Energy efficiency: financing options: custom agricultural and industrial efficiency projects.
AB 2182
California Bills
20250AB__218297AMD INTRODUCED 2026-02-19 AMENDED_ASSEMBLY 2026-04-13 AMENDED_SENATE 2026-06-25 2025 AB AMD Introduced by Assembly Member Irwin LEAD_AUTHOR ASSEMBLY Irwin
An act to amend
Section 381.2 of the Public Utilities Code, relating to energy. energy Energy efficiency: financing options: custom agricultural and industrial efficiency projects. Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations.
Existing law requires the commission to require electrical corporations to implement various programs, such as energy efficiency programs, that are funded by electrical ratepayers.</xhtml:p><xhtml:p>This bill would require, on or before August 1, 2027, each large electrical corporation, as defined, to file a Tier advice letter with the commission establishing an Industrial Decarbonization and Energy Efficiency Program with funding allocated from energy efficiency charges collected from eligible facilities, defined as industrial or manufacturing facilities that meet specified requirements, as specified.
The bill would require the program to award grants to eligible facilities for eligible projects, including, among others, energy efficiency projects that meet certain requirements. The bill would require each large electrical corporation to administer its program, as provided, and require the Governor’s Office of Business and Economic Development to provide independent review and approval of grants awarded pursuant these provisions.</xhtml:p>"?> Existing law vests the Public Utilities Commission (PUC) with regulatory authority over public utilities, including electrical corporations and gas corporations.
Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to establish a regulatory proceeding to develop and implement a comprehensive program to achieve greater energy savings in California’s existing residential and nonresidential building stock. Existing law requires the PUC to investigate the ability of electrical corporations and gas corporations to provide various energy efficiency financing options to their customers for the purpose of implementing the program developed by the Energy Commission.
Existing law imposes requirements for custom projects and other custom programs for industrial, agricultural, commercial, residential, and public sector customers. Existing law requires the PUC to develop and maintain rules for custom energy efficiency projects that include eligibility criteria or metrics for determining if a project is eligible for funding.
This bill would delete the requirement on the PUC to develop and maintain those rules, and would instead require the commission, as part of the approval of the next Tier advice letters submitted after January 1, 2027, by program administrators for mid-cycle review pursuant to a specific commission decision, to revise the rules adopted for custom agricultural and industrial efficiency projects to replace the commission’s ex ante review process with a process that ensures the provision of incentives pursuant to these provisions for custom agricultural and industrial efficiency projects, as specified.
Under existing law, a violation of an order, decision, rule, direction, demand, or requirement of the PUC is a crime. Because a violation of a PUC action implementing this bill’s requirements would be a crime, the bill would impose a state-mandated local program. 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.
MAJORITY NO YES YES NO NO NO NO NO NO NO The people of the State of California do enact as follows: <caml:Num>SECTION 1.</caml:Num><caml:ActionLine action="IS_ADDED" xlink:href="urn:caml:codes:PUC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'8.6.'%5D)" xlink:label="fractionType: LAW_SPREAD||commencingWith: 1550" xlink:type="locator">Chapter 8.6 (commencing with
Section 1550) is added to Part of Division of the <caml:DocName>Public Utilities Code</caml:DocName>, to read:</caml:ActionLine><caml:Fragment><caml:LawHeading id="id_694C914B-6FF6-4958-AFE1-B415CE818F7E" type="CHAPTER"><caml:Num>8.6.</caml:Num><caml:LawHeadingVersion id="id_6053D9DF-8842-4892-844F-9B5FDBE07B38"><caml:LawHeadingText>Industrial Decarbonization and Energy Efficiency Program</caml:LawHeadingText></caml:LawHeadingVersion><caml:LawSection id="id_A2C26F97-5F13-4BD5-9BBD-C613B956B7AF"><caml:Num>1550.</caml:Num><caml:LawSectionVersion id="id_71F13023-DEE9-442E-A721-AD584D5310C8"><caml:Content><xhtml:p>For purposes of this chapter, all of the following
definitions apply:</xhtml:p><xhtml:p>(a)<xhtml:span class="EnSpace"/>“Eligible facility” means an industrial or manufacturing facility that meets all of the following requirements:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>Takes bundled, direct access, or community choice aggregation electrical service within the service territory of a large electrical corporation.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>Is enrolled in a medium or large energy customer electric tariff, including TOU-8, B-19, B-20, or successor tariffs.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>Meets a minimum peak load requirement of kilowatts or more.</xhtml:p><xhtml:p>(4)<xhtml:span class="EnSpace"/>Is not identified as a residential, state, or local government customer.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>“Eligible project” includes, but is not limited to, all of the following projects:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>Energy efficiency projects using commercially available technology that reduce energy consumption by at least percent compared to the replaced technology, and result in reduced emissions of greenhouse gases.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>Projects for industrial process heat recovery, as defined in
