HomeMy WebLinkAboutItem 7b. Introduce an Ordinance adopting local amendments to Part 6 of the Building Construction & Fire Prevention Code and approve the Energy Efficient Renovations Policy Item 7b
Department: Administration
Cost Center: 1005
For Agenda of: 5/21/2024
Placement: Public Hearing
Estimated Time: 90 minutes
FROM: Greg Hermann, Deputy City Manager
Timmi Tway, Community Development Director
Prepared By: Chris Read, Sustainability Manager
Michael Loew, Chief Building Official
SUBJECT: ENERGY EFFICIENT RENOVATIONS POLICY FOR MAJOR
RESIDENTIAL ADDITIONS AND ALTERATIONS
RECOMMENDATION
Introduce a Draft Ordinance, entitled, “An Ordinance of the City Council of the City of San
Luis Obispo, California, adopting Local Amendments to Part 6 of the Building
Construction and Fire Prevention Code, 2023” approving the Energy Efficient
Renovations Policy for major residential additions and alterations.
POLICY CONTEXT
A suite of adopted City Council policies support the staff recommendation to adopt the
Energy Efficient Renovations Policy for existing single-family residential buildings. A
select summary of this policy context is below:
Land Use Element of the General Plan:
o Policy 9.4 (Climate Action Plan) - The City shall maintain and implement its
Climate Action Plan to reduce community and municipal greenhouse gas
(“GHG”) emissions consistent with State laws and objectives.
o Policy 9.7 (Sustainable Design) - The City shall promote and, where
appropriate, require sustainable building practices that consume less
energy, water and other resources, facilitate natural ventilation, use daylight
effectively, and are healthy, safe, comfortable, and durable.
Conservation and Open Space Element of the General Plan:
o Policy 2.2.1 (Atmospheric Change) - City actions shall seek to minimize
undesirable climate changes and deterioration of the atmosphere’s
protective functions that result from the release of carbon dioxide and other
substances.
o Goal 4.2 (Sustainable energy use) - Increase use of sustainable energy
sources such as solar, wind and thermal energy, and reduce reliance on
non-sustainable energy sources to the extent possible with available
technology and resources.
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Climate Adaptation and Safety Element of the General Plan:
o Policy HE-4.3 (Green and Healthy Buildings) - The City shall support fuel
switching retrofits (from fossil fuel to high-efficiency electric appliances),
energy efficiency retrofits, and distributed energy resources as low-carbon
solutions to create safe, cool, and healthy buildings and consider programs
and projects that support these retrofits as critical to maintaining community
safety and to supporting disaster preparedness.
Resolution 11159 (2020 Series) adopted the Climate Action Plan for Community
Recovery with the goal of community carbon neutrality by 2035 and a sub -goal of
50 percent reduction in emissions from existing buildings by 2030.
Resolution No. 11381 (2022 Series) reaffirmed these goals and created a work
program for fiscal years 2023-27, including Green Buildings Action 2.1.E, which
directs staff to, “Develop an equitable framework for requiring electrification
retrofits and develop cost effective building electrification policies for additions and
alterations.”
2023-25 Financial Plan Climate Action Major City Goal action 4.1.i directs staff to
conduct a study session, and pending Council direction, develop an equitable
framework for cost-effective building electrification retrofit policies, with an initial
focus on additions and alterations, as called for by CAP Green Buildings Task
2.1.E. Staff conducted the study session on December 4, 2023 and received
strategic direction to return with an additions and alterations policy in 2024.
REPORT-IN-BRIEF
On August 19, 2020, Council approved the City’s Climate Action Plan for Community
Recovery (“CAP”), and adopted Resolution 11159 (2020 Series), which includes the goal
of carbon neutrality by 2035 and building sector goals of 1) zero emissions from new
buildings, and 2) a 50 percent reduction in emissions from existing buildings by 2030. On
December 6, 2022, the Climate Action Plan was updated, and the building sector goals
were reaffirmed.
On December 5, 2023, staff conducted a Study Session with City Council to discuss the
various policy options available to increase the rate of existing buildings emissions
reductions. Council directed staff to return in 2024 with draft energy efficiency
requirements for major additions and alterations. This report and the attached proposed
ordinance provide these draft requirements, referred to as the Energy Efficient
Renovations Policy, for Council’s consideration.
Focusing on the biggest energy users in residential buildings, water heating and space
heating, as well as whole building efficiency, the Energy Efficient Renovations Policy
would require that major additions and alterations (as further defined herein) will need to
include certain energy efficiency measures as part of their project. The Policy would be
implemented via local amendments to the California Energy Code and would not apply to
cooking equipment (e.g., stoves), laundry dryers, or other unregulated energy uses.
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To be consistent with federal and state law, the City must make findings that the proposed
building code amendments related to building energy performance are cost effective and
use less energy than the standard State Code. The California Energy Commission (CEC)
must agree with the City's analysis before the local amendments to the California Energy
Code can go into effect. This report provides findings that the proposed amendments that
affect building energy use are cost effective (as further defined herein). The study that
illustrates cost effectiveness is provided as Attachment B.
Should Council move forward with staff’s recommendation, the second reading of the
Ordinance would occur on June 4, 2024. Pending California Energy Commission approval
of the local amendments to the California Energy Code, staff would develop project intake
forms and work with 3C-REN to develop an Energy Code Coach support service ahead
of the reach code going into effect on January 1, 2025.
DISCUSSION
Background
On August 19, 2020, Council approved the City’s Climate Action Plan for Community
Recovery (“CAP”), and adopted Resolution 11159 (2020 Series), which includes the goal
of carbon neutrality by 2035 and building sector goals of 1) zero emissions from new
buildings, and 2) a 50 percent reduction in emissions from existing buildings by 2030.
On December 6, 2022, the Climate Action Plan was updated, and the building sector
goals were reaffirmed. In addition to a suite of solutions to support voluntary retrofits, the
updated Climate Action Plan includes work task “Green Build ings 4.1.A”, which directs
staff to “Develop an equitable framework for requiring electrification retrofits and develop
cost-effective building electrification policies for additions and alterations.” This action is
included in the 2023-25 Financial Plan as Climate Action Major City Goal Task 4.1.i.
As the City’s electricity provided by Central Coast Community Energy (3CE) is on track
to be 100% renewable by 2030, efforts to reduce climate emissions from buildings in SLO
focus on reducing natural gas consumption and increasing overall building energy
efficiency. Between 80 and 90 percent of gas used in residential buildings is consumed
by a building’s water heater and furnace. Due to current regulatory limitations, the City is
excluding stoves and laundry dryers from existing building policy discussion. For these
reasons, the existing building policy discussion, including the Energy Efficient
Renovations Policy discussed in this report, will focus on water heating, space
conditioning, and whole home energy efficiency.
On December 5, 2023, staff conducted a Study Session with City Council to discuss the
various policy options available to increase the rate of building decarbonization. Council
provided strategic direction to staff to return in 2024 with draft energy efficiency
requirements for major additions and alterations. This report provides these draft
requirements, now referred to as the Energy Efficient Renovations Policy, for Council’s
consideration.
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Proposed Approach
As discussed in the September 19, 2023 Council Agenda Report regarding local energy
code amendments for new buildings, the California Restaurant Association v. City of
Berkeley ruling prevents the City from requiring all-electric buildings. Staff identified
increased building energy performance requirements via local amendments to the
California Energy Code (also known as a “reach code”) as an allowable and viable
alternative way to achieve lower emissions in new buildings. Just as with new buildings,
Section 10-106 of the California Energy Code also allows for local amendments for
efficiency standards for existing buildings in projects that include additions and
alterations.1 Similar to new buildings, Section 10-106 also notes that local amendments
must be cost effective and result in buildings that consume less energy than permitted by
the state Energy Code.
The California Energy Code establishes whole-building efficiency requirements, which
account for a building’s water heater, HVAC (heating, ventilation, and air conditioning)
system, solar generating system, and insulation, among other things. However, it does
not account for cooking equipment, laundry dryers, or other unregulated energy uses.
Proposed Energy Efficiency Renovations Policy
Staff proposes that single-family residential major additions and alterations be required
to include certain energy efficiency measures, and in some cases include zero emission
readiness provisions (i.e., pre-wiring for future electric appliances). This section provides
proposed definitions for a “major addition” and “major alteration”, the energy efficiency
measures required for compliance, and proposed exemptions.
Proposed Policy Applicability
Staff reviewed construction and compliance measure cost estimates, previously
submitted building permits, and examples from the nearly 20 statewide existing building
energy reach codes to identify the appropriate applicability for buildings in San Luis
Obispo. Based on cost of construction and compliance and in seeking to adopt a policy
that effectively fits into major construction projects, staff propose that the policy apply to
single-family homes under the following definitions and thresholds for applicability:
Major Addition - Any change to an existing building that increases conditioned
floor area by 500 or more square feet.
Major Alteration - Any construction or renovation to an existing structure other than
a repair whose work area covers 500 or more square feet of the total floor area of
the existing building.
Major Addition and Alteration – Any project whose combined addition and
alteration has a work area equal to or greater than 500 square feet.
Compliance Period - Per the draft ordinance, work that is completed within a one-
year period would count toward the thresholds noted above.
1 Building Energy Efficiency Standards: https://www.energy.ca.gov/sites/default/files/2022-12/CEC-400-2022-
010_CMF.pdf
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Proposed Policy Compliance Requirements
As proposed, projects that are identified as a Major Addition, Major Alteration, or Major
Addition and Alteration, would have to complete the first two requirements listed below,
and in some cases would also be required to complete the third requirement.
Requirement 1 - Upgrade all internal and external lighting to LED lighting and
upgrade external fixtures to include photocells or timers so that they are not
operated during the daytime.
Requirement 2 - Select from one of the following:
a. A combination of energy efficient measures from Table 1 (below) totaling 8
or more points, or
b. A heat pump hot water heater, or
c. A heat pump HVAC system, or
d. A rooftop solar energy system.
Requirement 3 - Projects that are subject to the policy and that are electively
upgrading their electrical service to 200 amps and their electrical panel must install
breakers in the panel, run conduit and wiring to the location of a future heat pump
hot water heater and heat pump HVAC system, and install outlets for those future
systems.
Table 1. Energy Efficiency Measures2
Measure Measure Points
Water Heating Package 1
Air Sealing 1
R-49 Attic Insulation 2
Duct Sealing 2
New Ducts and Duct Sealing 4
Windows 3
R-19 Floor Insulation 8
R-30 Floor Insulation 10
Proposed Exemptions
To accommodate the wide variability in existing buildings, s taff proposes the following
exemptions(the list below provides a brief overview of exemptions which are described in
greater detail in Attachment A):
1. Repairs. Repairs are expressly exempt from the Policy.
2. Hardship. Projects with compliance costs that are more than 10% of total project
cost, or that have building specific conditions that make compliance technically
infeasible, may request a hardship exemption. Hardship exemptions will also cover
2 Attachment A provides additional information about each energy efficiency measure.
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unexpected circumstances. Approval of an infeasibility claim will be at the
discretion of the Chief Building Official. As with all building code determinations
and interpretations, decisions are appealable to the Construction Board of
Appeals.
3. Pre-Compliance. Projects that can demonstrate that they have previously installed
compliance measures will be given credit for those measures.
4. Historic Buildings. Historic buildings that could not comply without affecting their
listing or registry status would be exempt.
5. Hazard Mitigation. Alterations completed solely for seismic safety upgrades would
be exempt.
6. Roof and Windows: Alterations that consist solely of roof and/or window projects
would be exempt.
7. New Units: When an addition or alteration results in the creation of a new
residential unit, the square footage of that unit shall not be counted towards the
500 square threshold.
Examples of Applicable Projects and Compliance
The types of projects that would be applicable to the Energy Efficient Renovation Policy
under the definitions proposed above would be elective major construction projects that
are closer to new construction than a typical smaller addition or alteration might be. These
types of projects require a building permit and are required to comply with state and local
codes and requirements. As such, depending on the project scope, applicants of these
types of projects typically already have an architect, engineer, and energy code
compliance expert on their design team. In many cases, the construction teams of such
projects include a general contractor and both plumbing and electrical sub-contractors.
Staff reviewed recent permits and standard construction cost estimates to develop an
example major addition and major alteration, described in Figure 1, below. Since it is
unlikely that most people in the community have considered adding 500 square feet to
their home or altering 500 square feet of their home, it is helpful to provide examples of
both types of projects. Note that costs are estimates and may be higher or lower
depending on specific situations.
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Figure 1. Additions and Alterations
The major addition example can be used to illustrate how compliance works. In this
project, it is likely that the project would include replacing a hot water heater, so the
builder/owner would likely choose to comply with the heat pump hot water heater
measure. Since they are electively upgrading their electric service and panel, they would
also add a breaker, conduit and wire, and an outlet for a future HVAC system. Taken
together, the LED lighting upgrades, zero emission building readiness requirements, and
heat pump hot water heater installation is estimated to cost $5,000-$15,000. Compliance
would result in an approximately 2-6% increase in project costs. However, much of these
costs could be offsets by available rebates and incentives as described below.
Cost Effectiveness
The California Energy Commission (CEC) requires any local energy standards that
exceed the California Energy Code to be cost effective and to use less energy than the
state requirements. The CEC requires the local agency to adopt a determinat ion, at a
public meeting, that the energy standards are cost effective. Staff has provided
recommended findings that meet these standards below and in the draft Ordinance
provided as Attachment A. The determination must subsequently be filed with the CEC,
which would be completed by staff upon adoption of the draft Ordinance.
The CEC provides two different cost effectiveness metrics. “On-bill” cost effectiveness
refers to the direct cost experienced by the homeowner. For something to be cost effective
“on-bill”, the energy bill savings of a measure must at least pay for the cost of that
measure over a 20-year period. The other approach is “Long-Term Systemwide Cost”
(LSC). LSC considers the cost to install energy efficiency measures, the on-bill savings
from those measures, and larger system costs that everyone pays for like energy
infrastructure costs and the impacts of climate change. For CEC approval, a local
MAJOR ADDITION EXAMPLE
-1,000 sq ft single family home adds 550 square
feet in a second story with two new bedrooms and
a full bathroom
-Electively upgrades electrical service and installs
new panel
MAJOR ALTERATION EXAMPLE
-1,500 sq ft single family home alters 800 square
feet, including converting 2 bedrooms, a hallway,
and open space into 3 bedrooms and adding a new
bathroom
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amendment to the California Energy Code must show a compliance pathway that is either
“on-bill” or “LSC” cost effective. As described below, staff’s proposed policy has “on -bill”
and “LSC” cost effective compliance pathways.
In support of reach code development, the California Energy Codes and Standards
Statewide Utility Program, which includes the State's Investor-Owned Utilities (Pacific
Gas, and Electric (PG&E), San Diego Gas and Electric (SDG&E), and Southern California
Edison (SCE), under the auspices of the California Public Utilities Commission)
developed and published the 2024 Single Family Cost Effectiveness Report, provided as
Attachment B.3
This study and the associated cost-effectiveness data are highly detailed and are included
in the record to support Council’s findings and policy decisions. The study and the
associated cost-effectiveness data include a calculated benefit-to-cost ratio for a wide
variety of measures and climate zones. A benefit-cost value of “1” or greater illustrates
that the measures save more than they cost and are therefore “cost e ffective.”4 The study
and the associated cost-effectiveness data are the basis for staff’s recommended cost
effectiveness findings and are sufficient to illustrate compliance with the requirements set
forth under California Administrative Code Chapter 10-106.
