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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-06-20 Focusing on supporting projects to electrify water heating is expected to support the market shift towards more central heat pump water heaters.
• For jurisdictions interested in a reach code that allows for mixed fuel buildings, a mixed fuel efficiency and PV package (and battery for the 3-story prototype) was found to be cost-effective based on TDV in all cases and cost-effective On-Bill in most climate zones. This path, referred to as “Electric-Preferred”, allows for mixed fuel buildings but requires a higher building performance than for all-electric buildings. The efficiency measures evaluated in this study did not provide significant compliance benefit. As a result, the Reach Codes Team recommends establishing a compliance margin target based on source energy or total TDV. This would allow for PV and battery above minimum code requirements to be used to meet the target. • Jurisdictions interested in increasing affordable multifamily housing should know that applying the CARE rates has the overall impact of increasing utility cost savings for an all-electric building in most climate zones compared to a code compliant mixed fuel building, improving On-Bill cost-effectiveness.
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. Reach codes that amend Part 6 of the California 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.
Table 22. Summary of Efficiency TDV Compliance Margins and Cost-Effectiveness Climate
Zone
Electric
/Gas Utility
3-Story 5-Story
All-Electric
Prescriptive
Code
AllElectric
+ PV
Mixed
Fuel
Efficiency
Mixed
Fuel
Efficiency
+ PV +
Battery
All-Electric
Prescriptive
Code
AllElectric
+ PV
Mixed
Fuel
Efficiency
Mixed
Fuel
Efficiency
+ PV
CZ01 PGE 26% 26% 1% 1% 14% 14% 0% 0%
CZ02 PGE 20% 20% 1% 1% 9% 9% 1% 1%
CZ03 PGE 21% 21% 1% 1% 11% 11% 0% 0%
CZ04 PGE 18% 18% 1% 1% 9% 9% 1% 1%
CZ04 CPAU 18% 18% 1% 1% 9% 9% 1% 1%
CZ05 PGE 23% 23% 1% 1% 12% 12% 0% 0%
CZ05 PGE/SCG 23% 23% 1% 1% 12% 12% 0% 0%
CZ06 SCE/SCG 18% 18% 1% 1% 9% 9% 0% 0%
CZ07 SDGE 20% 20% 0% 0% 11% 11% 0% 0%
CZ08 SCE/SCG 13% 13% 1% 1% 8% 8% 1% 1%
CZ09 SCE 13% 13% 1% 1% 7% 7% 1% 1%
CZ10 SCE/SCG 14% 14% 3% 3% 7% 7% 2% 2%
CZ10 SDGE 14% 14% 3% 3% 7% 7% 2% 2%
CZ11 PGE 14% 14% 3% 3% 8% 8% 2% 2%
CZ12 PGE 17% 17% 2% 2% 9% 9% 2% 2%
CZ12 SMUD/PGE 17% 17% 2% 2% 9% 9% 2% 2%
CZ13 PGE 13% 13% 4% 4% 7% 7% 2% 2%
CZ14 SCE/SCG 13% 13% 3% 3% 6% 6% 2% 2%
CZ14 SDGE 13% 13% 3% 3% 6% 6% 2% 2%
CZ15 SCE/SCG 5% 5% 5% 5% 3% 3% 3% 3%
CZ16 PG&E 24% 24% 5% 5% 9% 9% 2% 2%
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-06-20 6 References
Barbose, G., Darghouth, N., O'Shaughnessy, E., & Forrester, S. (2022, October). Tracking the Sun. Pricing and Design Trends for Distributed Photovoltaic Systems in the United States 2022 Edition. Retrieved from https://emp.lbl.gov/tracking-the-sun
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. (2022a). 2022 Building Energy Efficiency Standards for Residential and Nonresidential Buildings. CEC-400-2022-010-CMF. Retrieved from https://www.energy.ca.gov/sites/default/files/2022- 12/CEC-400-2022-010_CMF.pdf
California Energy Commission. (2022b). 2022 Reference Appendices for the 202 Building Energy Efficiency Standards.
CEC-400-2022-010-AP. Retrieved from https://www.energy.ca.gov/sites/default/files/2022-08/CEC-400- 2022-010-AP.pdf
California Energy Commission. (2022c, Feb). 2022 Single-Family Residential Alternative Calculation Method Reference Manual. CEC-400-2022-008-CMF-REV. Retrieved from https://www.energy.ca.gov/publications/2022/2022- single-family-residential-alternative-calculation-method-reference-manual 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/cpuc-website/divisions/office-of-governmental-affairsdivision/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 California Public Utilities Commission. (2022). Proposed Decision Rulemaking 19-01-011: PHASE III DECISION ELIMINATING GAS LINE EXTENSION ALLOWANCES. Retrieved from https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M496/K876/496876177.PDF E-CFR. (2020). https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt10.3.431&r=PART&ty=HTM L#se10.3.431_197. Retrieved from Electronic Code of Federal Regulations: https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt10.3.431&r=PART&ty=HTM L#se10.3.431_197
Energy + Environmental Economics. (2020). Time Dependent Valuation of Energy for Developing Building Efficiency Standards: 2022 Time Dependent Valuation (TDV) and Source Energy Metric Data Sources and Inputs.
E-Source companies. (2020). Behind-the-Meter Battery Market Study. Prepared for San Diego Gas & Electric.
Retrieved from https://www.etcc-ca.com/reports/behind-meter-battery-market-study?dl=1582149166 Horii, B., Cutter, E., Kapur, N., Arent, J., & Conotyannis, D. (2014). Time Dependent Valuation of Energy for Developing Building Energy Efficiency Standards.
Statewide CASE Team. (2018). Energy Savings Potential and Cost-Effectiveness Analysis of High Efficiency Windows in California. Prepared by Frontier Energy. Retrieved from https://www.etcc-ca.com/reports/energy-savingspotential-and-cost-effectiveness-analysis-high-efficiency-windows-california Statewide CASE Team. (2020a). Nonresidential High Performance Envelope Codes and Standards Enhancement (CASE) Initiative 2022 California Energy Code. Prepared by Energy Solutions. Retrieved from https://title24stakeholders.com/wp-content/uploads/2020/10/2020-T24-NR-HP-Envelope-Final-CASEReport.pdf Statewide CASE Team. (2020b). Residential Energy Savings and Process Improvements for Additions and Alterations Codes and Standards Enhancement (CASE) Initiative 2022 California Energy Code. Prepared by Frontier
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-06-20 Energy. Retrieved from https://title24stakeholders.com/wp-content/uploads/2020/08/SF-Additions-andAlterations_Final_-CASE-Report_Statewide-CASE-Team.pdf Statewide CASE Team. (2020c). Multifamily All-Electric Codes and Standards Enhancement (CASE) Initiative 2022 California Energy Code. Prepared by TRC.
Statewide Reach Codes Team. (2020). 2019 Mid-Rise New Construction Reach Code Cost-Effectiveness Study.
Prepared by Frontier Energy, Misti Bruceri & Associates, and EnergySoft. Retrieved from https://localenergycodes.com/download/492/file_path/fieldList/2019%20Mid-rise%20NC%20CostEff%20Report.pdf Statewide Reach Codes Team. (2021). 2019 Cost-Effectiveness Study: 2020 Analysis of High-Rise Residential New Construction. Prepared by Frontier Energy and Misti Bruceri & Associates. Retrieved from https://www.localenergycodes.com/download/737/file_path/fieldList/2019%20High-Rise%20NC-CostEff%20Report-2021-02-22.pdf Statewide Reach Codes Team. (2022a). 2022 Cost-Effectiveness Study: Single Family new Construction. Prepared by Frontier Energy and Misti Bruceri & Associates. Retrieved from California Energy Codes & Standards:
https://localenergycodes.com/content/resources
Statewide Reach Codes Team. (2022b). Nonresidential New Construction Reach Code Cost-effectiveness Study.
Prepared by Avani Goyal, Farhad Farahmand, TRC Companies. Retrieved from California Energy Codes & Standards: https://localenergycodes.com/content/resources TRC. (2018 ). 2019 Title 24 Energy Reach Code Cost-Effectiveness Analysis Draft. City of Palo Alto. Retrieved from https://cityofpaloalto.org/civicax/filebank/documents/66742 TRC. (2019). Multifamily Prototypes. Prepared for Southern California Edison. Retrieved from https://title24stakeholders.com/wp-content/uploads/2019/06/SCEMFModeling_MultifamilyPrototypesReport_2019-06-07_clean.pdf
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7.1 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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7.2 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. The California Climate Credit was applied for both electricity and natural gas service for the IOUs using the 2022 credits shows below.9 The credits were applied to reduce the total calculated annual bill, including any fixed fees or minimum bill amounts.
Electricity rates reflect the most recent approved tariffs. Monthly gas rates were estimated based on the latest available gas rate (December 2022) and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand.
The seasonal curve was estimated from monthly residential tariffs between 2012 and 2022 (between 2020 and 2022 for CPAU). 12-month curves were created from monthly gas rates for each of the eleven years (three years for CPAU).
These annual curves were then averaged to arrive at an average normalized annual curve. This was conducted separately for baseline and excess energy rates. Costs used in this analysis were then derived by establishing the most recent baseline and excess rate from the latest tariff as a reference point (December 2022), and then using the normalized curve to estimate the cost for the remaining months relative to the reference point rate. 9 https://www.cpuc.ca.gov/industries-and-topics/natural-gas/greenhouse-gas-cap-and-trade-program/california-climatecredit
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7.2.1 Pacific Gas & Electric
The following pages provide details on the PG&E electricity and natural gas tariffs applied in this study. Error! Reference source not found. describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of $0.0474/ kWh was applied to any net annual electricity generation based on a one-year average of the rates between November 2021 and October 2022.
Table 23. 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 $/therm was applied on a monthly basis according to the rates shown in Error! Reference source not found.. These are applied to both the G-1 and GM rates. These rates are based on applying a normalization curve to the December 2022 tariff based on eleven years of historical gas data. See the beginning of Section Error! Reference source not found. Error! Reference source not found. for further details. The corresponding CARE rates are shown in Error! Reference source not found. and reflect the 20 percent discount per the GL-1 tariff. The GM master metered wather heating baseline quantity of 0.43 therms per dwelling unit per day in all baseline territories and in both seasons was applied to the centrally metered gas water heating.
Table 24. PG&E Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
January $2.20579 $2.66008
February $2.24291 $2.69637
March $2.11750 $2.58278
April $2.08101 $2.55500
May $2.08062 $2.55844
June $2.09104 $2.56928
July $2.10404 $2.58189
August $2.15162 $2.63251
September $2.18718 $2.67910
October $2.23153 $2.71934
November $2.32121 $2.79158
December $2.34123 $2.80922
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-06-20 Table 25. PG&E Monthly CARE (GL-1) Gas Rate ($/therm)
Month Total CARE Charge
Baseline Excess
January $1.76463 $2.12806
February $1.79433 $2.15710
March $1.69400 $2.06622
April $1.66480 $2.04400
May $1.66449 $2.04675
June $1.67283 $2.05543
July $1.68323 $2.06551
August $1.72129 $2.10601
September $1.74974 $2.14328
October $1.78523 $2.17547
November $1.85697 $2.23327
December $1.87298 $2.24738
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7.2.2 Southern California Edison
The following pages provide details on are the SCE electricity tariffs applied in this study. Error! Reference source not found. describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of $ 0.04361/ kWh was applied to any net annual electricity generation based on a one-year average of the rates between November 2021 and October 2022
Table 26: 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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7.2.3 Southern California Gas
Following are the SoCalGas natural gas tariffs applied in this study. Error! Reference source not found. describes the baseline territories that were assumed for each climate zone.
Table 27. 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 $/therm was applied on a monthly basis according to the rates shown in Error! Reference source not found.. These rates are based on applying a normalization curve to the December 2022 tariff based on eleven years of historical gas data. See the beginning of Section Error! Reference source not found.
Error! Reference source not found. for further details. Long-term historical natural gas rate data was only available for SoCalGas’ procurement charges.10 The baseline and excess transmission charges were found to be consistent over the course of a year and applied for the entire year based on 2022 rates. CARE rates reflect the 20 percent discount per the GR tariff.
Table 28. SoCalGas Monthly Gas Rate ($/therm)
Month Procurement
Charge
Transportation Charge Total Charge
Baseline Excess Baseline Excess
January $0.90581 $0.82487 $1.23877 $1.73068 $2.14458
February $0.83669 $0.82487 $1.23877 $1.66156 $1.84967
March $0.80596 $0.82487 $1.23877 $1.63083 $1.82938
April $0.71941 $0.82487 $1.23877 $1.54428 $1.75890
May $0.77049 $0.82487 $1.23877 $1.59536 $1.78548
June $0.86253 $0.82487 $1.23877 $1.68740 $1.83337
July $0.87687 $0.82487 $1.23877 $1.70174 $1.86833
August $0.95391 $0.82487 $1.23877 $1.77878 $1.91089
September $0.85896 $0.82487 $1.23877 $1.68383 $1.83611
October $0.84147 $0.82487 $1.23877 $1.66634 $1.84936
November $0.89018 $0.82487 $1.23877 $1.71505 $1.88836
December $1.05329 $0.82487 $1.23877 $1.87816 $1.98294
10 The SoCalGas procurement and transmission charges were obtained from the following site:
https://www.socalgas.com/for-your-business/energy-market-services/gas-prices
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7.2.4 San Diego Gas & Electric
Following are the SDG&E electricity and natural gas tariffs applied in this study. Error! Reference source not found. describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of $0.04174 / kWh was applied to any net annual electricity generation based on a one-year average of the rates between January 2022 and December 2022.
Table 29. SDG&E Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ07 Coastal
CZ10 Inland
CZ14 Mountain
The SDG&E monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Error! Reference source not found.. These rates are based on applying a normalization curve to the December 2022 tariff based on eleven years of historical gas data. See the beginning of Section Error! Reference source not found.
Error! Reference source not found. for further details. CARE rates reflect the 20 percent discount per the G-CARE tariff.
Table 30. SDG&E Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
January $2.33762 $2.34748
February $2.26751 $2.28440
March $2.25119 $2.27016
April $2.20192 $2.22744
May $2.24252 $2.26403
June $2.31819 $2.33060
July $2.32406 $2.33630
August $2.37527 $2.38090
September $2.33542 $2.34971
October $2.30366 $2.32151
November $2.31722 $2.33381
December $2.45653 $2.73517
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7.2.5 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 Error! Reference source not found.. These rates are based on applying a normalization curve to the December 2022 tariff based on three years of historical gas data. See the beginning of Section Error! Reference source not found. Error! Reference source not found. for further details. The monthly service charge applied was $106.90 per month per the December 2022 G-2 tariff.
Table 31. CPAU Monthly Gas Rate ($/therm)
Month G2
Volumetric
Totals
January $1.80964
February $1.67009
March $1.68480
April $1.68698
May $1.78478
June $1.88288
July $1.88355
August $2.06943
September $2.06798
October $2.08553
November $2.09681
December $2.45700
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7.2.6 Sacramento Municipal Utilities District (Electric Only) Following are the SMUD electricity tariffs applied in this study. The rates effective January 2023 were used.
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7.2.7 Fuel Escalation Assumptions
The average annual escalation rates in Error! Reference source not found. were used in this study. These 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 32: Real Utility Rate Escalation Rate Assumptions Statewide Natural
Gas Residential
Average Rate
(%/year, real)
Electric Residential Average Rate
(%/year, real)
PG&E SCE SDG&E
2023 4.6% 1.8% 1.6% 2.8%
2024 4.6% 1.8% 1.6% 2.8%
2025 4.6% 1.8% 1.6% 2.8%
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%
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7.3 Cost Details
Table 33 presents additional detail on the first cost assumptions for the central water heating systems. For the 5-story prototype costs are provided both for a CO2 refrigerant Sanden-based and R-134a refrigerant Colmac-based heat pump water heater designs. The results presented in the main body of this report are based on the Sanden design. A sensitivity analysis was also conducted for a Colmac design (see Appendix 7.5 Central Heat Pump Water Heater Comparison) and the cost comparison is presented here. All costs are based on data from the 2022 Multifamily AllElectric CASE Report (Statewide CASE Team, 2020c).
Table 33. Heat Pump Water Heater First Costs per Building (Present Value (2023$)) Item
3-Story (36-units) 5-Story (88-units)
Gas
Boiler
(CZs 1-9)
Gas Boiler
(CZs 10-16)
Heat
Pump
Gas
Boiler
(CZs 1-9)
Gas Boiler
(CZs 10-16)
Heat
Pump
(Sanden)
Heat
Pump
(Colmac)
Water Heating
Equipment $87,602 $87,602 $140,907 $135,146 $135,146 $244,742 $319,485 Solar Thermal
Collector $39,800 $46,888 n/a $74,740 $91,776 n/a n/a
Gas Piping $8,890 $8,890 n/a $9,065 $9,065 n/a n/a
Electrical Circuits n/a n/a $25,000 n/a n/a $25,000 $25,000 Overhead & Markup $37,480 $39,430 $45,624 $60,212 $64,896 $74,179 $94,733 Total $173,772 $182,810 $211,531 $279,163 $300,883 $343,920 $439,218 Table 34 presents additional detail on the first cost assumptions for the space hating systems.
Table 34. Heat Pump Space Heater First Costs per Dwelling Unit (Present Value (2023$) Item
3-Story 5-Story
Furnace + Source & Notes
Split AC
Heat
Pump
Furnace +
Split HP
Heat
Pump
Dwelling Unit HVAC
$5,651 $5,460 $6,109 $5,460
Gas system costs based on 2022
Multifamily All-Electric CASE Report.
