Agenda packet, regular meeting — San Mateo City Council, March 2, 2026 (part 2 of 3)

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I. NEW CEQA EXEMPTION ELIGIBILITY REQUIREMENTS
To qualify for the AB 130 CEQA exemption, the project must satisfy specific site and project requirements. Unlike other housing streamlining laws enacted in recent years, AB 130 does not contain any affordability requirements, and labor requirements are limited to only a narrow class of projects, none of which fit the description for the Project. As described below, the Project fits each of the AB 130 qualifying criteria.
a. Housing project. The project must be a housing development project, which is defined to include: (1) projects consisting of residential uses only; (2) mixed-use projects where at least two-thirds of the new or converted square footage is designated for residential use; (3) mixed-use projects with greater than 500 units where at least half of the new or converted square footage is designated for residential use and other specific requirements are met; (4) transitional housing or supportive housing; and (5) farmworker housing. (Gov. Code §§ 65589.5(h)(2), 65905.5(b); Pub. Res. Code § 21080.66(a).)
The Project meets this requirement because, as described in the Project application, it will be developed with 100% residential uses.
b. Acreage. The project site must be 20 acres or less, except Builder’s Remedy project sites must be 5 acres or less. (Pub. Res. Code § 21080.66(a)(1).) The Project meets this requirement because it is not a Builder’s Remedy project and the Property is 0.64 acres.
c. Urban area. The project site must be within the boundaries of an incorporated municipality or in an urban area, as defined by the U.S. Census Bureau. (Pub. Res.

Code § 21080.66(a)(2).)
The Project meets this requirement because it is within the City of San Mateo, an incorporated municipality.
d. Infill location. The project site must be an urban infill site, meaning that: (i) the site was previously developed with an urban use; (ii) at least 75% of the perimeter of the site adjoins parcels that are developed with urban uses; (iii) at least 75% of the area within a one-quarter mile radius of the site is developed with urban uses; or (iv) for sites with four sides, at least three sides are developed with urban uses and at least 159 of 662
To: Prometheus Real Estate Group From: David H. Blackwell Date: October 9, 2025

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two-thirds of the perimeter of the site adjoins parcels that are developed with urban uses. (Pub. Res. Code § 21080.66(a)(3).)
The Project meets this requirement because the Property is currently developed with a retail center, which qualifies as an “urban use.” The Property also qualifies under the other definitions of urban infill site because it is surrounded on at least 75% of the perimeter, or three of four sides, by urban uses.
e. Environmental siting criteria. The project must meet environmental siting criteria set forth in SB 35/423. To qualify, a site must not be located in any of the following:
1) certain areas of the coastal zone; 2) prime farmland, farmland of statewide importance, or land designated for agricultural protection or preservation; 3) wetlands; 4) a very high fire hazard severity zone (unless certain mitigation measures adopted); 5) a hazardous waste site; 6) a delineated earthquake fault zone; 7) a 100-year flood hazard area or regulatory floodway; 8) lands identified for conservation or under a conservation easement; or 9) habitat for protected species. (Pub. Res. Code § 21080.66(a)(6); Gov. Code § 65913.4(a)(6).)
The Project meets this requirement because the Property does not fall within any of the prohibited categories. Specifically:
i. The Property is not within the coastal zone;
ii. The Property is not on land used or designated for agriculture; iii. The Property is not on a wetland;
iv. The Property is not within a very high fire hazard severity zone, per our review of the Office of the State Fire Marshal’s Fire Hazard Severity Zone maps; v. The Property is not on a hazardous waste site, per our review of the Cortese List of hazardous waste sites;
vi. The Property is not within a delineated earthquake fault zone, per our review of the California Department of Conservation’s Earthquake Hazards Zone Application;
vii. The Property is not within a 100-year flood hazard area nor a regulatory floodway, per our review of FEMA’s National Flood Hazard Layer Viewer; 160 of 662
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viii. The Property is not on lands identified for conservation or subject to a conservation easement;
ix. The Property is not habitat for protected species.
f. Land use regulations. The project must be consistent with the applicable general plan and zoning ordinance, as well as any applicable local coastal program. If the general plan and zoning ordinance are inconsistent, the project need only be consistent with one. Use of any State Density Bonus Law density bonus, incentive or concession, waiver, or reduced parking ratio shall not be grounds to determine the project is inconsistent with the zoning, general plan, or local coastal program. The housing development shall be deemed consistent if there is substantial evidence that would allow a reasonable person to conclude as such. (Pub. Res. Code § 21080.66(a)(4).) The Project meets this requirement because it is consistent with the land use designations for the Property. The Property is designated “Mixed Use Medium II” in the City’s 2040 General Plan and is within the Central Business Support (“CBD-S”) zoning district. The Mixed Use Medium II designation permits a mix of uses, including residential, with a maximum density range of 51 - 99 dwelling units per acre. The CBD-S zoning district permits residential uses subject to R3 or R4 district minimum development standards and CBD residential development standards. The CBD-S district permits a maximum of 50 dwelling units per acre. This is inconsistent with the minimum density of the Mixed Use Medium II general plan designation. Under AB 130, if the general plan and zoning are inconsistent, then the project shall be deemed consistent with both if it is consistent with one.

Per the Project application, the residential density will be 99 dwelling units per acre which is within the General Plan range for the Property. Because the Project is consistent with the General Plan, it is deemed consistent with the applicable zoning district. Further, because the Project qualifies for a density bonus, any development standards that would preclude development of the Project as designed, such as the R3, R4, or CBD residential development standards, will be waived or reduced. g. Minimum density. The proposed residential density must be at least 50% of the minimum residential density deemed appropriate to accommodate housing for the jurisdiction. Depending on the type of jurisdiction (nonmetropolitan, suburban, or metropolitan), the minimum density ranges from 5 to 15 units per acre. (Gov. Code § 65583.2(c)(3)(B); Pub. Res. Code § 21080.66(a)(5).)
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The Project meets this requirement because, with a proposed density of 99 dwelling units per acre, it has a greater density than the highest statutory minimum density of 15 units per acre.
h. Historic structures. The project does not require the demolition of a historic structure that was placed on a national, state, or local historic register before the date a preliminary application (as defined) was submitted. (Pub. Res. Code § 21080.66(a)(7).)
The Project meets this requirement because none of the existing structures to be demolished are on a national, state, or local historic register. i. Freeway proximity. For any housing within 500 feet of a freeway, the building: (i) must have a centralized heating, ventilation, and air-conditioning system and the outdoor intakes for that system cannot face the freeway; (ii) must provide air filtration media for outside and return air that provide a minimum efficiency reporting value of 16, which must be replaced as specified; and (iii) must not have any balconies facing the freeway. (Pub. Res. Code § 21080.66(c)(2).)
The project is not within 500 feet of a freeway.
j. Tribal notice. The City must notify all California Native American tribes that are traditionally and culturally affiliated with the project site, and consult with any tribe that elects to be involved, as specified in the statute. Related conditions of project approval may be imposed. (Pub. Res. Code § 21080.66(b).) During preparation of the EIR for the 2040 General Plan, the City identified the following tribes as potentially having local knowledge: 1) Amah Mutsun Tribal Band of Mission San Juan Bautista; 2) Costanoan Rumsen Carmel Tribe; 3) Indian Canyon Mutsun Band of Costanoan; 4) Muwekma Ohlone Indian Tribe of the SF Bay Area; 5) The Ohlone Indian Tribe; and 6) Wuksache Indian Tribe/Eshom Valley Band. Of these, only the Canyon Mutsun Band of Costanoan Ohlohne People responded.

Therefore, it is possible that this tribe will respond to a consultation request for the Project.
k. Phase I environmental site assessment. A Phase I Environmental Site Assessment (“ESA”) must be performed for the project site, and if a recognized environmental condition is found, certain steps must be taken to ensure there is no threat to human health or safety, as specified in the statute. (Pub. Res. Code § 21080.66(c)(1).) 162 of 662
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A Phase I ESA for the Property was prepared for Prometheus Real Estate Group on June 6, 2025. The report identified three Recognized Environmental Conditions (“RECs”): 1) the presence of fuel-related impacts in sub-surface media due to upgradient gasoline/service stations (one of which received regulatory closure in 2015, the other in 2021); 2) a vapor encroachment condition from offsite sources of TPHg and benzene; and 3) the presence of lead in shallow soil. The Phase I did not identify any Controlled Recognized Environmental Conditions (“CRECs”), Historical Recognized Environmental Conditions (“HRECs”), Business Environmental Risks (“BERs”), de minimis conditions, or significant data gaps.

Significant fuel-related impacts were not identified in shallow soil and were only present in soil collected 20 feet below ground surface or deeper. The Phase I also noted that oxygen levels in the soil have created a bioattenuation zone beneath the property and that vapor mitigation for the current commercial land use is not required. The report stated that the lead levels identified at the site were “commonplace” in the region, were not characterized as a California or Federal Hazardous Waste, and did not extent further down than five feet.

Due to the identified RECs, Prometheus will prepare a Preliminary Endangerment Assessment, as defined in Health & Safety Code Section 78095, to determine if a hazardous substance has been released on the site and what the potential exposure is for future occupants. A Preliminary Endangerment Assessment is currently being prepared by Citadel EHS, and no concerns have been identified to date. Regardless, this document will be reviewed by the San Mateo County Groundwater Protection Program, which will determine whether significant mitigation or ongoing management will be required by the County. Upon receipt of the County’s approval, the City may issue a certificate of occupancy.

Note that the presence of RECs on the Property in no way affects the applicability or timing of the AB 130 CEQA exemption. The only result is an obligation for Prometheus to address the RECs prior to receipt of a certificate of occupancy. l. Transient lodging. For new projects “deemed complete” on or after January 1, 2025, no portion of the project may be designated for use as transient lodging (as defined). “Deemed complete” means that an SB 330 preliminary application or a complete application (pursuant to Gov. Code § 65943) has been submitted for the project. (Pub.

Res. Code § 21080.66(a)(8).)
The Project meets this requirement because none of the proposed components will be used for transient lodging.
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m. Labor requirements. Any building over 85 feet in height (from grade) is subject to the SB 35 labor standards, including prevailing wage requirements, recordkeeping requirements, additional labor standards for developments over 50 units, and additional skilled and trained workforce requirements. (Pub. Res. Code § 21080.66(d)(2); see Gov. Code § 65913.4(a)(8).) All construction workers employed in the execution of public or private housing development projects where 100% of units will be dedicated to lower income households shall be paid prevailing wages; registered apprentices may be paid the applicable apprentice prevailing rate. (Pub.

Res. Code § 21080.66(d)(1).)
The Project will not be required to comply with the above labor provisions because it will not be over 85 feet in height, nor will 100% of the units be dedicated to lower income households.

II. NEW PROJECT APPROVAL TIMELINE
AB 130 also amended the Permit Streamlining Act (“PSA”) to create a new approval timeline for agencies with approval authority over projects that qualify for the AB 130 CEQA exemption. (Gov. Code § 65950(a)(7).) The amended PSA states that an agency must approve or disapprove the project “[t]hirty days from the conclusion of [the tribal consultation process]” for projects invoking the new CEQA exemption. (Id.)
Additionally, the tribal consultation process itself contains statutory approval timelines that, when combined with the new PSA provisions, establish a single approval timeline for an AB 130 project starting with application completeness, or for applications already deemed complete, when the applicant notifies the City that the project qualifies for AB 130. Because the tribal consultation process can conclude in multiple ways, the exact timing cannot be determined from the outset. At a minimum, if no tribes elect to participate in the consultation, a project must be approved no later than 104 days from the date of application completeness/AB 130 notification. If a tribe elects to participate in the consultation, a project must be approved no later than 178 days from the date of application completeness/AB 130 notification, but may be approved earlier.

At this time, we understand the Project’s application is under review with the City Planning Department. Under AB 130, the approval timeline begins either when the application is deemed complete, or for projects with already completed applications, when the applicant notifies the City that the project qualifies for AB 130. (Gov. Code § 21080.66(b)(1)(A)(i)-(ii); § 65589.5(h)(5).) For the purposes of AB 130, “deemed complete” means the applicant has submitted an SB 330 preliminary application. (Id.) Therefore, if a preliminary application was previously submitted for the Project, Prometheus can start the approval timeline immediately by notifying the City that the Project qualifies for AB 130. Note that the City only has 14 days from the date of application 164 of 662
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completeness/AB 130 notification to provide formal notification to tribes. Therefore, we recommend informing the City as soon as possible that the Project will utilize the AB 130 CEQA exemption to ensure that there are no delays once the application is deemed complete or Prometheus makes an AB 130 notification. As stated above, at least one tribe participated in the preparation of the 2024 General Plan, so it is possible that the Project may go through this consultation process. 165 of 662
Feb 10, 2026
City of San Mateo
330 W 20th Ave
San Mateo, CA 94403
By Email: [email protected]
CC: [email protected], [email protected], [email protected], [email protected] Re: Proposed Housing Development Project at 668 East 3rd Avenue Dear San Mateo Planning Commission,
The California Housing Defense Fund (“CalHDF”) submits this letter to remind the City of its obligation to abide by all relevant state laws when evaluating the proposed 128-unit housing development project at 668 East 3rd Avenue, which includes 10 very low-income units, and 10 moderate-income units. These laws include the Housing Accountability Act (“HAA”), the Density Bonus Law (“DBL”), and AB 130.

The HAA provides the project legal protections. It requires approval of zoning and general plan compliant housing development projects unless findings can be made regarding specific, objective, written health and safety hazards. (Gov. Code, § 65589.5, subds. (d.), (j).) The HAA also bars cities from imposing conditions on the approval of such projects that would reduce the project’s density (id. at subd. (j)) or render the project infeasible (id. at subd. (d)) unless, again, such written findings are made. As a development with at least two-thirds of its area devoted to residential uses, the project falls within the HAA’s ambit, and it complies with local zoning code and the City’s general plan. Increased density, concessions, and waivers that a project is entitled to under the DBL (Gov. Code, § 65915) do not render the project noncompliant with the zoning code or general plan, for purposes of the HAA (Gov.

Code, § 65589.5, subd. (j)(3)). The HAA’s protections therefore apply, and the City may not reject the project except based on health and safety standards, as outlined above.

Furthermore, if the City rejects the project or impairs its feasibility, it must conduct “a thorough analysis of the economic, social, and environmental effects of the action.” (Id. at subd. (b).)
2201 Broadway, PH1, Oakland, CA 94612
www.calhdf.org
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CalHDF also writes to emphasize that the DBL offers the proposed development certain protections. The City must respect these protections. In addition to granting the increase in residential units allowed by the DBL, the City must not deny the project the proposed concessions and waivers with respect to height, blank walls, setbacks, stepbacks, entries, and parking. If the City wishes to deny requested waivers, Government Code section 65915, subdivision (e)(1) requires findings that the waivers would have a specific, adverse impact upon health or safety, and for which there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact. If the City wishes to deny requested concessions, Government Code section 65915, subdivision (d)(1) requires findings that the concessions would not result in identifiable and actual cost reductions, that the concessions would have a specific, adverse impact on public health or safety, or that the concessions are contrary to state or federal law. The City, if it makes any such findings, bears the burden of proof. (Gov.

Code, § 65915, subd. (d)(4).) Of note, the DBL specifically allows for a reduction in required accessory parking in addition to the allowable waivers and concessions. (Id. at subd. (p).) Additionally, the California Court of Appeal has ruled that when an applicant has requested one or more waivers and/or concessions pursuant to the DBL, the City “may not apply any development standard that would physically preclude construction of that project as designed, even if the building includes ‘amenities’ beyond the bare minimum of building components.” (Bankers Hill 150 v. City of San Diego (2022) 74 Cal.App.5th 755, 775.) Furthermore, the project is eligible for a statutory exemption from environmental review pursuant to section 21080.66 of the Public Resources Code. Caselaw from the California Court of Appeal affirms that local governments err, and may be sued, when they improperly refuse to grant a project a CEQA exemption or streamlined CEQA review to which it is entitled. (Hilltop Group, Inc. v. County of San Diego (2024) 99 Cal.App.5th 890, 911.) As you are well aware, California remains in the throes of a statewide crisis-level housing shortage. New housing such as this is a public benefit: it will provide badly needed affordable housing; it will increase the city’s tax base; it will bring new customers to local businesses; and it will reduce displacement of existing residents by reducing competition for existing housing. It will also provide important housing in the heart of Silicon Valley, a region that has seen an explosion of employment opportunities without the needed housing growth, resulting in crippling rent burdens and housing shortages. While no one project will solve the statewide housing crisis, the proposed development is a step in the right direction.

CalHDF urges the City to approve it, consistent with its obligations under state law.

Sincerely,
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Dylan Casey
CalHDF Executive Director
James M. Lloyd
CalHDF Director of Planning and Investigations
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February 10th, 2026
City of San Mateo
Planning Commission and City Council
330 West 20th Avenue
San Mateo, CA 94403
Re: 668 E. 3rd Ave. Project Application
Dear City of San Mateo Planning Commissioners and City Council Members, As a 32-year resident of Foster City and business owner of the City of San Mateo, I am writing to urge you to approve the 668 E. 3rd Ave. project.

The 668 E. 3rd Ave. project will provide much needed housing in close proximity to transit which will be in line with the goals of the recently adopted General Plan.

The building’s highly detailed Mediterranean architecture incorporates well into the Objective Design Standards associated with Downtown San Mateo be a great addition to this part of the City adding much needed vibrancy and activity.

This is a wonderful opportunity to improve the neighborhood and downtown and address the need for housing. Please approve 668 E. 3rd Ave.

Sincerely,
All About Parking, inc.
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1 From: Elizabeth "Liz" Gagliardi
Sent: Monday, March 2, 2026 4:04 PM
To: Chantal Eaton
Cc: Zachary Dahl; Joanna Winter; Sung H. Kwon
Subject: Fw: Notice of City Council Public Hearing for PA-2025-025, 668 E 3rd Ave (Gateway)

SPAR & SDPA
Importance: High
Hi Chantal, Zach, Joanna, & Sung,
I was going through to see if any comments have been received on Gateway and it looks like I had missed this one from Friday 2/20. Is it possible to add this as a post-packet public comment? Thank you,
Liz
Liz Gagliardi (she/her)
Associate Planner
Community Development Department
330 W. 20th Ave., San Mateo, CA 94403
650-522-7206 | [email protected]
From: Jacob Madden
Sent: Friday, February 20, 2026 5:56 PM
To: Elizabeth "Liz" Gagliardi <[email protected]> Subject: RE: Notice of City Council Public Hearing for PA-2025-025, 668 E 3rd Ave (Gateway) SPAR & SDPA

Hi Liz,
This property has subsurface soil, water and vapor contamination that will require management and potential mitigation as part of development. We would request that you put a requirement that the developer submit a site management plan to our office for approval prior to final planning approval and before any grading permit is issued. If the developer or their environmental consultant has any questions, you can give them my contact information.

Thank you,
Jacob Madden, PG
Program Specialist
San Mateo County Groundwater Protection Program
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2 From: Elizabeth "Liz" Gagliardi <[email protected]> Sent: Friday, February 20, 2026 2:52 PM
Subject: Notice of City Council Public Hearing for PA-2025-025, 668 E 3rd Ave (Gateway) SPAR & SDPA

CAUTION: This email originated from outside of San Mateo County. Unless you recognize the sender's email address and know the content is safe, do not click links, open attachments or reply.

Dear Interested Parties and Planning Project Subscription List,

This email serves as a notice of the upcoming City Council Public Hearing on Monday, March 2, 2026 at 7:00 PM. At this meeting, the Council will hold a public hearing for Planning Application PA-2025-025, for a proposed multifamily residential development located at 668 E 3rd Avenue. Please see attached notice placard for detailed project description, staff and applicant contact information, and meeting details.

Please let me know if you have any comments or questions regarding this Project.

Regards,
Liz Gagliardi
Liz Gagliardi (She/Her)
Associate Planner | Community Development Department
330 W. 20th Ave., San Mateo, CA 94403
650-522-7206 | [email protected]

* PRIVILEGE AND CONFIDENTIALITY NOTICE: This message, together with any attachments, is intended only for the use of the individual or entity to which it is addressed. It may contain information that is confidential and prohibited from disclosure. If you are not the intended recipient, you are hereby notified that any dissemination or copying of this message or any attachment is strictly prohibited. If you have received this message in error, please notify the original sender immediately by telephone or by return email and delete this message along with any attachments from your computer. Thank you. 173 of 662
1 From: James Lloyd >
Sent: Monday, March 2, 2026 3:39 PM
To: Adam Loraine; Nicole Fernandez; Danielle Cwirko-Godycki; Lisa Diaz Nash; Rob Newsom; City Council (San Mateo)
Cc: City Attorney's Office; Clerk; Community Development Distribution; City Mgr Subject: public comment re item 5 for tonight's Council meeting Attachments: San Mateo - 668 East 3rd Avenue - HAA - CC.pdf Dear San Mateo City Council,
The California Housing Defense Fund (“CalHDF”) submits the attached public comment re item 5 for tonight's Council meeting, the proposed 128-unit housing development project at 668 East 3rd Avenue, which includes 10 very low-income units, and 10 moderate-income units.

Sincerely,
James M. Lloyd
Director of Planning and Investigations
California Housing Defense Fund
CalHDF is grant & donation funded
Donate today - https://calhdf.org/donate/
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Mar 2, 2026
City of San Mateo
330 W 20th Ave
San Mateo, CA 94403
By Email: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected] CC: [email protected], [email protected], [email protected], [email protected] Re: Proposed Housing Development Project at 668 East 3rd Avenue Dear San Mateo City Council,
The California Housing Defense Fund (“CalHDF”) submits this letter to remind the City of its obligation to abide by all relevant state laws when evaluating the proposed 128-unit housing development project at 668 East 3rd Avenue, which includes 10 very low-income units, and 10 moderate-income units. These laws include the Housing Accountability Act (“HAA”), the Density Bonus Law (“DBL”), and AB 130.

Code, § 65589.5, subd. (j)(3)). The HAA’s protections therefore apply, and the City may not reject the project except based on health and safety standards, as outlined above.

Furthermore, if the City rejects the project or impairs its feasibility, it must conduct “a 2201 Broadway, PH1, Oakland, CA 94612
www.calhdf.org
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thorough analysis of the economic, social, and environmental effects of the action.” (Id. at subd. (b).)
CalHDF also writes to emphasize that the DBL offers the proposed development certain protections. The City must respect these protections. In addition to granting the increase in residential units allowed by the DBL, the City must not deny the project the proposed concessions and waivers with respect to height, blank walls, setbacks, stepbacks, entries, and parking. If the City wishes to deny requested waivers, Government Code section 65915, subdivision (e)(1) requires findings that the waivers would have a specific, adverse impact upon health or safety, and for which there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact. If the City wishes to deny requested concessions, Government Code section 65915, subdivision (d)(1) requires findings that the concessions would not result in identifiable and actual cost reductions, that the concessions would have a specific, adverse impact on public health or safety, or that the concessions are contrary to state or federal law. The City, if it makes any such findings, bears the burden of proof. (Gov.

CalHDF urges the City to approve it, consistent with its obligations under state law.

CalHDF is a 501(c)(3) non-profit corporation whose mission includes advocating for increased access to housing for Californians at all income levels, including low-income households. You may learn more about CalHDF at www.calhdf.org. 2 of 3
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668 E 3rd Ave "Gateway“
Eight Story Multifamily Residential Building
PA-2025-025
City Council Public Hearing
May 2, 2026
Liz Gagliardi, Associate Planner
Community Development Department
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PRESENTATION OVERVIEW
• PROJECT BACKGROUND
• Project History
• Location
• Project Description
• Entitlements
• CODE & POLICY REVIEW
• General Plan, Zoning Code & Local Plans
• State Law
• Affordable Housing
• Design Review
• Impact Fees
• Environmental Review
• PUBLIC NOTICE
• STAFF RECOMMENDATION
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PROJECT BACKGROUND
• Pre-Application
• SB 330 Preliminary Application filed
on November 13, 2024
• Neighborhood Informational
Meeting held on March 19, 2025
• Formal Planning Application
• Filed on April 2, 2025
• Refined project design
• Environmental Review – Exempt
from CEQA under AB130
Project History
Location
Project Description
Entitlements
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4 Project Site Caltrain rail
corridor
Downtown Caltrain Station
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5 Existing Office (to remain on neighboring parcel)
Existing Gas Station (to remain on neighboring parcel)
Existing Commercial – to be demolished on project site
Block 21
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PROJECT BACKGROUND
Project History
Location
Project Description
Entitlements
Project Site
Metropolitan
Block 21
Block 20
222 S. Fremont
Downtown
San Mateo
Downtown
Caltrain Station
Kiku Crossing
Bespoke
Draeger’s
Kiku Garage
Project Site – 668 E 3rd Avenue

0.64 Acres
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PROJECT BACKGROUND
• Approx. 169,750 sq.ft. building – residential use
• 128 residential rental units
• 20 affordable units (10 for very-low income, 10 for moderate income) • 8 stories (83’-9” to top plate, 88’-9” to parapet)
• 73 covered parking stalls (includes 1 level below grade parking garage). Vehicle access off of S. Eldorado St.
• Residential amenities – fitness room, amenity deck on 3rd floor, common room & amenity deck/BBQ area on 8th floor
Project History
Location
Project Description
Entitlements
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PROJECT BACKGROUND
Unit Mix
128 total units (108 market rate + 20 below market rate) Project History
Location
Project Description
Entitlements
Unit Type BMR Units
(VLI)
BMR Units
(Moderate)
Market
Rate Units
Total Units
Studio 0 1 0 1
Urban 1-
bed
4 2 46 52
1-bed 3 4 30 37
2-bed 2 3 28 33
3-bed 1 0 4 5
Total Units 10 10 108 128
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PROJECT BACKGROUND
• Site Plan & Architectural Review (SPAR)
• New multifamily residential building.
• Requires City Council approval (building exceeds
General Plan height limit)
• Site Development Planning Application (SDPA)
• Removal of 9 total trees, including 4 protected trees • Replacement planting (16 trees) and landscape unit inlieu fees Project History
Location
Project Description
Entitlements
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CODE AND POLICY
REVIEW
• State Density Bonus Law
• “Stacked” Density Bonus
• 50% Density Increase for providing 15% of units at BMR - Very Low Income
• 50 % Density Increase for providing 15% of units at BMR - Moderate Income
• Up to 3 Concessions
• Unlimited Waivers
• Proposed Project
• 100% Density Increase (128 Units)
• 15% of base density (10 Units) for Very Low Income
• 15% of base density (10 Units) for Moderate Income
• No Concessions requested
• Waivers from Development Standards
• Reduced setbacks & stepbacks
• Increased building height
• Loading zone dimensions & location
• Objective Design Standards
General Plan and Zoning Code &
Local Plans
State Law
Affordable Housing
Design Review
Impact Fees
Environmental Review
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CODE AND POLICY
REVIEW
• General Plan Land Use – Mixed Use Medium II
General Plan, Zoning Code &
Local Plans
State Law
Affordable Housing
Design Review
Impact Fees
Environmental Review
Mixed Use Medium II Maximum Proposed
Density (DU/acre) 99 (64 units) 200 (128 units)
Height 6 stories 8 stories
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CODE AND POLICY
REVIEW
• Zoning: CBD/S (Central Business District Support)
• Downtown Area Plan: Gateway Sub-Area
General Plan, Zoning Code &
Local Plans
State Law
Affordable Housing
Design Review
Impact Fees
Environmental Review
Other Standards
(Zoning & Local Plans)
Minimum Required Proposed
Setbacks & Stepbacks
• Front
• Left Side
• Right Side
• Rear
Front setback: 15’-20’
• Front Stepback: +8’ for
portion of building over
30’
Left Side: 15’-20’ Right
Side: 15’-20’
• Side Stepbacks: +8’ for
portion of building over
25’
Rear: -
Front: 3.1’
Left Side: 9’
Right Side: 2.5’
Rear: 2.4’
Parking None Required
(AB2097)
73 Stalls
Bicycle Parking 139 (Long Term)
9 (Short Term)
140 (Long Term)
10 (Short Term)
Loading 1 1
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CODE AND POLICY
REVIEW
Density Bonus Waivers
General Plan and Zoning Code &
Local Plans
State Law
Affordable Housing
Design Review
Impact Fees
Environmental Review
Standard
Loading Berth – SMMC Section 27.64.390
Turning Radii – SMMC Section 27.64.130
Building Height – General Plan 2040 Mixed Use Medium II Blank Walls – ODS 4.1.1
Massing Breaks – ODS 4.4.7.A.3.b
Façade Design – ODS 7.1.1.B
Setbacks – ODS 7.7.1.A.2 & .3
Stepbacks – ODS 7.7.1.B.1 & .2
Residential Entries – ODS 7.7.3.A.1 & 7.7.3.A.3.b
Ground Floor Residential Entries – ODS 4.2.1
Architectural Style & Materials – ODS 7.7.1.D
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CODE AND POLICY
REVIEW
General Plan and Zoning Code &
Local Plans
State Law
Affordable Housing
Design Review
Impact Fees
Environmental Review
• Housing Crisis Act (Senate Bill 330)
• Preliminary Application- November 13, 2024
• Project vesting date – freezes development standards and fee structure
• Housing Accountability Act (HAA)
• Limits a local agency’s ability to deny, reduce the density of, or render housing development projects infeasible if objective standards are met
• Assembly Bill (AB) 130
• New California Environmental Quality Act (CEQA) exemption for housing development projects
• Expedited review process
• Assembly Bill (AB) 2097
• Removes minimum parking requirements for projects within onehalf mile from major public transit stop 192 of 662

CODE AND POLICY
REVIEW
City’s Below Market Rate(BMR)
Inclusionary Program
• Projects with 11 or more rental units, must
provide at least:
• 15% of the units for Lower-Income Households; or
• 10% of the units for Very Low-Income Households
• This project exceeds local BMR requirements by
providing:
• 15% of the units for Very Low-Income Households; and
• 15% of the units for Moderate-Income Households.
• The units proposed at the Very Low-Income level
must also meet local requirements for unit size,
type, and design.

General Plan and Zoning Code &
Local Plans
State Law
Affordable Housing
Design Review
Impact Fees
Environmental Review
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CODE AND POLICY
REVIEW
General Plan and Zoning Code &
Local Plans
State Law
Affordable Housing
Design Review
Impact Fees
Environmental Review
E. 3rd Ave S. Delaware St.
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View of “Townhome Style” Units from East 3rd Avenue
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Detailed View of “Townhome Style” Units from East 3rd Avenue 196 of 662
View of Lobby Entrance from corner of East 3rd Avenue & South Delaware St. 197 of 662
View from East 3rd Avenue
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View from South Delaware St.
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View from corner of East 3rd Avenue & South Eldorado St. 200 of 662
View from South Eldorado St.
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Rear (Southeast) Elevation
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CODE AND POLICY
REVIEW
General Plan and Zoning Code &
Local Plans
State Law
Affordable Housing
Design Review
Impact Fees
Environmental Review
Fee Estimate
Childcare Development Fee $432,000
Park Impact Fee $2.37 million
Wastewater Capacity Charge $920,000
School Impact Fees $4.94 per square foot
Landscape Unit In-Lieu Fee $11,750
Public Art In-Lieu Fee 1.19% of building valuation
Transportation Improvement
Fee
$479,000
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CODE AND POLICY
REVIEW
California Environmental Quality Act (CEQA)
• Exempt from CEQA pursuant to Public
Resources Code Section 21080.66 (AB 130)
• Effective date: June 20, 2025
• Requires expedited project review & decision
timeline
• Tribal Consultation requirements
General Plan and Zoning Code &
Local Plans
State Law
Affordable Housing
Design Review
Impact Fees
Environmental Review
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PUBLIC NOTICE
• Neighborhood Meeting: March 19, 2025
• 40 attendees
• Comments related to parking, traffic & construction impacts, loss of existing business/retail.
• Public Noticing: 10 days in advance of hearing & newspaper notice 205 of 662

PLANNING COMMISSION SUMMARY
• Planning Commission public hearing on February 10, 2026 • Planning Commission recommended City Council approval of the project, by unanimous vote (with one Commissioner
recused)
• Added a recommendation to provide flexibility for the applicant to propose a more colorful decorative tile at the project entry feature. 206 of 662

PLANNING COMMISSION RECOMMENDATION
Add a new condition of approval to include the following:

DECORATIVE TILE AT ENTRY FEATURE – The applicant may propose an alternative colored and/or patterned tile design for the approved decorative tile at the Project entryway, subject to review and approval by the Community Development Director or
designee.
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STAFF RECOMMENDATION
Adopt a Resolution to approve the Site Plan and Architectural Review (SPAR), and Site Development Planning Application (SDPA) for the construction of a new multi-family residential building with 128 units and associated site improvements at 668 East 3rd Avenue, and find that the Project is Statutorily Exempt from the California Environmental Quality Act (CEQA) pursuant to Assembly Bill 130, based on the findings for approval and subject to the conditions of approval.
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Thank You
Liz Gagliardi, Associate Planner
Community Development Department
[email protected]
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SAN MATEO,
California
668 E. 3RD AVE.

MARCH 2ND, 2026

CITY COUNCIL MEETING
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 1 JONES ARCHITECTURE 210 of 662

METROPOLITAN
715 N. SAN MATEO DRIVE

B STREET SOUTH

BRICKLINE

BESPOKE
1ST AND B
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 2 JONES ARCHITECTURE

PROMETHEUS - SAN MATEO
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• Residential & Mixed-uses per 2040 General Plan
• Mixed-Use Medium II

PROJECT SITE
Source: City of San Mateo, 2022; ESRI, 2022; PlaceWorks, 2025.

Adopted: March 18, 2024
Last Amended: March 17, 2025
Strive San Mateo General Plan 2040 38
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 3 JONES ARCHITECTURE 2040 GENERAL PLAN
212 of 662
• Specific Plan Area Standards per city’s
Objective Design Standards:
- 7.1 Downtown Plan Area
- 7.7 Vision of the Gateway
• New development within each plan area
is required to implement a Mediterranean
architectural style
• Proposed plan is to redevelop an aging
retail center & parking lot to enhance
surrounding neighborhood.
• Site in close proximity to historic
downtown and Caltrain
• Direct access to major transportation routes
Project Site
Vision of the Gateway Specific Plan Area
Downtown Specific Plan Area
Historic Downtown
Prometheus Properties

CALTRAIN
KEY
E 4TH AVE 3RD AVE

S DELAWARE ST

EL CAMINO REAL

SAN MATEO CREEK

DOWNTOWN HISTORIC
HWY 101

THE GATEWAY VISION OF
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 4 JONES ARCHITECTURE
SITE CONTEXT + SPECIFIC PLAN AREAS
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San Mateo’s Multifamily
Objective Design Standards:
• Preserve and enhance
the City’s architectural
character
• Ensure high-quality,
well-designed new
development
Project Overview
• 8-story multifamily
building
• Internal parking garage
• Corner plaza at 3rd Street
& Delaware main entry
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 5 JONES ARCHITECTURE

ARCHITECTURAL PROPOSAL
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Architectural Approach
• Contemporary
Mediterranean
interpretation of Spanish
Revival architecture [7.1.2]
• Light-colored stucco
façades, low-pitched
roofs/sloped parapets, and
red tile roofing reinforce
region’s heritage [7.1.2]
Design Alignment with
City Guidelines
• High-quality materials
and construction that
enhanced neighborhood
character [4.7]
• Integrated open space
improving pedestrian
experience [7.1.3]
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 6 JONES ARCHITECTURE

ARCHITECTURAL CONCEPT
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• 7 of 13 Spanish
Revival architectural
elements are
required in the ODS
specific plans. [7.1.2,

7.7.2]
• The architecture
incorporates 8 of the
elements into the
design.

1. Multi-level roofs

2. Asymmetrical massing

3. Arches

4. Ornamental details

5. Spiral columns

6. Multi-pane windows

7. Window grilles

8. Elaborate chimney tops

9. Round or square towers

10. Decorative tiles

11. Decorative ironwork

12. Ornamental door/
window surrounds

13. Deep recessed openings
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 7 JONES ARCHITECTURE

BUILDING DESIGN & ARCHITECTURE
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• Primary building entry
and lobby are located on
the active corner of 3rd &
Delaware. [4.6]
• Publicly accessible open
space is sited adjacent
to the main entry, further
activating the street
corner [3.1, 3.3, 5.1, 7.1]
• Ground Story units with
recessed entries, stoops,
and landscape buffers
located on 3rd Ave. [7.7]
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 8 JONES ARCHITECTURE

SITE PLANNING & PROGRAM
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• Entry corner activated
with colonnade of arches,
decorative tiles, and lush
plantings. [3.1, 4.6, 5.1]
• Fine detailing of
the Mediterranean
architectural elements
enriches the facade and
creates layering and
depth [7.1.2, 7.7.2]
• Brick detailing at the base
of the building grounds
the overall massing and
establishes a humanscaled architecture [7.1.2,

7.7.2]
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 9 JONES ARCHITECTURE

BUILDING DESIGN & ARCHITECTURE
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• Deep, protected porches
introduce shadow and
depth, creating a more
intimate street experience
[7.1.2, 7.7.3]
• Canopies and recessed
balconies articulate façades,
minimizing vertical
height while creating depth
& interest [7.1.2, 7.7.1]
• Textured cornice and
pergola at
third-story step backs
visually cap the residential
volume, reinforcing a
residential scale [7.1.2, 7.7.1]
• Rich landscaping softens
the street edge, buffering
ground-story units and
enhancing the pedestrian
realm [7.1.3, 7.7.3]
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 10 JONES ARCHITECTURE

BUILDING DESIGN & ARCHITECTURE
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THANK YOU
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 11 JONES ARCHITECTURE 220 of 662

QUESTIONS
668 E. 3RD AVE., SAN MATEO, CA | CITY COUNCIL MEETING | MARCH 2, 2026 12 JONES ARCHITECTURE 221 of 662

CITY OF SAN MATEO

CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 6 Section Name: PUBLIC HEARING Account Number: 10-1311 File ID: 26-10836 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: City Manager's Office
MEETING DATE: March 2, 2026
SUBJECT:

Reach Codes for the 2025 Code Cycle — Ordinance Introduction RECOMMENDATION:

Introduce an Ordinance to amend San Mateo Municipal Code Chapter 23.24 "Energy Code" to require energy conservation measures for air conditioner alterations, replacements and installations in single family homes, duplexes and townhomes; energy conservation measures for heating, ventilation and air conditioner replacements and installations in nonresidential buildings; and increased efficiency and electric readiness requirements for additions and alterations to single family homes, duplexes, and townhomes; and adopt a Resolution making findings that the proposed changes or modifications are reasonably necessary due to local climatic, geographical, or topographical conditions.

BACKGROUND:

Every three years, California updates its Building Standards Code, known as Title 24, to incorporate the latest technology, best practices, and policy goals for safe, efficient, and sustainable buildings. Title 24 includes requirements for building safety, energy efficiency, and green building practices. The California Energy Code establishes minimum energy efficiency standards, such as for insulation, heating and cooling systems, lighting, and solar. The City of San Mateo updates its building codes every three years in alignment with the state’s code cycle and often adopts local amendments that exceed the state’s minimum requirements, particularly as related to energy efficiency and green building (“reach code” or “reach codes”). In 2015, San Mateo established its first reach code, and since then has regularly explored and adopted reach codes to meet the City’s Climate Action Plan greenhouse gas emission reduction targets.

Peninsula Clean Energy (PCE) is a joint powers agency established in 2016 to provide clean electricity in San Mateo County.

PCE supports jurisdictions in the adoption of reach codes to advance local and regional climate goals. Through the Bay Area Reach Codes effort, PCE, in partnership with Silicon Valley Clean Energy (SVCE), provides model Ordinances and technical support to city staff. The Bay Area Reach Codes team developed model Ordinances for the following four reach code options:
1) Cooling upgrade requirements for single family homes, duplexes and townhomes 2) Cooling upgrade requirements for non-residential buildings 3) FlexPath for single family homes, duplexes and townhomes 4) Electric-readiness requirements for single family homes, duplexes and townhomes At the November 3, 2025 City Council meeting, staff reviewed these four reach code options in detail including costeffectiveness analysis, estimated greenhouse gas emission reductions, potential impacted number of permits per year, and other cities with similar reach codes. The report also summarized the broad outreach and engagement conducted, which included community and contractor meetings, and posting flyers in the libraries and recreation centers as well as through the City’s online social media channels and eNews. Staff also shared feedback from the October 8, 2025 Sustainability and Infrastructure Commission meeting. At the November 3, 2025 City Council meeting, City Council directed staff to develop 222 of 662

CITY OF SAN MATEO
an Ordinance that includes all four reach code options. For Reach Code Option 3 FlexPath, City Council specified that the projects covered should be defined as additions and alterations of 1,000 square feet or more and that the target score should be 12.

PROPOSED ORDINANCE
The Ordinance does not require whole home electrification, nor does the Ordinance necessitate a property owner to initiate a project for the sole purpose of meeting the reach code requirements. In contrast to the Electrify San Mateo Sustainable Building Strategy effort that reviewed broad policy areas to electrify existing buildings and whole home electrification costs, the Ordinance requirements hone in on specific project opportunities to encourage building electrification and energy efficiency when work is already voluntarily being completed. The following summarizes key components of the Ordinance:
• Cooling upgrade requirements for single family homes, duplexes and townhomes: When a property owner opts to install a new or replacement air conditioner unit in a single family home, duplex or townhome, the proposed Ordinance requires more stringent energy standards for the new and replacement air conditioning installations and maintains state minimum requirements for new heat pump installations. The more stringent energy standards are related to attic insulation, duct insulation, air sealing, fan efficacy, and refrigerant charge verification.

Ordinance requirements do not apply to gas furnace replacements or repairs. • Cooling upgrade requirements for non-residential buildings: When a property owner opts to install a new or replacement air conditioner unit between 5 and 20 tons in a nonresidential building, the proposed Ordinance requires more stringent energy standards for the air conditioner system installation and maintains state minimum requirements for heat pump installations. Property owners can either install a single zone heat pump or a single zone air conditioner system with a furnace plus a heat recovery ventilator. • FlexPath for single family homes, duplexes and townhomes: When a property opts to do an addition or alteration of 1,000 square feet or more in a single family home, duplex or townhome, the proposed Ordinance requires the project to incorporate energy efficiency measures or electrification upgrades selected from a menu to achieve a target score of 12. The types of projects that would be applicable to the FlexPath are elective major residential addition/renovation projects that may include plumbing, electrical and mechanical upgrades. Applicants of these types of projects typically already have an architect, engineer, and energy code compliance expert on their design team who could help facilitate compliance with the FlexPath reach code. This reach code would not apply to routine repairs and maintenance, hazard mitigation, roof or windows projects, or ADUs. The Ordinance language includes economic hardship and technical infeasibility exceptions. • Electric-readiness requirements for single family homes, duplexes and townhomes: The proposed Ordinance requires specific additions and alterations to include electric readiness as part of their project, such as when conducting electrical work within three feet of an existing appliance. The requirements are focused on pre-wiring for gas cooking, water heating, clothes drying and outdoor appliances to reduce future retrofit costs.

COST EFFECTIVENESS
The California Energy Commission (CEC) requires any local amendments to the Energy Code that affect energy use in regulated buildings to be cost effective and use less than the standard requirements. In support of reach code development, the California Energy Codes and Standards Statewide utility Program, which includes the State’s Investor Owned Utilities (PG&E, SDG&E, and SCE, under the auspices of the California Public Utilities Commission) developed and published the following studies:
• 2025 Cost-Effectiveness Study: Single Family AC to Heat Pump Replacement1 • 2025 Nonresidential Alterations: Reach Code Study2
1 https://localenergycodes.com/download/2034/file_path/fieldList/2025%20Single%20Family%20AC%20to%20HP%20Costeff%20Study.pdf 2 https://localenergycodes.com/download/2049/file_path/fieldList/2025%20NR%20Alterations%20CostEff%20Report.pdf 223 of 662

CITY OF SAN MATEO
• 2022 Cost-Effectiveness Study: Existing Single Family Building Upgrades5 • Application of the 2022 Studies to 2025 Energy Code: Existing Single Family Building Upgrades6 These studies are highly detailed and support the findings required for CEC approval. These studies are available at the referenced weblinks and also attached to this agenda report for convenience.

PROPOSED RESOLUTION
California Health and Safety Code Sections 17922, 17958, 17958.5, 17958.7, and 18941.5 authorizes the City to make local amendments to the California Energy Code based upon express findings that the changes or modifications are reasonably necessary due to local climatic, geographical, or topographical conditions. Furthermore, local jurisdictions have the authority to adopt local 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, provided the City Council finds 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.

The proposed resolution makes the express findings required. Note, California Assembly Bill 130 (AB 130) restricts cities and counties from adopting local amendments to the California Building Standards Code applicable to residential units until June 1, 2031, with certain exceptions. The proposed Ordinance is within an exception provided in AB 130 and California Health and Safety Code Sections 17958.5, and 17958.7. Specifically, the proposed Ordinance is excepted from AB 130 because these proposed requirements align with City’s general plan approved on or before June 10, 2025, and permits mixed-fuel residential construction consistent with federal law while also incentivizing all-electric construction as part of an adopted greenhouse gas emissions reduction strategy. On March 18, 2024, the City adopted the City’s General Plan as well as an updated Climate Action Plan. The proposed Ordinance requirements align with policies and actions included in the General Plan Land Use Element including, “Policy LU-10.2 Decarbonized Building Stock. Eliminate the use of fossil fuels as an energy source in all new building construction and reduce the use of fossil fuels as an energy source in the existing building stock at the time of building alteration through requirements for all-electric construction.” and “Action LU

10.8 Building Decarbonization. Evaluate and adopt reach codes and other policies to decarbonize the building stock.” The City’s Climate Action Plan serves as the City’s qualified greenhouse gas emissions reduction strategy which also identifies building decarbonization, energy performance and reach codes as a key actions to achieving climate goals.

NEXT STEPS
After Ordinance introduction and adoption, reach codes need to be filed and approved by the California Energy Commission (CEC) and filed and accepted by the Building Standards Commission (BSC) before they can be enforced. CEC approval can take roughly four months. Once the reach codes are in effect, staff will monitor and evaluate reach code implementation and provide a report during the annual Climate Action Plan progress report to City Council which typically occurs in May or June of each year. To educate the community about these new regulations, reach code information will be available on the City’s reach codes web page, posted on the City’s Customer Self-Service Online Permit Portal, and included in various checklists, guidelines and forms that help contractors and community members navigate the City’s permitting process.

Reach codes for new construction cannot be evaluated at this time because cost-effectiveness studies are not yet available. Cost-effective studies are anticipated for Spring 2026. Staff will return to the Sustainability and Infrastructure Commission and City Council when these studies and model reach codes are made available.

Staff recommends City Council introduction of the proposed Ordinance and adoption of the proposed Resolution.

BUDGET IMPACT:

There is no budget impact.
5 https://localenergycodes.com/download/1222/file_path/fieldList/Single%20Family%20Retrofits%20CostEff%20Report.pdf 6 https://localenergycodes.com/download/2081/file_path/fieldList/2022+to+2025+FlexPath+Memo.pdf 224 of 662

CITY OF SAN MATEO
ENVIRONMENTAL DETERMINATION:

This action to adopt reach codes and amend the Energy Code is categorically exempt from CEQA as an action by a regulatory agency for the protection of the environment, because reach codes are intended to reduce greenhouse gas emissions. (CEQA Guidelines Section 15308.)

NOTICE PROVIDED
All meeting noticing requirements were met.

ATTACHMENTS
Att 1 – Proposed Ordinance
Att 2 – Proposed Ordinance - Tracked Changes
Att 3 – Proposed Resolution
Att 4 – 2025 Cost-Effectiveness Study: Single Family AC to Heat Pump Replacement Att 5 – 2025 Nonresidential Alterations: Reach Code Study Att 6 – 2022 Cost-Effectiveness Study: Existing Single Family Building Upgrades Att 7 – Application of the 2022 Studies to 2025 Energy Code Att 8 – Public Comment

STAFF CONTACT
Andrea Chow, Sustainability Analyst
[email protected]
(650) 522-7007
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1 CITY OF SAN MATEO

DRAFT ORDINANCE
Amending the San Mateo Municipal Code Chapter 23.24 “Energy Code” of Title 23 to amend the California Energy Code, 2025 Edition
WHEREAS, the City of San Mateo’s (City) Climate Action Plan recommends the City review local amendments to the California Energy Code to promote building electrification and energy efficiency; and WHEREAS, California Energy Code, 2025 Edition, was adopted by the City of San Mateo on November 3, 2025; and
WHEREAS, the proposed ordinance amends the California Energy Code to require energy conservation measures for air conditioner alterations, replacements and installations in existing single family homes, duplexes and townhomes; and
WHEREAS, the proposed ordinance amends the California Energy Code to require energy conservation measures for heating, ventilation and air conditioner replacements and installations in existing nonresidential buildings; and
WHEREAS, the proposed ordinance amends the California Energy Code to require increased efficiency and electric readiness requirements for additions and alterations to single family homes, duplexes, and townhomes; and
WHEREAS, California Health and Safety Code Sections 17922, 17958, 17958.5, 17958.7, and 18941.5 authorizes the City to make local amendments to the California Energy Code based upon express findings that such changes or modifications are reasonably necessary due to local climatic, geographical, or topographical conditions; and
WHEREAS, concurrent with this ordinance, the City Council of the City of San Mateo has adopted a resolution adopting express findings in support of local amendments to the California Energy Code, 2025 Edition; and
WHEREAS, Public Resources Code Section 25402.1(h)2 and Section 10-106 of the Building Energy Efficiency Standards (Standards) establish a process which allows local adoption of energy standards that are more stringent than the statewide Standards, provided that such local standards are cost effective and the California Energy Commission finds that the standards will require building to be designed to consume no more energy than permitted by the California Energy Code; and WHEREAS, staff has reviewed the cost effectiveness studies prepared by the California Statewide Codes and Standards Reach Code Program and associated study data and find them sufficient to illustrate compliance with the requirements set forth under California Administrative Code Chapter 10-106; and WHEREAS, based on these studies, the City of San Mateo finds that the local modifications are costeffective and will require buildings to be designed to consume no more energy than permitted by the California Energy Code; and
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2 WHEREAS, the proposed ordinance is consistent with Assembly Bill 130, as it is necessary to implement a local code amendment that is adopted to align with the City’s general plan approved before June 10, 2025, and permits mixed-fuel residential construction consistent with federal law while also incentivizes all-electric construction as part of an adopted greenhouse gas emissions reduction strategy.

NOW, THEREFORE, THE COUNCIL OF THE CITY OF SAN MATEO ORDAINS AS FOLLOWS:

Section 1. Section 23.24.010 of the San Mateo Municipal Code is amended as follows:

23.24.010 Adoption
(a) The California Energy Code, 2025 Edition, Title 24, Part 6 of the California Code of Regulations, as adopted and amended by the State of California, hereinafter called "Energy Code," is adopted as the rules, regulations and standards within this City as to all matters therein except as hereinafter modified or amended. (b) No section of the Energy Code shall impose a mandatory duty of enforcement on the City, or on any officer, official, agent, employee, board, council or commission thereof. Instead, if any section purports to impose a mandatory duty of enforcement, said section shall be deemed to invest the City, and the appropriate officer, official, agent, employee, board, council or commission thereof with discretion to enforce the section or not enforce it.
(c) One Copy of the Energy Code shall at all times be kept on file in the office of the City Clerk.

Section 2. Section 23.24.020 of the San Mateo Municipal Code is added to Chapter 23.24 as follows:

23.24.020 Energy Conservation Measures for Air Conditioner Alterations, Replacements and Installations in Existing Single-Family Buildings
(a) Energy Code subsection 150.2(b)1C is hereby amended to read:

C. Entirely new or complete replacement space-conditioning systems installed as part of an alteration, shall include all the system heating or cooling equipment, including but not limited to: condensing unit cooling or heating coil, and air handler for split systems; or complete replacement of a packaged unit; plus entirely new or replacement duct system (Section 150.2(b)1Diia). Entirely new or complete replacement space-conditioning systems shall meet the requirements of Sections 150.0(h), 150.0(i), 150.0(j)1, 150.0(j)2, 150.0(m)1 through 150.0(m)10; 150.0(m)12; 150.0(m)13, 150.1(c)7, 150.2(b)1G, and TABLE 150.2-A. Additionally, where an entirely new or complete replacement space conditioning system includes a new or replacement air-cooled air conditioner in Climate Zones 1 through 14 and 16, it shall meet the applicable requirements of Section 150.2(b)1Fiv. Where an entirely new or complete replacement space conditioning system includes a new or replacement heat pump, it shall meet the applicable requirements of Section 150.2(b)1Fv.
(b) Energy Code subsection 150.2(b)1F is hereby amended to read:
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3 F. Altered space-conditioning system - mechanical cooling. Alterations which install new or replacement air-cooled air conditioners shall meet the applicable requirements of subsections i and iv. Alterations which install new or replacement heat pumps shall meet the applicable requirements of subsections i, ii, iii, and v. All other alterations to refrigerant containing components such as the compressor, condensing coil, evaporator coil, refrigerant metering device, or refrigerant piping, shall meet the applicable requirements of subsections i, ii, and iii:
i. All thermostats associated with the system shall be replaced with setback thermostats meeting the requirements of Section 110.2(c).
ii. Air-cooled air conditioners in Climate Zones 2 and 8 through 15 and air-source heat pumps in all climate zones, including but not limited to ducted split systems, ducted package systems, small duct high velocity air systems, and minisplit systems, shall comply with Subsections a and b, unless the system is of a type that cannot be verified using the specified procedures. Systems that cannot comply with the requirements of 150.2(b)1Fii shall comply with Section 150.2(b)1Fiii.

Exception to Section 150.2(b)1Fii: Entirely new or complete replacement packaged systems for which the manufacturer has verified correct system refrigerant charge prior to shipment from the factory are not required to have refrigerant charge confirmed through field verification and diagnostic testing. The installer of these packaged systems shall certify on the Certificate of Installation that the packaged system was pre-charged at the factory and has not been altered in a way that would affect the charge. Ducted systems shall comply with minimum system airflow rate requirement in Section 150.2(b)1Fiia, provided that the system is of a type that can be verified using the procedure specified in RA3.3 or an approved alternative in RA1. a. Minimum system airflow rate shall comply with the applicable Subsection I or II below as confirmed through field verification and diagnostic testing in accordance with the procedures specified in Reference Residential Appendix Section RA3.3 or an approved alternative procedure as specified in Section RA1.

1. Small duct high velocity systems shall demonstrate a minimum system airflow rate greater than or equal to 250 cfm per ton of nominal cooling capacity; or

2. All other air-cooled air conditioner or air-source heat pump systems shall demonstrate a minimum system airflow rate greater than or equal to 300 cfm per ton of nominal cooling capacity; and
Exception 1 to Section 150.2(b)1Fiia: Systems unable to comply with the minimum airflow rate requirement shall demonstrate compliance using the procedures in Section RA3.3.3.1.5; and the system's thermostat shall conform to the specifications in Section 110.12.
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4 Exception 2 to Section 150.2(b)1Fiia: Entirely new or complete replacement space conditioning systems, as specified by Section 150.2(b)1C, without zoning dampers may comply with the minimum airflow rate by meeting the applicable requirements in Tables-150.0-B or 150.0-C as confirmed by field verification and diagnostic testing in accordance with the procedures in Reference Residential Appendix Section RA3.1.4.4 and RA3.1.4.5. The design clean-filter pressure drop requirements of Section 150.0(m)12C for the system air filter device(s) shall conform to the requirements given in Tables150.0-B and 150.0-C.
b. The installer shall charge the system according to manufacturer’s specifications. Refrigerant charge shall be verified according to one of the following options, as applicable.

I. The installer and rater shall perform the standard charge verification procedure as specified in Reference Residential Appendix Section RA3.2.2, or an approved alternative procedure as specified in Section RA1; or II. The installer shall perform the weigh-in charging procedure as specified by Reference Residential Appendix Section RA3.2.3.1 provided the system is of a type that can be verified using the RA3.2.2 standard charge verification procedure and RA3.3 airflow rate verification procedure or approved alternatives in RA1. The ECC-Rater shall verify the charge using RA3.2.2 and RA3.3 or approved alternatives in RA1.

Exception to Section 150.2(b)1Fiii: Entirely new or complete replacement packaged systems for which the manufacturer has verified correct system refrigerant charge prior to shipment from the factory are not required to have refrigerant charge confirmed through field verification and diagnostic testing. The installer of these packaged systems shall certify on the Certificate of Installation that the packaged system was pre-charged at the factory and has not been altered in a way that would affect the charge. Ducted systems shall comply with minimum system airflow rate requirement in Section 150.2(b)1Fiiib, provided that the system is of a type that can be verified using the procedure specified in Section RA3.3 or an approved alternative in Section RA1.
(c) Energy Code subsection 150.2(b)1F is hereby amended to add new subsection 150.2(b)1Fiv:
iv. New or replacement air-cooled air conditioners in Climate Zones 1 through 14 and 16 shall meet the requirements of Section 150.2(b)1Fiva or 150.2(b)1Fivb. a. Systems with existing duct distribution systems shall meet the following requirements:

I. In all climate zones, meet the airflow and fan efficacy requirements of Section 150.0(m)13B, 150.0(m)13C, or 150.0(m)13D.

Exception 1 to Section 150.2(b)1FivaI: Single zone central forced air systems and zonally controlled central forced air systems may demonstrate compliance with an airflow greater than or equal to 300 CFM per ton of nominal cooling capacity.