Based on the study, staff recommends finding that the proposed local additions and
alterations amendments to the 2022 California Energy Code to be cost -effective and
consume less energy than otherwise permitted by Title 24, Part 6. The following addi tional
detail is included for transparency and to facilitate the California Energy Commission’s
review of the City’s cost effectiveness findings:
The City’s requirement that major additions or alterations install energy efficiency
measures includes at least five cost effective measure packages:
o Package 1, installing the efficiency measure of R-30 Floor Insulation would
save energy relative to the base code and would achieve a benefit to cost
ratio of 1.4 on an on-bill basis.
o Package 2, installing the efficiency measure of R-19 Floor Insulation would
save energy relative to the base code and would achieve a benefit to cost
ratio of 1.4 on an on-bill basis.
o Package 3 to installing a Heat Pump Water Heater (HPWH), would save
energy relative to the base code and would achieve a benefit to cost ratio
of 1.6 on an LSC basis.
o Package 4, Heat Pump Space Heater, would also save energy relative to
the base code and would achieve a benefit to cost ratio of 4.2 on an LSC
basis.
3 The California Energy Codes and Standards Statewide Utility Program publishes cost effectiveness
reports and accompanying study data at: https://localenergycodes.com/content/resources
4 For more detail, see section 2.1.3 of
https://localenergycodes.com/download/1266/file_path/fieldList/2022%20Nonres%20New%20 Construction%20C
ost-eff%20Report.pdf
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o Package 5 to install PV + Electric Ready Pre-Wiring would also save energy
relative to the base code and would achieve a benefit to cost ratio of 1.4 on
an on-bill basis.
Available Resources for Lower Cost Renovations
Many of the compliance measures have rebates, incentives, and tax credits associated
with them which could substantially reduce the cost of compliance. Financial resources
and technical assistance include:
Central Coast Community Energy provides the Electrify Your Home program,
which provides rebates and incentives to contractors completing heat pump hot
water heater ($4,600 to $6,385), heat pump HVAC ($1,500 to $5,000), and
associated electrical work (lesser of $2,000 or 50% of total project cost).
3C-REN provides single family incentives for energy savings associated with
energy efficiency projects. Incentives are available for heat pump hot water heaters
($1,500 to $6,000) and heat pump HVAC ($2,000 to $9,000).
The Inflation Reduction Act added new provisions to the federal tax code that
allows for tax credits for certain energy efficiency measures (30% off of total project
cost, up to $1,200), heat pump hot water heaters (30% up to $2,000), heat pump
HVAC systems (30% off of total project cost up to $2,000) and rooftop solar
generation systems (30% off of total project cost with no maximum). 5
The Energy Code Coach program offered by 3C-REN provides no-cost
personalized support to help building professionals and local government staff
navigate the Energy Code, including local amendments adopted by the City. The
City will work with 3C-REN staff to develop a help desk support service to answer
applicant questions about compliance with the Energy Efficient Renovations
Policy. This service will be hosted by 3C-REN at no-cost to the City.
Previous Council or Advisory Body Action
August 2020 – Council adopted Resolution 11159 (2020 Series) which approved
the Climate Action Plan for Community Recovery with the goal of community
carbon neutrality by 2035 and a sub-goal of 50 percent reduction in emissions from
existing buildings by 2030.
December 2022 – Council adopted Resolution No. 11381 (2022 Series) reaffirming
these goals and created a work program for fiscal years 2023-27, including Green
Buildings Action 2.1.E, which directs staff to, “Develop an equitable framework for
requiring electrification retrofits and develop cost effective building electrification
policies for additions and alterations.”
June 2023 – Council adopted the 2023-25 Financial Plan Climate Action Major City
Goal 4.1.i, which directs staff to conduct a study session, and pending Council
direction, develop an equitable framework for cost effective building electrification
retrofit policies, with an initial focus on additions and alterations, as called for by
CAP Green Buildings Task 2.1.E.
5 The 3CE, 3CREN, and tax credit incentives may be “stacked” and used together to cover 100% of project costs.
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December 2023 – Council receives a report and presentation from staff regarding
existing building energy retrofit policy options and provides direction to staff to
return in Spring of 2024 with a draft policy related to energy efficiency requirements
in major residential additions and alterations.
Public Engagement
Ahead of the December study session on existing buildings, staff conducted numerous
public engagement activities. Since receiving Council strategic direction to develop an
additions and alterations retrofit policy at that study session, staff have conducted the
additional following outreach:
Community Workshops and Survey. At the December 2023 study session, staff
received direction to reach out directly to neighborhood groups. Following this
direction, staff held two workshops in March of 2024 – one at Laguna Middle
School and one at the downtown library. Staff reached out directly to community
members associated with neighborhood groups including Residents for Quality
Neighborhoods, Alta Vista, and Save Our Downtown. Staff requested that these
community members forward meeting invites directly to their membership and
worked with them to facilitate ease of access. Approximately 15 community
members attended across the two meetings and provided substantial feedback
that led to direct changes in the policy, including the addition of solar as a
compliance measure, the replacement of a percentage metric for the definition of
major alteration with a square foot metric, removing accessory dwelling units as
triggers for existing building retrofits, and introducing flexibility for an applicant to
identify where a future water heater or HVAC system might be placed as they work
to comply with the proposed electric readiness requirements.
To support broader access to the workshop, staff also developed an Open City
Hall exercise that included a narrated version of the workshop presentat ion; 284
community members visited, leaving 112 comments.6 Critical feedback included
concerns about administrative complexity and potential impacts on other Building
Department related activities, the potential for negatively impacting housing costs
and affordability, disagreements about the importance of local climate action, and
concerns about unintended consequences. Other feedback included general
support for the policy with recommendations to make compliance as streamlined
as possible, facilitate access to rebates and incentives, and ensure that the
exemptions are as clear as possible.
Chamber of Commerce. Staff presented to the Legislative Action Committee on
April 11 to provide detail about the proposed energy efficient renovations policy
described in this Council Agenda Report.
6 Comments from the exercise are archived and available for viewing at:
https://communityfeedback.opengov.com/portals/sanluisobispoca/Issue_13269
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Climate Coalition. City Staff presented to the Climate Coalition Executive Director
on April 22 and multiple representatives from the Climate Coalition attended the
community workshops as described above.
Central Coast Community Energy. City staff met with 3CE staff to discuss the
ongoing availability of relevant rebates and incentives. As part of this outreach,
Building Department staff also met with 3CE Program Staff to identify ways to
streamline rebate applications and as a result, are currently working on integrating
3CE’s rebate process into relevant online permit applications.
One-on-One Discussions with Contractors. Staff met with several contractors,
ranging from large corporate-owned to small family-owned companies. Staff found
that the regional workforce generally has the capacity and capability to install the
compliance measures included in staff’s proposed policy.
Construction Board of Appeals: Staff presented the proposed policy with a special
focus on exemptions at an informational presentation to the Construction Board of
Appeals on April 25. Board member questions focused on issues related to
electrical panel capacity for proposed improvements, future statewide electric
appliance regulations, and the applicability of Accessory Dwelling Units.
Developer’s Roundtable: Staff presented the proposed policy and received
feedback from the Developer’s Roundtable on May 2. Participants primarily asked
clarifying questions and one participant asked for the City to share more
information about available rebates and incentives.
Policy Implementation Considerations
The policy would be implemented via an additional intake form required at time of building
permit submittal. Building staff would review the application for consistency with the policy
and field verification would happen as part of the typical inspection process. To limit the
impact on Building Department staff, the Office of Sustainability proposes teaming with
3C-REN’s “Energy Code Coach” Program to spend June through December of 2024
developing project intake forms, developing staff guidance curriculum and training,
convening Code Coach staff and Building Department staff for internal training, and
developing applicant communications and public facing guidance documents. In addition,
3C-REN’s Energy Code Coach will provide a technical assistance hotline starting on
January 1, 2025, to answer basic applicant questions about the policy, provide applicants
information about common compliance pathways, connect applicants to rebates and
incentives, and answer City staff questions about compliance during field verification. City
staff have worked with 3C-REN staff to confirm the availability of and support for this
scope of work.
Staff recommends that the City Council consider the following during discussion of the
draft ordinance:
1. Based on direction provided by Council at the study session, the ordinance
addresses single family additions and remodels over a certain size. According to
past permit records there are approximately 15 projects of this size and scope per
year – most of which already complied with the provisions of the policy. It is
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therefore expected that approximately 5 -10 projects would be required to add
energy efficiency measures due to this ordinance per year , but the total would
increase over time and contribute to the City’s goal of carbon neutrality by 2035.
Staff estimate that compliance would reduce covered buildings greenhouse gas
emissions by up to 40%. Due to the fact that this ordinance addresses additions
and alterations to single-family homes it is not likely that it will impact developers.
Building and Safety staff have reported that the types of projects generally
completed in the City that would be subject to this ordinance are homeowners and
those that purchase houses to flip (although this has become a less common
practice lately).
2. As this policy change is occurring outside the regular building code update cycle,
it will require re-adoption during the building code update ahead of January 2026
as is also the case with energy reach code provisions for new buildings and other
local amendments made in other parts of the building code.
3. As with any change to regulations or codes, this policy will require some additional
training for staff and assistance/education for the public as they learn the new
requirements. This may marginally increase the amount of time required to review
projects that are subject to the regulations, especially early in the implementation
of the new ordinance when staff and the public are adjusting to the new
requirements.
4. Energy efficiency retrofits for multi-family projects and for the main properties of
attached Accessory Dwelling Units (ADUs) were initially considered as part of the
policy development process. Multi-family projects were removed from staff’s
recommendation due to an extended delay in the statewide cost effectiveness
study for this property type. Accessory Dwelling Units were removed due to
extensive community concern about potential impacts to housing production. In
both cases, staff believes there are cost effective ways to include electric readiness
and energy efficiency measures in these projects and recommends reevaluating
the feasibility of including these types of projects as part of the 2026 Energy Code
update.
SCHEDULE AND NEXT STEPS
Should Council approve staff’s recommendations, work would proceed on the timeline
provided in Table 2 below.
Table 2. Schedule and Next Steps
Task Timeframe
Second reading of the draft Ordinance (Attachment A)
and submittal to the California Energy Commission. June 2024
Receive approval from the California Energy
Commission September-October 2024
Develop implementation forms, training, and help desk
services. July – December 2024
Policy goes into effect January 1, 2025
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CONCURRENCE
The Community Development Department and City Attorney’s Office concurs with this
report.
ENVIRONMENTAL REVIEW
Staff’s recommendations are found to be exempt from CEQA under the general rule,
15061(b)(3), because it can be seen with certainty that the provisions contained herein
would not have the potential for causing a significant effect on the environment. Further,
this ordinance is also exempt from CEQA under the categorical exemptions in Section
15308 of the CEQA Guidelines in that the proposed ordinance would institute regulatory
requirements intended to protect the environment and natural resources.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2023-24
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State
Federal
Fees
Other:
Total $ $ $ $
The reach code requirements will be implemented through the building permit review
process as described in the Policy Implementation section above . There may be costs
associated with training staff and providing additional support to the community during
the implementation of this program. If implementation of this program impacts time
required to review permit plans, then fees for review of building permit plans may increase
to absorb the cost, but any impacts are expected to be marginal. Some of this additional
work can be directly supported by the 3C-REN Energy Code Coach Program, which
provides technical support for code interpretation. Funded under the auspices of the
California Public Utilities Commission, Energy Code Coach is free to the user and can be
accessed at no cost by project applicants and City staff.
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ALTERNATIVES
1. Council could decide not to adopt the ordinance. Staff does not recommend this
alternative as the Policy is supportive of achieving the goal of reducing emissions from
existing buildings in half by 2030.
2. Council could provide direction to staff to continue to work on the ordinance to
explore the inclusion of new ADUs and multifamily units. Upon receiving this
direction, staff would continue to work on the policy and return at a later date with
options to address multi-family units and ADUs.
3. Council could provide direction on program specifics including definitions,
compliance measures, exemptions, and effective date. Staff requests that Council
provide specific direction on proposed changes.
4. Council could provide direction to delay reach code adoption to coinc ide with
the 2025 California Building Code update. The 2025 code would be adopted in late
2025 and would go into effect in 2026, which would delay implementation by one year.
ATTACHMENTS
A - Draft Ordinance Adopting the Energy Efficient Renovations Policy
B - 2024 Single Family Cost-Effectiveness Study
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O ______
ORDINANCE NO. _____ (2024 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ADOPTING LOCAL AMENDMENTS TO PART 6
OF THE BUILDING CONSTRUCTION AND FIRE PREVENTION CODE,
2023
WHEREAS, greenhouse gas accumulation in the atmosphere as the result of
human activity is the primary cause of the global climate crisis; and
WHEREAS, in California alone, the initial impacts of climate change have resulted
in unprecedented disasters with tremendous human, economic, and environmental costs
and;
WHEREAS, the Intergovernmental Panel on Climate Change estimates that global
emissions need to be reduced by 45 percent from 2010 levels by 2030, and 100 percent
by 2050 to prevent global catastrophe; and
WHEREAS, the State of California enacted Assembly Bill (AB) 1279 to require
statewide carbon neutrality "as soon as possible," but no later than 2045; and
WHEREAS, City of San Luis Obispo residents and businesses have repeatedly
identified climate action as a top community priority; and
WHEREAS, Resolution 11159 (2020 Series) adopts the City of San Luis Obispo
Climate Action Plan for Community Recovery, which includes a communitywide goal of
carbon neutrality by 2035 and sector specific goal of reducing emissions from existing
buildings by half by 2030; and
WHEREAS, Resolution 11381 (2022 Series) reaffirmed these communitywide and
sector specific goals; and
WHEREAS, the inventoried greenhouse gas emissions in the City of San Luis
Obispo come from a variety of sources, primarily transportation and energy use in
buildings and facilities; and
WHEREAS, in order to achieve carbon neutrality, existing sources of greenhouse
gas emissions need to be substantially reduced or eliminated; and
WHEREAS, Public Resources Code Section 25402.1 (h)(2) allows local agencies
to adopt local amendments that are cost-effective and that result in buildings that use less
energy than would otherwise be required by the California Energy Code; and
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WHEREAS, the California Energy Codes and Standards Statewide Utility
Program, has determined specific modificat ions to the 2022 State Energy Code for each
climate zone that are cost-effective; and that such modifications will result in designs that
consume less energy than they would under the 20 22 State Energy Code; and
WHEREAS, staff has reviewed the “2022 Code Cycle: Custom Cost Effectiveness
Analysis - City of San Luis Obispo” existing building cost-effectiveness study, and finds it
sufficient to illustrate compliance with the requirements set forth under California
Administrative Code Chapter 10-106; and
WHEREAS, based on these studies, the City finds the proposed local
amendments to the 2022 California Energy Code to be cost-effective and consume less
energy than permitted by Title 24, Part 6; and
WHEREAS, the 2022 California Energy Code offers compliance options that were
established through the public rulemaking process of the code update; and
WHEREAS, the Council expressly declares that the proposed amendments to the
Energy Code are reasonably necessary because of local climatic, topological, and
geological conditions; and
WHEREAS, the requirements specified in this Ordinance were reviewed via public
comment and through a publicly noticed public hearing process.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Purpose. It is the purpose and intent of this Ordinance to establish
standards for single-family residential retrofits including major additions and alterations
that exceed minimum 2022 Title 24 Part 6 requirements.
