Public Utilities Code, to read:
CHAPTER  7.6. California Clean Energy Consumers Access Act of 2013

2833.
 For the purposes of this chapter, the following the terms have the following meanings:
(a) “Bill neutrality” means a utility customer’s annual payments of OBR repayment charges set at an amount that is less than or equal to the projected annual electric and gas energy savings arising from the OBR improvements in a methodology to be determined by the commission pursuant to Section 2833.1.
(b) “Incurring customer” means the utility customer of record during the billing period during which any OBR repayment charge becomes due and payable.
(c) “OBR agreement” means a written agreement executed by, and among, a utility customer, an OBR partner or its agent, and a utility or its agent, governing the terms of an OBR obligation.
(d) “OBR improvement” means an eligible energy improvement financed through an OBR obligation.
(e) “OBR obligation” means an obligation to repay a financing provided to a utility customer by an OBR partner pursuant to an on-bill repayment program approved by the commission.
(f) “OBR partner” means a person or entity providing financing for eligible energy improvements pursuant to an on-bill repayment program. OBR partners include, but are not limited to, banks, savings and loan institutions, credit unions, project developers, or independent solar energy producers, as defined in Section 2868. Financing may be provided in the form of a loan, lease, power purchase agreement, energy service agreement, or other financing structure approved by the commission.
(g) “On-bill repayment program” or “OBR program” means a program, which may include one or more pilot test programs, approved by the commission that enables building owners or occupants to arrange, by an OBR agreement, for the financing of eligible energy improvements that is repaid through charges to be included as a portion of utility bills for utility service to the premises served by the improvements financing of eligible energy improvements to be repaid through charges to be associated with the same utility account or accounts where savings are anticipated to be realized as a result of the improvements.
(h) “OBR repayment charge” means a charge, constituting repayment of all or a portion of any OBR obligation, that is included on a utility bill in accordance with a commission-approved utility tariff.
(i) “Run with the meter” means all of the following:
(1) The OBR obligation, for so long as any portion of the OBR obligation remains outstanding prior to the sale or transfer of the applicable real property, survives a change in ownership, tenancy, or meter account responsibility.
(2) The OBR obligation, for so long as any portion of the OBR obligation remains outstanding, at all times constitutes an obligation of the utility customer of record with respect to the premises served by the OBR improvements to repay.
(3) Arrears in OBR repayment charges outstanding prior to the sale or transfer of the applicable real property remain the responsibility of the incurring customer, unless expressly assumed by a subsequent customer or third party.
(4) The exemption from restrictions on a utility’s right to terminate service pursuant to Section 2833.11 applies to the subsequent utility customer for as long as any portion of the OBR obligation remains outstanding.
(j) “Utility” means an electrical corporation or gas corporation that develops, or is required to develop, an on-bill repayment program.

2833.1.
 (a) The commission may require an electrical corporation or gas corporation with 250,000 or more service connections in the state to develop and implement one or more on-bill repayment programs for eligible energy efficiency, renewable energy, distributed generation, energy storage, or demand response improvements.
(b) A utility shall not implement the on-bill repayment program without the express approval of the commission.
(c) The commission shall supervise on-bill repayment programs to ensure that the programs are administered in compliance with the terms approved by the commission.

2833.2.
 (a) The commission shall establish requirements to be met by each utility in the utility’s on-bill repayment programs that are submitted to the commission for approval, including, but not limited to, eligibility criteria for types of improvements and projects, the establishment of energy and cost savings evaluation standards, requirements that prevent increases in expected disconnection rates, prepayment options, rules that prohibit the unauthorized removal from the property of an OBR improvement, a methodology to determine bill neutrality, and project inspection services or requirements.
(b) The commission shall limit technologies eligible to be financed through OBR obligations to those that will achieve reductions of greenhouse gases as defined in the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code).
(c) The commission shall ensure the on-bill repayment program includes all of the following program elements:
(1) (A) For two years from the initial approval of the program by the commission, all on-bill repayment programs shall require bill neutrality.
(B) Two years after the initial approval, the commission shall evaluate the success of projects financed through on-bill repayment to date. If the commission determines that the requirement for bill neutrality has unnecessarily limited the types of projects that may be financed through the program, the commission may limit the application of the bill neutrality requirement.
(C) Notwithstanding subparagraph (B), the bill neutrality requirement shall apply, at all times, in cases where a portion of the OBR repayment charges are expected to be paid by one or more tenants on the property, whether directly or indirectly.
(D) The commission may include changes in the expected operating and maintenance costs in calculating bill neutrality.
(2) A requirement that an OBR obligation shall not be put in place without authorization by all owners of the fee interest in the property where the premises served by the OBR improvements is located.
(3) (A) Consumer protections for low-income residential customers, including protections to prevent increases in the expected number of service terminations, such as targeted use of a commission-approved loan loss reserve in lieu of service termination, and, including, at all times, a requirement for bill neutrality for lower income households.
(B) The commission may include changes in the expected operating and maintenance costs in calculating bill neutrality.
(4) A requirement that the OBR partner implement consumer protections, loan eligibility, and credit determinations.
(5) A requirement that the OBR partner provide the utility or its agent with a copy of all financing documents associated with an OBR obligation.
(6) A requirement that the OBR repayment charge be listed by the utility as a separate line item on the customer’s bill from the utility.
(7) A requirement that the on-bill repayment charge collected by the utility or its agents be remitted to the OBR partner pursuant to a timeframe determined by the commission.
(d) The commission shall consider, before the next energy efficiency program cycle, opportunities to coordinate OBR with ongoing efforts with participants in existing programs to support careers in energy efficiency, particularly for minorities, women, and other disadvantaged communities. This includes coordination with efforts to improve workforce diversity, job quality, and the collection of data on workforce outcomes.