II. In all climate zones, meet the refrigerant charge verification requirements of Section 150.2(b)1Fii; and
III. In all climate zones, vented attics shall have insulation installed to achieve a U-factor of 0.020 or insulation installed at the ceiling level shall result in an insulated thermal resistance of R-49 or greater for the insulation alone; luminaires not rated for insulation contact must be replaced or retrofitted with a fireproof cover that allows for insulation to be installed directly over the cover; and
Exception 1 to Section 150.2(b)1FivaIII: Dwelling units with at least R-38 existing insulation installed at the ceiling level.
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6 Exception 2 to Section 150.2(b)1FivaIII: Dwelling units where the alteration would directly cause the disturbance of asbestos unless the alteration is made in conjunction with asbestos abatement.
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6 Exception 3 to Section 150.2(b)1FivaIII: Dwelling units with knob and tube wiring located in the vented attic.

Exception 5 to Section 150.2(b)1FivaIII: Where the attic space above the altered dwelling unit is shared with other dwelling units and the requirements of Section 150.2(b)1FivaIII are not triggered for the other dwelling units.

IV. In all climate zones, air seal all accessible areas of the ceiling plane between the attic and the conditioned space in accordance with Section 110.7.

Exception 1 to Section 150.2(b)1FivaIV: Dwelling units with at least R-38 existing insulation installed at the ceiling level.

Exception 2 to Section 150.2(b)1FivaIV: Dwelling units where the alteration would directly cause the disturbance of asbestos unless the alteration is made in conjunction with asbestos abatement.

Exception 3 to Section 150.2(b)1FivaIV: Dwelling units with atmospherically vented space heating or water heating combustion appliances located inside the pressure boundary of the dwelling unit.
b. Systems with entirely new or complete replacement duct systems shall meet the following:

I. R-8 duct insulation shall be installed for all new ducts located in unconditioned space; and
II. In all climate zones, meet the airflow requirements of Section 150.0(m)13B, 150.0(m)13C, or 150.0(m)13D and demonstrate an air-handling unit fan efficacy of less than or equal to 0.35 W/CFM.

III. In all climate zones, meet the refrigerant charge verification requirements of Section 150.2(b)1Fii;
Exception 1 to Section 150.2(b)1Fiv: Where the capacity of the existing main electrical service panel is insufficient to supply the electrical capacity of a heat pump and where the existing main electrical service panel is sufficient to supply a new or replacement air conditioner, as calculated according to the requirements of California Electrical Code Article 220.83 or Article 220.87, systems shall comply with the applicable requirements of Sections 150.2(b)1Fi, 150.2(b)1Fii, and 150.2(b)1Fiii. Documentation of 232 of 662
7 electrical load calculations in accordance with Article 220 must be submitted to the enforcement agency prior to permitting for both the heat pump and proposed air conditioner.

Exception 2 to Section 150.2(b)1Fiv: Where the required capacity of a heat pump to meet the system selection requirements of Section 150.0(h)5 is greater than or equal to 12,000 Btu/h more than the greater of the required capacity of an air conditioner to meet the design cooling load OR the capacity of the existing air conditioner, systems shall comply with the applicable requirements of Sections 150.2(b)1Fi, 150.2(b)1Fii, and 150.2(b)1Fiii. Documentation of heating and cooling load calculations in accordance with 150.0(h) must be submitted to the enforcement agency prior to permitting for both the heat pump and proposed air conditioner.
(d) Energy Code subsection 150.2(b)1F is hereby amended to add new subsection 150.2(b)1Fv:
v. In all climate zones, heat pumps with supplementary heat, including, but not limited to, electric resistance heaters or gas furnace supplementary heating, shall comply with Section 150.0(h)7 and shall lock out supplementary heating above an outdoor air temperature of no greater than 35°F.
(e) Energy Code 150.2 Table 150.2-G is hereby amended to read as follows:

Table 150.2-G Standard Design for an Altered Component
Altered
Component
Standard Design Without Third Party
Verification of Existing Conditions Shall be
Based On
Standard Design With Third Party
Verification of Existing Conditions
Shall be Based On
Ceiling
Insulation,
Wall
Insulation,
and Raisedfloor
Insulation
The requirements of Sections 150.0(a), (c),
and (d).

The requirements of Section 150.2(b)1J for
altered ceilings and for entirely new or
complete replacement duct systems where
the air handler and ducts are located within a
vented attic.

The requirements of Section 150.2(b)1Fiv for
alterations which include new or replacement
air-cooled air conditioners.

The existing insulation R-value
Fenestration The requirements of Section 150.1(c)3A. The existing fenestration U-factor and
SHGC values as verified.

Window Film The requirements of Section 150.1(c)3A. The existing fenestration in the alteration shall be based on TABLE
110.6-A and TABLE 110.6-B.

Doors The U-factor of 0.20. The door area shall be
the door area of the existing building.

If the proposed U-factor is < 0.20,
the standard design shall be based
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8 on the existing U-factor value as
verified. Otherwise, the standard
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8 design shall be based on the Ufactor of 0.20. The door area shall be the door area of the existing
building.

Space-Heating
and SpaceCooling
Equipment
Table 150.1-A for equipment efficiency
requirements;
Section 150.2(b)1C for entirely new or
complete replacement systems;
Section 150.2(b)1F for refrigerant charge
verification, airflow, and fan efficacy
requirements.

Section 150.2(b)1Fiv for new or replacement
air-cooled air conditioners
The existing efficiency levels.

Air
Distribution
System – Duct
Sealing
The requirements of Sections 150.2(b)1D and
150.2(b)1E
The requirements of Sections
150.2(b)1D and 150.2(b)1E
Air
Distribution
System – Duct
Insulation
The requirements of Sections 150.2(b)1D,
and for new or replacement air-cooled air
conditioners, Section 150.2(b)1Fiv.

The existing efficiency levels.

Water
Heating
Systems
The requirements of Section 150.2(b)1Hii The existing efficiency level.

Roofing
Products
The requirements of Section 150.2(b)1I. The requirements of Section 150.2(b)1I
All Other
Measures
The proposed efficiency levels. The existing efficiency levels.

Section 3. Section 23.24.030 of the San Mateo Municipal Code is added to Chapter 23.24 as follows:

23.24.030 Energy Conservation Measures for Heating, Ventilation and Air Conditioner Replacements and Installations in Existing Nonresidential Buildings
(a) Energy Code subsection 141.0(b)2C is amended to add a new subsection 141.0(b)2Ciii as follows:
iii. In addition to the requirements in Section 141.0(b)2Cii above, new or replacement single zone packaged rooftop systems with direct expansion cooling with rated cooling capacity of 65,000 Btu/hr or more and less than 240,000 Btu/hr serving Financial Institution, Grocery, Library, Office, School, or Retail occupancies shall meet the applicable requirements specified in Table 141.0-E-1A or shall meet the performance compliance requirements of Section 141.0(b)3. 235 of 662
9 Table 141.0-E-1A – REQUIREMENTS FOR NEW OR REPLACMENT SZAC or SZHP, GREATER THAN 65,000 BTU/HR AND LESS THAN 240,000 BTU/HR System Size CZ 3
65,000 to 240,000 Btu/hr SZHP or SZAC3
SZHP = Single Zone Heat Pump
SZAC3 = Single Zone Air Conditioner with Furnace + Heat Recovery Ventilator Exception 1 to Section 141.0(b)2Ciii: Where the capacity of the existing main electrical service panel is insufficient to supply the electrical capacity of a heat pump and where the existing main electrical service panel is sufficient to supply a new or replacement air conditioner, as calculated according to the requirements of California Electrical Code Article 220. Documentation of electrical load calculations in accordance with Article 220 must be submitted to the enforcement agency prior to permitting for both the heat pump and proposed air conditioner.

Exception 2 to Section 141.0(b)2Ciii: Where a licensed structural engineer determines that the roof would need a structural upgrade to support the additional weight of an appropriately sized SZHP but would not need a structural upgrade to support an equivalent SZAC.

Section 4. Section 23.24.040 of the San Mateo Municipal Code is added to Chapter 23.24 as follows:

23.24.040 Increased Efficiency and Electric Readiness Requirements for Additions and Alterations in Single Family Buildings
(a) Energy Code 100.0 is amended to add a new subsection 100.0(i) as follows:
(i) Single Family Building Remodel Energy Reach Code - Purpose and Intent. In addition to all requirements of the California Energy Code applicable to Single Family building additions and alterations, the energy efficiency, renewable energy, and electric readiness measures specified in Sections 150.0(w) and 150.0(x) shall be required for certain single family additions and alterations. (b) Energy Code subsection 100.1(b) is amended to include the following definitions:

COVERED SINGLE FAMILY PROJECT shall mean any project in a Single Family residential building originally permitted for construction before 1992 that includes an alteration, addition or combined alteration and addition, that has an affected floor area that covers 1,000 square feet or greater.

Single-family residential buildings shall comply with the applicable requirements of Sections 150.0(a) through 150.0(v).
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10 NOTE: The requirements of Sections 150.0(a) through 150.0(v) apply to newly constructed buildings. Sections 150.2(a) and 150.2(b) specify which requirements of Sections 150.0(a) through 150.0(v) also apply to additions or alterations. In addition, Covered Single Family Projects shall also be required to comply with Section 150.0(w) and certain additions and alterations shall also be required to comply with Section 150.0(x). (d) Energy Code subsections 150.0(a) through 150.0(v) remain in full effect. (e) Energy Code Section 150.0 is amended to add a new subsection 150.0(w) as follows:
(w) A Covered Single Family Project shall install a set of measures from the Measure Menu Table, Table 150.0-J, to achieve a total Measure Point Score that is equal to or greater than the Target Score in Table 150.0-I. In addition, all mandatory measures listed in Table 150.0-J shall be installed. Measure verification shall be explicitly included as an addendum to the Certificate of Compliance to be filed pursuant to 2025 Title 24, Part 6, Section 10-103.

Installed measures shall meet the specifications in Table 150.0-K. Unless otherwise specified, the requirements shall apply to the entire dwelling unit, not just the additional or altered portion.

Measures from the Measure Menu table that are to be installed to satisfy requirements under the California Energy Code, Title 24, Part 6, may not count towards compliance with these requirements. Where these requirements conflict with other California Energy Code requirements, the stricter requirements shall prevail.

Exception 1 to 150.0(w): Creation of a new accessory dwelling unit or junior accessory dwelling unit that is within the existing space of a single family dwelling or accessory structure and includes an expansion of not more than 150 square feet beyond the same physical dimensions as the existing accessory structure. An expansion beyond the physical dimensions of the existing accessory structure shall be limited to accommodating ingress and egress. Or, if the project would not otherwise be a Covered Single Family Project were it not for the inclusion of an accessory dwelling unit or junior accessory dwelling unit that meets the criteria above.

Exception 2 to 150.0(w): Mobile Homes, Manufactured Housing, or Factory-built Housing as defined in Division 13 of the California Health and Safety 12 Code (commencing with Section 17000 of the Health and Safety Code).

Exception 3 to Section 150.0(w): The project is solely related to any of the following: a repair as defined by Title 24 Part 2 Section 202; medically necessary improvements; seismic safety improvements; safety improvement to remove a known hazard; roofing projects; fenestration projects; or Emergency Housing pursuant to Appendix P of the California Building Code.

Exception 4 to 150.0(w): If the applicant demonstrates, using Commission-certified compliance software as specified by Section 10-109(c) and Section 10-116, that the Energy Budget of the Proposed Building Design would be less than or equal to the Energy Budget of the building under the project if it included any set of measures that would achieve compliance under this Section 150.0(w).
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11 Exception 5 to 150.0(w): A Covered Single Family Project, other than an addition, that would not otherwise be subject to this section 150.0(w) but for installation of solar PV, solar water heating, EV charging, electrical upgrades for solar PV or EV charging, or energy storage.

Exception 6 to 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, or designee, then these measures shall not be required to be newly installed, and appropriate credit shall be included in the applicable compliance calculations.

Exception 7 to 150.0(w): A measure that is necessary for compliance is prohibited because of a covenant or other deed restriction on the property, such as a homeowners association covenant.

Exception 8 to 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 Building Official, or designee, and as regulated by the California Historic Building Code (Title 24, Part 8). In making a determination of exemption, the Planning Director or designee may require the submittal of an evaluation by an architectural historian or similar expert.

Exception 9 to 150.0(w): Due to conditions specific to the project, it is technically or economically infeasible to achieve compliance, the Building Official, or designee, may reduce the Target Score and/or waive some or all of the mandatory requirements.

Exception 10 to 150.0(w): If the project includes circumstances which constitute hardship or infeasibility, the applicant may request an exemption. In applying for an exemption, the burden is on the applicant to show hardship or infeasibility. Circumstances that constitute hardship or infeasibility shall include one or more of the following:
a. That the cost of achieving compliance exceeds 20% of the valuation of the cost of the project; or b. That it is technically infeasible to achieve compliance through all packages due to conditions specific to the project; or
c. That strict compliance with these standards would create or maintain a hazardous condition(s) and present a life safety risk to the occupants.

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 2025 California Energy Code (Title 24, Part 6) and referenced standards, or the 2025 California Green Building Standards (Title 24, Part 11) of the California Building Standards Code. Granting of exemption. If the Building Official, or 238 of 662
12 designee, 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 2025 California Energy Code (Title 24, Part 6) and referenced standards, or the 2025 California Green Building Standards (Title 24, Part 11) of the California Building Standards Code, the 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 Building Official, or designee.

2. Denial of exemption. If the Building Official, or designee, 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.

3. Appeals
A. Within 10 days of issuance of the Building Official’s, or designee’s, written decision, the applicant may submit a notice of appeal of the determination of the Building Official, or designee, regarding the grant or denial of an exemption or compliance with any other provision of this section. An appeal of a determination of the Building Official, or designee, shall be filed in writing with the Director of the Community Development Department.

Failure to file an appeal in accordance with the provisions of this section shall constitute a waiver of that applicant's rights to contest the written decision.

B. As soon as practicable after receiving the written notice of appeal, the Community Development Department shall review it for sufficiency. If found to be complete and in conformance with this section, the appeal hearing shall be scheduled for the next available date before the Director of the Community Development.

C. Written notice of the time and place for the hearing may be served by personal service, or first class mail to the address provided by the applicant on the notice of appeal. The failure of any person with an interest in the property to receive such properly addressed notice of the hearing shall not affect the validity of any proceedings under this section. Service by first class mail shall be effective on the date of mailing. The failure of the applicant to receive such properly addressed notice of the hearing shall not affect the validity of any proceedings under this section. 239 of 662
13 D. At the hearing, the applicant will be given an opportunity to present documentary evidence or witnesses concerning the written decision. The failure of the applicant to appear at the appeal hearing shall constitute a waiver of its right to appeal, and the written decision shall be upheld.

E. The Director may conduct the hearing informally, both as to the rules of procedure and admission of evidence, and in any manner which will provide a fair hearing to obtain additional evidence.

F. The Director’s decision on appeal shall be final and not subject to any further administrative appeals.

Table 150.0-I: TARGET SCORES
Target Score
Climate Zone 3 12
Table 150.0-J: MEASURE MENU
ID Measures Measure Points
E1 Lighting Measures Mandatory
E2 Water Heating Package 2
E3 Air Sealing 2
E4 R-49 Attic Insulation 4
E5 Duct Sealing 3
E6 New Ducts, R-8 Insulation + Duct Sealing 6
E7 Windows 4
E8 R-15 Wall Insulation 5
E9 R-19 Raised Floor Insulation 9
E10 R-30 Raised Floor Insulation 10
FS1 Heat Pump Water Heater Replacing Gas 12
FS2 High Eff. Heat Pump Water Heater Replacing Gas 13
FS3 Heat Pump Water Heater Replacing Electric 5
FS4 High Eff. Heat Pump Water Heater Replacing Electric 6 FS5 Heat Pump Space Conditioning System 18
FS6 High Eff. Heat Pump Space Conditioning System 19
FS7 Dual Fuel Heat Pump Space Conditioning System 18
FS8 Heat Pump Clothes Dryer 1
FS9 Induction Cooktop 1
PV Solar PV and Electric Readiness 13
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14 Table 150.0-K: MEASURE SPECIFICATIONS
ID Measure Specification
Energy Efficiency Measures
E1 Lighting Measures – Install lighting with an efficiency of 45 lumens per watt or greater in all interior and exterior screw-in fixtures. Install photocell, occupancy sensor or energy management system controls that meet the requirements of 150.0(k)3 in all outdoor lighting permanently mounted to a residential building or to other buildings on the same lot.

E2 Water Heating Package: Insulate all accessible hot water pipes with pipe insulation a minimum of ¾ inch thick. This includes insulating the supply pipe leaving the water heater, 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.

Exception: Upgraded fixtures are not required if existing fixtures have rated or measured flow rates of no more than ten percent greater than 2025 California Green Building Standards Code (Title 24, Part 11) Section 4.303 water efficiency requirements.

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. Weather-strip doors if not already present. Verification shall be conducted following a prescriptive checklist that outlines which building aspects need to be addressed by the permit applicant and verified by an inspector. Compliance can also be demonstrated with blower door testing conducted by a certified ECC 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 and seven for 1978 to 1991 vintage buildings. If combustion appliances are located within the pressure boundary of the building, conduct a combustion safety test by a certified ECC Rater or a professional certified by the Building Performance Institute, in accordance with the BPI Technical Standards for the Building Analyst Professional.

E4 R-49 Attic Insulation: Attic insulation shall be installed to achieve a weighted assembly Ufactor 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. 241 of 662
15 Exception: 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 2025 Title 24, Part 6, Section 150.2(b)1E. The duct system must be tested by a ECC Rater no more than three years prior to the Covered Single Family Project 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.

Exception: Buildings without ductwork or where the ducts are in conditioned space.

E6 New Ducts, R-8 insulation + Duct Sealing: Replace existing space conditioning ductwork with new R-8 ducts that meet the requirements of 2025 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 before the Covered Single Family Project 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 0.27.

E8 R-15 Wall Insulation: Install wall insulation in all exterior walls to achieve a weighted Ufactor of 0.095 or install wall insulation in all exterior wall cavities that shall result in an installed thermal resistance of R-15 or greater for the insulation alone.

E9 R-19 Raised 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.

E10 R-30 Raised 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.

Fuel Substitution and Solar PV Measures
FS1 Heat Pump Water Heater (HPWH) Replacing Gas: Replace existing natural gas water heater with a heat pump water heater that meets the requirements of Sections 110.3 and 150.2(b)1.H.iii.b.

FS2 High Efficiency Heat Pump Water Heater (HPWH) Replacing Gas: Replace existing natural gas water heater with heat pump water heater with a Northwest Energy Efficiency Alliance (NEEA) Tier 3 or higher rating that also meets the requirements of Sections 110.3 and 150.2(b)1.H.iii.c.
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16 FS3 Heat Pump Water Heater (HPWH) Replacing Electric: Replace existing electric resistance water heater with a heat pump water heater that meets the requirements of Sections 110.3 and 150.2(b)1.H.iii.b.

FS4 High Efficiency Heat Pump Water Heater (HPWH) Replacing Electric: Replace existing electric resistance water heater with heat pump water heater with a Northwest Energy Efficiency Alliance (NEEA) Tier 3 or higher rating that also meets the requirements of Sections 110.3, and 150.2(b)1.H.iii.c.

FS6 High Efficiency Heat Pump Space Conditioning System: Replace all existing gas and electric resistance primary space heating systems with an electric-only heat pump system that meets the requirements of Sections 110.2 and 150.2(b)1.C, 150.2(b)1.E, 150.2(b)1.F, and 150.2(b)1.G and one of the following:

A. A ducted heat pump system with a SEER2 rating of 16.5 or greater, an EER2 rating of

12.48 or greater and an HSPF2 rating of 9.5 or greater; or B. A ductless mini-split heat pump system with a SEER2 rating of 16.0 or greater, an EER2 rating of 12.0 or greater and an HSPF2 rating of 9.0 or greater FS7 Dual Fuel Heat Pump Space Conditioning System: Install a heat pump space conditioning system that meets the requirements of Sections 110.2 and 150.2(b)1.C, 150.2(b)1.E, 150.2(b)1.F, and 150.2(b)1.G and either:

A. Replaces all existing gas and electric resistance primary heating systems with a hybrid gas and electric heat pump system, or
B. Is an electric-heat pump system in tandem with a gas furnace and controls to use the gas furnace for backup heat only.

FS8 Heat Pump Clothes Dryer: Replace existing electric resistance or gas clothes dryer with heat pump dryer with no resistance element and cap gas line.

FS9 Induction Cooktop: Replace all existing gas and electric resistance stove tops with induction stove top and cap the gas line.

PV Solar PV and Electric Readiness: Install a solar PV system that meets the requirements of Section 150.1(c)14. In addition, for existing PV systems that had been installed prior to the application date of the current project, meet at least two of the electric readiness requirements in Section 150.0(x)1-6, regardless of whether they are otherwise required and regardless of the exceptions to Section 150.0(x).
(f) Energy Code Section 150.0 is amended to add 150.0(x) as follows:
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17 (x) Electric Readiness for Alterations and for Electric Readiness Credit for Solar PV Measure in Table 150.0-K.

1. Electric range. Where branch circuits or receptacles are added or altered in a kitchen and the work requires an electrical permit, install electrical components in accordance with the California Electrical Code. The electrical components shall include either of the following:

B. A pathway for a future 240 volt 50 amp minimum branch circuit that shall consist of either conductors or raceway from the main electrical service panel. The main electric panel shall have space reserved to allow for the installation of a double pole circuit breaker for a future electric range installation. The reserved space shall be permanently marked as “For Future 240V use”. The raceway or conductors shall terminate at a junction box within 3 feet of the appliance. The blank cover shall be identified as “240V ready”.

2. Electric dryer. Where a branch circuit is added or altered within 3 feet of a gas or propane clothes dryer and the work requires an electrical permit, install electrical components in accordance with the California Electrical Code. The electrical components shall include either of the following:

A. A dedicated 125 volt, 20 amp electrical receptacle that is connected to the electric panel with a 120/240 volt 3 conductor branch circuit rated at 30 amps minimum, within 3 feet from the appliance and accessible to the appliance with no obstructions. Both ends of the unused conductor shall be labeled with the word “spare” and be electrically isolated. Space shall be reserved for a single pole circuit breaker in the electrical panel adjacent to the circuit breaker for the branch circuit and labeled with the words “Future Use”; or,
B. A pathway for a future 240 volt 30 amp minimum branch circuit that shall consist of either conductors or raceway from the main electrical service panel. The main electric panel shall have space reserved to allow for the installation of a double pole circuit breaker for a future heat pump dryer installation. The reserved space shall be permanently marked as “For Future 240V use”. The raceway or conductors shall terminate at a junction box 244 of 662
18 within 3 feet of the appliance. The blank cover shall be identified as “240V ready”.

3. Heat pump water heater.

2.5 feet by 2.5 feet wide and 7 feet tall and shall include a condensate drain that is no more than 2 inches higher than the base of an installed water heater and allows natural draining without pump assistance or installed piping or tubing within 3 feet of the water heater location to a condensate drain or exterior location. If pump assistance is needed, a receptacle on a 120 volt, minimum 15 amp branch circuit for a condensate pump must be available within 3 feet of the water heater location.

B. Where branch circuits are altered or added within 3 feet of an existing gas or propane water heater or within 10 feet of the designated future location of a heat pump water heater as required under Section 150.0(x)3A, and the work requires an electrical permit, install electrical components in accordance with the California Electrical Code. The electrical components shall include either of the following:
i. A dedicated 125 volt, 20 amp electrical receptacle that is connected to the electric panel with a 120/240 volt 3 conductor, 10 AWG copper branch circuit rated at 30 amps minimum, within 3 feet from the water heater and accessible to the water heater with no obstructions. Both ends of the unused conductor shall be labeled with the word “spare” and be electrically isolated. Space shall be reserved for a single pole circuit breaker space in the electrical panel adjacent to the circuit breaker for the branch circuit and labeled with the words “Future 240V Use”; or
ii. A pathway for a future 240 volt 30 amp minimum branch circuit that shall consist of either conductors or raceway from the main electrical service panel. The main electric panel shall have space reserved to allow for the installation of a double pole circuit breaker for a future HPWH installation. The reserved space shall be permanently marked as “For Future 240V use”. The pathway shall terminate at a junction box within 3 feet of the appliance. The blank cover shall be identified as “240V ready”.
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19 4. Outdoor gas appliances. Where a gas line is added or extended to any pool water heater, spa water heater, sauna, fireplace, outdoor cooking appliance, or outdoor heating system, install infrastructure and reserve physical space to accommodate 246 of 662
19 future installation of an electric equivalent of that system that serves the same function, as certified by a registered design professional or licensed electrical contractor.

A. Install conduit designed to serve a future electric appliance(s) with the same function, including the appropriate voltage, phase, minimum amperage, and an electrical receptacle or junction box within five feet of the appliance that is accessible with no obstructions, in accordance with manufacturer requirements and the California Electrical Code. In lieu of or in addition to conduit, electrically isolated branch circuit wiring may be installed; and B. Label both ends of the unused conduit or conductors “For Future Electrical Appliance”; and
C. Reserve circuit breakers in the electrical panel(s) for each branch circuit, appropriately labeled; and
D. Designate physical space for future electric appliances, including equipment footprint, on the construction drawings. The footprint necessary for future electric appliances may overlap with the location of currently designed combustion equipment.

Exception to Section 150.0(x)4: Generator systems used for emergency power generation.

5. Battery Storage. As a measure qualifying the Solar PV credit under 150.0(w), meet the requirements A through D below.

A. At least one of the following shall be provided:
i. ESS ready interconnection equipment with a minimum backed up capacity of 60 amps and a minimum of four ESS supplied branch circuits, or
ii. A dedicated raceway from the main service to a panelboard (subpanel) that supplies the branch circuits in 150.0(s)2. All branch circuits are permitted to be supplied by the main service panel prior to the installation of an ESS. The trade size of the raceway shall be not less than one inch. The panelboard that supplies the branch circuits (subpanel) must be labeled “Subpanel shall include all backed-up load circuits.”
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20 B. A minimum of four branch circuits shall be identified and have their source of supply collocated at a single panelboard suitable to be supplied by the ESS. At least one circuit shall supply the refrigerator, one lighting circuit shall 248 of 662
20 be located near the primary egress, and at least one circuit shall supply a sleeping room receptacle outlet.

C. The main panelboard shall have a minimum busbar rating of 225 amps or sufficient capacity a battery storage system and circuits in paragraphs A and B above.

D. Sufficient space shall be reserved to allow future installation of a system isolation equipment/transfer switch within 3 feet of the main panelboard.

Raceways shall be installed between the panelboard and the system isolation equipment/transfer switch location to allow the connection of backup power source.

6. All-Electric Plan. As a measure qualifying the Solar PV credit under 150.0(w), provide a plan including single line diagrams and calculations for electrification of the equipment below. Calculations shall be in accordance with California Electrical Code Article 220.83 or 220.87.

A. All appliances with gas stub outs including space conditioning, water heating, range, and clothes dryer;
B. Low Power Level 2 EV charger; and
C. Battery storage system rated at 240 volts, 60 amp minimum.

Exception 1 to Section 150.0(x): The project is solely related to any of the following: a repair as defined by Title 24 Part 2 Section 202; medically necessary improvements; seismic safety improvements; safety improvement to remove a known hazard; or Emergency Housing pursuant to Appendix P of the California Building Code.

Exception 2 to Section 150.0(x): If an electrical permit is not otherwise required for the project other than compliance with this section.

Exception 3 to Section 150.0(x): Where upgrades to the existing electrical panel or utility service are not proposed, electrical panel capacity shall not be required to exceed the existing utility electrical service to the building to meet compliance with this section. Capacity and overcurrent protection spaces shall be reserved to the extent allowable under the existing electrical panel capacity. Tandem overcurrent protection devices shall be used to the extent permissible under the California Electrical Code.

Exception 4 to Section 150.0(x): Mobile Homes, Manufactured Housing, or Factory-built Housing as defined in Division 13 of the California Health and Safety 12 Code (commencing with Section 17000 of the Health and Safety Code).
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21 Exception 5 to Section 150.0(x): Creation of a new accessory dwelling unit or junior accessory dwelling unit that is within the existing space of a single family dwelling or accessory structure and includes an 250 of 662
21 expansion of not more than 150 square feet beyond the same physical dimensions as the existing accessory structure. An expansion beyond the physical dimensions of the existing accessory structure shall be limited to accommodating ingress and egress. Or, if the project would not otherwise be a Covered Single Family Project were it not for the inclusion of an accessory dwelling unit or junior accessory dwelling unit that meets the criteria above.
(g) Energy Code subsection 150.2(a) is amended to read as follows:
(a) 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), (x), and either Section 150.2(a)1 or 2.

Exception 1 to Section 150.2(a): Additions of 300 square feet or less are not required to comply with the roofing requirements of Section 150.1(c)11.

Exception 2 to Section 150.2(a): Existing inaccessible piping shall not require insulation as defined under Section 150.0(j)1.

Exception 3 to Section 150.2(a): Space-conditioning system. When heating or cooling will be extended to an addition from the existing system(s), the existing heating and cooling equipment need not comply with Part 6. The heating system capacity must be adequate to meet the minimum requirements of CRC 303.10.

Exception 4 to Section 150.2(a): Space-conditioning system ducts. When any length of duct is extended from an existing duct system to serve the addition, the existing duct system and the extended duct shall meet the applicable requirements specified in Section 150.2(b)1Di and 150.2(b)1Dii.

Exception 5 to Section 150.2(a): Additions 1,000 square feet or less are not required to comply with the ventilation cooling requirements of Section 150.1(c)12.

Exception 6 to Section 150.2(a): Photovoltaic systems, as specified in Section 150.1(c)14, are not required for additions.
(h) Energy Code subsections 150.2(a)1 through 150.2(a)2 remain in full effect. (i) Energy Code subsection 150.2(b) is amended to read as follows:
(b) 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 the requirements of Sections 150.0(w) and (x), and either Item 1 or 2 below. (j) Energy Code subsections 150.2(b)1 through 150.2(b)2 remain in full effect as amended by this ordinance.
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22 Section 4. Environmental Determination. In accordance with California Environmental Quality Act (CEQA) Guidelines, section 15308, this action to adopt reach codes and amend the Energy Code is categorically exempt from CEQA as an action by a regulatory agency for the protection of the environment, because reach codes are intended to reduce greenhouse gas emissions.

Section 5. Severability. In the event any section, clause or provision of this ordinance shall be determined invalid or unconstitutional, such section, clause or provision shall be deemed severable and all other sections or portions hereof shall remain in full force and effect.

Section 6. Publication. This Ordinance shall be published in summary in a newspaper of general circulation, posted in the City Clerk's Office, and posted on the City's website, all in accord with Section 2.15 of the City Charter.

Section 7. Legislative History and Effective Date. This ordinance was introduced on Clerk to complete., and adopted on Clerk to complete., and shall be effective 30 days after its adoption. 252 of 662
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23.24.010 Adoption
(a) The California Energy Code, 2025 Edition, Title 24, Part 6 of the California Code of Regulations, as adopted and amended by the State of California, hereinafter called "Energy Code," is adopted as the rules, regulations and standards within this City as to all matters therein except as hereinafter modified or amended.
(b) No section of the Mechanical Energy Code shall impose a mandatory duty of enforcement on the City, or on any officer, official, agent, employee, board, council or commission thereof. Instead, if any section purports to impose a mandatory duty of enforcement, said section shall be deemed to invest the City, and the appropriate officer, official, agent, employee, board, council or commission thereof with discretion to enforce the section or not enforce it.
(c) One Copy of the Energy Code shall at all times be kept on file in the office of the City Clerk.

Additionally, where an entirely new or complete replacement space conditioning system includes a new or replacement air-cooled air conditioner in Climate Zones 1 through 14 and 16, it shall meet the applicable requirements of Section 150.2(b)1Fiv. Where an entirely new or complete replacement space conditioning system includes a new or replacement heat pump, it shall meet the applicable requirements of Section 150.2(b)1Fv. (b) Energy Code subsection 150.2(b)1F is hereby amended to read:

F. Altered space-conditioning system - mechanical cooling. Alterations which install new or replacement air-cooled air conditioners shall meet the applicable requirements of subsections i and iv. Alterations which install new or replacement heat pumps shall meet the applicable requirements of subsections i, ii, iii, and v. All other alterations to refrigerant containing components such as the compressor, condensing coil, evaporator coil, refrigerant metering device, or refrigerant piping, shall meet the applicable requirements of subsections i, ii, and iii:
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i. All thermostats associated with the system shall be replaced with setback thermostats meeting the requirements of Section 110.2(c). ii. Air-cooled air conditioners in Climate Zones 2 and 8 through 15 and air-source heat pumps in all climate zones, including but not limited to ducted split systems, ducted package systems, small duct high velocity air systems, and minisplit systems, shall comply with Subsections a and b, unless the system is of a type that cannot be verified using the specified procedures. Systems that cannot comply with the requirements of 150.2(b)1Fii shall comply with Section 150.2(b)1Fiii.

Exception to Section 150.2(b)1Fii: Entirely new or complete replacement packaged systems for which the manufacturer has verified correct system refrigerant charge prior to shipment from the factory are not required to have refrigerant charge confirmed through field verification and diagnostic testing. The installer of these packaged systems shall certify on the Certificate of Installation that the packaged system was pre-charged at the factory and has not been altered in a way that would affect the charge. Ducted systems shall comply with minimum system airflow rate requirement in Section 150.2(b)1Fiia, provided that the system is of a type that can be verified using the procedure specified in RA3.3 or an approved alternative in RA1.
a. Minimum system airflow rate shall comply with the applicable Subsection I or II below as confirmed through field verification and diagnostic testing in accordance with the procedures specified in Reference Residential Appendix Section RA3.3 or an approved alternative procedure as specified in Section RA1.

1. Small duct high velocity systems shall demonstrate a minimum system airflow rate greater than or equal to 250 cfm per ton of nominal cooling capacity; or

Exception 2 to Section 150.2(b)1Fiia: Entirely new or complete replacement space conditioning systems, as specified by Section 150.2(b)1C, without zoning dampers may comply with the minimum airflow rate by meeting the applicable requirements in Tables-150.0-B or 150.0-C as confirmed by field verification and diagnostic testing in accordance with the procedures in Reference Residential Appendix 254 of 662
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Section RA3.1.4.4 and RA3.1.4.5. The design clean-filter pressure drop requirements of Section 150.0(m)12C for the system air filter device(s) shall conform to the requirements given in Tables150.0-B and 150.0-C. (a) The installer shall charge the system according to manufacturer’s specifications.

Refrigerant charge shall be verified according to one of the following options, as applicable.

Exception 1 to Section 150.2(b)1Fiib: When the outdoor temperature is less than 55° F and the installer utilizes the weigh-in charging procedure in Reference Residential Appendix Section RA3.2.3.1to demonstrate compliance, the installer may elect to utilize the verification procedure in Reference Residential Appendix Section RA3.2.3.2. If the verification procedure in Section RA3.2.3.2 is used for compliance, the system's thermostat shall conform to the specifications in Section 110.12. Ducted systems shall comply with the minimum system airflow rate requirements in Section 150.2(b)1Fiia.
iii. Air-cooled air conditioners in Climate Zones 2 and 8 through 15 and air-source heat pumps in all climate zones, including but not limited to ducted split systems, ducted package systems, small duct high velocity, and minisplit systems, which are of a type that cannot comply with the requirements of 150.2(b)1Fiib shall comply with subsections a and b, as applicable.
a. The installer shall confirm the refrigerant charge using the weigh-in charging procedure specified in Reference Residential Appendix Section RA3.2.3.1, as verified by an ECC-Rater according to the procedures specified in Reference Residential Appendix RA3.2.3.2; and
b. Systems that utilize forced air ducts shall comply with the minimum system airflow rate requirement in Section 150.2(b)1Fiia provided the system is of a type that can be verified using the procedures in Section RA3.3 or an approved alternative procedure in Section RA1.
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Exception to Section 150.2(b)1Fiii: Entirely new or complete replacement packaged systems for which the manufacturer has verified correct system refrigerant charge prior to shipment from the factory are not required to have refrigerant charge confirmed through field verification and diagnostic testing. The installer of these packaged systems shall certify on the Certificate of Installation that the packaged system was precharged at the factory and has not been altered in a way that would affect the charge. Ducted systems shall comply with minimum system airflow rate requirement in Section 150.2(b)1Fiiib, provided that the system is of a type that can be verified using the procedure specified in Section RA3.3 or an approved alternative in Section RA1.
(a) Energy Code subsection 150.2(b)1F is hereby amended to add new subsections 150.2(b)1Fiv and 150.2(b)1Fv as follows:
iii. New or replacement air-cooled air conditioners in Climate Zones 1 through 14 and 16 shall meet the requirements of Section 150.2(b)1Fiva or 150.2(b)1Fivb. a. Systems with existing duct distribution systems shall meet the following requirements:

I. In all climate zones, meet the airflow and fan efficacy requirements of Section 150.0(m)13B, 150.0(m)13C, or 150.0(m)13D.

Exception 2 to Section 150.2(b)1FivaIII: Dwelling units where the alteration would directly cause the disturbance of asbestos unless the alteration is made in conjunction with asbestos abatement.

Exception 3 to Section 150.2(b)1FivaIII: Dwelling units with knob and tube wiring located in the vented attic.

Exception 4 to Section 150.2(b)1FivaIII: Where the accessible space in the attic is not large enough to accommodate the required R-value, the entire accessible space shall be filled with insulation provided such installation does not violate Section 806.3 of Title 24, Part 2.5.
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Exception 5 to Section 150.2(b)1FivaIII: Where the attic space above the altered dwelling unit is shared with other dwelling units and the requirements of Section 150.2(b)1FivaIII are not triggered for the other dwelling units.

I. In all climate zones, air seal all accessible areas of the ceiling plane between the attic and the conditioned space in accordance with Section 110.7.

Exception 1 to Section 150.2(b)1FivaIV: Dwelling units with at least R-38 existing insulation installed at the ceiling level.

Exception 2 to Section 150.2(b)1FivaIV: Dwelling units where the alteration would directly cause the disturbance of asbestos unless the alteration is made in conjunction with asbestos abatement.

Exception 3 to Section 150.2(b)1FivaIV: Dwelling units with atmospherically vented space heating or water heating combustion appliances located inside the pressure boundary of the dwelling unit.
a. Systems with entirely new or complete replacement duct systems shall meet the following:

III. In all climate zones, meet the refrigerant charge verification requirements of Section 150.2(b)1Fii;
Exception 1 to Section 150.2(b)1Fiv: Where the capacity of the existing main electrical service panel is insufficient to supply the electrical capacity of a heat pump and where the existing main electrical service panel is sufficient to supply a new or replacement air conditioner, as calculated according to the requirements of California Electrical Code Article 220.83 or Article 220.87, systems shall comply with the applicable requirements of Sections 150.2(b)1Fi, 150.2(b)1Fii, and 150.2(b)1Fiii. Documentation of electrical load calculations in accordance with Article 220 must be submitted to the enforcement agency prior to permitting for both the heat pump and proposed air conditioner.

Exception 2 to Section 150.2(b)1Fiv: Where the required capacity of a heat pump to meet the system selection requirements of Section 150.0(h)5 is greater than or equal to 12,000 Btu/h more than the greater of the required capacity of an air conditioner to meet the design cooling load OR the capacity of the existing air conditioner, systems shall comply with the applicable requirements of Sections 150.2(b)1Fi, 150.2(b)1Fii, and 150.2(b)1Fiii. Documentation of heating and cooling load calculations in accordance with 150.0(h) must be submitted to the enforcement agency prior to permitting for both the heat pump and proposed air conditioner.
iii. In all climate zones, heat pumps with supplementary heat, including, but not limited to, electric resistance heaters or gas furnace supplementary heating, shall comply with Section 150.0(h)7 and shall lock out supplementary heating above an outdoor air temperature of no greater than 35°F.
(a) Energy Code 150.2 Table 150.2-G is hereby amended to read as follows:
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Table 150.2-G Standard Design for an Altered Component
Altered
Component
Standard Design Without Third Party
Verification of Existing Conditions Shall be
Based On
Standard Design With Third Party
Verification of Existing Conditions
Shall be Based On
Ceiling
Insulation, Wall
Insulation, and
Raised-floor
Insulation
The requirements of Sections 150.0(a), (c), and (d).

The requirements of Section 150.2(b)1J for altered
ceilings and for entirely new or complete
replacement duct systems where the air handler
and ducts are located within a vented attic.

The requirements of Section 150.2(b)1Fiv for
alterations which include new or replacement aircooled air conditioners.

The existing insulation R-value
Fenestration The requirements of Section 150.1(c)3A. The existing fenestration U-factor and SHGC values as verified.

Window Film The requirements of Section 150.1(c)3A. The existing fenestration in the alteration shall be based on TABLE 110.6-A and
TABLE 110.6-B.

Doors The U-factor of 0.20. The door area shall be the
door area of the existing building.

If the proposed U-factor is < 0.20, the
standard design shall be based on the
existing U-factor value as verified.

Otherwise, the standard design shall be
based on the U-factor of 0.20. The door
area shall be the door area of the
existing building.

Space-Heating
and SpaceCooling
Equipment
Table 150.1-A for equipment efficiency
requirements;
Section 150.2(b)1C for entirely new or complete
replacement systems;
Section 150.2(b)1F for refrigerant charge
verification, airflow, and fan efficacy requirements.

Section 150.2(b)1Fiv for new or replacement aircooled air conditioners The existing efficiency levels.

Air Distribution
System – Duct
Sealing
The requirements of Sections 150.2(b)1D and
150.2(b)1E
The requirements of Sections 150.2(b)1D
and 150.2(b)1E
Air Distribution
System – Duct
Insulation
The requirements of Sections 150.2(b)1D, and for
new or replacement air-cooled air conditioners,
Section 150.2(b)1Fiv.

The existing efficiency levels.

Water Heating
Systems
The requirements of Section 150.2(b)1Hii The existing efficiency level.

Roofing
Products
The requirements of Section 150.2(b)1I. The requirements of Section 150.2(b)1I All Other
Measures
The proposed efficiency levels. The existing efficiency levels.

Table 141.0-E-1A – REQUIREMENTS FOR NEW OR REPLACMENT
SZAC or SZHP, GREATER THAN 65,000 BTU/HR AND LESS THAN
240,000 BTU/HR
System Size CZ 3
65,000 to 240,000 Btu/hr SZHP or SZAC3
SZHP = Single Zone Heat Pump
SZAC3 = Single Zone Air Conditioner with Furnace + Heat Recovery Ventilator
Exception 1 to Section 141.0(b)2Ciii: Where the capacity of the existing main electrical service panel is insufficient to supply the electrical capacity of a heat pump and where the existing main electrical service panel is sufficient to supply a new or replacement air conditioner, as calculated according to the requirements of California Electrical Code Article 220. Documentation of electrical load calculations in accordance with Article 220 must be submitted to the enforcement agency prior to permitting for both the heat pump and proposed air conditioner.

23.24.040 Increased Efficiency and Electric Readiness Requirements for Additions and Alterations in Single Family Buildings
(a) Energy Code 100.0 is amended to add a new subsection 100.0(i) as follows:
(i) Single Family Building Remodel Energy Reach Code - Purpose and Intent. In addition to all requirements of the California Energy Code applicable to Single Family building additions and alterations, the energy efficiency, renewable energy, and electric readiness measures specified in Sections 150.0(w) and 150.0(x) shall be required for certain single family additions and alterations.
(b) Energy Code subsection 100.1(b) is amended to include the following definitions:

LOW POWER LEVEL 2 ELECTRIC VEHICLE (EV) CHARGING RECEPTACLE is a 208/240- volt 20-ampere minimum branch circuit and a receptacle. (c) Energy Code Section 150.0 Mandatory Features and Devices is amended as follows:
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Single-family residential buildings shall comply with the applicable requirements of Sections 150.0(a) through 150.0(v).

NOTE: The requirements of Sections 150.0(a) through 150.0(v) apply to newly constructed buildings. Sections 150.2(a) and 150.2(b) specify which requirements of Sections 150.0(a) through 150.0(v) also apply to additions or alterations. In addition, Covered Single Family Projects shall also be required to comply with Section 150.0(w) and certain additions and alterations shall also be required to comply with Section 150.0(x). (a) Energy Code subsections 150.0(a) through 150.0(v) remain in full effect. (b) Energy Code Section 150.0 is amended to add a new subsection 150.0(w) as follows:
(w) A Covered Single Family Project shall install a set of measures from the Measure Menu Table, Table 150.0-J, to achieve a total Measure Point Score that is equal to or greater than the Target Score in Table 150.0-I. In addition, all mandatory measures listed in Table 150.0-J shall be installed. Measure verification shall be explicitly included as an addendum to the Certificate of Compliance to be filed pursuant to 2025 Title 24, Part 6, Section 10-103.

Installed measures shall meet the specifications in Table 150.0-K. Unless otherwise specified, the requirements shall apply to the entire dwelling unit, not just the additional or altered portion. Measures from the Measure Menu table that are to be installed to satisfy requirements under the California Energy Code, Title 24, Part 6, may not count towards compliance with these requirements. Where these requirements conflict with other California Energy Code requirements, the stricter requirements shall prevail.

Exception 5 to 150.0(w): A Covered Single Family Project, other than an addition, that would not otherwise be subject to this section 150.0(w) but for installation of solar PV, solar water heating, EV charging, electrical upgrades for solar PV or EV charging, or energy storage.

Exception 7 to 150.0(w): A measure that is necessary for compliance is prohibited because of a covenant or other deed restriction on the property, such as a homeowners association covenant.

Exception 10 to 150.0(w):

If the project includes circumstances which constitute hardship or infeasibility, the applicant may request an exemption. In applying for an exemption, the burden is on the applicant to show hardship or infeasibility. Circumstances that constitute hardship or infeasibility shall include one or more of the following:
a. That the cost of achieving compliance exceeds 20% of the valuation of the cost of the project; or
b. That it is technically infeasible to achieve compliance through all packages due to conditions specific to the project; or
c. That strict compliance with these standards would create or maintain a hazardous condition(s) and present a life safety risk to the occupants.

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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 2025 California Energy Code (Title 24, Part 6) and referenced standards, or the 2025 California Green Building Standards (Title 24, Part 11) of the California Building Standards Code, the 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 Building Official, or designee.

C. Written notice of the time and place for the hearing may be served by personal service, or first class mail to the address provided by the Applicant on the notice of appeal. The failure of any person with an interest in the property to receive such properly addressed notice of the hearing shall not affect the validity of any proceedings under this section Service by first class mail shall be effective on the date of mailing. Service by first class mail shall be effective on the date of mailing. The failure of the applicant to receive such properly addressed notice of the hearing shall not affect the validity of any proceedings under this section.

D. At the hearing, the applicant will be given an opportunity to present documentary evidence or witnesses concerning the written decision. The failure of the applicant to appear at the appeal hearing shall constitute a waiver of its right to appeal, and the written decision shall be upheld. 262 of 662
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The Director may conduct the hearing informally, both as to the rules of procedure and admission of evidence, and in any manner which will provide a fair hearing to obtain additional evidence.

E. The Director’s decision on appeal shall be final and not subject to any further administrative appeals.

Table 150.0-I: TARGET SCORES
Target Score
Climate Zone 3 12
Table 150.0-J: MEASURE MENU
ID Measures Measure Points
E1 Lighting Measures Mandatory
E2 Water Heating Package 2
E3 Air Sealing 2
E4 R-49 Attic Insulation 4
E5 Duct Sealing 3
E6 New Ducts, R-8 Insulation + Duct Sealing 6
E7 Windows 4
E8 R-15 Wall Insulation 5
E9 R-19 Raised Floor Insulation 9
E10 R-30 Raised Floor Insulation 10
FS1 Heat Pump Water Heater Replacing Gas 12
FS2 High Eff. Heat Pump Water Heater Replacing Gas 13
FS3 Heat Pump Water Heater Replacing Electric 5
FS4 High Eff. Heat Pump Water Heater Replacing Electric 6 FS5 Heat Pump Space Conditioning System 18
FS6 High Eff. Heat Pump Space Conditioning System 19
FS7 Dual Fuel Heat Pump Space Conditioning System 18
FS8 Heat Pump Clothes Dryer 1
FS9 Induction Cooktop 1
PV Solar PV and Electric Readiness 13
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Table 150.0-K: MEASURE SPECIFICATIONS
ID Measure Specification
Energy Efficiency Measures
E1 Lighting Measures – Install lighting with an efficiency of 45 lumens per watt or greater in all interior and exterior screw-in fixtures. Install photocell, occupancy sensor or energy management system controls that meet the requirements of 150.0(k)3 in all outdoor lighting permanently mounted to a residential building or to other buildings on the same lot.

Weather-strip doors if not already present. Verification shall be conducted following a prescriptive checklist that outlines which building aspects need to be addressed by the permit applicant and verified by an inspector. Compliance can also be demonstrated with blower door testing conducted by a certified ECC 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 and seven for 1978 to 1991 vintage buildings. If combustion appliances are located within the pressure boundary of the building, conduct a combustion safety test by a certified ECC Rater or a professional certified by the Building Performance Institute, in accordance with the BPI Technical Standards for the Building Analyst Professional.

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.

Exception: 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.

E7 Windows: Replace at least 50% of existing windows with high performance windows with an area-weighted average U-factor no greater than 0.27.

E8 R-15 Wall Insulation: Install wall insulation in all exterior walls to achieve a weighted U-factor of 0.095 or install wall insulation in all exterior wall cavities that shall result in an installed thermal resistance of R-15 or greater for the insulation alone.

FS3 Heat Pump Water Heater (HPWH) Replacing Electric: Replace existing electric resistance water heater with a heat pump water heater that meets the requirements of Sections 110.3 and 150.2(b)1.H.iii.b.

FS5 Heat Pump Space Conditioning System: Replace all existing gas and electric resistance primary space heating systems with a heat pump system that meets the requirements of Sections 110.2, 150.2(b)1.C, 150.2(b)1.E, 150.2(b)1.F, and 150.2(b)1.G.
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FS6 High Efficiency Heat Pump Space Conditioning System: Replace all existing gas and electric resistance primary space heating systems with an electric-only heat pump system that meets the requirements of Sections 110.2 and 150.2(b)1.C, 150.2(b)1.E, 150.2(b)1.F, and 150.2(b)1.G and one of the following:

A. A ducted heat pump system with a SEER2 rating of 16.5 or greater, an EER2 rating of 12.48 or greater and an HSPF2 rating of 9.5 or greater; or B. A ductless mini-split heat pump system with a SEER2 rating of 16.0 or greater, an EER2 rating of 12.0 or greater and an HSPF2 rating of 9.0 or greater FS7 Dual Fuel Heat Pump Space Conditioning System: Install a heat pump space conditioning system that meets the requirements of Sections 110.2 and 150.2(b)1.C, 150.2(b)1.E, 150.2(b)1.F, and 150.2(b)1.G and either:

FS8 Heat Pump Clothes Dryer: Replace existing electric resistance or gas clothes dryer with heat pump dryer with no resistance element and cap gas line.

FS9 Induction Cooktop: Replace all existing gas and electric resistance stove tops with induction stove top and cap the gas line.

PV Solar PV and Electric Readiness: Install a solar PV system that meets the requirements of Section 150.1(c)14. In addition, for existing PV systems that had been installed prior to the application date of the current project, meet at least two of the electric readiness requirements in Section 150.0(x)1-6, regardless of whether they are otherwise required and regardless of the exceptions to Section 150.0(x).
(a) Energy Code Section 150.0 is amended to add 150.0(x) as follows:
(x) Electric Readiness for Alterations and for Electric Readiness Credit for Solar PV Measure in Table 150.0-K

A. A 125 volt, 20 amp electrical receptacle that is connected to the electric panel with a 120/240 volt 3 conductor branch circuit rated at 50 amps minimum, within 3 feet from the appliance and accessible to the appliance with no obstructions. Both ends of the unused conductor shall be labeled with the word “spare” and be electrically isolated. Space shall be reserved for a single pole circuit breaker in the electrical panel adjacent to the circuit breaker for the branch circuit and labeled with the words “Future Use”.
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A. A pathway for a future 240 volt 50 amp minimum branch circuit that shall consist of either conductors or raceway from the main electrical service panel. The main electric panel shall have space reserved to allow for the installation of a double pole circuit breaker for a future electric range installation. The reserved space shall be permanently marked as “For Future 240V use”. The raceway or conductors shall terminate at a junction box within 3 feet of the appliance. The blank cover shall be identified as “240V ready”.

1. Electric dryer. Where a branch circuit is added or altered within 3 feet of a gas or propane clothes dryer and the work requires an electrical permit, install electrical components in accordance with the California Electrical Code. The electrical components shall include either of the following:

A. A dedicated 125 volt, 20 amp electrical receptacle that is connected to the electric panel with a 120/240 volt 3 conductor branch circuit rated at 30 amps minimum, within 3 feet from the appliance and accessible to the appliance with no obstructions. Both ends of the unused conductor shall be labeled with the word “spare” and be electrically isolated. Space shall be reserved for a single pole circuit breaker in the electrical panel adjacent to the circuit breaker for the branch circuit and labeled with the words “Future Use”; or,
B. A pathway for a future 240 volt 30 amp minimum branch circuit that shall consist of either conductors or raceway from the main electrical service panel. The main electric panel shall have space reserved to allow for the installation of a double pole circuit breaker for a future heat pump dryer installation. The reserved space shall be permanently marked as “For Future 240V use”. The raceway or conductors shall terminate at a junction box within 3 feet of the appliance. The blank cover shall be identified as “240V ready”.

2. Heat pump water heater.

A. If wall framing is removed or replaced within 3 feet of a gas or propane water heating appliance, space suitable for the future installation of a heat pump water heater (HPWH) shall be provided. The space shall be at least 2.5 feet by 2.5 feet wide and 7 feet tall and shall include a condensate drain that is no more than 2 inches higher than the base of an installed water heater and allows natural draining without pump assistance or installed piping or tubing within 3 feet of the water heater location to a condensate drain or exterior location. If pump assistance is needed, a receptacle on a 120 volt, minimum 15 amp branch circuit for a condensate pump must be available within 3 feet of the water heater location.

The main electric panel shall have space reserved to allow for the installation of a double pole circuit breaker for a future HPWH installation. The reserved space shall be permanently marked as “For Future 240V use”. The pathway shall terminate at a junction box within 3 feet of the appliance. The blank cover shall be identified as “240V ready”.

1. Outdoor gas appliances. Where a gas line is added or extended to any pool water heater, spa water heater, sauna, fireplace, outdoor cooking appliance, or outdoor heating system, install infrastructure and reserve physical space to accommodate future installation of an electric equivalent of that system that serves the same function, as certified by a registered design professional or licensed electrical contractor.

A. Install conduit designed to serve a future electric appliance(s) with the same function, including the appropriate voltage, phase, minimum amperage, and an electrical receptacle or junction box within five feet of the appliance that is accessible with no obstructions, in accordance with manufacturer requirements and the California Electrical Code. In lieu of or in addition to conduit, electrically isolated branch circuit wiring may be installed; and
B. Label both ends of the unused conduit or conductors “For Future Electrical Appliance”; and
C. Reserve circuit breakers in the electrical panel(s) for each branch circuit, appropriately labeled; and
D. Designate physical space for future electric appliances, including equipment footprint, on the construction drawings. The footprint necessary for future electric appliances may overlap with the location of currently designed combustion equipment.

Exception to Section 150.0(x)4: Generator systems used for emergency power generation.

2. Battery Storage. As a measure qualifying the Solar PV credit under 150.0(w), meet the requirements A through D below.

A. At least one of the following shall be provided:
i. ESS ready interconnection equipment with a minimum backed up capacity of 60 amps and a minimum of four ESS supplied branch circuits, or
ii. A dedicated raceway from the main service to a panelboard (subpanel) that supplies the branch circuits in 150.0(s)2. All branch circuits are permitted to be supplied by the 270 of 662
2025-10-23 17
main service panel prior to the installation of an ESS. The trade size of the raceway shall be not less than one inch. The panelboard that supplies the branch circuits (subpanel) must be labeled “Subpanel shall include all backed-up load circuits.” A. A minimum of four branch circuits shall be identified and have their source of supply collocated at a single panelboard suitable to be supplied by the ESS. At least one circuit shall supply the refrigerator, one lighting circuit shall be located near the primary egress, and at least one circuit shall supply a sleeping room receptacle outlet.

B. The main panelboard shall have a minimum busbar rating of 225 amps or sufficient capacity a battery storage system and circuits in paragraphs A and B above.

C. Sufficient space shall be reserved to allow future installation of a system isolation equipment/transfer switch within 3 feet of the main panelboard. Raceways shall be installed between the panelboard and the system isolation equipment/transfer switch location to allow the connection of backup power source.

Exception 2 to Section 150.0(x): If an electrical permit is not otherwise required for the project other than compliance with this section.

Capacity and overcurrent protection spaces shall be reserved to the extent allowable under the existing electrical panel capacity. Tandem overcurrent protection devices shall be used to the extent permissible under the California Electrical Code.

Exception 4 to Section 150.0(x): Mobile Homes, Manufactured Housing, or Factorybuilt Housing as defined in Division 13 of the California Health and Safety 12 Code (commencing with Section 17000 of the Health and Safety Code).

Exception 5 to Section 150.0(x): Creation of a new accessory dwelling unit or junior accessory dwelling unit that is within the existing space of a single family dwelling or accessory structure and includes an expansion of not more than 150 square feet beyond the same physical dimensions as the existing accessory structure. An expansion beyond the physical dimensions of the existing accessory structure shall be limited to 271 of 662
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accommodating ingress and egress. Or, if the project would not otherwise be a Covered Single Family Project were it not for the inclusion of an accessory dwelling unit or junior accessory dwelling unit that meets the criteria above.
(a) Energy Code subsection 150.2(a) is amended to read as follows:
(a) 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), (x), and either Section 150.2(a)1 or 2.