SECTION 2. Adoption. The local amendments to Part 6 of the City of San Luis
Obispo Building Construction and Fire Prevention Code, 2023 (SLOMC Section
15.02.060) as specified in Exhibit A, are hereby adopted by the City of San Luis Obispo
to be codified under Chapter 15.02.060 and Chapter 15.04.065. The Council hereby
adopts the recitals herein as separate and additional findings of fact in support of adoption
of the ordinance.
SECTION 3. Severability. If any word, phrase sentence part, section, subsection
or other portion of this amendment or any application thereof to any person or
circumstance is declared void, unconstitutional, or invalid for any reason, then such word,
phrase, sentence, part, section, subsection, or other portion, or the prescribed application
thereof, shall be severable, and the remaining provisions of this amendment, and all
applications thereof, not having been declared void, unconstitutional or invalid, shall
remain in full force and effect.
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SECTION 5. Findings. The City Council finds that each of the changes or
modifications to measures referred to therein are reasonably necessary because of local
climatic, geological, or topographical conditions in the area encompassed by th e
boundaries of the City of San Luis Obispo, and the City Council adopts the following
findings in support of local necessity for the changes or modifications:
1. San Luis Obispo is situated along a wildland -urban interface and has been
identified as a Community at Risk from wildfire and is extremely vulnerable to
wildfires and firestorms, and human activities releasing greenhouse gases into
the atmosphere cause increases in worldwide average temperature, drought
conditions, vegetative fuel, and length of fire seasons- contributing to the
likelihood and consequences of fire.
2. The City of San Luis Obispo is situated at the base of a watershed of the Santa
Lucia Mountains and flooding of San Luis, Chorro, Stenner, Old Garden, and
Brizzolara Creeks results in conditions rendering fire department vehicular
traffic unduly burdensome or impossible, as witnessed in major floods that
occurred in 1952, 1961, 1969, 1973, 1978, 1982, 1995 , and 2023. Furthermore,
flood conditions described above create the potential for overcoming the ability
of the fire department to aid or assist in fire control, evacuations, rescues and
other emergency task demands inherent in such situations. The resulting
overburdening of fire department personnel may cause a substantial or total
lack of protection against fire for the buildings and structures located in the City
of San Luis Obispo. The afore-described conditions support the imposition of
fire protection requirements greater than those set forth in the California State
Building Standards Code and support the imposition of more restrictive
requirements than set forth in the California Energy Code for the purpose of
reducing the City's contributions to Greenhouse Gas Emissions resulting in a
warming climate and related severe weather events.
3. The aforementioned flood and rain events result in conditions wherein
stormwater can inundate the wastewater treatment system as witnessed in
major floods that occurred in 1952, 1961, 1969, 1973, 1978, 1982, and 1995.
Furthermore, rain events and flood conditions described above create a
condition referred to as Inflow and Infiltration (I/I) that allow rain and flood
waters to flow and/or seep into the wastewater system and overcome the ability
of the wastewater collection system and Water Reclamation Facility (WRF) to
convey and treat sewage. The resulting overburdening of the wastewater
system can result in threats to public health, public and private property and
water quality and violations and fines from the State of California, the
Environmental Protection Agency (EPA) or others. To the extent that climate
change has the potential to make these conditions worse, more restrictive
Energy Code requirements to achieve reduced greenhouse gas emissions are
necessary.
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4. Seasonal climatic conditions during the late summer and fall create numerous
serious difficulties in the control and protection against fire situations in the City
of San Luis Obispo. The hot, dry weather in combination with Santa Lucia
(offshore) winds frequently results in wildland fires in the brush-covered slopes
on the Santa Lucia Mountains, San Luis Mountain, and the Irish Hills areas of
the City of San Luis Obispo. The aforementioned areas surround the City.
When a fire occurs in said areas, such as occurred in 1985 when the Los Pilitas
fire burned six days and entered the City and damaged many structures, the
entirety of local fire department personnel is required to control, monitor, fight
and protect against such fire situations in an effort to protect life and preserve
property and watershed land. The same climatic conditions may result in the
concurrent occurrence of one or more fires in the more populated areas of the
City without adequate fire department personnel to protect against and control
such a situation. Therefore, the above -described findings support the
imposition of measures to increase the efficiency of existing buildings in the
City to reduce greenhouse gas emissions.
5. Failure to address and substantially reduce greenhouse gas emissions creates
an increased risk to the health, safety, and welfare of City residents.
6. The standards imposed by this Ordinance are necessary because of local
climatic, geological, or topographical conditions evidenced above and are cost-
effective, as supported by the “2022 Code Cycle: Custom Cost Effectiveness
Analysis - City of San Luis Obispo” cost effectiveness study prepared by the
California Energy Codes and Standards Statewide Utility Program. Specifically,
the City finds that there are at least five cost effective measure packages:
Package 1, installing the efficiency measure of R-30 Floor Insulation would
save energy relative to the base code and would achieve a benefit to cost
ratio of 1.4 on an on-bill basis.
Package 2, installing the efficiency measure of R-19 Floor Insulation would
save energy relative to the base code and would achieve a benefit to cost
ratio of 1.4 on an on-bill basis.
Package 3 to installing a Heat Pump Water Heater (HPWH), would save
energy relative to the base code and would achieve a benefit to cost ratio
of 1.6 on a “Long-term System Cost” (LSC basis).
Package 4, Heat Pump Space Heater, would save energy relative to the
base code and would achieve a benefit to cost ratio of 4.2 on an LSC basis.
Package 5 to install PV + Electric Ready Pre-Wiring would save energy
relative to the base code and would achieve a benefit to cost ratio of 1.4 on
an on-bill basis.
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SECTION 6. CEQA. This ordinance is categorically exempt from CEQA because
it is an action taken by a regulatory agency for the purpose of protecting the environment
(CEQA Guidelines Section 15308). In addition, this ordinance is exempt from CEQA
under the general rule, 15061(b)(3), on the grounds that these standards are more
stringent than the State energy standards, there are no reasonably foreseeable adverse
impacts, and there is no possibility that the activity in question may have a significant
effect on the environment. The following findings are made in support of these
determinations:
1. The purpose of the implementation of a Reach Code is to reduce the amount
of greenhouse gas emissions in the City of San Luis Obispo that are produced
from buildings.
2. The Reach Code approval process requires that the City determines that the
local standards will require buildings to use no more energy than current
statewide requirements. Furthermore, the California Energy Commission
approval process requires that the City make the findings as part of its approval
process. Therefore, the Reach Code standards can only go into effect if they
protect the environment by making buildings more efficient.
SECTION 7. Violations. Violation of the requirements of this Ordinance shall be
considered, at the City’s election, an infraction of the City of San Luis Obispo Municipal
Code punishable by all sanctions prescribed in Chapter 1.12, or an administrative
violation punishable as provided under Chapter 1.24 .
SECTION 8. Effective Date. Pending approval by the California Energy
Commission, this Ordinance shall be effective on January 1, 2025.
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SECTION 9. Ordinance Summary. A summary of this ordinance, together with the
names of Council members voting for and against, shall be published at least five (5) days
prior to its final passage, in The New Times, a newspaper published and circulated in this
City. This ordinance shall go into effect at the expiration of thirty (30) days after its final
passage.
INTRODUCED on the ____ day of _____ 2024, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the ____ day of ____, 20 24, on the following
vote:
AYES:
NOES:
ABSENT:
___________________________
Mayor Erica A. Stewart
ATTEST:
_______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington, City Clerk
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Exhibit A
Section 15.02.060
Amend Section 15.020.060 to read as follows:
The City of San Luis Obispo hereby adopts the 2022 California Energy Code as
Part 6 of the San Luis Obispo Building Construction and Fire Prevention Code,
2023. Except as otherwise provided herein, or as later amended in Section
15.04.060 and 15.04.065, or affected by San Luis Obispo Health and Safety Code
Chapter 8.11, Part 6 of the San Luis Obispo Building Construction and Fire
Prevention Code, 2023, shall be as published in the California Energy Code, 2022
Edition, and as copyrighted by the California Building Standards Commission,
California Code of Regulations, Title 24, Part 6, including all of its tables, indices,
appendices, addenda and footnotes. Said California Energy Code is hereby
referred to and by such reference is incorporated herein as if fully set forth.
Section 15.04.065
AMENDMENTS – ENERGY STANDARDS – ADDITIONS AND ALTERATIONS
A. Adoption of Codes and Applicability
The effective date of this ordinance shall be January 1, 2025 and is applicable to
existing single family residential buildings. The amendments contained in
15.04.065 do not apply to repairs to buildings.
B. Add the following definitions to Subchapter 1, Section 100.1(b):
MAJOR ADDITION is any change to an existing building that increases
conditioned floor area by 500 or more square feet in a one-year period.
MAJOR ALTERATION is any construction or renovation to an existing structure
other than a repair or alteration whose work area covers 500 or more square feet
in a one-year period. A project that consists only of roof and/or window
replacement is not considered a Major Alteration.
WORK AREA That portion or portions of a building consisting of all reconfigured
spaces as indicated on the construction documents. Work area excludes other
portions of the building where incidental work entailed by the intended work must
be performed and portions of the building where work not initially intended by the
owner is specifically required by this code.
C. Amend Section 150.0 SINGLE-FAMILY RESIDENTIAL BUILDINGS –
MANDATORY FEATURES AND DEVICES to read as follows:
Single-family residential buildings shall comply with the applicable requirements of
Sections 150.0(a) through 150.0(w).
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D. Add new Section 150(w) to read as follows:
(w) Mandatory Requirements for Existing Building Additions and Alterations.
Existing Building Additions and Alterations shall meet the requirements
of Items 1 through 4 below, as applicable:
1. Major addition. Any Major Addition shall install a set of measures from
the Measure Menu Table, Table 150.0-I to achieve a total score that is
equal to or greater than 8. In addition, all mandatory measures listed
in Table 150.0-I shall be installed. Measure verification shall be
explicitly included as an addendum to the Certificate of Compliance to
be filed pursuant to 2022 Title 24 Section 10 -103. Installed measures
shall meet the specifications in Table 150.0 -J.
2. Major alteration. Any major alteration shall install a set of measures
from the Measure Menu Table, Table 150.0 -I to achieve a total score
that is equal to or greater than 8. In addition, all mandatory measures
listed in Table 150.0-I shall be installed. Measure verification shall be
explicitly included as an addendum to the Certificate of Compliance to
be filed pursuant to 2022 Title 24 Section 10 -103. Installed measures
shall meet the specifications in Table 150.0 -J.
3. Combination major addition and alteration. Any project that
includes an addition and alteration that has a work area equal to or
greater than 500 square feet shall install a set of measures from the
Measure Menu Table, Table 150.0-I to achieve a total score that is
equal to or greater than 8. In addition, all mandatory measures listed
in Table 150.0-I shall be installed. Measure verification shall be
explicitly included as an addendum to the Certificate of Compliance to
be filed pursuant to 2022 Title 24 Section 10 -103. Installed measures
shall meet the specifications in Table 150.0-J.
4. Electric Readiness. Any major addition, major alteration, or
combination major addition and alteration that includes a new electrical
panel and electrical service upgrade to 200A or more shall include
electric readiness components per 150.0(n)1(A)-(B) and 150.0(t)
Exception 1 to Section 150.0(w): The project is the result of a repair as defined
by Title 24 Part 2 Section 202.
Exception 2 to Section 150.0(w): If compliance costs exceed 10% of total project
valuation, or due to conditions specific to the project, it is technically infeasible to
achieve compliance through any available set of measures, the applicant may
request an exemption as set forth below. In applying for an exemption, the burden
is on the applicant to show hardship or infeasibility.
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(1) Application. Based on the following, the applicant shall identify in writing
the specific requirements of the standards for compliance that the
project is unable to achieve and the circumstances that make it a
hardship or infeasible for the project to comply with this chapter. The
applicant may not petition for relief from any requirement of the 2022
California Energy Code (Title 24, Part 6) and referenced standards, or
the 2022 California Green Building Standards (Titl e 24, Part 11) of the
California Building Standards Code. Circumstances that constitute
hardship or infeasibility shall include one of the following:
i. That the cost of achieving compliance is disproportionate to
the overall cost of the project (i.e., compliance exceeds 10%
of total project cost);
ii. That it is technically infeasible to achieve compliance through
any available set of measures.
iii. That strict compliance with these standards would create or
maintain a hazardous condition(s) and present a life safety
risk to the occupants.
(2) Granting of exemption. If the chief building official determines that it is a
hardship or infeasible for the applicant to fully meet the requirements of this
chapter and that granting the requested exemption will not cause the
building to fail to comply with the 2022 California Energy Code (Title 24,
Part 6) and referenced standards, or the 2022 California Green Building
Standards (Title 24, Part 11) of the California Building Standards Code, the
chief building official shall determine the minimum feasible threshold of
compliance reasonably achievable for the project. If an exemption is
granted, the applicant shall be required to comply with this chapter in all
other respects and shall be required to achieve the threshold of compliance
determined to be achievable by the chief building official.
(3) Denial of exemption. If the chief building official determines that it is
reasonably possible for the applicant to fully meet the requirements of this
chapter, the request shall be denied, and the applicant shall be notified of
the decision in writing. The project and compliance documentation shall be
modified to comply with the standards for compliance.
(4) Appeal. Any aggrieved applicant or person may appeal the
determination of the chief building official regarding the granting or denial of
an exemption or compliance with any other provision of this chapter. An
appeal of a determination of the chief building official shall be filed in writing.
Exception 3 to Section 150.0(w): If the dwelling unit has previously installed
measures from the Measure Menu, Table 150.0-I, and compliance can be
demonstrated to the building official, then these measures shall not be required to
be newly installed.
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Exception 4 to Section 150.0(w): The applicant may request an exemption to any
requirements of this chapter which would impair the historic integrity of any building
listed on a local, state, or federal register of historic structures, as determined by
the chief building official and as regulated by the California Historic Building Code
(Title 24, Part 8). In making a determination of exemption, the chief building official
may require the submittal of an evaluation b y an architectural historian or similar
expert.
Exception 5 to Section 150.0(w): An alteration that consists solely of seismic
safety improvements.
Exception 6 to Section 150.0(w): An alteration that consists solely of roof and/or
window projects.
Exception 7 to Section 150.0(w): When an addition or alteration results in the
creation of a new residential unit, the square footage of that unit shall not be
counted towards the 500 square foot “Major” addition, alteration, or addition and
alteration threshold.