Heat pump costs based on online
equipment research indicating a 2-ton
HP is $191 less than a furnace/AC of
the same size.
Refrigerant Piping $563 $563 $423 $423
2022 Multifamily All-Electric CASE
Report. Gas Piping $92 $0 $227 $0
Electrical Circuits $0 $150 $0 $150
Labor
$9,904 $6,985 $9,904 $6,985
Based on the 2022 Multifamily AllElectric CASE Report with adjustments to align with updated
equipment costs.
Overhead & Markup $4,457 $3,618 $4,582 $3,579 Based on a 27% markup Total $20,667 $16,776 $21,245 $16,597
Incremental Cost ($3,891) ($4,647)
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7.4 PG&E Gas Infrastructure Cost Memo
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-06-20
7.5 Central Heat Pump Water Heater Comparison
Table 35 presents energy and cost-effectiveness results for a R-134a refrigerant based system design using a Colmac central heat pump water heater in the 5- story prototype. This was only found to be cost-effective based on at least one of the two metrics in Climate Zones 1, 4 in CPAU territory, and 16.
Table 35. 5-Story Cost-Effectiveness: All-Electric Prescriptive Code with R-134a Heat Pump Water Heater Climate
Zone
Electric
/Gas Utility
Efficiency
TDV
Comp
Margin
Source
Comp
Margin
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Utility Cost
Savings Incremental Cost On-Bill TDV
First
Year
Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
CZ01 PGE 6% 6% -1,496 147 ($155) ($1,240) ($3,556) ($4,223) 3.4 $2,984 >1 $5,870 CZ02 PGE 4% 2% -1,197 120 ($145) ($1,513) $1,691 $2,749 0.0 ($4,262) 0.5 ($1,287) CZ03 PGE 6% 3% -1,166 120 ($138) ($1,360) $1,691 $2,749 0.0 ($4,109) 0.8 ($523) CZ04 PGE 4% 2% -1,116 113 ($76) ($49) $1,691 $2,749 0.0 ($2,798) 0.7 ($949) CZ04 CPAU 4% 2% -1,116 113 $185 $7,144 $1,718 $2,776 2.6 $4,368 0.6 ($976) CZ05 PGE 5% 2% -1,161 117 ($137) ($1,391) $1,691 $2,749 0.0 ($4,140) 0.5 ($1,412) CZ05 PGE/SCG 5% 2% -1,161 117 ($189) ($3,016) $1,691 $2,749 0.0 ($5,765) 0.5 ($1,412) CZ06 SCE/SCG 4% 1% -1,000 104 ($92) ($879) $1,691 $2,749 0.0 ($3,628) 0.6 ($1,013) CZ07 SDGE 5% 2% -996 106 ($183) ($3,216) $1,691 $2,749 0.0 ($5,965) 0.7 ($936) CZ08 SCE/SCG 3% 1% -948 100 ($156) ($2,413) $1,691 $2,749 0.0 ($5,162) 0.7 ($695) CZ09 SCE 3% 0% -966 100 ($132) ($1,863) $1,691 $2,749 0.0 ($4,612) 0.7 ($738) CZ10 SCE/SCG 3% 1% -962 84 ($188) ($3,375) $1,444 $2,395 0.0 ($5,770) 0.3 ($1,596) CZ10 SDGE 3% 1% -962 84 ($239) ($4,959) $1,444 $2,395 0.0 ($7,354) 0.3 ($1,596) CZ11 PGE 4% 3% -1,029 92 ($165) ($2,487) $1,444 $2,395 0.0 ($4,882) 0.4 ($1,367) CZ12 PGE 4% 3% -1,081 96 ($172) ($2,591) $1,444 $2,395 0.0 ($4,986) 0.3 ($1,667) CZ12 SMUD/PGE 4% 3% -1,081 96 $26 $1,988 $1,444 $2,395 0.8 ($407) 0.3 ($1,667) CZ13 PGE 3% 2% -976 88 ($156) ($2,361) $1,444 $2,395 0.0 ($4,756) 0.4 ($1,452) CZ14 SCE/SCG 2% -1% -1,045 84 ($210) ($3,880) $1,444 $2,395 0.0 ($6,275) 0.1 ($2,056) CZ14 SDGE 2% -1% -1,045 84 ($270) ($5,725) $1,444 $2,395 0.0 ($8,120) 0.1 ($2,056) CZ15 SCE/SCG 2% -1% -718 65 ($146) ($2,713) $1,444 $2,395 0.0 ($5,108) 0.3 ($1,564) CZ16 PG&E -5% 6% -1,913 142 ($276) ($4,142) ($3,803) ($4,577) 1.1 $435 1.2 $746
17.185
Cost-Effectiveness Analysis: Single Family New Construction 63 Appendices
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-06-20
7.6 Summary of Measures by Package
Table 36 provides the details of the measures in each of the efficiency package by climate zone. The measures are the same for the 3-story and 5-story prototypes. Table 37 presents the PV capacities per dwelling unit in the upgrade packages. In Climate Zone 6 for the mixed fuel case in the 5-story prototype there is no upgrade to the PV system capacity as the prescriptive PV system already offset all of the estimated electricity use.
Table 36. Mixed Fuel Efficiency Package Measures
Climate
Zone
0.70 Roof
Solar
Reflectance
0.24 U-Factor
Windows
0.35 W/cfm
Verified Low
Leakage Ducts in
Conditioned
Space
1 X X
2 X
3 X
4 X
5 X
6 X
7 X
8 X
9 X X
10 X X X
11 X X X
12 X X X
13 X X X
14 X X X
15 X X X
16 X X X
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Cost-Effectiveness Analysis: Single Family New Construction 64 Appendices
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-06-20 Table 37. Upgrade Package PV Capacities (kW-DC)
Climate
Zone
All-Electric + PV Mixed Fuel + PV
3-Story 5-Story 3-Story 5-Story
CZ01 4.41 4.35 3.69 3.43
CZ02 3.56 3.58 3.02 2.98
CZ03 3.31 3.29 2.80 2.72
CZ04 3.21 3.27 2.73 2.75
CZ05 3.04 3.08 2.57 2.55
CZ06 2.91 3.04 2.49 2.68
CZ07 3.09 3.21 2.64 2.74
CZ08 3.18 3.30 2.76 2.86
CZ09 3.04 3.16 2.63 2.73
CZ10 3.20 3.30 2.79 2.86
CZ11 3.90 3.95 3.42 3.43
CZ12 3.53 3.60 3.05 3.08
CZ13 3.77 3.84 3.32 3.36
CZ14 3.20 3.23 2.79 2.79
CZ15 3.93 3.94 3.58 3.58
CZ16 3.79 3.76 2.60 2.90
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Cost-Effectiveness Analysis: Single Family New Construction 65 Appendices
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-06-20 Get In Touch
The adoption of reach codes can differentiate jurisdictions as efficiency leaders and help accelerate the adoption of new equipment, technologies, code compliance, and energy savings strategies.
As part of the Statewide Codes & Standards Program, the Reach Codes Subprogram is a resource available to any local jurisdiction located throughout the state of California.
Our experts develop robust toolkits as well as provide specific technical assistance to local jurisdictions (cities and counties) considering adopting energy reach codes. These include cost-effectiveness research and analysis, model ordinance language and other code development and implementation tools, and specific technical assistance throughout the code adoption process.
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17.188
Cost-effectiveness Analysis: Nonresidential New Construction Buildings Prepared by:
Avani Goyal, Farhad Farahmand
TRC Companies Inc.
Prepared for:
Jay Madden
Codes and Standards Program Southern California Edison
Last modified: 2023/03/24
Revision: 1.3
2 0 2 2 C o d e :
Nonresidential New
Construction Reach Code
Cost-effectiveness Study
17.189
Cost-effectiveness Analysis: Nonresidential New Construction Buildings Legal Notice
This report was prepared by Southern California Edison Company and funded by the California utility customers under the auspices of the California Public Utilities Commission.
Copyright 2023, Southern California Edison Company. All rights reserved, except that this document may be used, copied, and distributed without modification.
Neither SCE 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.
Acronym List
AC – Air Conditioner
ASHRAE - American Society of Heating, Refrigerating
and Air-Conditioning Engineers
B/C – Benefit-to-Cost Ratio
BOD – Basis of Design
BSC – Building Standards Commission
Btu – British thermal unit
CAV – Constant Air Volume
CBECC - California Building Energy Code Compliance
CBECS - Commercial Building Energy Consumption Survey
CBSC - California Building Standards Commission
CEC - California Energy Commission
CPAU – City of Palo Alto Utilities
CZ – Climate Zone
DCKV – Demand-Controlled Kitchen Ventilation
DHW – Domestic Hot Water
DEER – Database for Energy Efficient Resources
DOE – U.S. Department of Energy
E3 – Energy and Environmental Economics
EUI – Energy Use Index
FDD – Fault Detection and Diagnostics
GHG - Greenhouse Gas
GPM – Gallons Per Minute
HVAC – Heating, Ventilation, and Air Conditioning
IOU – Investor-Owned Utility
17.190
Cost-effectiveness Analysis: Nonresidential New Construction Buildings kWh – Kilowatt Hour
LADWP – Los Angeles Department of Water and Power
LBNL – Lawrence Berkeley National Lab
LPD – Lighting Power Density
NPV – Net Present Value
QSR – Quick-Service Restaurant
PNNL – Pacific Northwest National Laboratory
POU – Publicly Owned Utility
PTHP – Packaged Terminal Heat Pump
PG&E – Pacific Gas & Electric (utility)
PTAC – Packaged Terminal Air Conditioning
PV - Solar Photovoltaic
SCE – Southern California Edison (utility)
SCG – Southern California Gas (utility)
SDG&E – San Diego Gas & Electric (utility)
SHW – Service Hot Water
SMUD – Sacramento Municipal Utility District
SZ – Single Zone
TDV – Time Dependent Valuation
VAV – Variable Air Volume
TDV - Time Dependent Valuation
Title 24 – California Code of Regulations Title 24, Part 6 TOU – Time of Use
17.191
Cost-effectiveness Analysis: Nonresidential New Construction Buildings Summary of Revisions
Date Description Reference (page or section)
11/16/2022 Original Release -
01/31/2023 Minor changes to reflect efficiency compliance margin calculation updates in workbook and report
tables
Section 5
03/24/2023 Minor changes in narrative of quick service
restaurant in reach code considerations
Section 5
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Cost-effectiveness Analysis: Nonresidential New Construction Buildings
TABLE OF CONTENTS
Executive Summary..........................................................................................................................................................1 1 Introduction................................................................................................................................................................3 2 Methodology and Assumptions...............................................................................................................................5
2.1 Cost-effectiveness ................................................................................................................................................................ 5
2.1.1 Benefits......................................................................................................................................................................... 5
2.1.2 Costs............................................................................................................................................................................. 5
2.1.3 Metrics .......................................................................................................................................................................... 6
2.1.4 Utility Rates................................................................................................................................................................... 6
2.2 Energy Simulations ............................................................................................................................................................... 7
2.3 2022 T24 Compliance Metrics .............................................................................................................................................. 7
2.4 GHG Emissions .................................................................................................................................................................... 8
2.5 Limitations and Further Considerations ................................................................................................................................ 8 3 Prototypes, Measure Packages, and Costs ..........................................................................................................10
3.1 Prototype Characteristics.................................................................................................................................................... 10
3.2 Measure Definitions and Costs ........................................................................................................................................... 12
3.2.1 Fuel Substitution ......................................................................................................................................................... 12
3.2.2 Efficiency..................................................................................................................................................................... 21
3.2.3 Load Flexibility ............................................................................................................................................................ 28
3.2.4 Additional Solar PV and Battery Storage .................................................................................................................... 29
3.3 Measure Packages ............................................................................................................................................................. 30 4 Cost-Effectiveness Results ....................................................................................................................................32
4.1 Medium Office..................................................................................................................................................................... 33
4.2 Medium Retail..................................................................................................................................................................... 34
4.3 Quick-Service Restaurant (QSR)........................................................................................................................................ 35
4.4 Small Hotel.......................................................................................................................................................................... 36 5 Energy Code Compliance Results and Reach Code Considerations ................................................................37
5.1 Medium Office..................................................................................................................................................................... 41
5.2 Medium Retail..................................................................................................................................................................... 42
5.3 Quick-Service Restaurant (QSR)........................................................................................................................................ 44
5.4 Small Hotel.......................................................................................................................................................................... 46 6 Conclusions .............................................................................................................................................................48 7 References ...............................................................................................................................................................50 8 Appendices ..............................................................................................................................................................52
8.1 Map of California CZs ......................................................................................................................................................... 52
8.2 Utility Rate Schedules......................................................................................................................................................... 53
8.2.1 PG&E.......................................................................................................................................................................... 54
8.2.2 SCE............................................................................................................................................................................. 57
8.2.3 SCG ............................................................................................................................................................................ 60
8.2.4 SDG&E ....................................................................................................................................................................... 62
8.2.5 CPAU.......................................................................................................................................................................... 68
8.2.6 SMUD (Electric Only).................................................................................................................................................. 70
8.2.7 Escalation Rates ......................................................................................................................................................... 71
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Cost-effectiveness Analysis: Nonresidential New Construction Buildings
8.3 HVAC and SHW System Cost Scalers ............................................................................................................................... 71
8.4 Mixed Fuel Baseline Figures............................................................................................................................................... 72
8.5 GHG Savings Summary...................................................................................................................................................... 76
LIST OF TABLES
Table 1. Utility Tariffs Used Based on CZ (October 2022).................................................................................................................... 7 Table 2. Baseline Prototype Characteristics ....................................................................................................................................... 11 Table 3. HVAC and Water Heating Characteristics Summary ............................................................................................................ 14 Table 4. Medium Office Average Mechanical System Costs .............................................................................................................. 15 Table 5. Medium Retail Average Mechanical System Costs............................................................................................................... 16 Table 6. Quick-Service Restaurant Average Mechanical System Costs - HS Package...................................................................... 16 Table 7. Small Hotel HVAC and Water Heating System Costs........................................................................................................... 18 Table 8. Quick-Service Restaurant Cooking Equipment Costs........................................................................................................... 18 Table 9. Small Hotel Clothes Dryer Costs........................................................................................................................................... 19 Table 10. Electrical Infrastructure Costs ............................................................................................................................................. 20 Table 11. Gas Infrastructure Costs by Component............................................................................................................................. 21 Table 12. Total Gas Infrastructure Cost Estimates by Building Type.................................................................................................. 21 Table 13. Efficiency Measures Applicability, Costs, and Sources....................................................................................................... 26 Table 14. Load Flexibility Measure Summary ..................................................................................................................................... 29 Table 15. Additional Solar PV Measure Summary.............................................................................................................................. 30 Table 16. Reach Code Pathway Considerations ................................................................................................................................ 39 Table 17. Cost-effectiveness and Compliance Summary – Medium Office ........................................................................................ 41 Table 18. Cost-effectiveness and Compliance Summary – Medium Retail......................................................................................... 42 Table 19. Cost-effectiveness and Compliance Summary – Quick-Service Restaurant (without cooking electrification)..................... 44 Table 20. Cost-effectiveness and Compliance Summary – Quick-Service Restaurant (with cooking electrification).......................... 45 Table 21. Cost-effectiveness and Compliance Summary – Small Hotel. ............................................................................................ 46 Table 22. Cost-effectiveness and Compliance Summary – Small Hotel (PTHP) ................................................................................ 47 Table 23. Utility Tariffs Analyzed Based on CZ – Detailed View......................................................................................................... 53 Table 24. Real Utility Rate Escalation Rate Assumptions Above Inflation .......................................................................................... 71 Table 25. Materials and Labor Adjustment Factors by Climate Zone ................................................................................................. 71 Table 26. Contractor Markup Values .................................................................................................................................................. 72 Table 27. Mixed Fuel Baseline Model – Medium Office...................................................................................................................... 72
17.194
Cost-effectiveness Analysis: Nonresidential New Construction Buildings Table 28. All-electric Baseline Model – Medium Retail ....................................................................................................................... 73 Table 29. Mixed Fuel Baseline Model – Quick-Service Restaurant .................................................................................................... 74 Table 30. Mixed Fuel Baseline Model – Small Hotel........................................................................................................................... 75
LIST OF FIGURES
Figure 1. Medium Office Cost-Effectiveness Summary....................................................................................................................... 33 Figure 2. Medium Retail Cost-effectiveness Summary ....................................................................................................................... 34 Figure 3. QSR Cost-effectiveness Summary ...................................................................................................................................... 35 Figure 4. Small Hotel Cost-effectiveness Summary............................................................................................................................ 36 Figure 5. Map of California CZs .......................................................................................................................................................... 52 Figure 6. PG&E Electric Schedule - B-1 ............................................................................................................................................. 54 Figure 7. PG&E Electric Schedule - B-10 ........................................................................................................................................... 55 Figure 8. PG&E Gas Schedule – G-NR1 ............................................................................................................................................ 56 Figure 9. SCE Electric Schedule – TOU-GS-1.................................................................................................................................... 57 Figure 10. SCE Electric Schedule – TOU-GS-2.................................................................................................................................. 58 Figure 11. SCE Electric Schedule – TOU-GS-3.................................................................................................................................. 59 Figure 12. SCG Gas Schedule – G-10................................................................................................................................................ 60 Figure 13. SDG&E Electric Schedule – AL-TOU ................................................................................................................................ 62 Figure 14. SDG&E Electric Schedule - EECC .................................................................................................................................... 65 Figure 15. SDG&E Gas Schedule – GN-3 .......................................................................................................................................... 66 Figure 16. CPAU Electric Schedule – E-2........................................................................................................................................... 68 Figure 17. CPAU Gas Schedule – G-2 ............................................................................................................................................... 69 Figure 18. SMUD Electric Schedule – CITS-0/CITS-1........................................................................................................................ 70 Figure 19. Percentage GHG Savings – Medium Office ...................................................................................................................... 76 Figure 20. Percentage GHG Savings – Medium Retail....................................................................................................................... 76 Figure 21. Percentage GHG Savings – Quick Service Restaurant ..................................................................................................... 77 Figure 22. Percentage GHG Savings – Small Hotel ........................................................................................................................... 77
17.195
Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 1 Executive Summary
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Executive Summary
The California Codes and Standards (C&S) Reach Codes program provides technical support to local governments considering adopting a local ordinance, also known as a reach code, intended to support meeting local and/or statewide energy efficiency and greenhouse gas (GHG) reduction goals. The program facilitates the adoption and implementation of reach codes 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 (the Team) provides this report and accompanying Reach Code Results Workbook to present measures and measure packages that local jurisdictions can adopt to achieve energy savings and emissions reductions beyond what will be accomplished by enforcing the minimum state requirements according to the 2022 Building Energy Efficiency Standards (Title 24, Part 6), effective January 1, 2023. This report documents a variety of above-code electrification, energy efficiency, load flexibility, and solar photovoltaic (PV) packages applied to a set of four nonresidential building prototypes: Medium Office, Standalone Retail, Quick-Service Restaurant, and Small Hotel.
