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Home My WebLink About6/16/2020 Item 11, Hofmann Clerk, Intern From:erichofmann . <erichofmann@uwua132.org> Sent:Monday, June 15, 2020 12:58 PM To:E-mail Council Website Subject:Energy Policy Item #11 Attachments:4SLO STATEMENT OF ERIC HOFMANN.pdf please see attached. thank you, -Eric Hofmann President UWUA Local 132 AFL-CIO 1 1 SAN LUIS OBISPO CITY COUNCIL MEETING JUNE 16, 2020 STATEMENT OF ERIC HOFMANN, PRESIDENT OF LOCAL 132 UTILITY WORKERS UNION OF AMERICA On AGENDA ITEM 11, CLEAN ENERGY CHOICE POLICY FOR NEW BUILDINGS COUNCILMEMBERS. Thank you for letting me address you on the important topic of an Energy Reach Code for new buildings in San Luis Obispo. Like you I am a veteran of the fight to address climate change and more specifically to reduce the role of methane and other greenhouse gases in global warming. The UWUA initiated and sponsored Senator Leno’s 2010 legislation1 that shapes all of the current debate over utility safety programs. The UWUA initiated and sponsored Senator Leno’s 2014 legislation2 to reduce gas system leaks. With my union brothers and sisters I have worked to implement those laws at the CPUC and in the field, in this community and throughout Southern California. I have been working on these issues for many years and have had some impact. I am here to tell you that this proposal is a false step on our common path and to recommend that you take the No Action alternative offered to you by your Staff. Its primary impact will be to raise housing costs in San Luis Obispo with very little gain in GHG reduction, the equivalent of taking 100 cars off the road per year for the next 15 years.3 I offer you an alternative: support us, the utility workers, in doing our jobs to provide safe, responsive, affordable, less leaky gas service and revisit the issue in a few years when we collectively have more experience with the all-electric solar buildings required by the 2019 California Energy Code. Because of your unique situation of being a university town with world-class architectural and engineering talent, having a temperate climate and a constituency committed to environmental justice, you can do more than be passive observers of developments in building energy use, as I will outline. But you do not have to saddle your constituents with higher housing costs while you do it. And you do not have to threaten my members’ livelihood or undercut our efforts to do our jobs. 1 Chapter 522, Stats. 2011 (SB 705 (Leno)); c.f. CPUC Docket R. 13-11-006 and its progeny implementing the policy of safety first in utility ratemaking. 2 Chapter 525, Stats. 2014 (SB 1371 (Leno)); c.f. CPUC Docket R. 15-01-008 adopting best practices for leak detection and abatement. 3 Packet page 154, footnote 3 and related text. 2 What is the proposal before you? The Clean Energy Choice Policy for New Buildings (CEC Policy) has the following basic elements: Within the City’s policy preference for all-electric new buildings, the program (1) APPLIES TO NEW BUILDINGS WITH SIGNIFICANT EXCEPTIONS for “essential service buildings” (notably public facilities and health-related buildings); temporary buildings; already-permitted developments; manufacturing processes and commercial kitchens.4 This means that the existing gas infrastructure will continue in use indefinitely to serve occupants and residents of existing buildings. It will also be available for gas-fueled emergency generators (the least polluting version of support for resilient microgrids in the absence of long-duration storage). We should all agree that it needs to be well maintained, safe, reliable and with minimum leaks. It also means that the primary impact will be on new housing and new multi-family and commercial buildings, which will either not install internal gas connection infrastructure or pay a premium for installing gas connection infrastructure. (2) PERMITS EITHER ALL-ELECTRIC OR DUAL-FUEL INTERNAL SYSTEMS, BUT (3) IT PUTS A THUMB ON THE SCALE (IMPOSES EXTRA COSTS) FOR DUAL-FUEL BUILDINGS IN AT LEAST THREE WAYS: (A) Carbon Offsets or contribution of an in lieu fee to an external fund5 The offsets are either direct payment for retrofit of an existing building or the in lieu fee, based on estimated retrofit costs of utility-administered energy efficiency programs. They are based on paying $27.33 per therm of gas use generated by the new building, or residential unit, with usage estimates varying by project.6 (B) Electric retrofit ready The duel fuel residential buildings must be “electric retrofit ready” – must have internal pre-wiring and controls to enable heat pump water heating and air source heat pump space conditioning. Air source heat pumps are the preferred approach to electrification because electric resistance heating/water heating destroys the economics of electrification in high rate settings like California. The use of air source heat pumps poses complex problems affecting building configuration and appliance location (air sources) as well as piping for transfer of heat and hot water and electrical infrastructure. For that reason the CEC Policy has been modified by removing the retrofit ready requirement for non-residential buildings.7 4 Packet, page 158, item 4 5 Packet, page 161 6 Packet page 198 7 Packet, page 158 footnote 12 and related text. 3 The same complexities applicable to commercial buildings – appliance size, location, piping, air sources and venting, etc. – also apply in multi-family housing configurations. The effect of this requirement may be to make new dual-fuel multi-family buildings infeasible, even if gas heating and water heating are clearly preferable from an affordability perspective in the near and medium term. But even in single-family settings there are issues with a heat pump mandate. The use of heat pumps always involves the use of refrigerants, including chemicals that have extreme global warming affects (HFCs, CFCs). A recent study by consultants for NRDC notes: Enforcement of the requirement of the Montreal Protocol - Kigali Amendment20 is likely [fn] to require that the refrigerants in use today will be phased out from use in the U.S.