Exception 1 to Section 150.2(a): Additions of 300 square feet or less are not required to comply with the roofing requirements of Section 150.1(c)11.

Exception 2 to Section 150.2(a): Existing inaccessible piping shall not require insulation as defined under Section 150.0(j)1.

Exception 5 to Section 150.2(a): Additions 1,000 square feet or less are not required to comply with the ventilation cooling requirements of Section 150.1(c)12.

Exception 6 to Section 150.2(a): Photovoltaic systems, as specified in Section 150.1(c)14, are not required for additions.
(b) Energy Code subsections 150.2(a)1 through 150.2(a)2 remain in full effect. (c) Energy Code subsections 150.2(b) is amended to read as follows:
(b) 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 the requirements of Sections 150.0(w) and (x), and either Item 1 or 2 below. (c)(a) Energy Code subsections 150.2(b)1 through 150.2(b)2 remain in full effect as amended by this ordinance.
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CITY OF SAN MATEO
RESOLUTION NO. ____ (2026)

ADOPTING EXRESS FINDINGS FOR LOCAL SUSTAINABILITY-RELATED AMENDMENTS TO THE CALIFORNIA BUILDING STANDARDS CODE, 2025 EDITION, RELATIVE TO LOCAL CLIMATIC, GEOGRAPHICAL, OR

TOPOGRAPHICAL CONDITIONS
WHEREAS, the City of San Mateo’s (City) Climate Action Plan recommends the City review local amendments to the California Energy Code to promote building electrification and energy efficiency; and WHEREAS, California Energy Code 2025 Edition, was adopted by the City of San Mateo on November 3, 2025; and
WHEREAS, concurrent with this resolution, the City Council will adopt local amendments to amend the California Energy Code to require energy conservation measures for air conditioner alterations, replacements and installations in existing single family homes, duplexes and townhomes; energy conservation measures for heating, ventilation and air conditioner replacements and installations in existing nonresidential buildings; and increased efficiency and electric readiness requirements for additions and alterations to single family homes, duplexes, and townhomes; and
WHEREAS, California Health and Safety Code Sections 17922, 17958, 17958.5, 17958.7, and 18941.5 authorizes the City to make local amendments to the California Energy Code based upon express findings that the such changes or modifications are reasonably necessary due to local climatic, geographical, or topographical conditions; and
WHEREAS, these amendments are reasonably necessary because of health and safety concerns as City of San Mateo residents suffer from asthma and other health conditions associated with poor indoor and outdoor air quality exacerbated by the combustion of methane gas; and WHEREAS, promoting electric equipment in indoor environments reduces the risk of asthma associated with gas appliances,
WHEREAS, in 2016, the State of California enacted Senate Bill (SB) 32, which added Health and Safety Code Section 38566 to require greenhouse gas emissions to be reduced to 40 percent below 1990 levels by no later than December 31, 2030; and
WHEREAS, consistent with federal law stated in the Energy Policy and Conservation Act, the standards contained within the proposed amendments permit mixed fuel residential construction; and WHEREAS, the proposed amendments are consistent with AB130, in that they are necessary to implement a local code amendment that is adopted to align with the City’s general plan approved before June 10, 2025; and
WHEREAS, consistent with AB130, the standards contained within the proposed amendments permit mixed fuel residential construction consistent with federal law while also incentivizing all-electric construction; and
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WHEREAS, consistent with AB130, the standards imposed by the proposed amendments incentivize electric equipment through the cost-effective installation of electric appliances while preserving energyequivalent pathways for mixed-fuel residential appliances; and WHEREAS, pursuant to Sections 17958.5 and 17958.7 of the Health and Safety Code, the proposed amendments meet the following conditions to demonstrate local amendments are necessary: the changes are necessary to align local building codes with General Plan and Climate Action Plan goals while permitting mixedfuel residential construction and incentivizing electric construction, and the changes are necessary to implement the standards contained in the proposed amendments; and WHEREAS, on March 18, 2024, the City Council adopted the San Mateo General Plan that includes policies and actions to “evaluate and adopt reach codes that help decarbonize the building stock” and “reduce the use of fossil fuels as an energy source in the existing building stock” that align with the emissions reduction goals in the proposed amendments; and
WHEREAS, on March 18, 2024, the City Council adopted the San Mateo Climate Action Plan which includes substantial GHG reduction goals for San Mateo, to reduce emissions 40% below 1990 levels by 2030 and 85% below 1990 levels by 2045 that align with the emissions reduction goals in the proposed amendments; and
WHEREAS, the City’s Climate Action Plan includes policies and actions to encourage the transition to electric technologies during planned upgrades in existing residential and nonresidential buildings that align with the emissions reduction goals in the proposed amendments; and WHEREAS, in alignment with the Climate Action Plan, the local amendments to the 2025 California Energy Code establish requirements which will reduce demands for local energy resources, reduce regional pollution, and promote a lower contribution to greenhouse gas emissions; and WHEREAS, the City Council has determined and finds that local amendments are needed and reasonably necessary because of local climatic, geological, or topographical conditions of the City; and WHEREAS, Public Resources Code Section 25402.1(h)2 and Section 10-106 of the Building Energy Efficiency Standards (Standards) establish a process which allows local adoption of energy standards that are more stringent than the statewide Standards, provided that such local standards are cost effective and the California Energy Commission finds that the standards will require building to be designed to consume no more energy than permitted by the California Energy Code; and WHEREAS, staff has reviewed the cost effectiveness studies prepared by the California Statewide Codes and Standards Reach Code Program and associated study data and find them sufficient to illustrate compliance with the requirements set forth under California Administrative Code Chapter 10-106; and WHEREAS, that such modifications will result in designs that consume less energy than they would under the 2025 State Energy Code through the California Statewide Codes and Standards Reach Code Program, has performed cost effectiveness analyses as required by the California Energy Commission for the local 274 of 662
amendments to the California Energy Code contained in the ordinance adopted concurrent with this resolution; and
WHEREAS, based upon these analyses, the San Mateo City Council finds that the local amendments to the California Energy Code contained in ordinance adopted concurrent with this resolution have at least one cost effective pathway and will require buildings to be designed to consume no more energy than permitted by the California Energy Code.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN MATEO, CALIFORNIA, HEREBY FINDS that:

1. Adoption of this resolution adopting express findings in support of local amendments to the California Energy Code, 2025 Edition, is not subject to CEQA review because it is an action taken by a regulatory agency, as authorized by state ordinance, to assure the maintenance, restoration, enhancement, or protection of the environment where the regulatory process involves procedures for the protection of the environment. (CEQA Guidelines Section 15308.)

2. The City Council makes findings that local amendments to the California Energy Code, 2025 Edition, in Ordinance No. 2026-____ are reasonably necessary because of local climatic, geological and topographical conditions summarized in Exhibit A attached and incorporated to this resolution. 275 of 662
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Exhibit A
Findings Supporting Local Amendments to the California Energy Code, Title 24, Part 6 Section 17958 of the California Health and Safety Code provides that the City may make changes to the provisions in the uniform codes that are published in the California Building Standards Code.

Sections 17958.5 and 17958.7 of the Health and Safety Code require that for each proposed local change to those provisions in the uniform codes and published in the California Building Standards Code which regulate buildings used for human habitation, the City Council must make findings supporting its determination that each such local change is reasonably necessary because of local climatic, geological, or topographical conditions.

Regarding the Energy 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, provided the City Council finds 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.

Local building regulations having the effect of amending the uniform codes, which were adopted by the City prior to November 23, 1970, were unaffected by the regulations of Sections 17958, 17958.5 and 17958.7 of the Health and Safety Code. Therefore, amendments to the uniform codes which were adopted by the City Council prior to November 23, 1970, and have been carried through from year to year without significant change, need no required findings. Also, amendments to provisions not regulating buildings used for human habitation, including amendments made only for administrative consistency, do not require findings.

Code: California Energy Code, Title 24, Part 6
Section(s) Title Add Deleted Amended Justification
(See below
for Key)
100.0 Scope x C & E
100.1 Definitions and Rules of Construction x C & E
141.0 Additions, Alterations and Repairs to Existing
Nonresidential and Hotel/Motel Buildings, to
Existing Outdoor Lighting and to Internally
and Externally Illuminated Signs
x C & E
150.0 Mandatory Features and Devices x C & E
150.2 Energy Efficiency Standards for Additions
and Alterations to Existing Single-Family
Residential Buildings

X C & E
Key:

A Administrative
This is an administrative amendment to clarify and establish civil and administrative procedures, regulations, or rules to enforce and administer the activities by the San Mateo Community Development Department. These administrative amendments do not need to meet HSC 18941.5/17958/13869 per HSC 18909(c). 277 of 662
C Climatic
The local amendments are justified on the basis of a local climatic conditions in San Mateo. Failure to address and significantly reduce greenhouse gas (GHG) emissions could result in rises in sea level, including in San Francisco Bay, that could put at risk City homes and businesses, public facilities, and Highway 101 (Bayshore Freeway), particularly the mapped Flood Hazard areas of the City. Buildings with lower energy and GHG emissions benefit the health, safety, and welfare of San Mateo residents. Requiring highly efficient buildings will reduce the amount of GHG emissions produced in San Mateo.

G Geological
The local amendments are justified on the basis of local geological conditions in San Mateo. Major faults cross through all nine Bay Area counties. The closest active faults in San Mateo are the San Andreas Fault located two miles west and the Hayward Fault, 14 miles east of San Mateo. A powerfully damaging earthquake similar to the 1906 earthquake or 1989 Loma Prieta earthquake is rare but likely to occur in the next 30 years. Smaller magnitude earthquakes are also likely to occur, potentially producing significant local damage. The reduction of natural gas infrastructure in buildings would reduce the hazards associated with gas leaks during seismic events.

E Environmental
The local amendments improve the public health and welfare by promoting the environmental and economic health of the City through the design, construction, maintenance, operation and deconstruction of buildings and sites by incorporating green practices into all development. The local amendments are consistent with the goals of the Energy Code and help achieve the following goals:
• Increase energy efficiency in buildings;
• Increase resource conservation;
• Provide durable buildings that are efficient and economical to own and operate; and • Promote the health and productivity of residents, workers, and visitors to the city.

T Topographic
The local amendments are justified on the basis of local topographic conditions in San Mateo. The City of San Mateo topography includes areas that are subject to wildland type fires due to existing vegetation, particularly chaparral, the steep slopes, and the temperate climate with dry summer months. These wildland areas pose substantial risk to nearby residences and the natural environment. The elimination of natural gas infrastructure in new buildings and the transition to electric appliances in existing residential buildings would reduce fire hazards in buildings near highly combustible wildland areas. 278 of 662
2025 CostEffectiveness Study:

Single Family AC to Heat
Pump Replacement
Prepared by:

Ada Shen, Rebecca Evans, Keith
Saechao, Alea German, & Marc
Hoeschele, Frontier Energy, Inc
Misti Bruceri, Misti Bruceri &
Associates, LLC
Prepared for:

Kelly Cunningham, Codes and
Standards Program, Pacific Gas
and Electric
Revision: 2.0
Last modified: 2025/08/08
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 1 2025/08/08
Table 1. Summary of Revisions
Date Description Reference (page or section)
6/09/2025 Original Release N/A
8/08/2025 The following issues were corrected in this report. Note that none of the issues flipped cost-effectiveness results from costeffective to not cost-effective or vice versa in any climate zone except for the DFHP in the 1978-1991 vintage in CZ 15 is now LSC cost-effective.

1. 30-year DFHP results for all sizes except the 3-ton
system have been impacted. Increase in costeffectiveness for Climate Zones 2,4,8-15, decrease in cost effectiveness in Climate Zone 3.

Table 7, Table 8, Table 9,
Table 12, Table 15, Table 22,
Table 25, Table 28, Table 31,
Section 4: Recommendations
and Discussion
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 2025, 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 privatelyowned rights including, but not limited to, patents, trademarks or
copyrights.
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 2 2025/08/08

2. Incremental cost tables 7-9 had incorrect condensing furnace costs.

3. Zero NOx discussion in the recommendations and
discussion section was based on the high gas
escalation rates but were compared against the
modest escalation standard results. The discussion
has been corrected to compare against the high gas
escalation standard results instead.
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 3 2025/08/08
Acronym List
AC – Air conditioner
ACH50 – Air Changes per
Hour at 50 pascals pressure
differential
AFUE – Annual Fuel
Utilization Efficiency
B/C – Lifecycle Benefit-toCost Ratio
BSC – Building Standards
Commission
CA IOUs – California
Investor-Owned Utilities
CARE – California Alternate
Rates for Energy
CASE – Codes and
Standards Enhancement
CBECC-Res – Computer
program developed by the
California Energy
Commission for
demonstrating compliance
with the California
Residential Building Energy
Efficiency Standards
CFM – Cubic Feet per
Minute
CO2 – Carbon Dioxide
CPAU – City of Palo Alto
Utilities
CPUC – California Public
Utilities Commission
CZ – California Climate
Zone
DFHP – Dual Fuel Heat
Pump
DHW – Domestic Hot Water
DOE – Department of
Energy
EDR – Energy Design
Rating
EER – Energy Efficiency
Ratio
EF – Energy Factor
GHG – Greenhouse Gas
HPWH – Heat Pump Water
Heater
HSPF – Heating Seasonal
Performance Factor
HVAC – Heating,
Ventilation, and Air
Conditioning
IOU – Investor Owned
Utility
kBtu – kilo-British thermal
unit
kWh – Kilowatt Hour
LCC – Lifecycle Cost
LLAHU – Low Leakage Air
Handler Unit
VLLDCS – Verified Low
Leakage Ducts in
Conditioned Space
NEEA – Northwest Energy
Efficiency Alliance
NEM – Net Energy Metering
NPV – Net Present Value
PG&E – Pacific Gas and
Electric Company
PV – Photovoltaic
SCE – Southern California
Edison
SDG&E – San Diego Gas
and Electric
SEER – Seasonal Energy
Efficiency Ratio
SF – Single Family
SMUD – Sacramento
Municipal Utility District
SoCalGas – Southern
California Gas Company
TDV – Time Dependent
Valuation
Therm – Unit for quantity of
heat that equals 100,000
British thermal units
Title 24 – Title 24, Part 6
TOU – Time-Of-Use
UEF – Uniform Energy
Factor
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 1 2025/08/08
Table of Contents
Executive Summary............................................................................................................4 1 Introduction..................................................................................................................7 2 Methodology and Assumptions..................................................................................9

2.1 Modeling............................................................................................................... 9

2.2 Prototype Characteristics.....................................................................................10

2.3 Cost-Effectiveness Approach...............................................................................13

2.3.1 Benefits ...........................................................................................................13

2.3.2 Costs ...............................................................................................................13

2.3.3 Metrics.............................................................................................................15

2.3.4 Utility Rates .....................................................................................................16

2.4 Measure Details and Cost....................................................................................18

2.4.1 Lifecycle Cost Assuming Zero-NOx Standards for Space Heating After 2030 ..20 3 Results........................................................................................................................22

3.1 Cost-Effectiveness Results ..................................................................................22

3.1.1 Cost Effectiveness Results Using Standard Tariffs...........................................23

3.1.2 Cost Effectiveness Results Using CARE Tariffs ...............................................26

3.2 Zero-NOx Scenario Results.................................................................................28

3.3 AC Pathways for Heat Pump Replacements........................................................30 4 Recommendations and Discussion..........................................................................33 5 References .................................................................................................................36 6 Appendices ................................................................................................................38

6.1 Map of California Climate Zones..........................................................................38

6.2 Cost-Effectiveness Results ..................................................................................39

6.2.1 Standard Rates................................................................................................39

6.2.2 CARE tariffs.....................................................................................................45

6.3 Utility Rate Schedules..........................................................................................51

6.3.1 Pacific Gas & Electric.......................................................................................51

6.3.2 Southern California Edison ..............................................................................60

6.3.3 Southern California Gas...................................................................................64

6.3.4 San Diego Gas & Electric ................................................................................65 283 of 662
Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 2 2025/08/08

6.3.5 City of Palo Alto Utilities ...................................................................................72

6.3.6 Sacramento Municipal Utilities District (Electric Only) ......................................74

6.3.7 Fuel Escalation Assumptions ...........................................................................76 List of Tables
Table 1. Summary of Revisions............................................................................................ 1 Table 2. Residential Prototype Characteristics ....................................................................10 Table 3. Efficiency Characteristics for Three Vintage Cases................................................12 Table 4. System Sizing by Climate Zone .............................................................................15 Table 5. Investor-Owned Utility Tariffs Used Based on Climate Zone ..................................16 Table 6. Publicly Owned Utility Tariffs Used Based on Climate Zone...................................17 Table 7. Lifecycle Incremental Cost Breakdown for a 4-Ton DFHP Existing Furnace...........19 Table 8. Lifecycle Incremental Cost Breakdown for 4-Ton HPSH ........................................19 Table 9. HVAC Measure Cost Assumptions – 4-Ton Electric Replacements........................20 Table 10. SCAQMD Rule 1111 Proposed Manufacturer Compliance Targets.......................20 Table 11. Lifecycle Incremental Cost Breakdown for 4-Ton System with no Gas Furnaces after 2030............................................................................................................................21 Table 12. [1992-2010] DFHP Existing Furnace....................................................................23 Table 13. [1992-2010] Standard Efficiency HPSH ...............................................................24 Table 14. [1992-2010] High Efficiency HPSH ......................................................................25 Table 15. [1992-2010] DFHP Existing Furnace CARE.........................................................26 Table 16. [1992-2010] Standard Efficiency HPSH CARE ....................................................27 Table 17. [1992-2010] High Efficiency HPSH CARE............................................................28 Table 18. DFHP Existing Furnace On-Bill NPV with High Gas Escalation (Zero-NOx Rule) 29 Table 19. DFHP Existing Furnace LSC Savings (Zero-NOx Rule).......................................30 Table 20. New AC Only Path Cost Estimates ......................................................................32 Table 21. New AC/Furnace and New Ducts Path Cost Estimates........................................32 Table 22. [Pre-1978] DFHP Existing Furnace......................................................................39 Table 23. [Pre-1978] Standard Efficiency HPSH..................................................................40 Table 24. [Pre-1978] High Efficiency HPSH.........................................................................41 Table 25. [1978-1991] DFHP Existing Furnace....................................................................42 Table 26. [1978-1991] Standard Efficiency HPSH ...............................................................43 Table 27. [1978-1991] High Efficiency HPSH ......................................................................44 Table 28. [Pre-1978] DFHP Existing Furnace CARE ...........................................................45 Table 29. [Pre-1978] Standard Efficiency HPSH CARE.......................................................46 Table 30. [Pre-1978] High Efficiency HPSH CARE..............................................................47 Table 31. [1978-1991] DFHP Existing Furnace CARE.........................................................48 Table 32. [1978-1991] Standard Efficiency HPSH CARE ....................................................49 Table 33. [1978-1991] High Efficiency HPSH CARE............................................................50 Table 34. PG&E Baseline Territory by Climate Zone............................................................51 Table 35. PG&E Monthly Gas Rate ($/therm)......................................................................52 284 of 662
Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 3 2025/08/08
Table 36. SCE Baseline Territory by Climate Zone ..............................................................60 Table 37. SoCalGas Baseline Territory by Climate Zone .....................................................64 Table 38. SoCalGas Monthly Gas Rate ($/therm)................................................................65 Table 39. SDG&E Baseline Territory by Climate Zone.........................................................65 Table 40. SDG&E Monthly Gas Rate ($/therm) ...................................................................66 Table 41. CPAU Monthly Gas Rate ($/therm) ......................................................................72 Table 42. Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis...................................................................................................................................77 Table 43. Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis.........................78 List of Figures
Figure 1. AC vs. Heat Pump Pathway Requirements ..........................................................31 Figure 2. AC vs. Heat Pump Energy Comparison................................................................31 Figure 3. Map of California climate zones. ..........................................................................38 285 of 662
Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 4 2025/08/08
Executive Summary
The California Codes and Standards (C&S) Reach Codes program, also known as the Local Energy 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 (GHG) 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.

It is important to note that there is a voluntary measure in the 2025 CALGreen for replacing an air conditioner with a heat pump at time of air conditioner replacement, which can be adopted as is. This report seeks to provide options to modify the heat pump measure and demonstrate the cost-effectiveness of these options.

This analysis used two different metrics to assess the cost-effectiveness of the proposed upgrades for a 1,665 square foot single family home prototype with an attached garage.

Both methodologies require estimating and quantifying the incremental costs and energy savings associated with each energy efficiency measure over a 30-year analysis period. OnBill cost-effectiveness is an occupant-based lifecycle cost (LCC) approach that values energy based upon estimated site energy usage and customer utility bill savings using today’s electricity and natural gas utility tariffs. To reflect how natural gas prices fluctuate with seasonal supply and demand, a normalized curve was used to estimate the cost for the remaining months relative to today’s rates. Long-term Systemwide Cost (LSC) is the California Energy Commission’s metric for determining cost-effectiveness of efficiency measures in the 2025 Energy Code. This metric is intended to capture the long-term projected cost of energy including costs for providing energy during peak periods of demand, carbon emissions, grid transmission and distribution impacts.

Local jurisdictions may 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. For example, reach codes that amend Part 6 of the California Building Code (the Energy Code) and require energy performance beyond state code minimums must demonstrate the proposed changes are cost-effective and obtain approval from the Energy Commission as well as the Building Standards Commission (BSC). Amendments to Part 11, such as requirements for increased water efficiency or electric vehicle infrastructure only require BSC approval and do not require the Energy Commission approval. Although a cost-effectiveness study is only required to amend Part 6 of the California Building Code, this study provides valuable context for jurisdictions pursuing other ordinance paths to understand the economic impacts of the 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. 286 of 662
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The following summarizes key results:

2. The study assumes utility rates escalate over time. Because it is very difficult to predict how the rates will change, the analysis presents two escalation scenarios (modest and high gas escalation) to represent a range of outcomes.

3. The LSC metric most often produces more favorable cost-effectiveness results relative to the results produced using actual utility costs (On-Bill). When the analysis assumes a higher escalation rate for natural gas costs relative to electricity in future years (high gas escalation), the On-Bill results are more favorable in some cases. a. In the oldest (pre-1978) vintage, all three measures (dual fuel heat pump with existing furnace, standard heat pump space heater, and high efficiency heat pump space heater) are cost-effective using the LSC metric in all climate zones. When using the On-Bill metric, the measures remain cost-effective in most climate zones.
b. In the newer (1978-1991 and 1992-2010) vintages, the dual fuel heat pump (DFHP Existing Furnace) and the standard efficiency HPSH are cost-effective based on LSC in all cases except for Climate Zone 15 when using both the standard and California Alternate Rates for Energy (CARE) tariff.

4. Using the CARE tariff results in higher cost savings and cost-effectiveness relative to standard rates, with almost all cases yielding first year utility cost savings. The DFHP Existing Furnace is On-Bill cost-effective based on the high gas escalation scenario in all cases in the pre-1978 vintage, and almost all cases in the 1978-1991 and 1992-2010 vintage. It is also On-Bill cost-effective in most climate zones for the modest gas escalation scenario across all vintages. In Climate Zones 5, 8, 9, 10, 14, and 15, cost-effectiveness declines relative to other areas, and in some cases is not cost-effective from an On-Bill perspective. This is the case for both the CARE tariff and the standard rate.

5. The analysis also modeled the cost impact of using a standard time-of-use electricity tariff versus switching to a newer electrification tariff, designed to reduce costs in homes with heat pumps and/or electric vehicles. Older homes tend to be the least efficient and achieve the most savings from improving equipment efficiency. In most of the state, because older homes tend to use more electricity than a similarly sized, newer vintage home, they realize more costs savings under the electrification tariff.

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savings from switching tariffs; they generally perform better under the standard tariff.

This trend is different in milder climate zones in SCE territory (excluding CZ 15), where newer homes realize more cost savings. Both the standard and electrification tariffs in SCE territory include a daily allocation of lower-cost baseline electricity and a second, higher-priced tier when the baseline is exceeded. In many newer homes, a higher percentage of overall electricity use is within the baseline allocation, resulting in greater cost savings.

6. Higher efficiency equipment reduces utility costs in all cases and improves costeffectiveness in many climate zones in the oldest vintage relative to standard efficiency equipment. However, in more efficient newer homes, where costeffectiveness is generally lower, the savings are insufficient to offset the roughly $3,000 increase in incremental cost.

7. Given the adopted Bay Area Air Quality Management District (BAAD) Zero NOx rule, and the proposed California Air Resource Board or South Coast Air Quality Management District (SCAQMD) Zero-NOx rules, and gas furnaces are no longer available or less available to be installed in 2030, a sensitivity analysis was performed for the Zero NOx scenario and found that cost-effectiveness declines in many cases except in Climate Zones 8-10, some results improve enough to become cost-effective. The improved cost-effectiveness in Climate Zones 8-10 is due to the higher baseline cost when a HPSH must be installed at year 10 when the furnace must be replaced. However, the overall magnitude of 30-year On-Bill costeffectiveness is lower because there are only 10 years of utility cost savings. After year 10 the base case and upgrade measures are both heat pumps.

This report documents the key results and conclusions from the Reach Codes Team analysis. 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/.

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 [email protected].
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1 Introduction
The California Codes and Standards Reach Codes program, also known as the Local Energy Codes program, provides technical support to local governments considering adopting a local ordinance intended to support meeting local and/or statewide energy efficiency and greenhouse gas (GHG) 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.

Local jurisdictions may 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. For example, reach codes that amend Part 6 of the California Building Code (the Energy Code) (CEC, 2025) and require energy performance beyond state code minimums must demonstrate the proposed changes are cost-effective and obtain approval from the Energy Commission as well as the Building Standards Commission (BSC). Amendments to Part 11, such as requirements for increased water efficiency or electric vehicle infrastructure only require BSC approval and do not require the Energy Commission approval. Although a cost-effectiveness study is only required to amend Part 6 of the California Building Code, this study provides valuable context for jurisdictions pursuing other ordinance paths to understand the economic impacts of the 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.

This report is an update to the 2022 Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2024) focused on an ordinance structure that encourages air conditioner (AC) to heat pump replacement. The methodology, prototype characteristics, and relevant measure packages are retained from the main study referenced above. The study includes updated utility rates, revised costs based on the TECH Clean California1 incremental cost study data, estimated costs for the AC path, updated and expanded AC path options, and a new cost-effectiveness scenario that considers upcoming proposed zero-NOx emission regulations (SCAQMD, 2025) (California Air Resources Board, 2022) (BAAD, 2025).

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.

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 1 https://techcleanca.com/
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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 local leadership, residents, and other stakeholders make informed policy decisions.

This report was developed in coordination with the California Statewide Investor-Owned Utilities (IOUs) Codes and Standards Program, the California Energy Commission (CEC), key consultants, and engaged cities—collectively known as the Statewide Reach Codes Team. 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 [email protected].
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2 Methodology and Assumptions
This study evaluates a potential reach code that encourages a heat pump or dual fuel system that includes a heat pump combined with a furnace when an air conditioner is replaced or installed new in existing single family homes. The ordinance structure and this analysis is based on the voluntary requirements adopted in 2025 Title 24, Part 11 California Green Building Standards Code (CALGreen), Section A4.204.1.1 for heat pump space conditioning alterations in single family homes (California Energy Commission, 2025). The proposed reach code also defines pathways for air conditioning equipment to be installed combined with additional efficiency measures. The heat pump path requires the heat pump as the primary heat source, with backup heating allowable either provided by electric resistance or natural gas. In cases where the existing furnace remains, the heat pump is installed alongside the existing furnace with integrated controls to allow for the furnace to provide backup heating. In alignment with the 2025 Energy Code requirements the heat pump must be sized to satisfy the heating load at the design heating temperature without the use of backup heat.

All methodology and assumptions are consistent with prior statewide analysis (Statewide Reach Codes Team, 2024) with the following exceptions:

1. Updated utility rates to January 2025

2. Equipment costs based on TECH data where available; the original report was based on Statewide contractor survey costs

3. Cost estimates were obtained for the AC path

4. Expanded AC path options

5. Cost-effectiveness results for the scenario if gas furnaces are no longer available for sale in California in 2030

2.1 Modeling
The Reach Codes Team performed energy simulations using the 2025 research version of the Residential California Building Energy Code Compliance software (CBECC). The 2025 version of CBECC includes updated weather files, metrics, and the weather stations were changed in Climate Zones 4 and 6 from San Jose to Paso Robles and Torrance to Los Angeles International Airport, respectively. Note that at the time of this report, the Energy Commission was working on integrating a new heat pump model into the CBECC-Res software to better reflect the actual energy use of heat pumps. The updated model results in lower heating energy use than is currently estimated. Once the revised software is released, the reach codes team plans to update this analysis.

Three unique building vintages are included: pre-1978, 1978-1991, and 1992-2010. The vintages were defined based on review of historic building code requirements and defining periods with distinguishing features. The proposed measures were modeled to determine the projected site energy (therm and kWh), source energy, GHG emissions, and long-term systemwide cost (LSC) impacts. Annual utility costs were calculated using hourly data 291 of 662
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output from CBECC, and updated (as of 1/1/2025) electricity and natural gas tariffs for each of the investor-owned utilities (IOUs) as appropriate for that climate zone.

Site energy results are similar between CBECC-Res 2022 and 2025. The 2025 compliance metrics include assumptions that more appliances will be electric in the future. This is predicted to result in higher natural gas retail rates as a result of gas utilities continuing to maintain safe and reliable infrastructure amidst declining natural gas use.

Equivalent CO2 emission reductions were calculated based on outputs from the CBECCRes simulation software. Electricity emissions vary by region and by hour of the year.

CBECC-Res applies two distinct hourly profiles, one for Climate Zones 1 through 5 and 11 through 13 and another for Climate Zones 6 through 10 and 14 through 16. Natural gas emissions do not vary hourly. To compare the mixed-fuel and all-electric cases side-by-side, GHG emissions are presented as pounds of CO2-equivalent (CO2e) emissions.

The Statewide Reach Codes Team designed the approach and selected measures for evaluation based on the 2019 existing building single family reach code analysis (Statewide Reach Codes Team, 2021) and supporting analysis used in the 2025 Energy Code development cycle as well as from outreach to architects, builders, and engineers.

2.2 Prototype Characteristics
The Energy Commission defines building prototypes which it uses to evaluate the costeffectiveness of proposed changes to Energy Code requirements. Average home size has steadily increased over time, 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 the Energy Code. In the 2025 Energy Code heat pumps are prescriptively required for space and water heating for additions (California Energy Commission, 2023).

Table 2. Residential Prototype Characteristics
Climate Zone 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 292 of 662
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determined based on either prescriptive requirements from the building code that were in effect or standard construction practice during that time period. For example, 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. • 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. Heat pump space conditioning measures were modeled to determine the projected energy performance and utility cost impacts relative to the baseline vintage.
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Table 3. Efficiency Characteristics for Three Vintage Cases Building Component Efficiency
Feature Pre-1978 Vintage 1978-1991 Vintage 1992-2010 Vintage Envelope
Exterior Walls 2x4, 16-inch on center wood frame,
R-02
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/SHGC3 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 2 Pre-1978 wall modeled with R-5 cavity insulation to better align wall system performance with monitored field data and not overestimate energy use. 3 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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2.3 Cost-Effectiveness Approach

2.3.1 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 6.3.7. • Long-term Systemwide Cost (LSC): Formerly known as Time Dependent Valuation (TDV) energy cost savings, LSC reflects the Energy Commission’s current lifecycle cost (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-tradebased CO2 emissions (California Energy Commission, 2023). This is the methodology used by the Energy Commission in evaluating cost-effectiveness for measures in the 2025 Energy Code.

Energy simulations were completed using the 2025 research version of the Residential California Building Energy Code Compliance software (CBECC).

2.3.2 Costs
The Reach Codes Team assessed the incremental costs and savings of the packages over the lifecycle of 30-years. Incremental costs represent the equipment, installation, replacement, and maintenance costs of the proposed measure relative to the 2025 Energy Code minimum requirements or standard industry practices.

In February 2024, the TECH Clean California statewide program completed an incremental cost study from cost data collected from 64 contractor participants (Opinion Dynamics, 2024). This report directly uses the TECH costs for all the scenarios for which there was TECH cost data available. These costs were supplemented with measure costs the Reach Codes Team obtained from a contractor survey conducted in the summer of 2023. Additional detail on the contractor cost survey is available in the prior existing building statewide study (Statewide Reach Codes Team, 2024). The following summarizes key assumptions in this costing approach.
• Average statewide costs from the TECH Study were used, no regional specific costs were applied.
• Costs for 3-ton and 4-ton units were scaled for smaller and larger systems based on linear interpolation between the 3-ton and 4-ton costs. 295 of 662
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• The TECH study provided cost for a minimum efficiency 60,000 Btu/h gas furnace.

However, beginning in 2028, newly installed residential gas furnaces must comply with updated federal efficiency standards requiring a minimum of 95% AFUE4 .

Because the TECH study did not include cost estimates for a 95% AFUE condensing furnace, an adjustment was made using data from the statewide contractor cost survey. For systems requiring larger furnace capacities, cost estimates were derived as follows:
o 80,000 Btu/h furnaces (serving systems sized 3 tons): The cost difference between the minimum efficiency and 95% AFUE versions of the 80,000 Btu/h furnace and the cost difference between the minimum efficiency 80,000 Btu/h furnace and the minimum efficiency 60,000 Btu/h furnace, as reported in the contractor survey, was added to the TECH cost for the 60,000 Btu/h unit. o 100,000 Btu/h furnaces (serving systems 4 tons and larger): The same method was applied using the corresponding cost differential for 100,000 Btu/h units.
• At time of replacement for the heat pump, based on heating loads and contractor feedback it is assumed an electric resistance backup coil would be installed with the air handler for Climate Zones 1 and 16. The CBECC-Res software applies back up electric resistance heating for all climate zones whenever it is assumed that the heat pump cannot meet the heating load based on the performance of currently available products (Heinemeier, 2025).The TECH costs did not include this option. The $819 incremental cost from the statewide study was added in this case. • At the time of replacement for a furnace when it fails, the statewide study assumed a fan motor replacement. The TECH costs did not include this option. A $1,200 incremental cost was added to the TECH cost.
• At time of replacement for high efficiency heat pump, the sum of the TECH cost for standard efficiency heat pump and the incremental cost difference from the statewide study for high efficiency and standard efficiency heat pump was applied.

Costs were applied based on the system capacity from heating and cooling load calculations in CBECC-Res as presented in Table 4. Air conditioner nominal capacity was calculated as the CBECC-Res cooling load, rounded up to the nearest half ton. Heat pump nominal capacity was calculated as the maximum of either the CBECC-Res heating or cooling load, rounded up to the nearest half ton. In both cases a minimum capacity of 1.5- ton was applied as this represents the typical smallest available split system heat pump equipment. Load calculations revealed that Climate Zones 2 through 15 were coolingdominated, whereas Climate Zones 1 and 16 were heating-dominated. In these heating4 https://www.energy.gov/articles/doe-finalizes-energy-efficiency-standards-residential-furnaces-saveamericans-15- billion#:~:text=These%20furnace%20efficiency%20standards%20were,heat%20for%20the%20livin g%20space.
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dominated zones, the heat pump was upsized compared to an air conditioner designed solely for cooling to ensure adequate heating performance.

Table 4. System Sizing by Climate Zone
Climate
Zone
Air Conditioner
Capacity (tons)
Heat Pump
Capacity (tons)
1 1.5 3.0
2 3.5 3.5
3 2.5 2.5
4 3.5 3.5
5 3.0 3.0
6 3.0 3.0
7 3.0 3.0
8 4.0 4.0
9 4.0 4.0
10 4.0 4.0
11 4.5 4.5
12 4.0 4.0
13 4.5 4.5
14 4.0 4.0
15 5.0 5.0
16 3.5 4.0

2.3.3 Metrics
Cost-effectiveness is presented using net present value (NPV). • 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).

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 construction cost savings and lifetime energy cost savings).
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2.3.4 Utility Rates
In coordination with the CA IOU rates team (comprised of representatives from Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E)) and two Publicly-Owned-Utilities (POUs) (Sacramento Municipal Utility District (SMUD) and City of Palo Alto Utilities (CPAU)), the Reach Codes Team determined appropriate utility rates for each climate zone to calculate utility costs and determine On-Bill cost-effectiveness for the proposed measures and packages. The utility tariffs, summarized in Table 5 and Table 6 with details in Section 6.2.26.2.2, were determined based on the appropriate rate for each. Utility rates were applied to each climate zone based on the predominant IOU serving the population of each zone, with a few climate zones evaluated multiple times under different utility scenarios. Climate Zones 10 and 14 were evaluated with both SCE for electricity and Southern California Gas Company (SoCalGas) for gas and SDG&E tariffs for both electricity and gas since each utility has customers within these climate zones. Climate Zone 5 is evaluated under both PG&E and SoCalGas natural gas rates. Two POU or municipal utility rates were also evaluated: SMUD in Climate Zone 12 and CPAU in Climate Zone 4.

First-year utility costs were calculated using hourly electricity and natural gas output from CBECC-Res and applying the utility tariffs summarized in Table 5 and Table 6. Homes with a heat pump in IOU territory are eligible for either the electrification or the standard tariff. Utility costs were calculated under both tariffs with results presented using the one that yielded the lower annual utility cost. The electrification tariff resulted in better utility costs savings when there was high kWh usage, typically in older, less efficient homes. Conversely, newer homes which are more efficient, tend to benefit more under the standard tariff. However, in SCE’s milder climate zones, older homes benefit more under the standard tariff. Annual costs were also estimated for IOU customers eligible for the CARE tariff discounts on both electricity and natural gas bills.

Table 5. Investor-Owned Utility Tariffs Used Based on Climate Zone Climate
Zones
Electric / Gas
Utility
Electricity
Tariff:

Standard
Rate
Electricity
Tariff:

Electrification
Rate
Natural Gas
Tariff
1-5,11-13,16 PG&E / PG&E E-TOU-C E-ELEC G1
5 PG&E / SoCalGas E-TOU-C E-ELEC GR
6, 8-10, 14, 15 SCE / SoCalGas TOU-D-4-9 TOU-D-PRIME GR 7, 10, 14 SDG&E / SDG&E TOU-DR-1 EV-TOU-5 GR
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Table 6. Publicly Owned Utility Tariffs Used Based on Climate Zone Climate
Zones
Electric / Gas Utility
Electricity Tariff: Standard
Rate
Electricity
Tariff:

Electrification
Rate
Natural Gas
Tariff
4 CPAU / CPAU E-1 G1
12 SMUD / PG&E R-TOD G1
Utility rates are assumed to escalate over time. Because it is very difficult to predict how rates will change, two escalation scenarios are presented in this study to represent a range of outcomes. See Appendix 6.3.7 Fuel Escalation Assumptions for details. 1) Modest Gas Escalation: This scenario is based on assumptions from the CPUC 2021 En Banc hearings on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation rates throughout the remainder of the 30-year evaluation period are based on the escalation rate assumptions within the 2022 Energy Code TDV factors developed by the Energy Commission (California Energy Commission. 2021b).
2) High Gas Escalation: This scenario is based on escalation rates developed by the Energy Commission and used within the 2025 Energy Code LSC factors (LSC replaces TDV in the 2025 Energy Code) which assumed steep increases in gas rates in the latter half of the analysis period.

Electricity tariff structures will evolve over time. Most recently, the CPUC approved an income-graduated fixed charge intended to benefit low-income customers and support electrification measures.5 The IOUs are currently developing tariffs that meet the direction given by the CPUC in this proceeding. These tariffs were not available at the time of this study, but this analysis may be re-evaluated later in 2025 once the rates are finalized. 5 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-responsedr/demand-flexibility-rulemaking 299 of 662
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2.4 Measure Details and Cost
This section describes the details of the measures and documents incremental costs. All measure costs were obtained from the TECH cost survey and contractor survey unless otherwise noted. These surveys reflect the cost to the customer and include equipment, labor, permit fees, and required HERS testing.

The following heat pump space heater (HPSH) measures were evaluated as described below. All included HERS verified refrigerant charge, 10% duct sealing, and 300 CFM/ton airflow, aligned with the proposed code requirements for the 2025 Title 24 code. 1) Dual Fuel Heat Pump (DFHP Existing Furnace): Replace existing ducted AC with an electric heat pump and install controls to operate the heat pump as the primary space conditioning source and to use the existing gas furnace (78 AFUE) for backup heat when heating demands cannot be met by the heat pump. In this report, dual fuel heat pumps were modeled to disable furnace operation above an outdoor temperature of 35°F in compliance with Energy Code Section 150.0(h)7, which requires this lockout for any heat pump with supplemental heating. A minimum federal efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) heat pump was evaluated.

Savings are compared to a new AC (14.3 SEER2, 11.7 EER2) alongside the existing furnace (78 AFUE). A new evaporator coil is assumed to be installed with the AC system.
2) HPSH: Replace existing ducted AC and natural gas furnace with an electric heat pump and air handler. Minimum federal efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) heat pumps were evaluated. Savings are compared to a new ducted natural gas furnace and AC (14.3 SEER2, 11.7 EER2, 80 AFUE).
3) High Efficiency HPSH: Replace existing ducted AC and natural gas furnace with an electric heat pump and air handler. Higher efficiency (17 SEER2, 12.48 EER2, 9.5 HSPF2) heat pumps were evaluated. Savings are compared to a new ducted natural gas furnace and AC (14.3 SEER2, 11.7 EER2, 80 AFUE).

Over the 30-year analysis period, certain changes are assumed when the equipment is replaced that impact both lifetime costs and energy use. Table 7 and Table 8 present the lifetime scenario for the DFHP Existing Furnace and HPSH measures, respectively. The analysis assumed a 20-year effective useful lifetime (EUL) for a furnace, a 15-year EUL for an air conditioner and a 15-year EUL for a heat pump. Lifetimes are based on the Database for Energy Efficient Resources (DEER) (California Public Utilities Commission, 2021b). The existing furnace is assumed to be halfway through its EUL at the beginning of the analysis period. After 10 years when the furnace reaches the end of its life and needs to be replaced, it will be subject to new federal efficiency standards for residential gas furnaces that go into effect in 2028 requiring 95 AFUE6
. Five years later the air conditioner reaches the end of its life and is replaced with a new air conditioner.
6 https://www.energy.gov/articles/doe-finalizes-energy-efficiency-standards-residential-furnaces-saveamericans-15- billion#:~:text=These%20furnace%20efficiency%20standards%20were,heat%20for%20the%20livin g%20space.
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 19 2025/08/08
For the DFHP upgrade case, after 10 years when the furnace fails it’s expected that the furnace is abandoned in place since the heat pump serves primary heating and was sized to provide the full design heating load. In this case it is assumed that the fan motor is replaced with a new aftermarket unit and operates another five years until the heat pump fails and is replaced with a new heat pump and air handler. Table 7 through Table 8 present the lifecycle incremental cost breakdown for a 4-ton system. The heat pump is sized for each climate zone based on the heating and cooling load as shown in Table 4, and the 4-ton system was selected as an example to show the lifecycle cost breakdown.

Table 7. Lifecycle Incremental Cost Breakdown for a 4-Ton DFHP Existing Furnace Calendar
Year
Baseline AC
Replacement
Schedule
Baseline
Future
Cost
Baseline
Present
Value
Cost
Heat Pump
Heat
Pump
Future
Cost
Heat
Pump
Present
Value
Cost
2026 AC fails, install new
AC, keep existing
furnace
$10,431 $10,431 AC fails, install new
HP, keep existing
furnace
$12,347 $12,347
2036 Furnace fails, install
new 95AFUE
furnace
$7,879 $5,863 Furnace fails,
replace fan motor
$1,200 $893
2041 AC fails, install new
AC
$10,431 $6,695 HP fails, install new
HP and air handler
$14,529 $9,326
Total $22,989 $22,566
Incremental Cost -$424
Table 8. Lifecycle Incremental Cost Breakdown for 4-Ton HPSH Calendar
Year
Baseline AC
Replacement
Schedule
Baseline Future
Cost
Baseline
Present
Value
Cost
Heat Pump
Heat Pump
Future
Cost
Heat
Pump
Present
Value
Cost
2026 AC fails, install
new AC &
furnace
$13,808 $13,808 AC fails,
install new

HP & AHU
$14,529 $14,529
2041 AC fails, install
new AC
$10,431 $6,695 HP fails,
install new

HP & AHU
$13,529 $8,684
2046 Furnace fails,
install new
95AFUE
furnace
$7,879 $4,363
- - -
2056 Remaining
useful life for
furnace
- -$1,623
- - -
Total $23,243 $23,213
Incremental Cost -$30
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 20 2025/08/08
Table 9 presents estimated first and lifetime costs for the baseline and heat pump scenarios for 4-ton equipment. Costs include all material and installation labor including providing new 240 V electrical service to the air handler location for all new air handler installations and decommissioning of the furnace for the cases where the furnace is removed. DFHP costs incorporate controls installation and commissioning to ensure the heat pump and the furnace communicate properly and don’t operate at the same time. Future replacement costs do not include any initial costs associated with 240V electrical service or furnace decommissioning.

Table 9. HVAC Measure Cost Assumptions – 4-Ton Electric Replacements Measure Case
AC +
Evaporator
Coil
Gas
Furnace
/AC
DFHP Existing
Furnace HPSH
High
Efficiency
HPSH
Base Case - - AC +
Evaporator Coil
Gas
Furnace
/AC
Gas
Furnace
/AC
First Cost $10,431 $13,808 $12,347 $14,529 $17,506
Replacement Cost
(Future Value) $18,310 $18,310 $15,729 $13,529 $16,506
Replacement Cost
(Present Value) $12,558 $11,058 $10,219 $8,684 $10,594
Remaining Value at
Year 30 $0 -$1,623 $0 $0 $0
Total Lifecycle Cost $22,989 $23,243 $22,566 $23,213 $28,100 Incremental Cost - - -$424 -$30 $4,857

2.4.1 Lifecycle Cost Assuming Zero-NOx Standards for Space Heating After 2030
The California Air Resource Board proposed a strategy for reducing emissions in their 2022 Scoping Plan for Achieving Carbon Neutrality that includes a zero-emission standard for space and water heaters sold in California that would go into effect in 2030 (California Air Resources Board, 2022).

The South Coast Air Quality Management District (SCAQMD) proposed Rule 1111 for the Reduction of NOx Emissions from Natural Gas-Fired Furnaces. This rule applies to furnaces less than 175,000 Btu/hr and sets compliance goals for manufacturers with the proposed dates in Table 10. The sale of gas furnaces above the compliance target will incur a mitigation fee (SCAQMD, 2025).

Table 10. SCAQMD Rule 1111 Proposed Manufacturer Compliance Targets Target Dates 2027-2028 2029-2032 2033-2035 2036 and after NOx Emitting Units (e.g. gas) 70% 50% 25% 10%
Zero-Emission Units 30% 50% 75% 90%
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 21 2025/08/08
The Bay Area Air Quality Management District (BAAD) adopted Rule 9-4 that similarly requires zero NOx standards for space heating systems sold in the Bay Area.

Implementation for residential furnaces will begin January 2029 (BAAD, 2025).

The BAAD Rule 9-4 has been adopted, but both the California Air Resources Board and SCAQMD Rule 1111 are proposed rules that have not yet been adopted, but given the implications these rulings would have on the 30-year cost-effectiveness if gas furnaces were very limited or no longer available in 2030, a sensitivity analysis for this scenario is included in this study for the DFHP Existing Furnace scenario. The other heat pump measures would also be impacted by this ruling; however, for simplicity the team selected one measure to give a sense of the impact on the results. The following costs reflect the scenario where gas furnaces are not available in 2030. This 30-year lifecycle analysis assumes that in 10 years when the furnace reaches the end of its useful life and needs to be replaced, it will be subjected to the SCAQMD Rule 1111 or California Air Resources Board proposal and will be replaced with a heat pump.

Table 11. Lifecycle Incremental Cost Breakdown for 4-Ton System with no Gas Furnaces after 2030
Calendar
Year
Baseline AC
Replacement
Schedule
Baseline
Future
Cost
Baseline
Present
Value
Cost
Heat Pump
Heat
Pump
Future
Cost
Heat
Pump
Present
Value
Cost
2026
AC fails, install new
AC, keep existing
furnace
$10,431 $10,431
AC fails, install new
HP, keep existing
furnace
$12,347 $12,347
2036 Furnace fails, install
new HP $14,529 $10,811 Furnace fails, replace fan motor $1,200 $893 2041 - - - HP fails, install new
HP and air handler $14,529 $9,326
2051 HP fails, install new
HP $13,529 $6,462 - - -
2056 Remaining useful
life for HP - -$4,459 - - -
Total $23,244 $22,566
Incremental Cost -$679
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 22 2025/08/08
3 Results
The primary objective of the evaluation is to identify cost-effective HPSH upgrade measures for existing single family buildings, to support the design of local ordinances encouraging installation of a heat pump when replacing an air conditioner. While this section focuses primarily on the results of the cost-effectiveness analysis, it is important to highlight that the associated greenhouse gas (GHG) emissions savings are significant – averaging a 25% annual reduction across the climate zones and vintages. A full dataset of all results, including site energy, source energy, LSC and GHG emissions, 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/.

3.1 Cost-Effectiveness Results
Table 12 through Table 14 present results across the 16 climate zones for the 1992-2010 vintage using standard tariffs and Table 15 through Table 17 present results across the 16 climate zones and three vintages using CARE tariffs. Results show the incremental cost and utility bill savings for the first year along with cost effectiveness results for LSC and On-Bill under both the modest and high gas escalation scenarios. Results for additional vintages using standard tariffs are in Appendix 6.2 Cost-Effectiveness Results. 304 of 662
Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 23 2025/08/08

3.1.1 Cost Effectiveness Results Using Standard Tariffs Table 12. [1992-2010] DFHP Existing Furnace
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $60 $10,843 $5,471 $21,616
CZ02 PGE $1,670 ($86) $8,462 $2,312 $12,767
CZ03 PGE $1,178 $15 $8,302 $4,810 $13,877
CZ04 PGE $1,670 ($68) $7,396 $1,955 $10,123
CZ04 CPAU $1,670 ($9) $7,396 $2,207 $7,179
CZ05 PGE $1,424 ($12) $6,848 $3,425 $11,150
CZ05 PGE/SCG $1,424 ($195) $6,848 ($1,864) $2,099
CZ06 SCE/SCG $1,424 ($34) $2,647 $675 $1,468
CZ07 SDGE $1,424 ($36) $2,691 $599 $1,734
CZ08 SCE/SCG $1,916 ($65) $2,028 ($662) $311
CZ09 SCE/SCG $1,916 ($90) $2,749 ($1,037) $437
CZ10 SCE/SCG $1,916 ($79) $2,444 ($833) $543
CZ10 SDGE $1,916 $54 $2,444 $2,350 $4,857
CZ11 PGE $2,162 $68 $7,672 $4,713 $14,750
CZ12 PGE $1,916 $44 $8,466 $4,851 $15,371
CZ12 SMUD/PGE $1,916 $353 $8,466 $11,771 $22,513
CZ13 PGE $2,162 $76 $5,318 $3,972 $11,212
CZ14 SCE/SCG $1,916 ($179) $4,803 ($2,215) $1,489
CZ14 SDGE $1,916 ($22) $4,803 $1,431 $7,207
CZ15 SCE/SCG $2,408 ($133) ($122) ($3,289) ($3,060)
CZ16 PGE $2,243 ($66) $8,842 $1,260 $11,982
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 24 2025/08/08
Table 13. [1992-2010] Standard Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 ($145) $10,949 ($34) $17,899
CZ02 PGE $652 ($229) $9,362 ($702) $11,825
CZ03 PGE $514 ($62) $8,244 $2,373 $11,665
CZ04 PGE $652 ($205) $8,680 ($572) $10,753
CZ04 CPAU $652 ($85) $8,680 $556 $7,194
CZ05 PGE $583 ($113) $6,957 $752 $9,206
CZ05 PGE/SCG $583 ($316) $6,957 ($5,101) ($811)
CZ06 SCE/SCG $583 ($37) $2,134 ($63) $716
CZ07 SDGE $583 ($39) $2,156 ($149) $981
CZ08 SCE/SCG $721 ($79) $1,812 ($1,356) ($371)
CZ09 SCE/SCG $721 ($118) $2,589 ($2,038) ($524)
CZ10 SCE/SCG $721 ($103) $2,311 ($1,723) ($259)
CZ10 SDGE $721 $34 $2,311 $1,533 $4,218
CZ11 PGE $790 ($35) $8,817 $2,833 $14,504
CZ12 PGE $721 ($94) $9,199 $1,812 $13,563
CZ12 SMUD/PGE $721 $363 $9,199 $12,027 $24,107
CZ13 PGE $790 $6 $5,948 $2,558 $10,687
CZ14 SCE/SCG $721 ($412) $6,635 ($6,964) ($1,073)
CZ14 SDGE $721 ($107) $6,635 $166 $10,249
CZ15 SCE/SCG $859 ($139) ($112) ($3,434) ($3,186)
CZ16 PGE $2,095 ($385) $13,600 ($2,842) $19,424
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 25 2025/08/08
Table 14. [1992-2010] High Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $56 $9,783 ($350) $17,727
CZ02 PGE $3,606 ($94) $7,527 ($2,544) $10,080
CZ03 PGE $3,422 $59 $5,701 $312 $9,692
CZ04 PGE $3,606 ($61) $6,961 ($2,193) $9,235
CZ04 CPAU $3,606 $0 $6,961 ($2,389) $4,310
CZ05 PGE $3,514 $4 $4,176 ($1,450) $7,088
CZ05 PGE/SCG $3,514 ($199) $4,176 ($7,303) ($2,929)
CZ06 SCE/SCG $3,514 ($14) ($2,162) ($4,367) ($3,567)
CZ07 SDGE $3,514 ($12) ($2,090) ($4,312) ($3,191)
CZ08 SCE/SCG $3,698 $13 ($1,660) ($4,217) ($3,149)
CZ09 SCE/SCG $3,698 ($26) ($750) ($4,883) ($3,284)
CZ10 SCE/SCG $3,698 ($4) ($844) ($4,418) ($2,864)
CZ10 SDGE $3,698 $132 ($844) ($1,068) $1,587
CZ11 PGE $3,789 $186 $7,738 $2,845 $14,675
CZ12 PGE $3,698 $88 $7,575 $996 $12,879
CZ12 SMUD/PGE $3,698 $422 $7,575 $8,459 $20,580
CZ13 PGE $3,789 $208 $4,419 $2,165 $10,439
CZ14 SCE/SCG $3,698 ($219) $5,760 ($7,575) ($1,506)
CZ14 SDGE $3,698 $77 $5,760 ($424) $9,604
CZ15 SCE/SCG $3,881 $50 ($2,144) ($4,209) ($3,786)
CZ16 PGE $5,071 ($97) $14,557 ($1,291) $21,181
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 26 2025/08/08

3.1.2 Cost Effectiveness Results Using CARE Tariffs
Table 15. [1992-2010] DFHP Existing Furnace CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $153 $10,843 $6,436 $19,266
CZ02 PGE $1,670 $18 $8,462 $3,916 $12,233
CZ03 PGE $1,178 $73 $8,302 $5,493 $12,696
CZ04 PGE $1,670 $14 $7,396 $3,217 $9,716
CZ04 CPAU $1,670 $0 $7,396 $786 $786
CZ05 PGE $1,424 $47 $6,848 $4,198 $10,337
CZ05 PGE/SCG $1,424 ($98) $6,848 $23 $3,191
CZ06 SCE/SCG $1,424 ($18) $2,647 $967 $1,600
CZ07 SDGE $1,424 ($16) $2,691 $1,000 $1,887
CZ08 SCE/SCG $1,916 ($38) $2,028 ($136) $644
CZ09 SCE/SCG $1,916 ($52) $2,749 ($301) $879
CZ10 SCE/SCG $1,916 ($45) $2,444 ($182) $920
CZ10 SDGE $1,916 $51 $2,444 $2,147 $4,112
CZ11 PGE $2,162 $115 $7,672 $5,068 $13,039
CZ12 PGE $1,916 $103 $8,466 $5,436 $13,792
CZ12 SMUD/PGE $1,916 $418 $8,466 $12,488 $21,071
CZ13 PGE $2,162 $100 $5,318 $4,013 $9,760
CZ14 SCE/SCG $1,916 ($98) $4,803 ($700) $2,268
CZ14 SDGE $1,916 $23 $4,803 $2,156 $6,677
CZ15 SCE/SCG $2,408 ($88) ($122) ($2,307) ($2,111)
CZ16 PGE $2,243 $33 $8,842 $2,737 $11,267
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 27 2025/08/08
Table 16. [1992-2010] Standard Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 $33 $10,949 $2,703 $16,973
CZ02 PGE $652 ($59) $9,362 $2,211 $12,188
CZ03 PGE $514 $25 $8,244 $3,685 $11,074
CZ04 PGE $652 ($53) $8,680 $2,048 $11,067
CZ04 CPAU $652 $0 $8,680 $255 $255
CZ05 PGE $583 ($13) $6,957 $2,389 $9,117
CZ05 PGE/SCG $583 ($173) $6,957 ($2,232) $1,208
CZ06 SCE/SCG $583 ($20) $2,134 $249 $872
CZ07 SDGE $583 ($18) $2,156 $279 $1,161
CZ08 SCE/SCG $721 ($47) $1,812 ($728) $62
CZ09 SCE/SCG $721 ($70) $2,589 ($1,094) $122
CZ10 SCE/SCG $721 ($61) $2,311 ($892) $281
CZ10 SDGE $721 $39 $2,311 $1,509 $3,612
CZ11 PGE $790 $60 $8,817 $4,141 $13,421
CZ12 PGE $721 $22 $9,199 $3,592 $12,940
CZ12 SMUD/PGE $721 $471 $9,199 $13,622 $23,292
CZ13 PGE $790 $61 $5,948 $3,234 $9,693
CZ14 SCE/SCG $721 ($241) $6,635 ($3,632) $1,098
CZ14 SDGE $721 ($5) $6,635 $1,996 $9,885
CZ15 SCE/SCG $859 ($91) ($112) ($2,414) ($2,201)
CZ16 PGE $2,095 ($92) $13,600 $2,163 $19,892
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 28 2025/08/08
Table 17. [1992-2010] High Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $164 $9,783 $813 $15,177
CZ02 PGE $3,606 $28 $7,527 ($683) $9,357
CZ03 PGE $3,422 $104 $5,701 $674 $8,120
CZ04 PGE $3,606 $41 $6,961 ($703) $8,383
CZ04 CPAU $3,606 $0 $6,961 ($4,595) ($4,595)
CZ05 PGE $3,514 $62 $4,176 ($727) $6,056
CZ05 PGE/SCG $3,514 ($98) $4,176 ($5,348) ($1,853)
CZ06 SCE/SCG $3,514 ($5) ($2,162) ($4,219) ($3,583)
CZ07 SDGE $3,514 ($0) ($2,090) ($4,112) ($3,235)
CZ08 SCE/SCG $3,698 $15 ($1,660) ($4,248) ($3,401)
CZ09 SCE/SCG $3,698 ($8) ($750) ($4,603) ($3,330)
CZ10 SCE/SCG $3,698 $6 ($844) ($4,300) ($3,065)
CZ10 SDGE $3,698 $103 ($844) ($1,892) $191
CZ11 PGE $3,789 $203 $7,738 $2,425 $11,808
CZ12 PGE $3,698 $141 $7,575 $1,351 $10,784
CZ12 SMUD/PGE $3,698 $471 $7,575 $8,735 $18,405
CZ13 PGE $3,789 $192 $4,419 $1,255 $7,809
CZ14 SCE/SCG $3,698 ($111) $5,760 ($5,632) ($783)
CZ14 SDGE $3,698 $115 $5,760 ($98) $7,755
CZ15 SCE/SCG $3,881 $36 ($2,144) ($4,549) ($4,220)
CZ16 PGE $5,071 $95 $14,557 $1,460 $19,324

3.2 Zero-NOx Scenario Results
This section presents cost-effectiveness results for the DFHP Existing Furnace under the scenario where proposed air quality district zero-NOx rules go into effect over the next 10 years. In the base case, at time of replacement of the gas furnace at year 10 a heat pump is installed. The energy profile between the base case and the heat pump upgrade case are subsequently identical for the remaining 20 years of the 30-year analysis period. As a result, energy and cost savings only persist for the first 10 years.