The Team evaluated energy simulation results and code compliance using the CBECC v1.0 software version released in June 2022. Results may change with future software versions. Results across all prototypes indicate the efficiency measures included in the analysis, both On-Bill and TDV, are cost-effective across all climate zones when added to the prescriptive baseline prototype. In all cases all-electric packages are capable of achieving the greatest greenhouse gas emissions reductions as compared to mixed-fuel buildings.
These results, including the attached Reach Code Results Workbook, indicate that all-electric packages can achieve the greatest greenhouse gas emissions reductions as compared to mixed-fuel buildings. Results align with the decarbonization objectives set by California Energy Commission (Energy Commission), and several new construction new construction ordinances focusing on all-electric design. The results of this study by prototype are summarized below:
Medium Office: Due to the lack of a prescriptive compliance pathway and performance modeling approach in CBECC, all-electric space heating is simulated as electric-resistance variable-air-volume reheat. This system selection limits operational benefits, energy code compliance, and cost-effectiveness. All-electric packages are cost-effective with energy efficiency and load flexibility measures in many climate zones, but do not achieve code compliance across all three metrics—with efficiency TDV margin being the most challenging. Results will be updated in the first half of 2023 when central heat pump boilers can be simulated in CBECC. Jurisdictions may adopt reach codes that exempt building systems that do not have a prescriptive pathway in the energy code and cannot be modeled to comply using the performance approach. Efficiency packages over the mixedfuel baseline are cost-effective and compliant across all climate zones.
Medium Retail: All-electric is prescriptively required in most scenarios in Retail buildings. The Team identified cost-effective and code compliant packages with energy efficiency measures over an all-electric baseline in most climate zones. This study analyzed mixed-fuel retail buildings with large (>240 kBtuh) gas furnace packaged units replacing the smaller (<240 kBtuh) packaged heat pumps. The mixed-fuel building is neither cost-effective nor code compliant in most climate zones.
Quick-Service Restaurant: The Team identified cost-effective, nearly cost-effective, and code compliant packages in several climate zones for all-electric space conditioning and service water heating when including energy efficiency and solar PV measures. The Team could not identify cost-effective packages including allelectric commercial cooking equipment except for City of Palo Alto Utility (CPAU) territory. Also, when including energy efficiency measures, restaurants with all-electric cooking achieve compliance and are nearly On-Bill cost-effective in Sacramento Municipal Utility District (SMUD) territory as well. Jurisdictions may adopt AllElectric reach codes that exempt commercial cooking equipment or require energy efficiency for either mixedfuel and/or all-electric buildings, in many climate zones.
17.196
Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 2 Executive Summary
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Small Hotel: All-electric packages are cost-effective and code-compliant in most climate zones. The remaining climate zones are very close to meeting the TDV Efficiency compliance criteria and may achieve compliance by re-evaluating nonresidential-area modeling using central heat pump boiler instead of electric resistance VAV systems. In addition to electrification packages that include single-zone packaged heat pumps, the Team analyzed an alternative scenario with packaged terminal heat pumps (PTHPs) that improved all-electric code minimum cost-effectiveness due to high first-cost savings, but PTHPs do not achieve TDV Efficiency compliance. Mixed-fuel plus energy efficiency is code compliant and cost-effective across all climate zones.
Jurisdictions may use these results for amending Part 6, Part 11, other parts of the California building code, or their municipal code as determined appropriate for the given jurisdiction. A cost-effectiveness study is required to amend Part 6 of the California building code or when adopting energy efficiency or energy conservation measures, including solar PV or batteries. The Energy Commission has previously concluded that all-electric requirements do not constitute an energy efficiency or energy conservation standard and are outside the scope of Public Resources Code section 25402.1(h)(2).
1 Jurisdictions may adopt an All-Electric reach code when amending Part 11 or their municipal code.
Even reach code policies that only require electrification, and do not require energy efficiency or conservation, will benefit from findings in this study to inform potential economic impacts of a policy decision. This study documents the estimated costs, benefits, energy impacts and GHG 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 www.localenergycodes.com. Local jurisdictions that are considering adopting an ordinance are encouraged to contact the program for further technical support at [email protected] . 1 CEC Letter to South San Francisco 2021: https://bayareareachcodes.org/wp-content/uploads/2022/10/CEC-Letter-to-SSFSigned.pdf
17.197
Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 3 Introduction
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 1 Introduction
This report documents cost-effective combinations of measures that exceed the minimum state requirements, the 2022 California Building Energy Efficiency Standards Title 24, Part 6 (Title 24) (CEC 2022), effective January 1, 2023, for newly constructed nonresidential buildings. This report was developed in coordination with the California Statewide Investor-Owned Utilities (CA IOUs) Codes and Standards Program, key consultants, and engaged cities—collectively known as the Reach Code Team (or “the Team” for short). The objectives of this report are to inform discourse for local reach code adoption and, where applicable, support approval of local energy code amendments from the California Energy Commission (the Energy Commission).
The Reach Code Team performed cost-effectiveness analysis for the following scenarios above prescriptive 2022 Title 24 code requirements in all 16 California climate zones (CZs):
▪ Fuel substitution with federal code-minimum efficiency appliances, compared to a prescriptive minimum design compliance pathway.
• For the retail building type, the prescriptive code minimum is all-electric. Fuel substitution packages revert to mixed-fuel appliances.
• For all other building types, the prescriptive code minimum is mixed-fuel. Fuel substitution packages switch to all-electric appliances.
▪ Energy efficiency measures
▪ Load flexibility measures
▪ Solar PV and Battery
The Reach Code Team analyzed four prototypes—Medium Office, Medium Retail, Quick-Service Restaurant, and Small Hotel—to represent common nonresidential new construction buildings in the California. The selected building types align with the requests received from dozens of jurisdictions seeking to adopt reach codes. The results of this cost-effectiveness study could potentially be extrapolated to other building types that have similar properties such as occupancy pattern, HVAC design and layout. These results were attained using the first version of California Building Energy Compliance Calculator (CBECC) software that is approved by CEC for 2022 code compliance. There are a few gaps in functionalities and standard design assumptions in this software version, described in Section 2.5, the Reach Code team has been actively coordinating with the CBECC software team to inform future software updates.
Title 24 is maintained and updated every three years by two state agencies: 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).
When adopting local energy efficiency or conservation ordinances, 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 formal approval from the Energy Commission and file the ordinance with the BSC for the ordinance to be legally enforceable. Local jurisdictions do not require Energy Commission approval when adopting ordinances that do not require efficiency or conservation, such as only electrification-required ordinances.
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 equipment 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 measures to increase energy performance. While federal preemption limits
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Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 4 Introduction
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 reach code mandatory requirements for covered appliances, in practice, builders may install any package of compliant measures to achieve the performance requirements.
This study references the statewide reach code study performed in 2019 for newly constructed nonresidential buildings as a starting point for additional measure definitions. Importantly, the current 2022 cost-effectiveness report introduced a new restaurant building type and updated the modeling and cost assumptions.
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Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 5 Methodology and Assumptions
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 2 Methodology and Assumptions
The Reach Code Team analyzed four prototypes—Medium Office, Medium Retail, Quick-Service Restaurant, and Small Hotel—using the cost-effectiveness methodology detailed in this section below.
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 time dependent valuation (TDV) of energy-based approaches to evaluate costeffectiveness. Both On-Bill and TDV require estimating and quantifying the energy savings and costs associated with energy measures. The primary difference between On-Bill and TDV is how energy is valued:
▪ 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 15-year duration accounting for a three percent discount rate and energy cost inflation per Appendix 8.2. ▪ TDV: TDV was developed by the Energy Commission to reflect the time dependent value of energy, including long-term projected costs of energy such as the cost of providing energy during peak periods of demand and other societal costs including projected costs for carbon emissions and grid transmission impacts. This metric values energy uses differently depending on the fuel source (gas, electricity, and propane), time of day, and season. Electricity used (or saved) during peak periods has a much higher value than electricity used (or saved) during off-peak periods. This refers to the “Total TDV” that includes all the energy end uses such as space-conditioning, mechanical ventilation, service water heating indoor lighting, photovoltaic (PV) and battery storage systems, and covered process loads.
2.1.2 Costs
The Reach Code Team assessed the incremental costs and savings of the energy packages over a 15 year lifecycle.
Incremental costs represent the equipment, installation, replacements, and maintenance costs of the proposed measure relative to the 2022 Title 24 standards minimum requirements or standard industry practices. The Reach Code Team obtained baseline and measure costs from manufacturer distributors, contractors, literature review, and online sources such as RS Means.
For heating, ventilation, and air conditioning (HVAC) and water heating baseline and measure costs, including gas and electrical infrastructure, the Reach Code Team contracted two different firms, one mechanical contractor (Western Allied Mechanical, based in Menlo Park) and one mechanical designer (P2S Engineering, based in Irvine) to provide cost data. The Reach Code Team developed a basis of design for all prototypes described in section 3.1 and worked with the mechanical contractor and designer to get cost estimates. The Reach Code Team determined HVAC design heating and cooling loads and capacities by climate zone from the energy models. For each HVAC system type, the Reach Code Team requested costs for the smallest capacity unit required and the largest capacity unit required and specified federal minimum equipment efficiency.
The mechanical contractor and mechanical designer collected equipment costs and labor assumptions from their vendors and manufacturers’ representatives, as well as through their own recent projects. The mechanical contractor and designer provided material and labor cost estimates for the entire HVAC and DHW systems, disaggregated by the HVAC and DHW equipment itself; refrigerant piping; structural; electrical supply; gas supply; controls; commissioning and startup; general conditions and overhead; design and engineering; permit, testing, and inspection; and a contractor profit or market factor. The mechanical contractor and designer provided costs for each of the system capacities, based on which the Reach Code Team developed a relationship between HVAC system capacity and cost to calculate the cost for each building in each climate zone. In most cases, the analysis uses the average of the costs provided by
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Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 6 Methodology and Assumptions
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 the contractor and the costs provided by the designer. In some limited cases where costs provided by one source were unlikely to be representative of the measure, costs from only the other source were used. The Reach Code Team added taxes, contractor markups, maintenance costs, and replacement costs where needed, and adjusted material and labor costs for each climate zone based on weighting factors from RS Means (presented in Appendix 8.3).
Actual project costs vary widely based on a range of real-building considerations. The costs that the Reach Code Team determined through contractors are likely costs for the given prototypes and are not representative of all projects.
2.1.3 Metrics
Cost-effectiveness is presented using net present value (NPV) and benefit-to-cost (B/C) ratio metrics. ▪ NPV: Net savings (NPV benefits minus NPV costs). If the net savings of a measure or package is positive over a lifetime of 15 years, 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 incremental costs to implement the measure (i.e., construction and maintenance cost savings) outweigh the negative energy cost impacts.
▪ B/C Ratio: Ratio of the present value of all benefits to the present value of all costs over 15 years (NPV benefits divided by NPV costs). The criterion for cost-effectiveness is a B/C greater than 1.0. A value of one indicates the savings over the life of the measure are equivalent to the incremental cost of that measure. A value greater than one represents a positive return on investment.
Improving the energy performance of a building often requires an initial capital investment, though in some cases an energy measure may be cost neutral or have a lower cost. In most cases the benefit is represented by annual On-Bill utility or TDV savings and the cost by incremental first cost and replacement costs. 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., shows positive 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 IOU and POU rate teams the Reach Code Team determined appropriate utility rates for each CZ and package as of October 2022. The utility tariffs, summarized in Table 1, were determined based on the annual load profile of each prototype and the corresponding package, the most prevalent rate in each utility territory, and information indicating that the rates were unlikely to be phased out during the code cycle.
A time-of-use (TOU) rate was applied to most cases, some POUs may not have TOU rates. In addition to energy consumption charges, there are kW demand charges for monthly peak loads. Utilities calculate the peak load by the highest kW of the 15-minute interval readings in the month. However, the energy modeling software produces results on hourly intervals; hence, the Team calculated the demand charges by multiplying the highest load of all hourly loads in a month with the corresponding demand charge per kW. The utility rates applicable to a prototype may vary by package and CZ especially between a mixed fuel and all-electric package if the monthly peak demand loads exceed the applicable threshold.
The Reach Code Team coordinated with utilities to select tariffs for each prototype given the annual energy demand profile of each specific prototype, climate zone, and measure package 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. For a more detailed breakdown of the rates selected, refer to Appendix 8.2.
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 For packages with PV generation, the approved Net Energy Metering (NEM) 2.0 tariffs were applied along with minimum daily use billing and mandatory non-bypassable charges. For the PV cases, annual electric production was always less than the modeled annual electricity consumption; therefore, no credits for surplus generation were necessary.
The analysis assumes that utility rates escalate over time for commercial buildings, as described in Appendix 8.2.
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.
Table 1. Utility Tariffs Used Based on CZ (October 2022) CZs Electric / Gas Utility Electricity Natural Gas
Investor-Owned Utilities
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 (SCG)
TOU-GS-1 / TOU-GS-2
/TOU-GS-3
G-10 (GN-10)
7, 10, 14 San Diego Gas and Electric Company (SDG&E)
AL-TOU + EECC (AL-TOU)
GN-3
Publicly Owned Utilities
4 City of Palo Alto Utilities (CPAU) E-2 G-2
12 Sacramento Municipal Utilities District (SMUD) CI-TOD 1 (CITS-0 /CITS-1) G-NR1
2.2 Energy Simulations
The Reach Code Team performed energy simulations using California’s Building Energy Code Compliance Software CBECC 2022.1.0 (1250) with ruleset version BEMCmpMgr 2022.1.0 (7361) (California Building Energy Code Compliance 2022).
2 This is the first 2022 Title 24 code compliance software approved by Energy Commission for compliance of nonresidential buildings on June 8, 2022. The CBECC software combined the capabilities of CBECCCom and CBECC-Res software into one to model both nonresidential and multifamily building prototypes in one interface.
The Reach Code Team set up parametric simulations using Modelkit software to run thousands of measure packages for each prototype in all California’s CZs. Individual measures were simulated separately and combined into costeffective measure packages for each CZ. Where necessary, the Reach Code Team employed minor ruleset changes, such as load flexibility measures that alter thermostat setpoint schedules, to improve the cost-effectiveness of measure packages. While these measures produce operational savings, they may not be used to achieve code compliance without further software upgrades.
2.3 2022 T24 Compliance Metrics
2022 Title 24 Section 140.1 defines the energy budget of the building based on source energy and TDV energy for space-conditioning, indoor lighting, mechanical ventilation, photovoltaic (PV) and battery storage systems, and service 2 Prior to the CBECC software, the Reach Code Team used CBECC-Com 2022 and CBECC 2022.0.8 Beta to model nonresidential prototypes for the 2022 reach code analysis. The Reach Code Team noted the changes in results due to updates in functionalities and standard design assumptions.
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 water heating and covered process loads. CEC has introduced two new compliance metrics in addition to Total Compliance TDV Margin for 2022 code cycle. A building needs to comply with all three compliance metrics below:
▪ Efficiency TDV. Efficiency TDV accounts for all regulated end-uses but does not include the impacts of PV and battery storage.
▪ Total TDV. Total TDV Compliance metric includes regulated end-uses accounting for PV and battery storage contributions.
▪ Source Energy. Source energy is based on fuel used for power generation, assuming utilities meet all Renewable Portfolio Standard (RPS) goals and other obligations projected over 15-year lifecycle.
2.4 GHG Emissions
The analysis uses the GHG emissions estimates built into CBECC. The GHG emission multipliers were developed by Energy + Environmental Economics (E3) to support development of compliance metrics for use in the 2022 California energy code (E3 2021). There are 8,760 hourly multipliers accounting for time dependent energy use and carbon emissions based on source emissions, including RPS projections. For the 2022 code cycle, the multipliers incorporate GHG from methane and refrigerant leakage, which are two significant sources of GHG emissions (NORESCO 2020).
There are 32 strings of multipliers, with a different string for each California CZ and each fuel type (metric tons of CO2 per kWh for electricity and metric tons of CO2 per therm for natural gas).
