DATE: March 18, 2024
TO: Mayor and Members of the City Council
VIA: Stefan Chatwin, City Manager
Marlene Subhashini, Assistant City Manager
FROM: Sofia Mangalam, Community Development Director
DEPARTMENT: Community Development
SUBJECT: INFORMATIONAL REPORT ON ELECTRICAL CAPACITY STUDY
PREPARED FOR THE PURPOSES OF POTENTIAL REACH
CODES ADOPTION
RECOMMENDATION
It is recommended that the City Council receive and accept an informational report on the Electrical Capacity Study prepared for consideration of potential adoption of local Energy Reach Codes and by Minute Order, provide policy direction to staff regarding Reach Codes.
EXECUTIVE SUMMARY
Senate Bill (SB) 32 requires the California State Air Resources Board (CARB) to ensure the state’s greenhouse gas (GHG) emissions are reduced to 40 percent below the 1990 levels by 2030. Residential and commercial buildings are responsible for roughly 25% of California’s greenhouse gas (GHG) emissions (California Air Resources Board. 2019. California Greenhouse Gas Emission Inventory: 2000 – 2017, 2019 Edition, California Air Resources Board). Building electrification is a strategy to decarbonize buildings and achieve GHG emission reduction goals.
Every three (3) years the State of California adopts and publishes a set of new construction codes referred to as the California Building Standards Code (CBSC) or California Code of Regulations (CCR), Title 24. Through the code adoption process,
the California Building Standards Commission selects and approves a set of model codes, including California Building, Mechanical, Plumbing, Electrical, Existing Buildings, Fire, Energy, Residential Building, Historical Building, and Green Building Codes. Participating State agencies, such as State Fire Marshal (SFM), Division of the State Architect (DSA), Housing and Community Development (HCD), and Office of Statewide Health Planning and Development (OSHPD), have an opportunity to amend the code for the occupancy groups under their respective authorities. Without taking any action, the State Model Building Codes become the default codes of the City. Local jurisdictions may choose to adopt local building codes that “reach” above and beyond the State minimums, these are referred to as “Reach Codes”.
With regard to the California Energy Code, a Reach Code can go beyond the state minimum requirements for energy use in building design and construction, creating opportunities for local governments to pave the way for clean air, reduce greenhouse gas emissions (GHGs), address climate change, and renewable energy solutions.
Most cities update local building codes including Reach Codes concurrently with state- required adoption of the standards. The most recent code cycle was adopted in 2022 with an effective date of January 1, 2023. The next code cycle will be proposed for adoption in 2024 (draft) with an effective date of January 1, 2026. The most recent code cycle was adopted in 2022 with an effective date of January 1, 2023. The next code cycle will be proposed for adoption in 2025 with an effective date of January 1, 2026.
On August 15, 2022, the City Council adopted City Resolution No. 2022-100 authorizing staff to issue an RFP for consultant services for developing and adopting a local Energy Reach Code including performing an electrical capacity study of the City of Foster City, a cost effectiveness study and community engagement. Subsequently, on October 3, 2022, City Council approved an agreement with Integrated Design 360 LLC (ID360) for developing and adopting a local Energy Reach Code including but not limited to performing an electrical capacity study of the City of Foster City, cost effectiveness study, energy savings study and community engagement.
On January 11, 2024, ID360 provided staff with a completed “Electrical Capacity study” as included in the scope of work (see Attachment #1).
BACKGROUND
Local jurisdictions must demonstrate that the requirements of Reach Codes are cost- effective and do not result in buildings consuming more energy than is permitted by Title
24. Funded by California Investor-Owned Utilities (IOUs) such as Pacific Gas and Electric (PG&E), the California Statewide Codes and Standards Program (Statewide Program) provides cost-effectiveness studies for use by local jurisdictions. See link for available cost-effectiveness studies for 2022 building code cycle ( link). For example, 2022 Cost- Effectiveness Study: Single Family New Construction considers traditional detached single family and detached accessory dwelling unit (ADUs) building types and evaluates mixed fuel and all-electric package options in various California climate zones (CZs). The City of Foster City is located in climate zone 3.
In the City of Foster City, all electrical services are underground and most electrical service panels are 100 Amp. While reviewing the available cost-effectivenes studies, it was noted that the cost of underground electrical services was not considered within the 2022 Statewide Cost-Effectiveness Studies. Thus, preparation of a local Electrical Capacity study was included in the scope of work for for developing and adopting a local Energy Reach Code.
ANALYSIS
ID360 collaborated with Frontier Energy to prepare an Electrical Capacity Study. To support the City in understanding the feasibility of electrification, Frontier Energy analyzed three (3) components:
1. estimated increase in electricity use from buildings and transportation that must be supported by electric utility infrastructure,
2. potential capacity gaps in existing infrastructure, and
3. the cost-effectiveness of residential building electrification.
The consultant estimated the increase in electricity use that would result from city-wide electrification from existing buildings, new developments, and transportation.
The report concluded that electrification of existing buildings, new building development, and vehicles will add an estimated 228.5 GWh of annual electricity consumption in addition to the existing 204.7 GWh electricity use in 2022, more than doubling current electricity use. For more details, please refer to Attachment 1.
It is important to understand that full electrification of buildings and transportation comes with practical challenges and the report notes substantial challenges for Foster City.
Pages 36 through 38 of Attachment 1 includes a list of conclusions, recommendations, and mitigation strategies. Some of the highlights from the report are as follows:
•The existing electric distribution system will not fully support the future development and electrification of Foster City.
•Even when service upgrades are necessary, it is still cost-effective to electrify single family homes based on the CEC’s societal based long-term system cost (LSC) metric. However, service upgrades present a high first cost to owners and can be a deterrent to equitable decarbonization.