D. Add new Table 150.0-I to read as follows:
Table 150.0-I: Measure Menu
Measures
Target Score
8
E1 - LED lamps and Exterior Photocells Mandatory
E2 - Water Heating Package 1
E3 - Air Sealing 1
E4 - R-49 Attic Insulation 2
E5 - Duct Sealing 2
E6 - New Ducts + Duct Sealing 4
E7 - Windows 3
E8 - R-19 Floor Insulation 8
E9 - R-30 Floor Insulation 10
E10 - Heat Pump Water Heater (HPWH) 12
E11 - Heat Pump Space Heater 11
ER1 - Solar PV + Electric Ready Pre-Wire 13
Note: the measures in the Measure Menu table shall conform to the
specifications in Table 150.0-J
Page 850 of 888
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E. Add new Table 150.0-J to read as follows:
Table 150.0-J: Measure Specifications
ID Measure Specification
Energy Efficiency Measures
E1 Lighting Measures – Replace all interior and exterior screw-in incandescent, halogen, and compact fluorescent lamps with LED lamps.
Install photocell controls on all exterior lighting luminaires consistent with current Title 24 requirements for new single family residential
buildings. Alternative means of exterior lighting timing controls, including smart home devices, may be approved.
E2 Water Heating Package: Add exterior insulation meeting a minimum of R-6 to existing storage water heaters. Insulate all accessible
hot water pipes with pipe insulation a minimum of ¾ inch thick. This includes insulating the supply pipe leaving the water he ater,
piping to faucets underneath sinks, and accessible pipes in attic spaces or crawlspaces. Upgrade fittings in sinks and showers to meet
current California Green Building Standards Code (Title 24, Part 11) Section 4.303 water efficiency requirements. Water heaters 20
gallons or less, or water heaters that are not able to add exterior insulation may not take credit for this measure.
E3 Air Sealing: Seal all accessible cracks, holes, and gaps in the building envelope at walls, floors, and ceilings. Pay special attention to
penetrations including plumbing, electrical, and mechanical vents, recessed can light luminaires, and windows. Weathe r-strip doors if
not already present. Compliance shall be demonstrated with blower door testing conducted by a certified HERS Rater no more than
three years prior to the permit application date that either: a) shows at least a 30 percent reduction from pre -retrofit conditions; or b)
shows that the number of air changes per hour at 50 Pascals pressure difference (ACH50) does not exceed ten for Pre -1978 vintage
buildings, seven for 1978 to 1991 vintage buildings and five for 1992-2010 vintage buildings. If combustion appliances are located
within the pressure boundary of the building, conduct a combustion safety test by a professional certified by the Building Pe rformance
Institute in accordance with the ANSI/BPI-1200-S-2017 Standard Practice for Basic Analysis of Buildings, the Whole House
Combustion Appliance Safety Test Procedure for the Comfortable Home Rebates Program 2020 or the California Community
Services and Development Combustion Appliance Safety Testing Protocol.
E4 R-49 Attic Insulation: Attic insulation shall be installed to achieve a weighted assembly U-factor of 0.020 or insulation installed at the
ceiling level shall have a thermal resistance of R-49 or greater for the insulation alone. Recessed downlight luminaires in the ceiling
shall be covered with insulation to the same depth as the rest of the ceiling. Luminaires not rated for insulation contact must be
replaced or fitted with a fire-proof cover that allows for insulation to be installed directly over the cover. In buildings where existing R-
30 is present and existing recessed downlight luminaires are not rated for insulation contact, insulation is not required to be installed
over the luminaires.
E5 Duct Sealing: Air seal all space conditioning ductwork to meet the requirements of the 2022 Title 24 Section 150.2(b)1E. The duct
system must be tested by a HERS Rater no more than three years prior to the alteration or addition permit application date to verify
the duct sealing and confirm that the requirements have been met. This measure may not be combined with the New Ducts and Duct
Sealing measure in this Table. Buildings without ductwork or where the ducts are in conditioned space may not take credit for this
measure.
E6 New Ducts and Duct Sealing: Replace existing space conditioning ductwork with new R-8 ducts that meet the requirements of 2022
Title 24 Section 150.0(m)11. This measure may not be combined with the Duct Sealing measure in this Table. To qualify, a
preexisting measure must have been installed no more than three years b efore the alteration or addition permit application date.
E7 Windows: Replace at least 50% of existing windows with high performance windows with an area -weighted average U-factor no
greater than 0.30.
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E8 R-19 Floor Insulation: Raised-floors shall be insulated such that the floor assembly has an assembly U-factor equal to or less than U-
0.037, or shall be insulated between wood framing with insulation having an R -value equal to or greater than R-19.
E9 R-30 Floor Insulation: Raised-floors shall be insulated such that the floor assembly has an assembly U-factor equal to or less than U-
0.028, or shall be insulated between wood framing with insulation having an R -value equal to or greater than R-30.
E10 Heat Pump Water Heater (HPWH): Replace existing electric resistance or natural gas storage water heater with a heat pump water
heater.
E11 Heat Pump Space Heater: Replace all existing gas and electric resistance space heating systems with an electric -only heat pump
system.
Solar PV and Electric-Readiness Measures
ER1 PV and Electric Ready Pre-Wire: Install a solar PV system that meets the requirements of 2022 Title 24 Section 150.1(c)14.
In addition to the solar PV system, Include electric readiness components per 150.0(n)1(A)-(B) and 150.0(t) and one of:
A. Energy Storage Systems (ESS) Ready, as specified in Section 150.0(s), or
B. EV Charger Ready as specified in the California Green Building Code, Title 24, Part 11, Section A4.106.8.1,which otherwise
applies to new construction.
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F. Modify Section 150.2(a) ENERGY EFFICIENCY STANDARDS FOR ADDITIONS
AND ALTERATIONS TO EXISTING SINGLE FAMILY RESIDENTIAL BUILDINGS to
read as follows:
Additions. Additions to existing single-family residential buildings shall meet the
requirements of Sections 110.0 through 110.9, Sections 150.0(a) through (n), (p),
(q), (w) and either Section 150.2(a)1 or 2.
G. Modify Section 150.2(b) ENERGY EFFICIENCY STANDARDS FOR ADDITIONS
AND ALTERATIONS TO EXISTING SINGLE FAMILY RESIDENTIAL BUILDINGS to
read as follows:
Alterations. Alterations to existing single-family residential buildings or alterations
in conjunction with a change in building occupancy to a single-family residential
occupancy shall meet either Item 1 or 2 below.
1. Prescriptive approach. The altered component and any newly installed
equipment serving the alteration shall meet the applicable requirements of
Sections 110.0 through 110.9 and all applicable re quirements of Sections
150.0(a) through (l), 150.0(m)1 through 150.0 (m)10, 150.0(p) through (q), and
150.0(w); and
2. Performance approach. The altered component(s) and any newly installed
equipment serving the alteration shall meet the applicable requirem ents of
Subsections A, B, and C below.
a. The altered components shall meet the applicable requirements of
Sections 110.0 through 110.9, Sections 150.0(a) through (l), Sections
150.0(m)1 through 150.0 (m)10, Sections 150.0(p) through (q), and
Section 150.0(w). Entirely new or complete replacement mechanical
ventilation systems as these terms are used in Section 150.2(b)1L, shall
comply with the requirements in Section 150.2(b)1L. Altered mechanical
ventilation systems shall comply with the requirements of Section
150.2(b)1M. Entirely new or complete replacement space -conditioning
systems, and entirely new or complete replacement duct systems, as
these terms are used in Sections 150.2(b)1C and 150.2(b)1Diia, shall
comply with the requirements of Sections 150.0(m)12 and 150.0(m)13.
Page 853 of 888
Page 854 of 888
Prepared by:
Frontier Energy, Inc
Misti Bruceri & Associates, LLC
Prepared for:
Kelly Cunningham, Codes and Standards Program, Pacific Gas and Electric
Last modified: 2024/3/15
Revision: 1.0
Page 855 of 888
Cost-Effectiveness Analysis: Central Coast Community Energy
Legal Notice
This report was prepared by Pacific Gas and Electric Company and
funded by the California utility customers under the auspices of the
California Public Utilities Commission.
Copyright 2024, Pacific Gas and Electric Company. All rights
reserved, except that this document may be used, copied, and
distributed without modification.
Neither PG&E nor any of its employees makes any warranty,
express or implied; or assumes any legal liability or responsibility for
the accuracy, completeness or usefulness of any data, information,
method, product, policy or process disclosed in this document; or
represents that its use will not infringe any privately-owned rights
including, but not limited to, patents, trademarks or copyrights.
Acronym List
3CE – Central Coast Community Energy
B/C – Benefit-to-Cost Ratio
CBECC - California Building Energy Code Compliance
CBSC - California Building Standards Commission
CEC - California Energy Commission
CZ – Climate Zone
GHG - Greenhouse Gas
IOU – Investor-Owned Utility
POU – Publicly Owned Utility
PG&E – Pacific Gas & Electric (utility)
SCE – Southern California Edison (utility)
SCG – Southern California Gas (utility)
SDG&E – San Diego Gas & Electric (utility)
SLO – San Luis Obispo
kWh – Kilowatt Hour
NPV – Net Present Value
PV - Solar Photovoltaic
TDV - Time Dependent Valuation
Title 24 – California Code of Regulations Title 24, Part 6
2022 CODE CYCLE: Custom Cost Effectiveness Analysis:
Central Coast Community Energy
Last modified: 2022/11/03
Revision: 1.0
Page 856 of 888
Cost-Effectiveness Analysis: Central Coast Community Energy
TABLE OF CONTENTS
1 Introduction ................................................................................................................................................................ 5
2 Methodology and Assumptions ............................................................................................................................... 6
2.1 Reach Codes ........................................................................................................................................................................ 6
2.1.1 Benefits ......................................................................................................................................................................... 6
2.1.2 Costs ............................................................................................................................................................................. 6
2.1.3 Metrics .......................................................................................................................................................................... 6
2.1.4 Utility Rates ................................................................................................................................................................... 7
2.2 Greenhouse Gas Emissions ................................................................................................................................................. 7
3 Prototype Designs and Measure Packages ............................................................................................................ 8
3.1 Prototype Characteristics ...................................................................................................................................................... 8
4 Results ...................................................................................................................................................................... 10
4.1 Pre-1978 Vintage ................................................................................................................................................................ 11
4.2 1978-1991 Vintage .............................................................................................................................................................. 14
4.3 1992-2010 Vintage .............................................................................................................................................................. 17
4.4 Sensitivities ......................................................................................................................................................................... 20
5 Summary .................................................................................................................................................................. 21
6 References ............................................................................................................................................................... 23
7 Appendices .............................................................................................................................................................. 24
7.1 Map of California Climate Zones ......................................................................................................................................... 24
7.2 Utility Rate Schedules ......................................................................................................................................................... 25
7.2.1 Central Coast Community Energy – Electricity ........................................................................................................... 25
7.2.2 SoCalGas – Gas ......................................................................................................................................................... 31
7.2.3 Fuel Escalation Rates ................................................................................................................................................. 32
LIST OF TABLES
Table 1. Utility Tariffs for San Luis Obispo ............................................................................................................................................ 7
Table 2: Residential Prototype Characteristics ..................................................................................................................................... 8
Table 3. Efficiency Characteristics for Three Vintage Cases ................................................................................................................ 9
Table 4: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary Pre-1978 ...................................................................... 11
Table 5: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary Pre-1978 ..................................................................... 11
Table 6: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary Pre-1978 ................................. 12
Table 7: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary Pre-1978 ...................................................................... 12
Table 8: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary Pre-1978 ........................................................................... 13
Table 9: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary Pre-1978 .......................................................................... 13
Table 10: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary 1978-1991 .................................................................. 14
Table 11: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary 1978-1991 ................................................................. 14
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Table 12: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary 1978-1991 ............................. 15
Table 13: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary 1978-1991 .................................................................. 15
Table 14: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary 1978-1991 ...................................................................... 16
Table 15: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary 1978-1991 ..................................................................... 16
Table 16: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary 1992-2010 .................................................................. 17
Table 17: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary 1992-2010 ................................................................. 17
Table 18: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary 1992-2010 ............................. 18
Table 19: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary 1992-2010 .................................................................. 18
Table 20: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary 1992-2010 ...................................................................... 19
Table 21: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary 1992-2010 ..................................................................... 19
Table 22. Sensitivity Analysis Results for On-Bill NPV ....................................................................................................................... 20
Table 23. Electric Panel Upgrade Sensitivity [Pre-1978] .................................................................................................................... 20
Table 24: Comparison of 3CE and PG&E’s E-TOU-C Rates .............................................................................................................. 25
Table 25: Comparison of 3CE and PG&E’s E-Elec Rates .................................................................................................................. 25
Table 26: SoCalGas Monthly Gas Rate ($/therm) .............................................................................................................................. 31
Table 27: Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis ...................................................... 32
Table 28: Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis ....................................................................................... 33
LIST OF FIGURES
Figure 1. Map of California climate zones. .......................................................................................................................................... 24
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California Energy Codes & Standards | A statewide utility program 2024-03-15
1 Introduction
The California Codes and Standards (C&S) Reach Codes program provides technical support to local governments
considering adopting a local ordinance (reach code) intended to support meeting local and/or statewide energy
efficiency and greenhouse gas reduction goals. The program facilitates adoption and implementation of the code
when requested by local jurisdictions by providing resources such as cost-effectiveness studies, model language,
sample findings, and other supporting documentation.
The California Building Energy Efficiency Standards Title 24, Part 6 (Title 24) (CEC, 2019) is maintained and updated
every three years by two state agencies: the California Energy Commission (the Energy Commission) and the Building
Standards Commission (BSC). In addition to enforcing the code, local jurisdictions have the authority to adopt local
energy efficiency ordinances—or reach codes—that exceed the minimum standards defined by Title 24 (as
established by Public Resources Code Section 25402.1(h)2 and Section 10-106 of the Building Energy Efficiency
Standards). Local jurisdictions must demonstrate that the requirements of the proposed ordinance are cost-effective
and do not result in buildings consuming more energy than is permitted by Title 24. In addition, the jurisdiction must
obtain approval from the Energy Commission and file the ordinance with the BSC for the ordinance to be legally
enforceable.
This report is an addendum to the 2022 Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team,
2024) modified to accurately represent local conditions for San Luis Obispo (SLO) in California Climate Zone 5 and
Central Coast Community Energy’s (3CE’s) service territory. The study analyzes cost-effective measure upgrades in
existing single family buildings that exceed the minimum state requirements, the 2022 Building Energy Efficiency
Standards, effective January 1, 2023. Local jurisdictions in California may consider adopting local energy ordinances to
achieve energy savings beyond what will be accomplished by enforcing building efficiency requirements that apply
statewide. This report was developed in coordination with the California Statewide Investor-Owned Utilities (IOUs)
Codes and Standards Program, key consultants, and engaged cities—collectively known as the Statewide Reach Codes
Team.
The methodology, prototype characteristics, and measure packages are retained from the main study referenced
above except for the energy costs are calculated using local 3CE utility rates. Measure packages include upgrades in
existing single family buildings that exceed the minimum state requirements. It evaluates efficiency measures such as
adding insulation, replacing windows, and duct upgrades, fuel substitution measures that upgrade space heating and
water heating to heat pumps, and solar photovoltaics (PV). A 1,665 square foot single family home prototype with an
attached garage was evaluated in this study.
Local jurisdictions may also adopt ordinances that amend different Parts of the California Building Standards Code or
may elect to amend other state or municipal codes. The decision regarding which code to amend will determine the
specific requirements that must be followed for an ordinance to be legally enforceable. Although a cost-effectiveness
study is only required to amend Part 6 of the CA Building Code, it is important to understand the economic impacts of
any policy decision. This study documents the estimated costs, benefits, energy impacts and greenhouse gas emission
reductions that may result from implementing an ordinance based on the results to help residents, local leadership,
and other stakeholders make informed policy decisions.