2.5 Limitations and Further Considerations
The Team encountered some modeling limitations, outside of the Team’s control that should be noted while using these results to inform reach code policies,
▪ CBECC Software:
• The Reach Code Team coordinated with the CBECC software development team on potential differences in our understanding of 2022 code requirements and its implementation in standard design such as battery controls. The version of 2022 CBECC software v1.0, described in Section 2.2, available to the Reach Code Team at the time of the analysis has limited functionalities and could not model heat pump hydronic system or other measures like drain water heat recovery. As the software evolves, some results may look different.
• The most likely all-electric replacement for a central gas boiler serving a variable air volume reheat system would be a central heat pump boiler; however, this system cannot be modeled in CBECC at the time of the writing of this report. The Reach Code Team is treating this analysis as temporary until a compliance pathway is established for a central heat pump boiler in the Energy Code and results can be updated accordingly.
• The team identified some apparent anomalies in software-reported compliance margins when they became available in June 2022. The Reach Code Team is in the midst of discussing outputs and ramifications with software development team specifically related to ventilation such as fan power and heat recovery, among other modeling methods. Results may change with future software versions. In the interim, the Reach Code Team manually calculated the compliance margins using the mixed fuel baseline model created in this study based on our best understanding. ▪ Prototype Building: The cost-effectiveness analysis is based on standard prototypical buildings, which may differ from actual buildings being constructed. Jurisdictions should keep this in mind while extrapolating to the buildings in their territory.
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 ▪ System Cost Assumptions: The incremental electrification and additional measure costs are based on specific system selection and assumptions made by experienced professionals. These costs can vary based on contractor, system design and specifications, and regional variation.
The Team will re-evaluate packages with central heat pump boiler system in Medium Office and Small Hotel in early 2023. In addition to the packages assessed in the report, there are other future potential enhancements that can be considered for more cost-effective or compliant packages:
▪ Adding more solar PV than already analyzed if the building has more roof space to accommodate. ▪ Adding battery at higher levels than prescriptively required in 2022 Title 24 with more advanced controls. ▪ Adding energy efficiency measures as software capability evolves such as drain water heat recovery. ▪ Applying federally pre-emptive (high) efficiency energy systems or appliances.
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 3 Prototypes, Measure Packages, and Costs
This section describes the prototype characteristics and the scope of analysis including measures and their corresponding costs. The Reach Code Team used versions of the following four DOE building prototypes to evaluate cost-effectiveness of measure packages in the occupancy types listed below:
▪ Medium Office
▪ Medium Retail
▪ Quick-Service Restaurant (QSR)
▪ Small Hotel
The Reach Code Team designed the baseline prototypes to be mixed fuel based on 2022 Title 24 Final Express Terms requirements. The Reach Code Team reviewed the 2022 T24 ACM HVAC system map to ensure alignment as applicable for most cases, differences if any are discussed in subsequent sections. The Team built new construction prototypes to have compliance margins as close to zero as possible to reflect a prescriptively compliant new construction building in each CZ. The code compliance is based on the first publicly available CBECC v1.0 compliance software as described in Section 2.2. Misalignments have been reported back to the software team for future software iterations, as described in Section 2.5.
3.1 Prototype Characteristics
The DOE provides building prototype models which, when modified to comply with 2022 Title 24 requirements, can be used to evaluate the cost-effectiveness of efficiency measures (U.S. Department of Energy 2022 A). These prototypes have historically been used by the Energy Commission to assess potential code enhancements. The selection of four building types for this analysis is based on the priority suggested by a group of California cities. The cost-effectiveness results of this study could potentially be extrapolated to other building types that have similar properties such as occupancy pattern, HVAC design and layout.
Water heating includes both service hot water (SHW) for office and retail buildings and domestic hot water for hotel guest rooms. In this report, water heating or SHW is used to refer to both. The compliance software assumes a Standard Design, where HVAC and SHW systems are based on the system maps included in 2022 Nonresidential ACM Reference Manual. However, the Reach Code Team applied both 2022 Title 24 prescriptive requirements and 2022 ACM system map for baseline mixed fuel model, HVAC and SHW system characteristics as described below. ▪ Medium Office
• The HVAC design is a variable air volume (VAV) reheat system with two gas hot water boilers, three packaged rooftop units (one serving each floor), and VAV terminal units with hot water reheat coils. • The SHW design includes one 8.7 kW electric resistance hot water heater with a 5-gallon storage tank. ▪ Medium Retail
• For CZs 2 to 15, the 2022 Title 24 ACM System Map Standard Design informed the baseline model to have three packaged Single Zone Heat Pump (SZHP) systems for the smaller capacity (<240 kBtuh) thermal zones, in alignment with 2022 Title 24 prescriptive code requirements. 3 The large (>240 kBtuh)
core thermal zone has two smaller (<240 kBtuh) SZHPs with VAV fans instead of one large SZHP, since larger rooftop packaged heat pumps are not available in the market. The 2022 Title24 ACM Standard Design assumes a large SZHP for larger zones as well, however this deviation does not impact the results considerably.3
3 https://www.energy.ca.gov/publications/2022/2022-nonresidential-and-multifamily-alternative-calculation-method-reference
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 • For CZs 1 and 16, the baseline model assumed all-electric packaged single zone heat pumps similar to CZs 2-15. The assumption deviates from 2022 Title24 ACM System Map that suggests a single zone dual fuel heat pump. Presumably this will not impact results significantly because the dual fuel system will be in heat-pump mode most times.
• The SHW design includes one 8.7 kW electric resistance hot water heater with a 5-gallon storage tank. ▪ Quick-Service Restaurant
• HVAC includes two SZAC (VAV or constant volume, depending on capacity) with gas furnace, one for kitchen and another for dining area. An exhaust fan is applied for kitchens in all climates based on prescriptive requirements in 2022 Title 24 code.
• The SHW design includes a gas storage water heater with a 100-gallon storage tank. ▪ Small Hotel
• The nonresidential HVAC design is a VAV reheat system with two gas hot water boilers, four packaged rooftop units (one serving each floor), and VAV terminal units with hot water reheat coils. The SHW design includes a small electric resistance water heater with 30-gallon storage tank. • The guest room HVAC design includes one packaged SZAC unit with gas furnace serving each guest room. The water heating design includes a central gas water heater with a 250-gallon storage tank and recirculation pump, serving all guest rooms.
Table 2 summarizes the baseline mixed-fuel prototype characteristics, based on prescriptive 2022 Title 24 new construction requirements.
Table 2. Baseline Prototype Characteristics
Medium Office Medium Retail Quick-Service Restaurant Small Hotel Conditioned floor
area (ft2)
53,628 24,563 2,501
42,554
(77 guest rooms)
(Nonresidential area:
15,282 (36%))
Number of stories 3 1 1 4
Window-to-Wall
Area ratio 0.33 0.07 0.11 0.14
Window Ufactor/SHGC
U-factor:
CZ 1-8, 10, 16 – 0.36
CZ 9, 11-15 – 0.34
SHGC:
CZ 1-8, 10, 16 – 0.25
CZ 9, 11-15 – 0.22
U-factor:
CZ 1-8, 10, 16 – 0.36
CZ 9, 11-15 – 0.34
SHGC:
CZ 1-8, 10, 16 – 0.25
CZ 9, 11-15 – 0.22
U-factor:
CZ 1-8, 10, 16 – 0.36
CZ 9, 11-15 – 0.34
SHGC:
CZ 1-8, 10, 16 – 0.25
CZ 9, 11-15 – 0.22
Nonresidential:
U-factor:
CZ 1-8,10,16 – 0.36
CZ 9, 11-15 –0.34
SHGC:
CZ 1-8,10,16 – 0.25
CZ 9, 11-15 – 0.22
Guest Rooms:
U-factor: 0.36
SHGC: 0.25
Solar PV size 123 kW – 204 kW
Depending on CZ
64 kW – 87 kW
Depending on CZ None 17 kW – 25 kWDepending on CZ
Battery Storage 217 kWh – 360 kWh
Depending on CZ
70 kWh – 94 kWh
Depending on CZ None 16 kWh – 24 kWhDepending on CZ
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Medium Office Medium Retail Quick-Service Restaurant Small Hotel HVAC System
VAV reheat system with
packaged rooftop units,
gas boilers, VAV terminal
units with hot water
reheat
CZ 1
Heat recovery for Core
Retail space only
< 65 kBtu/h: SZHP
> 65 kBtu/h and < 240
kBtu/h: SZHP VAV
> 240 kBtu/h: SZHP VAV
< 65 kBtu/h:
SZAC + gas furnace
> 65 kBtu/h:
SZAC VAV
Nonresidential and Laundry:
VAV reheat system with
packaged rooftop units, gas
boilers, VAV terminal units with
hot water reheat
Guest Rooms: SZAC with gas
furnaces
SHW System 5-gallon electric resistance
water heater
5-gallon electric resistance
water heater
100-gallon gas water
heater
Nonresidential: 30-gallon
electric resistance water heater
Laundry Room: 120-gal gas
storage water heater
Guest rooms: Central gas water
heater, 250 gallons storage,
recirculation loop
3.2 Measure Definitions and Costs
The measures evaluated in the analysis fall into four different categories:
Fuel Substitution
▪ Heat pump or electric
space heating or gas
furnace
▪ Heat pump or electric
water heaters
▪ Electric cooking
▪ Electric clothes dryer
▪ Electrical panel capacity
▪ Natural gas infrastructure
Energy Efficiency
▪ Envelope
▪ Mechanical equipment
(HVAC and SHW)
▪ Lighting
Load Flexibility
▪ Peak Load
shedding
▪ Load shift
Additional solar PV
and/or battery
storage.
These measures are detailed further in this section.
3.2.1 Fuel Substitution
The Reach Code Team investigated the cost and performance impacts and associated infrastructure costs associated with changing the mixed-fuel baseline HVAC and water heating systems to all-electric equipment for all prototypes except Medium Retail where the baseline is already an all-electric design.
For Medium Office, Quick Service Restaurant and Small Hotel, the fuel substitution measure entails electrification including heat pump space heating, electric resistance re-heat coils, electric water heaters with storage tank, heat pump water heating, increasing electrical capacity, and eliminating natural gas connections that would have been present in mixed-fuel new construction.
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 For Medium Retail with all-electric baseline, the fuel substitution measure entails mixed-fuel space conditioning system including single zone packaged AC with gas furnace, dual fuel heat pump, adding gas infrastructure costs and eliminating any additional electric infrastructure.
3.2.1.1 HVAC and Water Heating
The 2022 T24 nonresidential standards analysis uses a mixed-fuel baseline for most of the Standard Design mechanical equipment, primarily gas for space heating, except for some heat pump scenarios in Retail prototype (see Table 2). Quick-Service Restaurant has a gas storage water heater in baseline, and heat pump water heater in allelectric scenario. The Small Hotel has a central gas water heating system serving the guest rooms and a separate gas storage water heater for laundry room. In the all-electric scenario, gas equipment serving HVAC and water heating end-uses is replaced with electric equipment. Full details of HVAC and water heating systems in baseline and proposed fuel substitution measure package are described in Table 3.
Regions of California covered by the South Coast Air Quality Management District have emissions restrictions imposed on mechanical equipment. The Reach Code Team investigated the potential cost implications of meeting these requirements for gas furnaces and boilers but found that costs are minimal for mechanical systems under 2,000,000 Btu/h, and therefore did not include them. All gas-fired mechanical systems in this study are under 2,000,000 Btu/h and are subject to only an initial permitting fee, while larger systems require additional permitting costs and annual renewals.
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 3. HVAC and Water Heating Characteristics Summary Medium Office Medium Retail
Quick-Service
Restaurant
Small Hotel
HVAC
Baseline
Packaged DX +
VAV with hot
water reheat.
Central gas
boilers.
All zones and CZs: Single
zone packaged heat
pumps
Packaged SZAC +
gas furnace
Nonresidential: Packaged DX
+ VAV with hot water
reheat. Central gas boilers.
Guest Rooms: Packaged
SZAC +
gas furnaces
Proposed – Fuel
Substitution
Packaged DX +
VAV with electric
resistance reheat.
Core zone (>30 ton):
Packaged SZAC + VAV +
gas furnace
Other small zones: SZHP,
or dual fuel heat pump
for CZ 1 and 16
Single zone packaged
heat pumps
Nonresidential: Packaged DX
+ VAV with electric
resistance reheat
Guest Rooms: SZHPs
SHW
Baseline
Electric resistance
with storage
Electric resistance with
storage
Gas storage water
heater
Nonresidential: Electric
resistance storage
Guest Rooms: Central gas
storage with recirculation
Proposed – Fuel
Substitution
Unitary heat pump
water heater
Nonresidential: Electric
resistance storage
Guest Rooms: Central heat
pump water heater with
recirculation
The Reach Code Team received cost data for mechanical equipment from two experienced mechanical design firms including equipment and material, labor, subcontractors (for example, HVAC and SHW control systems), and contractor overhead.
3.2.1.1.1 Medium Office
For the Medium Office all-electric HVAC design, the Reach Code Team investigated several potential all-electric design options, including variable refrigerant flow, packaged heat pumps, and variable volume and temperature systems. The most likely all-electric replacement for a central gas boiler serving a variable air volume reheat system would be a central heat pump boiler; however, this system cannot be modeled in CBECC at the time of writing of this report. As such, Reach Code Team is treating this analysis as temporary until a compliance pathway is established for a central heat pump boiler in the Energy Code and results can be updated accordingly. This modeling capability is anticipated by Q1 2023 according to discussions with the CBECC software development team, and the costeffectiveness analysis should become available in the first half of 2023.
After seeking feedback from the design community and considering the software modeling constraints, the Reach Code Team determined that the most feasible all-electric HVAC system is a VAV system with an electric resistance reheat instead of hot water reheat coil. A parallel fan-powered box (PFPB) implementation of electric resistance reheat
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 would further improve efficiency due to reducing ventilation requirements, but an accurate implementation of PFPBs is not currently available in compliance software.
The actual gas consumption for the VAV hot water reheat baseline may be higher than the current simulation results due to a combination of boiler and hot water distribution losses. A recent research study shows that the total losses can account for as high as 80 percent of the boiler energy use.4If these losses are considered savings for the electric resistance reheat (which has zero associated distribution loss), cost-effectiveness may be higher than presented.
The all-electric SHW system remains the same electric resistance water heater as the baseline and has no associated incremental costs. Cost data for Medium Office designs are presented in Table 4. The all-electric HVAC system presents cost savings compared to the hot water reheat system from elimination of the hot water boiler and associated hot water piping distribution. CZ10 and CZ15 all-electric design costs are slightly higher because they require larger size rooftop heat pumps than the other CZs.
Table 4. Medium Office Average Mechanical System Costs
Components (HVAC Only)
Baseline – Mixed Fuel Proposed – All-electric Incremental Cost Description
Packaged units, boilers,
hot water piping, VAV
boxes, ductwork, grilles
Packaged units, electric
resistance VAV boxes,
electric circuitry,
ductwork, grilles
VAV Boxes, electric
infrastructure
Material $491,630 $438,555 $(53,075)
Labor $173,816 $102,120 $(71,696)
Electric Infrastructure $0 $112,340 $112,340
Gas Infrastructure $17,895 $0 $(17,895)
Overhead & CZ adjustment ** $267,052 $250,114 $(16,938) TOTAL $950,393 $903,129 $(47,264)
** The overhead and CZ adjustment factors are presented in Section 8.3.
3.2.1.1.2 Medium Retail
The baseline HVAC system includes five packaged single zone heat pumps. Based on fan control requirements in Section 140.4(m), units with cooling capacity ≥ 65,000 Btu/h have variable air volume fans, while smaller units have constant volume fans. For the Medium Retail proposed fuel substitution scenario, the Reach Code Team assumed one large Single Zone Packaged ACs with gas furnaces to replace the two smaller packaged heat pumps in the large core thermal zone. The all-electric SHW system remains the same electric resistance water heater as the baseline and has no associated incremental costs. In addition, according to the prescriptive requirement in Section 140.4 (q), the air system of Core Retail Zone in CZ1 meets the requirement in Table 140.4 J, which should include exhaust air heat recovery. Cost data for Medium Retail designs are presented in Table 5. Costs for rooftop air-conditioning systems are very similar to rooftop heat pump systems.
4 Raftery, P., A. Geronazzo, H. Cheng, and G. Paliaga. 2018. Quantifying energy losses in hot water reheat systems. Energy and Buildings, 179: 183-199. November. https://doi.org/10.1016/j.enbuild.2018.09.020. Retrieved from https://escholarship.org/uc/item/3qs8f8qx
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 For climate zones 2 to 15, the proposed fuel substitution HVAC design includes three SZHP units (VAV or constant volume, depending on capacity) based on prescriptive requirements and one large SZAC that is between 35-45 tons for the core zone.
For climate zones 1 and 16, the smaller capacity (<240 kBtuh) thermal zones may have either of dual-fuel SZHPs or SZACs, depending on capacity. The core zone with 35-to-45-ton cooling capacity is assumed to have one large SZAC.
CZ 1 also assumes an exhaust air heat recovery system for core zone based on prescriptive requirement in Title 24 Part 6 Section 140.4.
