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AB-3001 Zero-emissions buildings and sources of heat energy.(2017-2018)

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Date Published: 04/03/2018 09:00 PM
AB3001:v98#DOCUMENT

Amended  IN  Assembly  April 03, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill
No. 3001

Introduced by Assembly Member Bonta
(Coauthor: Assembly Member Friedman)

February 16, 2018

An act to amend Section 25402 25402.1 of, and to add Section 25403 to, the Public Resources Code, and to amend Sections 12819 and 16480 of, and to add Sections 380.7, 380.8, and 740.18 to, add Section 380.7 to the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


AB 3001, as amended, Bonta. Zero-emissions buildings and sources of heat energy.
(1) The Warren-Alquist State Energy Resources Conservation and Development Act requires the State Energy Resources Conservation and Development Commission (Energy Commission) to adopt building design and construction standards and energy and water conservation standards for new residential and nonresidential buildings to reduce the wasteful, uneconomic, inefficient, or unnecessary consumption of energy, including energy associated with the use of water. The act requires those standards to be cost effective when taken in their entirety and when amortized over the economic life of the structure compared with historic practice. Existing law requires the Energy Commission, in determining cost effectiveness, to consider certain factors. Existing law requires the Energy Commission to take various actions, including the establishment of a formal process for certification of compliance options for new products, materials, and calculation methods for showing compliance with the above standards for new products, materials, or calculation methods.
This bill would additionally require the Energy Commission, in the cost-effectiveness determination, to consider emissions of greenhouse gases from fossil fuel combustion and fugitive emissions that are avoided and progress toward meeting the state’s climate goals. require the Energy Commission to provide compliance incentive credit for measures that result in reduced emissions of greenhouse gases beyond those the commission has determined to be cost effective. The bill would require the Energy Commission, for the year 2022 and thereafter, to require new residential and nonresidential buildings to be electric-ready buildings, as defined, and to develop standards pursuant to which emissions of greenhouse gases associated with new residential and nonresidential buildings could be reduced in a cost-effective manner.
(2) Existing law authorizes the PUC Public Utilities Commission (PUC) to fix the rates and charges for every public utility, including electrical corporations, and requires that those rates and charges be just and reasonable.
This bill would require the PUC to require electrical corporations to develop a tariff offering optional residential and commercial rates that encourage encourages the deployment of flexible electric loads. loads, removes disincentives customers face to adopt low-emissions heating technologies, and helps integrate renewable energy to support achieving the goals of the California Renewables Portfolio Standard Program in the most cost-effective manner. By requiring electrical corporations to develop the tariff, a violation of which would be a crime, this bill would impose a state-mandated local program. The bill would require the PUC to identify and make policy changes to support the achievement of zero-emissions buildings. PUC, in a new proceeding, to identify barriers and adopt rules requiring electrical and gas corporations to make policy changes to their energy efficiency programs to support the adoption of space and water heating technologies that reduce emissions of greenhouse gases in new and existing buildings. The bill would require the PUC to (A) revise update its 3-prong fuel substitution test, as specified, (B) include societal and environmental costs of energy use in determining the cost-effectiveness of programs under its jurisdiction, and (C) include thermal storage and electric vehicle smart charging as qualifying resources for incentives and procurement requirements for energy storage systems. create or update incentive programs, including those specified, that encourage the transition to low-emissions heating technologies in residential and nonresidential buildings.

(3)Existing law, except as specified, prohibits public utility districts and municipal utility districts from expending funds for advertising when the advertising encourages increased consumption of the services or commodities.

This bill would additionally authorize advertising that encourages increased consumption of services and commodities if the increased consumption results in a net decrease in the emissions of greenhouse gases due to the displacement of energy use resulting from the increased consumption.

(4)

(3) 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 Zero-Emissions Buildings Act.

SEC. 2.