Model ordinance language and other resources are posted on the C&S Reach Codes Program website at
LocalEnergyCodes.com. Local jurisdictions that are considering adopting an ordinance may contact the program for
further technical support at info@localenergycodes.com.
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2 Methodology and Assumptions
2.1 Reach Codes
This section describes the approach to calculating cost-effectiveness including benefits, costs, metrics, and utility rate
selection.
2.1.1 Benefits
This analysis used two different metrics to assess the cost-effectiveness of the proposed upgrades. Both
methodologies require estimating and quantifying the incremental costs and energy savings associated
with each energy efficiency measure. The main difference between the methodologies is the way they value energy
impacts:
• On-Bill: Customer-based lifecycle cost approach that values energy based upon estimated site energy usage
and customer on-bill savings using electricity and natural gas utility rate schedules over a 30-year duration,
accounting for a three percent discount rate and energy cost inflation per Appendix 7.2.3.
• Long-term Systemwide Cost (LSC): Formerly known as Time Dependent Valuation (TDV) energy cost savings,
LSC reflects the Energy Commission’s current LCC methodology, which is intended to capture the total value
or cost of energy use over 30 years. This method accounts for the hourly cost of marginal generation,
transmission and distribution, fuel, capacity, losses, and cap-and-trade-based CO2 emissions (California
Energy Commission, 2023). This is the methodology used by the Energy Commission in evaluating cost-
effectiveness for efficiency measures in the 2025 Energy Code.
The Reach Codes Team performed energy simulations using the 2025 research version of the Residential California
Building Energy Code Compliance software (CBECC).
2.1.2 Costs
The Reach Codes Team assessed the incremental costs and savings of the energy packages over the lifecycle of 30
years. Incremental costs represent the equipment, installation, replacement, and maintenance costs of the proposed
measure relative to the 2022 Title 24 Standards minimum requirements or standard industry practices. The Reach
Codes Team obtained measure costs from a contractor survey conducted in the summer of 2023.
2.1.3 Metrics
Cost-effectiveness is presented using net present value (NPV) and benefit-to-cost (B/C) ratio metrics.
• NPV: The Reach Codes Team uses net savings (NPV benefits minus NPV costs) as the cost-effectiveness
metric. If the net savings of a measure or package is positive, it is considered cost effective. Negative net
savings represent net costs to the consumer. A measure that has negative energy cost benefits (energy cost
increase) can still be cost effective if the costs to implement the measure are even more negative (i.e.,
construction and maintenance cost savings).
• B/C Ratio: Ratio of the present value of all benefits to the present value of all costs over 30 years (NPV
benefits divided by NPV costs). The criteria for cost-effectiveness is a B/C greater than 1.0. A value of one
indicates the savings over the life of the measure are equivalent to the incremental cost of that measure. A
value greater than one represents a positive return on investment.
Improving the energy performance of a building often requires an initial investment. In most cases the benefit is
represented by annual on-bill utility or LSC savings, and the cost by incremental first cost and replacement costs.
However, some packages result in initial construction cost savings (negative incremental cost), and either energy cost
savings (positive benefits), or increased energy costs (negative benefits). In cases where both construction costs and
energy-related savings are negative, the construction cost savings are treated as the benefit while the increased
energy costs are the cost. In cases where a measure or package is cost-effective immediately (i.e., upfront
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construction cost savings and lifetime energy cost savings), B/C ratio cost-effectiveness is represented by “>1”.
Because of these situations, NPV savings are also reported, which, in these cases, are positive values.
2.1.4 Utility Rates
Table 1 summarizes the utility tariffs applied in this analysis. The standard tariff was applied in most cases. Homes
with a heat pump service space or water heating in IOU territory are eligible for either the electrification or the
standard tariff. In these cases, results are provided using both tariff options. The Net Billing Tariff (NBT) tariff was
applied to homes with onsite generation (PV systems).
For a more detailed breakdown of the rates selected refer to Appendix 7.2 Utility Rate Schedules.
Table 1. Utility Tariffs for San Luis Obispo
Electric / Gas
Utility
Standard
Electric Tariff
Electrification
Tariffs
Tariffs
Required
Under NBT
Natural
Gas
Tariff
3CE / SoCalGas E-TOU Option C E-ELEC E-ELEC GR
The Reach Code Team applied the recently approved net billing tariff (NBT) rules for PV systems. NBT, also known as
NEM-3, is the successor tariff to NEM 2.0. The rate paid for electricity exported to the grid is much lower under NBT
than under NEM 2.0. The hourly export rates applied in this study were obtained from analysis conducted by Energy
and Environmental Economics (E3) for the California Public Utilities Commission as part of the NEM revisit.1 These
hourly export rates vary for each major IOU and by year, the 2024 export rate projections were used for this analysis.
Utility rates are assumed to escalate over time according to the assumptions from the CPUC 2021 En Banc hearings
on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation rates through the remainder
of the 30-year evaluation period are based on the escalation rate assumptions within the 2022 TDV factors. A second
set of escalation rates were also evaluated to demonstrate the impact that utility cost changes have on cost-
effectiveness over time. This utility rate escalation sensitivity analysis, presented in Section 4.4 Sensitivities, was
based on those used within the 2025 LSC factors (LSC replaces TDV in the 2025 code cycle) which assumed steep
increases in gas rates in the latter half of the analysis period. Appendix 7.2.3 and the main 2022 Single Family Retrofit
Cost-effectiveness Study (Statewide Reach Codes Team, 2024) for details.
2.2 Greenhouse Gas Emissions
The analysis uses the greenhouse gas (GHG) emissions estimates built-in to CBECC-Res. There are 8760 hourly
multipliers accounting for time dependent energy use and carbon emissions based on source emissions, including
renewable portfolio standard projections. Natural gas fugitive emissions, which are shown to be substantial, are not
included. There are two strings of multipliers—one for Northern California climate zones, and another for Southern
California climate zones.2
1 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/customer-generation/nem-revisit/net-billing-
tariff
2 CBECC-Res multipliers are the same for CZs 1-5 and 11-13 (presumed to be Northern California), while there is another set of multipliers for
CZs 6-10 and 14-16 (assumed to be Southern California).
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3 Prototype Designs and Measure Packages
3.1 Prototype Characteristics
The Energy Commission defines building prototypes which it uses to evaluate the cost-effectiveness of proposed
changes to Title 24 requirements. Average home size has steadily increased over time, 3 and the Energy Commission
single family new construction prototypes are larger than many existing single family homes across California. For this
analysis, a 1,665 square foot prototype was evaluated. Table 2 describes the basic characteristics of the single family
prototype. Additions are not evaluated in this analysis as they are already addressed in Section 150.2 of Title 24, Part
6. The CEC has proposed significant changes to the 2025 Energy Code that would remove the allowance of gas space
heating and water heating equipment for additions and instead require additions to follow the same space heating
and water heating equipment requirements as new construction (California Energy Commission, 2023).
Table 2: Residential Prototype Characteristics
Specification
Existing Conditioned Floor Area 1,665 ft2
Num. of Stories 1
Num. of Bedrooms 3
Window-to-Floor Area Ratio 13%
Attached Garage 2-car garage
Three building vintages were evaluated to determine sensitivity of existing building performance on cost-
effectiveness of upgrades. For example, it is widely recognized that adding attic insulation in an older home with no
insulation is cost-effective, however, newer homes will likely have existing attic insulation reducing the cost-
effectiveness of an incremental addition of insulation. The building characteristics for each vintage were determined
based on either prescriptive requirements from Title 24 that were in effect or standard construction practice during
that time period. Homes built under 2001 Title 24 are subject to prescriptive envelope code requirements very similar
to homes built under the 2005 code cycle, which was in effect until January 1, 2010.
Table 3 summarizes the assumptions for each of the three vintages. Additionally, the analysis assumed the following
features when modeling the prototype buildings. Efficiencies were defined by year of the most recent equipment
replacement based on standard equipment lifetimes.
• Individual space conditioning and water heating systems, one per single family building.
• Split-system air conditioner with natural gas furnace.
• Scenarios with an existing natural gas wall furnace without AC were also evaluated.
• Small storage natural gas water heater.
• Scenarios with an existing electric resistance storage water heater were also evaluated.
• Gas cooktop, oven, and clothes dryer.
The methodology applied in the analyses begins with a design that matches the specifications as described in Table 3
for each of the three vintages. Prospective energy efficiency measures were modeled to determine the projected
energy performance and utility cost impacts relative to the baseline vintage. In some cases, where logical, measures
were packaged together.
3 https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf
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Table 3. Efficiency Characteristics for Three Vintage Cases
Building Component Efficiency
Feature
Vintage Case
Pre-1978 1978-1991 1992-2010
Envelope
Exterior Walls 2x4, 16-inch on center wood frame,
R-0a
2x4 16 inch on center wood frame,
R-11
2x4 16 inch on center wood frame,
R-13
Foundation Type & Insulation Uninsulated slab (CZ 2-15)
Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-19 (CZ 1 & 16)
Ceiling Insulation & Attic Type
Vented attic, R-5 @ ceiling level for CZ
6 & 7,
Vented attic, R-11 @ ceiling level
(all other CZs)
Vented attic, R-19 @ ceiling level Vented attic, R-30 @ ceiling level
Roofing Material & Color Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Radiant Barrier No No No
Window Type: U-factor/SHGCb Metal, single pane: 1.16/0.76 Metal, dual pane: 0.79/0.70 Vinyl, dual pane Low-E: 0.55/0.40
House Infiltration at 50 Pascals 15 ACH50 10 ACH50 7 ACH50
HVAC Equipment
Heating Efficiency 78 AFUE (assumes 2 replacements) 78 AFUE (assumes 1 replacement) 78 AFUE
Cooling Efficiency 10 SEER (assumes 2 replacements) 10 SEER (assumes 1 replacement) 13 SEER, 11 EER
Duct Location & Details Attic, R-2.1, 30% leakage at 25 Pa Attic, R-2.1, 25% leakage at 25 Pa Attic, R-4.2, 15% leakage at 25 Pa
Whole Building Mechanical
Ventilation None None None
Water Heating Equipment
Water Heater Efficiency 0.575 Energy Factor (assumes 2
replacements)
0.575 Energy Factor (assumes 1
replacement) 0.575 Energy Factor
Water Heater Type 40-gallon gas storage 40-gallon gas storage 40-gallon gas storage
Pipe Insulation None None None
Hot Water Fixtures Standard, non-low flow Standard, non-low flow Standard, non-low flow
a Pre-1978 wall modeled with R-5 cavity insulation to better align wall system performance with monitored field data and not overestimate energy use.
b Window type selections were made based on conversations with window industry expert, Ken Nittler. If a technology was entering the market during the
time period (e.g., Low-E during 1992-2010 or dual-pane during 1978-1991) that technology was included in the analysis. This provides a conservative
assumption for overall building performance and additional measures may be cost-effective for buildings with lower performing windows, for example
buildings with metal single pane windows in the 1978-1991 vintage.
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4 Results
The primary objective of the evaluation is to identify cost-effective energy upgrade measures and packages for
existing single family buildings, to support the design of local ordinances requiring upgrades, which may be triggered
by different events, such as at the time of a significant remodel or at burnout of mechanical equipment. In this
report, the 1992-2010 vintage is shown for the equipment measures because it is the most conservative case (lowest
loads), while the pre-1978 vintage is shown for the envelope and duct measures because some of those measures
only apply to the pre-1978 vintage. A full dataset of all results can be downloaded at
https://localenergycodes.com/content/resources. Results alongside policy options can also be explored using the
Cost-effectiveness Explorer at https://explorer.localenergycodes.com/.
The following describes which results are presented in the tables in this section. See the main 2022 Single Family
Retrofit Cost-Effectiveness Study (Statewide Reach Codes Team, 2024) for details of the measures.
• Table 4 through Table 6 show the cost-effective results for the pre-1978 vintage for heat pump space heaters
(HPSHs) including dual fuel heat pumps (DFHPs), heat pump water heaters (HPWHs) and envelope and duct
measures, respectively, for E-TOU-C rate.
• Table 7 through Table 9 show the cost-effective results for the pre-1978 vintage for PV, HPSH, and HPWH,
upgrade measures, respectively, for E-Elec rate.
• Table 10 through Table 12 show the cost-effective results for the 1978-1991 vintage for heat pump space
heaters, heat pump water heaters and envelope and duct measures, respectively, for E-TOU-C rate.
• Table 13 through Table 15 show the cost-effective results for the 1978-1991 vintage for PV, HPSH, and HPWH
upgrade measures, respectively, for E-Elec rate.
• Table 16 through Table 18 show the cost-effective results for the 1992-2010 vintage for heat pump space
heaters, heat pump water heaters and envelope and duct measures, respectively, for E-TOU-C rate.
• Table 19 through Table 21 show the cost-effective results for the 1992-2010 vintage for PV, HPSH, and HPWH
upgrade measures, respectively, for E-Elec rate.
