MCE Board of Directors Meeting
Special Meeting & Public Workshop
Thursday, October 22, 2026
4:30 p.m.
1125 Tamalpais Ave
San Rafael, CA 94901
2300 Clayton Road, Suite 1500
Concord, CA 94520
Public comments may be made in person or remotely via the details below.
Remote Public Meeting Participation
Video Conference:
https://us02web.zoom.us/j/89558191522?pwd=3ZDhGry61ufbKYiEKaAmZDKJaB5qrf.1 Phone: Dial (669) 900-9128, Meeting ID: 895 5819 1522, Passcode: 551526 Materials related to this agenda are available for physical inspection at MCE’s offices in San Rafael at 1125 Tamalpais Avenue, San Rafael, CA 94901 and in Concord at 2300 Clayton Road, Suite 1500, Concord, CA 94520.
DISABLED ACCOMMODATION: If you are a person with a disability who requires an accommodation or an alternative format, please contact MCE at (888) 632-3674 or [email protected] at least 72 hours before the meeting start time to ensure arrangements are made.
1. Roll Call/Quorum
2. MCE Presentation: Building Electrification and Changing Regulations
3. Bay Area Air District Presentation: Zero-NOx Building Appliance Rules
4. Open Q&A Session for All Attendees*
5. Adjourn
The Board of Directors may discuss any or all of the items listed on the agenda irrespective of how the items are described.
*Please note that if a quorum is not achieved for this special meeting, the meeting will proceed as a public workshop to discuss the matters listed on this agenda. Any members of the MCE Board of Directors will participate in the discussion in the same fashion as the public and such Board Members may not discuss among themselves, other than as part of the scheduled agenda, any other specific business of MCE.
Public Workshop:
Building Electrification
and Changing Regulations
October 22, 2026
Building Electrification: Behind the Meter
2 Heating and
Cooling Air
Electric Clothes
Dryers
Induction Cooking Water Heating
Support Measures Solar + Storage
Benefits of Electrification
3 Heating and Cooling Air
Electric Clothes Dryers Induction Cooking
Water Heating Solar + Storage
Support Measures
• Three times more
energy efficient
• Improved air quality
• No gas – lower
emissions
• One system
• 50% less energy
• No exhaust
ventilation required
– no gas
• Gentle on laundry
• Potentially lower
bills
• Energy bill savings
• Clean energy when
needed most
• Increased grid
reliability for
everyone
• Increased safety for
pets and children
• Improves indoor air
quality
• 75% less energy
• No gas
• Well-insulated,
keeps water hot
when not in use
• Enable
electrification
measures
installation
• Optimize electrical
systems
Installation Costs
4 Heat Pump Water Heater: $6,000
Higher unit cost
Light construction costs
Wiring
Panel upgrades
Gas Water Heater: $2,800
Operating Costs
5 Annual Bills After ($)
Annual Bills Before ($)
Annual Bills Before vs After
Heat Pump Installation ($)
6 1. Do I need to do an expensive electrical panel
upgrade?