 (a) The Legislature finds and declares all of the following:
(1) Residential and nonresidential buildings are the second largest source of emissions of greenhouse gases in the state, and are significant sources of air pollution harmful to the health of Californians and the environment.
(2) California cannot achieve its air quality and climate goals without a deep reduction in emissions from residential and nonresidential buildings. Current building-related energy policies fall short of achieving an emission reduction of greenhouse gases of 40 percent below 1990 levels by 2030 and 80 percent below the 1990 levels by 2050 for residential and nonresidential buildings. While energy efficiency in buildings will continue to be an important and significant contributor to reducing emissions, a large-scale transition away from burning fossil fuels, such as natural gas and propane, transition to cleaner heating fuels, is also needed to reach California’s climate and clean air targets.
(3) While California is a leader in increasing the availability of clean electricity, the state has made little progress on transitioning away from burning fossil fuels and towards clean energy alternatives in buildings. reducing emissions from fossil fuels used in buildings.
(4) Modern clean technologies, such as electric heat pumps and solar thermal systems, have the potential to dramatically and affordably reduce pollution from the building sector, while helping to integrate high levels of renewable energy into the electricity grid.
(5) Large-scale deployment of these clean heating technologies at the pace and scale necessary to achieve California’s air quality and climate goals requires a comprehensive strategy that does all of the following:
(A) Removes regulatory barriers that currently hinder the clean energy transition in buildings.
(B) Sets electricity rates that value and encourage demand flexibility.
(C) Unleashes industrial innovation to reduce costs through a clear long-term direction and short- and mid-term market stimulation.
(D) Develops capacity in the supply chain through installer, distributor, and retailer training.
(E) Raises awareness among the public to drive demand.
(6) The transition to healthy and affordable clean energy buildings will protect the health of Californians, create local jobs, stimulate economic growth, and safeguard the environment.
(b) It is the intent of the Legislature for the state’s energy agencies to take expedient action to accelerate the transition of the California building sector to developing healthy, affordable, and clean energy buildings, in alignment with the state’s climate and clean energy goals, while also prioritizing investments in low-income and disadvantaged communities.
SEC. 3.Section 25402 of the Public Resources Code is amended to read:
25402.

The commission shall, after one or more public hearings, do all of the following in order to reduce the wasteful, uneconomic, inefficient, or unnecessary consumption of energy, including the energy associated with the use of water:

(a)(1)Prescribe, by regulation, lighting, insulation climate control system, and other building design and construction standards that increase the efficiency in the use of energy and water for new residential and new nonresidential buildings. The commission shall periodically update the standards and adopt any revision that, in its judgment, it deems necessary. Six months after the commission certifies an energy conservation manual pursuant to subdivision (c) of Section 25402.1, no city, county, city and county, or state agency shall issue a permit for any building unless the building satisfies the standards prescribed by the commission pursuant to this subdivision or subdivision (b) that are in effect on the date an application for a building permit is filed. Water efficiency standards adopted pursuant to this subdivision shall be demonstrated by the commission to be necessary to save energy.

(2)Prior to adopting a water efficiency standard for residential buildings, the Department of Housing and Community Development and the commission shall issue a joint finding whether the standard (A) is equivalent or superior in performance, safety, and for the protection of life, health, and general welfare to standards in Title 24 of the California Code of Regulations and (B) does not unreasonably or unnecessarily impact the ability of Californians to purchase or rent affordable housing, as determined by taking account of the overall benefit derived from water efficiency standards. Nothing in this subdivision in any way reduces the authority of the Department of Housing and Community Development to adopt standards and regulations pursuant to Part 1.5 (commencing with Section 17910) of Division 13 of the Health and Safety Code.

(3)Water efficiency standards and water conservation design standards adopted pursuant to this subdivision and subdivision (b) shall be consistent with the legislative findings of this division to ensure and maintain a reliable supply of electrical energy and be equivalent to or superior to the performance, safety, and protection of life, health, and general welfare standards contained in Title 24 of the California Code of Regulations. The commission shall consult with the members of the coordinating council as established in Section 18926 of the Health and Safety Code in the development of these standards.

(b)(1)Prescribe, by regulation, energy and water conservation design standards for new residential and new nonresidential buildings. The standards shall be performance standards and shall be promulgated in terms of hourly source energy consumption per gross square foot of floorspace, but may also include devices, systems, and techniques required to conserve energy and water. The commission shall periodically review the standards and adopt any revision that, in its judgment, it deems necessary. A building that satisfies the standards prescribed pursuant to this subdivision need not comply with the standards prescribed pursuant to subdivision (a). Water conservation design standards adopted pursuant to this subdivision shall be demonstrated by the commission to be necessary to save energy. Prior to adopting a water conservation design standard for residential buildings, the Department of Housing and Community Development and the commission shall issue a joint finding whether the standard (A) is equivalent or superior in performance, safety, and for the protection of life, health, and general welfare to standards in the California Building Standards Code and (B) does not unreasonably or unnecessarily impact the ability of Californians to purchase or rent affordable housing, as determined by taking account of the overall benefit derived from the water conservation design standards. Nothing in this subdivision in any way reduces the authority of the Department of Housing and Community Development to adopt standards and regulations pursuant to Part 1.5 (commencing with Section 17910) of Division 13 of the Health and Safety Code.