2833.3.
 The OBR program shall develop all of the following:
(a) A description of OBR programs and OBR obligations that would be included in the informational booklet developed pursuant to Section 25402.9 of the Public Resources Code.
(b) A standard disclosure required by Section 2079.10b of the Civil Code to be available for use by a seller of real property that is served by OBR improvements that is provided by the OBR partners or its agent free of charge to the seller upon request.
(c) A standard disclosure required by Section 1940.10 of the Civil Code to be available for use by a lessor of real property that is served by OBR improvements that is provided by the OBR partners or its agent free of charge to the lessor upon request.

2833.4.
 (a) If the amount paid by the utility customer is less than the amount billed to the customer on the utility bill, for a utility customer account to which an OBR obligation is in effect, the commission shall adopt one of the following methods for allocation of the payment:
(1) Allocate the payment in the following order of priority:
(A) Beginning with the earliest billing period in which an arrearage exists, allocate to the utility in respect of the outstanding arrearage in all charges other than OBR repayment charges (such charges, the non-OBR charges) accrued during that billing period. Upon the satisfaction of that arrearage, allocation to the OBR partner in respect of the outstanding arrearage in the OBR repayment charges accrued during that billing period.
(B) Upon the satisfaction of arrearage pursuant to subparagraph (A), the remaining amount of the payment, if any, shall be allocated to the arrearages accrued in subsequent billing periods pursuant to subparagraph (A), with the arrearage accruing from any earlier billing period being satisfied before the arrearages accruing from subsequent billing period periods. With respect to any billing period, allocation shall be made first to the utility in respect of all non-OBR charges, and, after satisfaction of the arrearage in non-OBR charges accruing in such billing period, to the OBR partner in respect of the arrearage in OBR repayment charges accruing in such billing period.
(C) Upon the satisfaction of all prior arrearages accruing from prior billing periods, the remaining payment, if any, shall be allocated first to the utility in respect of the non-OBR charge in the current billing period. Upon the satisfaction of that charge, allocation shall be made to the OBR partner in respect of the OBR repayment charge in the current billing period.
(2) Allocate the payment to the utility and the OBR partner on a pro rata basis, in proportion to the non-OBR charge and OBR repayment charge due and owing during the applicable billing period, with arrearages from the earlier billing period being satisfied first, followed by arrearages from subsequent billing periods, which shall be addressed in chronological order, followed by charges that are due and owing during the current billing period.
(b) Any arrearage in payment for a billing period shall be included in subsequent billing periods until it is paid in full.
(c) In the event of an arrearage in payment, the full amount of the arrearage constitutes a failure to pay for electric or gas service and shall be treated consistent with the rules established by the commission for a customer’s failure to pay for service.

2833.5.
 With respect to a utility account that has been closed and in which an arrearage exist exists, including an arrearage with respect to OBR repayment charges, the commission may shall adopt rules providing that after a reasonable period of time to be determined by the commission, the share of total arrearage that is attributable to the OBR obligation may shall be deemed, as of a date certain that is no later than 90 days after the closing of the account, to be an obligation owed directly to the OBR partner and not to the utility.

2833.6.
 (a) An OBR obligation shall run with the meter unless the commission has determined that it is not reasonable for the applicable category of OBR obligation to run with the meter.
(b)  Acceptance of electric or gas service to premises that are served by OBR improvements, and to which an OBR obligation is outstanding, following submission of an application for that service, operates as an acceptance of the OBR obligation associated with electric or gas service, as applicable, to the extent that OBR repayment charges accrue during the period of electric or gas service and an assumption of the contractual rights and obligations of the OBR agreement for the duration of receipt of that service.
(c)  Acceptance of electric or gas service does not operate as an assumption of any past due OBR repayment charges incurred prior to the commencement of that service by the person or entity that subsequently becomes the customer of record.