2. Will my bill go up?
3. Technology isn’t available - I won’t have enough hot water
4. Does it really help air quality and safety of the home that much?
5. Power outages will cause disruptions
6. Installation timelines
7. Higher purchase and installation costs
Common Questions and
Concerns about Home
Electrification
6 7
• Foundational principle across all
programs, sectors, and customer
segments
• Advancing affordable, equitable, and
community-led decarbonization solutions
• EE is decarbonization: all MCE programs
inherently contribute to GHG reduction
• Prioritize program design and
implementation that promotes building
electrification: no incentives for gas
Advance building decarbonization
activities in energy efficiency (EE)
portfolios
MCE’s Focus
7 California’s Clean Water Heater Efforts
8 California Air Resources
Board
Bay Area Air District
Zero-GHG regulation Zero NOx
Statewide regulation Bay Area compliance
Regulate manufacturers
statewide
Regulate local installations
Regulate water heaters
plus:
• Emissive equipment
that uses other fuel
types besides gas (oil,
propane)
• Pool heaters
• Furnaces > 175,000
BTU/hr
Regulate water heaters
SB 222 (Wiener) Permit and Fee
Streamlining
AB 2313 (Berman) Appliance
Electrification Incentives
3M
All-Electric
Homes by
2030
6M
Heat Pumps
by 2030
7M
All-Electric
Homes by
2035
Zero-NOx
Water Heater
and Furnace Rules
MCE Contractor Resources
10 Visibility through MCE’s Contractor Finder
• Business listed on website for local homeowners
• Available after enrolling and completing first qualifying project Training on the latest technologies
• Receive $3,500 per crew member to attend electrification training Support to grow your team at no cost
• Get matched with pre-vetted, entry-level job seekers
• Receive up to $2,000 for hiring and retaining a new hire and $350 reimbursement for new-hire tools and materials
Cash for electrifying homes
• Get up to $675 for installing heat pump water heaters • Get up to $400/ton for installing heat pump heating and cooling systems • Get paid to install energy efficiency measures, rebates for customers, and bonuses for metered savings
Contractor Finder
Tool • mceCleanEnergy/contractor
-finder
• Exclusively lists contractors enrolled in
1 or more of MCE’s contractor programs
• Special highlights for contractors enrolled in
Residential Flex Market and Green Workforce
Pathways
• Memberships for signatory contractors
Find contractors skilled in home
electrification upgrades
11 Contractor Events
Calendar • mceCleanEnergy/contractor
-events
• One-stop training resource • Accessible learning opportunities • Supports workforce development • Fosters industry collaboration • Add your Contractor Event’ feature Trainings, events & connections
12 Green Workforce
Pathways
1. Cash stipends for contractors attending
electrification training
2. Access to MCE Contractor Finder Tool for
more visibility and lead generation
3. MCE and partner-led technical and job
support skills trainings
Stipends for
contractors
and staff
Workforce development program
supporting workforce training
providers and installer staff for all-electric technologies Program Benefits:
Regional
Industry
Trainings
13 Heat Pump Water Heater Incentives
14 Residential Flex
Market
Multifamily Energy
Savings
Home Energy Savings
Rebate of up to $675 for installing a
heat pump water heater
Rebate of up to $400 per 500 square
feet for installing a heat pump heating
and cooling system
Free home energy assessment with a
licensed contractor
Home Energy Savings
15 Who: Income-qualifying homes in
MCE’s service area
What: Free in-home
energy assessment and
upgrades
Savings Equivalent to:
5,189
Miles driven by an
average gas-powered
car
Residential Flex
Market Program
Who
• Can serve all homeowners
What
• Guaranteed upfront incentives for
homeowners
• Bonus performance payments for high energy-saving projects • Stackable with other incentive programs
16 Fill out an interest form
to get started today!
Partnerships
18 Permitting study
19 Outreach
20 Customer Service Support
21 Electrification-focused rate support:
Identify additional customer benefits: Ongoing customer support:
Post-upgrade customer surveys:
• E-ELEC rate for fully-electric customers
• New solar customers on Solar Billing
Plan automatically enrolled in E-ELEC
• Evaluate customer experience, measure
satisfaction, identify additional support
needs and opportunities for
improvement
• MCE Cares Credit, MCE Sync (EV smart
charging app), Solar Storage Credit, or
EV rebates
• [email protected]
• (888) 632-3674
• Bill questions, electric rate support,
electrification programs, incentives, &
other available MCE services
Questions?
mceCleanEnergy.org
[email protected]
Jennifer Lam
Manager, Regulatory Development
Bay Area Air District
October 22, 2026
Zero-NOx
Building Appliance Rules
2 1. Overview of Air District, air pollution sources and their health impacts
2. Zero-NOx water heater and gas furnace rules
• Health benefits
• Regulatory history
• Proposed exemptions and other changes under consideration • Next steps
3. Questions and discussion
Outline
June 9, 2026 2
June 9, 2026 3
Bay Area Air District
• Formed in 1955 by the California Legislature
• Regulates stationary sources of air pollution
in the 9-county Bay Area
• Governed by Board of Directors
o 24 locally elected representatives from
each county
3 4
Residential appliance emissions
3,198 3,464 3,690
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Fuels Refining Passenger
Vehicles
Natural Gas
Combustion in
Buildings
2019 Air District NOx Emissions (tons)
Space
Heating
66%
Water
Heating
23%
Cooking
6%
Other
5%
2019 Air District Residential Natural
Gas Combustion NOx Emissions
June 9, 2026 4
Zero-NOx standards – 2023 amendments
• NOx standards within Rule 9-4 (furnaces) and Rule 9-6 (water heaters) have been in place for over three decades
• Zero-NOx standards have gradual phase-in: all new sales or installations of units manufactured after compliance dates
1/1/2027 Water heaters less than 75,000 BTU/hr
1/1/2029 All applicable natural gas-fired furnaces (e.g., residential and commercial; including direct-vent units)
1/1/2031 Water heaters 75,000 to 2 million BTU/hr
• Staff update to the Board due two years prior to each compliance date June 9, 2026 5
Health benefits
June 9, 2026 6
June 9, 2026 7
2024 “Readiness Report” for Rule 9-6
• Average additional cost of zero-NOx water heater
compared to gas:
o $1,800 (vs. new gas tankless)
o $3,500 (vs. new gas tanked)
• New 120-volt “plug-in” HPWHs and “watt diet”
strategies can help manage and lower costs
• Installations requiring extensive work need flexibility o Appliance relocation, electric panel upsizing
o Emergency replacements
• Key findings directly informed exemptions to be
considered by Board of Directors.
