Energy Efficiency State Policy: 2014 Legislative Update

1/15/2015

Light blubIn the 2014 legislative session, states continued to explore low-cost approaches to meeting energy needs and promoting economic growth, considering more than 800 bills related to energy efficiency.

Legislatures in at least 37 states and Washington, D.C., enacted more than 100 bills related to building energy codes, including: energy use in publicly owned or operated buildings; efficient building initiatives for new construction or retrofits; state energy efficiency policies; financing energy efficiency; education and outreach; and additional policy areas.

Building Energy Codes

States are strengthening building energy codes to help owners and renters reap the economic and comfort benefits of improved heating and cooling systems, insulation and ventilation. Currently, 44 states, Washington, D.C., and four territories have established state building energy codes for commercial buildings. Forty-three states, Washington, D.C., and four territories have state building energy codes for residential buildings. In the 2014 session, at least 10 states and Washington, D.C., enacted legislation to modify building energy codes, including Alaska, Connecticut, Florida, Hawaii, Idaho, Illinois, Mississippi, North Carolina, New Hampshire, South Carolina and Washington, D.C.

Examples of enacted legislation include:

  • Legislation in Alaska established the Alaska Housing Finance Corporation as the authorizing agency to approve home energy rating systems for the state beginning in July 2014. Alaska currently does not have a statewide building energy code for either commercial or residential buildings, but localities can adopt codes.
  • Florida legislation required the Florida Building Commission to adopt requirements for the construction and modification of manufactured buildings and building modules. The bill also modified the definition of a building energy efficiency rating system to include specific, measurable criteria and oversight.
  • A Hawaii bill requires the State Building Council to adopt or update building codes and standards at least once every six years and provide yearly reports to the governor. The bill requires buildings to comply with codes one year after the council’s adoption of a new code, with certain exceptions.
  • Idaho legislation authorized the State Building Code Board to adopt updated versions of the International Residential Building Code and the International Energy Conservation Code. The codes, including the board’s amendments, revisions and modifications, will serve as the Idaho Residential Building Code and the Idaho Energy Conservation Code, respectively. Further editions or amendments to the code will be made through the state board’s code adoption process. Legislative intent states the board would adopt the current versions of both codes.
  • Illinois legislation created the Community Stabilization Assessment Freeze Pilot Program, allowing chief county assessment officers to reduce the assessed value of improvements to residential buildings in certain conditions. Among the requirements, residences must meet local building codes or the U.S. Department of Housing and Urban Development’s Housing Quality Standards or must complete substantial rehabilitations, including energy conservation improvements and installation of Energy Star appliances.
  • Legislation in Mississippi required counties and municipalities to adopt building codes that have been amended and adopted from the Mississippi Building Codes Council, including one of the three most recent editions of the International Building Codes, one of the three most recent editions of the International Residential Code, and other codes for electrical, plumbing, mechanical, fire and fuel gas building aspects.
  • A council bill in Washington, D.C., modified existing policies on the disclosure of energy benchmarking data to include benchmarking data requirements, use of the Energy Star Portfolio Manager account and provisions regarding the sale of a green building.

Public Buildings

energy efficient buildingAn increasing number of states are adopting energy efficiency mandates and incentives for state-owned or funded buildings through legislation or executive order that extend beyond the state energy code. Common standards include those established by the U.S. Green Building Council’s Leadership in Energy & Environmental Design (LEED), American Society of Heating, Refrigerating and Air‑Conditioning Engineers (ASHRAE), Green Globes and the U.S. Environmental Protection Agency’s Energy Star. In the 2014 legislative session, at least 18 states enacted legislation concerning the energy efficiency in state buildings. Bills were enacted in California (Assembly Bill 1478 and Senate Bill 862), Florida, Georgia (House Resolution 1185 and House Resolution 1208), Hawaii, Iowa, Illinois, Indiana, Kentucky (House Bill 235, House Resolution 261, Senate Bill 70 and Senate Resolution 60), Massachusetts, Maryland, Missouri, Nebraska, New Jersey, Ohio, Pennsylvania, South Carolina (House Bill 3592 and Senate Bill 975), Tennessee and Vermont.