•Bay Meadows Feeder, which is one of the seven PG&E feeders, currently serving portions of neighborhoods 1, 2, 3, PT (Pilgrim Triton), and C (Chess Hatch) as well as portions of San Mateo will not be able to support electrification with its remaining capacity of 0.6 MW.
The report also includes numerous recommendations and mitigation strategies, most importantly re-engaging with PG&E to coordinate and plan mitigation efforts before loads exceed existing distribution capacities.
Recent Case Law Related to Electrification
On April 17, 2023, the Ninth Circuit filed its decision in California Restaurant Association v. City of Berkeley, 89 F.4th 1094 (9th Cir. 2024) (“CRA”), finding that the City of Berkeley’s Ordinance No. 7672-NS, creating a ban on natural gas infrastructure in newly constructed buildings, is preempted by the federal Energy Policy and Conservation Act (“EPCA”), which authorizes the Department of Energy to set energy efficiency standards for consumer appliances.
The Ninth Circuit panel held that the EPCA preempts the Berkeley ordinance. In the decision, the Ninth Circuit panel takes a very expansive reading of the plain text of the EPCA (42 U.S.C. § 6297(c)), which states that it is intended to preempt “State regulation[s] concerning the energy efficiency, energy use, or water use of [a] covered product.” While Berkeley argued that its ordinance did not directly ban any appliances or specifically regulate their use, and therefore was not an “energy efficiency standard” subject to preemption under the EPCA, the panel found that Berkeley was regulating the “energy use” of gas appliances via a more circuitous route, by prohibiting natural gas piping into new buildings, rendering the gas appliances useless.
As a result of the CRA decision, many jurisdictions that had locally adopted electrification requirements have suspended enforcement to evaluate alternative methods of regulation to avoid any preemption challenges under the EPCA.
For example, some jurisdictions such as San Luis Obispo, San Jose and Santa Cruz have adopted amendments to the California Energy Code that focus on carbon reductions and encourage all-electric construction through different incentives but does not mandate electrification.
For future reach codes, the Statewide team recommended a new approach called the "One Hourly Source Energy Margin" model code that uses source energy as the performance metric. Version 1.0 of the model code recommends compliance margins based on the source energy values for new single-family and multifamily buildings. The model code primarily focuses on building components (e.g., HVAC, hot water heating) and does not encompass site components such as outdoor cooking and fireplaces.
Similarly, the Bay Area Reach Codes Program published a source energy margin model code tailored for jurisdictions located in Climate Zone 3 and Climate Zone 4. The model code addresses new single-family, multifamily, and nonresidential new construction.
The one-margin model code is considered a high-performance ordinance and establishes a single compliance margin for both all-electric and mixed-fuel buildings. The City of San Luis Obispo, the City of Santa Cruz, and the City of San José adopted high-performance energy efficiency requirements based on this approach to replace previously adopted all- electric requirements.
Another option that some jurisdictions are considering is the zero emission/zero NOx method of regulation. To date, the only city in the region that has adopted an ordinance establishing this regulation is the Town of Los Altos Hills, which amended its regulations to parallel the definition of all-electric and references with that of zero NOx emission buildings. The Los Altos Hills ordinance requires certain appliances, such as water heaters, space heating and/or space cooling systems, and clothes dryers, upgrades to be “zero NOx emitting equipment” where Zero NOx emitting equipment is defined as “Any equipment or appliance that emits no more than 0.0 nanograms of nitrogen oxides (expressed as NOx) per joule of heat and/or light output.
Peninsula Clean Energy (PCE), and Silicon Valley Clean Energy (SVCE) are currently developing an emissions model code called the “Air Quality Code” which is anticipated to be published in late March 2024.
Further study of both options would need to be undertaken to ensure that the regulations would survive any preemption challenges under the EPCA.
Next Code Cycle
Adoption of California Building Standards Triennial Code is a long process, and 2025 edition is well under its way. The deadline for state agencies to submit the International Association of Plumbing and Mechanical Officials (IAPMO), CALGreen and National Electrical Code (NEC) changes to CBSC was February 1, 2024. The International Code Council (ICC) related code changes are due May 3, 2024. The proposed code changes include adoption of the 2024 editions of the ICC and IAPMO model codes and the 2023 edition of the NEC. These code changes will result in the 2025 edition of the California Building Standards Code, which will then become effective January 1, 2026.
Policy Direction
Staff would like to note three (3) key points, including:
•The electrical capacity study concluded that the existing electric distribution system will not fully support the future development and electrification of Foster City.
•The U.S. Court of Appeals for the Ninth Circuit overturned Berkeley ordinance that prohibited natural gas infrastructure in new buildings, and due to this ruling, several cities and counties are currently pausing their Reach Code electrification implementations.
•The next code cycle, 2025 Title 24, Part 6 Standards are set to be released in June 2024, which will include a new set of State minimum regulations.
Staff would like to seek policy direction from the City Council on the following items:
1. If staff should continue to study options for Energy Reach Codes.
2. If staff should engage with PG&E to discuss the outcome of the study, distribution capacities and necessary resources to meet load growth.
California Environmental Quality Act
CEQA General Rule Exemption
FISCAL IMPACT
On October 3, 2022, the City Council approved an agreement with Integrated Design 360 LLC (ID 360) for developing and adopting a local Energy Reach Code in the amount of $127,774 out of which $70,145.20 has been spent so far. There is no additional fiscal impact.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Smart Planning, Development, and the Local Economy
ATTACHMENTS
Attachment 1 – Electrical Capacity Study