Table 18 shows the On-Bill NPV cost-effectiveness results assuming high gas escalation.

The high gas escalation was used for the zero-NOx analysis because the high gas escalation is built on the assumption that gas furnaces are no longer available to be installed due to zero-NOx regulations or similar policies. Table 19 shows the LSC costeffectiveness results for all three vintages. 2025 LSC savings were calculated using individual year multipliers for the first 10 years, 2026 through 2035. 310 of 662
Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 29 2025/08/08
Table 18. DFHP Existing Furnace On-Bill NPV with High Gas Escalation (Zero-NOx Rule) Climate
Zone
Electric/
Gas Utility
On-Bill NPV
Pre-1978 1978-1991 1992-2010
CZ01 PGE $5,473 $4,136 $2,349
CZ02 PGE $1,785 $1,031 $1,101
CZ03 PGE $2,863 $2,097 $2,052
CZ04 PGE $2,133 $1,162 $1,019
CZ04 CPAU $2,340 $1,599 $1,213
CZ05 PGE $1,918 $1,486 $1,576
CZ05 PGE/SCG ($1,308) ($834) ($491)
CZ06 SCE/SCG $401 $605 $635
CZ07 SDGE $1,473 $999 $641
CZ08 SCE/SCG ($125) $99 $195
CZ09 SCE/SCG ($563) ($183) $22
CZ10 SCE/SCG ($259) $53 $110
CZ10 SDGE $2,985 $2,261 $1,430
CZ11 PGE $3,287 $2,866 $2,279
CZ12 PGE $2,935 $2,578 $2,202
CZ12 SMUD/PGE $7,877 $5,978 $5,040
CZ13 PGE $2,927 $2,556 $2,053
CZ14 SCE/SCG ($864) ($943) ($543)
CZ14 SDGE $2,204 $1,655 $1,064
CZ15 SCE/SCG $1,338 $396 ($688)
CZ16 PGE $1,192 $1,071 $1,096
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 30 2025/08/08
Table 19. DFHP Existing Furnace LSC Savings (Zero-NOx Rule) Climate
Zone
Electric/
Gas Utility

LSC NPV
Pre-1978 1978-1991 1992-2010
CZ01 PGE $3,019 $2,510 $1,558
CZ02 PGE $1,256 $1,025 $1,006
CZ03 PGE $1,460 $1,120 $1,036
CZ04 PGE $1,242 $949 $887
CZ04 CPAU $1,242 $949 $887
CZ05 PGE $1,127 $816 $820
CZ05 PGE/SCG $1,127 $816 $820
CZ06 SCE/SCG $545 $318 $251
CZ07 SDGE $639 $403 $314
CZ08 SCE/SCG $428 $279 $244
CZ09 SCE/SCG $608 $424 $372
CZ10 SCE/SCG $469 $320 $293
CZ10 SDGE $469 $320 $293
CZ11 PGE $1,871 $1,475 $1,263
CZ12 PGE $1,924 $1,539 $1,356
CZ12 SMUD/PGE $1,375 $1,090 $939
CZ13 PGE ($206) ($186) $50
CZ14 SCE/SCG ($206) ($186) $50
CZ14 SDGE $127 $60 $38
CZ15 SCE/SCG ($185) ($12) $77
CZ16 PGE $3,019 $2,510 $1,558

3.3 AC Pathways for Heat Pump Replacements
Many jurisdictions are interested in seeing alternative pathways for residents who may prefer to replace an air conditioner with similar equipment, rather than migrating to a heat pump system. Alternative packages analyzed to support this request include air conditioning equipment combined with additional efficiency measures resulting in options that are reasonably energy or LSC cost equivalent to a heat pump system, to the extent feasible.

Figure 1 shows two AC pathways, one with an existing duct system and another path with a new duct system, alongside the heat pump pathways. The figure presents the proposed efficiency upgrade measures that would be part of a reach code (solid blue) along with the relevant requirements from Title 24, Part 6 that are triggered as part of equipment replacements (white or gradient blue). A reach code that establishes requirements when an air conditioner is replaced or installed new could allow for either a heat pump to be installed or an AC as long as the performance measures listed below are met. 312 of 662
Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 31 2025/08/08
Figure 1. AC vs. Heat Pump Pathway Requirements
The heat pump only and two AC pathways are presented in Figure 2 comparing total LSC energy use relative to the existing home for the 1992-2010 vintage. The heat pump path is represented by the DFHP Existing Furnace scenario. In most climate zones, the heat pump path results in higher energy savings, in the milder climates the AC and new ducts and New AC Only paths save marginally more energy.

Figure 2. AC vs. Heat Pump Energy Comparison
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 32 2025/08/08
Though the AC path does not need to meet cost-effectiveness criteria to be adopted as a reach code since it’s an alternative path, in order to understand the implications of the AC path on the customer, Table 20 and Table 21 present estimated costs for the new AC only and the new AC + new ducts paths respectively.

Table 20. New AC Only Path Cost Estimates
New AC Only Path Pre-1978 1978-1991 1992-2010
Fan Efficacy: 0.45 W/CFM - - -
Refrigerant Charge Verification $100 $100 $1007
R-49 Attic Insulation $5,483 $3,612 $1,827
Air Sealing $1,963 $1,963 $1,963
Total $7,546 $5,675 $3,790
Table 21. New AC/Furnace and New Ducts Path Cost Estimates New AC and New Ducts Path Pre-1978 1978-1991 1992-2010
New R-8 Ducts $6,311 $6,311 $6,311
Furnace $5,951 $5,951 $5,951
Fan Efficacy: 0.35 W/CFM $500 $500 $500
Refrigerant Charge Verification $100 $100 $100
Total $12,862 $12,862 $12,862
7 This is an incremental cost and in some climate zones, refrigerant charge verification is required so there is no incremental cost added.
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4 Recommendations and Discussion
This analysis evaluated the feasibility and cost-effectiveness of AC to heat pump measures in California existing homes built before 2010. To meet the needs of jurisdictions evaluating this option, Statewide Reach Codes Team used both On-Bill and LSC-based lifecycle cost 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 pumps are significantly more efficient than gas furnaces, requiring less than half the energy to meet the heating load. However, despite this reduction in heating energy use, the cost of heating a home using electricity (heat pump) could be higher than the cost to heat that same home with natural gas (furnace), depending on the electricity tariffs relative to the gas tariffs. Therefore, while a heat pump measure could be deemed as cost-effective over its lifecycle, installing a heat pump could result in a decrease or an increase in utility costs in the first years relative to a gas furnace and AC system. For example, the heat pump space heater measure in climate zone 12 in the newest vintage results in the customer saving money on their utility bill in SMUD territory but paying more on their utility bill in PG&E territory. Both PG&E and SMUD territory use PG&E gas rates, but SMUD has lower electricity rates than PG&E. With fuel switching measures like the AC to HP measure, the electricity to gas ratio has a significant impact on the savings or costs the customer will see by switching from gas to an electric heat pump space heater.

2. The LSC metric most often produces more favorable cost-effectiveness results relative to the results produced using actual utility costs (On-Bill). When the analysis assumes a higher escalation rate for natural gas costs relative to electricity in future years (high gas escalation), the On-Bill results are more favorable in some cases. a. In the oldest (pre-1978) vintage, all three measures (dual fuel heat pump with existing furnace, standard heat pump space heater, and high efficiency heat pump space heater) are cost-effective using the LSC metric in all climate zones. When using the On-Bill metric, the measures remain cost-effective in most climate zones.
b. In the newer (1978-1991 and 1992-2010) vintages, the dual fuel heat pump (DFHP Existing Furnace) and the standard efficiency HPSH are cost-effective based on LSC in all cases except for Climate Zone 15 when using both the standard and California Alternative Rates for Energy (CARE) tariff.

3. Using the CARE tariff results in higher cost savings and cost-effectiveness relative to standard rates, with almost all cases yielding first year utility cost savings. The DFHP Existing Furnace is On-Bill cost-effective based on the high gas escalation scenario in all cases in the pre-1978 vintage, and almost all cases in the 1978-1991 and 1992-2010 vintage. It is also On-Bill cost-effective in most climate zones for the 315 of 662
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modest gas escalation scenario across all vintages. In Climate Zones 5, 8, 9, 10, 14, and 15, cost-effectiveness declines relative to other areas, and in some cases is not cost-effective from an On-Bill perspective. This is the case for both the CARE tariff and the standard rate.

4. The analysis also modeled the cost impact of using a standard time-of-use electricity tariff versus switching to a newer electrification tariff, designed to reduce costs in homes with heat pumps and/or electric vehicles. Older homes tend to be the least efficient and achieve the most savings from improving equipment efficiency. In most of the state, because older homes tend to use more electricity than a similarly sized, newer vintage home, they realize more costs savings under the electrification tariff.

Newer homes tend to use less electricity and therefore do not realize the same cost savings from switching tariffs; they generally perform better under the standard tariff.

This trend is different in milder climate zones in SCE territory (excluding CZ 15), where newer homes realize more cost savings than older homes. Both the standard and electrification tariffs in SCE territory include a daily allocation of lower-cost baseline electricity and a second, higher-priced tier when the baseline is exceeded.

In many newer homes, a higher percentage of overall electricity use is within the baseline allocation, resulting in greater cost savings.

5. Higher efficiency equipment reduces utility costs in all cases and improves costeffectiveness in many climate zones in the oldest vintage relative to standard efficiency equipment. However, in more efficient newer homes, where costeffectiveness is generally lower, the savings are insufficient to offset the roughly $3,000 increase in incremental cost.

6. Given the adopted Bay Area Air Quality Management District Zero NOx rule, and the proposed California Air Resource Board or South Coast Air Quality Management District (SCAQMD) Zero-NOx rules, and gas furnaces may not be available to be installed in 2030, a sensitivity analysis was performed for the Zero NOx scenario and found that cost-effectiveness decreases in many cases except in Climate Zone 15.

The improved cost-effectiveness is due to the higher baseline cost when HPSH must be installed at year 10 when the furnace must be replaced. It is also important to note that Climate Zone 15 is the only climate zone that utilizes a 5-ton HPSH, which has a much higher cost than the smaller sized systems, resulting in costeffectiveness improvements under the Zero-Nox rules.

7. While not evaluated in this report, the 2022 Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2024) shows it is beneficial to combine a heat pump space conditioning system with photovoltaics (PV) because the additional electricity required by the heat pump can be met by the PV system and result in reduced utility bills.

8. In this study the dual fuel heat pump is evaluated with an existing furnace, however the homeowner could choose to replace the existing furnace with a new furnace at this time as well. This measure (DFHP New Furnace) was evaluated in the 2022 316 of 662
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Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2024) but found to be less cost-effective than the DFHP Existing Furnace case. 317 of 662
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5 References
BAAD. (2025, May 7). Rules 9-4 and 9-6 Building Appliances. Retrieved from Bay Area Air District: https://www.baaqmd.gov/en/rules-and-compliance/ruledevelopment/building-appliances California Air Resources Board. (2022, August 12). 2022 State Strategy for the State Implementation Plan (2022 State SIP Strategy). Retrieved from California Air Resources Board Web site: https://ww2.arb.ca.gov/sites/default/files/2022- 11/Proposed_2022_State_SIP_Strategy.pdf
California Energy Commission. (2017). Rooftop Solar PV System. Measure number: 2019- Res-PV-D Prepared by Energy and Environmental Economics, Inc. Retrieved from https://efiling.energy.ca.gov/getdocument.aspx?tn=221366 California Energy Commission. (2021b). Final Express Terms for the Proposed Revisions to the 2022 Energy Code Reference Appendices. Retrieved from https://efiling.energy.ca.gov/Lists/DocketLog.aspx?docketnumber=21-BSTD-01 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=88 051
California Energy Commission. (2025). Final Express Terms for the Proposed Revisions to 2025 Title 24, Part 11 (CALGreen). Retrieved from
https://efiling.energy.ca.gov/GetDocument.aspx?tn=261229&DocumentContentId=97 592
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/cpucwebsite/divisions/office-of-governmental-affairs-division/reports/2021/senate-bill-695- report-2021-and-en-banc-whitepaper_final_04302021.pdf
California Public Utilities Commission. (2021b). Database for Energy-Efficient resources (DEER2021 Update). Retrieved April 13, 2021, from
http://www.deeresources.com/index.php/deer-versions/deer2021 Department of Energy. (2023). DOE Finalizes Energy Efficiency Standards for Residential Furnaces to Save Americans $1.5 Billion In Annual Utility Bills. Retrieved from www.energy.gov: https://www.energy.gov/articles/doe-finalizes-energy-efficiencystandards-residential-furnaces-save-americans-15-billion 318 of 662
Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 37 2025/08/08
E-CFR. (2020). https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt1

0.3.431&r=PART&ty=HTML#se10.3.431_197. Retrieved from Electronic Code of Federal Regulations: https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt1

0.3.431&r=PART&ty=HTML#se10.3.431_197
Heinemeier, K. (2025). Residential HVAC Performance. Retrieved from https://title24stakeholders.com/wp-content/uploads/2025/03/Residential-HVACPerformance.pdf SCAQMD. (2025). Proposed Amended Rules (PAR) 1111 and 1121. Retrieved from aqmd.gov.

SCAQMD. (2025, February 21). Space and Water Heating Building Appliances. Retrieved from South Coast AQMD: https://www.aqmd.gov/docs/defaultsource/Agendas/ssc/ssc-agenda-2-21-2025.pdf Statewide CASE Team. (2023). Multifamily Domestic Hot Water. Retrieved from https://title24stakeholders.com/wp-content/uploads/2023/08/2025_T24_CASEReport-_MF-DHW-Final-1.pdf Statewide CASE Team. (2023). Residential HVAC PErformance. Retrieved from https://title24stakeholders.com/wpcontent/uploads/2023/11/Revised_2025_T24_Final-CASE-Report-RES-HVACPerformance.pdf Statewide Reach Codes Team. (2021). 2019 Cost-Effectiveness Study: Existing Single Family Residential Buidling Upgrades. Retrieved from
https://localenergycodes.com/content/resources
Statewide Reach Codes Team. (2024). 2022 Cost-Effectiveness Study: Existing Single Family Building Upgrades. Prepared by Frontier Energy. Retrieved from https://localenergycodes.com/download/1222/file_path/fieldList/Single%20Family%2 0Retrofits%20CostEff%20Report.pdf
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6 Appendices

6.1 Map of California Climate Zones
Climate zone geographical boundaries are depicted in Figure 3. The map in Figure 3 along with a zip-code search directory is available at:
https://ww2.energy.ca.gov/maps/renewable/building_climate_zones.html Figure 3. Map of California climate zones.
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6.2 Cost-Effectiveness Results

6.2.1 Standard Rates
The following tables present results across the 16 climate zones for the pre-1978 (Table 22 through Table 24) and the 1978-1991 (Table 25 through Table 27) vintages supplementing the results in Section 3.

Table 22. [Pre-1978] DFHP Existing Furnace
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $155 $25,223 $14,524 $51,831
CZ02 PGE $1,670 ($81) $11,625 $4,391 $20,880
CZ03 PGE $1,178 $39 $11,599 $7,167 $21,825
CZ04 PGE $1,670 ($7) $10,648 $5,023 $18,395
CZ04 CPAU $1,670 $63 $10,648 $5,251 $14,605
CZ05 PGE $1,424 ($29) $9,462 $4,574 $16,955
CZ05 PGE/SCG $1,424 ($314) $9,462 ($3,674) $2,838
CZ06 SCE/SCG $1,424 ($70) $4,223 $179 $1,795
CZ07 SDGE $1,424 $41 $4,278 $2,725 $5,055
CZ08 SCE/SCG $1,916 ($111) $3,365 ($1,358) $524
CZ09 SCE/SCG $1,916 ($168) $4,387 ($2,351) $274
CZ10 SCE/SCG $1,916 ($133) $3,904 ($1,625) $923
CZ10 SDGE $1,916 $201 $3,904 $6,324 $10,832
CZ11 PGE $2,162 $93 $12,045 $7,668 $25,025
CZ12 PGE $1,916 $46 $12,451 $7,097 $24,339
CZ12 SMUD/PGE $1,916 $584 $12,451 $19,146 $36,775
CZ13 PGE $2,162 $112 $8,254 $6,448 $18,815
CZ14 SCE/SCG $1,916 ($244) $6,795 ($2,777) $3,481
CZ14 SDGE $1,916 $65 $6,795 $4,352 $13,446
CZ15 SCE/SCG $2,408 $80 $550 $1,655 $2,681
CZ16 PGE $2,243 ($199) $17,538 $2,333 $25,276
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Table 23. [Pre-1978] Standard Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 ($127) $27,155 $7,800 $48,445
CZ02 PGE $652 ($242) $13,342 $1,420 $21,282
CZ03 PGE $514 ($46) $11,946 $4,614 $19,670
CZ04 PGE $652 ($139) $13,059 $3,274 $21,888
CZ04 CPAU $652 ($48) $13,059 $3,194 $15,372
CZ05 PGE $583 ($131) $9,998 $2,045 $15,648
CZ05 PGE/SCG $583 ($449) $9,998 ($7,152) ($94)
CZ06 SCE/SCG $583 ($76) $3,860 ($652) $931
CZ07 SDGE $583 $35 $3,876 $1,901 $4,218
CZ08 SCE/SCG $721 ($128) $3,305 ($2,112) ($199)
CZ09 SCE/SCG $721 ($219) $4,415 ($3,839) ($1,141)
CZ10 SCE/SCG $721 ($188) $3,982 ($3,168) ($483)
CZ10 SDGE $721 $166 $3,982 $5,200 $10,049
CZ11 PGE $790 ($74) $14,045 $4,727 $24,836
CZ12 PGE $721 ($179) $13,850 $2,374 $21,622
CZ12 SMUD/PGE $721 $601 $13,850 $19,845 $39,654
CZ13 PGE $790 ($14) $9,394 $3,998 $17,858
CZ14 SCE/SCG $721 ($450) $10,103 ($6,294) $4,015
CZ14 SDGE $721 ($66) $10,103 $2,757 $18,994
CZ15 SCE/SCG $859 $68 $643 $1,364 $2,430
CZ16 PGE $2,095 ($484) $27,492 $2,918 $49,419
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Table 24. [Pre-1978] High Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $249 $30,518 $11,401 $52,316
CZ02 PGE $3,606 ($24) $13,354 $1,431 $21,449
CZ03 PGE $3,422 $100 $10,768 $3,122 $18,282
CZ04 PGE $3,606 $118 $13,537 $4,185 $22,984
CZ04 CPAU $3,606 $101 $13,537 $1,665 $13,950
CZ05 PGE $3,514 $10 $8,416 $384 $14,087
CZ05 PGE/SCG $3,514 ($308) $8,416 ($8,814) ($1,654)
CZ06 SCE/SCG $3,514 $3 $380 ($3,709) ($2,052)
CZ07 SDGE $3,514 $114 $430 ($1,063) $1,230
CZ08 SCE/SCG $3,698 $31 $1,065 ($3,478) ($1,420)
CZ09 SCE/SCG $3,698 ($40) $2,358 ($4,759) ($1,897)
CZ10 SCE/SCG $3,698 $6 $2,191 ($3,746) ($882)
CZ10 SDGE $3,698 $344 $2,191 $4,481 $9,276
CZ11 PGE $3,789 $283 $15,614 $7,801 $28,167
CZ12 PGE $3,698 $152 $14,490 $4,899 $24,385
CZ12 SMUD/PGE $3,698 $708 $14,490 $17,350 $37,236
CZ13 PGE $3,789 $326 $10,164 $6,697 $20,802
CZ14 SCE/SCG $3,698 ($173) $11,876 ($5,041) $5,522
CZ14 SDGE $3,698 $244 $11,876 $5,111 $21,254
CZ15 SCE/SCG $3,881 $335 $393 $2,323 $3,635
CZ16 PGE $5,071 $45 $34,043 $9,856 $56,737
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Table 25. [1978-1991] DFHP Existing Furnace
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $99 $20,184 $10,746 $40,368
CZ02 PGE $1,670 ($114) $9,216 $2,259 $14,435
CZ03 PGE $1,178 $3 $8,952 $5,020 $15,543
CZ04 PGE $1,670 ($68) $8,234 $2,394 $11,893
CZ04 CPAU $1,670 $18 $8,234 $3,236 $9,492
CZ05 PGE $1,424 ($32) $7,070 $3,268 $11,902
CZ05 PGE/SCG $1,424 ($238) $7,070 ($2,666) $1,747
CZ06 SCE/SCG $1,424 ($39) $2,941 $614 $1,557
CZ07 SDGE $1,424 $1 $3,046 $1,512 $2,837
CZ08 SCE/SCG $1,916 ($78) $2,294 ($877) $294
CZ09 SCE/SCG $1,916 ($116) $3,127 ($1,506) $271
CZ10 SCE/SCG $1,916 ($89) $2,755 ($947) $720
CZ10 SDGE $1,916 $139 $2,755 $4,470 $7,469
CZ11 PGE $2,162 $103 $9,192 $6,313 $18,851
CZ12 PGE $1,916 $60 $9,753 $5,919 $18,655
CZ12 SMUD/PGE $1,916 $430 $9,753 $14,208 $27,211
CZ13 PGE $2,162 $111 $6,312 $5,317 $14,322
CZ14 SCE/SCG $1,916 ($230) $5,080 ($3,128) $1,188
CZ14 SDGE $1,916 $35 $5,080 $2,942 $9,420
CZ15 SCE/SCG $2,408 ($17) $50 ($658) ($161)
CZ16 PGE $2,243 ($161) $14,397 $1,740 $20,318
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Table 26. [1978-1991] Standard Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 ($128) $21,427 $5,043 $37,346
CZ02 PGE $652 ($235) $10,428 ($90) $14,711
CZ03 PGE $514 ($67) $8,999 $2,767 $13,608
CZ04 PGE $652 ($164) $9,984 $1,062 $14,605
CZ04 CPAU $652 ($66) $9,984 $1,535 $9,914
CZ05 PGE $583 ($132) $7,290 $703 $10,264
CZ05 PGE/SCG $583 ($361) $7,290 ($5,939) ($1,104)
CZ06 SCE/SCG $583 ($43) $2,450 ($151) $775
CZ07 SDGE $583 ($3) $2,539 $747 $2,065
CZ08 SCE/SCG $721 ($96) $2,111 ($1,658) ($472)
CZ09 SCE/SCG $721 ($152) $3,022 ($2,659) ($831)
CZ10 SCE/SCG $721 ($121) $2,672 ($2,017) ($239)
CZ10 SDGE $721 $114 $2,672 $3,568 $6,801
CZ11 PGE $790 ($46) $10,682 $3,545 $18,156
CZ12 PGE $721 ($110) $10,747 $2,278 $16,574
CZ12 SMUD/PGE $721 $445 $10,747 $14,697 $29,392
CZ13 PGE $790 $1 $7,141 $3,112 $13,232
CZ14 SCE/SCG $721 ($398) $7,556 ($6,191) $1,058
CZ14 SDGE $721 ($53) $7,556 $1,909 $13,834
CZ15 SCE/SCG $859 ($25) $71 ($848) ($322)
CZ16 PGE $2,095 ($445) $22,236 $708 $37,873
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Table 27. [1978-1991] High Efficiency HPSH
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $169 $23,092 $6,895 $39,412
CZ02 PGE $3,606 ($75) $9,242 ($1,370) $13,547
CZ03 PGE $3,422 $53 $6,872 $675 $11,602
CZ04 PGE $3,606 $26 $9,114 $463 $14,143
CZ04 CPAU $3,606 $43 $9,114 ($868) $7,590
CZ05 PGE $3,514 ($16) $4,859 ($1,522) $8,122
CZ05 PGE/SCG $3,514 ($246) $4,859 ($8,164) ($3,246)
CZ06 SCE/SCG $3,514 ($1) ($1,546) ($4,024) ($3,059)
CZ07 SDGE $3,514 $47 ($1,407) ($2,879) ($1,576)
CZ08 SCE/SCG $3,698 $37 ($828) ($3,608) ($2,300)
CZ09 SCE/SCG $3,698 ($17) $232 ($4,573) ($2,623)
CZ10 SCE/SCG $3,698 $20 $82 ($3,764) ($1,856)
CZ10 SDGE $3,698 $251 $82 $1,869 $5,060
CZ11 PGE $3,789 $259 $10,685 $5,452 $20,283
CZ12 PGE $3,698 $138 $10,023 $2,954 $17,430
CZ12 SMUD/PGE $3,698 $525 $10,023 $11,609 $26,363
CZ13 PGE $3,789 $289 $6,612 $4,624 $14,951
CZ14 SCE/SCG $3,698 ($188) $7,697 ($6,429) $1,012
CZ14 SDGE $3,698 $182 $7,697 $2,525 $14,378
CZ15 SCE/SCG $3,881 $193 ($1,111) ($992) ($267)
CZ16 PGE $5,071 ($30) $26,407 $5,118 $42,581
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6.2.2 CARE tariffs
Table 28. [Pre-1978] DFHP Existing Furnace CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $364 $25,223 $16,641 $46,300
CZ02 PGE $1,670 $64 $11,625 $6,507 $19,628
CZ03 PGE $1,178 $128 $11,599 $8,167 $19,817
CZ04 PGE $1,670 $90 $10,648 $6,273 $16,909
CZ04 CPAU $1,670 $0 $10,648 $786 $786
CZ05 PGE $1,424 $69 $9,462 $5,901 $15,746
CZ05 PGE/SCG $1,424 ($157) $9,462 ($613) $4,598
CZ06 SCE/SCG $1,424 ($37) $4,223 $776 $2,067
CZ07 SDGE $1,424 $42 $4,278 $2,609 $4,434
CZ08 SCE/SCG $1,916 ($63) $3,365 ($446) $1,060
CZ09 SCE/SCG $1,916 ($97) $4,387 ($983) $1,121
CZ10 SCE/SCG $1,916 ($75) $3,904 ($511) $1,528
CZ10 SDGE $1,916 $160 $3,904 $5,112 $8,649
CZ11 PGE $2,162 $183 $12,119 $8,564 $22,361
CZ12 PGE $1,916 $152 $12,451 $8,275 $21,982
CZ12 SMUD/PGE $1,916 $686 $12,451 $20,229 $34,321
CZ13 PGE $2,162 $160 $8,329 $6,744 $16,567
CZ14 SCE/SCG $1,916 ($126) $6,795 ($630) $4,382
CZ14 SDGE $1,916 $101 $6,795 $4,679 $11,801
CZ15 SCE/SCG $2,408 $60 $550 $1,131 $1,937
CZ16 PGE $2,243 $34 $17,538 $5,963 $24,236
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Cost-effectiveness Analysis: Single Family AC to Heat Pump Replacement 46 2025/08/08
Table 29. [Pre-1978] Standard Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 $205 $27,155 $12,440 $44,777
CZ02 PGE $652 ($16) $13,342 $5,095 $20,910
CZ03 PGE $514 $76 $11,946 $6,319 $18,293
CZ04 PGE $652 $41 $13,059 $6,031 $20,843
CZ04 CPAU $652 $0 $13,059 $255 $255
CZ05 PGE $583 $12 $9,998 $4,285 $15,110
CZ05 PGE/SCG $583 ($240) $9,998 ($2,978) $2,679
CZ06 SCE/SCG $583 ($42) $3,860 ($7) $1,259
CZ07 SDGE $583 $37 $3,876 $1,837 $3,652
CZ08 SCE/SCG $721 ($75) $3,305 ($1,076) $457
CZ09 SCE/SCG $721 ($131) $4,415 ($2,095) $72
CZ10 SCE/SCG $721 ($110) $3,982 ($1,649) $504
CZ10 SDGE $721 $139 $3,982 $4,305 $8,106
CZ11 PGE $790 $94 $14,045 $7,108 $23,108
CZ12 PGE $721 $20 $13,850 $5,506 $20,829
CZ12 SMUD/PGE $721 $772 $13,850 $22,326 $38,189
CZ13 PGE $790 $89 $9,394 $5,347 $16,369
CZ14 SCE/SCG $721 ($241) $10,103 ($2,418) $5,836
CZ14 SDGE $721 $62 $10,103 $4,832 $17,541
CZ15 SCE/SCG $859 $52 $643 $930 $1,769
CZ16 PGE $2,095 $16 $27,492 $10,883 $47,907
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Table 30. [Pre-1978] High Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $450 $30,518 $13,096 $45,609
CZ02 PGE $3,606 $126 $13,354 $3,405 $19,322
CZ03 PGE $3,422 $172 $10,768 $3,678 $15,720
CZ04 PGE $3,606 $209 $13,537 $4,926 $19,859
CZ04 CPAU $3,606 $0 $13,537 ($4,595) ($4,595)
CZ05 PGE $3,514 $103 $8,416 $1,521 $12,412
CZ05 PGE/SCG $3,514 ($148) $8,416 ($5,742) ($19)
CZ06 SCE/SCG $3,514 $11 $380 ($3,634) ($2,319)
CZ07 SDGE $3,514 $89 $430 ($1,774) $25
CZ08 SCE/SCG $3,698 $33 $1,065 ($3,586) ($1,955)
CZ09 SCE/SCG $3,698 ($10) $2,358 ($4,304) ($2,027)
CZ10 SCE/SCG $3,698 $21 $2,191 ($3,628) ($1,354)
CZ10 SDGE $3,698 $255 $2,191 $2,127 $5,893
CZ11 PGE $3,789 $327 $15,614 $7,382 $23,549
CZ12 PGE $3,698 $236 $14,490 $5,437 $20,914
CZ12 SMUD/PGE $3,698 $772 $14,490 $17,439 $33,302
CZ13 PGE $3,789 $310 $10,164 $5,378 $16,558
CZ14 SCE/SCG $3,698 ($54) $11,876 ($3,161) $5,265
CZ14 SDGE $3,698 $263 $11,876 $4,651 $17,300
CZ15 SCE/SCG $3,881 $232 $393 ($35) $970
CZ16 PGE $5,071 $360 $34,043 $13,682 $50,953
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Table 31. [1978-1991] DFHP Existing Furnace CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $2,405 $273 $20,184 $12,619 $36,168
CZ02 PGE $1,670 $12 $9,216 $4,240 $13,931
CZ03 PGE $1,178 $76 $8,952 $5,930 $14,293
CZ04 PGE $1,670 $23 $8,234 $3,777 $11,336
CZ04 CPAU $1,670 $0 $8,234 $786 $786
CZ05 PGE $1,424 $40 $7,070 $4,285 $11,150
CZ05 PGE/SCG $1,424 ($122) $7,070 ($400) $3,130
CZ06 SCE/SCG $1,424 ($21) $2,941 $952 $1,705
CZ07 SDGE $1,424 $9 $3,046 $1,631 $2,667
CZ08 SCE/SCG $1,916 ($45) $2,294 ($246) $693
CZ09 SCE/SCG $1,916 ($67) $3,127 ($563) $861
CZ10 SCE/SCG $1,916 ($50) $2,755 ($208) $1,125
CZ10 SDGE $1,916 $110 $2,755 $3,621 $5,975
CZ11 PGE $2,162 $155 $9,192 $6,617 $16,577
CZ12 PGE $1,916 $128 $9,753 $6,583 $16,702
CZ12 SMUD/PGE $1,916 $506 $9,753 $15,028 $25,418
CZ13 PGE $2,162 $135 $6,312 $5,245 $12,393
CZ14 SCE/SCG $1,916 ($128) $5,080 ($1,202) $2,261
CZ14 SDGE $1,916 $65 $5,080 $3,272 $8,344
CZ15 SCE/SCG $2,408 ($9) $50 ($504) ($107)
CZ16 PGE $2,243 $28 $14,397 $4,676 $19,471
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Table 32. [1978-1991] Standard Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $3,067 $146 $21,427 $8,941 $34,641
CZ02 PGE $652 ($47) $10,428 $3,076 $14,864
CZ03 PGE $514 $33 $8,999 $4,259 $12,882
CZ04 PGE $652 ($10) $9,984 $3,558 $14,338
CZ04 CPAU $652 $0 $9,984 $255 $255
CZ05 PGE $583 ($18) $7,290 $2,586 $10,196
CZ05 PGE/SCG $583 ($199) $7,290 ($2,659) $1,219
CZ06 SCE/SCG $583 ($24) $2,450 $215 $956
CZ07 SDGE $583 $6 $2,539 $898 $1,929
CZ08 SCE/SCG $721 ($57) $2,111 ($896) $57
CZ09 SCE/SCG $721 ($91) $3,022 ($1,455) $13
CZ10 SCE/SCG $721 ($71) $2,672 ($1,035) $390
CZ10 SDGE $721 $96 $2,672 $2,939 $5,474
CZ11 PGE $790 $74 $10,682 $5,209 $16,830
CZ12 PGE $721 $30 $10,747 $4,418 $15,794
CZ12 SMUD/PGE $721 $573 $10,747 $16,567 $28,332
CZ13 PGE $790 $72 $7,141 $4,003 $12,047
CZ14 SCE/SCG $721 ($224) $7,556 ($2,880) $2,930
CZ14 SDGE $721 $42 $7,556 $3,476 $12,809
CZ15 SCE/SCG $859 ($13) $71 ($639) ($219)
CZ16 PGE $2,095 ($25) $22,236 $7,529 $37,120
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Table 33. [1978-1991] High Efficiency HPSH CARE
Climate
Zone
Electric/ Gas
Utility
First
Incremental
Cost
First-year
Utility
Savings
Lifecycle NPV Savings
2025

LSC NPV
On-Bill NPV
Modest Gas
Escalation
On-Bill NPV
High Gas
Escalation
CZ01 PGE $5,998 $339 $23,092 $8,460 $34,300
CZ02 PGE $3,606 $57 $9,242 $547 $12,409
CZ03 PGE $3,422 $111 $6,872 $1,228 $9,907
CZ04 PGE $3,606 $113 $9,114 $1,472 $12,340
CZ04 CPAU $3,606 $0 $9,114 ($4,595) ($4,595)
CZ05 PGE $3,514 $58 $4,859 ($544) $7,120
CZ05 PGE/SCG $3,514 ($124) $4,859 ($5,789) ($1,857)
CZ06 SCE/SCG $3,514 $5 ($1,546) ($3,963) ($3,196)
CZ07 SDGE $3,514 $39 ($1,407) ($3,143) ($2,122)
CZ08 SCE/SCG $3,698 $32 ($828) ($3,800) ($2,766)
CZ09 SCE/SCG $3,698 ($0) $232 ($4,336) ($2,784)
CZ10 SCE/SCG $3,698 $25 $82 ($3,803) ($2,290)
CZ10 SDGE $3,698 $184 $82 $124 $2,631
CZ11 PGE $3,789 $272 $10,685 $4,725 $16,488
CZ12 PGE $3,698 $191 $10,023 $3,148 $14,639
CZ12 SMUD/PGE $3,698 $573 $10,023 $11,680 $23,445
CZ13 PGE $3,789 $259 $6,612 $3,262 $11,441
CZ14 SCE/SCG $3,698 ($82) $7,697 ($4,629) $1,311
CZ14 SDGE $3,698 $195 $7,697 $2,166 $11,452
CZ15 SCE/SCG $3,881 $133 ($1,111) ($2,349) ($1,794)
CZ16 PGE $5,071 $245 $26,407 $8,685 $38,470
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6.3 Utility Rate Schedules

6.3.1 Pacific Gas & Electric
The following pages provide details on the PG&E electricity and natural gas tariffs applied in this study. Table 34 describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of $ 0.03396/ kWh was applied to any net annual electricity generation based on a one-year average of the rates between February 2024 and January 2025.

Table 34. PG&E Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ01 V
CZ02 X
CZ03 T
CZ04 X
CZ05 T
CZ11 R
CZ12 S
CZ13 R
CZ16 Y
The PG&E monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Table 35. The gas rates were developed based on the latest available gas rate for January 2025 and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The seasonal curve was estimated from PG&E’s monthly residential tariffs between 2015 and 2024. 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. 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 January 2025 rates. The costs presented in Table 35 were then derived by establishing the baseline and excess rates from the latest January 2025 tariff as a reference point, and then using the normalized curve to estimate the cost for the remaining months relative to the January rates.

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Table 35. PG&E Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
January $2.63 $3.15
February $2.64 $3.16
March $2.41 $2.94
April $2.24 $2.77
May $2.21 $2.74
June $2.23 $2.77
July $2.26 $2.80
August $2.36 $2.90
September $2.42 $2.98
October $2.52 $3.07
November $2.63 $3.17
December $2.70 $3.23
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6.3.2 Southern California Edison
The following pages provide details on the SCE electricity tariffs applied in this study. Table describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of $ 0.01532/ kWh was applied to any net annual electricity generation based on a one-year average of the rates between February 2024 and January 2025.

Table 36. SCE Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ06 6
CZ08 8
CZ09 9
CZ10 10
CZ14 14
CZ15 15
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6.3.3 Southern California Gas
Following are the SoCalGas natural gas tariffs applied in this study. Table 37 describes the baseline territories that were assumed for each climate zone.

Table 37. SoCalGas Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ05 2
CZ06 1
CZ08 1
CZ09 1
CZ10 1
CZ14 2
CZ15 1
The SoCalGas monthly gas rate in $/therm applied in this analysis is shown in Table 38. The gas rates were developed based on the latest available gas rate for January 2025 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 2015 and 2024. 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.8 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 January 2025 rates. The costs presented in Table 38 were then derived by establishing the baseline and excess rates from the latest January 2025 tariff as a reference point, and then using the normalized curve to estimate the cost for the remaining months relative to the January rates. CARE tariffs reflect the 20 percent discount per the GR tariff.
8 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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Table 38. SoCalGas Monthly Gas Rate ($/therm)
Month Procurement
Charge
Transportation Charge Total Charge
Baseline Excess Baseline Excess
January $0.45 $0.98 $1.40 $1.43 $1.85
February $0.31 $0.98 $1.40 $1.29 $1.71
March $0.26 $0.98 $1.40 $1.24 $1.66
April $0.21 $0.98 $1.40 $1.19 $1.62
May $0.22 $0.98 $1.40 $1.20 $1.62
June $0.25 $0.98 $1.40 $1.23 $1.65
July $0.26 $0.98 $1.40 $1.24 $1.66
August $0.29 $0.98 $1.40 $1.27 $1.70
September $0.27 $0.98 $1.40 $1.25 $1.67
October $0.26 $0.98 $1.40 $1.24 $1.66
November $0.29 $0.98 $1.40 $1.27 $1.69
December $0.33 $0.98 $1.40 $1.31 $1.73

6.3.4 San Diego Gas & Electric
Following are the SDG&E electricity and natural gas tariffs applied in this study. Table 39 describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of $ 0.01837/ kWh was applied to any net annual electricity generation based on a one-year average of the rates between February 2024 and January 2025.

Table 39. SDG&E Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ07 Coastal
CZ10 Inland
CZ14 Mountain
The SDG&E monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Table 40. The gas rates were developed based on the latest available gas rate for January 2025 and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The seasonal curve was estimated from SDG&E’s monthly residential tariffs between 2015 and 2024. 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. 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 January 2025 rates. The costs presented in Table 40 were then derived by establishing the baseline and excess rates from the latest January 2025 tariff as a reference point, and then using the normalized curve to estimate the cost for the remaining months relative to the January rates.

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Table 40. SDG&E Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
January $2.07 $2.36
February $2.01 $2.30
March $1.93 $2.22
April $1.86 $2.16
May $1.88 $2.18
June $1.94 $2.24
July $1.95 $2.25
August $2.02 $2.32
September $1.97 $2.27
October $1.94 $2.24
November $1.97 $2.27
December $2.07 $2.37
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6.3.5 City of Palo Alto Utilities
Following are the CPAU electricity and natural gas tariffs applied in this study. The CPAU monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Table 41. The gas rates were developed based on the latest available gas rate for January 2025 and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The seasonal curve was estimated from CPAU’s monthly residential tariffs between 2018 and 2024. 12-month curves were created from monthly gas rates for each of the seven years. The seven annual curves were then averaged to arrive at an average normalized annual curve. 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 January 2025 rates. The costs presented in Table 41 were then derived by establishing the baseline and excess rates from the latest January 2025 tariff as a reference point and then using the normalized curve to estimate the cost for the remaining months relative to the January rates. The monthly service charge applied was $16.93 per month per the January 2025 G-1 tariff.

Table 41. CPAU Monthly Gas Rate ($/therm)
Month G1 Volumetric
Total Baseline
G1 Volumetric
Total Excess
January $1.74 $3.02
February $1.33 $2.53
March $1.24 $2.43
April $1.21 $2.39
May $1.21 $2.39
June $1.23 $2.42
July $1.31 $2.64
August $1.37 $2.71
September $1.36 $2.71
October $1.38 $2.72
November $1.45 $2.80
December $1.57 $2.96
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6.3.6 Sacramento Municipal Utilities District (Electric Only) Following are the SMUD electricity tariffs applied in this study. The rates effective January 2025 were used.
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6.3.7 Fuel Escalation Assumptions
The average annual escalation rates in Table 42 and Table 43 were used in this study. Table 42 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 CPAU and SMUD, therefore electricity escalation rates for PG&E and statewide natural gas escalation rates were applied. Table 43 rates are based on the escalation rate assumptions within the 2025 LSC factors from 2026 through 2055.9 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 year 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.
9https://www.energy.ca.gov/files/2025-energy-code-hourly-factors. (California Energy Commission, 2023). Actual escalation factors were provided by consultants E3.
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Table 42. Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis Statewide Natural
Gas Residential
Average Rate
(%/year, real)
Electric Residential Average Rate
(%/year, real)

PG&E SCE SDG&E
2026 4.6% 1.8% 1.6% 2.8%
2027 4.6% 1.8% 1.6% 2.8%
2028 4.6% 1.8% 1.6% 2.8%
2029 4.6% 1.8% 1.6% 2.8%
2030 4.6% 1.8% 1.6% 2.8%
2031 2.0% 0.6% 0.6% 0.6%
2032 2.4% 0.6% 0.6% 0.6%
2033 2.1% 0.6% 0.6% 0.6%
2034 1.9% 0.6% 0.6% 0.6%
2035 1.9% 0.6% 0.6% 0.6%
2036 1.8% 0.6% 0.6% 0.6%
2037 1.7% 0.6% 0.6% 0.6%
2038 1.6% 0.6% 0.6% 0.6%
2039 2.1% 0.6% 0.6% 0.6%
2040 1.6% 0.6% 0.6% 0.6%
2041 2.2% 0.6% 0.6% 0.6%
2042 2.2% 0.6% 0.6% 0.6%
2043 2.3% 0.6% 0.6% 0.6%
2044 2.4% 0.6% 0.6% 0.6%
2045 2.5% 0.6% 0.6% 0.6%
2046 1.5% 0.6% 0.6% 0.6%
2047 1.3% 0.6% 0.6% 0.6%
2048 1.6% 0.6% 0.6% 0.6%
2049 1.3% 0.6% 0.6% 0.6%
2050 1.5% 0.6% 0.6% 0.6%
2051 1.8% 0.6% 0.6% 0.6%
2052 1.8% 0.6% 0.6% 0.6%
2053 1.8% 0.6% 0.6% 0.6%
2054 1.8% 0.6% 0.6% 0.6%
2055 1.8% 0.6% 0.6% 0.6%
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Table 43. 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)
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%
2054 -0.6% 1.1%
2055 -0.6% 1.1%
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Revision: 1.0
Last modified: 2025/06/09
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2025 Nonresidential
Alterations:

Reach Code Study
Prepared by:

TRC Companies:

Lucy Albin, Shannenia Sumawan,
Avani Goyal, Farhad Farahmand
Prepared for:

Amy Discher, Southern California
Edison
Revision: 1.0
Last modified: 2025/07/07

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Summary of Revisions
Date Description Reference (page or section)
7/7//2025 Original Release N/A
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Acronym List
B/C – Benefit-to-Cost Ratio
CBECC - California Building
Energy Code Compliance
CBSC - California Building
Standards Commission
CEC - California Energy
Commission
CPAU – City of Palo Alto
Utilities
CZ – Climate Zone
GHG - Greenhouse Gas
HP – Heat Pump
HVAC – Heating,
Ventilation, and Air
Conditioning (equipment)
IOU – Investor-Owned
Utility
kWh – Kilowatt Hour
LSC – Long-term
Systemwide Cost
MF – Mixed-Fuel
NPV – Net Present Value
POU – Publicly Owned
Utility
PG&E – Pacific Gas &
Electric (utility)
PV - Solar Photovoltaic
RTU – Rooftop Unit
(equipment)
SCE – Southern California
Edison (utility)
SCG – Southern California
Gas (utility)
SDG&E – San Diego Gas &
Electric (utility)
SMUD – Sacramento
Municipal Utility District
SZAC – Single Zone Air
Conditioner
SZHP – Single Zone Heat
Pump
Title 24 – California Code of
Regulations Title 24, Part 6
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Table of Contents
Executive Summary...............................................................................................................4 1 Introduction.....................................................................................................................5 2 Methodology and Assumptions .....................................................................................6

2.1 Cost-Effectiveness ..................................................................................................... 6

2.1.1 Benefits ............................................................................................................... 6

2.1.2 Costs ................................................................................................................... 6

2.1.3 Metrics................................................................................................................. 7

2.1.4 Utility Rates ......................................................................................................... 7

2.2 Greenhouse Gas Emissions....................................................................................... 9 3 Prototypes, Measure Packages, and Costs ................................................................10

3.1 Prior Reach Code Study Research............................................................................10

3.2 Prototype Characteristics ..........................................................................................10

3.3 Measure Definitions and Costs..................................................................................13

3.3.1 Baseline and Measure Packages........................................................................13

3.3.2 Energy Efficiency Measures................................................................................15

3.3.3 HVAC Retrofit .....................................................................................................18 4 Stakeholder Interviews .................................................................................................21

4.1 Objectives and Research Questions .........................................................................21

4.2 Results ......................................................................................................................21

4.3 Interpretation.............................................................................................................22 5 Cost-effectiveness Results ..........................................................................................25

5.1 Small Office...............................................................................................................26

5.1.1 Individual Efficiency Measure Results.................................................................26

5.1.2 SZAC Package Results ......................................................................................27

5.1.3 SZHP Package Results ......................................................................................28

5.2 Medium Retail ...........................................................................................................29

5.2.1 Individual Efficiency Measure Results.................................................................29

5.2.2 SZAC Package Results ......................................................................................30

5.2.3 SZHP Package Results ......................................................................................31 6 Reach Code Options.....................................................................................................32 7 Conclusions and Next Steps........................................................................................36 8 References ....................................................................................................................38 365 of 662
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9 Appendices ...................................................................................................................39

9.1 Map of California Climate Zones ...............................................................................39

9.2 Mixed-Fuel Baseline Energy Figures.........................................................................40

9.3 Long-Term Systemwide Cost (LSC) Impacts .............................................................54

9.3.1 Small Office ........................................................................................................54

9.3.2 Medium Retail.....................................................................................................55

9.4 Utility Rate Schedules ...............................................................................................56

9.4.1 Pacific Gas & Electric..........................................................................................57

9.4.2 Southern California Edison .................................................................................59

9.4.3 Southern California Gas......................................................................................62

9.4.4 San Diego Gas & Electric ...................................................................................63

9.4.5 City of Palo Alto Utilities ......................................................................................65

9.4.6 Sacramento Municipal Utilities District (Electric Only) .........................................70

9.4.7 Fuel Escalation Rates.........................................................................................70

9.5 Prototype Characteristics ..........................................................................................72

9.6 Occupancy Schedules and Building Types................................................................75

9.7 Interview Guide .........................................................................................................75 List of Tables
Table 1. Utility Tariffs Used Based on Climate Zone ................................................................ 8 Table 2. Existing Building Prototype Characteristics ...............................................................11 Table 3. Small Office (SO) Prototype Characteristics, by Vintage...........................................12 Table 4. Medium Retail (RE) Prototype Characteristics, by Vintage .......................................13 Table 5. Summary of Measure Packages ...............................................................................15 Table 6. Lighting Retrofit Lighting Power Density Efficiency Measure Specifications ..............17 Table 7. Applicability and Cost of Energy Efficiency Measures ...............................................17 Table 8. Cost of Energy Efficiency Measures .........................................................................18 Table 9. Small Office Retrofit Costs (Example: Climate Zone 14) ...........................................20 Table 10. Medium Retail HVAC Retrofit Costs (Example: Climate Zone 12)...........................20 Table 11. Cost-Effectiveness for Individual Efficiency Measures: Small Office........................26 Table 12. Cost-Effectiveness for SZAC Packages: Small Office .............................................27 Table 13. Cost-Effectiveness for SZHP Package: Small Office...............................................28 Table 14. Cost-Effectiveness for Individual Efficiency Measures: Medium Retail ....................29 Table 15. Cost-Effectiveness for SZAC Packages: Medium Retail .........................................30 Table 16. Cost-Effectiveness for SZHP Packages: Medium Retail .........................................31 366 of 662
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Table 17. HVAC RTU Replacement Reach Code Option 1 Applicability .................................33 Table 18. HVAC RTU Replacement Reach Code Option 2 Applicability .................................34 Table 19. HVAC RTU Replacement Reach Code Option 3 Applicability (Retail only)..............35 Table 20. Medium Retail: Existing Mixed-Fuel Baseline 1980.................................................40 Table 21. Medium Retail: Existing Mixed-Fuel Baseline 1990.................................................41 Table 22. Medium Retail: Existing Mixed-Fuel Baseline 2000.................................................42 Table 23. Medium Retail: Existing Mixed-Fuel FDD Baseline 1980 ........................................43 Table 24. Medium Retail: Existing Mixed-Fuel FDD Baseline 1990 ........................................44 Table 25. Medium Retail: Existing Mixed-Fuel FDD Baseline 2000 ........................................45 Table 26. Medium Retail: Mixed-Fuel SZAC Code Minimum Baseline 1980...........................46 Table 27. Medium Retail: Mixed-Fuel SZAC Code Minimum Baseline 1990...........................47 Table 28. Medium Retail: Mixed-Fuel SZAC Code Minimum Baseline 2000...........................48 Table 29. Small Office: Existing Mixed-Fuel Baseline 1980 ....................................................49 Table 30. Small Office: Existing Mixed-Fuel Baseline 1990 ....................................................50 Table 31. Small Office: Existing Mixed-Fuel Baseline 2000 ....................................................51 Table 32. Small Office: Mixed-Fuel SZAC Code Minimum Baseline 1990 ..............................53 Table 33. Real Utility Rate Escalation Rate Assumptions .......................................................71 Table 34. Non-res Roof U-Value by CZ for three vintages ......................................................72 Table 35 Non-res Exterior Wall U-Value by CZ for three vintages...........................................73 Table 36. Non-res Window U-Value, SHGC and VT for all vintages .......................................74 Table 37. Equipment Turnover Assumptions ..........................................................................74 List of Figures
Figure 1. Packaged RTU Images ............................................................................................ 4 Figure 2. Seasonal PG&E Historical Gas Rates ...................................................................... 8 Figure 3. Equipment Costs by Fuel Type and Unit Capacity...................................................19 Figure 4. Peak Heating Demand as a Percent of Peak Cooling Demand, and Unmet Heating Load Hours ............................................................................................................................23 Figure 5. Heating Capacity as a Percent of Peak Heating Demand from CBECC ..................24 Figure 6. Map of California climate zones. .............................................................................39 Figure 7. Small Office LSC Impacts: MF-EFF vs HP ..............................................................55 Figure 8. Medium Retail LSC Impacts: MF-HRVDCV vs HP ..................................................55 Figure 9. Medium Retail LSC Impacts: MF-EFF vs HP-DCV ..................................................56 Figure 10. Occupancies in 141.0-E-1 Schedules....................................................................75 367 of 662
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Executive Summary
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 emissions 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 Reach Code Team evaluated the energy savings and cost-effectiveness of various measures in three different vintages (1980s, 1990s, and 2000s) of the Small Office and Medium Retail prototypes for this report. The Team analyzed measures include packaged rooftop unit (RTU) replacements as well as efficiency measures, including cool roof, window film, lighting retrofit, HRV, DCV, and economizer FDD.

For packaged rooftop units, the Team found that Single Zone Heat Pump (SZHP) replacements of Single Zone Air Conditioners (SZAC) achieve energy savings and are generally cost-effective. For SZHP up to 20 tons, depending on the climate zone, some additional efficiency measures may be required to achieve cost-effectiveness, while SZHP up to 10 tons are cost-effective without additional efficiency measures. The energy savings and cost-effectiveness of individual energy efficiency measures applied to an existing building without an RTU retrofit or bundled with RTU replacements (both SZACs and SZHPs), vary by prototype, climate zone, and vintage.

Figure 1. Packaged RTU Images
Local jurisdictions may 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 California 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 [email protected].
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1 Introduction
This report documents cost-effective combinations of measures that exceed the minimum requirements of the 2025 Building Energy Efficiency Standards, effective January 1, 2026, for existing nonresidential buildings. This report was developed in coordination with the California Statewide Investor-Owned Utilities (CA IOUs) Codes and Standards Reach Codes Program, key consultants, and engaged cities—collectively known as the Reach Code Team.

The purpose of this study is to evaluate the cost-effectiveness of measure packages to increase energy performance in existing nonresidential buildings. The Reach Code Team analyzed packages with different combinations of SZHP space heating equipment replacements, HVAC-related efficiency measures, envelope, and lighting efficiency measures.

Analysis used the CBECC (California Building Energy Code Compliance) 2025 software. The Reach Code Team conducted stakeholder interviews and collected cost data for each measure analyzed to determine the cost-effectiveness and technical feasibility of the proposed measures.

The California Building Energy Efficiency Standards Title 24, Part 6 (Energye rgy Code) (CEC, 2025) 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 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, Part 6. 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.

The Department of Energy (DOE) sets minimum efficiency standards for equipment and appliances that are federally regulated under the National Appliance Energy Conservation Act, including heating, cooling, and water heating equipment [1]. Since state and local governments are prohibited from adopting higher minimum efficiencies than the federal standards require, the focus of this study is to identify and evaluate cost-effective packages that do not include high efficiency heating, cooling, and water heating equipment or appliances. High efficiency appliances are often the easiest and most affordable measures to increase energy performance. While federal preemption limits reach code mandatory requirements for covered appliances, in practice, builders may install any package of compliant measures to achieve higher performance.
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2 Methodology and Assumptions
The Reach Codes Team used the cost-effectiveness methodology detailed in this section to analyze two prototype designs representing a medium retail building and a small office using, as described in Section 3.

The Reach Code Team performed energy simulations using the most recent software available for 2025 Energy Code compliance analysis, CBECC 2025 Subversion (SVN) Revision 8219. LSC results using 2025 software will provide a forward-looking indication of the feasibility of SZHP replacements and efficiency measure packages.

2.1 Cost-Effectiveness
This section describes the approach to calculating cost-effectiveness including benefits, costs, metrics, and utility rate selection.