(2)In order to increase public participation and improve the efficacy of the standards adopted pursuant to subdivisions (a) and (b), the commission shall, prior to publication of the notice of proposed action required by Section 18935 of the Health and Safety Code, involve parties who would be subject to the proposed regulations in public meetings regarding the proposed regulations. All potential affected parties shall be provided advance notice of these meetings and given an opportunity to provide written or oral comments. During these public meetings, the commission shall receive and take into consideration input from all parties concerning the parties’ design recommendations, cost considerations, and other factors that would affect consumers and California businesses of the proposed standard. The commission shall take into consideration prior to the start of the notice of proposed action any input provided during these public meetings.

(3)The standards adopted or revised pursuant to subdivisions (a) and (b) shall be cost effective when taken in their entirety and when amortized over the economic life of the structure compared with historic practice. When determining cost-effectiveness, the commission shall consider the value of the water or energy saved, the life cycle emissions of greenhouse gases from fossil fuel, including combustion and fugitive emissions, instate and out-of-state, that are avoided, impact on product efficacy for the consumer, and the life cycle cost of complying with the standard. The commission shall consider other relevant factors, as required by Sections 18930 and 18935 of the Health and Safety Code, including, but not limited to, the impact on housing costs, the total statewide costs and benefits of the standard over its lifetime, economic impact on California businesses, progress toward the state’s 2030 climate goals as set forth in Division 25.5 (commencing with Section 38500) of the Health and Safety Code and other climate goals adopted by the Legislature, and alternative approaches and their associated costs.

(c)(1)Prescribe, by regulation, standards for minimum levels of operating efficiency, based on a reasonable use pattern, and may prescribe other cost-effective measures, including incentive programs, fleet averaging, energy and water consumption labeling not preempted by federal labeling law, and consumer education programs, to promote the use of energy and water efficient appliances whose use, as determined by the commission, requires a significant amount of energy or water on a statewide basis. The minimum levels of operating efficiency shall be based on feasible and attainable efficiencies or feasible improved efficiencies that will reduce the energy or water consumption growth rates. The standards shall become effective no sooner than one year after the date of adoption or revision. No new appliance manufactured on or after the effective date of the standards may be sold or offered for sale in the state, unless it is certified by the manufacturer thereof to be in compliance with the standards. The standards shall be drawn so that they do not result in any added total costs for consumers over the designed life of the appliances concerned.

In order to increase public participation and improve the efficacy of the standards adopted pursuant to this subdivision, the commission shall, prior to publication of the notice of proposed action required by Section 18935 of the Health and Safety Code, involve parties who would be subject to the proposed regulations in public meetings regarding the proposed regulations. All potential affected parties shall be provided advance notice of these meetings and given an opportunity to provide written or oral comments. During these public meetings, the commission shall receive and take into consideration input from all parties concerning the parties’ design recommendations, cost considerations, and other factors that would affect consumers and California businesses of the proposed standard. The commission shall take into consideration prior to the start of the notice of proposed action any input provided during these public meetings.

The standards adopted or revised pursuant to this subdivision shall not result in any added total costs for consumers over the designed life of the appliances concerned. When determining cost-effectiveness, the commission shall consider the value of the water or energy saved, impact on product efficacy for the consumer, and the life cycle cost to the consumer of complying with the standard. The commission shall consider other relevant factors, as required by Sections 11346.5 and 11357 of the Government Code, including, but not limited to, the impact on housing costs, the total statewide costs and benefits of the standard over its lifetime, economic impact on California businesses, and alternative approaches and their associated costs.

(2)No new appliance, except for any plumbing fitting, regulated under paragraph (1), that is manufactured on or after July 1, 1984, may be sold, or offered for sale, in the state, unless the date of the manufacture is permanently displayed in an accessible place on that appliance.

(3)During the period of five years after the commission has adopted a standard for a particular appliance under paragraph (1), no increase or decrease in the minimum level of operating efficiency required by the standard for that appliance shall become effective, unless the commission adopts other cost-effective measures for that appliance.