Section 451.7.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>Carbon capture technologies, subject to any limitations or eligibility criteria established by the large electrical corporation to ensure cost-effectiveness and reduced emissions of greenhouse gases that are sited, installed, or expanded at the eligible facility.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>“Large electrical corporation” means an electrical corporation with more than 3,000,000 customer accounts in California.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>“Office” means the Governor’s Office of Business and Economic Development.</xhtml:p><xhtml:p>(e)<xhtml:span class="EnSpace"/>“Program” means an Industrial Decarbonization and Energy Efficiency Program established pursuant to
Section 1551.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection><caml:LawSection id="id_B1EE93DD-7F6F-4120-BDAF-75247B56BED0"><caml:Num>1551.</caml:Num><caml:LawSectionVersion id="id_D3432906-3FCB-4EB6-93CE-1DCE08EA2F62"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>On or before August 1, 2027, each large electrical corporation shall file a Tier advice letter with the commission to establish an Industrial Decarbonization and Energy Efficiency Program with funding allocated from energy efficiency charges collected from eligible facilities, as described in paragraph (2).</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>Each large electrical corporation shall allocate an amount for its program equal to the amount it would otherwise collect from eligible facilities for energy efficiency pursuant to commission-approved tariffs.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>The commission shall act on a Tier advice letter filed pursuant to subdivision (
a) on or before November 1, 2027.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>Each program shall award grants to eligible facilities for eligible projects.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>Each program shall prioritize grants for eligible projects that do all of the following:</xhtml:p><xhtml:p>(A)<xhtml:span class="EnSpace"/>Deliver durable and verifiable reduced emissions of greenhouse gases.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>Reduce overall electricity or fuel consumption.</xhtml:p><xhtml:p>(C)<xhtml:span class="EnSpace"/>Improve electrical grid efficiency or reduce peak demand impacts.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>Each large electrical corporation shall administer the program, including by establishing eligible project intake and data validation requirements, evaluating the eligibility of facilities and projects, and administering grant payments.</xhtml:p><xhtml:p>(e)<xhtml:span class="EnSpace"/>The office shall provide independent review and approval of grants awarded pursuant to each program and may clarify eligibility criteria for each program to ensure the program serves eligible facilities with significant potential for energy savings and reduced emissions of greenhouse gases.</xhtml:p><xhtml:p>(f)<xhtml:span class="EnSpace"/>Grants awarded pursuant to each program shall fund up to, and shall not exceed, 50 percent of the documented costs of the eligible project.</xhtml:p><xhtml:p>(g)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>Each eligible facility’s cumulative grant awards shall not exceed the total amount collected from the eligible facility pursuant to the allocation described in subdivision (a).</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>(A)<xhtml:span class="EnSpace"/>Moneys that have not been awarded to an eligible project within five years may be made available to other eligible facilities on a first-ready, first-served basis.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>Moneys made available pursuant to subparagraph (
A) and awarded to an eligible facility shall be excluded from the maximum allowable cumulative grant award limit established pursuant to paragraph (1).</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:LawHeading></caml:Fragment></caml:BillSection>"?>
SECTION
Section 381.2 of the Public Utilities Code is amended to read: 381.2. (a)
(1) The commission shall investigate the ability of electrical corporations and gas corporations to provide various energy efficiency financing options to their customers for the purpose of implementing the program developed pursuant to
Section of the Public Resources Code.
(2) It is the intent of the Legislature that the commission implement this
section by establishing applicable rules, within a reasonable period of time and in an open process, that are clear and operate on a prospective basis.