2.1.1 Benefits
This analysis used both on-bill and Long-term Systemwide Cost (LSC) of energy-based approaches to evaluate cost-effectiveness. Both the on-bill and LSC approaches require estimating energy savings and quantifying costs (incremental measure costs and energy costs) associated with energy measures. The primary difference between on-bill and LSC is how energy is valued:
• On-Bill: This approach uses a customer-based lifecycle cost method that values energy based on estimated site energy usage and customer on-bill savings. It incorporates electricity and natural gas utility rate schedules over a 30-year period for the prototypes, accounting for a 3% discount rate and energy cost inflation as outlined in Appendix 10.3.2.
• LSC: LSC, formerly Time Dependent Valuation (TDV), was developed by the Energy Commission. LSC savings are calculated using hourly LSC factors for both electricity and natural gas provided by the Energy Commission These LSC hourly factors are projected over the 30-year life of the building and incorporate the hourly cost of marginal generation, transmission and distribution, fuel, capacity, losses, and cap-andtrade-based CO2 emissions. 1 2.1.2 Costs
The Reach Code Team assessed the incremental costs and savings of the energy packages over the 30-year lifecycle, which is consistent with the Energy Commission’s approach to evaluating measures when the Energy Code is updated. Incremental costs represent the equipment, installation, replacements, and maintenance costs of the proposed measure relative to the 2025 Energy Code minimum requirements or standard industry practices. 1 See Hourly Factors for Source Energy, Long-term Systemwide Cost, and Greenhouse Gas Emissions at https://www.energy.ca.gov/files/2025-energy-code-hourly-factors 370 of 662
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The Reach Code Team obtained measure costs from manufacturer distributors, contractors, literature review, and online sources such as RS Means. Taxes and contractor markups were added as appropriate. Maintenance and replacement costs are included.

2.1.3 Metrics
Cost-effectiveness is presented using net present value (NPV) and benefit-to-cost (B/C) ratio metrics.
• NPV: Equation 1 demonstrates how lifetime NPV is calculated. If the NPV of a measure or package is positive, it is considered cost-effective. A negative value represents a net increase in costs over the 30-year lifetime. • B/C Ratio: This is the ratio of the present value of all benefits to the present value of all costs over 30 years (present value benefits divided by present value costs). A value of one indicates the NPV of the savings over the life of the measure is equivalent to the NPV of the lifetime incremental cost of that measure. A value greater than one represents a positive return on investment. The B/C ratio is calculated according to Equation 2.

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. The cost is represented 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 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
In coordination with the CA IOU rate team, and the publicly available information for several Publicly Owned Utilities (POUs), the Reach Code Team determined appropriate utility rates for each Climate Zone and package. The utility tariffs, summarized in Table 1, were determined based on the annual load profile of the prototype and the corresponding package and the most prevalent rate in each territory. A time-of-use (TOU) electric rate was applied to all cases.

For a more details on the rates selected refer to Appendix 9.3.2 - Utility Rate Schedules.

The analysis assumes that utility rates escalate over time for commercial buildings, as described in Appendix 9.4.7. Escalation rates above inflation for electricity beyond 2023 are assumed to be between 0.2% and 0.7%, before dropping to a steady 0.6% escalation per year in 2030. Natural gas is assumed to escalate at a relatively higher rate, peaking at 7.7% in 2024, then escalating more slowly to a rate of approximately 2% in the latter years of the analysis period.
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Table 1. Utility Tariffs Used Based on Climate Zone
Climate
Zones Electric / Gas Utility Electricity Natural Gas
IOUs
1-5,11-13,16 Pacific Gas & Electric Company (PG&E) B-1 / B-10 G-NR1 6, 8-10, 14, 15 Southern California Edison (SCE) /
Southern California Gas Company (SCG)
TOU-GS-1 / TOUGS-2 / TOU-GS3 GN-10
5 PG&E / SCG B-1 / B-10 GN-10
7, 10, 14 San Diego Gas and Electric Company
(SDG&E) TOU-A / AL-TOU GN-3
POUs
4 City of Palo Alto (CPAU) E-2 G-2
12 Sacramento Municipal Utility District
(SMUD) / PG&E CITS-0 / CITS-1 G-NR1
The Reach Code Team conducted an analysis of the gas rates by month to determine seasonal fluctuations. An example of the historical gas rates for PG&E are shown in Figure 2.

Figure 2. Seasonal PG&E Historical Gas Rates
To develop the seasonal gas rates for each utility, the Reach Code Team used an average seasonal curve based on 5-year historical data. The Team then applied the seasonal trend to the current month’s gas rate to reflect the most recent market conditions. In this study, the Reach Code Team collected gas rates from September 2024 for each utility and applied a factor for each month to normalize the monthly gas rate fluctuations. $0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
1 2 3 4 5 6 7 8 9 10 11 12
$ / Therm
PG&E Historical Gas Rates
2024 2023 2022 2021 2020 2019
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2.2 Greenhouse Gas Emissions
The GHG emissions are calculated using the latest applicable GHG Emissions hourly factors published by the Energy Commission and used by the Energy Commission’s reference code compliance software CBECC, and largely represent California IOUs. GHG emissions associated with community choice aggregators or POUs are not integrated into these multipliers and require a custom analysis, using the energy impacts in this report as a starting point.
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3 Prototypes, Measure Packages, and
Costs
This section describes the prototypes and the scope of analysis conducted by the Reach Code Team.

3.1 Prior Reach Code Study Research
In 2021, the Statewide CA IOU Reach Codes Team analyzed the cost-effectiveness of nonresidential alterations projects for mixed-fuel plus efficiency, SZHP replacements plus efficiency, and demand flexibility packages (Statewide Reach Codes Team 2021). Using this analysis, the Reach Code Team presented reach code options for jurisdictions to consider adopting based on cost-effectiveness. The Reach Code Team leveraged some information from the previous report to develop the results and conclusions in this report, including prototype and vintage characteristics, potential efficiency measures, package combinations, and cost data.

3.2 Prototype Characteristics
The Reach Code Team used modified versions of the Department of Energy (DOE) building prototypes for Medium Retail and Small Office to evaluate cost-effectiveness of measure packages. Existing retail and office occupancies are two of the occupancies that are prescriptively required to have SZHP rooftop units for new or replacement applications under 65,000 BTU/h according to 2025 Energy Code, Section 141.0(b)2Cii and Table 141.0-E-1.

This study analyzes retail and office prototypes specifically because they represent the largest portions of the existing building stock and represent similar occupancy schedules and load profiles as the other occupancies in Table 141.0-E-1, including grocery, school, financial institution, and library occupancies.

To identify appropriate characteristics, the Team created three vintages of each building prototype to represent historical construction practices by leveraging data and methodologies from previous IOU studies, Senate Bill 350 (SB350) analysis2 , and Commercial Building Energy Consumption Survey (CBECS)3 . These datasets include estimates of retrofits/upgrades to older buildings as well as field data on existing conditions. The three vintages that the Reach Code Team analyzed include:
• 1980s: represents buildings built prior to 1990 (code reference year 1982). • 1990s: represents buildings built during the 1990 era (code reference year 1992). • 2000s: represents buildings built during the 2000 era (code reference year 2006). 2 This references an unpublished analysis developed in support of the Energy Commission’s Senate Bill 350:
https://www.energy.ca.gov/rules-and-regulations/energy-suppliers-reporting/clean-energy-and-pollutionreduction-act-sb-350. 3 https://www.eia.gov/consumption/commercial/. 374 of 662
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The analysis presented in this report assumes a certain set of existing conditions within each prototype, and that buildings operate as-intended (i.e., no faulty conditions4 ). Real building
existing conditions are often a variety of old and new components, and equipment performance degrades over time. The analysis assumes some equipment replacement over time based on building system and envelope component, using assumptions from the SB350 analysis.

The Reach Code Team’s prototypes and cost-effectiveness results represent a range of vintages to account for the variety of existing conditions in real buildings in a simplified way.

Jurisdictions should consider how measure-specific findings would apply to the existing conditions in the buildings within their area.

Table 2 through Table 4 summarize the existing building prototype characteristics, with more detail available in Appendix 9.5.

Table 2. Existing Building Prototype Characteristics
Small Office Prototype Medium Retail Prototype
Conditioned floor
area (ft2) 5,502 24,563
Number of stories 1 1
Window-to-floor
area ratio 24% 7%
Number of Conditioned
Thermal Zones 5 4
4 The economizer FDD individual measure analysis only assumes a faulty economizer in the existing building baseline.
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Table 3. Small Office (SO) Prototype Characteristics, by Vintage Vintage 1980s 1990s 2000s
HVAC System Type Single Zone Packaged
Rooftop Unit (RTU)
Single Zone Packaged
Rooftop Unit (RTU)
Single Zone Packaged
Rooftop Unit (RTU)
Cooling System Direct Expansion (DX)
EER: 8.2
DX
EER: 8.8
DX
EER: 10.3
Heating System Gas Furnace
AFUE: 67.5%
Gas Furnace
AFUE: 78.1%
Gas Furnace
AFUE: 78.1%
Supply Fan Constant volume (CV)
Fan Efficiency: 47.5%
CV
Fan Efficiency: 50.8%
CV
Fan Efficiency: 55.0%
Economizer Control
No Economizer if
cooling capacity < 134
kBtuh,
Otherwise, Economizer
with Differential Dry Bulb
control
No Economizer if cooling capacity < 75 kBtuh,
Otherwise, Economizer with Differential Dry Bulb
control
Service Hot Water
Heating
Electric Conventional Small Storage
Energy Factor: 0.95
Roof Insulation
(U-Value) Vary by CZ, see Appendix 9.5
Steep-Sloped Roof
Solar Reflectance
CZ01: 0.105
Others: 0.117
CZ01: 0.104
Others: 0.114
CZ01: 0.102
Others: 0.2
Metal-Framed Wall
Insulation (U-Value) Vary by CZ, see Appendix 9.5
Windows Vary by CZ, see Appendix 9.5
LPD (W/ft2) 1.2
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Table 4. Medium Retail (RE) Prototype Characteristics, by Vintage Vintage 1980s 1990s 2000s
HVAC System Type Single Zone Packaged
Rooftop Unit (RTU)
Single Zone Packaged
Rooftop Unit (RTU)
Single Zone Packaged
Rooftop Unit (RTU)
Cooling System DX
EER: 8.2
DX
EER: 8.8
DX
EER: 10.3
Heating System Gas Furnace
AFUE: 0.675
Gas Furnace
AFUE: 0.781
Supply Fan Control Method: CV
Fan Efficiency: 47.5%
Control Method: CV
Fan Efficiency: 50.8%
Control Method: CV
Fan Efficiency: 55.0%
Economizer Control
No Economizer if
cooling capacity < 134
kBtuh, Otherwise,
Economizer with
Integrated, Differential
Dry Bulb control
No Economizer if cooling capacity < 75 kBtuh,
Otherwise, Economizer with Integrated, Differential
Dry Bulb control
Service Hot Water
Heating
Electricity Conventional Small Storage
Energy Factor: 0.95
Roof Insulation
(U-Value) Varies by CZ, see Appendix 9.5
Low-Sloped Roof
Solar Reflectance 0.182 0.166 0.552
Metal-Framed Wall
Insulation (U-Value) Varies by CZ, see Appendix 9.5
Windows Varies by CZ, see Appendix 9.5
LPD (W/ft2)
Retail spaces: 1.7
Back Space: 0.6
Front Entry: 1.5

3.3 Measure Definitions and Costs
The Reach Code Team analyzed the efficiency measures and HVAC retrofit measures described in this section as applied to the Medium Retail and Small Office prototypes. The sources of measure definitions and associated costs are related to stakeholder interview findings and interpretation discussed in Section 4.

3.3.1 Baseline and Measure Packages

3.3.1.1 Individual Measures
The Reach Code Team analyzed several scenarios. Individual energy efficiency measures were analyzed compared to the existing building baseline. • Existing Building Baseline: Mixed-fuel existing building including a packaged SZAC RTU with a gas-fired furnace, prescriptively built at the time of initial construction, assuming equipment turnover rates. See Appendix 9.5 for more details. • Existing Building + Individual Efficiency Measures: Mixed-fuel existing building, with the following individual efficiency measures.
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o Cool roof (Medium Retail only)
o Window film
o Lighting retrofit
o Economizer fault detection and diagnostics (Medium Retail only) All measures assume that the building system alteration is not already included in the proposed alteration scope, except Cool Roof which assumes a roof replacement is already occurring.

3.3.1.2 RTU Replacement + Measure Packages
The Reach Code Team analyzed several scenarios that include a RTU replacement. The baseline for these packages is defined below:
• MF (Mixed-fuel SZAC Code Min Baseline): Mixed-fuel existing building that is replacing all RTUs in accordance with 2025 Energy Code prescriptive requirements.

For units that are 5-ton and below in Climate Zones 3-13 and 15, RTUs are replaced with a single zone heat pump (SZHP) with efficiency set at federal code minimum and economizer. Units above 5-ton and in other Climate Zones will be replaced with a new code minimum single zone air conditioner (SZAC) packaged RTU including a gas-fired furnace.

The RTU replacement packages examined against the MF baseline package are defined below:
• MF-EFF (Mixed-fuel SZAC Code Min + Bundled Efficiency Measures): Mixed-fuel existing building replacing the packaged RTU with a new code minimum SZAC where prescriptively allowed. The following efficiency measures are applied to the package:
o Demand controlled ventilation (DCV, Medium Retail only) o Window film
o Lighting retrofit
• MF-HRV, MF-DCV, and MF-HRVDCV (Mixed-fuel SZAC Code Min + HVAC Measures): Mixed-fuel existing building replacing the packaged RTU with a new code minimum SZAC where prescriptively allowed. The following HVAC efficiency measures are applied to the package:
o Demand controlled ventilation (DCV, Medium Retail only) o Heat recovery ventilation (HRV)
• HP (SZHP Code Min): Mixed-fuel existing building that is replacing all RTUs with a federal code minimum efficiency SZHP up to 20 tons. Units 5 tons and below in Climate Zones 3-13 and 15 are already SZHPs with economizers in the Mixed-fuel SZAC Code Min Baseline, so this package measures impacts from SZHP replacements in the 6-20 ton range and other Climate Zones. • HP-10 (SZHP Code Min ≤10-Ton): Mixed-fuel existing building that is replacing all RTUs with a federal code minimum SZHP up to 10 tons. Units 5 tons and below in 378 of 662
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Climate Zones 3-13 and 15 are already SZHPs in the Mixed-fuel SZAC Code Min Baseline, so this package measures impacts from SZHP replacements in the 6-10 ton range and other Climate Zones. Note that this package is the same as HP for the Small Office prototype, because all units are below 10 tons. • HP-DCV (SZHP Code Min + HVAC Measures): Mixed-fuel existing building that is replacing the packaged RTU with a federal code minimum SZHP for units up to 20 tons. The following HVAC efficiency measures are applied to the package:
o Demand controlled ventilation (DCV, Medium Retail only) o Heat recovery ventilation (HRV)
The packages analyzed over the MF baseline are summarized in Table 5 below.

Table 5. Summary of Measure Packages
Package Name SO RE Baseline
Package
Proposed HVAC
System5
HVAC
Efficiency
Measures
Energy
Efficiency
Measures
Individual Measures
COOLROOF X Existing Existing SZAC - Cool roof
WINDOWFILM X X Existing Existing SZAC - Window
LIGHTING X X Existing Existing SZAC - Lighting
ECONOMIZERFDD X Existing6 Existing SZAC - Economizer
FDD
Mixed-Fuel SZAC Replacement Packages

MF-EFF X X
MF SZHP for units ≤ 5-tons in
Climate Zones 3-13 and

15. SZAC elsewhere.

DCV (RE
only)
Window,
Lighting
MF-HRV X X MF Same as above HRV -
MF-DCV X MF Same as above DCV -
MF-HRVDCV X MF Same as above HRV, DCV -
SZHP Replacement Packages
HP X X MF SZHP (≤ 20 tons) - -
HP-10 X MF SZHP (≤ 10 tons) - -
HP-DCV X MF SZHP (≤ 20 tons) HRV, DCV -

3.3.2 Energy Efficiency Measures
The Reach Code Team identified and investigated efficiency measures applicable in alterations scenarios through stakeholder interviews and literature review. 5 All replacement equipment is assumed to be code minimum. This is 81% AFUE and 14 SEER for SZAC packages, and 8 HSPF for SZHP packages. 6 This measure assumes the baseline to be the existing building with a faulty economizer. The measure would restore the economizer on the existing HVAC equipment and add FDD. 379 of 662
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3.3.2.1 Measure Descriptions

3.3.2.1.1 Envelope
Cool roof (low-sloped): This measure specifies solar reflectance exceeding 2025 Energy Code Section 141.0(b)2.B for low-sloped requirements when the renovation scope already includes replacing the roof.
o For Medium Retail (low-sloped roof), Climate Zones 2 and 4 through 16: The minimum aged solar reflectance is increased from 0.63 to 0.70. o Climate Zones 1 and 3: No proposed roof measure.

The cool roof individual measure is compared to the minimum aged solar reflectance requirements.

This measure does not apply to steep-sloped Small Office prototype, as cool roof is already required by the Energy Code.

Window Film: This measure reduces window SHGC of existing windows to 0.39 by adding window film. In addition to reducing heat gain, window films can serve as safety and security measures by stabilizing broken glass. Please see Appendix 9.5 for the existing window SHGC, which varies by building type, Climate Zone, and by vintage.

3.3.2.1.2 Heating, Ventilation, and Air Conditioning
Economizer repair and fault detection and diagnostics (FDD): This measure restores existing economizers to be fully functional and installs standalone economizer FDD on existing air handling units with cooling capacity greater than 134,000 Btu/hr in vintage 1980s and 75,000 Btu/hr in vintage 1990s/2000s. The measure recognizes that existing economizers are often non-functional, with the dampers often either failed closed or partially open (DNV KEMA, 2013). This is a standalone measure that can be installed without RTU replacements.

Demand control ventilation (DCV): This measure uses CO2 sensors to reduce ventilation based on actual occupancy for intermittent- or high-occupancy spaces. The DCV measure applies to retail spaces in the Medium Retail prototype. It doesn’t apply to the Small Office prototype since there are no packaged units serving only conference room zones, and the occupancy profile is otherwise relatively flat, leaving no opportunities for occupancy-based savings. This measure is part of RTU replacements.

Heat Recovery Ventilation (HRV): This measure is a mechanical device intended to remove air from buildings, simultaneously replace it with outdoor air, and in the process transfer heat from the warmer to the colder of the simultaneous airflows. This measure adds a wheel-type HRV to the space conditioning system to reduce the heating and cooling demands of the building. The modeling assumptions include fixed temperature control method, fixed supply temperature of 75°F, and a return fan. This measure is implemented on SZAC RTU replacements only.
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3.3.2.1.3 Lighting
Lighting retrofit: This measure is an additional improvement beyond the planned renovation scope, which replaces the existing luminaires. The measure reduces the existing LPD in select areas to the following, representing 2025 code-minimum upgrades:

Table 6. Lighting Retrofit Lighting Power Density Efficiency Measure Specifications Prototype Baseline LPD (W/ft2) LPD (W/ft2)
Small office 1.2 0.60
Medium Retail 1.7 0.95

3.3.2.2 Measure Applicability and Costs
The Reach Code team used the efficiency measures summarized in Table 7 below by Climate Zone and prototype. Measure application varies due to existing building and HVAC system characteristics, as well as the retrofit scenario being analyzed.

Table 7. Applicability and Cost of Energy Efficiency Measures Measure Name Applicable
Climate Zones
Existing Building +
Individual Measures
MF-HRV or MFHRVDCV
MF-EFF
Prototype SO RE SO RE SO RE
Cool roof (low-sloped) CZ 2,4-16 X
Window film 1980s vintage
1990s vintage X X X X
Economizer FDD CZ 2-16 X
DCV All X X
HRV All X X
Lighting retrofit All X X X X
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Table 8 summarizes the incremental measure costs, including cost data sources and total cost per prototype. Cost sources from previous years have been adjusted for inflation.

Table 8. Cost of Energy Efficiency Measures
Measure
Name
Primary cost
source(s)
Incremental
Cost
Description
Incremental
First Cost for
Small Office
Prototype*
Incremental
First Cost for
Retail
Prototype*
Useful Life /
Replacement
Year
Cool roof
(low-sloped) Distributor/online $0.04/ft
2 of roof
area
N/A $1,263 30
Window film RS Means $8.83/ft
2 of window
area $7,884 $10,053 30
Lighting
retrofit7 Distributor/online RE: $3.93/ft2
SO: $4.29/ft2 $20,807 $87,735 15
DCV
IL TRM8,
adjusted for
location
$1,764 per unit N/A $8,639
Same as HVAC
equipment
(15 years)
Economizer
FDD Distributors
$1,425 - $4,050 per
unit depending
on capacity
N/A $8,861
Same as HVAC
equipment
(15 years)
HRV Market data $4,773 per unit $23,867 $14,320
Same as HVAC
equipment
(15 years)
*When costs differ by vintage, the Team used the 2000s vintage as an example, except Window Film which uses the 1990s vintage. When costs differ by Climate Zone, CZ 12 is used as an example.

3.3.3 HVAC Retrofit
The Team examined the potential for all-electric heat pump retrofits of packaged single zone (SZ) rooftop HVAC where the system size is less than 240,000 kBtuh (20 tons).9 This threshold aligns with 2025 Energy Code new construction prescriptive requirements in section 140.4(a)2 and is representative of manufacturer HVAC products capable of heat pump heating.

The Team received cost estimates for all HVAC equipment from wholesale distributors and contractors. A mechanical contractor provided labor costs for typical new installations and noted that retrofit labor costs are highly variable due to building-specific considerations such as tight working conditions, prepping surfaces, elevated work, material handling, specialty rigging, and protecting existing finishes. The Team assumed the labor for a retrofit would be 25% more than a non-retrofit installation for both the mixed-fuel SZAC and the SZHP HVAC 7 The lighting costs include upgrading compact lighting, upgrading linear lighting, and adding luminaire level lighting controls. 8 2024 IL-TRM Version 12.0 Volume 1: Commercial and Industrial Measures, accessed at https://icc.illinois.gov/downloads/public/il-trm-12/ILTRM_Effective_010124_v12.0_Vol_2_C_and_I_09222023_FINAL_clean.pdf. 9 For the purposes of this study, the SZHP retrofit package may have some gas usage depending on the vintage and climate zone. Space heating equipment over 20 tons are outside the scope of the analysis, and units of this size will remain the existing mixed-fuel HVAC equipment. 382 of 662
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retrofits because in both cases, the packaged units are drop-in replacements at the system level, with no demolition required. No HVAC distribution changes are required as part of the heat pump retrofit.

The HVAC retrofit package costs are shown by unit capacity in Figure 3. This graph does not include labor costs, which are $4,568 for each unit, regardless of fuel type. Additionally, this graph does not include markups for overhead or Climate Zone specific adjustment factors.

Figure 3. Equipment Costs by Fuel Type and Unit Capacity For these building types, we assume no impact on electrical infrastructure because equipment capacity is driven by the cooling load and not the heating load. Therefore, the equipment capacity (and the electrical infrastructure required) would be the same for the all-electric case as the mixed-fuel/existing building case.

The Team assumed that both SZAC HVAC equipment and SZHP HVAC equipment have a 15- year useful life [2]. We assume that HVAC equipment is replaced at the end of its useful life.

The Team assumed that the maintenance requirements would be the same in the SZAC and SZHP scenarios, and do not have incremental impact.

3.3.3.1 Small Office
The existing HVAC system includes five packaged SZACs. The Reach Code Team selected packaged SZHPs to replace the existing packaged RTUs for the Small Office SZHP retrofit.

Table 9 shows an example of the incremental cost associated with the SZHP package for Small Office over the 30-year lifecycle. In Climate Zones 3-13 and 15, all units are 5 tons or less which are SZHPs in the baseline for the 1990s and/or the 2000s vintage, so the table below uses Climate Zone 14 costs as an example to show the comparison across vintages. -$5,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
3 4 5 6 7.5 8.5 10 12.5 15 20
Equipment Cost
Capacity (Tons)
SZAC SZHP Incremental Cost
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Table 9. Small Office Retrofit Costs (Example: Climate Zone 14) Vintage
SZAC
Measure
SZAC
Cost
SZHP
Retrofit
Measure
SZHP
Retrofit Cost
SZHP
Incremental
First Cost
Equipment
Capacities
1980s
Packaged
SZAC + gas
furnace
$93,733 Packaged
SZHP $87,422 - $6,311
One 4-ton unit,
three 5-ton units,
one 6-ton unit
1990s
Packaged
SZAC + gas
furnace
$85,744 Packaged
SZHP $75,052 - $10,693
One 3-ton unit,
three 4-ton units,
one 5-ton unit
2000s
Packaged
SZAC + gas
furnace
$85,164 Packaged
SZHP $75,229 - $9,936
Two 3-ton units,
two 4-ton units, one
5-ton unit
As shown in Table 9, the incremental costs across vintages do not vary as much for Small Office compared to the Medium Retail prototype because all HVAC units have a capacity of less than 10 tons.

3.3.3.2 Medium Retail
The existing HVAC system includes four packaged SZ rooftop air-conditioners (AC) with gas furnaces which are less than 20 tons. Note that the core zone in the Medium Retail has a unit over 20 tons and is thus excluded from the analysis. The Reach Code Team selected packaged SZHPs to replace the three existing packaged RTUs below 20 tons for the Medium Retail SZHP retrofit. Table 10 shows an example of the incremental first cost associated with the SZHP package for Medium Retail over the 30-year lifecycle.

Table 10. Medium Retail HVAC Retrofit Costs (Example: Climate Zone 12) Vintage
SZAC
Measure
SZAC
Cost
SZHP
Retrofit
Measure
SZHP
Cost
SZHP
Incremental
First Cost
Equipment
Capacities
1980s
Packaged
SZAC + gas
furnace
$94,531 Packaged
SZHP $111,596 $17,065 Three 12.5-ton units
1990s
Packaged
SZAC + gas
furnace
$82,431 Packaged
SZHP $84,368 $1,937 Three 10-ton units
2000s
Packaged
SZAC + gas
furnace
$78,147 Packaged
SZHP $79,204 $1,057 Two 9-ton units, one 10-ton unit
As shown in Table 10, the incremental cost can vary significantly across the vintages, which is mainly driven by the equipment capacities. In the 2000s vintage example, there is a modest incremental cost, and all HVAC units are 10 tons or less. More recent vintages often have smaller equipment capacities because of the efficiency improvements from code. In the 1980s vintage example, the incremental cost is significant due to the HVAC units all having a capacity of greater than 10 tons.
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4 Stakeholder Interviews
To support the code pathway options, the Reach Code Team interviewed five HVAC designers, three HVAC contractors, and two equipment distributors/ manufacturer representatives (“reps”) to gather information regarding their experience with replacing units within this size range, and their opinions of the challenges associated with replacing packaged SZAC + gas furnaces with packaged SZHP.

4.1 Objectives and Research Questions
The team conducted ten interviews focusing on the major factors that influence the replacement of a gas-fired packaged unit with a heat pump including physical constraints, electrical concerns, and capacity issues. The interview questions are provided in Appendix

9.6. 4.2 Results
Overall, eight of ten interviewees related challenges when replacing gas packs with heat pumps. Those challenges included:
• Leaving air temperature of heat pump being lower than a gas pack, • Condensate production on the outdoor coil during heating cycle, • Cool air being delivered to the space during the defrost cycle, particularly in occupancies with large outdoor air changes per hour and in colder climates, • Difficulty handling high outside air loads and associated electrical upgrades, and • Physical constraints, such as structural, footprint, existing duct configuration, and height issues.

The most common physical constraint reported by interviewees (n=6) was the need for an adapter curb during replacement, which has some minimal cost associated with configuration.

Two interviewees noted that this was necessary about 50% of the time regardless of whether the retrofit involved a SZAC or SZHP.

All of the designers and contractors the team interviewed (n=8) noted electrical issues as being concerns during retrofit, but generally uncommon. While power for the cooling for the packaged SZ AC + gas furnace is equal to or larger than the power demand from a heat pump during heating mode, the main electrical concern had to do with the installation of electric resistance for defrost control. Defrost cycles occur when the outdoor coil freezes during heating, and the unit needs to switch to air-conditioning mode for three to five minutes to melt the frost and improve heating efficiency. This concern is minimal as it may only trigger a circuit upgrade and not a building service upgrade. One contractor, however, did state that electrical power is more of a concern in older buildings because of prior improvements to the building, and the potential for the building service to not have the capacity to handle an additional electrical upgrade.
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The necessity of electric resistance for defrost control is debatable according to interview responses:
• There was no consensus as to a particular rule of thumb used for specification by designers. One cited an outside air load of more than 30-50%, another cited less than 20°F ambient conditions, and another mentioned specifying electric resistance as a precaution against minor discomfort.
• Similarly, there was no real consensus among contractors as two mentioned humid conditions in cold Climate Zones and another would simply include it as a precaution. • Distributors had consistent answers. Two mentioned that it was installed for back up heat, and another mentioned cold ambient conditions less than 33°F. However, neither distributor interviewed had encountered a situation where a heat pump was not able to maintain the space setpoint because electric resistance hadn’t been installed.

Interviewees commented that heating capacity is an issue during a heat pump retrofit.

However, different interviewee groups cited varying issues:
• Designers had concerns with high outside air capacities and low ambient conditions hindering heat pump heating capacity.
• Contractors mainly cited the defrost cycle as the biggest heating issue with heat pumps since the supply air temperature is cooler during the defrost cycle. • Distributors and manufacturer representatives also mentioned system performance at low outdoor ambient conditions and the defrost cycle as being heating concerns for heat pumps.

Two interviewees cited leaky building envelope issues as a heating concern, but this was unrelated to heat pump retrofits.

4.3 Interpretation
The Reach Code Team considered the issues raised by interviewees and concluded they do not result in significant cost implications, as described below:
• The lower leaving air temperature of heat pumps relative to gas packs increases heating duration but does not necessarily lead to comfort or feasibility issues. • Condensate production during the heating cycle is normal and can be routed in a similar way as the cooling cycle condensation.
• Cool air being delivered to the space during the defrost cycle is likely to happen only during peak heating events when overnight temperatures approach freezing, which is limited in commercial applications that primarily have daytime occupancy and operation.
• Physical constraints, such as structural, footprint, and height issues occur when replacing old equipment with similar size new models and manufacturers and are not associated specifically with heat pump retrofits.
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Due to conflicting interviewee feedback on the potential need for electric resistance for supplemental heat as well as defrost cycles, the Team performed additional analysis using CBECC.

Figure 4 depicts the auto-sized single-zone heat pump (SZHP) peak heating demand as a percentage of the peak cooling demand, along with the unmet heating load hours (UMLH) for units without electric resistance backup. In all Climate Zones, peak cooling demand is larger than peak heating demand and thus drives compressor sizing. Furthermore, for electrical supplemental heat, there are very limited UMLH, barely breach 200 hours in CZ16. This data suggests that backup electrical heat is not necessary in all California Climate Zones, except perhaps CZ16.

In Figure 5 the need for electric resistance heating for the purpose of defrost is tested by measuring the heating capacity of the heat pump unit, compared to the actual peak heating demand. Because the default heating capacity of the rooftop units is at least 120% of the peak heating demand for the building in all Climate Zones, the Team estimates that heat pumps will be able to defrost relatively quickly and without causing sustained discomfort.

Based on these two assessments, the need for electrical upgrades associated with heat pump retrofits appears to be minimal, and thus does not require inclusion in cost-effectiveness analysis.

Figure 4. Peak Heating Demand as a Percent of Peak Cooling Demand, and Unmet Heating Load Hours
-
50 100
150
200
250
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
cz01 cz02 cz03 cz04 cz05 cz06 cz07 cz08 cz09 cz10 cz11 cz12 cz13 cz14 cz15 cz16 Unmet Heating Load Hours
H/C Ratio
Climate Zone
Medium Retail Small Office Medium Retail Unmet Heating Load hours 387 of 662
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Figure 5. Heating Capacity as a Percent of Peak Heating Demand from CBECC 0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
cz01 cz02 cz03 cz04 cz05 cz06 cz07 cz08 cz09 cz10 cz11 cz12 cz13 cz14 cz15 cz16 Peak Heating Capacity/Peak Heating
Demand
Climate Zone
Medium Retail
Small Office
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5 Cost-effectiveness Results
Results are presented as per the prototype-specific Measure Packages described in Section

3. The LSC and On-Bill based, cost-effectiveness results are presented in terms of B/C ratio and NPV section. What constitutes a benefit or a cost varies with the scenarios because both energy savings and incremental construction costs may be negative depending on the package. Typically, utility bill savings are categorized as benefits, while incremental construction costs are treated as costs. In cases where both construction costs are negative and utility bill savings are negative, the construction cost savings are treated as the benefit, while the utility bill negative savings are as the cost. In Table 11 through Table 13, the results Both (shown in green shading) indicates that the result is cost-effective in both On-Bill and LSC. The result On-Bill or LSC (shown in yellow shading) indicates that the result is either cost-effective in On-Bill or LSC, respectively. The result [-] (results with no shading) indicates that the result is not cost-effective On-Bill or LSC. Results that are blank (shown in gray shading) indicate that the package or measure is not applicable, for example, if there are not relevant tonnage of equipment in a vintage.

There are several overarching factors to keep in mind when reviewing the results including:
• SZHP packages will have lower GHG emissions than SZAC packages in all cases, due to the clean power sources currently available from California’s power providers. • To pass the Energy Commission’s application process, local reach codes must have at least one pathway that is cost-effective and exceeds the energy performance budget using LSC (i.e., have a positive compliance margin). Other pathways must also exceed the energy performance budget but are not required to be cost-effective. To emphasize these two important factors, the modeling results that have demonstrated both LSC savings or are cost effective are highlighted in green in the figures within this section.
• As mentioned in Section 2.1.4, The Reach Code Team coordinated with utilities to select tariffs for each prototype given the annual energy demand profile and the most prevalent rates in each utility territory. The Reach Code Team did not compare a variety of tariffs to determine their impact on cost-effectiveness. Utility rate updates can affect cost-effectiveness results.
• As a point of comparison, mixed-fuel SZAC baseline energy figures are provided in Appendix 9.2.

For each prototype, the Reach Code Team assessed the viability of achieving a cost-effective outcome when combining efficiency measures with heat pump packages (e.g., the Heat Pump HVAC + Bundled Efficiency Measures packages) based on the NPVs achieved from each individual efficiency measure.
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5.1 Small Office

5.1.1 Individual Efficiency Measure Results
Table 11 shows cost-effectiveness results of individual efficiency measures applied to the existing mixed-fuel Small Office prototype. Window Film and Lighting Retrofit are mostly On-Bill cost-effective in most Climate Zones across the vintages.

Table 11. Cost-Effectiveness for Individual Efficiency Measures: Small Office Climate
Zone CZ1 CZ2 CZ3 CZ4 CZ4 CZ5 CZ5 CZ6 CZ7 CZ8 CZ9 CZ10 CZ10 CZ11 CZ12 CZ12 CZ13 CZ14 CZ14 CZ15 CZ16 Utility PG&E PG&E PG&E PG&E CPAU PG&E SCG SCE SDG&E SCE SCE SDG&E SCE PG&E PG&E SMUD PG&E SDG&E SCE SCE PG&E Window
Film 1980s ─ OnBill
OnBill OnBill ─ OnBill OnBill Both Both Both Both Both Both OnBill OnBill ─ OnBill On-Bill ─ Both ─ Window
Film 1990s ─ OnBill
OnBill OnBill ─ OnBill OnBill Both Both Both Both Both Both OnBill OnBill ─ OnBill On-Bill ─ Both ─ Window
Film 2000s
Lighting
Retrofit
1980s
OnBill OnBill OnBill OnBill ─ OnBill OnBill ─ On-Bill ─ ─ On-Bill ─ OnBill OnBill ─ OnBill On-Bill ─ LSC OnBill Lighting
Retrofit
1990s
OnBill OnBill OnBill OnBill ─ OnBill OnBill ─ On-Bill ─ ─ On-Bill ─ OnBill OnBill ─ OnBill On-Bill ─ ─ OnBill Lighting
Retrofit
2000s
OnBill OnBill OnBill OnBill ─ OnBill OnBill ─ On-Bill ─ ─ On-Bill ─ OnBill OnBill ─ OnBill On-Bill ─ ─ OnBill 390 of 662
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5.1.2 SZAC Package Results
Table 12 shows the cost-effectiveness results of the Small Office for SZAC packages. The MF-EFF package is mostly either On-Bill or LSC costeffective in all applicable Climate Zones across the three vintages. Due to package optimization, there are some Climate Zones excluded because no cost-effective measures are applicable. The MF-HRV package is not presented in this table because it is not cost-effective in any Climate Zones across the three vintages. However, the results are included in the Results Workbook for reference.

Table 12. Cost-Effectiveness for SZAC Packages: Small Office Climate
Zone CZ1 CZ2 CZ3 CZ4 CZ4 CZ5 CZ5 CZ6 CZ7 CZ8 CZ9 CZ10 CZ10 CZ11 CZ12 CZ12 CZ13 CZ14 CZ14 CZ15 CZ16 Utility PG&E PG&E PG&E PG&E CPAU PG&E SCG SCE SDG&E SCE SCE SDG&E SCE PG&E PG&E SMUD PG&E SDG&E SCE SCE PG&E MF-EFF
1980s LSC LSC OnBill
OnBill OnBill OnBill ─ On-Bill LSC OnBill On-Bill ─ OnBill OnBill OnBill LSC ─ LSC MF-EFF
1990s LSC LSC OnBill
OnBill OnBill OnBill OnBill On-Bill LSC OnBill On-Bill ─ OnBill OnBill OnBill LSC ─ LSC MF-EFF
2000s LSC LSC OnBill
OnBill OnBill OnBill On-Bill On-Bill OnBill OnBill OnBill LSC LSC 391 of 662
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5.1.3 SZHP Package Results
Table 13 shows the cost-effectiveness results of the Small Office for SZHP packages. The HP package is cost-effective in both metrics across most Climate Zones and vintages. In vintage 1990s and 2000s, only select Climate Zones are applicable, as most units are 5 tons or below and are prescriptively required to be SZHPs under the 2025 code.

Table 13. Cost-Effectiveness for SZHP Package: Small Office Climate
Zone CZ1 CZ2 CZ3 CZ4 CZ4 CZ5 CZ5 CZ6 CZ7 CZ8 CZ9 CZ10 CZ10 CZ11 CZ12 CZ12 CZ13 CZ14 CZ14 CZ15 CZ16 Utility PG&E PG&E PG&E PG&E CPAU PG&E SCG SCE SDG&E SCE SCE SDG&E SCE PG&E PG&E SMUD PG&E SDG&E SCE SCE PG&E HP
1980s Both Both Both Both Both Both OnBill Both Both Both Both Both Both Both Both Both Both Both Both Both Both HP
1990s Both Both OnBill
OnBill On-Bill OnBill Both Both
HP
2000s Both Both Both Both Both
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5.2 Medium Retail

5.2.1 Individual Efficiency Measure Results
Table 14 shows cost-effectiveness results of individual efficiency measures applied to the existing mixed-fuel Medium Retail prototype. The Cool Roof, Lighting Retrofit, and Economizer FDD measures as individual measures are On-Bill and LSC cost-effective in most Climate Zones and vintages where they are applicable. Window Film is mostly On-Bill and LSC cost-effective in selected Climate Zones and vintages.

Table 14. Cost-Effectiveness for Individual Efficiency Measures: Medium Retail Climate Zone CZ1 CZ2 CZ3 CZ4 CZ4 CZ5 CZ5 CZ6 CZ7 CZ8 CZ9 CZ10 CZ10 CZ11 CZ12 CZ12 CZ13 CZ14 CZ14 CZ15 CZ16 Utility PG&E PG&E PG&E PG&E CPAU PG&E SCG SCE SDG&E SCE SCE SDG&E SCE PG&E PG&E SMUD PG&E SDG&E SCE SCE PG&E Cool Roof 1980s OnBill
OnBill OnBill Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both ─ Cool Roof 1990s OnBill
OnBill OnBill Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both ─ Cool Roof 2000s OnBill
OnBill OnBill Both Both Both Both Both Both Both Both OnBill OnBill On-Bill Both Both Both Both ─ Window Film
1980s ─ OnBill
OnBill OnBill ─ OnBill OnBill Both Both Both Both Both Both OnBill OnBill ─ OnBill On-Bill ─ Both ─ Window Film
1990s ─ OnBill ─ OnBill ─ OnBill
OnBill Both Both Both Both Both Both OnBill OnBill ─ OnBill On-Bill ─ Both ─ Window Film
2000s
Lighting Retrofit
1980s Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Lighting Retrofit
1990s LSC Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Lighting Retrofit
2000s LSC Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Economizer FDD
1980s Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Economizer FDD
1990s Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Economizer FDD
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5.2.2 SZAC Package Results
Table 15 shows the cost-effectiveness results of the SZAC Medium Retail measure packages. The MF-EFF package is cost-effective in terms of LSC and On-Bill in most Climate Zones and vintages. The MF-HRVDCV package is partially cost-effective in terms of On-Bill due to the smaller savings compared to the incremental package cost.

Table 15. Cost-Effectiveness for SZAC Packages: Medium Retail Climate
Zone CZ1 CZ2 CZ3 CZ4 CZ4 CZ5 CZ5 CZ6 CZ7 CZ8 CZ9 CZ10 CZ10 CZ11 CZ12 CZ12 CZ13 CZ14 CZ14 CZ15 CZ16 Utility PG&E PG&E PG&E PG&E CPAU PG&E SCG SCE SDG&E SCE SCE SDG&E SCE PG&E PG&E SMUD PG&E SDG&E SCE SCE PG&E MF-EFF
1980s LSC Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both MF-EFF
1990s LSC Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both MF-EFF
2000s LSC Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both MFHRVDCV
1980s
Both Both OnBill Both Both Both Both ─ On-Bill OnBill OnBill On-Bill OnBill Both Both Both Both Both Both Both Both MFHRVDCV
1990s
Both Both ─ Both Both Both Both ─ ─ OnBill
OnBill On-Bill OnBill Both Both Both Both Both Both OnBill Both MFHRVDCV
1990s
Both Both ─ Both Both Both Both ─ ─ OnBill
OnBill On-Bill OnBill Both Both Both Both Both Both OnBill Both MFHRVDCV
2000s
Both Both Both Both Both Both Both ─ ─ OnBill
OnBill Both Both Both Both Both Both Both Both OnBill LSC 394 of 662
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5.2.3 SZHP Package Results
Table 16 shows the cost-effectiveness results of the SZHP packages for Medium Retail. The HP package is mostly cost-effective in terms of On-Bill in some Climate Zones in the 1980s and 1990s vintages. The Climate Zones where the package is not cost-effective is partly due to the large incremental first cost of switching to a SZHP HVAC system for larger capacity units over 10 tons. SZHP retrofits become cost effective in most Climate Zones in the 2000s vintage because of the lower incremental costs associated with smaller system sizes. Comparing this with the HP-10 package where only units at 10-ton or below are replaced with SZHPs, we can see improvements in the cost-effectiveness in terms of LSC and On-bill in applicable Climate Zones.

Table 16. Cost-Effectiveness for SZHP Packages: Medium Retail Climate
Zone CZ1 CZ2 CZ3 CZ4 CZ4 CZ5 CZ5 CZ6 CZ7 CZ8 CZ9 CZ10 CZ10 CZ11 CZ12 CZ12 CZ13 CZ14 CZ14 CZ15 CZ16 Utility PG&E PG&E PG&E PG&E CPAU PG&E SCG SCE SDG&E SCE SCE SDG&E SCE PG&E PG&E SMUD PG&E SDG&E SCE SCE PG&E HP 1980s Both OnBill Both OnBill
OnBill Both LSC OnBill ─ ─ ─ ─ ─ OnBill OnBill OnBill OnBill ─ OnBill ─ OnBill HP 1990s Both OnBill Both OnBill
OnBill OnBill ─ ─ ─ ─ OnBill ─ ─ Both Both Both Both LSC Both ─ OnBill HP 2000s Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both ─ OnBill HP-10
1980s Both Both Both Both Both Both
HP-10
1990s Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both On-Bill OnBill Both HP-10
2000s Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both Both OnBill OnBill
HP-DCV
1980s Both Both Both Both Both Both LSC OnBill ─ ─ OnBill On-Bill OnBill Both Both Both Both LSC Both OnBill OnBill
HP-DCV
1990s Both OnBill Both Both Both OnBill ─ ─ ─ OnBill OnBill On-Bill OnBill Both Both Both Both LSC Both ─ OnBill HP-DCV
2000s Both Both Both Both Both Both Both Both Both Both Both Both ─ Both Both ─ Both Both ─ ─ OnBill 395 of 662
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6 Reach Code Options
Adopting a reach code based on this package of measures is feasible in Climate Zones where:

1. There is an LSC compliant package. This report prioritizes SZHP LSC compliance; and

2. SZHP and SZAC packages have equivalent LSC savings, allowing for both a SZHP and SZAC pathway; and

3. At least one of the SZHP or SZAC is either LSC or on-bill cost-effective.

If one package is cost-effective and the other package achieves LSC equivalency with the costeffective package, then this reach code pathway could be considered within that Climate Zone.

HVAC RTU Replacement Reach Code Options include:
• Option 1: HP OR MF-HRV OR MF-HRVDCV: This reach code would require a SZHP up to 20 tons, or SZAC with additional HVAC efficiency measures. • Option 2: HP-10 OR MF-HRV OR MF-HRVDCV: This reach code would require SZHP replacements for units up to 10 tons or require additional HVAC efficiency measures for SZAC replacements.
• Option 3: HP-DCV OR MF-EFF: This reach code option increases the number of efficiency measures required as part of the RTU replacement and higher upfront costs and thus could be considered where Options 1 or 2 cannot be adopted. This reach code requires additional efficiency measures, including HVAC, as well as envelope and lighting if SZAC systems are installed.

The RTU replacement reach code options are evaluated in each Climate Zone and vintage and categorized based on the cost-effectiveness and LSC savings of the two pathways. For each reach code option, the primary pathway should be cost-effective under the assumption that the RTU will be replaced as part of the proposed project scope, and the alternative pathway should achieve at least as much LSC savings. The team evaluated several tiers of this reach code option with different requirements for the primary pathway. The primary pathway is a SZHP replacement for Option 1, SZHP replacements for units up to 10 tons only for Option 2, and SZHP replacements with additional HVAC measures for Option 3. If Option 1 is cost-effective, it will cover the broadest set of equipment with the simplest requirements for the SZHP. If Option 1 is not cost-effective, Options 2 or 3 may be considered.

The tables presented in this section show the results for each reach code option and Climate Zone. The primary pathway shows the number of prototypes that are cost-effective, and the number of prototypes analyzed. The alternative pathway shows the number of prototypes that meet or exceed the LSC savings of the primary pathway, regardless of whether they are cost-effective, and the number of prototypes that were analyzed. Note that due to differences in the prototypes, RTU capacities, and measure applicability, not all packages were able to be modeled for all Climate Zones, vintages, and building types. 396 of 662
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Table 17 shows the results for the RTU Replacement Reach Code Option 1, where the SZHP replacement is the primary pathway. The alternative pathways analyzed for energy equivalency are the SZAC replacement with HRV only, which is not consistently costeffective in all cases, and the SZAC replacement with HRV and DCV measures. The DCV measure was not modeled in the small office prototype because there are no packaged units serving only conference room zones and the occupancy profile is otherwise relatively flat. Because DCV was modeled in only one prototype, there are three modeled scenarios for this pathway (the Retail vintages) rather than six scenarios for the other pathways (both Small Office and Retail). However, because offices will have conference rooms and thus can achieve occupancy-based savings for DCV, the results are presented below and treated as widely applicable. Results show that the primary SZHP pathway is cost-effective for more than half of all Climate Zones and vintages.

Table 17. HVAC RTU Replacement Reach Code Option 1 Applicability Primary Pathway – Count
of prototypes that are C/E
Alternative Pathway - Count of
prototypes that achieve LSC equivalency
Climate Zone Utility HP MF-HRV MF-HRVDCV
CZ1 PG&E 6 / 6 3 / 6 3 / 3
CZ2 PG&E 6 / 6 5 / 6 3 / 3
CZ3 PG&E 4 / 4 4 / 4 3 / 3
CZ4 PG&E 4 / 4 4 / 4 3 / 3
CZ4-2 CPAU 4 / 4 4 / 4 3 / 3
CZ5 PG&E 4 / 4 4 / 4 3 / 3
CZ5-2 SCG 3 / 4 4 / 4 3 / 3
CZ6 SCE 3 / 4 3 / 4 3 / 3
CZ7 SDG&E 2 / 4 2 / 4 3 / 3
CZ8 SCE 3 / 5 3 / 5 3 / 3
CZ9 SCE 4 / 5 3 / 5 3 / 3
CZ10 SDG&E 3 / 5 3 / 5 3 / 3
CZ10-2 SCE 3 / 5 3 / 5 3 / 3
CZ11 PG&E 4 / 4 4 / 4 3 / 3
CZ12 PG&E 4 / 4 4 / 4 3 / 3
CZ12-2 SMUD 4 / 4 4 / 4 3 / 3
CZ13 PG&E 4 / 4 4 / 4 3 / 3
CZ14 SDG&E 5 / 6 6 / 6 3 / 3
CZ14-2 SCE 3 / 6 6 / 6 3 / 3
CZ15 SCE 1 / 4 4 / 4 3 / 3
CZ16 PG&E 6 / 6 6 / 6 3 / 3
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The Reach Code Team evaluated the cost-effectiveness as it relates to the average capacity of each variation and determined that the SZHP alone is generally cost-effective when the average capacity is around 10 tons or less. The Reach Code Team re-ran the above packages implementing a limit of 10 tons. For the RTU Replacement Reach Code Option 2 results presented in Table 18, the primary pathway is a SZHP replacement for units 5-10 tons, and units 10-20 tons remain the same as the baseline. The same measures are considered for the alternative SZAC pathway as RTU Replacement Reach Code Option 1.

Table 18. HVAC RTU Replacement Reach Code Option 2 Applicability Primary Pathway –
Count of
prototypes that are
C/E
Alternative Pathway - Count of
prototypes that achieve LSC
equivalency
Climate Zone Utility HP-10 MF-HRV MF-HRVDCV
CZ1 PG&E 6 / 6 3 / 6 3 / 3
CZ2 PG&E 5 / 5 4 / 5 2 / 2
CZ3 PG&E 4 / 4 4 / 4 3 / 3
CZ4 PG&E 3 / 3 3 / 3 2 / 2
CZ4-2 CPAU 3 / 3 3 / 3 2 / 2
CZ5 PG&E 4 / 4 4 / 4 3 / 3
CZ5-2 SCG 4 / 4 4 / 4 3 / 3
CZ6 SCE 4 / 4 3 / 4 3 / 3
CZ7 SDG&E 4 / 4 3 / 4 3 / 3
CZ8 SCE 4 / 4 2 / 4 2 / 2
CZ9 SCE 4 / 4 2 / 4 2 / 2
CZ10 SDG&E 4 / 4 2 / 4 2 / 2
CZ10-2 SCE 4 / 4 2 / 4 2 / 2
CZ11 PG&E 3 / 3 3 / 3 2 / 2
CZ12 PG&E 3 / 3 3 / 3 2 / 2
CZ12-2 SMUD 3 / 3 3 / 3 2 / 2
CZ13 PG&E 3 / 3 3 / 3 2 / 2
CZ14 SDG&E 5 / 5 5 / 5 2 / 2
CZ14-2 SCE 2 / 5 5 / 5 2 / 2
CZ15 SCE 2 / 2 2 / 2 1 / 1
CZ16 PG&E 5 / 5 5 / 5 2 / 2
RTU Replacement Reach Code Option 3 results, summarized in Table 19, show the SZHP replacement with DCV as the primary pathway and the mixed-fuel SZAC replacement with DCV, lighting retrofit, and window film as the alternative pathway. The HRV measure is 398 of 662
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excluded from the primary pathway because it is not cost-effective across all Climate Zones.

For Climate Zones and vintages that are cost-effective and energy equivalent for multiple reach code options, Option 1 is the more stringent option. Because there is an Option 1 RTU Replacement Reach Code available for all Climate Zones and vintages for Small Office, Option 3 was only evaluated for the Retail prototype.

Table 19. HVAC RTU Replacement Reach Code Option 3 Applicability (Retail only) Primary Pathway – Count
of prototypes that are
C/E
Alternative Pathway -
Count of prototypes that
achieve LSC equivalency
Climate Zone Utility HP-DCV MF-EFF
CZ1 PG&E 3 / 3 3 / 3
CZ2 PG&E 3 / 3 3 / 3
CZ3 PG&E 3 / 3 3 / 3
CZ4 PG&E 3 / 3 3 / 3
CZ4-2 CPAU 3 / 3 3 / 3
CZ5 PG&E 3 / 3 3 / 3
CZ5-2 SCG 2 / 3 3 / 3
CZ6 SCE 2 / 3 3 / 3
CZ7 SDG&E 1 / 3 3 / 3
CZ8 SCE 2 / 3 3 / 3
CZ9 SCE 3 / 3 3 / 3
CZ10 SDG&E 3 / 3 3 / 3
CZ10-2 SCE 3 / 3 3 / 3
CZ11 PG&E 3 / 3 3 / 3
CZ12 PG&E 3 / 3 3 / 3
CZ12-2 SMUD 3 / 3 3 / 3
CZ13 PG&E 3 / 3 3 / 3
CZ14 SDG&E 2 / 3 3 / 3
CZ14-2 SCE 3 / 3 3 / 3
CZ15 SCE 1 / 3 3 / 3
CZ16 PG&E 3 / 3 3 / 3
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7 Conclusions and Next Steps
The Reach Codes Team developed packages with SZHPs and energy efficiency measures, simulated them in building modeling software, and gathered costs to determine the costeffectiveness of multiple scenarios. The Reach Codes Team coordinated with multiple utilities, cities, and building community experts to develop a set of assumptions considered reasonable in the current market. Changing assumptions—such as the period of analysis, measure selection, cost assumptions, energy escalation rates, or utility tariffs—are likely to change results.

Jurisdictions statewide can adopt a variety of building reach codes using the results in this report. While results are nuanced by vintage, Climate Zone, and utility, the overarching takeaways by prototype using the assumptions in this report are summarized below:
• Small Office: Code minimum packaged SZHP space conditioning replacements are cost-effective in all Climate Zones and vintages. The bundled efficiency measure package is cost-effective for both SZAC (like-for-like) and SZHP replacements. The HRV measure is not cost-effective with the SZHP replacement. There are some individual efficiency measures that are cost-effective, depending on Climate Zone and vintage, including window film and lighting retrofit. • Medium Retail: Code minimum packaged SZHP space conditioning replacements are mainly cost-effective in the 2000s vintage, and where HVAC replacements are ≤ 10 tons. In the 1980s and 1990s vintages, which require larger equipment (>10 tons), SZHPs show more variation in cost-effectiveness based on the larger incremental cost of SZHP equipment. With the bundled efficiency measures, code minimum SZAC space heating replacements are cost-effective in all Climate Zones.

There are several cost-effective individual efficiency measures, depending on Climate Zone and vintage, including cool roof, economizer FDD, window film, and lighting retrofit.

Based on these results, the Reach Code Team has identified the following potential measure packages that jurisdictions in most Climate Zones and utility territories may consider adopting based on cost-effectiveness during RTU replacements. The RTU Replacement Reach Code options are as follows:
• Option 1: SZHP Code Min (up to 20 tons) or Mixed-fuel SZAC Code Min + HVAC Measures
• Option 2: SZHP Code Min (up to 10 tons) or Mixed-fuel SZAC Code Min + HVAC Measures
• Option 3: SZHP Code Min + HVAC Measures or Mixed-fuel SZAC Code Min + Bundled Efficiency Measures
Generally, the Reach Code Team found that at least one RTU Replacement Reach Code option may be considered for adoption for all Climate Zones, although in several Climate Zones the option may not be cost-effective across all vintages and prototypes modeled. The 400 of 662
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Reach Code options may be applied to a wider set of prototypes, including libraries, grocery, banks, and schools, as described in Section 3.2.

This analysis was limited to the measure packages and building types described. There may be other energy efficiency measures that are cost effective in some or all climate zones, and other building prototypes relevant to what is being retrofit in a particular region of California.