Table 5. Medium Retail Average Mechanical System Costs
Components (HVAC
Only)
Baseline – All-electric Proposed – Mixed Fuel Incremental Cost Description SZHPs
Single zone AC +
furnace, SZHP, or dual
fuel SZHP, depending
upon capacity and CZ
SZAC with gas furnace,
Added gas
infrastructure cost
HVAC – Material $189,160 $183,157 $(6,003)
HVAC – Labor $54,785 $52,886 $(1,899)
Electric Infrastructure $0 $0 -
Gas Infrastructure $0 $17,895 $17,895
Overhead & CZ
adjustment **
$94,600 $98,519 $3,919
TOTAL $338,546 $352,458 $13,912
** The overhead and CZ adjustment factors are presented in Section 8.3.
3.2.1.1.3 Quick-Service Restaurant
The baseline HVAC system includes two packaged single zone rooftop ACs with gas furnaces. Based on fan control requirements in Section 140.4(m), units with cooling capacity ≥ 65,000 Btu/h have variable air volume fans, while smaller units have constant volume fans. The SHW design includes one central gas storage water heater with 150 kBtu/h input capacity and a 100-gallon storage tank. For the QSR all-electric design, the Reach Code Team assumed packaged heat pumps and an A.O. Smith CHP-120 heat pump water heater with a 120-gallon storage tank. Cost data for the QSR designs are presented in Table 6, which shows the costs for full electrification of the HVAC and water heating equipment.
The Team has not included costs of electrifying the cooking equipment because of the negative impact on costeffectiveness, as demonstrated in a 2021 Restaurants cost-effectiveness study (TRC, P2S Engineers, and Western Allied Mechanical 2022). The HVAC and SHW electrification packages are referred to as the HS package to reflect allelectric HVAC and SHW.
Table 6. Quick-Service Restaurant Average Mechanical System Costs - HS Package Components
Baseline – Mixed Fuel Proposed – All-electric Incremental Cost Description Single zone AC + furnace, gas
storage water heater
SZHP, heat pump water
heater
HVAC +SHW
electrification
HVAC Material $50,065 $52,785 $2,719
HVAC Labor $6,748 $6,249 $(499)
SHW – Material $10,198 $13,720 $3,523
SHW – Labor $2,650 $2,529 $(121)
Electric Infrastructure $0 $12,960 $12,960
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Gas Infrastructure $17,895 $15,878 -$2,017
Overhead & CZ adjustment ** $41,633 $47,612 $5,979
TOTAL $150,838 $173,382 $22,544
** The overhead and CZ adjustment factors are presented in Section 8.3.
3.2.1.1.4 Small Hotel
The Small Hotel has two different baseline equipment systems, one for the nonresidential spaces and one for the guest rooms. The nonresidential HVAC system includes two gas hot water boilers, four packaged rooftop units, and twentyeight VAV terminal boxes with hot water reheat coil. The SHW design includes a small electric water heater with storage tank for nonresidential areas and gas storage water heater dedicated to laundry room. The guest rooms HVAC design includes one single-zone AC unit with gas furnace for each guest room, and the water heating design includes one central gas storage water heater with a recirculation pump for all guest rooms.
For the Small Hotel all-electric design, the Reach Code Team assumed the nonresidential HVAC system to be packaged heat pumps with electric resistance VAV terminal units, and the SHW system will remain a small electric resistance water heater. As described in Section 3.2.1.1.1 above, a central heat pump boiler may be the most commonly employed system type but was not evaluated in this study because of modeling limitations. For the guest room all-electric HVAC system, the Team assumed SZHPs and a central heat pump water heater serving all guest rooms. For the laundry room, all-electric HVAC system is same as other nonresidential areas and all-electric water heating is a split heat pump water heater. The central heat pump water heater includes a temperature maintenance loop with an electric resistance backup heater.
Cost data for Small Hotel designs are presented in Table 7. The all-electric design presents substantial cost savings because there is no hot water plant or piping distribution system serving the nonresidential spaces. The incremental cost savings are further enhanced considerably if packaged terminal heat pumps (PTHPs) are used instead of SZHPs in guest rooms compared to split DX/furnace systems with individual flues.
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 7. Small Hotel HVAC and Water Heating System Costs Components
Baseline – Mixed Fuel Proposed – All-electric Incremental Cost Description
Non-residential spaces: Packaged
units, boilers, hot water piping,
VAV boxes, ductwork, grilles, gas
water heater for laundry
Guest rooms: SZAC + furnace,
central gas water heater
Non-residential spaces:
Packaged units, electric
resistance VAV boxes, electric
circuitry, ductwork, grilles, heat
pump water heater for laundry
Guest rooms: SZHP, central
heat pump water heater
HVAC (NR and Guest Rooms)
Electrification
SHW (Laundry Room and
Guest Rooms)
HVAC - Material $802,004 $625,642 $(176,361)
HVAC - Labor $366,733 $282,394 $(84,339)
SHW - Material $55,829 $139,087 $83,258
SHW - Labor $11,780 $15,080 $3,300
Electric
Infrastructure
$- $119,625 $119,625
Gas Infrastructure $74,943 $- $(74,943)
Overhead & CZ
adjustment **
$518,741 $461,001 $(57,739)
TOTAL $1,830,029 $1,642,830 $(187,199)
TOTAL
HVAC (PTHP option)
$1,830,029 $1,161,178 ($668,851)
** The overhead and CZ adjustment factors are presented in 8.3.
3.2.1.2 Commercial Cooking Equipment
For Quick-Service Restaurant prototype, the Reach Code Team evaluated electrification of commercial cooking equipment extensively in 2019 Restaurants Cost Effectiveness analysis and leveraged it for cost and other specifications for the this study. It assumes a Type I exhaust hood and shows high incremental cost affecting the costeffectiveness of this measure. Table 8 summarizes the quick-service restaurant cooking equipment costs for both mixed-fuel and all-electric scenarios.
Table 8. Quick-Service Restaurant Cooking Equipment Costs Components
Baseline – Mixed Fuel
Proposed – All-electric (non
“HS” scenario) Incremental Cost
Description Gas based appliances Electric cooking appliance Cooking appliance electrification
Cooking equipment
cost
$21,649 $43,534 $21,886
TOTAL $21,649 $43,534 $21,886
This measure also adds electric infrastructure cost as detailed in Table 10 below.
3.2.1.3 Commercial Clothes Dryer
For the all-electric measure, the Reach Code Team assumed electric resistance clothes dryers for Small Hotel prototype. Commercial-scale heat pump clothes dryers take significantly longer time to dry compared to a conventional
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Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 19 Prototypes, Measure Packages, and Costs
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 gas or electric dryer and are not common in the United States On-Premise Laundry (OPL) market, where labor is relatively expensive and use of heat pump dryers implies hotels may need to require more than one shift to perform laundry duties. Most commercial clothes dryers are available in models that use either gas or electricity as the fuel source, so there is negligible incremental cost for electric resistance dryers. Table 9 summarizes the Small Hotel construction costs for both mixed-fuel and all-electric OPL scenarios.
Table 9. Small Hotel Clothes Dryer Costs
Components
Baseline – Mixed Fuel Proposed – All-electric Incremental Cost Description Gas clothes dryer Electric resistance clothes dryer -
Clothes Dryer cost $29,342 $29,342 $0
TOTAL $29,342 $29,342 $(0)
This measure also adds electric infrastructure cost as detailed in Table 10 below.
3.2.1.4 Infrastructure Impacts
3.2.1.4.1 Electrical infrastructure
Electric heating appliances and equipment often require a larger electrical connection than an equivalent gas appliance because of the higher voltage and amperage necessary to electrically generate heat. Thus, many buildings may require larger electrical capacity than a comparable building with natural gas appliances. This includes:
▪ Electric resistance VAV space heating in the medium office and common area spaces of the small hotel. ▪ Heat pump water heating for the guest room spaces of the small hotel.
Table 10 details the cost impact of additional electrical panel sizing and wiring required for all-electric scenarios as compared to their corresponding mixed-fuel scenario The costs are based on estimates from one contractor. The Reach Code Team excluded costs associated with electrical service connection upgrades because these costs are very often rate-based and highly complex.
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Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 20 Prototypes, Measure Packages, and Costs
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 10. Electrical Infrastructure Costs
Mixed-Fuel Equipment All-electric Equipment Electrical Infrastructure Impact
Incremental
Cost
Medium
Office
Hot water reheat system
with gas boiler plant and
VAV boxes with hot water
reheat coils
VAV boxes with electric
resistance reheat coils
Upgraded transformers,
transformer feeders,
switchboards, and branch
circuits
$ 112,340
Medium
Retail
Mix of SZHPs and single zone
AC plus furnace serving all
zones
SZHPs serving all zones Electrical requirements are
driven by cooling capacity,
so no impact.
$0
Quick-Service
Restaurant
Gas water heater Heat pump water heater Upgraded switchboard, transformer feeder, and
branch circuits
$12,960
Gas Water heater, Gas
cooking
Heat pump water heater,
Electric cooking
Upgraded switchboard,
transformer feeder, and
branch circuits
$95,260
Small Hotel Guest rooms HVAC: Single
zone AC plus furnace
Non-residential spaces
HVAC: Hot water reheat
system with gas boiler plant
and VAV boxes with hot
water reheat coils.
Water heating: Gas water
heating serving both laundry
and guest rooms.
Process: Gas dryers.
Guest rooms HVAC: SZHPs
Non-residential spaces
HVAC: VAV boxes with
electric resistance reheat
coils.
Water heating: Heat pump
water heating serving both
laundry and guest rooms.
Process: Electric resistance
dryers.
Upgraded transformers,
transformer feeders,
switchboards, and branch
circuits
$119,625
3.2.1.4.2 Gas Piping
The Reach Code Team assumes that gas would not be supplied to the site in an all-electric new construction scenario.
Eliminating natural gas in new construction would save costs associated with connecting a service line from the street main to the building, piping distribution within the building, and monthly connection charges by the utility.
The Reach Code Team determined that for a new construction building with natural gas piping, there is a service line (branch connection) from the natural gas main to the building meter. Table 11 gives a summary of the gas infrastructure costs by component, assuming 1-inch corrugated stainless-steel tubing (CSST) material is used for the plumbing distribution. The Reach Code Team assumes that the gas meter costs vary depending on the gas load.
Based on typical space heating loads for all building types, the Reach Code Team categorized CZs 1 and 16 as ‘Highload CZs’ and CZs 2-15 as ‘Low-load CZs’. The Reach Code Team assumed an interior plumbing distribution length based on the expected layout. Table 12 gives the total gas infrastructure cost by building type. The costs are based on estimates from one contractor.
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Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 21 Prototypes, Measure Packages, and Costs
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 11. Gas Infrastructure Costs by Component
Component Details Cost
Meter, including Pressure
Regulator, and Earthquake Valve
Low load CZ (CZ 2-15) $11,056
High load CZ (CZ 1,16) $15,756
Gas lateral Cost per linear foot of 1" CSST $40
Connection charges Includes street cut and plan review $1,015 Interior plumbing distribution Cost per linear foot of 1" CSST $40 Table 12. Total Gas Infrastructure Cost Estimates by Building Type Total gas infrastructure cost
Building Prototype Interior plumbing distribution length (ft) Low load CZ High load CZ Medium Office 100 $17,307 $22,007
Medium Retail 100 $17,307 $22,007
Quick-Service Restaurant 100 $2,017*
Small Hotel 1,412 $70,243 $74,943
*The Quick-Service Restaurant package includes gas cooking appliances, which will require a gas lateral and meter. These costs represent only the interior plumbing distribution costs that would have served the HVAC and SHW systems.
3.2.2 Efficiency
The Reach Code Team started with a potential list of energy efficiency measures proposed for the 2025 Title 24 energy code update by the Statewide Building Codes Advocacy program (CASE Team)5, which initially included over 500 options. Other options originated in previous energy code cycles or were drawn from other codes or standards (examples: ASHRAE 90.1 and International Energy Conservation Code [IECC]), literature reviews, or expert recommendations. The Reach Code Team leveraged the CASE Team's assessment tools for the 2025 Cycle, focusing on measures prioritized by the CASE Team. The Reach Code Team filtered the list of potential measures based on building type (to remove measures that applied to building types not covered in this study), measure category (to remove end-uses and loads that are not relevant to the prototypes) and impacts to new construction. Based on this filtering, the Team was left with around 100 measures to consider. The Reach Code Team ranked this list of potential measures based on applicability to the prototypes in this study, ability to model in simulation software, demonstrated energy savings potential, and market readiness.
Please note that the measures requiring a ruleset update cannot currently be modeled for compliance purposes. The modeling method for each efficiency measure is defined in their respective measure descriptions in Section 3.2.2.1 and if the ruleset amendment was applied. Please refer to Section 2.5 for further details.
The subsections below describe the energy efficiency measures that the Team analyzed, including description, modeling approach, and specification.
3.2.2.1 Envelope
1. Cool Roof: Requires higher reflectance and emittance values for the Medium Office building only. This measure was not shown to produce substantial savings in the other prototypes. 5 https://title24stakeholders.com/
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Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 22 Prototypes, Measure Packages, and Costs
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Modeling: Modeled cool roof measure in efficiency measures package by updating Aged Solar Reflectance (ASR) and/or Thermal Emittance (TE) in CBECC software.
Specification: Increased ASR from 0.63 to 0.70 with a TE of 0.85 in CZs 4 and 6-15.
2. Efficient Vertical Fenestration: Requires lower U-factor and Solar Heat Gain Coefficient (SHGC) for windows in select climate zones for three building types (Medium Office, Retail, and Small Hotel). The measure details and the climate zone selection are based on the proposition of 2022 NR CASE Report (Statewide CASE Team 2020 B).
Modeling: Modeled high performance windows in efficiency measures package by updating U-factor and SHGC inputs in CBECC software.
Specification: Reduced U-factor from 0.36 to 0.34 and SHGC from 0.25 to 0.22 in CZs 2, 6, 7 and 8 for Medium Office and Retail, Reduced U-factor from 0.36 to 0.34 and SHGC from 0.25 to 0.22 in all CZs for Small Hotel.
3. Vertical Fenestration as a Function of Orientation: Limit the amount of fenestration area as a function of orientation for the Medium Office. East-facing and west-facing windows are each limited to one-half of the average amount of north-facing and south-facing windows.
Modeling: Change z-coordinate input of windows in CBECC software for Medium Office to increase or decrease fenestration area for the Medium Office.
Specification: Decreased east-facing and west-facing fenestration area from 468 to 390 square feet.
Increased north-facing and south-facing fenestration area from 703 to 781 square feet.
3.2.2.2 Mechanical Equipment (SHW and HVAC)
4. Water Efficient Fixtures in Kitchen: Specifies commercial dishwashers that use 20% less water than ENERGY STAR® specifications. In addition, the dishwasher includes heat recovery function such that it only needs connection to cold water and reduces hot water demand and central SHW system capacity. For QSRs, which typically specify a three-compartment sink for dishwashing, this measure would replace or add a dishwasher to reduce total hot water load. The measure also adds 1.0 gallon per minute (GPM) faucet aerators to hand-washing sinks in the kitchen to reduce water usage. Title 20 requires kitchen sinks to have a flow rate of 1.8 GPM at most. The reduced hot water load from the water efficient fixtures above allows the heat pump water heater (HPWH) to operate without an electric resistance back-up.
Modeling: Reduced water usage in the ruleset based on calculations of expected water usage from literature review and fixture specifications. HPWH coefficient of performance (COP) is increased since there is no electric resistance back-up.
Specification: Decreased hot water usage by 26% in the software ruleset (13.4 gallons per person to 9.9 gallons per person) and increased HPWH COP from 3.1 to 4.2.
5. Ozone Washing Machines: Adds an ozone system to the large on-premises washing machines. The ozone laundry system generates ozone, which helps clean fabrics by chemically reacting with soils in cold water. This measure saves energy by reducing hot water usage and by reducing cycle time for laundry systems. Refer to DEER Deemed measure SWAP005-01 for more information (California Public Utilites Commission 2022).
Modeling: Reduced the total runtime of each cycle and hot water hourly usage per person (gallons per hour per person) for laundry area in software ruleset.
Specification: Reduced hot water usage by 85%, from 48.4 to 7.3 gal/hour-person based on the deemed measure data from the California electronic Technical Reference Manual (California Technical Forum 2022).
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24
6. Efficient Hot Water Distribution: Reduces domestic hot water (DHW) distribution system pipe heat losses in two ways. First, the Team used pipe sizing requirements in Appendix M of the California Plumbing Code instead of Appendix A. Appendix M reduces pipe diameters for the cold and hot water supply lines based on advancements made in water efficiency standards for plumbing fixtures found in hotel bathrooms. Second, the Team added more stringent pipe insulation thickness requirements for hotels to match that of single and multifamily dwellings using Title 24 Table 160.4-A Pipe Insulation Thickness Requirements for Multifamily DHW Systems instead of Table 120.3-A.
Modeling: The Team calculated the pipe heat loss savings for the Small Hotel prototype by following the modelling methodology applied to the low-rise loaded corridor multi-family building prototype in the 2022 CASE Multifamily Domestic Hot Water Distribution report (Statewide CASE Team 2020 A). The Team designed a riser distribution system for the Small Hotel prototype building using the baseline Appendix A and modern Appendix M pipe sizing tables. The pipe design and total pipe surface area of the supply and return lines for the Small Hotel closely matched the Low-Rise Loader Corridor Building prototype. The hotel insulated pipe heat loss for both Appendix A and M was approximated from the multifamily building heat loss modelling results for the 16 CZs and water heater energy savings calculated for the two sub-measures.
Specification: (a) Pipe diameter decreased from Appendix A requirements to Appendix M multifamily plumbing requirements (b) For pipe diameters at or above 1.5 inches, increase the insulation thickness from 1.5 to two inches thick for fluids operating in the 105-140⁰F temperature range. . The Team reduced the DHW energy consumption by 0.4 – 0.7% depending on CZ in a postprocessing of the model.
