Assemblymember Levine's Energy Efficiency Act Approved in State Assembly

AB 2021 Would Reduce Electricity Demand by 10 Percent over the Next 10 Years; Offset Need to Build 11 Major Power Plants

This effort alone would reduce forecasted electricity demand by 10 percent over the next 10 years, offsetting the need to build 11 major power plants.

“Energy efficiency is the only energy policy which lowers costs, creates reliability and is environmentally friendly,” Assemblymember Levine said. “In order for California to benefit from energy efficiency programs, all utilities must be responsible for their share.

“While the Public Utilities Commission has set aggressive energy efficiency goals for the investor-owned utilities, most municipal utilities lack similar goals,” Levine continued. “Since municipal utilities represent 27 percent of California’s electricity consumption, we cannot meet statewide energy efficiency goals without municipal utility participation.” 

AB 2021 requires that:

• Every three years, the California Energy Commission (CEC) adopts annual statewide electricity and natural gas saving targets based on the total amount of cost-effective achievable energy efficiency;
  
  
• All electric utilities contribute to meeting statewide energy saving targets. The Public Utilities Commission (PUC) will set targets for investor-owned utilities (IOUs) and the CEC will set targets for municipal utilities (munis);
  
  
• All utilities integrate energy efficiency into resource procurement and invest in efficiency whenever it is cheaper than investing in power plants;
  
  
• All utilities contract for independent evaluation, measurement, and verification of energy and demand savings achieved by the energy efficiency programs;
  
  
• The Energy Commission compares each municipal utility’s actual savings with its targets, and if a shortfall is found, requires the muni to provide funds to the Energy Commission to make remedial investments. The PUC will have authority to fine the IOUs; and
  
  
• The Energy Commission develops a plan to improve the energy efficiency, and to decrease peak electricity demand, of air conditioners in the hot, dry climate.

California is aggressively pursuing ways to reduce greenhouse gas emissions to 80 percent below the 1990 levels by 2050. A key component of the plan to meet this goal is decreasing the use of electricity produced by fossil fuel power plants by maximizing the state’s use of energy efficiency programs. 

In September 2005, the PUC unanimously approved IOUs, such as PG&E, Southern California Edison and SDG&E, energy efficiency program plans for 2006 through 2008. IOUs will spend $2.7 billion over the next three years on energy efficiency. This investment will save ratepayers $4.7 billion by avoiding electricity procurement costs. This is a ratepayer net savings of $2 billion. These investments will also help the state avoid future blackouts and will dramatically decrease greenhouse gas emissions. 

An informational hearing held last fall by the Assembly Utilities and Commerce Committee, chaired by Assemblymember Levine, showed that while IOUs have increased efficiency investments and savings under the state’s policy guidance, munis as a whole have not been nearly as aggressive in implementing energy efficiency. While the PUC has set aggressive energy efficiency goals for the IOUs, most munis lack similar goals. Since munis represent 27 percent of California’s electricity consumption, statewide energy efficiency goals cannot be met without muni participation.

“AB 2021 accelerates all utilities’ electricity and natural gas efficiency programs and will help California meet at least eight percent of the 2020 emissions limit and achieve enormous economic and job benefits,” Levine said. “This is a reduction of 174 million metric tons CO2 reduction by 2020, which is the equivalent of taking one million cars off the road. By adopting these policies, California will spur innovation that will lead to even larger efficiency opportunities.”

AB 2021 will be heard next in the Senate.