To request custom analysis, please contact [email protected]. 401 of 662
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8 References
[1] E-CFR, "https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt10.3.431 &r=PART&ty=HTML#se10.3.431_197," 2020. [Online]. Available: https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt10.3.431 &r=PART&ty=HTML#se10.3.431_197.
[2] California Energy Commission, 2024. [Online]. Available:
https://efiling.energy.ca.gov/GetDocument.aspx?tn=256847&DocumentContentId=92661. [3] Statewide Reach Code Team, "2019 Cost-effectiveness Study: Low-Rise Residential New Construction. Prepared for Pacific Gas and Electric Company. Prepared by Frontier Energy," 2019.
[4] California Energy Commission, "2025 Energy Code Date and Hourly Factors", 2025. [Online]. Available: https://www.energy.ca.gov/files/2025-energy-code-date-and-hourlyfactors [5] U.S. Energy Information Administration, "Commercial Buildings Energy Consumption Survey (CBECS)", 2018. [Online]. Available: https://www.eia.gov/consumption/commercial/ [6] California Energy Commission, "Clean Energy and Pollution Reduction Act - SB 350", 2019. [Online]. Available: https://www.energy.ca.gov/rules-and-regulations/energy-suppliersreporting/clean-energy-and-pollution-reduction-act-sb-350 [7] Illinois Statewise Technical Reference Manual, "Volume 2: Commercial and Industrial Measures", 2024. [Online]. Available: https://icc.illinois.gov/downloads/public/il-trm-12/ILTRM_Effective_010124_v12.0_Vol_2_C_and_I_09222023_FINAL_clean.pdf. [8] City of Palo Alto, "City of Palo Alto Monthly Gas Volumetric and Service Charges", 2020. [Online]. Available:
https://www.paloalto.gov/files/assets/public/v/29/utilities/business/business-rates/monthlygas-volumetric-and-service-charges-commercial.pdf [9] California Energy Commission, "2025 Nonresidential HVAC Heat Pump Baseline Report," 2024.
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9 Appendices

9.1 Map of California Climate Zones
Climate zone geographical boundaries are depicted in Figure 6. Map of California climate zones. The map in Figure 6. Map of California climate zones. along with a zip-code search directory is available at:
https://ww2.energy.ca.gov/maps/renewable/building_climate_zones.html Figure 6. Map of California climate zones.
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9.2 Mixed-Fuel Baseline Energy Figures
Table 20. Medium Retail: Existing Mixed-Fuel Baseline 1980 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 362,829 3,411 $129,201 $6,796 $135,996 41
CZ2 PG&E 440,689 2,431 $162,498 $4,956 $167,454 39
CZ3 PG&E 405,363 1,690 $147,666 $3,423 $151,089 33
CZ4 PG&E 479,116 2,287 $176,888 $4,726 $181,613 40
CZ4-2 CPAU 479,116 2,287 $104,157 $6,375 $110,532 40
CZ5 PG&E 399,754 1,599 $148,036 $3,215 $151,252 32
CZ5-2 SCG 399,754 1,599 $148,036 $2,436 $150,473 32
CZ6 SCE 427,133 590 $114,657 $1,041 $115,698 28
CZ7 SDG&E 435,608 435 $160,261 $623 $160,884 27
CZ8 SCE 498,649 656 $139,534 $1,147 $140,681 31
CZ9 SCE 496,146 846 $140,014 $1,420 $141,434 32
CZ10 SDG&E 518,627 826 $192,271 $1,083 $193,353 33
CZ10-2 SCE 518,627 826 $144,216 $1,388 $145,604 33
CZ11 PG&E 511,565 2,767 $186,733 $5,736 $192,469 44
CZ12 PG&E 471,069 2,466 $172,369 $5,121 $177,490 40
CZ12-2 SMUD 471,069 2,466 $80,619 $5,121 $85,739 40
CZ13 PG&E 524,977 1,865 $190,257 $3,959 $194,217 39
CZ14 SDG&E 518,931 2,349 $180,950 $2,873 $183,824 42
CZ14-2 SCE 518,931 2,349 $135,571 $3,350 $138,920 42
CZ15 SCE 660,960 448 $174,838 $844 $175,682 37
CZ16 PG&E 444,960 4,278 $158,233 $8,542 166,775 51
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Table 21. Medium Retail: Existing Mixed-Fuel Baseline 1990 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 337,880 2,543 $119,821 $5,120 $124,941 35
CZ2 PG&E 405,987 1,667 $149,136 $3,384 $152,520 33
CZ3 PG&E 370,768 1,094 $135,276 $2,258 $137,534 28
CZ4 PG&E 435,229 1,559 $160,056 $3,203 $163,258 33
CZ4-2 CPAU 435,229 1,559 $94,425 $4,945 $99,370 33
CZ5 PG&E 378,344 1,033 $139,394 $2,123 $141,517 28
CZ5-2 SCG 378,344 1,033 $139,394 $1,681 $141,075 28
CZ6 SCE 405,100 325 $107,392 $656 $108,048 25
CZ7 SDG&E 408,992 233 $148,909 $390 $149,299 25
CZ8 SCE 458,178 410 $122,006 $785 $122,792 28
CZ9 SCE 456,026 560 $122,445 $1,001 $123,446 29
CZ10 SDG&E 472,282 564 $173,098 $779 $173,876 29
CZ10-2 SCE 472,282 564 $125,599 $1,007 $126,606 29
CZ11 PG&E 458,080 1,808 $166,630 $3,726 $170,356 36
CZ12 PG&E 426,105 1,613 $155,174 $3,334 $158,508 33
CZ12-2 SMUD 426,105 1,613 $72,021 $3,425 $75,446 33
CZ13 PG&E 464,002 1,248 $167,727 $2,623 $170,350 33
CZ14 SDG&E 459,171 1,609 $159,827 $2,007 $161,834 34
CZ14-2 SCE 459,171 1,609 $118,811 $2,422 $121,233 34
CZ15 SCE 550,370 250 $141,683 $551 $142,234 30
CZ16 PG&E 406,009 3,099 $144,458 $6,244 $150,702 42
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Table 22. Medium Retail: Existing Mixed-Fuel Baseline 2000 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 331,055 2,964 $116,618 $5,889 $122,507 37
CZ2 PG&E 368,892 2,133 $133,976 $4,359 $138,335 33
CZ3 PG&E 347,589 1,472 $125,426 $2,982 $128,409 29
CZ4 PG&E 389,542 2,098 $141,959 $4,340 $146,299 34
CZ4-2 CPAU 389,542 2,098 $84,047 $6,003 $90,050 34
CZ5 PG&E 352,283 1,414 $128,191 $2,841 $131,031 29
CZ5-2 SCG 352,283 1,414 $128,191 $2,194 $130,384 29
CZ6 SCE 367,634 518 $94,579 $934 $95,513 24
CZ7 SDG&E 370,947 404 $132,002 $587 $132,589 24
CZ8 SCE 407,793 625 $106,172 $1,101 $107,273 27
CZ9 SCE 407,765 825 $106,932 $1,388 $108,320 28
CZ10 SDG&E 414,731 658 $148,951 $886 $149,837 27
CZ10-2 SCE 414,731 658 $107,541 $1,142 $108,683 27
CZ11 PG&E 418,772 2,167 $151,246 $4,529 $155,775 36
CZ12 PG&E 391,670 1,996 $141,560 $4,177 $145,738 34
CZ12-2 SMUD 391,670 1,996 $65,293 $4,177 $69,470 34
CZ13 PG&E 424,029 1,561 $152,401 $3,249 $155,650 33
CZ14 SDG&E 415,063 2,050 $142,703 $2,522 $145,226 35
CZ14-2 SCE 415,063 2,050 $105,480 $2,980 $108,459 35
CZ15 SCE 489,705 344 $124,170 $689 $124,860 28
CZ16 PG&E 378,759 3,736 $133,970 $7,450 $141,421 44
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Table 23. Medium Retail: Existing Mixed-Fuel FDD Baseline 1980 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E
CZ2 PG&E 454,429 2,431 $166,955 $4,957 $171,911 39
CZ3 PG&E 410,069 1,718 $149,667 $3,477 $153,144 33
CZ4 PG&E 493,340 2,268 $181,340 $4,689 $186,029 40
CZ4-2 CPAU 493,340 2,268 $107,191 $6,337 $113,528 40
CZ5 PG&E 420,845 1,595 $153,940 $3,208 $157,147 33
CZ5-2 SCG 420,845 1,595 $153,940 $2,431 $156,371 33
CZ6 SCE 453,474 595 $116,544 $1,048 $117,591 29
CZ7 SDG&E 465,024 444 $165,911 $633 $166,545 29
CZ8 SCE 520,726 650 $142,311 $1,138 $143,449 32
CZ9 SCE 515,751 842 $142,484 $1,413 $143,897 33
CZ10 SDG&E 535,283 820 $194,944 $1,076 $196,019 34
CZ10-2 SCE 535,283 820 $146,313 $1,380 $147,693 34
CZ11 PG&E 521,719 2,769 $189,851 $5,734 $195,584 44
CZ12 PG&E 484,282 2,462 $176,675 $5,112 $181,787 41
CZ12-2 SMUD 484,282 2,462 $82,124 $5,112 $87,236 41
CZ13 PG&E 538,085 1,868 $194,411 $3,961 $198,371 40
CZ14 SDG&E 530,607 2,345 $184,263 $2,868 $187,132 42
CZ14-2 SCE 530,607 2,345 $137,213 $3,344 $140,557 42
CZ15 SCE 671,269 450 $176,129 $846 $176,975 37
CZ16 PG&E 459,029 4,288 $163,083 $8,558 $171,641 51
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Table 24. Medium Retail: Existing Mixed-Fuel FDD Baseline 1990 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 343,733 2,534 $123,444 $5,104 $128,548 35
CZ2 PG&E 418,947 1,649 $153,333 $3,350 $156,683 33
CZ3 PG&E 390,900 1,085 $141,990 $2,241 $144,231 29
CZ4 PG&E 447,994 1,542 $164,034 $3,168 $167,202 33
CZ4-2 CPAU 447,994 1,542 $97,159 $4,911 $102,070 33
CZ5 PG&E 398,742 1,007 $145,166 $2,075 $147,241 29
CZ5-2 SCG 398,742 1,007 $145,166 $1,645 $146,811 29
CZ6 SCE 431,799 326 $109,424 $657 $110,081 26
CZ7 SDG&E 437,821 238 $154,396 $395 $154,790 26
CZ8 SCE 477,680 408 $124,303 $782 $125,085 28
CZ9 SCE 473,486 559 $124,510 $999 $125,510 29
CZ10 SDG&E 487,233 562 $175,501 $775 $176,276 30
CZ10-2 SCE 487,233 562 $127,366 $1,002 $128,368 30
CZ11 PG&E 466,851 1,808 $169,374 $3,722 $173,095 36
CZ12 PG&E 437,293 1,611 $158,828 $3,326 $162,154 33
CZ12-2 SMUD 437,293 1,611 $73,304 $3,417 $76,721 33
CZ13 PG&E 474,897 1,252 $171,129 $2,626 $173,755 33
CZ14 SDG&E 469,042 1,603 $162,673 $2,001 $164,674 35
CZ14-2 SCE 469,042 1,603 $120,229 $2,415 $122,645 35
CZ15 SCE 559,124 255 $142,698 $558 $143,255 31
CZ16 PG&E 418,885 3,099 $148,862 $6,244 $155,106 42
408 of 662
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Table 25. Medium Retail: Existing Mixed-Fuel FDD Baseline 2000 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 334,133 2,955 $118,836 $5,874 $124,710 37
CZ2 PG&E 376,400 2,109 $136,465 $4,316 $140,781 34
CZ3 PG&E 359,362 1,460 $129,290 $2,962 $132,252 29
CZ4 PG&E 397,033 2,072 $144,339 $4,293 $148,632 34
CZ4-2 CPAU 397,033 2,072 $85,661 $5,953 $91,615 34
CZ5 PG&E 364,695 1,383 $131,734 $2,785 $134,519 29
CZ5-2 SCG 364,695 1,383 $131,734 $2,151 $133,885 29
CZ6 SCE 384,244 510 $96,104 $923 $97,028 25
CZ7 SDG&E 388,971 403 $135,619 $585 $136,205 25
CZ8 SCE 419,809 621 $107,602 $1,094 $108,696 27
CZ9 SCE 418,105 817 $108,172 $1,377 $109,548 28
CZ10 SDG&E 423,876 653 $150,475 $880 $151,355 27
CZ10-2 SCE 423,876 653 $108,644 $1,134 $109,778 27
CZ11 PG&E 424,497 2,169 $153,029 $4,528 $157,557 36
CZ12 PG&E 398,822 1,988 $143,941 $4,161 $148,103 34
CZ12-2 SMUD 398,822 1,988 $66,124 $4,161 $70,285 34
CZ13 PG&E 431,259 1,566 $154,654 $3,252 $157,906 33
CZ14 SDG&E 421,138 2,041 $144,521 $2,512 $147,033 35
CZ14-2 SCE 421,138 2,041 $106,356 $2,968 $109,324 35
CZ15 SCE 495,422 347 $124,838 $693 $125,531 29
CZ16 PG&E 387,411 3,733 $136,960 $7,444 $144,405 44
409 of 662
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Table 26. Medium Retail: Mixed-Fuel SZAC Code Minimum Baseline 1980 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 330,146 3,634 $117,538 $7,104 $125,029 40
CZ2 PG&E 386,517 3,028 $142,626 $6,061 $148,784 39
CZ3 PG&E 350,383 2,205 $128,615 $4,472 $132,777 33
CZ4 PG&E 422,921 2,793 $156,411 $5,683 $162,326 39
CZ4-2 CPAU 422,921 2,793 $91,914 $7,369 $99,283 39
CZ5 PG&E 357,588 2,112 $133,079 $4,244 $137,183 32
CZ5-2 SCG 357,588 2,112 $133,079 $3,085 $136,164 32
CZ6 SCE 380,747 850 $102,047 $1,415 $103,121 26
CZ7 SDG&E 390,599 669 $144,977 $891 $145,908 26
CZ8 SCE 438,518 930 $119,049 $1,532 $120,395 29
CZ9 SCE 437,803 1,166 $120,876 $1,857 $122,464 31
CZ10 SDG&E 458,750 1,148 $173,011 $1,453 $174,689 31
CZ10-2 SCE 458,750 1,148 $125,076 $1,826 $126,902 31
CZ11 PG&E 456,417 3,295 $167,066 $6,765 $174,237 43
CZ12 PG&E 416,712 2,963 $152,974 $6,076 $159,597 40
CZ12-2 SMUD 416,712 2,963 $71,498 $6,076 $77,574 40
CZ13 PG&E 466,474 2,324 $169,400 $4,867 $174,919 38
CZ14 SDG&E 470,503 2,871 $165,898 $3,474 $170,600 41
CZ14-2 SCE 470,503 2,871 $122,830 $3,959 $126,790 41
CZ15 SCE 577,811 677 $153,714 $1,182 $154,982 33
CZ16 PG&E 399,719 4,978 $144,332 $9,824 $156,858 51
410 of 662
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Table 27. Medium Retail: Mixed-Fuel SZAC Code Minimum Baseline 1990 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 322,594 2,731 $114,844 $5,381 $120,348 35
CZ2 PG&E 379,888 1,773 $139,052 $3,542 $142,545 32
CZ3 PG&E 344,512 1,518 $125,878 $3,054 $128,693 29
CZ4 PG&E 395,103 1,991 $145,396 $4,119 $149,382 33
CZ4-2 CPAU 395,103 1,991 $85,705 $5,794 $91,498 33
CZ5 PG&E 350,123 1,464 $129,954 $2,918 $132,715 29
CZ5-2 SCG 350,123 1,464 $129,954 $2,262 $132,217 29
CZ6 SCE 375,743 527 $99,724 $947 $100,368 24
CZ7 SDG&E 378,545 412 $138,486 $595 $138,989 24
CZ8 SCE 420,056 609 $113,165 $1,076 $113,920 27
CZ9 SCE 418,250 791 $113,537 $1,338 $114,473 28
CZ10 SDG&E 431,007 806 $161,040 $1,058 $162,204 28
CZ10-2 SCE 431,007 806 $116,142 $1,358 $117,500 28
CZ11 PG&E 425,508 2,241 $155,289 $4,668 $159,824 36
CZ12 PG&E 402,141 1,692 $146,265 $3,461 $149,864 32
CZ12-2 SMUD 402,141 1,692 $67,348 $3,552 $70,900 32
CZ13 PG&E 429,557 1,578 $155,836 $3,276 $159,386 32
CZ14 SDG&E 439,219 1,630 $153,147 $2,024 $155,666 33
CZ14-2 SCE 439,219 1,630 $112,586 $2,450 $115,036 33
CZ15 SCE 508,300 345 $129,173 $692 $129,792 29
CZ16 PG&E 375,366 3,762 $135,625 $7,477 $144,980 43
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Table 28. Medium Retail: Mixed-Fuel SZAC Code Minimum Baseline 2000 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 321,233 3,071 $113,854 $5,975 $120,295 36
CZ2 PG&E 361,254 2,169 $131,810 $4,369 $136,118 33
CZ3 PG&E 330,971 1,926 $120,584 $3,914 $124,282 30
CZ4 PG&E 370,393 2,535 $136,586 $5,163 $141,648 35
CZ4-2 CPAU 370,393 2,535 $80,268 $6,862 $87,130 35
CZ5 PG&E 335,034 1,890 $123,792 $3,800 $127,347 30
CZ5-2 SCG 335,034 1,890 $123,792 $2,817 $126,609 30
CZ6 SCE 355,508 762 $93,744 $1,285 $94,620 25
CZ7 SDG&E 358,170 627 $130,391 $842 $131,108 24
CZ8 SCE 395,918 856 $105,868 $1,436 $106,879 27
CZ9 SCE 395,348 1,093 $106,814 $1,763 $108,063 28
CZ10 SDG&E 405,367 905 $149,399 $1,169 $150,412 27
CZ10-2 SCE 405,367 905 $107,416 $1,498 $108,914 27
CZ11 PG&E 417,708 2,183 $151,320 $4,538 $155,852 35
CZ12 PG&E 387,330 2,018 $140,877 $4,181 $145,153 33
CZ12-2 SMUD 387,330 2,018 $65,115 $4,181 $69,296 33
CZ13 PG&E 423,172 1,594 $152,705 $3,294 $156,178 32
CZ14 SDG&E 414,645 2,014 $144,695 $2,469 $147,726 34
CZ14-2 SCE 414,645 2,014 $106,914 $2,936 $109,850 34
CZ15 SCE 486,731 447 $123,568 $843 $124,277 28
CZ16 PG&E 369,114 3,405 $132,583 $6,739 $141,949 40
412 of 662
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Table 29. Small Office: Existing Mixed-Fuel Baseline 1980 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 75,261 778 $31,724 $1,597 $33,321 9
CZ2 PG&E 100,788 373 $42,553 $834 $43,387 8
CZ3 PG&E 91,453 248 $38,556 $589 $39,145 7
CZ4 PG&E 110,793 350 $46,904 $797 $47,701 9
CZ4-2 CPAU 110,793 350 $24,048 $2,569 $26,618 9
CZ5 PG&E 91,961 267 $38,743 $622 $39,366 7
CZ5-2 SCG 91,961 267 $38,743 $569 $39,312 7
CZ6 SCE 99,673 67 $26,098 $278 $26,376 6
CZ7 SDG&E 101,642 44 $35,577 $171 $35,747 7
CZ8 SCE 114,050 81 $31,431 $299 $31,730 7
CZ9 SCE 114,398 105 $31,901 $334 $32,235 8
CZ10 SDG&E 118,460 102 $43,632 $239 $43,871 8
CZ10-2 SCE 118,460 102 $33,047 $329 $33,376 8
CZ11 PG&E 117,108 425 $49,743 $950 $50,693 10
CZ12 PG&E 106,223 394 $44,995 $888 $45,883 9
CZ12-2 SMUD 106,223 394 $20,060 $888 $20,948 9
CZ13 PG&E 119,384 287 $50,724 $680 $51,404 9
CZ14 SDG&E 118,563 427 $41,525 $621 $42,146 10
CZ14-2 SCE 118,563 427 $32,206 $809 $33,015 10
CZ15 SCE 152,540 56 $40,238 $263 $40,501 9
CZ16 PG&E 103,301 832 $43,580 $1,716 $45,296 11
413 of 662
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Table 30. Small Office: Existing Mixed-Fuel Baseline 1990 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 72,021 438 $30,381 $953 $31,334 7
CZ2 PG&E 89,947 235 $37,988 $565 $38,553 7
CZ3 PG&E 83,347 147 $35,157 $392 $35,549 6
CZ4 PG&E 97,565 217 $41,303 $534 $41,837 7
CZ4-2 CPAU 97,565 217 $21,160 $2,309 $23,469 7
CZ5 PG&E 83,667 154 $35,270 $404 $35,674 6
CZ5-2 SCG 83,667 154 $35,270 $406 $35,675 6
CZ6 SCE 90,245 30 $23,698 $224 $23,921 6
CZ7 SDG&E 92,140 19 $32,220 $141 $32,362 6
CZ8 SCE 102,681 40 $28,184 $239 $28,423 6
CZ9 SCE 103,712 59 $28,728 $266 $28,994 7
CZ10 SDG&E 107,528 56 $39,322 $185 $39,507 7
CZ10-2 SCE 107,528 56 $29,772 $262 $30,034 7
CZ11 PG&E 100,240 236 $42,565 $573 $43,138 7
CZ12 PG&E 91,849 222 $38,909 $545 $39,454 7
CZ12-2 SMUD 91,849 222 $17,610 $545 $18,156 7
CZ13 PG&E 101,569 159 $43,140 $422 $43,563 7
CZ14 SDG&E 102,817 234 $36,438 $396 $36,835 7
CZ14-2 SCE 102,817 234 $28,177 $526 $28,703 7
CZ15 SCE 123,910 21 $33,089 $212 $33,301 7
CZ16 PG&E 92,250 482 $38,948 $1,041 $39,989 9
414 of 662
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Table 31. Small Office: Existing Mixed-Fuel Baseline 2000 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 68,456 493 $28,883 $1,055 $29,938 7
CZ2 PG&E 79,179 293 $33,447 $677 $34,123 7
CZ3 PG&E 76,464 208 $32,260 $510 $32,770 6
CZ4 PG&E 88,126 296 $37,294 $691 $37,986 7
CZ4-2 CPAU 88,126 296 $19,064 $2,464 $21,528 7
CZ5 PG&E 76,492 220 $32,254 $532 $32,786 6
CZ5-2 SCG 76,492 220 $32,254 $501 $32,755 6
CZ6 SCE 81,829 50 $21,808 $254 $22,062 5
CZ7 SDG&E 83,863 33 $29,630 $158 $29,788 5
CZ8 SCE 91,235 65 $24,986 $276 $25,263 6
CZ9 SCE 92,122 90 $25,427 $313 $25,739 6
CZ10 SDG&E 89,493 67 $32,760 $198 $32,957 6
CZ10-2 SCE 89,493 67 $24,833 $278 $25,111 6
CZ11 PG&E 91,473 288 $38,808 $675 $39,483 7
CZ12 PG&E 84,414 277 $35,745 $655 $36,400 7
CZ12-2 SMUD 84,414 277 $16,165 $655 $16,820 7
CZ13 PG&E 92,371 201 $39,199 $507 $39,706 7
CZ14 SDG&E 93,481 297 $32,954 $470 $33,424 7
CZ14-2 SCE 93,481 297 $25,404 $619 $26,023 7
CZ15 SCE 110,070 30 $29,189 $224 $29,413 7
CZ16 PG&E 86,242 553 $36,412 $1,176 $37,588 9
415 of 662
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Table 30. Small Office: Mixed-Fuel SZAC Code Minimum Baseline 1980 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 74,317 717 $31,326 $1,478 $32,805 9
CZ2 PG&E 84,591 488 $35,754 $1,049 $36,803 8
CZ3 PG&E 78,044 125 $32,919 $338 $33,257 6
CZ4 PG&E 94,705 166 $40,082 $420 $40,502 7
CZ4-2 CPAU 94,705 166 $20,479 $2,208 $22,687 7
CZ5 PG&E 78,443 135 $33,060 $351 $33,411 6
CZ5-2 SCG 78,443 135 $33,060 $374 $33,434 6
CZ6 SCE 83,582 43 $23,243 $242 $23,485 5
CZ7 SDG&E 85,477 31 $31,621 $155 $31,776 5
CZ8 SCE 96,775 48 $26,998 $250 $27,248 6
CZ9 SCE 97,201 62 $27,298 $271 $27,569 6
CZ10 SDG&E 100,456 63 $37,125 $193 $37,318 6
CZ10-2 SCE 100,456 63 $28,164 $271 $28,436 6
CZ11 PG&E 102,343 218 $43,454 $531 $43,985 8
CZ12 PG&E 92,336 198 $39,102 $488 $39,590 7
CZ12-2 SMUD 92,336 198 $17,582 $488 $18,070 7
CZ13 PG&E 103,162 156 $43,841 $411 $44,252 7
CZ14 SDG&E 102,851 511 $35,742 $719 $36,460 9
CZ14-2 SCE 102,851 511 $27,774 $931 $28,705 9
CZ15 SCE 121,320 123 $32,905 $362 $33,267 7
CZ16 PG&E 88,974 992 $37,598 $2,014 $39,612 11
416 of 662
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Table 32. Small Office: Mixed-Fuel SZAC Code Minimum Baseline 1990 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 72,012 430 $30,378 $937 $31,315 7
CZ2 PG&E 88,161 235 $37,233 $565 $37,798 7
CZ3 PG&E 82,180 0 $34,654 $0 $34,654 5
CZ4 PG&E 96,068 0 $40,621 $0 $40,621 6
CZ4-2 CPAU 96,068 0 $20,735 $0 $20,735 6
CZ5 PG&E 82,723 0 $34,858 $0 $34,858 5
CZ5-2 SCG 82,723 0 $34,858 $0 $34,858 5
CZ6 SCE 88,041 0 $23,392 $0 $23,392 5
CZ7 SDG&E 89,827 0 $31,698 $0 $31,698 6
CZ8 SCE 88,742 30 $24,858 $224 $25,082 5
CZ9 SCE 89,591 41 $25,393 $239 $25,632 6
CZ10 SDG&E 92,812 42 $34,544 $168 $34,712 6
CZ10-2 SCE 92,812 42 $26,132 $240 $26,372 6
CZ11 PG&E 98,184 0 $41,613 $0 $41,613 6
CZ12 PG&E 90,993 0 $38,498 $0 $38,498 6
CZ12-2 SMUD 90,993 0 $17,003 $0 $17,003 6
CZ13 PG&E 98,807 0 $41,898 $0 $41,898 6
CZ14 SDG&E 99,107 232 $34,189 $394 $34,583 7
CZ14-2 SCE 99,107 232 $26,343 $523 $26,866 7
CZ15 SCE 115,611 0 $30,127 $0 $30,127 7
CZ16 PG&E 91,003 471 $38,419 $1,019 $39,438 9
417 of 662
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Table 32. Small Office: Mixed-Fuel SZAC Code Minimum Baseline 2000 CZ Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(Therms)
Annual
Electricity
Cost
Annual
Natural
Gas
Cost
Total
Annual
Utility
Cost
Annual
GHG
Emissions
(mtons)
CZ1 PG&E 68,453 484 $28,882 $1,038 $29,920 7
CZ2 PG&E 79,039 288 $33,386 $666 $34,052 6
CZ3 PG&E 76,443 204 $32,251 $502 $32,753 6
CZ4 PG&E 87,575 291 $37,051 $680 $37,731 7
CZ4-2 CPAU 87,575 291 $18,925 $2,454 $21,379 7
CZ5 PG&E 76,461 216 $32,241 $524 $32,765 6
CZ5-2 SCG 76,461 216 $32,241 $495 $32,736 6
CZ6 SCE 81,803 49 $21,763 $252 $22,016 5
CZ7 SDG&E 83,831 33 $29,562 $158 $29,720 5
CZ8 SCE 89,680 67 $24,461 $279 $24,740 6
CZ9 SCE 90,572 92 $24,860 $315 $25,175 6
CZ10 SDG&E 88,870 65 $32,096 $196 $32,292 6
CZ10-2 SCE 88,870 65 $24,294 $276 $24,570 6
CZ11 PG&E 90,527 282 $38,386 $665 $39,050 7
CZ12 PG&E 83,984 272 $35,554 $645 $36,198 7
CZ12-2 SMUD 83,984 272 $15,937 $645 $16,582 7
CZ13 PG&E 91,394 198 $38,761 $500 $39,260 7
CZ14 SDG&E 92,520 292 $32,310 $464 $32,774 7
CZ14-2 SCE 92,520 292 $24,839 $611 $25,450 7
CZ15 SCE 107,550 29 $28,186 $224 $28,410 6
CZ16 PG&E 85,337 542 $36,030 $1,152 $37,182 9

9.3 Long-Term Systemwide Cost (LSC) Impacts
This section compared LSC impacts of efficiency measure SZAC packages with SZHP Code Min package. These results help inform the energy-equivalency of the packages being analyzed.

9.3.1 Small Office
Figure 7 shows the LSC impacts results of the MF-EFF package compared to the HP code min package. The MF-EFF package for Small Office prototype includes window film and lighting retrofit measures where they have positive LSC impacts and are cost-effective. This package has LSC impacts exceeding the HP code min package in all applicable Climate Zones and vintages. 418 of 662
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Figure 7. Small Office LSC Impacts: MF-EFF vs HP

9.3.2 Medium Retail
Figure 8 shows the LSC impacts results of the MF-HRVDCV package compared to the HP code min package. The MF-HRVDCV package for Medium Retail prototype includes DCV and HRV measures.

The package has LSC impacts meeting or exceeding the HP code min package in all Climate Zones and vintages.

Figure 8. Medium Retail LSC Impacts: MF-HRVDCV vs HP
Figure 9 shows the LSC impacts results of the MF-EFF package compared to the HP-DCV. In addition to the HVAC measures, the MF-EFF package for the Medium Retail prototype includes DCV, window film and lighting retrofit measures in Climate Zones where they have positive LSC impacts and are cost-effective. This package has LSC impacts exceeding the HP-DCV in all Climate Zones and vintages.
419 of 662
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Figure 9. Medium Retail LSC Impacts: MF-EFF vs HP-DCV

9.4 Utility Rate Schedules
The Reach Codes Team used the CA IOU and POU rate tariffs detailed below to determine the On-Bill savings for each package.
420 of 662
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9.4.1 Pacific Gas & Electric
Pacific Gas and
Electric Company·
Revised
Cancelling Revised
Cal. P.U.C. Sheet No.

Cal. P.U.C. Sheet No.
58719-E
58550-E
U 39 Oakland, California
RATES:

Advice
Decision
ELECTRIC SCHEDULE B-1

SMALL GENERAL SERVICE
Sheet 3
Total bundled service charges are calculated using the total rates shown below. Direct Access (DA) and Community Choice Aggregation (CCA) charges shall be calculated in accordance with the paragraph in this rate schedule titled Billing.

Total Bundled Time-of-Use Rates B-1 Rates B1-ST Rates
Total Customer Charge Rates
Customer Charge Single-phase
($ per meter per day)
Customer Charge Poly-phase
($ per meter per day)
Demand Charge (for B1-ST only)
Total Demand Rate (per metered kW/month
assessed from 2:00 p.m. to 11 :00 p.m. only)
Summer
Winter
Total TOU Energy Rates($ per kWh)
Peak Summer
Part-Peak Summer
Off-Peak Summer
Peak Winter
Partial-Peak Winter (for B1-ST only)
Off-Peak Winter
Super Off-Peak Winter
PDP Rates (Consecutive Day and Five-Hour
Event Option)'
PDP Charges($ per kWh)
All Usage During PDP Event
PDP Credits
Energy($ per kWh)
Peak Summer
Part-Peak Summer
• See PDP Detail, section g, for corresponding
reduction in PDP credits and charges if other
option(s) elected.
7382-E Issued by
Shi/pa Ramaiya
$0.32854
S0.82136
$0.49466
$0.44543
S0.42462
$0.41924
S0.40312
$0.38670
S0.60
($0.05841)
(S0.01735)
(I)
(I)
(1)
(I)
(I)
(I)
$0.32854
$0.82136
$8.01
$8.01
$0.52281
$0.38151
$0.33418
$0.42486
$0.39536
$0.30631
$0.28989
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(Continued)
Submitted September 30, 2024
Effective October 1, 2024
Vice President
Regulatory Proceedings and Rates
Resolution
421 of 662
2025 Nonresidential Alterations Reach Code Study 58
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Pacific Gas and
Electric Company·
Revised
Cancelling Revised
Cal. P.U.C. Sheet No.

Cal. P.U.C. Sheet No.
58721-E
58552-E
u 39 Oakland, California
RATE:

Advice
Decision
ELECTRIC SCHEDULE B-10 Sheet 3

MEDIUM GENERAL DEMAND-METERED SERVICE
Total bundled service charges shown on customers' bills are unbundled according to the component rates shown below. Direct Access (DA) and Community Choice Aggregation (CCA) charges shall be calculated in accordance with the paragraph in this rate schedule tilled Billing.

TOTAL BUNDLED TIME-OF-USE RATES
Secondary Primary Transmission
Voltage Voltage Voltage
Total Customer Charge Rates
Customer Charge $11 .51068 (I) $11 .51068 (I) $11.51068 (I) ($ per meter per day)
Total Demand Rates{$ [!er kW}
Summer $21 .53 (I) $20.84 (I) $14.28 (I)
Winter $21 .53 (I) $20.84 (I) $14.28 (I)
Total Energl,'. Rates {$ 11er kWh}
Peak Summer $0.36862 (I) $0.34745 (I) $0.25044 (I)
Part-Peak Summer $0.30694 (I) $0.28915 (I) $0.19370 (I) Off-Peak Summer $0.27437 (I) $0.25832 (I) $0.16363 (I)
Peak Winter $0.29236 (I) $0.27460 (I) $0.19739 (I)
Off-Peak Winter $0.25688 (I) $0.24097 (I) $0.16456 (I)
Super Off-Peak Winter $0.22054 (I) $0.20463 (I) $0.12822 (I) PDP Rates (Consecutive Dal,'. and Five-Hour
Event O[!tion
PDP Charges{$ 11er kWh}
All Usage During PDP Event $0.90 $0.90 $0.90
PDP Credits
Energy ($ per kWh)
Peak Summer ($0.08103) ($0.08103) ($0.08103)
Part-Peak Summer ($0.02807) ($0.02807) ($0.02807)
• See PDP Details, section g, for
corresponding reduction in PDP credits
and charges if other option(s) elected.
(Continued)
7382-E Issued by Submitted September 30, 2024
Shi/pa Ramaiya
Vice President
Regulatory Proceedings and Rates
Effective October 1, 2024
Resolution
422 of 662
2025 Nonresidential Alterations Reach Code Study 59
2025/07/07

9.4.2 Southern California Edison
E:i EoisoN _,...,so~ •>n-r:a-.ArlOJ'IIALCanSouthern Californ ia Edison Rosemead , California (U 338-E)
RATES (Continued )
En!!tvr ~ • SlkWl1
Fdties ~ OW'R#ldCh¥Qlll • SAW
T~RetadDem.n:ICh.1198-Mi:W
TllA!e-f'tmJflSeNc.e-W;Jy
Vcbg&Disccul. En!fv, - S.t.Wh
Vol:aO&Drttotn. Demand• SAW
.2J1lillD..l1
Ftom2kV10501CV
From ~1 tv\02191.V
220lV;ind.D;l'lltllt
F~R.-a
From2W1050W
,'b:w't50Wtiutbelbw2201CV .. ,,..,, V01tagt0b,ccu11,$l.lmlel"Or, P$;11:~ • $tk'W Fl'Offl2 t.Vl0 501.V
N!ole50Wtiutbeklw220t.'V
/IJ220 .. V
vcaave, Disc.~ WMtdats (4-9pm) Dam.n:I • SNN
From2 ~'Vll050t'V
"blNtSOWtiutbEttiw220fN
Al2201.V
~AlemaR.Mesllor
~Oaicxvt-~
calllolliaCll'r'«.eOlcffl-$hneW
Trans'
0).0000,)
(IUl0003)
(O.OIXI03)
(D.00003}
(0.00003)
(0.00003}
, _.,
, ......
000000

0.00000

0.00 0.00

0.00 Revised
Cancelling Revised
Schedule TOU-GS-1

TIME-OF-USE

GENERAL SERVICE
(Continued)
oer Oistrbtn'" NOC PPPC
-' WF< .. -
01lol099(1) 0.00809 O.ll0009 o..o,a,e(R) 0.00561
"""""'0) 0.00809 .....,. o..o,a,e(R) 0.00!561
001704 (1) 000809 000000 001i 18{Rl 000561
o..o.&099(1) 0.00809 .....,. o.o,a,e(R) 0.00561

0.01704(1) 0.00809 O.ll0009 o.o,a,e(R) 0.00561 0..00524 (1) 0.00809 .....,. o..o,a,e(R) 0.00561 .....
105(1)
01 (11

0.00 '-"•

0.00000

0.00000
f0..Cl238no>
l'Q.3,4)(1)
(1.32)(1)
(16.65)(1)
(0.08)
(U41(I)
(1.441(1)

0.00 0.00
000
100.00-
(95.00)
Cal. PUC Sheet No. 88873-E
Cal. PUC Sheet No. 88283-E
Sheet 5
Generauon
D'l\'RA • PUCRF" Totar UG" OWREC'~

0.00000 0.00100 0.0745l(ll 0. 11,880(R) 0.00000 0.00000 0.00100 0.07453(1) 0.10728(R) 0.00000

0.00000 0,00100 0.050Si(I) 007'C3-1 {R) 000000

0.00000 0.00100 0..07•5l{ll 0.11182(A) 0.00000 0.00000 0.00100 0.Cl5068{1J 0.078'M{R) 000000 0.00000 0.00100 0.03973(1) 0.OS90l5(R) 0.00000 O.IXIU8
000050
o ...
19,58{0

4..81 (11 15..7.ol (A'I
000 S.1-4 (R)
o .. ,

0.00000 (OtXl0"81(R)

0.00000 (O.OXl931(R)
to..0238nm (000051'51(R)
{0.l41(1)
(1.321(1)
(Ul.661(1)
(008) (0.20)
( 1.441(1) (0.<17)
( 1.441(1) (OA7)
000 (0.20)
000 (0.<17)
o_oo (0.<1 7)
100.00"
{SUN>)
Represents 100% of the discount percentage as shown in the applicable Special ConditK>n of this Schedule. '" The ongoing Compelition Transdton Charge (CTC) of $(0.00028) per kWh ,s recovered in lhe UG componenl of Generation. 1 Trans = Transmission and the Transmission Owners Tariff Charge Adjustments (TOTCA) which are FERC approved. The TOTCA represents the Transmission Revenue Balancing Accounl Adjustmenl (TRBAA) of $(0.00360) per kWh, Reliability Services Balancing Account Adjustmenl (RSBAA) of $(0.00006) per kWh , and Transmiss10n Access Charge Balanc,ng Accounl Adjustmenl (TAC BAA) of $0.00351 per kWh 2 Distrbtn = Oistnbution
3 NSGC • New System Generation Charge
4 NOC = Nuclear Decommissioning Charge
5 PPPC = Public Purpose Programs Charge (includes California Alternate Rates for Energy Surcharge where applicable.) 6 WFC = Wildfire Fund Non-Bypassable Cha~ge. The Wildfire Fund Non-Bypassable Charge supports the Callfomia Wild Ite Fund and is not applicable to exempt Customers pursuant to 0 .19--10-056. 7 PUC RF= The PUC Reimbursement Fee is described in Schedule RF•E. 8 Tola! = Tolal Delivery Service mies are applicable to Bundled service, Direcl Access (DA) and Communily Choice Aggregalion service (CCA Service) Customers, excepl DA and CCA Service Customers are not subject to the DWRBC rate component or lhis Schedule but instead pay the DWRBC as provided by Schedule OA.CRS or Schedule CCA-CRS. 9 Generation= The Generalion mies are applicable only to Bundled Service Customers. See Special Condition below for PCIA recovery. 10 DWREC = Department of Water Resources (DWR) Energy Credit - FOf' more information on lhe DWR Energy Credil, see the Bllling Calculation Special Condition or this Schedule.
11 DWRA = A refund from the California Departmenl of Water Resources (DWR) relaling to the purchase of power during the 2000-2001 energy crisis.
12 The Modified Cost Allocation Mechanism (MCAM} charge recovers the net cost associated 'With system reliability procurement ordered by the CPUC that SCE has procured on behalf of customers whose generation services are provided by certain EJectric Service Providers or Communtty Choice Aggregalors.
(To be inserted by utility)
Advice 5379-E ------------- Decision
5C9
(Continued )
Issued by
Michael Backstrom
Vice President
(To be inserted by Cal. PUC)
Date Submitted Sep 27, 2024
Effective Oct 1, 2024
Resolution
423 of 662
2025 Nonresidential Alterations Reach Code Study 60
2025/07/07
Southern California Edison
Rosemead, California (U 338-E) Cancelling
Schedule TOU-GS-2
Revised
Revised
Cal. PUC Sheet No.

Cal. PUC Sheet No.

Sheet 4

TIME-OF-USE - GENERAL SERVICE - DEMAND METERED
(Continued)
RATES (Continued)
88885-E
88295-E
~"' ra"°"
lllU..el>;iJo.

En.gyet>arge-M.Wh
Fbt..t~Chaf99 • SA.Wh
O2t120 QI O9Jl9P P..CPP
~-W~{4-Grpm)
F-Z
·--l V W:,~ • v
~50 W bulbelow-2l0 \ V
Al220 t.V
F,om2 l V I000 l V
~SO W bulbeiow-220..V
Al220W
~~w--w~~-$NW
~....,_R.Mnior
e-;y~ . .... TOU°"'°'
~Cln.-o.clil-~
oooon o.cpp Cf'Pe.-en.t9)'~- lo'\-
S....-Cf"Pl~c...ll
On-P.at.o..n..lC...tl • lltt.W
F_,.21.VtOOO t.V
At,o.,,t50 bulbelow220 l V
Al220 t.V
F_,.2 1.V IOOO IIV
Aboi<e50 kV bul below 2lO kV
Al22011V
-......
.,...,,, .,...,,, (0.0000,)
(0.00003) .,...,,,
- ·
""

0.00 0.00

0.00 000

0.00 0.00

0.00 000000

0.00000

0.00000
,n·

0.01~7 {1 ) o,..., o""""' 0.018'7{R)
o.01n• <o 0 .0094) 0.- O-01A7{R)

0.017'3tl (I) O.OOM3 0.00000 0.01U7(R)

0.011U7 {1) 0.0080 000000 001887{R)
o.o,n• <•> 0.00943 0.00000 O.01U7{R)
o.o,e.111 (11 O.00M3 0.00000 O.01U7(R)
ZlQ.:J.4 (1)
::!C.71 (1)
U'.18 (1)

2.1, (l)
(~)(A )
(0 42)(1)
(9. 13)(0
(20.77)(1)
l'O~)(I)
(6.-48) (1)
( 17. 18 )(1)
{0.00)
( 1.CM )(I)
(2.."78) (1)
(0.G0030HJ)
(O~(I)
(0.01«18)(0
ioo.oo·
3e.36 4t)
(M.00)
Represents t00% ot the dIsoounl percentage as shown in tile applicable SpeaaJ CoodrtlOO of Ills Sclledule.

0.0000 • o.oo,o , 0.0000 ,
o_, .. ..,.,
....,.,
The ongoing Competition Transilion Charge (CTC) ol S(0.00029) per kWh io 18COY8fed in the UG component ol Generation.

0.00000 0,00100

0.00000 0.00100

0.00000 D.00100
~00000 0.00100
~00000
~
o.ocnoo

0.00100
The MaximuTI Available Crd is the capped aeat amoonl (o, CPP Customers dual participalng in othef demand response protJrams. uu·•
O~(l) 0.11,WO(RJ 000000 0.0Cl17 1(1 ) 0.10'.)0(R) 0.00000 CUllll.13 (1 ) .__(RJ 000000

0.0IU34 (1 ) 0.OTne(R) 000000
O.Oei17 1(1) o..orn:t(R) 0.00000
o..oeo7& (1) 0.tMOt l (R) 0.00000
0001)7

0.0000,
2311.34 0)
~A? (I)
1?. 18 (1) 2t..24(R)

2.71 (1) ......
(8..:5) 1;A I
(0.<12)(11 0.00
(9.13)(11 0.00 (20,77) (1) 0.00
(0,.30)(11 l'0,4ij) (RJ
(6.48)(11 (l. ll ) (R)
( 17.18) (1) ( 1. l:2) (R)
., ... , {O. l2) (R)
( I.CM J(IJ (0.20) (R)
(2.78:J(IJ (0.20J(A)
(0000:)t)(I) (O..OCIC»o' )
(0.0082ll)(I) (O..oo:207 (A)
(0.01«18 )(1) (0.-002C»14"1)
100..00·
..... ,, ... ,., 0.,0000
.._ .. ,
(21.24)(R)
Trans = Transmission and lhe Transmission Owners Tariff Charge Adjustments (TOTCA) which are FERC approved. The TOTCA represents the Transmission Revenue Balancing Account Adjustment (TRBAA) of $(.00360) per kWh, Reliability Services Balancing Account Adjustment (RSBAA) or S(0.00006) per kWh, and Transmission Access Charge Balancing Account Adjustment (TAC BAA) or $0.00351 per kWh. 2 Dislrbln = Distribution
3 NSGC = New System Generation Charge
4 NDC = Nuclear OecommisstOning Charge
5 PPPC = Public Purpose Programs Charge (includes California Alternate Rates for Energy Surcharge where applicable.) 6 W FC = Wildfire Fund Non-Bypassable Charge. The Wildfire Fund Non-Bypassable Charge supports the California Wildfire Fund and is not applicable to exempt Customers pursuant to D.19-10-056. 7 PUCRF = The PUC Reimbursement Fee is described in Schedule RF-E. 8 Total = Total Delivery Service rales are applicable to Bundled Service, Direct Access (DA) and Community Choice Aggregation Service (CCA Service) Customers, except DA and CCA Service Customers are not subject to the DWRBC rate component of this Schedule but instead pay the DWRBC as provided by Schedule DA-CRS or Schedule CCA-CRS. 9 Generation = The Generatton rates are applicable only to Bundled Service Customers. See Special condition below for PCIA recovery. 10 DWREC = Department or Water Resources (DWR) Energy Credit - For more information on lhe DWR Energy Credit, see lhe Billing Calculation Special Condition ol lhis Schedule.
11 DWRA = A refund from the California Department of Water Resources (DWR) relating to the purchase of power during the 2000-2001 energy crisis.
12 The Modified Cost Allocation Mechanism (MCAM) charge recovers the net cost associated with system reliability procurement ordered by the CPUC that SCE has procured on behalf or customers wtiose generation services are provided by certain Electric Service Providers or Community Choice Aggregators.
(To be inserted by utility)
Advice 5379-E
------------ Decision
(Continued)
Issued by
Michael Backstrom
Vice President
(To be inserted by Cal. PUC)
Date Submitted Sep 27, 2024
Effective Oct 1, 2024
424 of 662
2025 Nonresidential Alterations Reach Code Study 61
2025/07/07
~ EoisoN ,.. , 111 Q .v, ,,._,.,. ,,o ~,u.c--,
Southern California Edison
Rosemead, California (U 338-E)
Revised
Cancelling Revised
Cal. PUC Sheet No. 88900-E
Cal. PUC Sheet No. 88310-E
Schedule TOU-GS-3 Sheet 3

TIME-OF-USE - GENERAL SERVIC E - DEMAND METERED
(Continued )
RA TES (Continued) Ll'ffl!Verv;:Mlfl ioe
""' -tn)tn·
Opli,pftQ/OpliqnR:Ctt
~CNtOt-Mwt<i
'"""""'' 0 ,0 1&>1 (1) ., .. ,.. 000000 0 .O172:0(R) o.ooee, 000000 0,00100 O.oe,oQS (I) D, 10008 (RI ....... .. _.._, o.01e?O <•> .,,.,.. 0.00000 0.O1720(A) 0.0000, 0.00000 0.00100 0.0.UO (l} 0 _006?)(111: ) <LOOOCIO .. _.._, 0.0 1~(1) 0.007" 000000 0 0 1no tR1 o_, 0 00000 0.001 00 O.b4ttO (ll o.~c1111 1 0 OOOCIO '"""""'' 0.01~(1) .,,.,.. 000000 o.01no(R1 0.00&61 0 .00000 0.00100 o.oeioos (I) 007!539 (RI <LCIOOCIO '"""""'' 0.0IOlV (I) .,,.,.. 000000 0.01720(RI
""""' 0-00000 0.00100 0~(1) 007~(RI <LCIOOCIO
- · 0.01~1 (1) .,,.,.. 0 .00000 0.01no(R1 """"' 0-00000 0 .00100 0 .0"7&2 (1) O.Ql09.l (R ) QOOOCIO 000110 o.oooe,
=:::i•MWof~~
~~ ~
.... 702.22(1)
11i> Ool (I)
=••

22.27 (1)

10.0- (1) Ul.cM III ,..,,'"' ..,.., ~:la-Cl) ...... ,
V,olu,g,tO- ~ • Sll<W
IF'tum2
·-- WV lo~kV
At,o,.,.50kV bull-:2:N) kV
F,_ :l:WIIO,OhV
-!IO bull-Z?OkV
Al 220kV

0.00 0.00

0.00 0.00
(Q.31!11(1)
ctM)CII
( Ht,041(1)
(0..Xl)(I)
(e.56)(1)
( 10-04)(()
(0.36) {1)
(1.N}Cll
( Ul.(M)(I)
l'0.2-5)(1) (O..oi2)(A)
~ S&)(I) (O.O?)(AI
(10.(M)(I) (Q.NH R I
~Ch-.. WirMWW....S.:,. (.....,_,0...-. M,W
From::t,V 111>50kV
,.._!IOt.V bl.il-Z!OhV
Al:nl>kV

0.00 0.00
0,00
co. .. ,
(1 10)(1)
CU8)(1)
(0.00) (O. IOH AI
( t 14){l) (0.2,5)(R I
(3.:la-){l) (0...36)(R I
Ft'Offl ::t •V IIOSO~V
-tlOkV bull- 220 kV
Al220 W

