Sustainability | June 20, 2024

California’s Energy Savings Act: A Look at Key Legislation

This is the fourth in a series of articles outlining recent updates to building performance policies across the U.S. Stay tuned for more information on other jurisdictions over the coming weeks.

Mantis Innovation assists organizations in navigating compliance with Building Performance Standards by establishing least-cost compliance pathways that drive value. For an in-depth look at how your business can benefit from guided energy compliance expertise, read our blog post about National Storage Affiliates’ initiative to drive business results through ESG reporting.

Following in the footsteps of Colorado and Washington, California has enacted new legislation that paves the way for a statewide building performance standard (BPS): the Energy Savings Act (Senate Bill 48). Senate Bill 48 lays the groundwork for establishing BPS throughout the state. As it stands, there is currently no formal BPS mandate. This bill demonstrates a clear desire by the state to commit to one. Read on to understand the Act's key provisions, how they may impact businesses like yours, and the three steps ahead that lead to a definitive BPS In the state:

Step 1: Benchmarking – A Signal for What’s to Come

The Act focuses on "covered buildings," generally commercial buildings with no residential utility accounts and residential buildings with five or more active utility accounts. Here's the initial step for compliance:

Assembly Bill 802 established mandatory benchmarking for all covered buildings of over 50,000 square feet in the State of California in 2018. Benchmarking requires building owners to track and assess their buildings’ energy use, establishing a baseline for measuring future improvements. The California Public Utilities Commission (CPUC) already requires utilities to provide whole-building, aggregated energy usage data for covered buildings. Building owners can request this information from their utility provider.

While many businesses in the state have already instituted benchmarking programs and have collected data, those who have yet to do so will likely find the challenges and costs increasing the longer they delay starting. In cases where initiating a successful benchmarking program in-house is out of reach, employing the help of an experienced energy benchmarking consultant like Mantis can be a viable step toward compliance.

Step 2: The CEC’s Data-backed Strategy for Engagement

While a formal mandate isn't immediate, the bill takes a significant first step. The California Energy Commission (CEC) is tasked with developing a comprehensive strategy by July 1, 2026. This strategy will outline measures to improve energy efficiency and reduce greenhouse gas emissions in covered buildings. It directs the CEC to leverage data collected from the building energy benchmarking policy.

Here's what we know about the development of this strategy:

  • Stakeholder Input: Essential for compliance, the CEC actively seeks input from a broad range of stakeholders, including building owners, tenant advocacy groups, and energy service providers. Mantis Innovation encourages you to stay informed and participate as opportunities arise. Your participation is critical to effectively navigating the Act's requirements.
  • Focus on Equity: Mitigating potential impacts, the Act prioritizes protecting tenants, particularly those in under-resourced communities, from rent increases or displacement due to building upgrades. The strategy will likely include measures to ensure affordability and minimize disruption. Mantis Innovation can help you understand and implement these measures to minimize negative impacts on your tenants.
  • Flexibility and Innovation: When finding the right solutions, the CEC will explore various compliance options, allowing you to choose solutions that best fit your building and budget. A facility, energy, and sustainability expert like Mantis Innovation can guide you in identifying and implementing the right-sized, right-cost solutions for your buildings.

Benchmarking data will be used to develop a strategy to track energy usage and greenhouse gas emissions in covered buildings. The strategy will aim to achieve state targets for energy efficiency and greenhouse gas emission reductions and avoid negative impacts on tenants like evictions or rent increases.

The strategy ought to prioritize measures that reduce fuel-related emissions and benefit tenants (lower energy costs, improved indoor air quality, etc.) while offering flexibility for building owners in choosing upgrade options and aligning them with equipment replacement cycles. Additionally, the CEC will consider proposals for alternative compliance plans and may delegate implementation authority to local jurisdictions with programs achieving similar results and tenant protections.

This focus on building decarbonization through Senate Bill 48 paves the way for future BPS in California, where energy performance improvements will likely become mandatory.

Step 3: BPS on the Horizon

The bill requires the CEC to submit its strategy and recommendations to the state legislature by August 1, 2026, to signal further legislative action. Stakeholders will have to wait and see what specific actions will manifest, but this timeline presents a reasonable prediction that formalized BPS policies will arrive at the state legislature.

In Conclusion

The Energy Savings Act presents a significant challenge and a unique opportunity for California businesses to become more sustainable and cost-effective. By working with the CEC, tenant advocates, and experienced energy service providers like Mantis Innovation, you can navigate the Act's uncertainties and ensure a future where our buildings are efficient, comfortable, and environmentally responsible.

As the CEC develops the implementation strategy, we'll continue to provide updates and insights. We encourage you to visit our website and subscribe to our newsletter for the latest developments.

Mantis Innovation is at the forefront of helping organizations understand and navigate this rapidly evolving regulatory environment and is adept at driving compliance efforts for building owners and operators.

Contact us today to learn how we can help you become and remain compliant, avoid penalties, and create value for stakeholders through the process.

Stay tuned for more updates on building performance standards across the U.S. as we continue to track these important developments.