(4)Neither the commission nor any other state agency shall take any action to decrease any standard adopted under this subdivision on or before June 30, 1985, prescribing minimum levels of operating efficiency or other energy conservation measures for any appliance, unless the commission finds by a four-fifths vote that a decrease is of benefit to ratepayers, and that there is significant evidence of changed circumstances. Before January 1, 1986, the commission shall not take any action to increase a standard prescribing minimum levels of operating efficiency for any appliance or adopt a new standard under paragraph (1). Before January 1, 1986, any appliance manufacturer doing business in this state shall provide directly, or through an appropriate trade or industry association, information, as specified by the commission after consultation with manufacturers doing business in the state and appropriate trade or industry associations on sales of appliances so that the commission may study the effects of regulations on those sales. These informational requirements shall remain in effect until the information is received. The trade or industry association may submit sales information in an aggregated form in a manner that allows the commission to carry out the purposes of the study. The commission shall treat any sales information of an individual manufacturer as confidential and that information shall not be a public record. The commission shall not request any information that cannot be reasonably produced in the exercise of due diligence by the manufacturer. At least one year prior to the adoption or amendment of a standard for an appliance, the commission shall notify the Legislature of its intent, and the justification to adopt or amend a standard for the appliance. Notwithstanding paragraph (3) and this paragraph, the commission may do any of the following:

(A)Increase the minimum level of operating efficiency in an existing standard up to the level of the National Voluntary Consensus Standards 90, adopted by the American Society of Heating, Refrigeration, and Air Conditioning Engineers or, for appliances not covered by that standard, up to the level established in a similar nationwide consensus standard.

(B)Change the measure or rating of efficiency of any standard, if the minimum level of operating efficiency remains substantially the same.

(C)Adjust the minimum level of operating efficiency in an existing standard in order to reflect changes in test procedures that the standards require manufacturers to use in certifying compliance, if the minimum level of operating efficiency remains substantially the same.

(D)Readopt a standard preempted, enjoined, or otherwise found legally defective by an administrative agency or a lower court, if final legal action determines that the standard is valid and if the standard that is readopted is not more stringent than the standard that was found to be defective or preempted.

(E)Adopt or amend any existing or new standard at any level of operating efficiency, if the Governor has declared an energy emergency as described in Section 8558 of the Government Code.

(5)Notwithstanding paragraph (4), the commission may adopt standards pursuant to Commission Order No. 84-0111-1, on or before June 30, 1985.

(d)Recommend minimum standards of efficiency for the operation of any new facility at a particular site that are technically and economically feasible. No site and related facility shall be certified pursuant to Chapter 6 (commencing with Section 25500), unless the applicant certifies that standards recommended by the commission have been considered, which certification shall include a statement specifying the extent to which conformance with the recommended standards will be achieved.

Whenever this section and Chapter 11.5 (commencing with Section 19878) of Part 3 of Division 13 of the Health and Safety Code are in conflict, the commission shall be governed by that chapter of the Health and Safety Code to the extent of the conflict.

(e)The commission shall do all of the following:

(1)Not later than January 1, 2004, amend any regulations in effect on January 1, 2003, pertaining to the energy efficiency standards for residential clothes washers to require that residential clothes washers manufactured on or after January 1, 2007, be at least as water efficient as commercial clothes washers.

(2)Not later than April 1, 2004, petition the federal Department of Energy for an exemption from any relevant federal regulations governing energy efficiency standards that are applicable to residential clothes washers.

(3)Not later than January 1, 2005, report to the Legislature on its progress with respect to the requirements of paragraphs (1) and (2).

SEC. 3.

 Section 25402.1 of the Public Resources Code is amended to read:

25402.1.
 In order to (a) To implement the requirements of subdivisions (a) and (b) of Section 25402, the commission shall do all of the following:

(a)

(1) Develop a public domain computer program which will enable contractors, builders, architects, engineers, and government officials to estimate the energy consumed by residential and nonresidential buildings. The commission may charge a fee for the use of the program, which fee shall be based upon the actual cost of the program, including any computer costs.