OOOOCIO

QOOOCIO
0_00000
(0~)(1)
( 0.0M3e)(I)
(0.01~ (1)
(0.00020) (1) (O~)(R)
CO.0053eJ(II (O.al.."OO)(R}
co..01.s&t,(11 (O.~ ){R)
,,_F_....__M V.A.R
GN.»IM-.!lOhV
l50 1tiVor..._
.... .. ., .... . ..,
~.-....-~ .. ~OMo..-
~
- •
100.00" 100.00'
~~~~~wt, . ...,.. On,,Pw,,at;O...-C.- - Mtw (1.e-5)
2 3
4 5
6 7
8 9
10 11
12 (ta..22:l(A)
Represents 100% of the discount percentage as shown in the applicable Special Condition of this Schedule.

The ongoing Compelition Transition Charge (CTC) or $(0.00029) per kWh is recovered in the UG componenl or Generation.

The Maximum Available Credit is the capped credit amount for CPP Customers dual participating in other demand response programs Trans= Transmission and the Transmission OWners Tariff Charge Adjustments (TOTCA) which are FERC approved. The TOTCA represents lhe Transmission Revenue Balancing Account Adjustment (TRBAA) of $(0.00360) per kWh, Reliability Services Balancing Account Adjustment (RSBAA) or $(0.00005) per kWh, and Transmission Access Charge Balancing Accounl Adjustment (TACBAA) or $0.00351 per kWh .

Distrbtn = Distribution
NSGC = New Syslem Generation Charge
NOC = Nuclear Decommissioning Charge
PPPC = Public Purpose Programs Charge (including California Alternate Rates for Energy Surcharge W'here applicable.) WFC == Wildfire Fund Non•Bypassable Charge. The Wildfire Fund Non•Bypassable Charge supports the California Wildfire Fund and is not applicable lo exempt Customers P<,Jrsuant lo 0 .19-10-056.

PUC RF= The PUC Reimbursement Fee is described in Schedule RF-E.

Total == Total Delrvery Seivice rates are applicable to Bundled Service, Direct Access (DA) and Community Choice Aggregation Service (CCA Service) Customers, except DA and CCA Service Customers are not subject lo lhe OWRBC rate component of this Schedule but instead pay the OWRBC as provided by Schedule OA-CRS or Schedule CCA-CRS.

Generation == The Generation rates are applicable only to Bundled Service Customers. See Special Condition below for PCIA recovery.

OWREC == Department of Water Resources (OWR) Energy Credit - For more information on the OWR Energy Credit, see the Billing Calculation Special Condition of this Schedule.

OWRA = A refund from lhe California Oepartmenl or Water Resources (OWR) relaling to the purchase or Power during the 2000-2001 energy crisis.

The Modified Cost Allocation Mechanism (MCAM) charge recovers the net cost associated with system reliability procurement ordered by the CPUC that SCE has procured on behalf of customers whose generation services are provided by certain Electric Seivice Providers or Community Choice Aggregators
(Continued)
(To be inserted by utility) Issued by
Michael Backstrom
Vice President
(To be inserted by Cal. PUC)
Advice 5379-E Date Submitted Sep 27, 2024 ------------- Decision Effective Oct 1, 2024 3C9 Resolution
425 of 662
2025 Nonresidential Alterations Reach Code Study 62
2025/07/07

9.4.3 Southern California Gas
SOD~R!"{ CALlFORl IIA GAS COllP . .\J.""I,: Revised CAf... !l.U.C. SHEE'FNO. 62162-G LO.<; . .\NGE1.£S, CALIFORNIA C.o\NCEUNG Revised CAf... !l.U.C. SHEE'FNO. 62131-G Schedule No. G-10
OORE OOMMERCLJ\L AND INDUSTRIAL SERVICE
(Jndudes GN-10. G -IOC and GT-10 Rates)
(Continued)
R.I\TES (Continued)
All ~ocurement, Transmission, and Commodity Giarges are billed perthenn.

Tier ll11
Sheet 2
GN- 10:., Applicable to natural gas proc,urement se1Vice t.o non-tesidential core cnst.omers, including se1.-vice not provided under any other rate scbeduile.

Procurement Charge: v
Tiansmission Charge:

Commodity Charge:

G-CPNR .... .... ....... ....... .. 27 .626¢
GPT-10 ........................ H3.275¢
GN- 10 .................. ..... 140.901¢

27.626¢
66: 41¢

94.36 ¢

27.626¢

35.540¢

63.166¢
GN-1 0C" : Core procurement service for previous non-resSidential transportati.on~only customers retnmi.ng to core procurement setvice, inchidiug CAT crnfomer with annual cow,1:imption over 50,000 therms as further de:fined in Schedule No. G-CP.

Procurement Charge: v
Tiansmission Charge:

Commodity Charge:

G-CPNRC ................. . _8.095¢
GPT-10 ............. H3.2 5¢
GN-IOC .................... 141.3 0¢
_8.095¢

66. 4U

94.836¢

28.095

35.540¢

63.635
GT-I 0-': Applicable to non~residential tranq>ertatiou-on1y service inclnding CAT service, as set forth in Special Coudi:tion 13.

Tiansmission Charge: GT-10 .......................... 113.275¢11 66. 41¢11 35.540¢11 11 Tier I rates are applicahle for the fu:st 250 fuerms used per wonfu. Tier II rate,;;. Me appl!icable for usage abO\'e Tier I quantities and up throogh4,167 therms permomh. I ier ID.rates are apphc.able for all usage above4,167 themJs per month. Under tb.i:s schedule, fue winter season shall be defirned as December I through March 31 and the summer sea;;on as April 1 through Noveni.ler 30.
11 11ms cha!rge is appli able for service to Utility Proc.tll'emen! Customers as sho\m in Schedule iNo. G-CP, in the lllllllll.erapproved by D.96-0&-037, and &ubject to cbange,montbly, as set forth in Specill] C-ondi1ion 5. 31 These charges are equal to tire coTe commodity rate less the foMowmg two components as approved in D.97-04- 082: (I) the weighted average ooot of gas; and (2) fue oore brokerage fee. (Footnotes. can±imre ne.'\Jt page.)
{TO, BE IN'SERTED BY ITTILJiYJ
AUVIC£ LETTER NO. 6369~G
OECISIONNO. D20-02-045; D24-
1H1 07-013
Continued

ISSUBOSY
Dao Skope~
Senior Vi President
Re,gula1Dry Affai"s
0 BE INSEITTIEID SY CAL. PUG.I
SUBMITTED Sep 26 2024
EFFECTIVE Oct I, 2024
RESOlUTION NO. -------
R
R
R
R
R
426 of 662
2025 Nonresidential Alterations Reach Code Study 63
2025/07/07

9.4.4 San Diego Gas & Electric
sos/' ..,..'E San Diego Gas & Electric Comr,any
San Diego, California
RATES• /Continued\
Description - AL-TOU Transm
Enemi Q!a,~ ,~Wh}
Qa-ei:lals - Summi:lc
Secondary (0.01945)
Primary (0,01945)
Secondary Substalion (0.01945)
Primary Substation (0.01945)
Transmission (0,01945)
Off-Peak - Summer
Secondary (0,01945)
Primary (0.01945)
Secondary Substation (0.01945)
Primary Substation (0,01945)
Transmission (0,01945)
SU!!!!• Off-Peak
Secondary (0.01945)
Primary (0.01945)
Secondary Substation (0,01945)
Primary Substation (0,01945)
Transmission (0.01945)
Qn-Peak - Winter
Secondary (0,01945)
Primary (0,01945)
Secondary Substalion (0,01945)
Primary Substation (0.01945)
Transmission (0.01945)
Qf!-PHk - JMn!!!f
Secondary (0.01945)
Primary (0.01945)
Secondary Substation (0.01945)
Primary Substation (0.01945)
Transmission (0,01945)
~ll!lcQ!l-e~at
Secondary (0,01945)
Primary (0.01945)
Secondary Substation (0.01945)
Primary SUbstation (0,01945)
Transmission (0.01945)
Revised Cal. P.U.C. Sheet No. 62379-E
Canceling Revised Cal PUC .. Sheet No 61921-E
SCHEDULE AL-TOU Sheet4

GENERAL SERVICE - TIME METERED
Dlstr PPP ND CTC LGC RS TRAC UDC
Total

0.00177 0.01789 I 0.00007 0,00047 0.01798 0.00001 0,01874

0.00177 0.01789 I 0.00007 0.00047 0.01798 0.00001 0.01874

0.00130 0.01726 I 0.00007 0.01798 0.00001 0.01717

0.00177 0.01789 I 0.00007 0,00047 0.01798 0.00001 0.01874

0.00177 0.01789 I 0.00007 0.00047 0.01798 0.00001 0.01874

0.00130 0.01726 I 0.00007 0.01798 0.00001 0.01717

0.00177 0.01789 I 0.00007 0.00047 0.01798 0.00001 0.01874

0.00130 0.01726 I 0.00007 0.01798 0.00001 0,01717
0,00130 0.01726 I 0.00007 0.01798 0.00001 0,01717

0.00130 0.01726 I 0.00007 0.01798 0.00001 0.01717
0,00177 0.01789 I 0,00007 0,00047 0.01798 0.00001 0,01874 0,00177 0.01789 I 0.00007 0,00047 0.01798 0.00001 0,01874 0,00130 0.01726 I 0.00007 0.01798 0.00001 0,01717

0.00130 0.01726 I 0.00007 0.01798 0.00001 0.01717

0.00177 0.01789 I 0.00007 0.00047 0.01798 0.00001 0.01874

0.00130 0.01726 I 0.00007 0.01798 0.00001 0.01717

0.00130 0.01726 I 0.00007 0.01798 0.00001 0.01717
0,00130 0.01726 I 0.00007 0.01798 0.00001 0,01717
0,00177 0.01789 I 0.00007 0,00047 0.01798 0.00001 0,01874

0.00177 0.01789 I 0.00007 0.00047 0.01798 0.00001 0.01874 0,00130 0.01726 I 0.00007 0.01798 0.00001 0,01717

0.00130 0.01726 I 0.00007 0.01798 0.00001 0,01717

0.00130 0.01726 I 0.00007 0.01798 0.00001 0.01717
Notes: Transmission Energy charges include Ille Transmission Revenue Balancing Accounl Adjuslment (TRBAA) of S(0.00289) per kWh and the Transmission Access Charge Balancing Account Acjuslmenl (TACBAA) of S(0.01656) per kWh. The PPP rale is composed of Energy and Demand charges. For all voltage levels, the PPP Energy charges irldudes Low Income PPP rate (LI-PPP) SQ.01515/kWh, Nonlow Income PPP rate (Non-LI-PPP) S0.00211/kWh (pursuant to PU Code Seciion 399.8, the Non-LI-PPP rate may not exceed January 1, 2000 levels). For Secondary and PYimary voltage levels, the PPP Energy charge also indudles CalJornia Solar Initiative rate (CSI) of $(0.00045)11<Wh and Self-Generation lnoentive Program rate {SGIP) S 0.00108 /kWh. For Secondary Substation, Prrnary Substation and Transmission voltage levels, the PPP rate irlcludes Demand charges for CSI of S{0.16Y"Wand SGIP of SQ.39 /kW. "These rates are nol applicable to TOU Period Grandfalhering Eligible Customer Generalors, please refer to SC 20 for applicable rates . {Continued)
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4C8 Issued by Submitted See 30, 2024
Advice Ur. No. 4507-E Dan Skopec Effective Oct 1, 2024
Senior Vice President
Decision No. 0 .24-07-013 Regulatory Affairs Resolution No. 427 of 662
2025 Nonresidential Alterations Reach Code Study 64
2025/07/07
_'E sos/'
San Diego Gas & Electric Company
San Diego, CalHomla
Revised Cal. P.U.C. Sheet No.

Canceling Revised Cal P U C Sheet No

SCHEDULE TOU-A

GENERAL SERVICE - TIME OF USE SERVICE
SPECIAL CONDITIONS (continued)
TO!,.l GRANDFATHERING RATES
Description Transm 0lstr PPP NO CTC LGC TOU-A
Ba.sic Service Fae ll/m
C:.W-ondarv
0-5kW 11.45
>5-20 kW 18.32
>20-50kW 34.35
>50kW 85.87
~
0-5kW 11.45
>5-20kW 18.32
>20-50kW 34.35
>50kW 85.87
•norov Charaos ,t"'Wh
On-Peak - Summer
Secondary 0.02991 0.15287 I 0.01696 I lo.00007 0.00052 0.01760 Primary 0.02991 0.15209 I 0.01696 I lo.00007 0.00052 0.01760 Semi-Peak. Summer
Secondary 0.02991 0.15287 I 0.01696 I io.00007 0.00052 0.01760 Primary 0.02991 0.15209 I 0.01696 I I0.00007 0.00052 0.01760 nt1-Peak - Summer
Secondary 0.02991 0.15287 I 0.01696 I lo.00007 0.00052 0.01760 Primary 0.02991 0.15209 I 0.01696 I lo.00007 0.00052 0.01760 Qn-Peak - Winter
Secondary 0.02991 0.15287 I 0.01696 I lo.00007 000052 0.01760 Primary 0.02991 0.15209 I 0.01696 I I0.00007 0.00052 0.01760 ~m~P!i!i!k • Winlfi:

Secondary 0.02991 0.15287 I 0.01696 I io.00007 0.00052 0.01760 Primary 0.02991 0.15209 I 0.01696 I lo.00007 0.00052 0.01760 Qff•P!i!i!!s • :tiln!fi:

Secondary 0.02991 0.15287 I 0.01696 I lo.00007 0.00052 0.01760 Primarv 0.02991 0.15209 I 0.01696 I lo.00007 0.00052 0.01760 TOU Grandfathering Time Periods
62371-E
61914-E
Sheet6
T
RS R uoc A Total C

11.45 18.32

34.35 85.87

11.45 18.32

34.35 85.87

0.00001 0.21794 I

0.00001 0.21716 I

0.00001 0.21794 I

0.00001 0.21716 I

0.00001 0.21794 I

0.00001 0.21716 I

0.00001 0.21794 I

0.00001 0.21716 I

0.00001 0.21794 I

0.00001 0.21716 I

0.00001 0.21794 I

0.00001 0.21716 I
All time periods listed are applicable to local time. The definition of time will be based upon the date service is rendered.

Summer - June 1 - October 31 Winter - November 1 - Mal£ 31 On-Peak 11 a.m. - 6 p.m. Weekdays 5 p.m. - 8 p.m. Weekdays Semi-Peak 6 a.m. - 11 a.m. Weekdays 6 a.m. - 5 p.m. Weekdays 6 p.m. - 10 p.m. Weekdays 8 p.m. - 10 p.m. Weekdays
Off-Peak 10 p.m. - 6 a.m. Weekdays 10 p.m. - 6 a.m. Weekdays Plus Weekends & Holidays Plus Weekends & Holidays
6C7 Issued by Submitted See 3o, 2024
Advice Ltr. No. 4507-E Dan Skopec Effective Oct 1, 2024 Senior Vice President
Decision No. 0 .24-07-013 Regulatory Affairs Resolution No. 428 of 662
2025 Nonresidential Alterations Reach Code Study 65
2025/07/07

9.4.5 City of Palo Alto Utilities

RESIDENTIAL MASTER-METERED A TIAL ELECTRIC

SERVICE
UTILITY RA TE SCHEDULE E-2
A. APPLICABILITY:

This Rate Schedule applie to the following Cu tomers receiving Electric Service from the City of Palo Alto tilitie :

1. on-residential Customers receiving on-Demand metered Electric Service; and

2. Customer with Account at Master-Metered multi-family facilities receiving onDemand metered Electric Service.

B. TERRITORY:

This rate schedule applies everywhere the City of Palo Alto provides Electric Service.

C. :NBUNDLED RATES:

Per kilowatt-hour (kWh) Commodity Distribution Public Benefits Total Summer Period $ 0.14926 0.09735 $ 0.00549 $ 0.25210
Winter Period 0.09242 0.06623 0.00549 0.16414
Customer Charge ($/month) 5.60
D. SPECIAL OTES:

1. Calculation of Cost Components
The actual bill amount is calculated ba ed on the applicable rate in Section C above and adjusted for any applicable discounts, surcharges and/or taxes. On a Customer's bill tatement, the bill amount may be broken down into appropriate component a calculated under Section C.

2. Sea onal Rate Change

CITY OF P
The Summer Period is effective May 1 to October 31 and the Winter Period is effective from ovember 1 to April 30. When the billing period includes use in both the ummer and the Winter Periods, the u age will be prorated ba ed on the nun1ber of day in each seasonal period, and the charges based on the applicable rates therein. For further discussion of bill calculation and proration, refer to Rule and Regulation 11.

TILITIES
Issued by the City Council QCITYOF
Supersedes Sheet No E-2-1
dated 7-1-2023

PALO ALTO
UTILITIES Sheet o E-2-1
Effective 7-1-2024
429 of 662
2025 Nonresidential Alterations Reach Code Study 66
2025/07/07
APP LI ABILITY:

ERVICE
UTILITY RA TE CHEDULE E-4
This Rate chedule applie to Demand metered econdary Electric ervice for Cu tomer with a maximum D mand below I 000 kilowatt . Thi Rat ch dule may includ ervice to ma termetered multi-family facilitie or other facilitie requiring Demand metered Service, a deten11ined by the City.

B. TERRITORY:

Thi rate chedule applie everywhere the City of Palo Ito provide Electric erv1ce.

UNB IDLED RATE:

Rate per kilowatt (kW) and kilowatt-hour (kWh):

Commodity Di tribution
ummer Period
Demand Charge (per kW) 10.98 34.31
nergy harge (per kWh) 0.123 18 0.02520
Winter Period
Demand Charge (per kW) $ 2.57 21.16
Energy Charge (per kWh) 0.07949 0.02520
u tomer harge ( /month)
PECIAL NOTES:

1. Calculation of Co t Components
Public
Benefit

0.00549

0.00549
$ 45.29

0.153 7
$ 23.73

0.11018
I 13.73
The actual bill amount i calculated ba ed on the applicable rate in above and adju ted for any applicable di count urcharge and/or taxe . n a cu tomer' bill tatement, the bill amount may be broken down into appropriate component a calculated under ection C.

CITY OF PALO AL TO TILITIES
I ued by the City ouncil

PALO ALTO
Supersedes Sheet
dated 7-1 -2023

QCITYO F
No E-4-1 UTILITIES Sheet 1o E-4-1
Effective 7-1-2024
430 of 662
2025 Nonresidential Alterations Reach Code Study 67
2025/07/07
MEDI 1 NO -RE ID TIAL ELECTRIC TIME OF E ERVICE
UTILITY RA TE SCHEDULE E-4 TOU
A. APPLICABILITY:

Thi volunta1y Rate chedule applie to Demand metered econdaiy lectric Service for Cu tomers with Demand behveen 500 and 1,000 kilowatt per month and who have u tained this level of usage for at least three consecutive months during the most recent 12 month period.

This Rate Schedule may include Service to Master-Metered multi-family facilitie or other facilities requiring Demand metered Service, as detennined by the City.

B. TERRITORY:

Thi rate chedule applie eve1ywhere the ity of Palo Alto provide Electric erv1ce.

C. UNBUNDLEDRATES:

Rates per kilowatt (kW) and kilowatt-hour (kWh):
ummer Period
Demand Charge (per kW)
Peak
Max Demand
Energy harge (per kWh)
Peak
Mid-Peak
Off-P ak
Winter Period
Demand Charge (per kW)
Peak
Max Demand
Energy Charge (per kWh)
Peak
Mid-Peak
Off-Peak
Customer Charge
( /month)
D. SPECIAL NOTES:

CITY OF PALO AL TO
Issued by the City Council
Supersedes Sheet No E-4-TOU-1
dated 7-1-2023
Commoditv
$ 9.72

1.29 $0.17038

0.14041

0.10556

1.30 1.30
$ 0.11976

0.09452

0.06525
Di tribution
$17.18

17.18 $ 0.02538

0.02538

0.02538
$ 10.73

10.73 $ 0.02500

0.02500

OCITYOF

PALO ALTO

UTILITIES
Public Benefit
$ 0.00549

0.00549

0.00549
$ 0.00549

0.00549

0.00549
Total
$ 26.90

18.47 $ 0.20125

0.17128

0.13643
$ 12.03

12.03 $ 0.15025

0.12501

0.09574
113.73
Sheet o E-4-TO -1
Effective 7-1-2024
431 of 662
2025 Nonresidential Alterations Reach Code Study 68
2025/07/07
RE IDENTIAL MA TER-METERED AND CO lMERCIAL GA
APP LI ABILITY:

This schedule applies to the following ustomer receiving Gas Service from the City of Palo Alto Utilitie :

1. ommercial Customer , ho use I than 250,000 thenn p r y ar at one ite·

2. Ma ter-metered residential ustomers in multi-family residential facilitie .

B. TERRITORY:

Thi chedule applie anywhere the City of Palo Ito provide Ga Service.

UNBUNDLED RA TE :
onthly ervice Charge: .. .................................................... ...... .................. ...... ................. $ 156.90 upply Charge :
l.

2. ommodity onthly Mark t Ba ed) ............................ ............ .

Cap and Trad Compliance Charg .......................................... .

3. Transpo1tation Charge ............................ .................................... .

4. arbon Offi et barge ......................... .... ........ ............................ .

Di tribution Charge: ......... .. .. ........................................................ ... ......................... .

D. SPECIAL OTES:

1. Calculation of Cost Components
PerThenu

0.10-$4.00

0.00-$0.25

0.00-$0.10
l.0809
The a tual bill amount i calculated ba ed on the applicable rate in ection above and adju ted for any applicable di counts, urcharge an or Taxe . On a Cu tom r' bill tat m nt, th bill amount may be brok n down iJ1tO appropriat compon nt a calculated under ection
The ommodity Charge i ba ed on the monthly natural ga Bidweek Price Index for delivery at PG&E itygate, adju ted to a count for delivery lo e to the Cu tomer' Meter. The ommodity barge al o include adju tment to account for ouncilapproved program implemented to reduce the co t of Ga , including a municipal purcha e discount 1, and a maximum 0.15/per therm co t for capped price winter natural 1 Adopted via Re olution 9451 , on eptember 15. 2014.

ITY OF PALO AL TO UTILITIE
I ued by the City ouncil
Supersedes Sheet No G-2-1
dated 11-1-2023 QCITYOF

PALO ALTO

UTI LITIES
Effective 7-1-2024
heet o G-2-1
432 of 662
2025 Nonresidential Alterations Reach Code Study 69
2025/07/07
The ‘Commodity and Volumetric Rates’ are selected for the latest available month of December 2020.10
10 https://www.paloalto.gov/files/assets/public/v/29/utilities/business/business-rates/monthly-gasvolumetric-and-service-charges-commercial.pdf •

CITY OF I PALO ALTO

UTILITIES
10/1/2024 0.4450
9/1/2024 0.3411
8/1/2024 0.5179
7/1/2024 0.4197
6/1/2024 0.1918
5/1/2024 0.2142
4/1/2024 0.2388
3/1/2024 0.2956
2/1/2024 0.5967
1/1/2024 0.4805
12/1/2023 0.6901
11/1/2023 0.7383
10/1/2023 0.4065
9/1/2023 0.4928
8/1/2023 0.5263
7/1/2023 0.4486
6/1/2023 0.3627
5/1/2023 0.5197
4/1/2023 0.6634
3/1/2023 0.7706
2/1/2023 1.2588
1/ 1/2023 4.0000
12/1/2022 1.4153
11/1/2022 0.7310
City of Palo Alto
Utility Rate Schedule G-2 - Residential Master-Metered and Commercial Gas Service Monthly Gas Volumetric and Service Charges
$ per Therm

0.1182 0.2500 0.0700

0.1451 0.2500 0.0700

0.1451 0.2201 0.0700

0.1451 0.2206 0.0700

0.1638 0.2206 0.0700

0.1534 0.2104 0.0700

0.1534 0.2022 0.0700

0.1309 0.1350 0.0700

0.1132 0.1350 0.0700

0.1132 0.1345 0.0700

0.1132 0.1344 0.0700

0.1033 0.1345 0.0700

0.0768 0.1345 0.0700

0.0768 0.1584 0.0700

0.8832

0.8062

0.9531

0.8554

0.6462

0.6686

0.6932

0.7294

1.0223

0.9061

1.0260

1.0742

0.7424

0.8110

0.8440

0.7662

0.6705

0.8275

0.9447

1.0519

1.5401

4.3052

1.7205

1.0362

1.0809

0.8941

0.7365

0.7365
Total Volumetric Charge
(e)+(f)

1.9641

1.8871

2.0340

1.9363

1.5403

1.5627

1.5873

1.6235

1.9164

1.8002

1.9201

1.9683

1.6365

1.7051

1.7381

1.6603

1.4070

1.5640

1.6812

1.7884

2.2766

5.0417

2.4570

1.7727
S per Month
156.90
156.90
156.90
156.90
129.78
129.78
129.78
129.78
129.78
129.78
129.78
129.78
129.78
i 129.78
129.78
129.78 f106.90
106.90
106.90
106.90
106.90
106.90
106.90
106.90
433 of 662
2025 Nonresidential Alterations Reach Code Study 70
2025/07/07

9.4.6 Sacramento Municipal Utilities District (Electric Only)

9.4.7 Fuel Escalation Rates
Utility rates are assumed to escalate over time, using assumptions from research conducted by Energy and Environmental Economics (E3). As stated by E3 in the TDV report, this latter assumption “does not presuppose specific new investments, changes in load and gas throughput, or other measures associated with complying with California’s climate policy goals” (i.e., business-as-usual is assumed).

Table 33 below demonstrates the escalation rates used for nonresidential buildings.

II. Firm Service Rates
A. OlDlDtl'rinl & ludu lrinl Tiloe-of-Dny Rnte
CITS-0: C&I SecondaQ O 20 kW
~OD- ummt-1· ea,on (October • May)
~·srem lnfrnsrru<"lllrt- fb':td Chari:e par mo,1th per merer ~fosimum Dem•nd Cb•re• $ per mom/1/y max kW
Elf'<'fl'id~· UsAjf' lrnref'
Pe•k SlkWI,
Off-Penk SlkWI,
Off-Peak Saver SlkW11
nmmer easou (June • September)
S~·stem Infrnstrncture- Fixed Chargt per monrh per merer '.\fo1:imum De-mand Chn1·s;it S per montlily max kW
Ele-enki~• Usai:e Cbriri:e
Peok SlkWI,
Off-Peak SlkWI,
CITS-I: C&I Secondary 21 -299 kW
:\"on- umme-r ea,on (October• May)
ysrtm lnfra srrutturt flxed Cbari:e per mo,irh per merer ire lufr. ,i; 11·11 r1ure Ch!l1·a• pe,· J 2 months ma:r kW or contract capacfr:,1 [lf'('f.-iC'i()," l.isaie b::irae
Peak 5/kWI,
Off-Peak SlkWI,
Off-Peak Sa.-er SlkW11
mnmt."r e-a soo (June • September)
ys1err1 Infr:1 s1ruNure fil':l d Ch:u·ee per momlt per merer Sile lufra <tj l1·11C'turt Charge pe,· I 2 months max kW or contract capacfry Summer Ptak Demand Chril'ge S per momlrl)' Peak max k-W Eltctl'id~- Usag,t b:irgt
Peak SlkWI,
Off-Peak S/kW11
Commercial & Industrial Time-of-Day
Rate Schedule CI-TOD1
EfftNh·r as of Effe<"rin as of
Jauuan· 1, 2023 Jauua1·v 1. 2024
S35.15 $36.65
S0.000 S0.713
S0.1440 $0.1446
S0.1364 $0.1335
S0.1323 $0.12 6
S35.15 $36,65
S0.000 S0.713
S0.2554 $0.2718
S0.1349 $0.1359
Sl58.30 S231.60
S .568 $ .106
S0.1230 $0.1283
S0.1158 $0.11 0
S0.1030 S0.09 I
SISS.30 SBI.60
S .568 $ .106
S3.468 $ .3 1
S0.1983 $0.2056
S0.1119 $0.1129
Efft<"tfre- a'§. of
~Ia,· 1, 2024
$3 .65
$0, 33
so. 1485
S0.13 I
S0.131 1
$3 .65
S0.733
$0.2 92
so 1396
$237.95
s .302
S0.1319
$0, 1202
S0.0998
S237.95
$ .302
s .498
S0.2 113
S0.1160
Effe-C'tfrt as of Efft<'ti\'f' as of
Januai·v I. 2025 Ma,· I, 2025
$39.20 $40.30
S1.505 Sl.5~6
$0.1491 S0.1532
$0. 1341 S0.13
$0.1261 S0.129
$39.20 $40.30
$1.505 Sl.546
$0.2968 S0.3049
$0.1410 S0.1448
S31 .30 5326.05
S6.806 $6.993
$0.13 4 S0.1412
$0.1214 S0.1248
$0,0932 S0.0958
$31 .30 S326.05
S6.806 $6.993
S .525 s 32
$0,2192 S0.2252
$0,1171 S0.1203
Co111111ercial rates beyond 2025 are ejfectii-e as sho..-11 in Section VIII. Tra11sitio11 Schedule. 434 of 662
2025 Nonresidential Alterations Reach Code Study 71
2025/07/07
Table 33. Real Utility Rate Escalation Rate Assumptions Year
Statewide Electric
Nonresidential
Average Rate
(%/year, real)
Statewide Natural Gas
Nonresidential Core
Rate
(%/year, real)
2024 0.7% 7.7%
2025 0.5% 5.5%
2026 0.7% 5.6%
2027 0.2% 5.6%
2028 0.6% 5.7%
2029 0.7% 5.7%
2030 0.6% 5.8%
2031 0.6% 3.3%
2032 0.6% 3.6%
2033 0.6% 3.4%
2034 0.6% 3.4%
2035 0.6% 3.2%
2036 0.6% 3.2%
2037 0.6% 3.1%
2038 0.6% 2.9%
2039 0.6% 3.2%
2040 0.6% 2.9%
2041 0.6% 3.5%
2042 0.6% 3.4%
2043 0.6% 3.4%
2044 0.6% 3.4%
2045 0.6% 3.5%
2046 0.6% 2.0%
2047 0.6% 1.8%
2048 0.6% 2.1%
2049 0.6% 1.7%
2050 0.6% 2.1%
2051 0.6% 2.8%
2052 0.6% 2.8%
2053 0.6% 2.8%
Source: Energy & Environmental Economics, 2019, Reach Code Team 435 of 662
2025 Nonresidential Alterations Reach Code Study 72
2025/07/07

9.5 Prototype Characteristics
Table 34. Non-res Roof U-Value by CZ for three vintages (Wood Framed and Other Roof)
1980 vintage 1990 vintage 2000 vintage
Assembly
U-value
Assembly
U-value
Assembly
U-value
CZ1 0.076 0.056 0.051
CZ2 0.085 0.056 0.051
CZ3 0.085 0.056 0.051
CZ4 0.086 0.056 0.051
CZ5 0.085 0.056 0.051
CZ6 0.093 0.077 0.075
CZ7 0.093 0.077 0.075
CZ8 0.093 0.077 0.075
CZ9 0.092 0.076 0.075
CZ10 0.089 0.074 0.051
CZ11 0.086 0.056 0.051
CZ12 0.086 0.056 0.051
CZ13 0.086 0.056 0.051
CZ14 0.085 0.056 0.051
CZ15 0.088 0.056 0.051
CZ16 0.08 0.056 0.051
436 of 662
2025 Nonresidential Alterations Reach Code Study 73
2025/07/07
Table 35 Non-res Exterior Wall U-Value by CZ for three vintages 1980 vintage 1990 vintage 2000 vintage
Medium
Retail
Small
Office
Assembly
U-value
Assembly
U-value
CZ1 0.277 0.333 0.182 0.216
CZ2 0.329 0.382 0.189 0.216
CZ3 0.331 0.384 0.189 0.223
CZ4 0.339 0.392 0.189 0.223
CZ5 0.329 0.382 0.189 0.223
CZ6 0.402 0.451 0.189 0.223
CZ7 0.381 0.431 0.189 0.223
CZ8 0.399 0.448 0.189 0.223
CZ9 0.368 0.419 0.189 0.223
CZ10 0.358 0.409 0.189 0.216
CZ11 0.338 0.39 0.182 0.216
CZ12 0.335 0.387 0.182 0.216
CZ13 0.34 0.393 0.182 0.216
CZ14 0.325 0.378 0.182 0.216
CZ15 0.389 0.438 0.182 0.216
CZ16 0.294 0.349 0.182 0.216
437 of 662
2025 Nonresidential Alterations Reach Code Study 74
2025/07/07
Table 36. Non-res Window U-Value, SHGC and VT for all vintages Window Assembly U-Value Window SHGC Window VT
1980
vintage
1990
vintage
2000
vintage
1980
vintage
1990
vintage
2000
vintage
1980
vintage
1990
vintage
2000
vintage
CZ1 1.144 0.689 0.468 0.568 0.549 0.427 0.36 0.383 0.4
CZ2 1.179 1.143 0.468 0.73 0.668 0.358 0.36 0.383 0.4
CZ3 1.209 1.168 0.763 0.735 0.672 0.407 0.36 0.383 0.4
CZ4 1.209 1.168 0.763 0.735 0.672 0.407 0.36 0.383 0.4
CZ5 1.209 1.168 0.763 0.735 0.672 0.407 0.36 0.383 0.4
CZ6 1.209 1.168 0.763 0.733 0.671 0.387 0.36 0.383 0.4
CZ7 1.209 1.168 0.763 0.733 0.671 0.387 0.36 0.383 0.4
CZ8 1.209 1.168 0.763 0.733 0.671 0.387 0.36 0.383 0.4
CZ9 1.209 1.168 0.763 0.733 0.671 0.387 0.36 0.383 0.4
CZ10 1.179 1.143 0.468 0.73 0.668 0.358 0.36 0.383 0.4
CZ11 1.144 0.689 0.468 0.561 0.544 0.358 0.36 0.383 0.4 CZ12 1.144 0.689 0.468 0.561 0.544 0.358 0.36 0.383 0.4 CZ13 1.144 0.689 0.468 0.561 0.544 0.358 0.36 0.383 0.4 CZ14 1.144 0.689 0.468 0.561 0.544 0.358 0.36 0.383 0.4 CZ15 1.144 0.689 0.468 0.561 0.544 0.358 0.36 0.383 0.4 CZ16 1.144 0.689 0.468 0.568 0.549 0.427 0.36 0.383 0.4 Table 37. Equipment Turnover Assumptions
Measure
Category
1980 Vintage 1990 Vintage 2000 Vintage
1980 1990 2000 2016 1980 1990 2000 2016 1980 1990 2000 2016 HVACSHW 71% 9% 14% 5% 0% 84% 12% 4% 0% 0% 97% 3%
Roofs 74% 8% 13% 5% 0% 86% 10% 4% 0% 0% 98% 2%
Windows 80% 7% 10% 4% 0% 89% 8% 3% 0% 0% 98% 2%
Walls 92% 3% 4% 1% 0% 96% 3% 1% 0% 0% 99% 1%
Process 63% 12% 19% 7% 0% 79% 15% 6% 0% 0% 96% 4%
Ltg 45% 15% 28% 12% 0% 67% 24% 9% 0% 0% 94% 6%
ExtLtg 71% 9% 14% 5% 0% 84% 12% 4% 0% 0% 97% 3%
The equipment turnover assumptions in Table 37 are based on SB350 Appendix B2-NR Vintage Data and represent best estimates for equipment replacements, not direct data.

Existing equipment efficiencies were estimated by weighting the code minimum requirements by the replacement rates. For example, the AFUE was assumed to be 63% for 1980, 78% for 1990 and 2000, and 80% for 2016. Using the equipment turnover assumptions above, this calculates to a weighted average of 67.5% AFUE for the 1980s vintage, and 78.1% for the 1990s and 2000s vintages.
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9.6 Occupancy Schedules and Building Types
The Reach Code Team explored how the results could apply to other building types with similar occupancy schedules. Figure 10 shows that Small Office shares similar occupancy schedules with Large Office, Library, and Financial Institutions, while Medium Retail aligns closely with Grocery. School, however, exhibits slightly different occupancy patterns, so the results may not be directly applicable to this building type. Other building types with significantly different occupancy schedules are not considered to be applicable.

Figure 10. Occupancies in 141.0-E-1 Schedules

9.7 Interview Guide
The Reach Code Team used the following guide for the market actor interviews. This guide asks similar questions for all market actors. For some questions, the wording is different for designers (“Des”) and contractors (“Cont”) — who work directly on projects, compared to distributors (Dist) and manufacturer reps (MFR) — who sell equipment, but still have an understanding of project challenges and opportunities through their involvement with the construction process and communication with their clients.

Introduction
Thank you for taking the time to speak with us today. As a reminder, we are conducting this interview on behalf of the California investor-owned utilities to understand HVAC retrofits.

Specifically, we are interested in your experience with the retrofit of rooftop units. This would include replacing gas-fired rooftop units (gas packs) with packaged heat pumps, and your experience with other efficiency measures. All answers will be kept anonymous. 0 0. 2

0. 4

0. 6

0. 8
1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Occu p an cy Fr act io n
Hour of Da y
Me d iu m Re t a il
Gro c e ry
Sm a ll Offic e
La rge Offic e
Lib ra ry
Fina nc ia l Ins
Sc hool
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Do we have your permission to record this interview? This is solely for note-taking purposes. a. Yes [RECORD CONTACT INFORMATION; SETUP INTERVIEW
TIME; EMAIL INTERVIEW TOPICS]
b. No [DISCUSS CONCERNS; ANSWER QUESTIONS; ATTEMPT TO
CONVERT TO “YES”]

1. (All) What is your role withing your organization?

2. (Cont/Des) What types of commercial projects have you worked on in the past year? a. (Dist/MFR) For what types of commercial projects have you sold HVAC products in the past 5 years?

3. (All) What area of California do you typically work in?

4. (Cont) Do you replace gas packs with heat pumps? How many replacements have you performed in the past year?
a. (Dist/MFR) Do you sell equipment for replacing gas packs with heat pumps? i. If yes, how often is this equipment sold? (Always, almost always, sometimes, rarely, never)
Research Topic A: Replacing gas packs with heat pumps

1. (Des/Cont) In general, have you faced challenges replacing gas packs with heat pumps? Y/N
a. If yes, what are those challenges?

2. (Dist/MFR) In general, have your customers faced challenges replacing gas packs with heat pumps? Y/N
a. If yes, what are those challenges?
If they don’t mention them, then probe:

3. (All)Are there any physical concerns or space constraints? Y/N a. If yes, what are those challenges? (don’t ask, but if they don’t volunteer, then probe)
Probe for: unit footprint, curb height, equipment weight b. How often is a curb adapter required? What are the cost implications?

4. (Cont/Des) Are there electrical concerns? Y/N (Interviewer can skip this section for Dist/MFR as these questions are geared for designers and contractors) a. If yes, what are those concerns?
b. What type of electrical upgrades are typical when replacing gas packs with heat pumps?
c. Is the additional capacity of electric resistance defrost enough to require electrical upgrades?

5. (All) Are there building heating capacity issues with replacing gas packs with heat pumps? Y/N
a. If yes, what are the issues? (don’t ask, but if they don’t volunteer, then probe) Probe for: meeting the building’s space heating loads.
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b. Under what conditions is electric resistance for defrost necessary? i. (If they don’t specify, then ask): Is this unique to specific locations or climates?
c. (Dist/MFR) Have you ever not been able to keep up with heating setpoint temperature because electric resistance for defrost was not installed? Research Topic B: Non-preempted ECMs for gas-for-gas HVAC unit replacement
We are looking to identify additional efficiency measures that could be installed as part of a gas-for-gas retrofit.

1. The first technology we’re considering is an ERV/HRV. a. (All) Are you familiar with the technology? Y/N
i. (Cont/Des): If Yes, how many times have you installed/specified them in the past year?

1.(Dist/MFR): How many have you sold in the last year?
ii. (All) Where in California are ERV/HRV most effective/appropriate? iii. (All) Are there areas of California where ERV/HRV would NOT be effective? b. (Des/Cont) Would you design/install an ERV/HRV separate from the rooftop unit or integrate them?
c. (Dist/MFR) [If integrated]: By percentage, how many ERV/HRV units have you sold with gas pack replacements? (Provide the multiple-choice ranges only if they are unwilling to estimate a value.)
i. <25%
ii. Between 25% and 75%
iii. More than 75%
iv. Not sure
d. (Dist/MFR) [If separate]: By percentage, how many ERV/HRV units have you sold with gas pack replacements? (Provide the multiple-choice ranges only if they are unwilling to estimate a value.)
v. <25%
vi. Between 25% and 75%
vii. More than 75%
viii. Not sure

2. Demand control ventilation (DCV) is another measure we are considering. a. Are you familiar with the technology?
b. Is this a good measure for retrofits?
c. (If time) Are there areas of California where this would NOT be effective?

3. We are also considering RTU fan ECM motor with staged controls. a. Are you familiar with the technology?
b. Is this a good measure for retrofits?
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c. (If time) Are there areas of California where this would NOT be effective?

4. We are also considering options for making a programmable thermostat more effective, such as by having it programmed by the installer.
a. (Des/Cont) When you install/specify thermostats, how often do you set a schedule or setpoints?
b. How do you determine a schedule for a thermostat when you program one? c. How often are you called back to reset a schedule for a programmable thermostat? d. (All) Which type of thermostat would be less likely to be overridden by the customer so that energy savings are actually achieved? Programmable where installer programs it according to customer preferences? Smart? Something else?

5. Do you have recommendations for any other efficiency measures to consider? (if they don’t volunteer, probe for DCV, RTU fan ECM motor with staged controls, DOAS)

6. (If time) Another measure we are considering is a dedicated outdoor air system (DOAS). a. Are you familiar with the technology? Y/N
i. If Yes, how often have you installed/specified them in the past year? b. What is your opinion on DOAS systems?
i. Are there areas of California where DOAS saves more energy? Are there areas of California where DOAS would NOT be effective?

7. Are you able to provide some cost estimates for the measures discussed today as a followup via email? Section C: Closing
Great! Thank you so much for your time. Those are all the questions we have for you today. For taking the time to speak to me today we will be emailing you a $150 e-gift card which you should receive in the next ten business days as a thank you. Before we finish, do you have any questions for me, or anything else you would like to add?
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Get In Touch
The adoption of reach codes can differentiate
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Last modified: 2024/04/25
Revision: 1.0
Prepared by:

Ada Shen, Alea German, Rebecca Evans, & Marc Hoeschele, Frontier Energy, Inc Misti Bruceri, Misti Bruceri & Associates, LLC
Prepared for:

Kelly Cunningham, Codes and Standards Program, Pacific Gas and Electric 444 of 662

Cost -Effectiveness Analysis: Existing Single Family Building Upgrades Executive Summary
2 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.

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
2023 PV$ – Present value costs in 2023
ACH50 – Air Changes per Hour at 50 pascals pressure differential ACM – Alternative Calculation Method
ADU – Accessory Dwelling Unit
AFUE – Annual Fuel Utilization Efficiency
B/C – Lifecycle Benefit-to-Cost Ratio
BEopt – Building Energy Optimization Tool
BSC – Building Standards Commission
CA IOUs – California Investor-Owned Utilities
CASE – Codes and Standards Enhancement
CBECC-Res – Computer program developed by the California Energy Commission for use in demonstrating compliance with the California Residential Building Energy Efficiency Standards CEER – Combined Energy Efficiency Rating
CFI – California Flexible Installation
CFM – Cubic Feet per Minute
CO2 – Carbon Dioxide
CPAU – City of Palo Alto Utilities
CPUC – California Public Utilities Commission
CZ – California Climate Zone
DFHP – Dual Fuel Heat Pump
DHW – Domestic Hot Water
DOE – Department of Energy
DWHR – Drain Water Heat Recovery
EDR – Energy Design Rating
EER – Energy Efficiency Ratio
EF – Energy Factor
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Cost -Effectiveness Analysis: Existing Single Family Building Upgrades Executive Summary
3 GHG – Greenhouse Gas
HERS Rater – Home Energy Rating System Rater
HPA – High Performance Attic
HPSH – Heat Pump Space Heater
HPWH – Heat Pump Water Heater
HSPF – Heating Seasonal Performance Factor
HVAC – Heating, Ventilation, and Air Conditioning
IECC – International Energy Conservation Code
IOU – Investor Owned Utility
kBtu –British thermal unit (x1000)
kWh – Kilowatt Hour
LBNL – Lawrence Berkeley National Laboratory
LCC – Life Cycle Cost
LLAHU – Low Leakage Air Handler Unit
VLLDCS – Verified Low Leakage Ducts in Conditioned Space LSC – Long-term Systemwide Cost
MF – Multifamily
MSHP – Mini-Split Heat Pump
NEEA – Northwest Energy Efficiency Alliance
NEM – Net Energy Metering
NPV – Net Present Value
NREL – National Renewable Energy Laboratory
PG&E – Pacific Gas and Electric Company
POU – Publicly-Owned-Utilities
PV – Photovoltaic
SCE – Southern California Edison
SDG&E – San Diego Gas and Electric
SEER – Seasonal Energy Efficiency Ratio
SF – Single Family
SMUD – Sacramento Municipal Utility District
SoCalGas – Southern California Gas Company
TDV – Time Dependent Valuation
Therm – Unit for quantity of heat that equals 100,000 British thermal units Title 24 – Title 24, Part 6
TOU – Time-Of-Use
UEF – Uniform Energy Factor
VCHP – Variable Capacity Heat Pump, Title 24 compliance credit ZNE – Zero-net Energy
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Cost -Effectiveness Analysis: Existing Single Family Building Upgrades Executive Summary
4 Summary of Revisions
Date Description Reference (page or section)
4/25/2024 Original Release N/A
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Cost -Effectiveness Analysis: Existing Single Family Building Upgrades Executive Summary
5 TABLE OF CONTENTS
Executive Summary..........................................................................................................................................................1 1 Introduction................................................................................................................................................................6 2 Methodology and Assumptions...............................................................................................................................7

2.1 Analysis for Reach Codes..................................................................................................................................................... 7

2.1.1 Modeling ....................................................................................................................................................................... 7

2.1.2 Prototype Characteristics.............................................................................................................................................. 7

2.1.3 Cost-Effectiveness Approach...................................................................................................................................... 10

2.1.4 Utility Rates................................................................................................................................................................. 11

2.1.5 Measure Cost Data Collection Approach .................................................................................................................... 12

2.2 Measure Details and Cost................................................................................................................................................... 12

2.2.1 Building Envelope & Duct Measures........................................................................................................................... 13

2.2.2 PV Measures .............................................................................................................................................................. 14

2.2.3 Equipment Fuel Substitution Measures – Heat Pump Equipment............................................................................... 15 3 Results......................................................................................................................................................................21

3.1 Cost-Effectiveness Results ................................................................................................................................................. 22

3.1.1 HPSH Measures ......................................................................................................................................................... 22

3.1.2 HPWH Measures ........................................................................................................................................................ 24

3.2 Climate Zone Case Studies ................................................................................................................................................ 26

3.2.1 HPSH Cost-Effectiveness ........................................................................................................................................... 27

3.2.2 HPWH Cost-Effectiveness .......................................................................................................................................... 28

3.2.3 Envelope & Duct Improvement Cost-Effectiveness..................................................................................................... 29

3.2.4 Sensitivities................................................................................................................................................................. 30

3.3 Gas Pathways for Heat Pump Replacements..................................................................................................................... 31 4 Recommendations and Discussion.......................................................................................................................33 5 References ...............................................................................................................................................................37 6 Appendices ..............................................................................................................................................................38

6.1 Map of California Climate Zones......................................................................................................................................... 38

6.2 Utility Rate Schedules......................................................................................................................................................... 39

6.2.1 Pacific Gas & Electric.................................................................................................................................................. 40

6.2.2 Southern California Edison ......................................................................................................................................... 48

6.2.3 Southern California Gas.............................................................................................................................................. 52

6.2.4 San Diego Gas & Electric............................................................................................................................................ 54

6.2.5 City of Palo Alto Utilities.............................................................................................................................................. 64

6.2.6 Sacramento Municipal Utilities District (Electric Only)................................................................................................. 66

6.2.7 Fuel Escalation Assumptions...................................................................................................................................... 68 448 of 662

Cost -Effectiveness Analysis: Existing Single Family Building Upgrades Executive Summary
6 LIST OF TABLES
Table 1. Prototype Characteristics........................................................................................................................................................ 8 Table 2. Efficiency Characteristics for Three Vintage Cases ................................................................................................................ 9 Table 3. Measure Cost Assumptions – Efficiency & Duct Measures .................................................................................................. 14 Table 4. Measure Descriptions & Cost Assumptions – PV ................................................................................................................. 15 Table 5. Lifetime Analysis Replacement Assumptions for DFHP (Existing Furnace) Scenario .......................................................... 16 Table 6. System Sizing by Climate Zone ............................................................................................................................................ 17 Table 7. Ducted HVAC Measure Cost Assumptions – 4-Ton Electric Replacements ......................................................................... 18 Table 8. Non-Ducted HVAC Measure Cost Assumptions – 4-Ton Electric Replacements ................................................................. 18 Table 9. Water Heating Measure Cost Assumptions – Existing Gas .................................................................................................. 19 Table 10. Water Heating Measure Cost Assumptions – Existing Electric Resistance ........................................................................ 20 Table 11. HPSH CZ 12 [1992-2010]................................................................................................................................................... 27 Table 12. HPSH CZ 16 [1992-2010]................................................................................................................................................... 27 Table 13. HPWH CZ 12 [1992-2010].................................................................................................................................................. 28 Table 14. HPWH CZ 16 [1992-2010].................................................................................................................................................. 28 Table 15. Envelope and Duct Measures CZ 3 [Pre-1978] .................................................................................................................. 29 Table 16. Envelope and Duct Measures CZ 10 [Pre-1978]................................................................................................................. 29 Table 17. Envelope and Duct Measures CZ 12 [Pre-1978]................................................................................................................. 29 Table 18. Sensitivity Analysis Results for On-Bill NPV Cost-Effectiveness in Climate Zone 12, PG&E.............................................. 30 Table 19. Electric Panel Upgrade Sensitivity for CZ 12 [1992-2010] .................................................................................................. 30 Table 20. PG&E Baseline Territory by Climate Zone.......................................................................................................................... 40 Table 21. PG&E Monthly Gas Rate ($/therm)..................................................................................................................................... 40 Table 22: SCE Baseline Territory by Climate Zone ............................................................................................................................ 48 Table 23. SoCalGas Baseline Territory by Climate Zone ................................................................................................................... 52 Table 24. SoCalGas Monthly Gas Rate ($/therm) .............................................................................................................................. 52 Table 25. SDG&E Baseline Territory by Climate Zone ....................................................................................................................... 54 Table 26. SDG&E Monthly Gas Rate ($/therm) .................................................................................................................................. 54 Table 27. CPAU Monthly Gas Rate ($/therm)..................................................................................................................................... 64 Table 28: Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis ...................................................... 68 Table 29: Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis ....................................................................................... 69 449 of 662

Cost -Effectiveness Analysis: Existing Single Family Building Upgrades Executive Summary
7 LIST OF FIGURES
Figure 1: DFHP with Existing Furnace............................................................................................................................................ 22 Figure 2: Standard Efficiency HPSH............................................................................................................................................... 22 Figure 3: High Efficiency HPSH...................................................................................................................................................... 23 Figure 4: Ducted MSHP.................................................................................................................................................................. 23 Figure 5: HPSH + PV...................................................................................................................................................................... 23 Figure 6: 240V Federal Minimum HPWH........................................................................................................................................ 24 Figure 7: 240V Market Standard NEEA HPWH .............................................................................................................................. 24 Figure 8: 120V Market Standard NEEA HPWH .............................................................................................................................. 24 Figure 9: 240V Federal Minimum HPWH + PV............................................................................................................................... 24 Figure 10: R-6 Ducts....................................................................................................................................................................... 26 Figure 11: 10% Duct Leakage ........................................................................................................................................................ 26 Figure 12: R-13 Wall Insulation....................................................................................................................................................... 26 Figure 13: R-49 Attic Insulation....................................................................................................................................................... 26 Figure 14. Heat pump space heater path compared to the air conditioner path. ............................................................................ 32 Figure 15. Heat pump water path compared to gas with solar thermal........................................................................................... 32 Figure 16. Map of California climate zones..................................................................................................................................... 38 450 of 662
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Cost -Effectiveness Analysis: Existing Single Family Building Upgrades Executive Summary
1 Executive Summary
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 (GHG) 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.

This report documents cost-effective measure 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) across all 16 California climate zones. A 1,665 square foot single family home prototype with an attached garage was evaluated in this study.

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 over a 30-year analysis period. On-Bill cost-effectiveness is a customer-based lifecycle cost (LCC) approach that values energy based upon estimated site energy usage and customer utility bill savings using today’s electricity and natural gas utility tariffs. Long-term Systemwide Cost (LSC) is the California Energy Commission’s LCC methodology for the 2025 Title 24, Part 6 (Title 24) code cycle (previously referred to as Time Dependent Valuation (TDV)), which is intended to capture the long-term projected cost of energy including costs for providing energy during peak periods of demand, carbon emissions, grid transmission and distribution impacts. This is the methodology used by the Energy Commission in evaluating cost-effectiveness for efficiency measures in Title 24 code development.

The following summarizes key results from the study:

Conclusions and Discussion:

1. Envelope measures. Improving envelope performance is very cost-effective in many older homes. 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. a. Adding attic insulation is cost-effective based on both LSC and On-Bill in many climate zones in homes with no more than R-19 existing attic insulation levels. Increasing attic insulation from R-30 to R-49 was still found to be cost-effective based on at least one metric in the colder and hotter climates of Climate Zone 10 (SDG&E territory only) through 16.
b. Insulating existing uninsulated walls is very cost-effective based on both metrics everywhere except Climate Zones 6 and 7 (in Climate Zone 8 it’s only cost-effective based on LSC). c. Adding R-19 or R-30 floor insulation is cost-effective based on LSC in the older two vintages (Pre-1978 and 1978-1991) in all CZ except CZ 6-10.
d. 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 are substantial and justify costeffectiveness of this measure based on at least one metric in Climate Zones 4, 8 through 12 (PG&E territory only), and 13 through 16.
e. At time of roof replacement, a cool roof with an aged solar reflectance of 0.25 was found to be costeffective in Climate Zones 4, 6 through 12 (PG&E territory only), and 13 through 15. When the roof deck is replaced during a roof replacement, adding a radiant barrier is low cost and provides substantial cooling energy savings, and was found to be cost-effective in almost all climate zones and homes.

Cost -Effectiveness Analysis: Existing Single Family Building Upgrades Executive Summary
2 the 1978-1991 vintage. If duct systems still have remaining life they should be sealed and tested to meet 10% leakage or lower; however, duct upgrades alone were only found to be cost-effective for newer homes in Climate Zones 10 (SDG&E territory only), 11, and 13 through 16. Duct upgrades may be able to be coupled with other measures to reduce the cost.

3. Heat pump space heating: HPSHs were found to be LSC cost-effective in many cases. The Dual Fuel Heat Pump (existing furnace) was LSC cost-effective everywhere except Climate Zone 15. The HPSH was LSC cost-effective everywhere except Climate Zones 8 and 15. 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. SMUD and CPAU are two exceptions where first year utility costs are lower for heat pumps than for gas equipment. Table 11 shows the impact of utility rates on cost-effectiveness of HPSH where the standard and high efficiency HPSH and the HPSH + PV measures are cost-effective under SMUD but not PG&E. Even with higher first year utility bills, there were some cases that still proved On-Bill cost-effective including the DFHP with an existing furnace in the central valley and northern coastal PG&E territories, the ducted MSHP in the central valley as well as Climate Zone 14 in SDG&E territory, and the HPSH + PV measure in CZ 3-5 (PGE), 7-11, and 12 (SMUD) – 15.
b. The ductless MSHPs were only found to be cost-effective based on either metric in Climate Zones 1 and 16. Ductless MSHPs have a high incremental cost because it is 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.

4. Heat pump water heating: All the HPWH measures were LSC cost-effective in all climate zones. Most measures were not On-Bill cost-effective with the exception of the HPWH + PV which was cost-effective OnBill in CPAU, SMUD, and SDG&E territories in addition to Climate Zones 11, 13, 14, and 15. 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. Table 13 shows the impact of utility rates on costeffectiveness where some HPWH measures are cost-effective under SMUD utility rates but are not costeffective anywhere under PG&E rates in Climate Zone 12. a. Various HPWH locations were also explored, however there are some factors outside of costeffectiveness 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, an additional heating load in the winter, 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).

Cost -Effectiveness Analysis: Existing Single Family Building Upgrades Executive Summary
3 new initiatives to obtain current costs including the TECH Clean California program1 that publishes heat pump data and costs; however, at the time of this analysis, the TECH data did not contain incremental costs because it only had the heat pump costs but not the gas base case costs.

6. Table 18 shows how CARE rates and escalation rate assumptions will impact cost-effectiveness. a. Applying CARE rates in the IOU territories has the overall impact to increase utility cost savings for an all-electric building compared to a code compliant mixed fuel building, improving On-Bill costeffectiveness. This is due to the CARE discount on electricity being higher than that on gas. The reverse occurs with efficiency measures where lower utility rates reduce savings and subsequently reduce cost-effectiveness.
b. 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 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.2 The CPUC will make a decision 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.

7. 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 in all climate zones except Climate Zones 1 through 3, 5, and 6.
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 in this study, 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.

Recommendations:

1. There are various approaches for jurisdictions who are interested in reach codes for existing buildings. Some potential approaches are listed below along with key considerations. a. Prescriptive measures: Non-preempted measures that are found to be cost-effective may be prescriptively required in a reach code. One example of this type or ordinance is a cool roof requirement at time of roof replacement. Another example is requiring specific cost-effective measures for larger remodels, such as high-performance windows when new windows are installed or duct sealing and testing when ducts are in an unconditioned space. b. Replacement equipment: This flavor of reach code sets certain requirements at time of equipment replacement. This study evaluated space heating and water heating equipment. Where a heat pump measure was found to be cost-effective based on either LSC or On-Bill, this may serve as the basis of a reach code given the following considerations.
i. Where reach codes reduce energy usage and are not just fuel switching, cost-effectiveness calculations are required and must be based on equipment that does not exceed the federal minimum efficiency requirements.
ii. Where reach codes are established using cost-effectiveness based on LSC, utility bill impacts and the owner’s first cost should also be reviewed and considered. 1 TECH Public Reporting Home Page (techcleanca.com)
2 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-response-dr/demand-flexibility-rulemaking California Energy Codes & Standards | A statewide utility program 2024-04-25 454 of 662

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4 iii. A gas path should also be prescriptively allowed to safely satisfy federal preemption requirements considering the CRA v. Berkeley case.3 Additional requirements may apply to the gas path, as described in Section 3.3, as long as the paths are reasonably energy or cost equivalent.
c. “Flexible Path”, minimum energy savings target: This flexible approach establishes a target for required energy savings based on a measure or a set of measures that were found to be cost-effective based on either LSC or On-Bill. A points menu compares various potential upgrades ranging from efficiency, PV, and fuel substitution measures, based on site or source energy savings. The applicant must select upgrades that individually or in combination meet the minimum energy savings target. The maximum target value shown in the Cost-effectiveness Explorer is based on a combination of costeffective, non-preempted measures.

2. Equipment replacement ordinances should consider appropriate exceptions for scenarios where it will be challenging to meet the requirements, such as location of the HPWH, total project cost limitations, or the need for service panel upgrades that wouldn’t have been required as part of the proposed scope of work in absence of the reach code.

3. Consider extending relevant proposals made by the CEC for the 2025 Title 24 code (California Energy Commission, 2023) in ordinances that apply under the 2022 Title 24 code, such as the following:
a. Mandatory ventilation requirements for HPWH installations (Section 110.3(c)7). The cost-effectiveness analysis can be found in the Multifamily Domestic Hot Water CASE report (Statewide Team, 2023). b. Requirement for HERS verified refrigerant charge verification for heat pumps in all climate zones (Table 150.1-A4). The cost-effectiveness analysis can be found in the Residential HVAC Performance CASE report (Statewide Team, 2023).

4. When evaluating reach code strategies, the Reach Codes Team recommends that jurisdictions consider combined benefits of energy efficiency alongside electrification. Efficiency and electrification have symbiotic benefits and are both critical for decarbonization of buildings. As demand on the electric grid is increased through electrification, efficiency can reduce the negative impacts of additional electricity demand on the grid, reducing the need for increased generation and storage capacity, as well as the need to upgrade upstream transmission and distribution equipment.

5. Education and training can play a critical role in ensuring that heat pumps are installed, commissioned, and controlled properly to mitigate grid impacts and maximize occupant satisfaction. Below are select recommended strategies.
a. The Quality Residential HVAC Services Program5 is an incentive program to train California contractors in providing quality installation and maintenance while advancing energy-efficient technologies in the residential HVAC industry. Jurisdictions can market this to local contractors to increase the penetration of contractors skilled in heat pump design and installation. b. Educate residents and contractors of available incentives, tax credits, and financing opportunities. c. Educate contractors on code requirements. Energy Code Ace provides free tools, training, and resources to help Californians comply with the energy code. Contractors can access interactive compliance forms, fact sheets, and live and recorded trainings, among other things, on the website:
https://energycodeace.com/. Jurisdictions can reach out to Energy Code Ace directly to discuss offerings.

6. Health and safety
a. Combustion Appliance Safety and Indoor Air Quality: Implementation of some of the recommended measures will affect the pressure balance of the home which can subsequently impact the safe operation of existing combustion appliances as well as indoor air quality. Buildings with older gas appliances can present serious health and safety problems which may not be addressed in a remodel 3 https://www.publichealthlawcenter.org/sites/default/files/2024-01/CRA-v-Berkeley-Ninth-Circuit-Opinion-Jan2024.pdf 4 This requirement does not show up in the Express Terms for alterations in Section 150.2(b)1F, but the Statewide Reach Codes Team expects that it will be added to the next release of the proposed code language in the 45-day language as it aligns with the proposal made by the Codes and Standards Enhancement Team (Statewide CASE Team, 2023). 5 https://qualityhvac.frontierenergy.com/ California Energy Codes & Standards | A statewide utility program 2024-04-25 455 of 662

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5 if the appliances are not being replaced. It is recommended that the building department require inspection and testing of all combustion appliances located within the pressure boundary of the building after completion of retrofit work that involves air sealing or insulation measures. b. Jurisdictions may consider requiring mechanical ventilation in homes where air sealing has been conducted. In older buildings, outdoor air is typically introduced through leaks in the building envelope.

After air sealing a building, it may be necessary to forcefully bring in fresh outdoor air using supply and/or exhaust fans to minimize potential issues associated with indoor air quality.

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. For example, reach codes that amend Part 6 of the CA Building Code and require energy performance beyond state code minimums must demonstrate the proposed changes are cost-effective and obtain approval from the Energy Commission as well as the Building Standards Commission (BSC). Amendments to Part 11, such as requirements for increased water efficiency or electric vehicle infrastructure only require BSC approval. Although a cost-effectiveness study is only required to amend Part 6 of the CA Building Code, this study provides valuable context for jurisdictions pursuing other ordinance paths 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.