[fn] over the next 15-20 years. [fn] This regulation impacts some heat pump systems more than others. Heat pumps that use split components connected by refrigerant lines such as VRF and mini-splits will be more difficult to replace because piping in occupied spaces may also need to be replaced, depending on the replacement refrigerant used. Packaged heat pumps may be easier to replace once installed, since a single piece of equipment can be swapped out for another without significant new piping. Heat pumps currently have expected lifespans of 15-20 years. [fn] The overlap of refrigerant legislation and equipment life means that a potentially major technology change may be required at the end of any upcoming heat pump installation. The more complex the heat pump infrastructure in a building, the more serious a consideration this needs to be.8 (C) Must exceed CEC 2019 energy efficiency requirements by a substantial amount9 Since the Energy Design Rating process involves all aspects of building performance, including windows, lighting, building envelope as well as appliances, the required enhanced performance may involve significant first cost increases beyond the installation of federally-compliant appliances. (4) THE EFFECT IS TO RAISE THE FIRST COST, INCLUDING FINANCING, OF ALL NEW HOUSING (ESPECIALLY AFFORDABLE AND MULTI-UNIT HOUSING) This is supposedly offset for the all-electric housing configuration by the Monterey Bay Community Energy Multi-Unit Development Program, which provides a grant of between $1750 and $2500 per unit. However, this new program (May 26, 2020) has only $1.2 million, which supports only 480-690 units throughout SLO, Monterey, San Benito and Santa Cruz Counties, with no grant exceeding $240,000.10 8 Steven Winter Associates, Heat Pump Retrofit Strategies for Multifamily Buildings, p. 7 (April 2019) https://www.nrdc.org/sites/default/files/heat-pump-retrofit-strategies- report-05082019.pdf 9 Packet page 157 10 Packet page 160; see also, Monterey Bay Community Power website, https://www.mbcommunitypower.org/mud-electrification-program/ 4 What do we gain from this increase in housing costs? The effect of the program at General Plan build-out in 2035 is an estimated reduction of annual carbon emissions in 2035 equivalent to taking 1320 cars off the road, about 100 cars per year.11 This is a negligible improvement. (6) THERE IS A HOUSING CRUNCH IN SLO; IN 2017 THE VACANCY RATE WAS 3.63% AND RENTS WERE RISING MORE QUICKLY THAN THE STATE AVERAGE.12 WHY RAISE THE COST OF NEW HOUSING UNDER THESE CIRCUMSTANCES FOR THIS MARGINAL BENEFIT? (7) PER THE CEC, BEGINNING IN 2020 ALL NEW HOUSING MUST HAVE SOLAR ANYWAY, SO THEY WILL BE DUAL-FUEL IF GAS SYSTEMS ARE INSTALLED. WHY NOT WAIT TO SEE HOW THIS NEW REQUIREMENT IMPACTS NEW HOUSING CONSTRUCTION AND RESIDENT COSTS IN SLO, BEFORE ADDING THE ADDITIONAL THUMB ON THE SCALE AGAINST DUAL FUEL HOUSES? (8) PG&E’S BANKRUPTCY IS GOING TO CAUSE ELECTRIC RATES TO INCREASE BY 7% PER YEAR FOR AT LEAST THE NEXT FIVE YEARS. THE IMPACT OF THESE RATE INCREASES IS NOT GOING TO BE AVOIDED BY MOVING ENERGY PROCUREMENT TO THE CCA (MBCP) BECAUSE OF THE PCIA AND THE NON- BYPASSABLE CHARGES ASSOCIATED WITH WILDFIRE CLAIMS AND MITIGATIONS. THE “COST EFFECTIVENESS” TESTS FROM 2017 AND 2018 DO NOT TAKE THESE RATE INCREASES INTO ACCOUNT. INSTEAD OF ADOPTING THE CEC POLICY PROPOSAL THE CITY SHOULD PROACTIVELY PARTNER WITH CAL POLY SLO, PG&E, SOCALGAS AND WILLING DEVELOPERS TO DEMONSTRATE COMPREHENSIVE SITE SPECIFIC APPROACHES TO BUILDING ENERGY MANAGEMENT THAT TAKES ACCOUNT OF SLO’S NEED FOR AFFORDABLE HOUSING AND ADDRESSES CURRENTLY UNSOLVED PROBLEMS INVOLVED IN MULTI-FAMILY SPACE HEATING, WATER HEATING, TELECOMMMUNICATIONS AND BROADBAND, POWER SUPPLY AND DISTRIBUTED ENERGY SOURCES. 11 Packet Page 154, footnote 3 noting a 20% downward revision of the estimate from last September. 12 Lending Tree.com https://www.deptofnumbers.com/rent/california/san-luis-obispo/ accessed June 15, 2020; see also, Community Profile, City of San Luis Obispo Housing Element (2015), page A-25: “Housing Affordability: Many people who live in San Luis Obispo overpay for housing, and many who work here cannot afford to live here. While the City saw median housing costs decreasing during the previous housing element planning period, the housing affordability issue is still problematic. Recently as median housing costs have outpaced incomes, between 2000 and 2013, median residential cost has increased 96% while the median income has only increased by 50%.” https://www.slocity.org/home/showdocument?id=6641 accessed June 15, 2020