(b)

(2) Establish a formal process for certification of compliance options for new products, materials, and calculation methods which provides for adequate technical and public review to ensure accurate, equitable, and timely evaluation of certification applications. Proponents filing applications for new products, materials, and calculation methods shall provide all information needed to evaluate the application that is required by the commission. The commission shall publish annually the results of its certification decisions and instructions to users and local building officials concerning requirements for showing compliance with the building standards for new products, materials, or calculation methods. The commission may charge and collect a reasonable fee from applicants to cover the costs under this subdivision. Any funds received by the commission for purposes of this subdivision shall be deposited in the Energy Resources Programs Account and, notwithstanding Section 13340 of the Government Code, are continuously appropriated to the commission for the purposes of this subdivision. Any unencumbered portion of funds collected as a fee for an application remaining in the Energy Resources Programs Account after completion of the certification process for that application shall be returned to the applicant within a reasonable period of time.
(3) Commencing with the next triennial edition of the building energy efficiency standards for residential and nonresidential buildings (Part 6 (commencing with Section 100) of Title 24 of the California Code of Regulations) adopted after July 1, 2019, adopt provisions that provide compliance incentive credit for measures that result in reduced emissions of greenhouse gases beyond those the commission has determined to be cost effective.

(c)

(4) Include a prescriptive method of complying with the standards, including design aids such as a manual, sample calculations, and model structural designs.

(d)

(5) Conduct a pilot project of field testing of actual residential buildings to calibrate and identify potential needed changes in the modeling assumptions to increase the accuracy of the public domain computer program specified in subdivision (a) and to evaluate the impacts of the standards, including, but not limited to, the energy savings, cost effectiveness, and the effects on indoor air quality. The pilot project shall be conducted pursuant to a contract entered into by the commission. The commission shall consult with the participants designated pursuant to Section 9202 of the Public Utilities Code to seek funding and support for field monitoring in each public utility service territory, with the University of California to take advantage of its extensive building monitoring expertise, and with the California Building Industry Association to coordinate the involvement of builders and developers throughout the state. The pilot project shall include periodic public workshops to develop plans and review progress. The commission shall prepare and submit a report to the Legislature on progress and initial findings not later than December 31, 1988, and a final report on the results of the pilot project on residential buildings not later than June 30, 1990. The report shall include recommendations regarding the need and feasibility of conducting further monitoring of actual residential and nonresidential buildings. The report shall also identify any revisions to the public domain computer program and energy conservation standards if the pilot project determines that revisions are appropriate.

(e)

(6) Certify, not later than 180 days after approval of the standards by the State Building Standards Commission, an energy conservation manual for use by designers, builders, and contractors of residential and nonresidential buildings. The manual shall be furnished upon request at a price sufficient to cover the costs of production and shall be distributed at no cost to all affected local agencies. The manual shall contain, but not be limited to, the following:

(1)

(A) The standards for energy conservation established by the commission.

(2)

(B) Forms, charts, tables, and other data to assist designers and builders in meeting the standards.

(3)

(C) Design suggestions for meeting or exceeding the standards.

(4)

(D) Any other information which the commission finds will assist persons in conforming to the standards.

(5)

(E) Instructions for use of the computer program for calculating energy consumption in residential and nonresidential buildings.

(6)

(F) The prescriptive method for use as an alternative to the computer program.

(f)The commission shall establish

(7) Establish a continuing program of technical assistance to local building departments in the enforcement of subdivisions (a) and (b) of Section 25402 and this section. The program shall include the training of local officials in building technology and enforcement procedures related to energy conservation, and the development of complementary training programs conducted by local governments, educational institutions, and other public or private entities. The technical assistance program shall include the preparation and publication of forms and procedures for local building departments in performing the review of building plans and specifications. The commission shall provide, on a contract basis, a review of building plans and specifications submitted by a local building department, and shall adopt a schedule of fees sufficient to repay the cost of those services.

(g)

(b) Subdivisions (a) and (b) of Section 25402 and this section, and the rules and regulations of the commission adopted pursuant thereto, shall be enforced by the building department of every city, county, or city and county.
(1) No building permit for any residential or nonresidential building shall be issued by a local building department, unless a review by the building department of the plans for the proposed residential or nonresidential building contains detailed energy system specifications and confirms that the building satisfies the minimum standards established pursuant to subdivision (a) or (b) of Section 25402 and this section applicable to the building.
(2) Where there is no local building department, the commission shall enforce subdivisions (a) and (b) of Section 25402 and this section.
(3) If a local building department fails to enforce subdivisions (a) and (b) of Section 25402 and this section or any other provision of this chapter or standard adopted pursuant thereto, the commission may provide enforcement after furnishing 10 days’ written notice to the local building department.
(4) A city, county, or city and county may, by ordinance or resolution, prescribe a schedule of fees sufficient to pay the costs incurred in the enforcement of subdivisions (a) and (b) of Section 25402 and this section. The commission may establish a schedule of fees sufficient to pay the costs incurred by that enforcement.
(5) No construction of any state building shall commence until the Department of General Services or the state agency that otherwise has jurisdiction over the property reviews the plans for the proposed building and certifies that the plans satisfy the minimum standards established pursuant to subdivision (a) or (b) of Chapter 2.8 (commencing with Section 15814.30) of Part 10b of Division 3 of Title 2 of the Government Code, Section 25402, and this section which are applicable to the building.