Local jurisdictions that are considering adopting an ordinance may contact the program for further technical support at [email protected].

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6 1 Introduction
This report documents 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 focus of this study is on existing single family buildings and does not apply to low or high-rise multifamily buildings.

Each jurisdiction must establish the appropriate structure and threshold for triggering the proposed requirements.

Some common jurisdictional structures include triggering the requirements at major remodels, additions, or date-certain (upgrades must be completed by a specific date). Some of these measures could be triggered with a permit for another specific measure, such as a re-roofing project. The analysis includes scenarios of individual measures and identifies cost-effective options based on the existing conditions of the building in all 16 California Climate Zones (CZ) (see CostEffectiveness Results for a graphical depiction of climate zone locations).

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.

The Department of Energy (DOE) sets minimum efficiency standards for equipment and appliances that are federally regulated under the National Appliance Energy Conservation Act, including heating, cooling, and water heating equipment (E-CFR, 2020). Since state and local governments are prohibited from adopting higher minimum efficiencies than the federal standards require, the focus of this study is to identify and evaluate cost-effective packages that do not include high efficiency heating, cooling, and water heating equipment. High efficiency appliances are often the easiest and most affordable measure to increase energy performance. While federal preemption limits reach code mandatory requirements for covered appliances, in practice, builders may install any package of compliant measures to achieve the performance requirements.

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7 2 Methodology and Assumptions

2.1 Analysis for Reach Codes
This section describes the approach to calculating cost-effectiveness including benefits, costs, metrics, and utility rate selection.

2.1.1 Modeling
The Reach Codes Team performed energy simulations using the 2025 research version of the Residential California Building Energy Code Compliance software (CBECC). The 2025 version of CBECC was used instead of the 2022 version to take advantage of updated weather files and metrics. Site energy results are similar between CBECC-Res 2022 and 2025; however, the 2025 compliance metrics applies assumptions reflective of an electrified future, such as high escalation for natural gas retail rates, which favors electric buildings. In addition, in 2025 the weather stations were changed in Climate Zones 4 and 6 from San Jose to Paso Robles and Torrance to Los Angeles International Airport, respectively.

Three unique building vintages are considered: pre-1978, 1978-1991, and 1992-2010. The vintages were defined based on review of historic Title 24 code requirements and defining periods with distinguishing features. Prospective energy efficiency measures were identified and modeled to determine the projected site energy (therm and kWh), source energy, GHG emissions, and LSC (long-term systemwide cost) impacts. Annual utility costs were calculated using hourly data output from CBECC, and current (as of 11/01/2023) electricity and natural gas tariffs for each of the investor-owned utilities (IOUs) appropriate for that climate zone.

Equivalent CO2 emission reductions were calculated based on outputs from the CBECC-Res simulation software.

Electricity emissions vary by region and by hour of the year. CBECC-Res applies two distinct hourly profiles, one for Climate Zones 1 through 5 and 11 through 13 and another for Climate Zones 6 through 10 and 14 through 16. Natural gas emissions do not vary hourly. To compare the mixed-fuel and all-electric cases side-by-side, GHG emissions are presented as lbs CO2-equivalent (CO2e) emissions.

The Statewide Reach Codes Team designed the analysis approach and selected measures for evaluation based on the 2019 existing building single family reach code analysis (Statewide Reach Codes Team, 2021) and work to support the 2025 Title 24 code development cycle as well as from outreach to architects, builders, and engineers.

2.1.2 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,6 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 1 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 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). The proposed prescriptive requirements for single family new construction homes are heat pump space heaters and water heaters, with gas equipment only allowed in the performance approach. 6 https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf California Energy Codes & Standards | A statewide utility program 2024-04-25 458 of 662

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8 Table 1. 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 costeffective, 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 2 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. o Scenarios with an existing natural gas wall furnace without AC were also evaluated. • Small storage natural gas water heater.
o 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 2 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.

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9 Table 2. 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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2.1.3 Cost-Effectiveness Approach

2.1.3.1 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 (the numerator in the benefit cost calculation):

Utility Bill Impacts (On-Bill): This customer-based lifecycle cost (LCC) approach values energy based upon estimated site energy usage and customer utility bill savings using the latest electricity and natural gas utility tariffs available at the time of writing this report. Total savings are estimated over a 30-year duration and include discounting of future utility costs, as well as assumed energy cost inflation over time.

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.

2.1.3.2 Costs
The Reach Codes Team assessed the incremental costs of the measures and packages over a 30-year analysis period. 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. Present value of replacement cost is included only for measures with lifetimes less than the 30-year evaluation period. In cases where at the end of the analysis period the measure has useful life remaining, the value of this remaining life is calculated and credited in the total lifetime cost.

2.1.3.3 Metrics
Cost-effectiveness is presented using net present value (NPV) and benefit-to-cost (B/C) ratio metrics.

NPV: Equation 1 demonstrates how lifetime NPV is calculated. If the NPV of a measure or package is positive, it is considered cost-effective. A negative value represents a net increase in costs over the 30-year lifetime.

B/C Ratio: This is the ratio of the present value of all benefits to the present value of all costs over 30 years (present value benefits divided by present value costs). A value of one indicates the NPV of the savings over the life of the measure is equivalent to the NPV of the lifetime incremental cost of that measure. A value greater than one represents a positive return on investment. The B/C ratio is calculated according to Equation 2.

Equation 1
𝑁𝑁𝑁𝑁𝑁𝑁 = 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑏𝑏𝑝𝑝𝑝𝑝𝑝𝑝𝑜𝑜𝑙𝑙𝑝𝑝 − 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑐𝑐𝑜𝑜𝑝𝑝𝑝𝑝 Equation 2
𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑏𝑏𝑝𝑝𝑝𝑝𝑝𝑝𝑜𝑜𝑙𝑙𝑝𝑝 𝐵𝐵𝑝𝑝𝑝𝑝𝑝𝑝𝑜𝑜𝑙𝑙𝑝𝑝 − 𝑝𝑝𝑜𝑜 − 𝐶𝐶𝑜𝑜𝑝𝑝𝑝𝑝 𝑅𝑅𝑣𝑣𝑝𝑝𝑙𝑙𝑜𝑜 = 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑐𝑐𝑜𝑜𝑝𝑝𝑝𝑝 Improving the efficiency of a project often requires an initial incremental investment. In most cases the benefit is represented by annual On-Bill utility or LSC savings, and the cost is represented by incremental first cost and future replacement costs. Some packages result in initial construction cost savings relative to the assumed base case scenario, 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 costeffective immediately (i.e., upfront construction cost savings and lifetime energy cost savings), B/C ratio costeffectiveness is represented by “>1”.

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The lifetime costs or benefits are calculated according to Equation 3.

Equation 3
𝐴𝐴 (𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑐𝑐𝑜𝑜 𝑏𝑏𝑏𝑏𝐴𝐴𝑏𝑏𝑏𝑏𝑏𝑏𝑐𝑐)𝑡𝑡 𝑁𝑁𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑐𝑐𝑜𝑜𝑝𝑝𝑝𝑝 𝑜𝑜𝑝𝑝 𝑏𝑏𝑝𝑝𝑝𝑝𝑝𝑝𝑜𝑜𝑙𝑙𝑝𝑝 = ∑𝑐𝑐=0 (1+𝑜𝑜)𝑡𝑡 Where:

1. n = analysis term in years

2. r = discount rate
The following summarizes the assumptions applied in this analysis to both methodologies.

3. Analysis term of 30 years

4. Real discount rate of three percent
Both base case measures and alternative energy efficiency measures may have different lifetime assumptions which impact life cycle economics. Future costing of many of the evaluated electrification measures are only based on current cost assumption, which may be overly conservative as the expected growth in heat pump-based technologies is growing rapidly and will likely lead to future cost reductions (at least relative to current fossil fueled equipment) as production volumes increase.

2.1.4 Utility Rates
In coordination with the CA IOU rate team (comprised of representatives from Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E)) and two Publicly-Owned-Utilities (POUs) (Sacramento Municipal Utility District (SMUD) and City of Palo Alto Utilities (CPAU)), the Reach Codes Team determined appropriate utility rates for each climate zone to calculate utility costs and determine On-Bill costeffectiveness for the proposed measures and packages. The utility tariffs, summarized in Chapter 6.2, were determined based on the appropriate rate for each case in each territory. Utility rates were applied to each climate zone based on the predominant IOU serving the population of each zone, with a few climate zones evaluated multiple times under different utility scenarios. Climate Zones 10 and 14 were evaluated with both SCE for electricity and Southern California Gas Company (SoCalGas) for gas and SDG&E tariffs for both electricity and gas since each utility has customers within these climate zones. Climate Zone 5 is evaluated under both PG&E and SoCalGas natural gas rates.

Two POU or municipal utility rates were also evaluated: SMUD in Climate Zone 12 and CPAU in Climate Zone 4.

For cases with onsite generation (i.e. solar photovoltaics (PV)), the approved NBT tariffs were applied along with monthly service fees and hourly export compensation rates for 2024.7 In December 2022, the California Public Utilities Commission (CPUC) issued a decision adopting NBT as a successor to NEM 2.0 that went into effect April of 20238 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. The Statewide Natural Gas Residential Average Rate for 2023 through 2030 is projected to be 4.6%. The Electric Residential Average Rate for PG&E, SCE and SDG&E for 2023 through 2030 is projected to be 1.8%,1.6% and 2.8% respectively. 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 3.2.4, was based on those used within the 2025 LSC factors (LSC replaces TDV in the 2025 code cycle) which assumed steep 7 Hourly export compensation rates were based on the NBT spreadsheet model created by E3 for the CPUC. https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/net-energy-meteringnem/nemrevisit/nbt-model--12142022.xlsb 8 https://www.cpuc.ca.gov/nemrevisit
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increases in gas rates in the latter half of the analysis period. See Appendix 6.2.7 Fuel Escalation Assumptions for details.

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.10 These were not included in this analysis but may be evaluated later in 2024 once the rates are finalized.

2.1.5 Measure Cost Data Collection Approach
To support this effort, a detailed cost study was completed in the summer of 2023 to gather data from a range of contractors to inform actual installed costs in the areas they provide services. These areas include HVAC, plumbing, envelope and air-sealing, and PV installation. Home performance contractors were also approached to collect this data. Collecting this type of data is challenging, both due to contractor reticence to share cost information and due to the timing of the survey which unfortunately coincided with the summer busy season for most contractors, especially HVAC installers. With these known challenges, the outreach effort focused on leveraging existing relationships between the analysis team and contractors to both gain access and provide assurance that all cost data would remain confidential and aggregated. Contractors that provided feedback were nominally compensated for their time.

The collected cost data was intended to represent recent costs for a “typical” retrofit installation. Each home in which a contractor does work has different site-specific issues that will likely affect costs. In addition, different jurisdictions have different levels of building department installation oversight and permit fees. Finally, each contractor typically has a different manufacturer product line they prefer to install. All these factors will influence installed costs11.

The most detailed and broad cost request was for the HVAC contractors, as there are a wide range of equipment replacement scenarios available for an existing ducted gas furnace with central split-system air conditioning. Options range from a base case scenario (like for like swap out), split-system heat pump replacement, dual fuel heat pumps (DFHP), ducted mini-split heat pumps, non-ducted mini-splits, etc. For plumbing contractors, a range of scenarios existed for water heater replacements including like-for-like replacement, HPWHs (in different locations- garage, indoor), need for electrical upgrade for HPWH installation, need for HPWH ducting, etc. Envelope measures focused on attic and wall insulation, window replacement, re-roofing (with Cool Roof materials or not), and attic ceiling plane airsealing. PV costing included different system sizes, panel upgrades costs, and battery costs. Home performance contractors were asked to provide as much data as they could on the different measure options. All costing information requested was intended to represent most recent installations, in an effort to capture current pricing as best as possible.

The contractors that responded with their cost estimates work in different regions of the state, operate in different markets with (potentially) different local efficiency incentives, do varying amounts of work based on the size of their company, target different market demographic sectors, and install different brands of equipment. All these factors will contribute to price variability. The Team considered applying climate zone specific cost adjustments to reflect some of these differences, but ultimately decided not to since a climate zone is not a monolithic entity with uniform customer pricing throughout. The Team recognizes that “zip code” pricing is a reality, but for simplicity, as well as consistency with Title 24, Part 6 code development costing approaches, applied uniform statewide costs to all measures.

2.2 Measure Details and Cost
This section describes the details of the measures and documents incremental costs. All measure costs were obtained from the contractor survey unless otherwise noted. All contractor provided costs reflect the cost to the customer and 10 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-response-dr/demandflexibility-rulemaking 11 One HVAC contractor mentioned that equipment brand alone may contribute to a +/-%5 variation in the total bid cost.

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Cost -Effectiveness Analysis: Existing Single Family Building Upgrades 13 Methodology and Assumptions
include equipment, labor, permit fees, and required HERS testing. Additional details of the measures can be found in Appendix Section Error! Reference source not found..

All measures are evaluated assuming they are not otherwise required by Title 24. For example, duct sealing is required by code whenever HVAC equipment is altered. For this analysis duct sealing was evaluated for those projects where it is not already triggered by code (i.e., no changes to the heating or cooling equipment). Where appropriate, measure requirements align with those defined in Title 24. In some cases, cost-effective measures were identified that exceed Title 24 requirements, such as attic insulation, cool roofs, and duct sealing.

2.2.1 Building Envelope & Duct Measures
The following are descriptions of each of the efficiency upgrade measures applied in this analysis.

Attic Insulation: Add attic insulation in buildings with vented attic spaces to meet either R-38 or R-49. The pre-1978 vintage assumes an existing condition of R-11, the 1978-1991 vintage assumes an existing condition of R-19, and the 1992-2010 vintage assumes R-30 as the existing insulation level. For pre-1978 vintage homes this measure was also evaluated to include air sealing of the attic. A 14% leakage reduction was modeled such that 15 ACH50 was reduced to 12.9 ACH50 in this measure. The costs for this measure include removing existing insulation.

Air Sealing and Weather-stripping: Apply air sealing practices throughout all accessible areas of the building. For this study, it was assumed that older vintage homes would be leakier than newer buildings and that approximately 30 percent improvement in air leakage is achievable through air sealing of all accessible areas. For modeling purposes, it was assumed that air sealing can reduce infiltration levels from 15 to ten air changes per hour at 50 Pascals pressure difference (ACH50) in the oldest vintages (pre-1978), to ten to seven ACH50 for the 1978-1991 vintage, and seven to five ACH50 in the 1992-2010 vintage.

Cool Roof: For steep slope roofs, install a roofing product rated by the Cool Roof Rating Council (CRRC) with an aged solar reflectance of 0.20 or 0.25 and thermal emittance of 0.75 or higher. This measure only applies to buildings that are installing a new roof as part of the scope of the remodel; the cost and energy savings associated with this upgrade reflects the incremental step between a standard roofing product with one that is CRRC rated with an aged solar reflectance of 0.20 or 0.25. This is similar to cool roof requirements in 2022 Title 24 Section 150.2(b)1Ii but assumes a higher solar reflectance.

Radiant Barrier: Add radiant barrier to any existing home vintage. This measure only applies to buildings that are installing a new roof as part of the scope of the remodel; the cost and energy savings associated with this upgrade reflects the incremental step between a standard roofing product with one that includes a laminated radiant barrier.

Raised Floor Insulation: In existing homes with raised floors and no insulation (pre-1978 and 1978-1991 vintages), add R-19 insulation. An upgraded R-30 floor insulation, assuming no current insulation, was evaluated in the pre-1978 and 1978-1991 vintages.

Wall Insulation: Blow-in R-13 wall insulation in existing homes without wall insulation (pre-1978 vintages).

Window Replacement: Replace existing windows with a non-metal dual-pane product, which has a U-factor equal to

0.28 Btu/hour-ft2-°F or lower and a Solar Heat Gain Coefficient (SHGC) equal to 0.23 or lower, except in heating dominated climates (Climate Zones 1, 3, 5, and 16) where an SHGC of 0.35 was evaluated.

Duct Sealing, New Ducts, and Duct Insulation: Air seal all ductwork to meet the requirements of the 2022 Title 24, Part 6 Section 150.2(b)1E. For this analysis, final duct leakage values of ten percent (proposed revised leakage rate for 2022 Title 24) was evaluated. The pre-1978 and 1978-1992 vintages assume leaky existing ducts (25-30% leakage).

The 1992-2010 vintage assumes moderately leaky existing ducts (15-20% leakage).

Replacing existing ductwork with entirely new ductwork to meet Sections 150.2(b)1Di and 150.2(b)1Diia of the 2022 Title 24 was also evaluated. This assumed new ducts meet 5% duct leakage and the option of R-6 and R-8 duct insulation in all climate zones.

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Table 3 summarizes the cost assumptions for the building envelope and HVAC duct improvement measures evaluated.

All the measures in Table 3 assume a 30-year effective useful life.

Table 3. Measure Cost Assumptions – Efficiency & Duct Measures Measure Performance Level
Incremental Cost –
Single Family Building
Pre 1978 1978 – 1991 1992 - 2010
Wall Insulation R-13 $2,950 N/A N/A
Raised Floor
Insulation
R-19 $3,633 $3,633 N/A
R-30 $4,113 $4,113 $4,113
Attic Insulation
R-38 $6,762 $2,555 $1,781
R-49 $7,446 $3,612 $1,827
Air Sealing
10 ACH50 $4,684 N/A N/A
7 ACH50 N/A $4,684 N/A
5 ACH50 N/A N/A $4,684
Cool Roof

0.25 Aged Solar Reflectance
CZs 1-3,5-7,16 $2,407 $2,407 $2,407

0.25 Aged Solar Reflectance
CZs 4, 8-15 $1,203 $1,203 $1,203
Window
U-factor/SHGC

0.28 U-factor. 0.23 SHGC in
CZs 2,4,6-15. $11,463 $11,463 $11,463

0.28 U-factor. 0.35 SHGC in
CZs 1,3,5,26 $11,871 $11,871 $11,871
Radiant Barrier Add Radiant Barrier $893 $893 $893
Duct Sealing 10% nominal airflow $2,590 $2,590 $1,400
All New Duct
System
R-6 ducts;
5% duct leakage $4,808 $4,808 $4,808
R-8 ducts;
5% duct leakage $6,311 $6,311 $6,311

2.2.2 PV Measures
Installation of on-site PV is required in the 2022 Title 24 code for new construction homes, but there are no PV requirements for additions or alterations to existing buildings. PV was evaluated in CBECC-Res according to the California Flexible Installation (CFI) 1 assumptions and 98% solar access. To meet CFI eligibility, the requirements of 2022 Reference Appendices JA11.2.2 (California Energy Commission, 2021b) must be met. A 3 kW PV system was modeled both as a standalone measure as well as coupled with heat pump installations.

The costs for installing PV are summarized in Table 4. They include the first cost to purchase and install the system, future inverter replacement costs, and annual maintenance costs. Upfront solar PV system costs are estimated from the contractor surveys to be $4.58/WDC and are reduced by 30 percent to account for the federal income Residential Clean Energy Credit. The solar panels are estimated to have an effective useful life of 30 years and the inverter 25 years. The inverter replacement cost of $7,000 (future value) is also from the contractor surveys. System maintenance costs are taken from the 2019 PV CASE Report (California Energy Commission, 2017) and are assumed to be California Energy Codes & Standards | A statewide utility program 2024-04-25 465 of 662

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$0.31/WDC present value. These costs do not include costs associated with electrical panel upgrades, which will be necessary in some instances.

Table 4. Measure Descriptions & Cost Assumptions – PV
Measure Performance
Level
Incremental Cost
Pre 1978 1978 – 1991 1992 - 2010
PV 3 kW $9,608

2.2.3 Equipment Fuel Substitution Measures – Heat Pump Equipment The fuel substitution measures are evaluated as replacements at the end of the life of the existing equipment. This means the baseline compared against is usually a like-for-like change-out of the natural gas equipment, and the upgrade is a heat pump.

For most of the space heating and water heating cases, costs for electrical service panel upgrades are not included as it is assumed many existing homes have the service capacity to support converting one appliance from gas to electric.

For homes with existing air conditioners, any incremental electric capacity necessary to support a heat pump space heater is marginal. The same applies for homes with existing electric resistance equipment. Section 3.2.4 presents the impacts for select cases where an upgrade to the electric panel is required.

Heat Pump Space Heating
All the heat pump space heater (HPSH) measures are described below. All were evaluated with HERS verified refrigerant charge aligned with the proposed code requirements for the 2025 Title 24 code. Dual fuel heat pumps (DFHPs) were controlled to lockout furnace operation above 35°F.

DFHP (Existing Furnace): Replace existing ducted air conditioner (AC) with an electric heat pump and install controls to operate the heat pump to use the existing gas furnace for backup heat. A minimum federal efficiency (14.3 SEER2,

11.7 EER2, 7.5 HSPF2) heat pump was evaluated. Savings are compared to a new AC (14.3 SEER2, 11.7 EER2) alongside the existing furnace (78 AFUE).

DFHP (New Furnace): Replace existing ducted AC and natural gas furnace with an electric heat pump and new gas furnace plus controls to operate the heat pump and use the new gas furnace for backup heat. A minimum federal efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) heat pump and furnace (80 AFUE) were evaluated to replace existing equipment. Savings are compared to a new ducted AC and natural gas furnace (14.3 SEER2, 11.7 EER2, 80 AFUE).

Heat Pump Space Heater: Replace existing ducted AC and natural gas furnace with an electric heat pump. Minimum federal efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) and higher efficiency (17 SEER2, 12.48 EER2, 9.5 HSPF2) heat pumps were evaluated. Savings are compared to a new ducted natural gas furnace and AC (14.3 SEER2, 11.7 EER2, 80 AFUE).

Ducted Mini-Split Heat Pump (MSHP): Replace existing ducted AC and natural gas furnace with a ducted high efficiency MSHP (16.5 SEER2, 12.48 EER2, 9.5 HSPF2). Savings are compared to a new ducted AC and natural gas furnace (14.3 SEER2, 11.7 EER2, 80 AFUE).

Ductless MSHP: In a home without AC, replace existing wall furnace with a ductless MSHP. A standard efficiency unit meeting minimum federal efficiency standards (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) was evaluated by modeling the variable capacity heat pump (VCHP) compliance credit in CBECC-Res. A premium, higher efficiency upgrade was also California Energy Codes & Standards | A statewide utility program 2024-04-25 466 of 662

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evaluated using CBECC-Res’ detailed VCHP model12 by simulating the performance of a representative high efficiency product (14.3 SEER2, 11.7 EER2, 7.5 HSPF2). Savings are compared to a new natural gas wall furnace with fan distribution (75% AFUE) and window AC (9 CEER).

Over the 30-year analysis period, certain changes are assumed when the equipment is replaced that impact both lifetime costs and energy use. Table 5 presents the lifetime scenario for the DFHP (existing furnace) measure. The analysis assumed a 20-year effective useful lifetime (EUL) for a furnace, a 15-year EUL for an air conditioner and a 15- year EUL for a heat pump. Lifetimes are based on the Database for Energy Efficient Resources (DEER) (California Public Utilities Commission, 2021b). The existing furnace is assumed to be halfway through its EUL at the beginning of the analysis period. After 10 years when the furnace reaches the end of its life and needs to be replaced, it will be subject to new federal efficiency standards for residential gas furnaces that go into effect in 2028 requiring 95 AFUE13. 5 years later the air conditioner reaches the end of its life and is replaced with a new air conditioner.

For the DFHP upgrade case, after 10 years when the furnace fails it’s expected that the furnace will be abandoned in place since the heat pump serves primary heating and was sized to provide the full design heating load. In this case it is assumed that the fan motor would be replaced with a new aftermarket unit and would operate another 5 years until the heat pump fails and is replaced with a new heat pump and air handler.

The other ducted heat pump cases similarly apply a 95 AFUE furnace in the baseline when the furnace reaches its EUL after 20 years.

Table 5. Lifetime Analysis Replacement Assumptions for DFHP (Existing Furnace) Scenario Year Baseline Upgrade
0 AC fails, install new AC,
keep existing furnace
AC fails, install new HP,
keep existing furnace
10 Furnace fails, install new
95AFUE furnace
Furnace fails, replace fan
motor
15 AC fails, install new AC HP fails, install new HP
and air handler
Costs were applied based on the system capacity from heating and cooling load calculations in CBECC-Res as presented in Table 6. Air conditioner nominal capacity was calculated as the CBECC-Res cooling load, rounded up to the nearest half ton. Heat pump nominal capacity was calculated as the maximum of either the CBECC-Res heating or cooling load, rounded up to the nearest half ton. In both cases a minimum capacity of 1.5-ton was applied as this represents the typical smallest available split system heat pump equipment. Load calculations demonstrated that Climate Zones 2 - 15 were cooling-dominated while Climate Zones 1 and 16 were heating-dominated. In the heating dominated climate zones the heat pump needed to be upsized relative to an air conditioner that only provides cooling. 12 The detailed VCHP option allows for the user to input detailed specifications based on the published National Energy Efficiency Partnership (NEEP) manufacturer specific performance data. It is not currently available for compliance analysis.
13 https://www.energy.gov/articles/doe-finalizes-energy-efficiency-standards-residential-furnaces-save-americans-15- billion#:~:text=These%20furnace%20efficiency%20standards%20were,heat%20for%20the%20living%20space.

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Table 6. System Sizing by Climate Zone
Climate
Zone
Air Conditioner
Capacity (tons)
Heat Pump
Capacity (tons)
1 1.5 3.0
2 3.5 3.5
3 2.5 2.5
4 3.5 3.5
5 3.0 3.0
6 3.0 3.0
7 3.0 3.0
8 4.0 4.0
9 4.0 4.0
10 4.0 4.0
11 4.5 4.5
12 4.0 4.0
13 4.5 4.5
14 4.0 4.0
15 5.0 5.0
16 3.5 4.0
Table 7 presents estimated first and lifetime costs for the various ducted baseline and heat pump scenarios for 4-ton equipment. Costs include all material and installation labor including providing new 240 V electrical service to the air handler location for all new air handler installations and decommissioning of the furnace for the cases where the furnace is removed. DFHP costs incorporate controls installation and commissioning to ensure the heat pump and the furnace communicate properly and don’t operate at the same time. Future replacement costs do not include any initial costs associated with 240V electrical service or furnace decommissioning.

Table 8 presents estimated first and lifetime costs for the ductless baseline and 2 heat pump scenarios, also for 4-ton heat pump equipment. EULs are based on 20 years for the gas wall furnace, 10 years for the window AC, and 15 years for the heat pump.14
14 The gas wall furnace and heat pump EULs were based on DEER (California Public Utilities Commission, 2021b).

Gas wall furnace lifetime was assumed to be the same as for central gas furnace equipment. Room air conditioner EUL was based on the DOE’s latest rulemaking for room air conditioned (Department of Energy, 2023). DOE determined an average lifetime of 9.3 years, which was rounded up to 10 years for this analysis.

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Table 7. Ducted HVAC Measure Cost Assumptions – 4-Ton Electric Replacements Case AC + Coil
Gas
Furnace
/AC
DFHP
(Existing
Furnace)
DFHP (New
Furnace)
Min. Eff.

Heat Pump
High Eff.

Heat
Pump
Ducted
MSHP
Base Case - - AC + Coil
Gas
Furnace
/AC
Gas
Furnace
/AC
Gas
Furnace
/AC
Gas
Furnace
/AC
First Cost $10,402 $16,653 $12,362 $20,676 $17,825 $20,802 $18,075 Replacement Cost
(Future Value) $19,365 $19,365 $19,025 $19,025 $16,825 $19,802 $18,075 Replacement Cost
(Present Value) $13,346 $11,639 $12,334 $12,897 $10,800 $12,710 $11,601 Remaining Value
at Year 30 $0 ($1,846) $0 ($1,846) $0 $0 $0
Total Lifecycle
Cost $23,748 $26,446 $24,696 $31,727 $28,625 $33,512 $29,676 Incremental Cost - - $948 $5,281 $2,179 $7,066 $3,230
Table 8. Non-Ducted HVAC Measure Cost Assumptions – 4-Ton Electric Replacements Wall Furnace
+ Window AC
Min. Eff.

Ductless
MSHP
High Eff.

Ductless
MSHP
First Cost $4,075 $17,412 $21,342
Replacement Cost (Future Value) $4,075 $17,412 $21,342
Replacement Cost (Present Value) $3,365 $11,176 $13,698 Remaining Value at Year 30 ($532) $0 $0
Total Lifecycle Cost $6,908 $28,588 $35,040
Incremental Cost - $21,680 $28,132
Heat Pump Water Heating:

The heat pump water heater (HPWH) measures are described below, and costs are presented in Table 9 and Table

10. The most typical scenario in California is a home with existing natural gas storage tank water heaters. However, there are also many existing homes with existing electric resistance storage tank water heaters and this work considers both baselines. This analysis evaluates the following 65-gallon replacement HPWHs:

1. HPWH that meets the federal minimum efficiency requirements of UEF 2.0

2. HPWH that meets the Northwest Energy Efficiency Alliance (NEEA)15 Tier 3 rating (3.45 UEF)

3. HPWH that meets the NEEA Tier 4 rating and that has demand response (DR) or load shifting control capability (4.02 UEF)

4. 120V HPWH that meets the NEEA Tier 3 rating (3.3 UEF). 15 Based on operational challenges experienced in the past, NEEA established rating test criteria to ensure newly installed HPWHs perform adequately, especially in colder climates. The NEEA rating requires an Energy Factor equal to the ENERGY STAR® performance level and includes requirements regarding noise and prioritizing heat pump use over supplemental electric resistance heating.

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The four cases above were evaluated with the HPWH located within an attached garage. Additionally, three separate cases for the federal minimum efficiency HPWH were analyzed to consider the impacts of location on performance and cost-effectiveness. These locations included the following:

1. Exterior closet.

2. Interior closet, no ducting.

3. Interior closet, ducted to the outside.

Additional costs for providing electrical wiring to these locations and for providing ductwork were included. Savings are compared to a new 50-gallon natural gas storage water heater (UEF 0.63) or a new 50-gallon electric water heater (UEF 0.92).

For this analysis, a HPWH that just meets the federal minimum efficiency standards of close to 2.0 Uniform Energy Factor (UEF) was evaluated in order to satisfy preemption requirements. However, the Reach Codes Team is not aware of any 2.0 UEF products that are available on the market. The lowest UEF reported for certified products in the Northwest Energy Efficiency Alliance (NEEA)16 database is 2.73. In fact, of the four certification tiers offered by NEEA for high efficiency HPWHs, those meeting Tier 3 or Tier 4 are the dominant products on the market today. According to NEEA all major HPWH manufacturers are represented in NEEA’s qualified product list17 and there are fewer than 10 integrated products certified as Tier 1 or Tier 2, all of which have UEFs greater than 3.0.18 Therefore, in this analysis, we refer to the NEEA rated HPWH as the “market standard” HPWH.

The HPWH costs for the 120V and NEEA certified units are based on a larger (60 or 65 gallon) HPWH, as most contractors are upsizing the HPWH tank size relative to an equal volume, but higher capacity gas storage water heater.

Costs include all material and installation labor including providing a new 240 V electrical service to the water heater location (not needed for the 120V product). Water heating equipment lifetimes are based on DOE’s recent water heater rulemaking (Department of Energy, 2022) and assume 15-year EULs for both the baseline water heaters and the HPWHs.19 Future replacement costs for 240V HPWHs do not include any initial costs associated with 240V electrical service, condensate disposal, etc.

Table 9. Water Heating Measure Cost Assumptions – Existing Gas Gas
Storage
Water
Heater
240V
Fed.

Min.

HPWH
240V
Market
Std. NEEA
HPWH
240V
Market
Std. NEEA
HPWH +
DR
120V
Market
Std. NEEA
HPWH
240V Fed.

Min.

HPWH,
Exterior
Closet
240V Fed.

Min. HPWH,
Interior
Closet, Not
Ducted
240V Fed.

Min. HPWH,
Interior
Closet,
Ducted
First Cost $2,951 $7,283 $8,144 $8,144 $5,844 $7,702 $7,363 $8,442 Replacement Cost
(Future Value) $2,951 $6,413 $7,274 $7,274 $5,101 $6,413 $6,413 $6,413 Replacement Cost
(Present Value) $1,894 $4,116 $4,669 $4,669 $3,274 $4,116 $4,116 $4,116 Total Lifecycle Cost $4,845 $11,399 $12,813 $12,813 $9,118 $11,818 $11,479 $12,558 Incremental Cost - $6,554 $7,968 $7,968 $4,273 $6,973 $6,634 $7,713 16 Based on operational challenges experienced in the past, NEEA established rating test criteria to ensure newly installed HPWHs perform adequately, especially in colder climates. The NEEA rating requires products comply with ENERGY STAR and includes requirements regarding noise and prioritizing heat pump use over supplemental electric resistance heating.
17 https://neea.org/success-stories/heat-pump-water-heaters 18 As of 12/21/23: https://neea.org/img/documents/residential-unitary-HPWH-qualified-products-list.pdf 19 The recent DOE rulemaking references a lifetime of 14 years for gas storage water heaters and 14.8 years for electric storage water heaters. 15 years for each was used in this analysis for both types for simplification.

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Table 10 presents similar costs to Table 9, except that the costs assume replacement of an existing 50-gallon electric storage water heater and does not include the 240 V electrical service cost.

Table 10. Water Heating Measure Cost Assumptions – Existing Electric Resistance Electric
Storage
Water
Heater
240V
Fed. Min.

HPWH
240V
Market
Std. NEEA
HPWH
240V
Market
Std. NEEA
HPWH +
DR
120V
Market
Std. NEEA
HPWH
240V Fed.

Min.

HPWH,
Exterior
Closet
240V Fed.

Min. HPWH,
Interior
Closet, Not
Ducted
240V Fed.

Min. HPWH,
Interior
Closet,
Ducted
First Cost $2,583 $6,413 $7,274 $7,274 $5,101 $6,413 $6,413 $7,492 Replacement Cost
(Future Value)
$2,583 $6,413 $7,274 $7,274 $5,101 $6,413 $6,413 $6,413 Replacement Cost
(Present Value)
$1,658 $4,116 $4,669 $4,669 $3,274 $4,116 $4,116 $4,116 Total Lifecycle Cost $4,241 $10,529 $11,943 $11,943 $8,375 $10,529 $10,529 $11,608 Incremental Cost - $6,288 $7,702 $7,702 $4,134 $6,288 $6,288 $7,367 California Energy Codes & Standards | A statewide utility program 2024-04-25 471 of 662

Cost -Effectiveness Analysis: Existing Single Family Building Upgrades 21 Results
3 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/.

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Cost -Effectiveness Analysis: Existing Single Family Building Upgrades 22 Results

3.1 Cost-Effectiveness Results
The extensive analysis for this type of report leads to an overwhelming number of scenarios including different base cases, house vintages, replacement options, and climate zones. To simplify the reporting, the Statewide Reach Codes Team has relied on graphical representation of select key cases indicating high level measure cost effectiveness from either an On-Bill perspective, an LSC perspective, both metrics, or neither. Figure 1 through Figure 13 present this reduced set of results of the LSC and On-Bill cost-effectiveness conclusions across the 16 climate zones. In the cases where there are multiple utilities serving a single climate zone, an asterisk “*” label is added to separately show the alternate utility cases. These graphs provide a general sense of the findings. 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/.

3.1.1 HPSH Measures
Figure 1 through Figure 5 show the cost-effectiveness of space heating equipment replacement measures for the 1992-2010 vintage including the following cases. The 1992-2010 vintage results are presented here as this is the most conservative scenario for HPSH measures. In general, where a HPSH measure is cost-effective for a new home it was also found to be cost-effective for older homes.
• Dual fuel heat pump with existing furnace as backup.
• Standard efficiency ducted central heat pump replacement. • High efficiency ducted central heat pump replacement. • Ducted mini-split heat pump replacement.
• Standard efficiency ducted central heat pump replacement with 3kW PV system.

Figure 1: DFHP with Existing Furnace Figure 2: Standard Efficiency HPSH California Energy Codes & Standards | A statewide utility program 2024-04-25 473 of 662

Cost -Effectiveness Analysis: Existing Single Family Building Upgrades 23 Results
Figure 3: High Efficiency HPSH Figure 4: Ducted MSHP
Figure 5: HPSH + PV
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3.1.2 HPWH Measures
Figure 6 through Table 11 show the cost-effectiveness of water heater measures for the 1992-2010 vintage including the following cases. HPWH energy savings and LSC cost-effectiveness is not sensitive to home vintage but rather depends on the magnitude of hot water loads, which are typically driven by the number of occupants. On-Bill costeffectiveness does vary slightly by vintage due to the impact of the electrification tariff relative to the load profile of the existing home. The impact is largest for the HPWH + PV case where On-Bill cost-effectiveness improves for older homes or homes with overall higher energy use resulting in less exports to the grid for a fixed size PV system. • 240V federal minimum HPWH
• 240V market standard NEEA HPWH
• 120V market standard NEEA HPWH
• 240V federal minimum HPWH with 3kW PV
Figure 6: 240V Federal Minimum HPWH Figure 7: 240V Market Standard NEEA HPWH Figure 8: 120V Market Standard NEEA HPWH Figure 9: 240V Federal Minimum HPWH + PV California Energy Codes & Standards | A statewide utility program 2024-04-25 475 of 662

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• Envelope and Duct Measures
Figure 10 through Figure 13 show the cost-effectiveness results of envelope and duct measures for the pre-1978 vintage including the following measures. The pre-1978 vintage is presented as representing the most favorable existing conditions for cost-effective upgrades. Newer homes with higher performing envelope may still benefit from these types of upgrade measures, but cost-effectiveness is reduced. Some measures, like R-13 wall insulation, aren’t applicable to newer homes which would have been constructed originally with insulated walls. • New R-6 ducts
• 10% duct leakage
• R-13 wall insulation
• R-49 attic insulation
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Figure 10: R-6 Ducts
Figure 11: 10% Duct Leakage
Figure 12: R-13 Wall Insulation Figure 13: R-49 Attic Insulation

3.2 Climate Zone Case Studies
To better understand the details of the results, a few climate zones were selected to provide a more detailed presentation of cost-effectiveness results. Section 3.2.1 through 3.2.3 show the first-year incremental cost, first-year utility savings, and NPV for a variety of cases. Section 3.2.4 shows the sensitivity of the cost effectiveness results due to varying utility escalation rates, the impact of CARE rates, future equipment cost assumptions, and the need for electrical panel upgrades. The climate zones were selected to be representative of areas of significant reach code activity. Please refer to the Cost-Effectiveness Explorer (Statewide Reach Codes, 2023) or the source dataset for the full analysis.

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3.2.1 HPSH Cost-Effectiveness
Cost-effectiveness of heat pump space heating measures for Climate Zones 12 and 16 is summarized in Table 11 and Table 12 below. In Climate Zone 12, HPSH measures are cost-effective based on LSC in all cases except the ductless MSHP cases and are cost-effective On-Bill with SMUD rates in all cases except the DFHP case with a new furnace and the ductless MSHP cases. These measures are cost-effective On-Bill with PGE for the DFHP with an existing furnace and ducted MSHP measures. Climate Zone 16 provides an example of HPSH cost-effectiveness in a cold climate where almost all HPSH measures are cost effective based on LSC but not cost-effective On-Bill.

Table 11. HPSH CZ 12 [1992-2010]
Measure
First
Incremental
Cost
2025 LSC
NPV

PGE SMUD
First-year
Utility
Savings
On-Bill
NPV
First-year
Utility
Savings
On-Bill
NPV
DFHP Existing Furnace $1,960 $7,093 ($19) $1,633 $247 $7,693 DFHP New Furnace $4,023 $3,915 ($34) ($3,134) $234 $2,979 HPSH (Std Efficiency) $1,172 $6,990 ($147) ($2,151) $246 $6,812 HPSH (High Efficiency) $4,149 $5,366 $13 ($3,368) $300 $3,160 Ducted MSHP $1,421 $9,136 $10 $378 $298 $6,951
Ductless MSHP (Std Efficiency) $13,336 ($9,175) $30 ($18,039) $276 ($12,428) Ductless MSHP (High Efficiency) $17,266 ($6,753) $409 ($15,853) $423 ($15,532) HPSH + PV $10,780 $5,289 $452 ($59) $885 $9,821
Table 12. HPSH CZ 16 [1992-2010]
Measure
First
Incremental
Cost
2025 LSC
NPV
PGE
First-year
Utility Savings On-Bill NPV
DFHP Existing Furnace $2,397 $7,289 ($116) ($1,891)
DFHP New Furnace $4,757 $2,457 ($133) ($6,322)
HPSH (Std Efficiency) $2,725 $11,142 ($480) ($8,532)
HPSH (High Efficiency) $5,701 $12,099 ($204) ($7,125)
Ducted MSHP $2,155 $16,554 ($221) ($2,853)
Ductless MSHP (Std Efficiency) $13,336 ($134) ($170) ($19,742) Ductless MSHP (High Efficiency) $17,266 $9,397 $539 ($10,031) HPSH + PV $12,333 $10,640 $316 ($1,949)
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3.2.2 HPWH Cost-Effectiveness
Cost-effectiveness of heat pump water heating measures for Climate Zones 12 and 16 is summarized in Table 13 and Table 14 below. This sensitivity study looks at a wider range of HPWH tank locations and whether or not the unit has ducting for supply and exhaust air. All the HPWH measures in Climate Zones 12 and 16 are cost effective based on LSC.

Table 13. HPWH CZ 12 [1992-2010]
Measure
First
Incremental
Cost
2025 LSC
NPV

PGE SMUD
First-Year
Utility
Savings
On-Bill
NPV
First-Year
Utility
Savings
On-Bill
NPV
240V Fed. Min. HPWH $4,332 $3,536 ($213) ($8,738) $191 $477 240V Market Std. NEEA
HPWH $5,193 $4,304 ($82) ($7,164) $230 ($56)
240V Market Std. NEEA
HPWH + DR $5,193 $5,536 ($21) ($5,773) $248 $362
120V Market Std. NEEA
HPWH $2,893 $9,730 ($2) ($1,651) $254 $4,203
240V Fed. Min. HPWH
(Exterior Closet) $4,751 $2,834 ($224) ($9,431) $186 ($78) 240V Fed. Min. HPWH
(Interior Closet) $4,413 $3,123 ($71) ($6,138) $188 ($235) 240V Fed. Min. HPWH
(Interior Closet, ducted) $5,492 $3,359 ($202) ($9,505) $205 ($231) 240V Fed. Min. HPWH + PV $13,940 $3,567 $577 ($2,300) $831 $3,486 Table 14. HPWH CZ 16 [1992-2010]
Measure
First
Incremental
Cost
2025 LSC
NPV
PGE
First-Year Utility
Savings On-Bill NPV
240V Fed. Min. HPWH $4,332 $4,186 ($250) ($9,307)
240V Market Std. NEEA HPWH $5,193 $4,088 ($160) ($8,652) 240V Market Std. NEEA HPWH + DR $5,193 $5,653 ($79) ($6,804 120V Market Std. NEEA HPWH $2,893 $10,646 ($13) ($1,602) 240V Fed. Min. HPWH (Exterior Closet) $4,751 $3,317 ($268) ($10,154) 240V Fed. Min. HPWH (Interior Closet) $4,413 $5,004 ($18) ($4,690) 240V Fed. Min. HPWH (Interior Closet,
ducted) $5,492 $4,857 ($202) ($9,174)
240V Fed. Min. HPWH + PV $13,940 $5,049 $620 ($1,043)
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3.2.3 Envelope & Duct Improvement Cost-Effectiveness
Cost-effectiveness of envelope and duct measures for Climate Zones 3, 10, and 12 is summarized in Table 15 through Table 17.

Table 15. Envelope and Duct Measures CZ 3 [Pre-1978]
Measure
First
Incremental
Cost
2025 LSC
NPV
PG&E
First-year Utility
Savings On-Bill NPV
R-6 Ducts $4,808 $2,851 $188 $463
R-8 Ducts $6,311 $1,747 $198 ($776)
10% Duct Sealing $2,590 $1,956 $104 $397
R-13 Wall Insulation $2,950 $3,476 $144 $1,221
R-38 Attic Insulation $6,762 ($1,567) $127 ($3,178)
R-49 Attic Insulation $7,446 ($1,768) $139 ($3,520)
R-30 Raised Floor Insulation $4,113 $9,008 $224 $2,975
Cool Roof (0.20 Ref) $893 ($2,419) ($18) ($1,811)
Table 16. Envelope and Duct Measures CZ 10 [Pre-1978]
Measure
First
Incremental
Cost
2025 LSC
NPV

SCE/SCG SDGE
First-year
Utility
Savings
On-Bill
NPV
Firstyear
Utility
Savings
On-Bill
NPV
R-6 Ducts $4,808 $7,463 $783 $13,168 $1,100 $22,155
R-8 Ducts $6,311 $6,326 $800 $12,076 $1,125 $21,268
10% Duct Sealing $2,590 $3,438 $370 $5,969 $518 $10,166 R-13 Wall Insulation $2,950 $1,795 $179 $1,476 $250 $3,494 R-38 Attic Insulation $6,762 $664 $416 $2,951 $582 $7,654 R-49 Attic Insulation $7,446 $796 $467 $3,435 $655 $8.756 R-30 Raised Floor Insulation $4,113 ($999) ($29) ($4,235) ($46) ($4,687) Cool Roof (0.20 Ref) $893 $428 $174 $2,647 $246 $4,656
Table 17. Envelope and Duct Measures CZ 12 [Pre-1978]
Measure
First
Incremental
Cost
2025 LSC
NPV

PG&E SMUD
First-year
Utility
Savings
On-Bill
NPV
Firstyear
Utility
Savings
On-Bill
NPV
R-6 Ducts $4,808 $11,609 $804 $14,727 $413 $5,816
R-8 Ducts $6,311 $10,722 $828 $13,849 $427 $4,711
10% Duct Sealing $2,590 $6,418 $397 $7,280 $222 $3,281
R-13 Wall Insulation $2,950 $5,774 $262 $4,054 $187 $2,342 R-38 Attic Insulation $6,762 $3,727 $499 $5,461 $261 $19 R-49 Attic Insulation $7,446 $4,092 $552 $6,063 $288 $33 R-30 Raised Floor Insulation $4,113 $5,245 $27 ($1,176) $156 $1,175 Cool Roof (0.20 Ref) $893 ($354) $154 $2,123 $44 ($386) California Energy Codes & Standards | A statewide utility program 2024-04-25 480 of 662

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3.2.4 Sensitivities
Table 18 shows the On-Bill NPV results of Climate Zone 12 with PG&E utility rates and the impacts of escalation rates, and CARE rates. The “Standard Results” in Table 18 assumes the escalation rates used in the analysis presented elsewhere in this report. Table 19 shows the impact of electrical panel upgrades. The “Standard Results” in Table 19 does not assume a panel upgrade is required.

Table 18. Sensitivity Analysis Results for On-Bill NPV Cost-Effectiveness in Climate Zone 12, PG&E Measure Vintage Standard
Results
2025 LSC
Escalation CARE
DFHP Existing Furnace 1992-2010 $1,063 $8,443 $1,884
DFHP New Furnace 1992-2010 ($6,770) $383 ($5,846)
HPSH (Std Efficiency) 1992-2010 ($2,151) $6,011 ($220)
HPSH (High Efficiency) 1992-2010 ($3,368) $4,987 ($2,721) Ducted MSHP 1992-2010 $378 $8,729 $1,057
Ductless MSHP (Std Efficiency) 1992-2010 ($18,039) ($10,732) ($17,623) Ductless MSHP (High Efficiency) 1992-2010 ($15,853) ($8,091) ($18,460) HPSH + PV 1992-2010 ($59) $8,822 ($1,255)
240V Fed. Min. HPWH 1992-2010 ($8,738) ($2,433) ($6,448) 240V Market Std. NEEA HPWH 1992-2010 ($7,164) ($694) ($5,918) 240V Market Std. NEEA HPWH + DR 1992-2010 ($5,773) $770 (5,014) 120V Market Std. NEEA HPWH 1992-2010 ($1,651) $4,930 (1,038) 240V Fed. Min. HPWH (Exterior Closet) 1992-2010 ($9,431) ($3,184) ($7,055) 240V Fed. Min. HPWH (Interior Closet) 1992-2010 ($6,138) ($1,000) ($5,098) 240V Fed. Min. HPWH (Interior Closet, ducted) 1992-2010 ($9,505) ($2,836) ($7,271) 240V Fed. Min. HPWH + PV 1992-2010 ($2,300) $4,952 ($4,858) R-6 Ducts Pre-1978 $14,727 $18,685 $8,592
R-8 Ducts Pre-1978 $13,849 $17,990 $7,532
10% Duct Sealing Pre-1978 $7,280 $9,752 $4,294
R-13 Wall Insulation Pre-1978 $4,054 $6,898 $2,196
R-38 Attic Insulation Pre-1978 $5,461 $8,126 $1,668
R-49 Attic Insulation Pre-1978 $6,063 $8,978 $1,864
R-30 Raised Floor Insulation Pre-1978 ($1,776) $2,468 ($1,602) Cool Roof (0.20 Ref) Pre-1978 $2,123 $1,848 $851
Table 19. Electric Panel Upgrade Sensitivity for CZ 12 [1992-2010] Measure Standard Results Electric Panel Upgrade
On-Bill NPV LSC NPV On-Bill NPV LSC NPV
HPSH (Std Efficiency) ($2,151) $6,990 ($4,931) $4,210
240V Fed. Min. HPWH ($8,738) $3,536 ($11,624) $756
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3.3 Gas Pathways for Heat Pump Replacements
Many jurisdictions are exploring policy options to accelerate the decarbonization of existing homes. A recent Ninth Circuit Court ruling in California Rest. Ass'n v. City of Berkeley20 invalidated Berkeley’s ordinance banning the installation of gas infrastructure in new construction. The ruling stated that the ordinance effectively banned covered products and was preempted by the Energy Policy and Conservation Act (“EPCA”), 42 U.S.C. § 6297(c). Given the possible impacts of that ruling, the Reach Codes Team analyzed policy options targeting equipment replacements that allow for the installation of either electric or gas-fueled equipment. These packages include gas equipment combined with additional efficiency measures resulting in options that are reasonably energy or LSC cost equivalent, to the extent feasible.

For space heating, the heat pump path is a DFHP (existing furnace).. The gas pathway is a new air conditioner with the following list of efficiency upgrades:
• 400 cfm/ton system airflow (HERS verified).
• 0.35 W/cfm fan efficacy (HERS verified).
• Refrigerant charge verification (HERS verified).
• R-8 ducts, 5% leakage (HERS verified).
• R-49 (from R-30) attic insulation.
• Air sealing of the ceiling from 7 to 6.5 ACH50.

The two pathways are presented in Figure 14 comparing total LSC energy use relative to the existing home for the 1992-2010 vintage. In most climate zones, the DFHP (existing furnace) path results in higher energy savings, in the milder climates the air conditioner path saves marginally more energy. A reach code that establishes requirements when an air conditioner is replaced or installed new, could allow for either a heat pump to be installed or an air conditioner as long as the performance measures listed above are met. Note that in this analysis a DFHP (existing furnace) was used; however, a reach code could require a different heat pump measure for the heat pump path. This approach aligns with the CEC’s proposal for the 2025 Title 24 code cycle for heat pump alterations in single family homes (California Energy Commission, 2023).
20 California Rest. Ass'n v. City of Berkeley, 65 F.4th 1045 (9th Cir. 2023) amended by 89 F.4th 1094 (9th Cir. 2024).

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Figure 14. Heat pump space heater path compared to the air conditioner path.

For water heating, the federal minimum HPWH case was used to develop the package. The HPWH was compared to a new gas storage water heater with a 50% solar thermal backup system.

Figure 15. Heat pump water path compared to gas with solar thermal.

The two pathways are presented in Figure 15 comparing total LSC energy use relative to the existing home for the 1992-2010 vintage. In all climate zones, the heat pump path results in higher energy savings than the gas path. A reach code that establishes requirements when a water heater is replaced could allow for either a HPWH to be installed or a gas water heater in combination with a solar thermal system that meets the solar fraction requirements listed above.

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4 Recommendations and Discussion
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 costeffectiveness and quantify the energy cost savings associated with energy efficiency measures compared to the incremental costs associated with the measures.

Conclusions and Discussion:

1. Envelope measures. Improving envelope performance is very cost-effective in many older homes. 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. a. Adding attic insulation is cost effective based on both LSC and On-Bill in many climate zones in homes with no more than R-19 existing attic insulation levels. Increasing attic insulation from R-30 to R-49 was still found to be cost-effective based on at least one metric in the colder and hotter climates of Climate Zone 10 (SDG&E territory only) through 16.
b. Insulating existing uninsulated walls is very cost-effective based on both metrics everywhere except Climate Zones 6 and 7 (in Climate Zone 8 it’s only cost-effective based on LSC). c. Adding R-19 or R-30 floor insulation is cost-effective based on LSC in the older two vintages (Pre-1978 and 1978-1991) in all climate zones except Climate Zones 6-10. d. 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 are substantial and justify costeffectiveness of this measure based on at least one metric in Climate Zones 4, 8 through 12 (PG&E territory only), and 13 through 16.
e. At time of roof replacement, a cool roof with an aged solar reflectance of 0.25 was found to be costeffective in Climate Zones 4, 6 through 12 (PG&E territory only), and 13 through 15. When the roof deck is replaced during a roof replacement, adding a radiant barrier is low cost and provides substantial cooling energy savings to be cost-effective in almost all climate zones and homes.

2. Duct measures: Many older homes have old, leaky duct systems that should be replaced when they reach the end of life, typically 20-30 years. In this case, installing new ducts was found to be cost-effective based on at least one metric (both in most cases) everywhere except mild Climate Zone 7 and Climate Zones 5 and 6 in the 1978-1991 vintage. If duct systems still have remaining life they should be sealed and tested to meet 10% leakage or lower; however, duct upgrades alone were only found to be cost-effective for newer homes in Climate Zones 10 (SDG&E territory only), 11, and 13 through 16. Duct upgrades may be able to be coupled with other measures to reduce the cost.

3. Heat pump space heating: HPSHs were found to be LSC cost-effective in many cases. The DFHP (existing furnace) was LSC cost-effective everywhere except Climate Zone 15. The HPSH was LSC cost-effective everywhere except Climate Zones 8 and 15.
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. SMUD and CPAU are two exceptions where first year utility costs are lower for heat pumps than for gas equipment. Table 11 shows the impact of utility rates on cost-effectiveness of HPSH where the standard and high efficiency HPSH and the HPSH + PV measures are cost-effective under SMUD but not PG&E. Even with higher first year utility bills, there were some cases that still proved On-Bill cost-effective including the DFHP with an existing furnace in the central valley and northern coastal PG&E territories, the ducted MSHP in the central valley as well as Climate Zone 14 in SDG&E territory, and the HPSH + PV measure in CZ 3-5 (PGE), 7-11, and 12 (SMUD) – 15.
b. The ductless MSHPs, evaluated for homes with existing ductless systems, were only found to be costeffective based on either metric in Climate Zones 1 and 16. Ductless MSHPs have a high incremental cost because it is 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 California Energy Codes & Standards | A statewide utility program 2024-04-25 484 of 662

Cost -Effectiveness Analysis: Existing Single Family Building Upgrades 34 Recommendations and Discussion
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.

4. Heat pump water heating: All the HPWH measures were LSC cost-effective in all climate zones. Most measures were not On-Bill cost-effective with the exception of the HPWH + PV which was cost-effective OnBill in CPAU, SMUD, and SDG&E territories in addition to Climate Zones 11, 13, 14, and 15. 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. Table 13 shows the impact of utility rates on costeffectiveness where some HPWH measures are cost-effective under SMUD utility rates but are not costeffective anywhere under PG&E rates in Climate Zone 12. a. Various HPWH locations were also explored, however there are some factors outside of costeffectiveness 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).

5. 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. There are also new initiatives to obtain current costs including the TECH Clean California program21 that publishes heat pump data and costs; however, at the time of this analysis, the TECH data did not contain incremental costs because it only had the heat pump costs but not the gas base case costs.

6. Table 18 shows how CARE rates and escalation rate assumptions will impact cost-effectiveness. a. Applying CARE rates in the IOU territories has the overall impact to increase utility cost savings for an all-electric building compared to a code compliant mixed fuel building, improving On-Bill costeffectiveness. This is due to the CARE discount on electricity being higher than that on gas. The reverse occurs with efficiency measures where lower utility rates reduce savings and subsequently reduce cost-effectiveness.
b. 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 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.22 The CPUC will decide in mid-2024 and the new rates are expected to be in place later that year or in 2025. 21 TECH Public Reporting Home Page (techcleanca.com)
22 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-response-dr/demandflexibility-rulemaking California Energy Codes & Standards | A statewide utility program 2024-04-25 485 of 662

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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.

7. 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 in all climate zones except Climate Zones 1 through 3 and 5 through 6.
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 in this study, 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.

Recommendations:

1. There are various approaches for jurisdictions who are interested in reach codes for existing buildings. Some potential approaches are listed below along with key considerations. a. Prescriptive measures: Non-preempted measures that are found to be cost-effective may be prescriptively required in a reach code. One example of this type or ordinance is a cool roof requirement at time of roof replacement. Another example is requiring specific cost-effective measures for larger remodels, such as high-performance windows when new windows are installed or duct sealing and testing where ducts are in unconditioned space. b. Replacement equipment: This flavor of reach code sets certain requirements at time of equipment replacement. This study evaluated space heating and water heating equipment. Where a heat pump measure was found to be cost-effective based on either LSC or On-Bill, this may serve as the basis of a reach code given the following considerations.
i. Where reach codes reduce energy usage and are not just fuel switching, cost-effectiveness calculations are required and must be based on equipment that does not exceed the federal minimum efficiency requirements.
ii. Where reach codes are established using cost-effectiveness based on LSC, utility bill impacts and the owner’s first cost should also be reviewed and considered. iii. A gas path should also be prescriptively allowed to safely satisfy federal preemption requirements considering the CRA v. Berkeley case.23 Additional requirements may apply to the gas path, as described in Section 3.3, as long as the paths are reasonably energy or cost equivalent.
c. “Flexible Path”, minimum energy savings target: This flexible approach establishes a target for required energy savings based on a measure or a set of measures that were found to be cost-effective based on either LSC or On-Bill. A points menu compares various potential upgrades ranging from efficiency, PV, and fuel substitution measures, based on site or source energy savings. The applicant must select upgrades that individually or in combination meet the minimum energy savings target. The measures used to set the target should be non-preempted measures.

3. Consider extending relevant proposals made by the CEC for the 2025 Title 24 code (California Energy Commission, 2023) in ordinances that apply under the 2022 Title 24 code, such as the following:
a. Mandatory ventilation requirements for HPWH installations (Section 110.3(c)7). 23 https://www.publichealthlawcenter.org/sites/default/files/2024-01/CRA-v-Berkeley-Ninth-Circuit-Opinion-Jan2024.pdf California Energy Codes & Standards | A statewide utility program 2024-04-25 486 of 662

Cost -Effectiveness Analysis: Existing Single Family Building Upgrades 36 Recommendations and Discussion
b. Requirement for HERS verified refrigerant charge verification for heat pumps in all climate zones (Table 150.1-A24).

5. Education and training can play a critical role in ensuring that heat pumps are installed, commissioned, and controlled properly to mitigate grid impacts and maximize occupant satisfaction. Below are select recommended strategies.
a. The Quality Residential HVAC Services Program25 is an incentive program to train California contractors in providing quality installation and maintenance while advancing energy-efficient technologies in the residential HVAC industry. Jurisdictions can market this to local contractors to increase the penetration of contractors skilled in heat pump design and installation. b. Educate residents and contractors of available incentives, tax credits, and financing opportunities. c. Educate contractors on code requirements. Energy Code Ace provides free tools, trainings, and resource to help Californians comply with the energy code. Contractors can access interactive compliance forms, fact sheets, and live and recorded trainings, among other things, on the website:
https://energycodeace.com/. Jurisdictions can reach out to Energy Code Ace directly to discuss offerings.

6. Health and safety
a. Combustion Appliance Safety and Indoor Air Quality: Implementation of some of the recommended measures will affect the pressure balance of the home which can subsequently impact the safe operation of existing combustion appliances as well as indoor air quality. Buildings with older gas appliances can present serious health and safety problems which may not be addressed in a remodel if the appliances are not being replaced. It is recommended that the building department require inspection and testing of all combustion appliances located within the pressure boundary of the building after completion of retrofit work that involves air sealing or insulation measures. b. Jurisdictions may consider requiring mechanical ventilation in homes where air sealing has been conducted. In older buildings, outdoor air is typically introduced through leaks in the building envelope.

After air sealing a building, it may be necessary to forcefully bring in fresh outdoor air using supply and/or exhaust fans to minimize potential issues associated with indoor air quality. 24 This requirement does not show up in the Express Terms for alterations in Section 150.2(b)1F, but the Statewide Reach Codes Team expects that it will be added to the next release of the proposed code language in the 45-day language as it aligns with the proposal made by the Codes and Standards Enhancement Team (Statewide CASE Team, 2023). 25 https://qualityhvac.frontierenergy.com/ California Energy Codes & Standards | A statewide utility program 2024-04-25 487 of 662

San Mateo City CouncilMarch 2, 2026

San Mateo City Council
March 2, 2026