(3) It is the intent of the Legislature that the commission implement this
section in a cost-effective and time-efficient manner. (
b) Recognizing the already underway commission work to adopt efficiency potential and goals, the Energy Commission work on its energy demand forecast, and the need to determine how to incorporate meter-based performance into determinations of goals, portfolio cost-effectiveness, and authorized budgets, the commission, in a separate or existing proceeding, shall, by September 1, 2016, authorize electrical corporations or gas corporations to provide financial incentives, rebates, technical assistance, and support to their customers to increase the energy efficiency of existing buildings based on all estimated energy savings and energy usage reductions, taking into consideration the overall reduction in normalized metered energy consumption as a measure of energy savings.
Those programs shall include energy usage reductions resulting from the adoption of a measure or installation of equipment required for modifications to existing buildings to bring them into conformity with, or to cause them to exceed, the requirements of Title of the California Code of Regulations, as well as operational, behavioral, and retrocommissioning activities reasonably expected to produce multiyear savings.
The commission shall authorize an electrical corporation or gas corporation to count all energy savings achieved through the authorized programs created by this subdivision toward overall energy efficiency goals or targets established by the commission. The commission may adjust the energy efficiency goals or targets of an electrical corporation or gas corporation to reflect this change in savings estimation consistent with this subdivision and subdivision (d). (
c) Effective January 1, 2016, electrical corporations and gas corporations may implement subdivision (
b) for high opportunity projects or programs. The commission shall provide expedited authorization of high opportunity projects and programs to apply the savings baseline provisions in subdivision (b). (
d) In furtherance of subdivision (b), the commission, in consultation with the Energy Commission, shall consider all of the following:
(1) The results of any interagency baseline assessment.
(2) Any available results from electrical corporation and gas corporation baseline pilot studies ordered in commission Decision 14-10-046 (October 24, 2014), Decision Establishing Energy Efficiency Savings Goals and Approving Energy Efficiency Programs and Budgets.
(3) Information necessary to ensure consistency with the energy forecast and planning functions of the Energy Commission and the Independent System Operator. (
e) The commission may direct electrical corporations and gas corporations to make filings that are necessary to ensure coordination with the energy forecast and planning functions of the Energy Commission and the Independent System Operator. (
f) The commission shall prioritize energy efficiency activities consistent with Sections 454.55 and 454.56. (g)
(1) This subdivision imposes the operative requirements pursuant to this
section for custom projects and other custom programs for industrial, agricultural, commercial, residential, and public sector customers. This subdivision applies only to those programs and projects. (
A) The commission shall authorize electrical corporations and gas corporations to provide financial incentives, rebates, technical assistance, and support to their customers to increase the energy efficiency of industrial, agricultural, commercial, residential, and public sector customers based on nationally recognized measurement and verification standards, such as the International Performance Measurement and Verification Protocol. (
B) All energy savings achieved through the programs authorized pursuant to this subdivision shall count toward the overall energy efficiency goals or targets established by the commission for an electrical corporation, gas corporation, or program administrator. (
C) The commission may adjust the energy efficiency goals or targets of an electrical corporation or gas corporation to reflect a change in the forecast energy savings consistent with this subdivision and subdivision (d). (2)<xhtml:span class="EnSpace"/>The commission shall develop and maintain rules for custom energy efficiency projects that include eligibility criteria and other metrics for determining whether a project is eligible for funding pursuant to the program.</xhtml:p>"?> (2) (
A) As part of the approval of the next Tier advice letters submitted after January 1, 2027, by program administrators for mid-cycle review pursuant to commission Decision 21-05-031 (May 20, 2021), Assessment of Energy Efficiency Potential and Goals and Modification of Portfolio Approval and Oversight Process, the commission shall revise the rules adopted for custom agricultural and industrial efficiency projects to replace the commission’s ex ante review process with a process that ensures the provision of incentives pursuant to this
section for custom agricultural and industrial efficiency projects that exceed existing California Building Standards Code requirements and provide measurable benefits to the electrical grid. (
B) The commission shall not adopt any project approval criteria for custom agricultural and industrial efficiency projects beyond those criteria specified in this section. (
C) For purposes of this paragraph, “benefits to the electrical grid” include avoided transmission and distribution costs or reductions in peak load demands that support reductions in utility costs. (
D) This paragraph shall not result in cost shifts between rate classes. (A)</xhtml:p>"?> (3) (
A) The commission shall review and circulate for public review and comment statewide eligibility criteria or metrics at least days before changes, including posting on the commission’s internet website. (
B) After the initial 30-day period for public review and comment, any changes to the initial proposed eligibility criteria or metrics shall be circulated for public review for not less than days prior to final adoption. (
C) Once eligibility criteria or metrics are adopted, any proposed revision shall be circulated for public review and comment for not less than days before a revision. For these purposes, grammatical corrections or other nonsubstantive modifications are not a revision and may be made when the need for the correction or modification is discovered. (
D) Statewide eligibility criteria or metrics shall operate only on a prospective basis, shall be applied uniformly and consistently by each electrical corporation and gas corporation, and shall not be applied retroactively to any pending or approved applications. (
E) Any delay in the adoption of eligibility criteria or metrics past July 1, 2019, shall not be the basis for denial of any application nor a basis to suspend the program. (3)</xhtml:p>"?> (4) (
A) The rules adopted by the commission for custom energy efficiency projects shall require each electrical corporation and gas corporation to maintain a custom measure project archive. The commission shall develop and maintain requirements for what information is to be included in the custom measure project archive, including information required to support the applications of customers’ custom energy efficiency projects. (B) (
i) Upon being notified of the filing of a new application, or that a proposed project has moved from the preapplication stage to the application stage, the commission shall make a determination of whether the application has been selected for review within days and notify the electrical corporation or gas corporation of its decision to review. (ii) The electrical corporation or gas corporation shall make the project application supporting documentation available to the commission for review within business days of the commission review selection date.