Examples include:

  • A California bill established an Energy Efficiency Retrofit State Revolving Fund for energy efficiency retrofits and renewable energy projects in state-owned buildings and facilities. Legislation authorized the State Energy Resources Conservation and Development Commission to recover project costs for the fund through interest earnings, rather than through energy utility rebates.
  • Legislation in Kentucky expanded guaranteed energy savings performance contracts to make state property, other than government buildings, eligible for financing contracts. For more information on energy savings performance contracting, please see “Financing Energy Efficiency” below.
  • Missouri legislation raises the cap on the amount of revenue bonds issues by the State Board of Public Buildings by $400 million dollars; with a specific exception, the increase in the cap can only be used for the renovation or repair of existing buildings or facilities. The legislation also raises the cap on the amount of revenue bonds issues by the State Board of Public Buildings for projects at public higher education institutions; the increase in the cap can only be used for the renovation or repair of existing buildings or facilities.
  • A bill in Pennsylvania authorized the testing of new, environmentally beneficial and energy efficiency products and technology within state agencies through the State Agency Green Technology Implementation Act. Legislation states the product or technology must have demonstrated energy savings benefits.
  • Legislation in South Carolina required the state to adopt the current Green Building Initiative and U.S. Green Building Council's Leadership in Energy and Environmental Design rating systems for major facility projects. The bill also established the Energy Independence and Sustainable Construction Advisory Committee to review building rating systems and make recommendations for future rating systems adoptions.
  • A Vermont bill, in addition to appropriating funds for energy efficiency improvements in state buildings, directed the Commissioner of Buildings and General Services to develop criteria and guidelines to evaluate and incorporate energy efficiency resources in buildings and facilities leased by the state. Legislation also required the Commissioner to develop and implement procedures for defining and allocating responsibility for future construction of state-owned or lease buildings and facilities.
  • Additionally, bills in Florida, Georgia, Kentucky, Illinois, Ohio, South Carolina and Tennessee concerned energy efficiency in schools and initiatives such as the U.S. Green Building Council’s Green Apple Day of Service, which works to transform schools into healthy, safe and productive learning environments through service projects.

Efficient Buildings

energy efficient buildingIn addition to building energy codes and efficiency requirements for state buildings, states are encouraging or incentivizing policies to increase green building initiatives. Legislation was enacted in Delaware, Louisiana, Maryland, New York and Washington, D.C. (Resolution 577 and Resolution 578) in 2014.

  • Delaware re-established the Green and Better Building Advisory Committee and established an advisory role for the committee to review legislation that relates to healthy and high performance green buildings, as well as sustainable land use issues. The Committee is assigned to provide current research and advice to the General Assembly.
  • Legislation in Maryland modified the definition of a high performance building to include the requirement that a building must meet standards recommended by the Maryland Green Building Council. The bill also requires the State Green Building Council to establish a process for receiving public input in its recommendations.

Efficiency Policies

building constructionNumerous states enacted legislation on energy efficiency policies, including Energy Efficiency Resource Standards, statewide coordination of efficiency efforts, planning councils and comprehensive efficiency efforts. In at least two states—Indiana and Ohio—legislatures reduced energy efficiency requirements, while a number of other states expanded energy efficiency efforts. Legislation was enacted in at least 17 states: Colorado, Hawaii (House Resolution 32, House Resolution 167 and Senate Bill 2196), Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Minnesota, New Hampshire, New York, Ohio, Rhode Island (House Bill 7545 and companion Senate Bill 2686, House Bill 8172 and companion Senate Bill 3088), Tennessee, Vermont (House Bill 823, Senate Bill 202 and Senate Bill 220), Virginia and Washington.

Examples include:

  • Three bills in Hawaii supported or increased energy efficiency planning in the state. One bill requested the Public Utilities Commission and the Department of Business, Economic Development and Tourism to develop a forecasting program to better align energy efficiency and renewable energy efforts with technological innovations. Another bill urged the Public Utilities Commission to establish energy efficiency and conservation programs for agricultural activities, and to develop incentives for agricultural users that can shift power consumption to off-peak times or encourage participation in demand response. A third bill reestablished the Energy Systems Development Special Fund for developing an integrated approach to management of renewable energy and energy efficiency technology projects.
  • Legislation in Indiana repealed the state’s energy efficiency standard. The 2-year old mandate for demand-side management had required investor-owned utilities to reduce electricity sales 2 percent by 2019. The program was originally authorized by the Indiana Utility Regulatory Commission and did not originate in the legislature.
  • Kansas legislation created the Energy Efficiency Investment Act, authorizing the state Corporation Commission to permit utilities to implement energy efficiency and demand-side programs. The Commission must consider the cost-effectiveness of programs, except for programs that target low-income customers. Legislation established for utility cost recovery, severing a direct connection between electricity sales and utility profits that would serve as a disincentive for energy efficiency. The Commission is also permitted to allow additional cost recovery mechanisms.
  • A bill in Kentucky funded energy efficiency technical assistance programs for manufacturing facilities and authorized bonds to assist facilities increase energy efficiency through guaranteed energy savings contracts. The Department for Local Government is required to establish an information clearinghouse to educate facility owners on industrial revenue bonds.
  • New Hampshire legislation directed the Office of Energy and Planning, the Department of Environmental Services and the Public Utilities Commission to identify means to maximize cost-effective energy efficiency across all energy use sectors, including electric consumption, heating homes and buildings and transportation. The organizations will be responsible for developing recommendations for policies, programs, and education and outreach.
  • Legislation in Ohio suspended the state’s Alternative Energy and Energy Efficiency Resource Standards. The suspension created a two-year freeze on the state’s requirement for utilities to purchase 12.5 percent of their electricity from renewable energy sources by 2025 and a requirement for investor-owned utilities to reduce electricity demand 22 percent by 2025, while a panel studies the costs and benefits of the requirement.
  • A bill in Tennessee required the University of Tennessee to perform a study on the economic feasibility of creating and utilizing a statewide comprehensive energy policy that includes promotion of energy conservation, among other measures.
  • Vermont legislation established that excess amounts raised from the energy efficiency charge will be used for thermal energy efficiency programs.