2833.7.
 (a) The commission shall authorize a utility to recover all prudently incurred actual costs, net of any fees charged to a customer, OBR partner, contractor, or other third party, of establishing and administering the on-bill repayment program.
(b) The commission shall approve a utility’s request for cost recovery of actual costs for all judgments, settlements, costs, and expenses, including attorney’s fees, and other liabilities paid or incurred by or imposed upon the utility in carrying out required activities under an OBR program pursuant to public or private enforcement of federal laws governing consumer lending, credit, debt collection, and servicing.
(c) Utilities, to the extent they are carrying out required activities pursuant to an on-bill repayment program, shall not be responsible for lending, underwriting, and credit determinations, and are not subject to the California Finance Lenders Law (Division 9 (commencing with Section 22000) of the Financial Code), the California Financial Information Privacy Act (Division 1.4 (commencing with Section 4050) of the Financial Code), or the Rosenthal Fair Debt Collection Practices Act (Title 1.6C (commencing with Section 1788) of Part 2 of Division 3 of the Civil Code).

2833.8.
 (a) For each OBR obligation, the OBR partner or its agent shall record in the county recorder’s office of a county in which the property is located, a notice, with respect to the real property on which the premises served by the OBR improvements are situated, of the existence of the OBR obligation and stating the “Notice of On-Bill Repayment Obligation” with a prominent header on the document that reads “On-Bill Repayment Obligation” in 14-point type and contains the assessor’s parcel number, owners of record of the affected property, the legal description of the affected property, the street address of the affected property, total amount of the OBR obligation, the term of the OBR obligation, and that the OBR obligation is being repaid through a charge on an electric or gas service provided to the property. The notice shall further state that it is being filed recorded pursuant to this section and, unless fully satisfied prior to the sale or transfer of the property, the OBR obligation shall survive changes in ownership, tenancy, or meter account responsibility and, until fully satisfied, shall constitute the obligation of the person responsible for the meter account. The notice shall does not constitute a mortgage or deed of trust and shall not create any security interest or lien title defect, lien, or encumbrance on the property. Upon
(b) Upon satisfaction of the OBR obligation, the OBR partner or its agent shall promptly record a notice of repayment or a termination of notice “Termination of Notice of On-Bill Repayment Obligation” within 10 days of receipt of full payment.

(b)The county recorder shall record the notices in the same book in which the deeds are recorded.

2833.9.
 The commission and the utility shall not provide a forum to adjudicate disputes arising from this chapter. If a dispute arises between the customer and the OBR partner regarding the customer’s obligation to pay the OBR obligation, the utility shall not be responsible in any respect relating to the disputes and shall handle funds collected from the customer in accordance with the program rules.

2833.10.
 The commission shall, with public notice and an opportunity for public comment, periodically evaluate on-bill repayment programs and may suspend or modify part or all of a program if it finds that the program does not meet commission requirements or goals. Suspension or modification of part or all of the program shall not affect the OBR obligations that exist at the time of the suspension or modification.

2833.11.
 Subdivision (e) of Section 777.1 and subdivision (a) of Section 779.2 do not apply to delinquency in OBR repayment charges.

2833.12.
 (a) In lieu of waiving disconnect protections for third-party financing as provided in Section 2833.11, the commission shall develop, to the extent feasible and cost effective, a loan-loss reserve program or loan guarantee program as part of the on-bill repayment program for providing energy efficiency programs to residential customers. The program shall be directed to residential customers who experience disproportionate bill impacts from summer cooling and other demands on the electrical system that cause excessive usage and potentially significant bill impacts.
(b) Notwithstanding subdivision (a), but consistent with paragraph (3) of subdivision (c) of Section 2833.2, the commission may determine that Section 2833.11 applies in either of the following circumstances:
(1) A customer or project is not covered by a loan-loss reserve program or a loan guarantee program established in subdivision (a).
(2) A customer elects to waive the provisions of subdivision (a).

2833.12.2833.13.
 (a) This chapter does not require that the on-bill repayment programs be identical and the commission may vary program elements for each utility based upon each utility’s individual circumstances.
(b)  This chapter does not limit the authority of the commission to approve and supervise separate on-bill repayment programs with different features for different categories of customers, including single-family residential, multifamily residential, industrial, governmental, commercial, and other categories of customers that the commission determines to be appropriate. Utilities shall not implement on-bill repayment programs without the express approval of the commission.

SEC. 7.

 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.