The commission shall develop and maintain requirements for what information is to be included in the custom measure project archive for those customer projects selected for review. (iii) The commission shall, within days of the submission of a project to the custom measure project archive, promptly notify an electrical corporation or gas corporation of any deficiency in the information supporting an application. (iv) The review of a proposed project shall be concluded within business days from the date when a project’s documentation is received by the commission, unless the commission determines it was provided incomplete or inaccurate supporting information from the electrical corporation or gas corporation, and notifies the electrical corporation and gas corporation of the need for additional review time.
The business days shall restart from the time complete and accurate documentation, as noted in the notification of deficiencies, is submitted by the electrical corporation or gas corporation. The electrical corporation or gas corporation shall notify the customer applicant within hours of any delays as a result of incomplete or inaccurate supporting project information, or if the commission needs additional review time. (
C) The commission shall notify the electrical corporation or gas corporation of the specific deficiencies in the information supporting an application, including each basis as to why the project is inconsistent with the eligibility criteria and metrics, which may include failure to adequately define the project, make specific recommendations for the conditions under which the project would be approved, and, if the application fails to adequately define the project, identify aspects of the project that require further definition. (
D) If, as a result of the review, the commission rejects the proposed project or requests modification of the project, the commission shall notify the electrical corporation or gas corporation of the reasons for the rejection or request for modification, including each basis as to why the project is rejected or modification is requested, and make specific recommendations for the conditions under which the project would be approved. The electrical corporation or gas corporation shall promptly inform the applicant as to the reasons why the project was rejected and the specific recommendations for the conditions under which the project would be approved. (
E) The commission shall not reject a proposed project or request modification of a project on the basis of inconsistency with eligibility criteria or metrics that were not in effect at the time the project application was submitted. (
F) If any party to the project is unsatisfied with the commission’s directions for the project, a dispute resolution process may be initiated by that party. The commission shall adopt rules for the conduct of the dispute resolution process. (
G) If a project is not selected by the commission for review within the period determined pursuant to subparagraph (B), or if a project has not received written direction from the commission within the period specified in clause (iv) of subparagraph (B), the commission shall be deemed to have waived review of the project and the project may proceed as if it had been approved by the commission, but the project is subject to the review of the electrical corporation or gas corporation. (4)</xhtml:p>"?> (5) (
A) For projects that were not reviewed and did not receive written documentation, as specified in subparagraph (
G) of paragraph (4), an electrical corporation or gas corporation may rely on its project application review process to determine the forecast energy savings values for the project based on rules adopted by the commission, and base the final customer incentive payment and contractor pay-for-performance payment on postinstallation measurement and verification results. (
B) The commission may employ postinstallation review of a project to determine if the project was carried out consistent with the application. (5)<xhtml:span class="EnSpace"/>Except as described in paragraph (2), this subdivision does not limit the commission’s existing authority to evaluate projects or programs for the purpose of prospectively adjusting the projects or programs for industrial and agricultural processes, facilities, systems, and equipment.</xhtml:p>"?>
SEC. 2. No reimbursement is required by this act pursuant to
Section 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