7. Demand Control Ventilation (DCV) and Transfer Air: The California Energy Code requires kitchen exhaust to have DCV if the exhaust rate is greater than 5,000 cfm. This measure expands this requirement and applies DCV regardless of the exhaust rate for the QSR. Additionally, the kitchen makeup air supply is decreased by requiring at least 15% of replacement air to come from the transfer air in the dining space that would otherwise be exhausted.
Modeling: Changed exhaust fan from constant speed fan to variable speed and reduce kitchen ventilation airflow rate for the QSR.
Specification: Changed Kitchen Exhaust Fan Control Method to Variable Flow Variable Speed Drive, reduced kitchen ventilation from 2,730 cfm to 2,293 cfm.
8. Guest Room Ventilation and Fan Power: Uses the 2021 IECC fan power limitation requirements for ventilation fans under 1/12 horsepower, and approximates the ASHRAE 90.1 Small Hotel guestroom control requirements, which require shutting off ventilation within five minutes of all occupants leaving the room and changing the cooling setpoint to at least 80⁰F and heating setpoint to at most 60⁰F.
Modeling: Since variable occupancy cannot be modeled in CBECC, the Reach Code Team revised the software ruleset ventilation schedule and setpoints from 8:00 AM to 7:00 PM—the time range where the CBECC software assumed occupancy to be less than half for all guestrooms.
Specification: Heating setpoint reduced from 68°F to 66°F, cooling setpoint increased from 78°F to 80°F PM, and ventilation shut off from 8:00 AM to 7:00 PM. Guestroom ventilation fans have fan efficacy of 0.263 W/cfm.
9. Variable speed Fans: Require variable speed fans at lower capacities than required by Title 24 Part 6 Section 140.4(m), currently at 65,000 Btu/hr. This measure is based on the 2022 Title 24 Part 6, Section 140.4(m),
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Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 24 Prototypes, Measure Packages, and Costs
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 where direct expansion units greater than 65,000 Btu/hr that control the capacity of the mechanical cooling directly shall have a minimum of two stages of mechanical cooling capacity and variable speed fan control.
Modeling: Reduced the cooling capacity threshold from 65,000 Btu/hr to 48,000 Btu/hr. Changed the supply fan control from constant speed to variable speed for zones that have cooling capacity > 48,000 Btu/hr and < 65,000 Btu/hr in the Medium Retail and QSR.
Specification: Changed the supply fan control from Constant Volume to Variable Speed Drive for the Front Retail and Point-of-Sale thermal zones in Medium Retail prototype and the Dining Zone in the QSR prototype.
3.2.2.3 Lighting
10. Interior lighting reduced lighting power density: Update lighting power densities (LPD, measured as Watts/ft2) requirements based on technology advances (e.g., optical efficiency, thermal management, and improved bandgap materials). Identify spaces with opportunities for more savings from lowered LPDs—not all spaces are subject to LPD reductions. Take into consideration IES recommended practices and biological effectiveness metrics (such as WELL) when developing the proposed LPD values (WELL 2022).
The 2022 Indoor Lighting CASE Study (Statewide CASE Team 2021 D) provided a survey of 2x2 troffer products available in the Design Lights Consortium Qualified Products List (DLC-QPL) and the efficacy level each measured. This study indicated that at the time of the report approximately 20% of available DLC-QPL products exceeded the performance level of the ‘Standard’ DLC-QPL listing by approximately 15%, meeting the ‘Premium’ listing criteria. The Title 24 2022 CASE Report uses the ‘Standard’ designation performance level as the design baseline for all the LPD calculations in the code. This document proposes using the ‘Premium’ designation performance as the basis of the LPD allowances.
A DOE study on solid-state light sources (LEDs) provides projections of efficacy improvement for LED light sources that are in the range of 2.5 to 3% per year, continuing for the next five or ten years (U.S. Department of Energy 2019 B). So, the products offered for sale by the luminaire manufacturers are improving as older products are discontinued and newer ones are introduced. Even in just three years, the overall performance of the products available can improve by 7 to 9%.
A recent Navigant LED pricing study shows a slightly negative cost to efficacy correlation, indicating that higher performing products may be slightly lower in cost (Navigant Consulting 2018). This is likely to be in part caused by the decreasing cost of the LED chips with each subsequent generation produced. There is likely to be no cost associated with employing higher performing LED luminaires.
Modeling: Reduce LPDs by approximately 13% in each space listed below under regulated lighting below Title 24 prescriptive requirements.
Specification: Medium Office
• All spaces: 0.52 W/ft2
Medium Retail
• Storage: 0.36 W/ft2
• Retail sales: 0.86 W/ft2
• Main entry lobby: 0.63 W/ft2
QSR
• Dining: 0.41 W/ft2
• Kitchen: 0.86 W/ft2
Small Hotel
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Cost-Effectiveness Analysis: Nonresidential New Construction Buildings 25 Prototypes, Measure Packages, and Costs
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Stairs: 0.54 W/ft2
Corridor: 0.36 W/ft2
Lounge: 0.50 W/ft2
The measures are summarized below by building type, including measure costs, in Table 13.
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Cost-effectiveness Analysis: Nonresidential New Construction 26 Prototypes, Measure Packages, and Costs
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 13. Efficiency Measures Applicability, Costs, and Sources Measure Applicability
• Included in packages with energy efficiency measures
- Not Applicable
Measure
Baseline T24
Requirement Proposed Measure
Med
Office
Med
Retail
QuickService
Restaurant
Small
Hotel:
Guest
Rooms
Small Hotel:
Nonresidential
Incremental
Cost Sources & Notes
Envelope
1. Cool Roof For low slope roofs:
ASR = 0.63
TE = 0.75
For low slope roofs:
ASR = 0.7
TE = 0.85
● ─ ─ ─ ─ $0.04/ft2
Final Nonresidential High
Performance Envelope Case
Report (Statewide CASE Team
2020 B)
2. Efficient
Vertical
Fenestration
U-factor = 0.36
SHGC = 0.25
U-factor = 0.34
SHGC = 0.22
● ● ─ ● ● $1.75/ft2
Final Nonresidential High
Performance Envelope Case
Report (Statewide CASE Team
2020 B)
3. Vertical
Fenestration
as a Function
of Orientation
40% window-to-wall
ratio in each
orientation per Title
24 Table 140.3-B.
Redistribute window
areas by orientation
● ─
─
─ ─ $0
No additional cost. This
measure is a design
consideration.
HVAC and SHW
4. Water
Efficient
Fixtures in
Kitchen
Kitchen faucet max
flow rate is 1.8 GPM
(Title 20)
Kitchen faucet flow
rate is 1 GPM
─ ─ ● ─ ─
High efficiency,
door-type, high
temperature
dishwasher:
$7,633/unit
Faucet aerator:
$8/unit
Combination of literature
review, online sources such as
Home Depot and
manufacturer websites
5.Ozone
Washing
Machine
Not required Reduced hot water
use
─ ─ ─ ─ ● $25,469/unit
DEER Deemed measure
SWAP005-01 (California
Public Utilites Commission
2022)
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Cost-effectiveness Analysis: Nonresidential New Construction 27 Prototypes, Measure Packages, and Costs
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Measure Applicability
• Included in packages with energy efficiency measures
- Not Applicable
Measure
Baseline T24
Requirement Proposed Measure
Med
Office
Med
Retail
QuickService
Restaurant
Small
Hotel:
Guest
Rooms
Small Hotel:
Nonresidential
Incremental
Cost Sources & Notes
6. Efficient Hot
Water
Distribution
Appendix A Pipe
Sizing with standard
pipe insulation
thickness 1.5’’
Appendix M pipe
sizing with 2” pipe
insulation thickness
─ ─ ─ ● ─ $5,819
Multifamily Domestic Hot
Water Final CASE Report
7. DCV &
Transfer Air
DCV required in
kitchen for exhaust
air rate > 5000 cfm
DCV for all exhaust
fans ─ ─ ● ─ ─ $8,500
Mechanical contractor cost
estimate
8. Guest Room
Ventilation,
Temperature
Setback, and
Fan Power
Guest rooms
required to have
occupancy sensing
zone controls, but
no ventilation fan
power requirement.
Updated fan power
and HVAC schedules
─ ─ ─ ● ─ $0
No cost increase, as guest
rooms already have controls.
9. Variable
Speed Fans
Variable speed
required if cooling
capacity is greater
than 65,000 Btu/h
Variable speed
control for smaller
capacity systems
─ ● ● ─ ─ $6,390/unit
Mechanical contractor cost
estimate
Lighting
10. Interior
Lighting
Reduced LPD
Per Area Category
Method, varies by
Primary Function
Area.
Top 20% of market
products
● ● ● ─ ● $0
Industry report on LED pricing
analysis shows that costs are
not correlated with efficacy.
(Navigant Consulting 2018)
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3.2.3 Load Flexibility
The Reach Code Team investigated a range of high-impact demand flexibility strategies potentially applicable to the four prototypes. The list of strategies is informed by DOE’s Grid-interactive Efficient Buildings efforts and the 2022 Nonresidential Grid Integration CASE report (U.S. Department of Energy 2021, Statewide CASE Team 2020). The Team selected the three measures based on their load flexibility potential, cost, compliance software modeling capabilities, savings potential and the ease of project implementation and field verification:
Please note that these measures require a ruleset update and cannot be modeled currently for compliance purposes.
11. Temperature Setback using Smart Thermostat: This measure leverages the existing mandatory requirement for HVAC zone thermostatic controls to pre-condition spaces prior to, and to shed demand during, peak period. This measure introduces a setback in temperature setpoint during peak period and incurs no additional cost because Occupant-Controlled Smart Thermostats (OCSTs) are already required for buildings similar to the Medium Office prototype.
Modeling: Instead of utilizing the demand responsive features, OCST would be used to change temperature setpoints and setpoint schedules. These changes were integrated by altering the setpoint schedules directly in the backend ruleset files of CBECC software.
Specification: In the base case, the Medium Office prototype HVAC equipment schedules dictate "on" hours (at desired temperature) from 6:00 AM through 12:00 AM on weekdays and 6:00 AM – 7:00 PM on Saturdays. All Sunday hours are "off." Cooling setpoints are 75°F during "on" and 85°F when "off" hours; heat setpoints are 70°F during "on" and 60°F during "off" hours. The Team modified this schedule such that the "on" setpoints are stepped back by 2°F from 4:00 PM through 12:00 AM on weekdays; and from 4:00 PM – 7:00 PM on Saturdays.
12. Demand Response Capable HPWH: The Reach Code Team modeled a measure intended to reduce the peak demand of the significant hot water loads in the QSR prototype. The measure increases costs due to adding a 100-gallon storage tank and plumbing hardware. The additional hot water storage enables preheating water ahead of demand by effectively increasing the HPWH’s thermal storage capacity. The extra plumbing hardware is needed to keep the stored hot water stratified to maintain efficient HPWH operations.
The Team did not directly address the issue of storage tank location but assumed floor plan design would be able to accommodate it.
Modeling: The measure uses the HPWH and additional storage tank capacity to produce and store hot water ahead of actual use during evening peak period. QSR hot water baseline schedule exhibits a low morning load (6:00 AM – 8:00 AM), moderate load near lunch time (11:00 AM), and a peak evening load (4:00 PM – 11:00 PM). These changes were made by changing the hot water load fraction in the ruleset.
Specification: Implements an early pre-heat that starts at 12:00 PM and finishes by 7:00 PM, avoiding the super peak hours of 7:00 PM – 9:00 PM.
13. Demand Response Lighting: This measure extends existing Title 24 mandatory requirements for demand responsive lighting by shedding demand during peak hours. There are no additional measure costs because demand responsive control capability is already required for nonresidential buildings with more than 4kW of total lighting load. This measure does not require additional commissioning.
Modeling: The baseline lighting schedule exhibits a plateau of 0.65 load fraction from 8:00 AM – 8:00 PM and trails off after 8:00 PM through the end of the day for weekdays. The Team altered the ruleset to reduce the load fraction during 4:00 PM – 9:00 PM.
Specification: The Team implemented a 10% setback during the 4-9pm peak hours.
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Cost-effectiveness Analysis: Nonresidential New Construction 29 Prototypes, Measure Packages, and Costs
localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 The load flexibility measure applications to each prototype are summarized in Table 14.
Table 14. Load Flexibility Measure Summary
Measure
Med
Office
Med
Retail
QSR Small Hotel Incremental Cost Other Notes
11. Smart
Thermostat
● - - - $0 Capability already required
12. Demand Control
HPWH - - ● - $5,400
An additional 100-gallon tank,
plumbing hardware, and related
labor hours
13. Demand
Response Lighting
● - - - $0 Capability already required
None of the measures apply to the Medium Retail or Small Hotel prototypes. While the Small Hotel contains some office space and common areas, the Medium Office load flexibility measures were not applied to the Small Hotel spaces because of the potential for unpopular impacts, varying occupancy schedules, difficult field maintenance, and limited energy impacts. Team also explored the impact of load flexibility in all-electric clothes dryer scenario but did not see enough savings impact, hence the measure was not included in the package.
3.2.4 Additional Solar PV and Battery Storage
The Reach Code Team considered additional solar PV and battery storage measures that exceed the 2022 Title 24 prescriptive requirements to improve the cost-effectiveness of proposed scenarios. For Medium Office and Retail, the prescriptive solar PV sizes are large enough to occupy the entirety of the available roof space. Additional rooftop solar PV could not be considered for the two prototypes. For the Quick-Service Restaurant, solar PV is not prescriptively required since the prototype qualifies for the exception and the Reach Code Team considered adding solar PV to improve cost-effectiveness. For Small Hotel, the required PV size in the code-compliant models did not occupy the entire available roof space. Additional PV system capacity was considered as a measure to improve cost-effectiveness.
For the cost-effectiveness analysis, the Team evaluated additional solar PV for all-electric scenarios for the two building types, Quick Service Restaurant and Small Hotel. The additional PV size is calculated based on available roof space, assuming the maximum available space is 50% of total roof space and 15 Watt per square foot panel size.
Modeling: Updated PV capacity (kW) input in CBECC software.
Specification: Baseline requirement is 0 kW and 22-32.6 (depending on climate zone) kW for Quick-Service Restaurant and Small Hotel respectively. Proposed measure specification is 18.8 kW and 79.8 kW for Quick-Service Restaurant and Small Hotel respectively.
The costs for PV include first cost to purchase and install the system, inverter replacement costs, and annual maintenance costs. A summary of incremental costs and sources is given in Table 15 below.
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 15. Additional Solar PV Measure Summary
Measure
Med
Office
Med
Retail
QSR
Small
Hotel
Incremental Cost Cost Source
Solar PV - - ● ●
First Cost: $3.20/W
Inverter replacement cost at 10-yr:
$0.15/W
Annual Maintenance Cost: $0.02/W
ITC Federal Incentive: 30%
National Renewable Energy
Laboratory (NREL) Q1 2016
(National Renewable Energy
Laboratory 2016)
E3 Rooftop Solar PV System
Report (Energy and
Environmental Economics,
Inc. 2017)
Upfront solar PV system costs are lowered because of the federal income tax credit (ITC)—approximately 30 percent based on the passage of Inflation Reduction Act. PV energy output is built into CBECC and is based on NREL’s PVWatts calculator, which includes long term performance degradation estimates.
A battery storage system is prescriptively required for three prototypes: Medium Office, Medium Retail, and Small Hotel. The current software, CBECC v1.0, applies the appropriate prescriptive battery size (kWh) and capacity (kW) in the standard design. However, the control assumed in standard design is “Basic Control”, which does not function for optimum battery use. The Team did not evaluate additional battery measures because the compliance software does not apply the “Time of Use” battery control method in standard design, which impacts the incremental energy costs and TDV benefits.
3.3 Measure Packages
The Reach Code Team compared a baseline Title 24 prescriptive package to mixed-fuel packages and two to four electrification packages depending on applicability of building type. Note that most QSR all-electric packages exclude kitchen electrification, while the Small Hotel all-electric package does include electric laundry cost and energy impacts. ▪ Mixed Fuel Code Minimum: Mixed-fuel prescriptive building per 2022 Title 24 requirements. ▪ Mixed Fuel + Efficiency Measures: Mixed-fuel prescriptive building per 2022 Title 24 requirements, including additional efficiency measures.
▪ All-electric Code Minimum Efficiency: All-electric building to minimum Title 24 prescriptive standards and federal minimum efficiency standards. This package has the same PV size as mixed-fuel prescriptive baseline. ▪ All-electric Energy Efficiency: All-electric building with added energy efficiency measures related to HVAC, SHW, lighting or envelope.
▪ All-electric Energy Efficiency + Load Flexibility: All-electric building with added energy efficiency and load flexibility measures.
▪ All-electric Energy Efficiency + Solar PV: All-electric building with added energy efficiency and additional Solar PV. The added PV size is larger than prescriptive 2022 Title 24 code requirements and accounts for roof space availability.
For QSR, the Reach Code Team has analyzed two scenarios for all-electric packages, one with electric cooking and the one with gas cooking (the latter of which is referred to as the “HS” package to reflect all-electric HVAC and SHW).
The results section includes results for both scenarios since all-electric package with electric cooking appliance can be cost-effective in POU territories. This study did not evaluate pre-empted package with all-electric HVAC and SHW to
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For Small Hotel, the Reach Code Team also analyzed an alternative scenario with PTHP instead of SZHP in all-electric scenario. It is denoted by the “PTHP” in parenthesis in package name.
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localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 4 Cost-Effectiveness Results
Cost-effectiveness results are presented in this section and the attached workbook per prototype and measure packages described in Section 3. The TDV and On-Bill based cost-effectiveness results are presented in terms of B/C ratio and NPV.