(h)

(c) Subdivisions (a) and (b) of Section 25402 and this section shall apply only to new residential and nonresidential buildings on which actual site preparation and construction have not commenced prior to the effective date of rules and regulations adopted pursuant to those sections that are applicable to those buildings. Nothing in those sections shall prohibit either of the following:
(1) The enforcement of state or local energy conservation or energy insulation standards, adopted prior to the effective date of rules and regulations adopted pursuant to subdivisions (a) and (b) of Section 25402 and this section with regard to residential and nonresidential buildings on which actual site preparation and construction have commenced prior to that date.
(2) The enforcement of city or county energy conservation or energy insulation standards, whenever adopted, with regard to residential and nonresidential buildings on which actual site preparation and construction have not commenced prior to the effective date of rules and regulations adopted pursuant to subdivisions (a) and (b) of Section 25402 and this section, if the city or county files the basis of its determination that the standards are cost effective with the commission and the commission finds that the standards will require the diminution of energy consumption levels permitted by the rules and regulations adopted pursuant to those sections. If, after two or more years after the filing with the commission of the determination that those standards are cost effective, there has been a substantial change in the factual circumstances affecting the determination, upon application by any interested party, the city or county shall update and file a new basis of its determination that the standards are cost effective. The determination that the standards are cost effective shall be adopted by the governing body of the city or county at a public meeting. If, at the meeting on the matter, the governing body determines that the standards are no longer cost effective, the standards shall, as of that date, be unenforceable and no building permit or other entitlement shall be denied based on the noncompliance with the standards.

(i)

(d) The commission may exempt from the requirements of this section and of any regulations adopted pursuant thereto any proposed building for which compliance would be impossible without substantial delays and increases in cost of construction, if the commission finds that substantial funds have been expended in good faith on planning, designing, architecture or engineering prior to the date of adoption of the regulations.

(j)

(e) If a dispute arises between an applicant for a building permit, or the state pursuant to paragraph (5) of subdivision (g), (b), and the building department regarding interpretation of Section 25402 or the regulations adopted pursuant thereto, either party may submit the dispute to the commission for resolution. The commission’s determination of the matter shall be binding on the parties.

(k)

(f) Nothing in Section 25130, 25131, or 25402, or in this section prevents enforcement of any regulation adopted pursuant to this chapter, or Chapter 11.5 (commencing with Section 19878) of Part 3 of Division 13 of the Health and Safety Code as they existed prior to September 16, 1977.

SEC. 4.

 Section 25403 is added to the Public Resources Code, to read:

25403.
 In regulations prescribed pursuant to subdivision (a) or (b) of Section 25402 for the year 2022 and thereafter, the commission shall do both of the following:
(a) Require, in consultation with the State Building Standards Commission, all new residential and nonresidential buildings be electric-ready buildings. For purposes of this subdivision, “electric-ready buildings” means buildings containing electric infrastructure necessary to enable building occupants to use electrical equipment in lieu of natural gas-fired equipment, such as space and water heating equipment, without the need for additional upgrades to the building’s electrical infrastructure.
(b) Develop standards pursuant to which emissions of greenhouse gases associated with new residential and nonresidential buildings could be reduced in a cost-effective manner.

SEC. 5.Section 380.7 is added to the Public Utilities Code, to read:
380.7.

The commission, in an existing or new proceeding, shall identify and make policy changes to support the achievement of zero-emissions buildings, including by any of the following:

(a)Removal of barriers to the use of clean energy in buildings, including electrification of space and water heating in buildings where electrification has the potential to help achieve the state’s climate goals.

(b)Creating incentive programs and rate structures that encourage the transition to cleaner fuels for residential and nonresidential buildings.

(c)Planning for and managing necessary changes in the energy infrastructure, such as investment in natural gas infrastructure.

SEC. 6.Section 380.8 is added to the Public Utilities Code, to read:
380.8.