Proposed flexibility amendments
1. Address affordability and the drivers
of high cost
2. Allow continued sales of some gas
equipment when zero NOx options do
not currently exist, and for emergency
situations
3. Process must be as simple and
automated as possible
Source: istockphoto.com
June 9, 2026 8
Approximately one year after original compliance date,
providing additional time to:
• Develop and test exemption system
• Align with manufacturers, distributors, retailers & contractors • Increase staff training and stakeholder education
• Conduct more property owner outreach
Additional delay of large water heaters, multifamily housing, hydronic units and others until 2033
Proposed: delay effective date to Jan. 2028
June 9, 2026 9
Proposed Rule Amendments Cont.
10 • Continued sales for NOx-emitting tanked gas water heaters 30 gallon and less (no exemption certificate/voucher required) • Limited exemptions to purchase non-compliant water heaters for:
Businesses with high-heat applications Low-income property owners Projects with space or electrical
constraints
Hydronic heating systems
Emergency loaners for licensed
contractors
Multi-family buildings with five units or
more
Deed-restricted affordable housing
Source: istockphoto.com
Attestation and documentation by licensed
contractors* who
• Have the knowledge and expertise to
accurately evaluate site conditions and
technical issues (e.g. electric service and
space constraints)
• Can stay up-to-date on evolving technology
solutions and funding options (e.g. low-voltage water heaters, rebate and incentive programs)
Exemption type: project-specific
11 * Electrical constraints to be verified by licensed electrician One-time exemption per project address
• For site-specific exemptions (i.e. space or
electrical constraints) only
• Supports long term air quality goals while
also provides exempted building owner
~13 years to prepare for future zero NOx
water heater, starting from 2027
• Full emissions benefits are realized later
instead of 2040
Source: istockphoto.com
12 Exemption Process
13 Online form accessible by mobile device
Simple, self-attestation by homeowner or contractor
Immediate approval if all fields completed
Minimal documentation required
Enforcement review to be completed in aggregate for issued exemptions Impact of Exemptions
• Up to 50% of projects will be eligible
for exemptions based on staff
estimates
• Most replacements will still occur, just
delayed (one-time exemptions, etc.)
• Water heaters vent outdoors and
emissions reductions benefits will
continue to accrue regionally
June 9, 2026 14
Phase I – 2026
• Develop clear, audience-specific messaging focused on benefits of switching to zero-NOx appliances
• Conduct baseline awareness survey (May–July)
• Launch media, contractor, and social outreach
Phase II – Fall through early 2027 (post-Board action)
• Launch local advertising campaign
• Expand outreach, including door-to-door, with clear timelines and calls to action Phase III – 2027 and beyond
• Continuation of advertising, public relations, stakeholder, and social media outreach Underway: public awareness campaign
15 knowthefacts.baaqmd.gov
Board of Directors hearing on Rule 9-6 changes expected November 2026 • Directors will deliberate and vote on whether to adopt amended rule language • “No” vote leaves 2023 adopted rule (no exemptions, 2027 implementation date) intact Sign up to our listserv for automatic updates:
https://www.baaqmd.gov/rules-and-compliance/rule-development/building-appliances Next steps
16 17
Comments?
Submit via: comments.baaqmd.gov
Learn more at: knowthefacts.baaqmd.gov