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4.1 Pre-1978 Vintage
Table 4: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary Pre-1978
Table 5: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary Pre-1978
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
DFHP Existing Furnace (1,774) 209 0.93 14,840 8.07 ($255) ($2,963) $2,349 $1,008 0.00 ($3,971) 8.25 $7,306
DFHP New Furnace (1,783) 204 0.90 14,281 7.78 ($270) ($3,392) $7,200 $8,708 0.00 ($12,101) 1.11 $993
HPSH (Std Efficiency) (2,265) 233 0.98 15,584 8.38 ($430) ($6,680) $1,020 $1,618 0.00 ($8,298) 5.88 $7,900
HPSH (High Efficiency) (1,855) 233 1.05 16,982 9.13 ($252) ($2,619) $3,951 $6,430 0.00 ($9,049) 1.98 $6,319
Ducted MSHP (1,847) 233 1.05 17,011 9.15 ($249) ($2,536) $1,442 $2,951 0.00 ($5,487) 4.35 $9,880
Ductless MSHP (Std Efficiency) (1,667) 208 0.94 15,070 8.18 ($227) ($2,436) $8,826 $14,274 0.00 ($16,709) 0.89 ($1,536)
Ductless MSHP (High Efficiency) (589) 208 1.12 18,747 10.19 $233 $8,061 $12,410 $20,158 0.40 ($12,097) 1.06 $1,171
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
240V Fed. Min. HPWH (1,391) 171 0.87 12,314 7.80 ($330) ($5,167) $4,332 $6,554 0.00 ($11,721) 1.65 $4,252
240V Market Std. NEEA HPWH (1,076) 171 0.90 13,414 8.21 ($179) ($1,725) $5,193 $7,967 0.00 ($9,692) 1.64 $5,136
240V Market Std. NEEA HPWH + DR (967) 171 0.92 13,789 8.43 ($124) ($461) $5,193 $7,967 0.00 ($8,428) 1.80 $6,335
120V Market Std. NEEA HPWH (935) 172 0.93 13,960 8.47 ($107) ($75) $2,893 $4,273 0.00 ($4,348) 3.41 $10,296
240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($349) ($5,628) $4,751 $6,973 0.00 ($12,601) 1.49 $3,384
240V Fed. Min. HPWH (Interior Closet) (1,158) 128 0.65 8,836 5.87 ($307) ($5,248) $4,413 $6,634 0.00 ($11,883) 1.12 $792
240V Fed. Min. HPWH (Interior Closet,
ducted) (1,354) 180 0.93 13,396 8.39 ($296) ($4,254) $5,492 $7,714 0.00 ($11,967) 1.60 $4,591
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Table 6: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary Pre-1978
Table 7: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary Pre-1978
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
30% Air Sealing 15 15 0.09 1,575 0.86 $53 $1,533 $4,684 $4,684 0.33 ($3,151) 0.43 ($2,686)
New Ducts: R-6 133 49 0.30 5,328 2.86 $162 $4,430 $4,808 $4,808 0.92 ($379) 1.48 $2,301
New Ducts: R-8 137 51 0.32 5,601 3.02 $169 $4,634 $6,311 $6,311 0.73 ($1,677) 1.18 $1,148
Duct Sealing: 10% 50 32 0.19 3,355 1.83 $89 $2,515 $2,590 $2,590 0.97 ($75) 1.69 $1,789
Wall Insulation: R-13 56 49 0.29 5,054 2.74 $126 $3,603 $2,950 $2,950 1.22 $653 2.19 $3,510
Attic Insulation: R-38 67 36 0.22 3,802 2.05 $106 $2,969 $6,762 $6,762 0.44 ($3,793) 0.74 ($1,784)
Attic Insulation: R-49 75 39 0.24 4,154 2.23 $116 $3,252 $7,446 $7,446 0.44 ($4,194) 0.73 ($2,001)
R-19 Raised Floor Insulation 4 87 0.52 8,759 4.83 $178 $5,370 $3,633 $3,633 1.48 $1,737 3.02 $7,356
R-30 Raised Floor Insulation (3) 100 0.59 9,945 5.49 $198 $6,011 $4,113 $4,113 1.46 $1,898 3.03 $8,342
Cool Roof (0.20 Ref) (at roof
replacement) 11 (13) (0.07) (1,242) (0.67) ($20) ($657) $893 $1,203 0.00 ($1,860) 0.00 ($2,685)
Cool Roof (0.25 Ref) (at roof
replacement) 14 (19) (0.11) (1,898) (1.03) ($32) ($1,031) $1,786 $2,407 0.00 ($3,438) 0.00 ($4,688)
Window Upgrade: 0.28 vs 0.30 U-factor 89 28 0.17 3,068 1.64 $101 $2,718 $11,871 $11,871 0.23 ($9,154) 0.35 ($7,742)
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
3kW PV 3,854 0 0.11 13,150 1.22 $510 $11,627 $9,608 $11,574 1.00 $52 0.72 ($3,283)
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Table 8: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary Pre-1978
Table 9: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary Pre-1978
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
DFHP Existing Furnace (1,774) 209 0.93 14,840 8.07 ($393) ($6,112) $2,349 $1,008 0.00 ($7,120) 8.25 $7,306
DFHP New Furnace (1,783) 204 0.90 14,281 7.78 ($408) ($6,528) $7,200 $8,708 0.00 ($15,236) 1.11 $993
HPSH (Std Efficiency) (2,265) 233 0.98 15,584 8.38 ($531) ($8,970) $1,020 $1,618 0.00 ($10,588) 5.88 $7,900
HPSH (High Efficiency) (1,855) 233 1.05 16,982 9.13 ($382) ($5,584) $3,951 $6,430 0.00 ($12,014) 1.98 $6,319
Ducted MSHP (1,847) 233 1.05 17,011 9.15 ($380) ($5,518) $1,442 $2,951 0.00 ($8,470) 4.35 $9,880
Ductless MSHP (Std Efficiency) (1,667) 208 0.94 15,070 8.18 ($388) ($6,096) $8,826 $14,274 0.00 ($20,369) 0.89 ($1,536)
Ductless MSHP (High Efficiency) (589) 208 1.12 18,747 10.19 $3 $2,804 $12,410 $20,158 0.14 ($17,354) 1.06 $1,171
HPSH + 3kW PV 2,688 233 1.12 32,485 9.94 $207 $7,845 $10,628 $13,192 0.59 ($5,347) 1.43 $5,633
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
240V Fed. Min. HPWH (1,391) 171 0.87 12,314 7.80 ($349) ($5,604) $4,332 $6,554 0.00 ($12,158) 1.65 $4,252
240V Market Std. NEEA HPWH (1,076) 171 0.90 13,414 8.21 ($224) ($2,739) $5,193 $7,967 0.00 ($10,706) 1.64 $5,136
240V Market Std. NEEA HPWH + DR (967) 171 0.92 13,789 8.43 ($173) ($1,591) $5,193 $7,967 0.00 ($9,558) 1.80 $6,335
120V Market Std. NEEA HPWH (935) 172 0.93 13,960 8.47 ($160) ($1,290) $2,893 $4,273 0.00 ($5,562) 3.41 $10,296
240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($366) ($6,007) $4,751 $6,973 0.00 ($12,980) 1.49 $3,384
240V Fed. Min. HPWH (Interior Closet) (1,158) 128 0.65 8,836 5.87 ($345) ($6,111) $4,413 $6,634 0.00 ($12,745) 1.12 $792
240V Fed. Min. HPWH (Interior Closet,
ducted) (1,354) 180 0.93 13,396 8.39 ($318) ($4,763) $5,492 $7,714 0.00 ($12,477) 1.60 $4,591
240V Fed. Min. HPWH + 3kW PV 3,562 171 1.00 29,215 9.36 $518 $14,166 $13,940 $18,128 0.78 ($3,962) 1.22 $3,933
Page 867 of 888
Cost-Effectiveness Analysis: Central Coast Community Energy 14
California Energy Codes & Standards | A statewide utility program 2024-03-15
4.2 1978-1991 Vintage
Table 10: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary 1978-1991
Table 11: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary 1978-1991
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
DFHP Existing Furnace (1,277) 150 0.67 10,672 5.76 ($165) ($1,818) $2,349 $1,008 0.00 ($2,826) 5.88 $4,914
DFHP New Furnace (1,283) 147 0.64 10,271 5.54 ($175) ($2,099) $7,200 $8,708 0.00 ($10,807) 0.80 ($1,776)
HPSH (Std Efficiency) (1,644) 169 0.71 11,279 6.01 ($294) ($4,530) $1,020 $1,618 0.00 ($6,148) 4.21 $5,192
HPSH (High Efficiency) (1,348) 169 0.76 12,291 6.57 ($167) ($1,626) $3,951 $6,430 0.00 ($8,056) 1.43 $2,761
Ducted MSHP (1,341) 169 0.76 12,314 6.58 ($164) ($1,561) $1,442 $2,951 0.00 ($4,512) 3.13 $6,289
Ductless MSHP (Std Efficiency) (1,152) 143 0.65 10,417 5.61 ($133) ($1,208) $8,826 $14,274 0.00 ($15,481) 0.61 ($5,499)
Ductless MSHP (High Efficiency) (407) 143 0.77 12,957 7.06 $179 $5,910 $12,410 $20,158 0.29 ($14,248) 0.73 ($5,390)
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
240V Fed. Min. HPWH (1,391) 170 0.86 12,273 7.77 ($352) ($5,840) $4,332 $6,554 0.00 ($12,394) 1.64 $4,202
240V Market Std. NEEA HPWH (1,077) 170 0.90 13,361 8.17 ($202) ($2,421) $5,193 $7,967 0.00 ($10,388) 1.64 $5,087
240V Market Std. NEEA HPWH + DR (967) 170 0.92 13,738 8.39 ($147) ($1,149) $5,193 $7,967 0.00 ($9,116) 1.79 $6,285
120V Market Std. NEEA HPWH (935) 171 0.92 13,893 8.43 ($130) ($774) $2,893 $4,273 0.00 ($5,047) 3.39 $10,213
240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($371) ($6,272) $4,751 $6,973 0.00 ($13,245) 1.49 $3,384
240V Fed. Min. HPWH (Interior Closet) (1,162) 130 0.67 9,069 6.00 ($316) ($5,511) $4,413 $6,634 0.00 ($12,145) 1.16 $1,058
240V Fed. Min. HPWH (Interior Closet,
ducted) (1,355) 180 0.93 13,367 8.37 ($320) ($4,987) $5,492 $7,714 0.00 ($12,701) 1.59 $4,541
Page 868 of 888
Cost-Effectiveness Analysis: Central Coast Community Energy 15
California Energy Codes & Standards | A statewide utility program 2024-03-15
Table 12: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary 1978-1991
Table 13: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary 1978-1991
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
30% Air Sealing 7 9 0.06 950 0.51 $34 $997 $4,684 $4,684 0.21 ($3,687) 0.26 ($3,452)
New Ducts: R-6 90 33 0.20 3,565 1.93 $104 $2,827 $4,808 $4,808 0.59 ($1,982) 1.00 ($13)
New Ducts: R-8 93 35 0.22 3,807 2.05 $109 $2,993 $6,311 $6,311 0.47 ($3,318) 0.81 ($1,200)
Duct Sealing: 10% 65 16 0.10 1,810 0.98 $60 $1,607 $2,590 $2,590 0.62 ($982) 0.97 ($75)
Attic Insulation: R-38 26 13 0.08 1,425 0.77 $39 $1,084 $2,555 $2,555 0.42 ($1,472) 0.73 ($691)
Attic Insulation: R-49 33 17 0.10 1,770 0.95 $49 $1,346 $3,612 $3,612 0.37 ($2,265) 0.65 ($1,264)
R-19 Raised Floor Insulation (75) 47 0.27 4,479 2.55 $50 $1,804 $3,633 $3,633 0.50 ($1,829) 1.51 $1,862
R-30 Raised Floor Insulation (79) 59 0.34 5,623 3.18 $69 $2,391 $4,113 $4,113 0.58 ($1,721) 1.68 $2,797
Cool Roof (0.20 Ref) (at roof
replacement) 7 (9) (0.05) (874) (0.47) ($14) ($465) $893 $1,203 0.00 ($1,668) 0.00 ($2,236)
Cool Roof (0.25 Ref) (at roof
replacement) 9 (14) (0.08) (1,335) (0.73) ($23) ($726) $1,786 $2,407 0.00 ($3,132) 0.00 ($4,005)
Window Upgrade: 0.28 vs 0.30 U-factor 56 26 0.16 2,796 1.51 $78 $2,144 $11,871 $11,871 0.18 ($9,727) 0.31 ($8,175)
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
3kW PV 3,733 0 0.10 12,736 1.18 $564 $12,855 $9,608 $11,574 1.11 $1,281 0.70 ($3,432)
Page 869 of 888
Cost-Effectiveness Analysis: Central Coast Community Energy 16
California Energy Codes & Standards | A statewide utility program 2024-03-15
Table 14: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary 1978-1991
Table 15: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary 1978-1991
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
DFHP Existing Furnace (1,277) 150 0.67 10,672 5.76 ($265) ($4,090) $2,349 $1,008 0.00 ($5,098) 5.88 $4,914
DFHP New Furnace (1,283) 147 0.64 10,271 5.54 ($275) ($4,364) $7,200 $8,708 0.00 ($13,072) 0.80 ($1,776)
HPSH (Std Efficiency) (1,644) 169 0.71 11,279 6.01 ($367) ($6,181) $1,020 $1,618 0.00 ($7,799) 4.21 $5,192
HPSH (High Efficiency) (1,348) 169 0.76 12,291 6.57 ($259) ($3,733) $3,951 $6,430 0.00 ($10,162) 1.43 $2,761
Ducted MSHP (1,341) 169 0.76 12,314 6.58 ($257) ($3,679) $1,442 $2,951 0.00 ($6,631) 3.13 $6,289
Ductless MSHP (Std Efficiency) (1,152) 143 0.65 10,417 5.61 ($251) ($3,900) $8,826 $14,274 0.00 ($18,174) 0.61 ($5,499)
Ductless MSHP (High Efficiency) (407) 143 0.77 12,957 7.06 $18 $2,227 $12,410 $20,158 0.11 ($17,931) 0.73 ($5,390)
HPSH + 3kW PV 3,309 169 0.85 28,180 7.57 $361 $10,401 $10,628 $13,192 0.79 ($2,791) 1.21 $2,758
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
240V Fed. Min. HPWH (1,391) 170 0.86 12,273 7.77 ($381) ($6,493) $4,332 $6,554 0.00 ($13,047) 1.64 $4,202
240V Market Std. NEEA HPWH (1,077) 170 0.90 13,361 8.17 ($179) ($1,898) $5,193 $7,967 0.00 ($9,865) 1.64 $5,087
240V Market Std. NEEA HPWH + DR (967) 170 0.92 13,738 8.39 ($129) ($743) $5,193 $7,967 0.00 ($8,710) 1.79 $6,285
120V Market Std. NEEA HPWH (935) 171 0.92 13,893 8.43 ($116) ($452) $2,893 $4,273 0.00 ($4,725) 3.39 $10,213
240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($320) ($5,117) $4,751 $6,973 0.00 ($12,090) 1.49 $3,384
240V Fed. Min. HPWH (Interior Closet) (1,162) 130 0.67 9,069 6.00 ($286) ($4,830) $4,413 $6,634 0.00 ($11,464) 1.16 $1,058
240V Fed. Min. HPWH (Interior Closet,
ducted) (1,355) 180 0.93 13,367 8.37 ($275) ($3,961) $5,492 $7,714 0.00 ($11,675) 1.59 $4,541
240V Fed. Min. HPWH + 3kW PV 3,562 170 1.00 29,174 9.33 $558 $14,917 $13,940 $18,128 0.82 ($3,211) 1.21 $3,800
Page 870 of 888
Cost-Effectiveness Analysis: Central Coast Community Energy 17
California Energy Codes & Standards | A statewide utility program 2024-03-15
4.3 1992-2010 Vintage
Table 16: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary 1992-2010
Table 17: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary 1992-2010
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
DFHP Existing Furnace (1,130) 136 0.61 9,784 5.34 ($130) ($1,209) $2,349 $1,008 0.00 ($2,217) 5.65 $4,692
DFHP New Furnace (1,134) 133 0.59 9,426 5.14 ($138) ($1,437) $7,200 $8,708 0.00 ($10,145) 0.76 ($2,098)
HPSH (Std Efficiency) (1,439) 151 0.65 10,216 5.51 ($239) ($3,515) $1,020 $1,618 0.00 ($5,133) 4.00 $4,859
HPSH (High Efficiency) (1,181) 151 0.69 11,096 5.98 ($129) ($1,004) $3,951 $6,430 0.00 ($7,434) 1.32 $2,078
Ducted MSHP (1,173) 151 0.69 11,126 6.00 ($125) ($919) $1,442 $2,951 0.00 ($3,870) 2.91 $5,623
Ductless MSHP (Std Efficiency) (1,025) 133 0.61 9,762 5.31 ($98) ($540) $8,826 $14,274 0.00 ($14,814) 0.59 ($5,782)
Ductless MSHP (High Efficiency) (388) 133 0.71 11,935 6.50 $166 $5,465 $12,410 $20,158 0.27 ($14,693) 0.67 ($6,588)
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
240V Fed. Min. HPWH (1,392) 170 0.86 12,259 7.77 ($358) ($6,017) $4,332 $6,554 0.00 ($12,570) 1.64 $4,186
240V Market Std. NEEA HPWH (1,077) 170 0.90 13,347 8.17 ($208) ($2,590) $5,193 $7,967 0.00 ($10,557) 1.63 $5,053
240V Market Std. NEEA HPWH + DR (968) 170 0.92 13,724 8.39 ($152) ($1,319) $5,193 $7,967 0.00 ($9,286) 1.79 $6,269
120V Market Std. NEEA HPWH (935) 171 0.92 13,876 8.42 ($136) ($941) $2,893 $4,273 0.00 ($5,213) 3.39 $10,196
240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($376) ($6,432) $4,751 $6,973 0.00 ($13,405) 1.49 $3,384
240V Fed. Min. HPWH (Interior Closet) (1,181) 130 0.66 8,979 5.96 ($331) ($5,899) $4,413 $6,634 0.00 ($12,534) 1.14 $941
240V Fed. Min. HPWH (Interior Closet,
ducted) (1,357) 180 0.93 13,354 8.37 ($327) ($5,187) $5,492 $7,714 0.00 ($12,900) 1.59 $4,524
Page 871 of 888
Cost-Effectiveness Analysis: Central Coast Community Energy 18
California Energy Codes & Standards | A statewide utility program 2024-03-15