In the following figures, the result Both (shown in green shading) indicates that the result is cost-effective on both OnBill and (Total) TDV basis. The result On-Bill or TDV (shown in yellow shading) indicates that the result is either costeffective on On-Bill or (Total) TDV basis, respectively. The result “ - “ (results with no shading) indicates that the result is not cost-effective on either an On-Bill basis or (Total) TDV basis.
Across all prototypes and climate zones, efficiency measures improve cost-effectiveness when added to the mixed-fuel baseline prototype and all-electric federal code minimum designs.
All-electric cost-effectiveness results by prototype can be summarized as:
Medium Office (Figure 1): All-electric space heating is predominantly achieved through electric resistance due to modeling limitations, which limits operational benefits. Efficiency measures yield some On-Bill costeffective all-electric packages in milder climate zones. Adding load flexibility measures increases the costeffectiveness to most climates.
Medium Retail (Figure 2): All-electric packages are cost-effective in all climate zones with added efficiency measures over all-electric baseline. Proposed mixed-fuel packages are cost-effective too with added efficiency measures in most climate zones primarily driven by cost-equivalency in the all-electric package compared to a mixed-fuel package.
Quick-Service Restaurant (Figure 3): All-electric package with and without cooking electrification is costeffective in CPAU and SMUD territories only, On-Bill. All-electric HVAC and SHW package with added efficiency measures is On-Bill cost-effective in CZs 1, 3-5 and 12. Adding efficiency and solar PV is On-Bill cost-effective in CZs 1-5, 11-13, and 16. While not depicted in Figure 3, the Results Workbook indicates that all-electric HVAC and SHW plus efficiency packages are nearly cost-effective (greater than -$350/month) in all climate zones using On-Bill Net Present Values.
Small Hotel (Error! Reference source not found.): The all-electric hotel has tremendous cost savings compared to a mixed-fuel package, primarily due to the avoidance of gas infrastructure to each guest room.
All-electric packages achieve TDV cost-effectiveness in all CZs except 16. On-Bill cost-effectiveness is limited to CZs 2-5, 12 and 15 with single zone ducted heat pumps, but nearly all CZs with a packaged terminal heat pump.
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4.1 Medium Office
In the all-electric Medium Office building, the upfront cost savings associated with avoiding boiler and gas infrastructure supports cost-effective packages in several climate zones, particularly with additional efficiency and load flexibility measures. ▪ Adding energy efficiency measures over mixed fuel code minimum is On-Bill cost-effective in all climate zones. ▪ The all-electric code minimum efficiency package is cost-effective for CZs 4 (CPAU), 6-10, 12 (SMUD) and 15. ▪ Adding energy efficiency measures to the all-electric code minimum package extends On-Bill cost-effectiveness to CZ 3 as well. ▪ All-electric energy efficiency along with load flexibility measure package is On-Bill cost-effective in most climate zones except 1, 11 and 16.
Figure 1. Medium Office Cost-Effectiveness Summary
CZ1 CZ2 CZ3 CZ4 CZ5 CZ6 CZ7 CZ8 CZ9 CZ10 CZ11 CZ12 CZ13 CZ14 CZ15 CZ16 Utility
Prototype Package
Both Both Both Both Both
Both Both Both Both Both
On-Bill ─ On-Bill ─ ─
On-Bill ─ On-Bill On-Bill ─
Both ─ Both ─ ─
Both ─ Both On-Bill ─
Both Both Both Both On-Bill
Both Both Both Both On-Bill
─
─
Medium Office
(MO)
Mixed Fuel + Efficiency
Measures
Both Both Both
All Electric Code
Minimum Efficiency
─ ─ Both
Both
Both
Both
Both
Both
─
Climate Zone
PG&E PG&E PG&E
PG&E
CPAU
PG&E
─
SDG&E
SCE
SCE
PG&E
SMUD
PG&E
Both
PG&E
PG&E
SCG
SCE SDG&E PG&E SCE
SDG&E
SCE
Both
Both On-Bill
Both
Both
Both Both Both
─ ─
All-Electric Energy
Efficiency + Load
Flexibility
─ Both Both On-Bill Both Both
All Electric Energy
Efficiency
─ ─ Both ─ ─
Both
On-Bill Both
Both Both
Both Both 17.228
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4.2 Medium Retail
2022 Title 24 code prescriptively requires heat pumps in most scenarios already. This report evaluates added energy efficiency measures over the baseline allelectric scenario and proposed mixed-fuel packages. ▪ The mixed-fuel code minimum is not cost-effective by itself in most climate zones. ▪ Adding energy efficiency measures to the mixed-fuel code minimum package is On-Bill and/or TDV cost-effective in most climate zones. ▪ Adding energy efficiency measures over prescriptive all-electric package is also cost-effective in most climate zones except CZ16 using TDV.
Figure 2. Medium Retail Cost-effectiveness Summary
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4.3 Quick-Service Restaurant (QSR)
High incremental cost for HVAC and SHW electrification (“HS” package) makes restaurant electrification challenging. Because cooking electrification packages are very expensive – both upfront and operationally in IOU territories – the Team evaluated HS packages that do not consider cooking equipment electrification.
This affects cost-effectiveness as gas infrastructure cost savings do not materialize. ▪ Adding energy efficiency measures over mixed fuel code minimum is On-Bill cost-effective in all climate zones. ▪ All-electric HVAC and SHW “HS” package is On-Bill cost-effective in CZ4 (CPAU) and CZ12 (SMUD) territory only. ▪ Adding energy efficiency and load flexibility measures extends On-Bill cost-effectiveness to CZs 1, 3 and 5. ▪ All-electric HVAC and SHW “HS” package with energy efficiency and solar PV measure is On-Bill cost-effective in climate zones 1-5, 11-13 and 16. ▪ All-electric package including cooking electrification is On-Bill cost-effective in CZ 4 (CPAU) territory only. ▪ The Results Workbook indicates that all-electric HVAC and SHW plus efficiency packages are nearly cost-effective (greater than -$350/month) in all climate zones using On-Bill Net Present Values.
Figure 3. QSR Cost-effectiveness Summary
CZ1 CZ2 CZ3 CZ4 CZ5 CZ6 CZ7 CZ8 CZ9 CZ10 CZ11 CZ12 CZ13 CZ14 CZ15 CZ16 Utility
Prototype Package
Both Both Both Both Both
Both Both Both Both Both
─ ─ ─ ─ ─
On-Bill ─ ─ On-Bill ─
─ On-Bill ─ ─ ─
On-Bill ─ ─ On-Bill ─
─ ─ ─ ─ ─
On-Bill ─ ─ On-Bill ─
On-Bill On-Bill ─ On-Bill ─
On-Bill On-Bill ─ On-Bill ─
─ ─ ─ ─ ─
On-Bill ─ ─ ─ ─
─ ─ ─ ─ ─
On-Bill ─ ─ ─ ─
─ ─ ─ ─
Quick-Service
Restaurant (QSR)
All Electric Energy
Efficiency
─ ─ ─ ─ ─ ─ ─
On-Bill
On-Bill ─
─
─ ─
─
─
─ ─ ─
PG&E
SMUD
PG&E
SDG&E
SCE
SCE PG&E
─ ─ ─ ─ ─ ─
SCE PG&E
SDG&E
SCE
Both
─
Both
─ ─ ─
Both Both Both Both
Climate Zone
PG&E PG&E PG&E
PG&E
CPAU
PG&E
SCG
SCE SDG&E PG&E
Both
All Electric HS Energy
Efficiency + Solar PV
All Electric Code
Minimum Efficiency
On-Bill
─
On-Bill On-Bill
Both
─
─
─
Mixed Fuel + Efficiency
Measures
Both Both
All Electric HS Code
Minimum Efficiency
All-Electric HS Energy
Efficiency + Load
Flexibility
On-Bill ─
All Electric HS Energy
Efficiency
On-Bill ─
─
Both
─
─ ─
On-Bill ─ On-Bill
─ ─ ─ ─ ─ ─ ─ ─ ─ ─
─ ─ ─ ─ On-Bill
─
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4.4 Small Hotel
The all-electric hotel has cost savings compared to a mixed-fuel package, primarily due to the avoidance of boilers and gas infrastructure to each guest room. The analysis assumes single zone ducted heat pump for all all-electric scenarios; however, the Team analyzed a Packaged Terminal Heat Pump (PTHP) scenario as well. PTHP shows higher incremental cost savings as compared to a baseline of mixed fuel single zone packaged system and hence are cost-effective in many climate zones.
▪ Adding energy efficiency measures over mixed fuel code minimum is On-Bill cost-effective in all climate zones. ▪ All-electric code minimum packages with or without energy efficiency measure packages are TDV cost-effective in all climate zones except 16, and OnBill cost-effective in CZ4 (CPAU) and CZ12 (SMUD) due to relatively lower electricity costs. ▪ Additional solar PV over all-electric energy efficiency package extends On-Bill cost-effectiveness to CZs 2, 3, 4 (PG&E), 5 and 15. ▪ The alternative all-electric scenario with PTHP is cost-effective in all climates, On-Bill in most CZs except 7,10 and 14 SDG&E territories.
Figure 4. Small Hotel Cost-effectiveness Summary
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Cost-effectiveness Analysis: Nonresidential New Construction 37 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 5 Energy Code Compliance Results and Reach Code Considerations This section combines the cost-effectiveness and 2022 Title 24 energy code compliance metric results — efficiency TDV, total TDV, and source energy, described in Section 2.3 — to highlight the viable reach code options for local jurisdictions. The Reach Code Team calculated metrics using both:
1. Software outputs using the ACM standard design and
2. Manually by subtraction against the baseline model because of software limitations that are beyond the Reach Code Team’s control.
6 All Efficiency TDV margins presented in this section are the lower of the two approaches, Software output and Manual, to be conservative and inform the minimum compliance margins that can be met by a typical modeler. Full details of compliance margins and cost-effectiveness results are presented in the Final Results Workbook for reference.
Importantly, the workbook shows that for all prototypes, all-electric packages are capable of achieving greater greenhouse savings as compared to mixed-fuel buildings. Below is a summary of how compliance results as well as cost-effectiveness for each prototype and package could influence reach code options. The Reach Code Team outlines recommendations using the following framework, based on reach codes that were adopted across California under the 2019 building code cycle:
▪ Mixed fuel buildings are allowed, with efficiency. Local amendments governing efficiency and conservation must be performed in the Title 24 Part 6 Building Energy Efficiency Standards and be approved by the Energy Commission.
• Energy Efficiency — Require energy efficiency for buildings regardless of fuel type. A jurisdiction can require different compliance thresholds for all-electric and/or mixed-fuel. The thresholds should be set considering how they may affect mixed-fuel or all-electric buildings. • Electric-Preferred — Allow mixed-fuel appliances but require a higher building performance via efficiency, total, or source compliance metric (for example, (Milpitas 2019), section 140.1).7 Applies only to mixed-fuel buildings.
▪ Mixed fuel buildings are not allowed. Local amendments governing green building requirements may be performed in the Title 24 Part 11 Green Building Standards Code and must be filed with the Building Standards Commission. Alternatively, the local amendment may be performed in a municipal code chapter of their respective jurisdictions.
• All-Electric — Require certain all-electric only appliances, with exceptions (for example (Menlo Park 2019). Does not involve efficiency or conservation measures, and cost-effectiveness is a not a legal requirement.
8 Local amendments may be performed through other building code sections, such as Part 11. See discussion on Exceptions below.
• All-Electric + Efficiency — Require certain all-electric appliances, but with a higher building performance via efficiency, total, or source compliance metric. Also requires amendment to Title 24 Part 6 and approval by the Energy Commission.
6 The difference between the two methods of calculating TDV margins occurs due to various software limitations. The Team had challenges modeling a baseline showing zero-percent (exactly compliant) compliance margin, and differing interpretations of 2022 Title 24 code regarding fan power, exhaust fan, heat recovery, battery control, and other aspects. Most scenarios show similar trends between software calculated compliance margin and the Team’s manual subtraction against baseline model, with a difference in magnitude. For example, if the Total TDV Compliance margin as shown by software directly is negative, it is typically negative per manual calculation as well. Nonetheless, modeling limitations introduce error into the calculations, which may affect results. Many scenarios have very low negative compliance margin and are very close to being zero. While this uncertainty in error may lead to imprecision in results, relative performance across packages can yield information helpful for decision-making. 7 Note Milpitas has since adopted an All-electric with Exceptions code for the 2022 code cycle. 8 See letter from CEC to South San Francisco for reference.
Fo
H
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Cost-effectiveness Analysis: Nonresidential New Construction 38 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Exceptions enable reach codes to broadly require electrification except for specific building systems. These systems may have uncertainty on energy code compliance, building industry electrification approaches, or other related impacts on economic development. During the 2019 code cycle, cities developed exemptions based on discussions with local stakeholders, resulting in a wide array of exemption types. 9 For the four prototypes in this
study, the Team has determined two exemptions that may be necessary for cities passing All-Electric reach codes. ▪ Building systems without a prescriptive compliance pathway in the energy code. This exemption considers that all-electric central space heating does not have a prescriptive pathway in Title 24, and central heat pump boilers cannot be currently modeled, which has impacted compliance results for the Medium Office and Small Hotel. This exemption has broad precedence and can apply to other large nonresidential buildings (e.g., (Berkeley 2019), section 12.80.040.A Exception 1). These exemptions typically state that the building is also not able to comply via the performance approach using commercially available technology. ▪ Commercial cooking. Cooking electrification does not considerably impact code compliance but is not nearly cost-effective against a mixed-fuel baseline. To account for this challenge, cities may wish to adopt reach codes that exempt commercial kitchen cooking appliances (e.g., (Menlo Park 2019) 100.0(e)2.A Exception 4). 9 See list of exemptions on Bay Area Reach Codes.
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Cost-effectiveness Analysis: Nonresidential New Construction 39 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 16. Reach Code Pathway Considerations
Prototype Compliance and Cost-Effectiveness Results Summary Energy Efficiency ElectricPreferred All-Electric All-Electric + Efficiency
Medium
Office
The Team could not identify any all-electric package that complies with all three compliance metrics, with the Efficiency TDV Compliance margin being the most challenging.
Future iterations of this study will re-evaluate the Medium Office with a central heat pump boiler, an anticipated compliance software capability in early 2023, instead of electric resistance VAVs.
To Be Determined.
Modeling constraints
impacted achievable
compliance margins
for all-electric
packages.
All CZs. Exempt building
systems without a
prescriptive
pathway in the
energy code.
To Be Determined.
Modeling constraints
impacted achievable
compliance margins
for all-electric
packages
Medium
Retail
The Team identified cost-effective and code compliant packages of all-electric + energy efficiency measures across most CZs.
Mixed-fuel + efficiency was cost-effective but not code compliant in most CZs.
CZs 7 and 9. CZs 7 and 9. CZs 2-15. 2022
T24 prescriptive
baseline
CZs 1-10, 12-14.
QuickService
Restaurant
The Mixed-fuel + efficiency package is cost-effective and compliant in many climate zones. Code compliance and cost-effectiveness results support reach code adoption for all-electric space conditioning and service water heating when adding efficiency and solar PV for CZs 1 and 3-5, many others are likely to be compliant with future modeling input updates. Cost-effectiveness is achieved or nearly achieved (Net Present Value is greater than -$350/month) On-Bill in all CZs.
Cooking electrification does not impact code compliance but is not cost-effective against a mixed-fuel baseline except for CPAU territory.
CZs 1, 3-7. CZs 1-7, 13. CZs 1, 3-7. Exempt
commercial kitchen
appliances, except
CZ4 (CPAU).
Nearly all remaining
CZs have a nearly
cost-effective
and/or nearly
compliant pathway
for HVAC and SHW
only.
CZs 1, 3-5.
Small Hotel
Results support Electric-Preferred reach code for all CZs. The allelectric packages are near compliant and TDV cost-effective for most CZs when including energy efficiency measures and additional solar PV. They are likely to be compliant with future modeling iterations.
Future iterations of this study will re-evaluate the nonresidential areas of the hotel with a central heat pump boiler, as mentioned for the Medium Office, which can potentially improve code compliance.
To Be Determined.
Modeling constraints
impacted achievable
compliance margins
for all-electric
packages.
All CZs. Exempt building
systems without a
prescriptive
pathway in the
energy code.
To Be Determined.
Modeling constraints
impacted achievable
compliance margins
for all-electric
packages.
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Cost-effectiveness Analysis: Nonresidential New Construction 40 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 The combined result of cost-effectiveness and code compliance across all climate zones and packages are detailed in Section 0 through 5.4 below. The tables are formatted to show:
▪ Cost-effectiveness results with color highlight:
• Green highlight — for scenarios that are cost-effective on both On-Bill and TDV metrics, may or may not be compliant.
• Yellow highlight — for scenarios that are cost-effective on either one of the On-Bill/TDV metrics, may or may not be compliant.
• Gray highlight — for scenarios that are not cost-effective on either metric, either compliant currently or likely to be compliant in future.
• White highlight — for scenarios that are not cost-effective on either metric and are not compliant. ▪ Compliance results with cell values:
• “EffTDV Margin” percentages — for scenarios that are compliant, across both Manual and CBECC software output, the reported value is the minimum of the two. • “-” for scenarios that do not comply across any one code compliance metric. “TBD” – for scenarios that are likely to be compliant with modeling updates or software versions in future, maybe compliant across either one of the Manual or CBECC software output approach or has a system type modeling limitation such as central heat pump boiler for Medium Office and Small Hotel. The package names in table results columns are as follows, as defined in Section 3.3:
▪ Mixed fuel — Code Min: Mixed Fuel Code Minimum Efficiency ▪ Mixed fuel — EE: Mixed Fuel + Efficiency Measures
▪ All-electric — Code Min: All-electric Code Minimum Efficiency ▪ All-electric — EE: All-electric Energy Efficiency
▪ All-electric — EE + LF: All-electric Energy Efficiency and Load Flexibility ▪ All-electric — EE + PV: All-electric Energy Efficiency and Solar PV The QSR has two electrification scenarios, with and without cooking appliance electrification, which is denoted by “HS” prefix.
