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What Building Owners Need to Know About New Energy Disclosure Requirements

By Senior Associate Luisa F. Elkins

New California state regulations are impacting numerous owners of commercial property across the Golden State. Specifically, owners of nonresidential buildings face new disclosure requirements regarding energy use, with potential legal ramifications for noncompliance. Here’s what California building owners need to know to stay on the right side of the law.

The California Energy Commission (CEC) issued regulations on March 7, 2018, establishing the Building Energy Benchmarking Program pursuant to Assembly Bill (AB) 802 (see Docket 15-OIR-05). This program replaced the time-of-transaction building energy use disclosure program pursuant to AB 1103, which was repealed on December 31, 2015. There was no statewide energy use disclosure requirement for 2016 and 2017.

AB 1103 required owners of nonresidential buildings to track the building’s energy use data and submit a disclosure report using the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR® Portfolio Manager (“Portfolio Manager”) tool prior to selling, leasing, or obtaining financing for the entire building. Under the new AB 802 disclosure regulations, commercial and multifamily building owners must submit building energy data usage by June 1st every year if the structure (1) has an area greater than 50,000 square feet, and (2) has no residential accounts or 17 or more residential accounts (“disclosable building”). The regulations also provide that owners may request data usage information from the utilities if the structure has three or more commercial accounts or five or more active utility accounts, where at least one of the accounts is residential.

While owners of disclosable buildings are required to submit the annual report to the CEC, the utility account customer (e.g., a tenant) must authorize the release of the energy consumption data if the building has (1) fewer than three commercial accounts, or (2) five or more active utility accounts, where at least one of the accounts is residential. In these events, the owner is not obligated to upload energy consumption data if the utility account customer has not granted permission to share that information. The owner may request permission from the utility account customer directly or simply submit its data request to the utility. The utility must confirm with the customer before releasing any information in response to the data request and will not provide any data unless the utility account customer expressly authorizes it to do so. Property owners should include a provision in their lease forms authorizing them to obtain the tenant’s energy consumption data from the utility if permitted under the new CEC program.

The process to file a report is the following:

  • Open a Portfolio Manager account (see here);
  • Request energy consumption data from the utility by March 1st (the utility has 28 calendar days to respond to the data request);
  • Upload energy use data into Portfolio Manager if the building has more than three “active” utility accounts  (i.e., accounts that are currently receiving energy and that received energy anytime during the time period covered by the report) for a commercial property, or more than five active utility accounts for a residential property; and
  • Complete the report in Portfolio Manager by June 1st.

The deadline to submit the first report for commercial building owners was June 1, 2018. However, the CEC will accept disclosure reports filed beyond this filing date. The deadline to submit the first report for multifamily building owners is June 1, 2019. Contact us if you have any questions to ensure proper compliance with the new CEC energy benchmarking disclosure rules.

 

Luisa F. Elkins is an attorney in Procopio’s Energy and Environment and Natural Resources practice groups, based in the firm’s Silicon Valley office. She assists clients with regulatory counseling and policy development with a particular focus on public utility regulation and the California Environmental Quality Act (CEQA).  Her practice includes advising utilities, lenders, local governments, and developers regarding the regulatory and environmental challenges associated with the development and acquisition of utility-scale renewable energy projects. She has represented clients in several proceedings before the California Public Utilities Commission (CPUC) and counseled clients regarding the CPUC and California Energy Commission’s (CEC) regulations and the California Independent System Operator’s (CAISO) stakeholder initiatives and tariffs.