Table 18: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary 1992-2010
Table 19: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary 1992-2010
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
30% Air Sealing 4 6 0.04 613 0.33 $25 $729 $4,684 $4,684 0.16 ($3,955) 0.17 ($3,901)
New Ducts: R-6 49 11 0.07 1,267 0.68 $42 $1,109 $4,808 $4,808 0.23 ($3,700) 0.37 ($3,043)
New Ducts: R-8 53 14 0.09 1,530 0.82 $48 $1,282 $6,311 $6,311 0.20 ($5,029) 0.33 ($4,213)
Duct Sealing: 10% 6 5 0.03 523 0.28 $12 $346 $1,400 $1,400 0.25 ($1,054) 0.49 ($718)
Attic Insulation: R-38 4 3 0.02 335 0.18 $8 $227 $1,781 $1,781 0.13 ($1,554) 0.25 ($1,332)
Attic Insulation: R-49 9 6 0.04 628 0.34 $15 $433 $1,827 $1,827 0.24 ($1,395) 0.46 ($978)
Cool Roof (0.20 Ref) (at roof
replacement) 0 (7) (0.04) (718) (0.39) ($14) ($413) $893 $1,203 0.00 ($1,616) 0.00 ($2,069)
Cool Roof (0.25 Ref) (at roof
replacement) (1) (11) (0.06) (1,096) (0.60) ($21) ($636) $1,786 $2,407 0.00 ($3,043) 0.00 ($3,722)
Window Upgrade: 0.28 vs 0.30 U-factor 32 39 0.23 3,968 2.15 $84 $2,423 $11,871 $11,871 0.20 ($9,449) 0.42 ($6,826)
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
3kW PV 3,654 0 0.10 12,468 1.15 $475 $10,820 $9,608 $11,574 0.93 ($754) 0.70 ($3,499)
Page 872 of 888
Cost-Effectiveness Analysis: Central Coast Community Energy 19
California Energy Codes & Standards | A statewide utility program 2024-03-15
Table 20: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary 1992-2010
Table 21: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary 1992-2010
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
DFHP Existing Furnace (1,130) 136 0.61 9,784 5.34 ($321) ($5,572) $2,349 $1,008 0.00 ($6,580) 5.65 $4,692
DFHP New Furnace (1,134) 133 0.59 9,426 5.14 ($329) ($5,794) $7,200 $8,708 0.00 ($14,503) 0.76 ($2,098)
HPSH (Std Efficiency) (1,439) 151 0.65 10,216 5.51 ($407) ($7,359) $1,020 $1,618 0.00 ($8,977) 4.00 $4,859
HPSH (High Efficiency) (1,181) 151 0.69 11,096 5.98 ($314) ($5,234) $3,951 $6,430 0.00 ($11,663) 1.32 $2,078
Ducted MSHP (1,173) 151 0.69 11,126 6.00 ($311) ($5,162) $1,442 $2,951 0.00 ($8,113) 2.91 $5,623
Ductless MSHP (Std Efficiency) (1,025) 133 0.61 9,762 5.31 ($141) ($1,533) $8,826 $14,274 0.00 ($15,807) 0.59 ($5,782)
Ductless MSHP (High Efficiency) (388) 133 0.71 11,935 6.50 $89 $3,706 $12,410 $20,158 0.18 ($16,452) 0.67 ($6,588)
HPSH + 3kW PV 3,514 151 0.78 27,117 7.07 $323 $9,292 $10,628 $13,192 0.70 ($3,900) 1.19 $2,475
Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C
Ratio NPV
240V Fed. Min. HPWH (1,392) 170 0.86 12,259 7.77 ($393) ($6,807) $4,332 $6,554 0.00 ($13,361) 1.64 $4,186
240V Market Std. NEEA HPWH (1,077) 170 0.90 13,347 8.17 ($268) ($3,956) $5,193 $7,967 0.00 ($11,923) 1.63 $5,053
240V Market Std. NEEA HPWH + DR (968) 170 0.92 13,724 8.39 ($217) ($2,801) $5,193 $7,967 0.00 ($10,769) 1.79 $6,269
120V Market Std. NEEA HPWH (935) 171 0.92 13,876 8.42 ($205) ($2,508) $2,893 $4,273 0.00 ($6,781) 3.39 $10,196
240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($408) ($7,166) $4,751 $6,973 0.00 ($14,139) 1.49 $3,384
240V Fed. Min. HPWH (Interior Closet) (1,181) 130 0.66 8,979 5.96 ($383) ($7,073) $4,413 $6,634 0.00 ($13,708) 1.14 $941
240V Fed. Min. HPWH (Interior Closet,
ducted) (1,357) 180 0.93 13,354 8.37 ($365) ($6,044) $5,492 $7,714 0.00 ($13,757) 1.59 $4,524
240V Fed. Min. HPWH + 3kW PV 3,562 170 1.00 29,160 9.33 $468 $12,827 $13,940 $18,128 0.71 ($5,301) 1.21 $3,767
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4.4 Sensitivities
Table 22 shows the On-Bill NPV results of Climate Zone 5 with 3CE utility rates and the impacts of escalation rates for
select cases. The “Standard Results” in Table 22 assumes the escalation rates used in the analysis presented
elsewhere in this report. Table 23 shows the impact of electrical panel upgrades. The “Standard Results” in Table 23
does not assume a panel upgrade is required. Both cases in Table 23 are based on the escalation rates used in the
analysis presented elsewhere in this report.
Table 22. Sensitivity Analysis Results for On-Bill NPV
Measure Vintage Standard
Results
2025 LSC
Escalation
DFHP Existing Furnace 1992-2010 ($2,217) $1,935
DFHP New Furnace 1992-2010 ($10,145) ($6,117)
HPSH (Std Efficiency) 1992-2010 ($5,133) ($669)
HPSH (High Efficiency) 1992-2010 ($7,434) ($2,838)
Ducted MSHP 1992-2010 ($3,870) $730
HPSH + 3kW PV 1992-2010 ($3,900) $1,238
240V Fed. Min. HPWH 1992-2010 ($12,570) ($8,539)
240V Market Std. NEEA HPWH 1992-2010 ($10,557) ($6,946)
240V Market Std. NEEA HPWH + DR 1992-2010 ($9,286) ($5,730)
120V Market Std. NEEA HPWH 1992-2010 ($5,213) ($1,715)
240V Fed. Min. HPWH (Exterior Closet) 1992-2010 ($13,405) ($9,369)
240V Fed. Min. HPWH (Interior Closet) 1992-2010 ($12,534) ($10,102)
240V Fed. Min. HPWH (Interior Closet, ducted) 1992-2010 ($12,900) ($8,604)
240V Fed. Min. HPWH + 3kW PV 1992-2010 ($5,301) $554
30% Air Sealing Pre-1978 ($3,151) ($2,262)
R-6 Ducts Pre-1978 ($379) $1,649
R-8 Ducts Pre-1978 ($1,677) $457
10% Duct Sealing Pre-1978 ($75) $1,230
R-13 Wall Insulation Pre-1978 $653 $2,616
R-38 Attic Insulation Pre-1978 ($3,793) ($2,317)
R-49 Attic Insulation Pre-1978 ($4,194) ($2,582)
R-30 Raised Floor Insulation Pre-1978 $1,898 $5,830
Cool Roof (0.20 Ref) (at roof replacement) Pre-1978 ($1,860) ($2,356)
Table 23. Electric Panel Upgrade Sensitivity [Pre-1978]
Measure Standard Results Electric Panel Upgrade
On-Bill NPV LSC NPV On-Bill NPV LSC NPV
HPSH (Std Efficiency) ($8,298) $7,900 ($13,368) $5,120
240V Fed. Min. HPWH ($11,721) $4,252 ($14,600) $1,472
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5 Summary
This analysis evaluated the feasibility and cost-effectiveness of retrofit measures in California existing homes built
before 2010. The Statewide Reach Codes Team used both On-Bill and LSC-based LCC approaches to evaluate cost-
effectiveness and quantify the energy cost savings associated with energy efficiency measures compared to the
incremental costs associated with the measures.
Conclusions and Discussion:
1. Heat pump space heating: HPSHs were found to be LSC cost-effective in most cases, but not On-Bill cost-
effective in any case. Cost-effectiveness for the ductless MSHP cases was poorer and was found to be LSC
cost-effective for only the pre-1978 vintage for high efficiency equipment.
a. Challenges to On-Bill cost-effectiveness include higher first costs and higher first-year utility costs due
to higher electricity tariffs relative to gas tariffs.
b. Ductless MSHPs, evaluated for homes with existing ductless systems, have a high incremental cost
because they are a more sophisticated system than the base model of a wall furnace with a window
AC unit. However, the ductless MSHP would provide greater comfort benefits if properly installed to
directly condition all habitable spaces (as is required under the VCHP compliance credit as evaluated
in this study) which may be an incentive for a homeowner to upgrade their system.
c. Higher efficiency equipment lowered utility costs in all cases and improved cost-effectiveness in
many cases, particularly with a ducted MSHP.
2. Heat pump water heating: All the HPWH measures were LSC cost-effective but were not On-Bill cost-effective
for all three vintages. The HPWH measures share many of the same challenges as the HPSH measures to
achieving cost-effectiveness including high first costs and utility rates and assumptions.
a. Various HPWH locations were also explored, however there are some factors outside of cost-
effectiveness that should also be considered.
i. HPWHs in the conditioned space can provide benefits such as free-cooling during the
summer, reduced tank losses, and shorter pipe lengths, and in some cases show improved
cost-effectiveness over garage located HPWHs. However, there are various design
considerations such as noise, comfort concerns, and condensate removal. Ducting the inlet
and exhaust air resolves comfort concerns but adds costs and complexity. Split heat pump
water heaters address these concerns, but currently there are limited products on the market
and there is a cost premium relative to the packaged products.
ii. Since HPWHs extract heat from the air and transfer it to water in the storage tank, they must
have adequate ventilation to operate properly. Otherwise, the space cools down over time,
impacting the HPWH operating efficiency. This is not a problem with garage installations but
needs to be considered for water heaters located in interior or exterior closets. For the 2025
Title 24 code the CEC is proposing that all HPWH installations meet mandatory ventilation
requirements (California Energy Commission, 2023).
3. Envelope measures: Improving envelope performance can be very cost-effective in older homes. However,
none of the envelope measures were found to be cost-effective in homes built 1978 and later. In addition to
reducing utility costs these measures provide many other benefits such as improving occupant comfort and
satisfaction and increasing a home’s ability to maintain temperatures during extreme weather events and
power outages. Below is a discussion of the results of specific measures for the pre-1978 vintage.
a. Adding new ducts with R-6, R-8 or duct sealing to 10% showed to be cost effective based on LSC only.
b. Adding attic insulation was not cost effective based on either metric.
c. Wall insulation showed to be cost effective On-Bill and on LSC.
d. Adding R-19 or R-30 floor insulation was cost-effective On-Bill and on LSC.
e. Upgrading to a cool roof at roof replacement with 0.2 or 0.25 solar reflectance was shown to not be
cost effective. This is expected in Climate Zone 5 where heating loads dominate since cool roofs
increase heating energy use by reducing solar heat gain through the roof and attic.
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f. Replacing old single pane windows with new high-performance windows has a very high cost and is
typically not done for energy savings alone. However, energy savings showed to be substantial, even
though it is not cost-effective.
4. The contractor surveys revealed overall higher heat pump costs than what has been found in previous
analyses. This could be due to incentive availability raising demand for heat pumps and thereby increasing
the price. This price increase may be temporary and may come down once the market stabilizes.
5. Table 22 shows how escalation rate assumptions will impact cost-effectiveness.
a. If gas tariffs are assumed to increase substantially over time, in-line with the escalation assumption
from the 2025 LSC development, cost-effectiveness substantially improves for the heat pump
measures as well as envelope and duct measures over the 30-year analysis period and many cases
become cost-effective that were not found to be cost-effective under the CPUC / 2022 TDV escalation
scenario. There is much uncertainty surrounding future tariff structures as well as escalation values.
While it’s clear that gas rates will increase, how much and how quickly is not known. Future
electricity tariff structures are expected to evolve over time, and the CPUC has an active proceeding
to adopt an income-graduated fixed charge that benefits low-income customers and supports
electrification measures for all customers.4 The CPUC will decide in mid-2024 and the new rates are
expected to be in place later that year or in 2025. While the anticipated impact of this rate change is
lower volumetric electricity rates, the rate design is not finalized. While lower volumetric electricity
rates provide many benefits, it also will make building efficiency measures harder to justify as cost-
effective due to lower utility bill cost savings.
6. Under NBT, utility cost savings for PV are substantially less than what they were under prior net energy
metering rules (NEM 2.0); However, savings are sufficient to be On-Bill cost-effective for vintages pre-1978
and 1978-1991.
a. Combining a heat pump with PV allows the additional electricity required by the heat pump to be
offset by the PV system while also increasing on-site utilization of PV generation rather than
exporting the electricity back to the grid at a low rate.
b. While not evaluated coupling PV with battery systems can be very advantageous under NBT
increasing utility cost savings because of improved on-site utilization of PV generation and fewer
exports to the grid.
4 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-response-dr/demand-flexibility-
rulemaking
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Cost-Effectiveness Analysis: Central Coast Community Energy 23
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6 References
California Energy Commission. (2023). 2025 Energy code Hourly Factors. Retrieved from
https://www.energy.ca.gov/files/2025-energy-code-hourly-factors
California Energy Commission. (2023). Draft 2025 Energy Code Express Terms. Retrieved from
https://efiling.energy.ca.gov/GetDocument.aspx?tn=252915&DocumentContentId=88051
California Public Utilities Commission. (2021a). Utility Costs and Affordability of the Grid of the Future: An Evaluation
of Electric Costs, Rates, and Equity Issues Pursuant to P.U. Code Section 913.1. Retrieved from
https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/office-of-governmental-affairs-
division/reports/2021/senate-bill-695-report-2021-and-en-banc-whitepaper_final_04302021.pdf
Statewide Reach Codes Team. (2024). 2022 Cost-Effectiveness Study: Existing Single Family Building Upgrades.