Financing Energy Efficiency

electric meterFinancing can help eliminate upfront cost barriers to energy efficiency by allowing consumers to complete energy-efficient upgrades and then pay installation and technology costs over a longer time frame. Energy performance contracting, on-bill financing or on-bill repayment, Property Assessed Clean Energy (PACE) financing, “green” state energy banks, bonds, loans and tax incentives are some of the vehicles states are using to achieve this.

At least five states enacted legislation concerning energy savings performance contracts, also known as guaranteed energy savings contracts: Colorado, Kentucky (House Bill 235 and Senate Bill 70), Mississippi, New Mexico and North Carolina.

  • A bill in Colorado permitted the aggregation of energy efficiency or renewable energy projects in small or rural communities or schools to better attract private sector financing through energy service companies.
  • Legislation in Mississippi authorized state agencies and public universities to enter into energy savings performance contracts for up to 20 years. 

California and Minnesota enacted legislation concerning on-bill financing or on-bill repayment programs. While California legislation expanded on-bill financing programs to include water efficiency, a Minnesota bill authorized on-bill repayment for all electric and gas utility customers for energy conservation improvements and certain renewable energy sources.

At least six states enacted legislation concerning Property Assessed Clean Energy (PACE) financing in the 2014 session. Bills were enacted in California (Assembly Bill 1883 and Assembly Bill 2597), Connecticut, Delaware, Maryland (House Bill 202 and companion Senate Bill 186), New Hampshire and Oregon. Bills in California, New Hampshire and Oregon concerned the mortgage underwriting in residential PACE programs. Several states are attempting to renew or modify residential PACE following Federal Housing and Finance Administration opposition to the primary underwriting of PACE loans.

At least six states enacted legislation for bonds or loans to increase energy efficiency financing. Florida, Kentucky, Minnesota and Oregon enacted bond-related legislation for energy efficiency, while Maryland (House Bill 553, House Bill 1165 and Senate Bill 875), Minnesota and Vermont enacted loan-related legislation for energy efficiency.

  • Legislation in Maryland establishes an energy-efficient home construction loan program and fund.
  • A Vermont bill granted the state treasurer flexibility in structuring a credit facility through the Vermont Economic Development Authority to provide funds for sustainable energy projects through the Vermont Clean Energy Loan Fund.

State energy banks are public-private partnerships that combine public funding with private capital and expertise to promote renewable and efficient energy technology. In the 2014 legislative session, Maryland enacted legislation requiring the state Clean Energy Center, in collaboration with the Energy Administration, to conduct a study of green banks and clean bank financing initiatives. The legislation required the Clean Energy Center to consult with specific entities and requires a report be submitted to the legislature before December 2015.

Education and Outreach

light blub in grassEducation and outreach are crucial to a policy or program’s success and at least three states enacted legislation in 2014 relating to education and outreach to the public: California, Kentucky and Maine.

  • A California bill required the Office of Small Business Advocate Web homepage to include a hyperlink to the Energy Upgrade California website, providing information to small businesses on demand-side management program opportunities.
  • Kentucky legislation funded energy efficiency technical assistance programs for manufacturing facilities and authorized bonds to help facilities increase energy efficiency through guaranteed energy savings contracts. The Department for Local Government is required to establish an information clearinghouse to educate facility owners on industrial revenue bonds.
  • A bill in Maine required transmission and distribution utilities to implement debt management program for eligible low-income residential customers, following programs’ approval by the Public Utility Commission.  Legislation also required utilities to work with the Efficiency Maine Trust to establish and provide access to a complementary energy efficiency program  to help reduce participants' electricity consumption.

Additional Legislation

In addition to the categories listed above, states enacted legislation in additional topic areas.

State Net logoLexis Nexis Terms and Conditions