The commission shall do all of the following:

(a)Revise the three-prong fuel substitution test used to determine the eligibility of projects to receive ratepayer-funded energy efficiency incentives, as established in commission decisions D92-10-020 and D92-12-050, to align the test with the state’s climate goals by increasing opportunities to reduce the emissions of greenhouse gases through fuel substitution.

(b)Include the societal and environmental costs of energy use, including combustion and fugitive emissions, in determining cost-effectiveness for programs under its jurisdiction.

(c)(1)Include thermal storage and electric vehicle smart charging as qualifying resources for incentive programs or procurement requirements for energy storage systems.

(2)Recommend to the Legislature necessary statutory amendments to implement paragraph (1).

SEC. 7.Section 740.18 is added to the Public Utilities Code, to read:
740.18.

The commission shall require electrical corporations to develop and submit to the commission for approval a tariff offering optional residential and commercial rates for electrical services that encourage the deployment of flexible electric loads.

SEC. 8.Section 12819 of the Public Utilities Code is amended to read:
12819.

(a)A district furnishing light, heat, or power shall not expend funds for advertising when the advertising encourages increased consumption of the services or commodities, unless, in the district’s determination, the increased consumption of services or commodities results in a net decrease in the emissions of greenhouse gases due to the displacement of light, heat, or power resulting from the increased consumption.

(b)This section does not prohibit a district furnishing light, heat, or power from expending funds for advertising that encourages the more efficient operation of the facilities, works, or utilities of the district, or for advertising that encourages the more efficient use of light, heat, or power, the conservation of energy or natural resources, or presents accurate information on the economical purchase, maintenance, or use of any appliance or device using light, heat, or power.

(c)This section does not prohibit a district furnishing light, heat, or power from expending funds for advertising for the purposes of economic development that benefits ratepayers, retaining customers, marketing competitive services and commodities, or promoting electrical technologies that enhance productivity or provide environmental benefits, within or without the district.

SEC. 9.Section 16480 of the Public Utilities Code is amended to read:
16480.

(a)A district furnishing light, heat, or power shall not expend funds for advertising when that advertising encourages increased consumption of those services or commodities, unless, in the district’s determination, the increased consumption of services or commodities results in a net decrease in the emissions of greenhouse gases due to the displacement of light, heat, or power resulting from the increased consumption.

(b)This section does not prohibit a district furnishing light, heat, or power from expending funds for advertising that encourages the more efficient operation of the facilities, works, or utilities of the district, or for advertising that encourages the more efficient use of light, heat, or power, the conservation of energy or natural resources, or presents accurate information on the economical purchase, maintenance, or use of any appliance or device using light, heat, or power.

SEC. 5.

 Section 380.7 is added to the Public Utilities Code, to read:

380.7.
 The commission, in a new proceeding, shall identify barriers and adopt rules requiring electrical and gas corporations to make policy changes to their energy efficiency programs to support the adoption of space and water heating technologies that reduce emissions of greenhouse gases in new and existing buildings. As part of that proceeding, the commission shall, at a minimum, do all of the following:
(a) Update the fuel substitution test used to determine the eligibility of projects to receive ratepayer-funded energy efficiency incentives, as established in commission Decision 92-10-020 and Decision 92-12-050, to increase opportunities for customers to reduce emissions of greenhouse gases by adopting low-emissions heating technologies.
(b) Include the societal and environmental costs of energy use, including combustion and fugitive emissions, in determining the cost-effectiveness for programs under its jurisdiction that pertain to space and water heating.
(c) Create or update incentive programs for new construction and existing buildings, emerging technologies, load management, and other initiatives under the commission’s jurisdiction that encourage the transition to low-emissions heating technologies in residential and nonresidential buildings.
(d) Require electrical corporations to develop and submit to the commission for approval a new or modified tariff for electrical services available to residential and commercial customers for application at the customer’s discretion that does all of the following:
(1) Removes disincentives customers face to adopt low-emissions heating technologies, such as by increasing usage baselines for customers using electric space and water heating technologies.
(2) Encourages the deployment of flexible electric loads to mitigate peak demand and associated system costs, such as grid-connected electric water heating and space heating that can shift usage to off-peak periods of the day when electricity is less expensive.
(3) Helps integrate electricity from eligible renewable energy resources to support achieving the goals of the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division 1) in the most cost-effective manner.

SEC. 10.SEC. 6.

 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.