Prepared by Frontier Energy. . Retrieved from Not yet published
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7 Appendices
7.1 Map of California Climate Zones
Climate zone geographical boundaries are depicted in Figure 1. The map in Figure 1 along with a zip-code search
directory is available at: https://ww2.energy.ca.gov/maps/renewable/building_climate_zones.html
Figure 1. Map of California climate zones.
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7.2 Utility Rate Schedules
The Reach Codes Team used 3CE electricity and SoCalGas gas tariffs detailed below to determine the On-Bill savings
for each package.
7.2.1 Central Coast Community Energy – Electricity
Following are the 3CE tariffs applied in this study. The E-TOU-C and E-Elec rate was applied to PG&E territory T,
climate zone 5.5 Table 24 and Table 25 provide a comparison of the generation rates and total effective rates
comparing 3CE and PG&E’s standard E-TOU-C rate and electric E-Elec rate.
The 2019 PCIA charge was used based on feedback from SLO staff.
Table 24: Comparison of 3CE and PG&E’s E-TOU-C Rates
PG&E/3CE Comparison Summer
Peak
Summer
Part-Peak
Summer
Off-Peak
Winter
Peak
Winter
Part-Peak
Winter
Off-Peak
PG&E Bundled Generation
Rate ($/kWh) (No PCIA
Charge)
$0.22387 0 $0.16043 $0.17528 0 $0.15025
3CE Bundled Generation Rate
($/kWh) (No PCIA Charge) $0.22422 0 $0.09322 $0.18422 0 $0.10022
Bundled Generation Rate %
Difference (0.2%) 0 42% (5%) 0 33%
PG&E Total Rate ($/kWh) $0.61806 0 $0.53462 $0.51536 0 $0.48701
3CE Total Rate ($/kWh) $0.61794 0 $0.46694 $0.52383 0 $0.43651
Total Rate % Difference .02% 0 13% (2%) 0 10%
Table 25: Comparison of 3CE and PG&E’s E-Elec Rates
PG&E/3CE Comparison Summer
Peak
Summer
Part-Peak
Summer
Off-Peak
Winter
Peak
Winter
Part-Peak
Winter
Off-Peak
PG&E Bundled Generation
Rate ($/kWh) (No PCIA
Charge)
$0.30550 $0.20639 $0.16129 $0.14337 $0.12340 $0.11005
3CE Bundled Generation Rate
($/kWh) (No PCIA Charge) $0.22422 $0.11122 $0.09022 $0.18422 $0.11222 $0.09922
Bundled Generation Rate %
Difference 27% 46% 44% (28%) 9% 10%
PG&E Total Rate ($/kWh) $0.63580 $0.47392 $0.41724 $0.40429 $0.38220 $0.36834
3CE Total Rate ($/kWh) $0.55405 $0.37828 $0.34570 $0.44467 $0.37055 $0.35704
Total Rate % Difference 13% 20% 17% (10%) 3% 3%
5ELEC_SCHEDS_E-TOU-C.pdf (pge.com)
ELEC_SCHEDS_E-ELEC.pdf (pge.com)
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7.2.2 SoCalGas – Gas
The SoCalGas monthly gas rate in $/therm applied in this analysis is shown in Table 26. The gas rates were developed
based on the latest available gas rate for February 2024 and a curve to reflect how natural gas prices fluctuate with
seasonal supply and demand. The seasonal curve was estimated from SoCalGas’s monthly residential tariffs between
2014 and 2023. 12-month curves were created from monthly gas rates for each of the ten years. The ten annual
curves were then averaged to arrive at an average normalized annual curve. Long-term historical natural gas rate
data was only available for SoCalGas’ procurement charges.6 The baseline and excess transmission charges were
found to be consistent over the course of a year and applied for the entire year based on February 2024 rates. The
costs presented in Table 26 were then derived by establishing the February baseline and excess rates from the latest
2024 tariff as a reference point, and then using the normalized curve to estimate the cost for the remaining months
relative to the February rates.
Table 26: SoCalGas Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
Jan $1.73685 $2.16346
Feb $1.46941 $1.89602
Mar $1.40304 $1.82965
Apr $1.33281 $1.75942
May $1.35857 $1.78518
June $1.40441 $1.83102
July $1.42375 $1.85036
Aug $1.48077 $1.90738
Sept $1.42813 $1.85474
Oct $1.39955 $1.82616
Nov $1.44858 $1.87519
Dec $1.53152 $1.95813
6 The SoCalGas procurement and transmission charges were obtained from the following site:
https://www.socalgas.com/for-your-business/energy-market-services/gas-prices
RES2023.xlsx (live.com)
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7.2.3 Fuel Escalation Rates
The average annual escalation rates in Table 27 were used in this study. The electricity and natural gas rates are
based on assumptions from the CPUC 2021 En Banc hearings on utility costs through 2030 (California Public Utilities
Commission, 2021a). Escalation rates through the remainder of the 30-year evaluation period are based on the
escalation rate assumptions within the 2022 TDV factors. No data was available to estimate electricity escalation
rates for 3CE, therefore electricity escalation rates for PG&E and statewide natural gas escalation rates were applied.
Table 28 presents the average annual escalation rates used in the utility rate escalation sensitivity analysis shown in
Section 4.4. Rates were applied for the same 30-year period and are based on the escalation rate assumptions within
the 2025 LSC factors from 2027 through 2053.7 These rates were developed for electricity use statewide (not utility-
specific) and assume steep increases in gas rates in the latter half of the analysis period. Data was not available for
the years 2024, 2025, and 2026 and so the CPUC En Banc assumptions were applied for those years using the average
rate across the three IOUs for statewide electricity escalation.
Table 27: Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis
7https://www.energy.ca.gov/files/2025-energy-code-hourly-factors. (California Energy Commission, 2023). Actual escalation factors
were provided by consultants E3.
Year
Statewide Natural
Gas Average Rate
(%/year, real)
PG&E Electric
Average Rate
(%/year, real)
2024 4.6% 1.8%
2025 4.6% 1.8%
2026 4.6% 1.8%
2027 4.6% 1.8%
2028 4.6% 1.8%
2029 4.6% 1.8%
2030 4.6% 1.8%
2031 2.0% 0.6%
2032 2.4% 0.6%
2033 2.1% 0.6%
2034 1.9% 0.6%
2035 1.9% 0.6%
2036 1.8% 0.6%
2037 1.7% 0.6%
2038 1.6% 0.6%
2039 2.1% 0.6%
2040 1.6% 0.6%
2041 2.2% 0.6%
2042 2.2% 0.6%
2043 2.3% 0.6%
2044 2.4% 0.6%
2045 2.5% 0.6%
2046 1.5% 0.6%
2047 1.3% 0.6%
2048 1.6% 0.6%
2049 1.3% 0.6%
2050 1.5% 0.6%
2051 1.8% 0.6%
2052 1.8% 0.6%
2053 1.8% 0.6%
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Table 28: Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis
Year
Statewide Natural
Gas Residential
Average Rate
(%/year, real)
Statewide
Electricity
Residential
Average Rate
(%/year, real)
2024 4.6% 2.1%
2025 4.6% 2.1%
2026 4.6% 2.1%
2027 4.2% 0.6%
2028 3.2% 1.9%
2029 3.6% 1.6%
2030 6.6% 1.3%
2031 6.7% 1.0%
2032 7.7% 1.2%
2033 8.2% 1.1%
2034 8.2% 1.1%
2035 8.2% 0.9%
2036 8.2% 1.1%
2037 8.2% 1.1%
2038 8.2% 1.0%
2039 8.2% 1.1%
2040 8.2% 1.1%
2041 8.2% 1.1%
2042 8.2% 1.1%
2043 8.2% 1.1%
2044 8.2% 1.1%
2045 8.2% 1.1%
2046 8.2% 1.1%
2047 3.1% 1.1%
2048 -0.5% 1.1%
2049 -0.6% 1.1%
2050 -0.5% 1.1%
2051 -0.6% 1.1%
2052 -0.6% 1.1%
2053 -0.6% 1.1%
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adoption of new equipment, technologies, code compliance, and energy savings strategies.
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Our experts develop robust toolkits as well as provide specific technical assistance to local jurisdictions (cities
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Page 888 of 888
1
City Council Public Hearing
May 21, 2024
2
1.Introduce a Draft Ordinance,entitled,“An Ordinance of the City
Council of the City of San Luis Obispo,California,adopting Local
Amendments to Part 6 of the Building Construction and Fire
Prevention Code,2023”approving the Energy Efficient Renovations
Policy for major residential additions and alterations.
3
4
•Conservation and Open Space Element
•Policy 2.2.1 (Atmospheric Change)
•Land Use and Circulation Element
•Policy 9.4 – (Climate Action Plan)
•Policy 9.7 (Sustainable Design)
•Climate Adaptation and Safety Element
•Policy HE-4.3 (Green and Healthy Building
5
•Community carbon neutrality by 2035
•Reduce emissions from existing
buildings in half by 2030
•Develop an equitable framework for
cost-effective building energy retrofit
policies
•December 2023 Study Session on
Buildings Energy Retrofit Policy
6
Gas Furnace
House Illustration source: Southern California Edison
Building
Envelope
7
•Municipal operations to be
carbon neutral by 2030
•Created in response to
community feedback
•Implementation in-progress
and ongoing
8
9
10
•Major Addition - Any change to an existing building that increases
conditioned floor area by 500 or more square feet.
•Major Alteration - Any construction or renovation to an existing structure
other than a repair whose work area covers 500 or more square feet of
the total floor area of the existing building.
•Major Addition and Alteration – Any project whose combined addition
and alteration has a work area equal to or greater than 500 square feet.
•Compliance Period - Per the draft ordinance, work that is completed
within a one-year period would count toward the thresholds noted above.
•Large construction projects - requires a building permit and must comply
with existing local and statewide requirements and typically requires an
architect, engineer, and energy code compliance expertise. The
contractor team will typically include, at a minimum, a general contractor,
electrician, and plumber.
11
1.Energy Efficiency Requirements: Upgrade to LED lighting (interior and exterior) and
select from:
2.Zero Emission Readiness Requirements: reserved breakers, conduit and wiring
runs, and labeled outlets adjacent to future water heating and HVAC systems
1.Energy Efficiency Measures Totaling 8 Points or More
Water Heating Package 1
Air Sealing 1
R-49 Attic Insulation 2
Duct Sealing 2
New Ducts + Duct Sealing 4
Windows 3
R-19 Floor Insultation 8
R-30 Floor Insulation 10
2. Heat Pump Hot Water Heater
3. Heat Pump HVAC
4. Solar Energy System
12
Local Example
•1,000 ft single family home
•Adds 550 square feet in a second story with two new
bedrooms and a full bathroom
•Electively upgrades electrical service and installs new panel
•Project valuation reported at $230,000
Compliance Example
•Project chooses a heat pump hot water heater to comply,
adds electric circuits and outlet, and LED lightbulbs
•Total compliance cost = $5,000 - $15,000 (+~2-6% cost
increase).
•Cost effective measures
•Rebates and incentives up to approximately $5,000 (much
higher if low-moderate income)
13
Local Example
•1,400 ft single family home
•Alters 700 square feet of home, including converting 2
bedrooms, living room area, and a hallway into 3 bedrooms
and adding a new bathroom with new water heater
•No alteration to the electrical service
•Project valuation reported at $100,000
Compliance Example
•Project chooses a heat pump hot water heater to comply and
installs LED lighting
•Total compliance cost = $5,000 (+~5% cost increase)
•Measures are cost effective
•Rebates and incentives up to approximately $5,000 (much
higher if low-moderate income)
14
1.Repairs
2.Hardship
3.Pre-Compliance
4.Historic Buildings
5.Hazard Mitigation
6.Roof and Windows
7.New Units
15
•The California Energy Commission (CEC) requires
any local energy standards that exceed the California
Energy Code to be cost effective and to use less
energy than the state requirements.
•The CEC requires the local agency to adopt a
determination, at a public meeting, that the energy
standards are cost effective. Staff has provided
recommended findings that meet these standards in
the Council Agenda Report and in the draft
Ordinance.
•At least five compliance pathways exist that are cost
effective.
•Mult-family report in progress.
16
In support of the proposed reach code, staff
conducted community outreach as follows:
•Neighborhood workshops
•Community survey
•Chamber of Commerce
•Climate Coalition
•Central Coast Community Energy
•3C-REN
•Contractors
•Construction Board of Appeals
•Developer’s Roundtable
17
Ordinances that amendment the California
Building Standards must be considered in the
full context of the standard
•Local Energy Standards are adopted
under Municipal Code Section 15.02
•Amendments to specific standards are
found under section 15.04
•This approach is consistent with the City's
approach to amending other building
standards
18
These amendments are anticipated to impact 10 to 15 projects a year
•This volume will allow staff to ensure delays are not caused in the permit process
for these projects without having to add additional resources
•The proposed approach will not impact the development of new housing units
•The affected population groups are expected to be homeowners and house
flippers
•An analysis of recent applications show that 70-80% of projects substansially
comply with the provisions of these amendments
19
Multifamily and ADUs buildings are not a part of the scope of this ordinance
•These buildings are more technically complicated from construction perspective
•There are complexities regarding disrupting existing living spaces for tenants
•Cost effectiveness studies have not yet been completed for multifamily
•Staff received feedback from community stakeholders regarding the impact on the
development of new housing units
•There are concerns over delays in construction of new ADUs if retrofit work is
required to be performed in existing occupied units
20
21
1.Council could decide not to adopt the ordinance. Staff does not recommend this
alternative as the Policy is supportive of achieving the goal of reducing emissions from
existing buildings in half by 2030.
2.Council could provide direction to staff to continue to work on the ordinance to
explore the inclusion of new ADUs and multifamily units. Upon receiving this
direction, staff would continue to work on the policy and return at a later date with options
to address multi-family units and ADUs.
3.Council could provide direction on program specifics including definitions,
compliance measures, exemptions, and effective date. Staff requests that Council
provide specific direction on proposed changes.
4.Council could provide direction to delay reach code adoption to coincide with the
2025 California Building Code update. The 2025 code would be adopted in late 2025
and would go into effect in 2026, which would delay implementation by one year.
22
1.Introduce a Draft Ordinance, entitled, “An Ordinance of the City
Council of the City of San Luis Obispo, California, adopting Local
Amendments to Part 6 of the Building Construction and Fire
Prevention Code, 2023” approving the Energy Efficient Renovations
Policy for major residential additions and alterations.
23
24
Type of ADU Number of Permits (23-24)Applicable Energy Standards
New Detached 27 Title 24 & SLO 2024 Reach Code
New ADU in Existing Strucutres 37 Title 24
ADUs are being built in the following manner:
•Conversion of existing spaces – 25/37 applications
•Unconditioned Spaces (garage conversions): The Energy Code views
new ADUs in existing unconditioned space similar to new construction
•Conditioned Spaces: The Energy Code regulates the specific new
equipment and materials in existing altered spaces
•Additions to existing structures – 12/37 applications
•The Energy Code regulates the new ADU unit but does not impose requirements
on the existing building.