The Small Hotel has an extra package that evaluates a different HVAC type in the all-electric Code Minimum Efficiency package, a Packaged Terminal Heat Pump (PTHP) instead of a Single Zone Heat Pump.
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5.1 Medium Office
For Medium Office, the Reach Code Team analyzed EE measures over mixed fuel baseline model and three electrification packages: 1) Code Min, 2) EE and 3) EE + LF packages, results shown in Table 17.
The most likely all-electric replacement for a central gas boiler serving a VAV reheat system would be a central heat pump boiler; however, this system cannot be modeled in CBECC at the time of the writing of this report. As such, the Reach Code Team is treating this analysis as temporary until a compliance pathway is established for a central heat pump boiler in the Energy Code and results can be updated accordingly. This modeling capability is anticipated in early 2023 according to discussions with the CBECC software development team, and the cost-effectiveness analysis should become available in the first half of 2023. Heat pump systems are multiple times more efficient, but may also be multiple times more costly, than the electric resistance reheat systems currently analyzed. ▪ Results support reach code adoption for energy efficiency measures over mixed fuel baseline, also known as the “Electric-Preferred”. A compliance margin of 4–5% is achievable depending on the climate zone. ▪ No all-electric package complies with all three-compliance metrics, with the efficiency compliance TDV margin being the most challenging. The Reach Code Team explored other efficiency measures that reduce the efficiency compliance TDV margin, but not enough to make the TDV margin positive. The compliance values are labeled as “TBD” for all-electric packages, as they are likely to be compliant with future modeling and/or software updates. Some climate zones are compliant currently on either one of the Software output or Manual compliance approaches.
Table 17. Cost-effectiveness and Compliance Summary – Medium Office CZ Utility
Mixed
Fuel All-electric
EE Code Min EE EE + LF
cz01 PG&E 4% TBD TBD TBD
cz02 PG&E 5% TBD TBD TBD
cz03 PG&E 5% TBD TBD TBD
cz04 PG&E 4% TBD TBD TBD
cz04-2 CPAU 4% TBD TBD TBD
cz05 PG&E 5% TBD TBD TBD
cz05-2 SCG 5% TBD TBD TBD
cz06 SCE 6% TBD TBD TBD
cz07 SDG&E 7% TBD TBD TBD
cz08 SCE 6% TBD TBD TBD
cz09 SCE 4% TBD TBD TBD
cz10 SDG&E 4% TBD TBD TBD
cz10-2 SCE 4% TBD TBD TBD
cz11 PG&E 3% TBD TBD TBD
cz12 PG&E 4% TBD TBD TBD
cz12-2 SMUD 4% TBD TBD TBD
cz13 PG&E 4% TBD TBD TBD
cz14 SDG&E 4% TBD TBD TBD
cz14-2 SCE 4% TBD TBD TBD
cz15 SCE 3% TBD TBD TBD
cz16 PG&E 4% TBD TBD TBD
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Cost-effectiveness Analysis: Nonresidential New Construction 42 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 * These results will be re-evaluated with central heat pump boiler system instead of electric resistance VAV systems, which largely are unable to achieve energy code compliance.
5.2 Medium Retail
For Medium Retail, the Team analyzed EE measure package over an all-electric baseline model and two mixed fuel packages — Code Min and EE, with results in Table 18. ▪ Results support reach code adoption for energy efficiency measures over mixed fuel code minimum package, also known as “Electric-Preferred” or “Energy Efficiency” reach code pathways in climate zones 7 and 9. ▪ Results also support “All-Electric + Efficiency” reach code option, with compliance margins of 4-14% above the all-electric code minimum baseline in climate zones 1-10 and 12-14. ▪ For some scenarios in climate zone 6, 8, 11, 15 and 16, labeled as “TBD”, the package is cost-effective and likely to be compliant in future with modeling input and/or software version updates.
Table 18. Cost-effectiveness and Compliance Summary – Medium Retail CZ Utility
Mixed Fuel Allelectric
Code Min EE EE
cz01 PG&E - - 6%
cz02 PG&E - - 4%
cz03 PG&E - - 12%
cz04 PG&E - - 11%
cz04-2 CPAU - - 11%
cz05 PG&E - - 12%
cz05-2 SCG - - 12%
cz06 SCE - TBD 9%
cz07 SDG&E - 12% 14%
cz08 SCE - TBD 8%
cz09 SCE - 11% 12%
cz10 SDG&E - - 3%
cz10-2 SCE - - 3%
cz11 PG&E - - TBD
cz12 PG&E - - 10%
cz12-2 SMUD - - 10%
cz13 PG&E - - 4%
cz14 SDG&E - - 7%
cz14-2 SCE - - 7%
cz15 SCE - - TBD
cz16 PG&E - - TBD
Cell Color
Cost effective on both TDV/On-Bill metrics
Cost effective on either TDV/On-Bill metrics
Compliant, not cost effective
Not compliant nor cost effective
Cell Value
X% EffTDV Compliance Margin percentages (Lowest common) Compliant on both Manual and Software output approaches TBD
Likely to comply with future modeling updates or software versions, maybe compliant on either Manual or Software output approach - Not compliant on either approach
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Cell Color
Cost effective on both TDV/On-Bill metrics
Cost effective on either TDV/On-Bill metrics
Compliant, not cost effective
Not compliant nor cost effective
Cell Value
X% EffTDV Compliance Margin percentages (Lowest common) Compliant on both Manual and Software output approaches TBD
Likely to comply with future modeling updates or software versions, maybe compliant on either Manual or Software output approach - Not compliant on either approach
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5.3 Quick-Service Restaurant (QSR)
The Team analyzed efficiency measures over a mixed fuel baseline and electrification packages, with and without cooking appliance electrification. For the “HS” scenario including HVAC and SHW electrification only, packages with EE, EE + LF and EE + PV were analyzed, with results in Table 19. ▪ Results support reach code adoption for energy efficiency measures over a mixed fuel baseline, also known as “Electric-Preferred” in climate zones 1 to 7 and 13, or “Energy Efficiency” in CZs 1 and 3 to 7. ▪ All-electric “HS” HVAC and SHW electrification can be adopted in CZs 1 and 3-7 since it is code compliant and nearly cost effective on at least one metric when energy efficiency measures and/or load flexibility or solar PV measure is added, demonstrated by yellow or gray cells. ▪ All-electric “HS” HVAC and SHW option with additional efficiency measures can be adopted in CZs 1 and 3-5.
Adding solar PV makes the package on-bill cost-effective on at least one metric marked as yellow cells.. ▪ Packages labeled as “TBD” may or may not be cost-effective but are likely to be compliant in the future with modeling input and/or software updates.
Table 19. Cost-effectiveness and Compliance Summary – Quick-Service Restaurant (without cooking electrification)
CZ Utility
Mixed Fuel All-electric "HS" (HVAC+SHW)
EE Code Min EE EE + LF EE + PV
cz01 PG&E 16% - 6% 16% 6%
cz02 PG&E 6% - TBD TBD TBD
cz03 PG&E 18% - 8% 13% 8%
cz04 PG&E 16% - 5% 8% 5%
cz04-2 CPAU 16% - 5% 8% 5%
cz05 PG&E 18% - 8% 15% 8%
cz05-2 SCG 18% - 8% 15% 8%
cz06 SCE 16% - 3% 6% 3%
cz07 SDG&E 21% - 9% 13% 9%
cz08 SCE TBD - - - -
cz09 SCE TBD - TBD TBD TBD
cz10 SDG&E TBD - - - -
cz10-2 SCE TBD - - - -
cz11 PG&E TBD - TBD TBD TBD
cz12 PG&E TBD - TBD TBD TBD
cz12-2 SMUD TBD - TBD TBD TBD
cz13 PG&E 7% - TBD TBD TBD
cz14 SDG&E TBD - TBD TBD TBD
cz14-2 SCE TBD - TBD TBD TBD
cz15 SCE TBD - TBD TBD TBD
cz16 PG&E TBD - - TBD -
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Cost-effectiveness Analysis: Nonresidential New Construction 45 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 The Reach Code Team analyzed a completely all-electric package including cooking appliances, results shown in Table 20, which show compliance in many climate zones with added efficiency and load flexibility. Remaining CZs are “TBD”, except climate zone 16, which comply on either one of the Manual or Software output approaches currently and are likely to show compliance with future modeling updates. However, the all-electric package is costeffective in CZ4 CPAU territory only and very close to being cost-effective in SMUD territory. Cooking electrification is expensive and challenging to show cost-effective.
Table 20. Cost-effectiveness and Compliance Summary – Quick-Service Restaurant (with cooking electrification)
CZ Utility
All-electric
Code Min EE EE + LF
cz01 PG&E - 6% 15%
cz02 PG&E - TBD 2%
cz03 PG&E - 10% 14%
cz04 PG&E - 8% 10%
cz04-2 CPAU - 8% 10%
cz05 PG&E - 10% 17%
cz05-2 SCG - 10% 17%
cz06 SCE - 6% 10%
cz07 SDG&E - 11% 14%
cz08 SCE - TBD TBD
cz09 SCE - TBD TBD
cz10 SDG&E - TBD TBD
cz10-2 SCE - TBD TBD
cz11 PG&E - TBD 0%
cz12 PG&E - TBD TBD
cz12-2 SMUD - TBD TBD
cz13 PG&E - TBD TBD
cz14 SDG&E - TBD TBD
cz14-2 SCE - TBD TBD
cz15 SCE - TBD 2%
cz16 PG&E - - -
Cell Color
Cost effective on both TDV/On-Bill metrics
Cost effective on either TDV/On-Bill metrics
Compliant, not cost effective
Not compliant nor cost effective
Cell Value
X% EffTDV Compliance Margin percentages (Lowest common) Compliant on both Manual and Software output approaches TBD
Likely to comply with future modeling updates or software versions, maybe compliant on either Manual or Software output approach - Not compliant on either approach
Cell Color
Cost effective on both TDV/On-Bill metrics
Cost effective on either TDV/On-Bill metrics
Compliant, not cost effective
Not compliant nor cost effective
Cell Value
X% EffTDV Compliance Margin percentages (Lowest common) Compliant on both Manual and Software output approaches TBD
Likely to comply with future modeling updates or software versions, maybe compliant on either Manual or Software output approach - Not compliant on either approach
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5.4 Small Hotel
The Team analyzed EE package over mixed fuel baseline and three electrification packages - Code Min, EE, EE+PV, with results in Table 21.
▪ Results support reach code adoption for energy efficiency measures over mixed fuel baseline, also known as “Electric-Preferred” reach code pathway with 2-5% compliance margin. ▪ All-electric packages with efficiency measures and/or solar PV in most CZs are cost-effective and likely to be compliant in future with modeling and/or software version updates. Some climate zones are compliant currently across either one of the Manual or Software output approaches. ▪ All all-electric scenarios are labeled as “TBD” because 36% of conditioned floor area is nonresidential space and has the same system type limitation as Medium Office (see Section 5.1). Hence, the Small Hotel will be reevaluated as well with a central heat pump boiler system instead of electric resistance VAV system in early 2023. The current results show compliance on either one of the Manual or Software output approaches in some climate zones with efficiency measures and solar PV, still labeled as “TBD” until the software inconsistencies are resolved.
Table 21. Cost-effectiveness and Compliance Summary – Small Hotel.
Mixed Fuel
EE Code Min EE EE + PV
cz01 PG&E 5% TBD TBD TBD
cz02 PG&E 4% TBD TBD TBD
cz03 PG&E 5% TBD TBD TBD
cz04 PG&E 5% TBD TBD TBD
cz04-2 CPAU 5% TBD TBD TBD
cz05 PG&E 5% TBD TBD TBD
cz05-2 SCG 5% TBD TBD TBD
cz06 SCE 5% TBD TBD TBD
cz07 SDG&E 4% TBD TBD TBD
cz08 SCE 5% TBD TBD TBD
cz09 SCE 5% TBD TBD TBD
cz10 SDG&E 5% TBD TBD TBD
cz10-2 SCE 5% TBD TBD TBD
cz11 PG&E 3% TBD TBD TBD
cz12 PG&E 4% TBD TBD TBD
cz12-2 SMUD 4% TBD TBD TBD
cz13 PG&E 3% TBD TBD TBD
cz14 SDG&E 4% TBD TBD TBD
cz14-2 SCE 4% TBD TBD TBD
cz15 SCE 5% TBD TBD TBD
cz16 PG&E 2% TBD TBD TBD
CZ Utility All-electric
Cell Color
Cost effective on both TDV/On-Bill metrics
Cost effective on either TDV/On-Bill metrics
Compliant, not cost effective
Not compliant nor cost effective
Cell Value
X% EffTDV Compliance Margin percentages (Lowest common) Compliant on both Manual and Software output approaches TBD
Likely to comply with future modeling updates or software versions, maybe compliant on either Manual or Software output approach - Not compliant on either approach
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Cost-effectiveness Analysis: Nonresidential New Construction 47 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 The Team analyzed an additional scenario that proposes PTHP compared to the same SZAC mixed fuel baseline model, results shown in Table 22. Though PTHP is a much cheaper alternative than SZHP, it is not compliant by itself.
Table 22. Cost-effectiveness and Compliance Summary – Small Hotel (PTHP) CZ Utility
All-electric
Code Min
(PTHP)
cz01 PG&E -
cz02 PG&E -
cz03 PG&E -
cz04 PG&E -
cz04-2 CPAU -
cz05 PG&E -
cz05-2 SCG -
cz06 SCE -
cz07 SDG&E TBD
cz08 SCE TBD
cz09 SCE TBD
cz10 SDG&E -
cz10-2 SCE -
cz11 PG&E -
cz12 PG&E -
cz12-2 SMUD -
cz13 PG&E -
cz14 SDG&E -
cz14-2 SCE -
cz15 SCE -
cz16 PG&E -
Cell Color
Cost effective on both TDV/On-Bill metrics
Cost effective on either TDV/On-Bill metrics
Compliant, not cost effective
Not compliant nor cost effective
Cell Value
X% EffTDV Compliance Margin percentages (Lowest common) Compliant on both Manual and Software output approaches TBD
Likely to comply with future modeling updates or software versions, maybe compliant on either Manual or Software output approach - Not compliant on either approach
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The Reach Code Team developed a variety of packages involving fuel substitution, energy efficiency, load flexibility, and solar PV, simulated them in building modeling software, and gathered costs to determine the cost-effectiveness of multiple scenarios. The 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, fuel costs, other costs, energy escalation rates, software or utility tariffs may change the results.
These results, including the attached Reach Code Results Workbook, indicate all-electric packages are capable of achieving the greatest GHG savings as compared to mixed-fuel buildings, see Appendix 8.5. Jurisdictions may adopt a variety of reach codes such as “Energy Efficiency”, “Electric-Preferred”, “All-Electric” or “All-Electric + Efficiency.” In summary:
▪ The Reach Code Team has identified a cost-effective and code compliant energy efficiency measure package for most prototypes and climate zones analyzed, which supports an “Electric-Preferred” and/or “Energy Efficiency” reach code pathways for jurisdictions.
▪ “All-Electric” reach codes are feasible for all building types and climate zones when Part 11 is modified, including some exceptions.
• All-electric HVAC consisting of packaged single zone systems, including rooftop units in the Medium Retail and Quick-Service Restaurant, and single zone heat pumps in the Small Hotel guest rooms, are widely shown to be cost-effective and energy code compliant, with exceptions in CZs 1 and 16. • All-electric SHW systems have a prescriptive pathway for all building types and have not been shown to be an impediment to cost-effectiveness or energy code compliance of all-electric packages in this study.
• All-electric laundry in the Small Hotel can be cost-effective with added energy efficiency and additional solar PV than required prescriptively by 2022 Title 24 code. • Medium Office all-electric packages are cost-effective with energy efficiency and load flexibility measures, but not code compliant due to the use of electric resistance VAV reheat systems. The Small Hotel faces a similar issue for its smaller nonresidential area HVAC systems in some climate zones.
This indicates that further efficiency measures would need to be added to achieve energy code compliance which may not be cost-effective. As described in Sections 5.1 and 5.4, modeling limitations impacted the code compliance results for the medium office and nonresidential portion of the small hotel. These prototypes will be re-evaluated using a more appropriate central heat pump boiler HVAC system, likely available in compliance software in early 2023. In the meantime, jurisdictions can choose to exempt building systems that do not have a prescriptive compliance pathway in the energy code. See Berkeley’s all-electric ordinance (Berkeley 2019) section 12.80.040.A Exception 1 for an example.
▪ Commercial kitchen electrification is challenging to design cost-effectively currently. These results align with a previous study focusing on restaurants (Statewide IOU Team 2022). Jurisdictions may choose to exempt cooking appliances until cost-effectiveness factors improve. See Menlo Park's ordinance (Menlo Park 2019) 100.0(e)2.A Exception 4 for an example.
▪ For the Medium Retail prototype in CZs 2 to 15, there is already a prescriptive pathway to comply with packaged single zone heat pumps in smaller (<240 kBtuh) thermal zones. This study supports an “All-Electric + Efficiency” reach code pathway for many climates. However, mixed-fuel scenarios with SZAC and gas furnaces for larger (>240 kBtuh) thermal zones are challenging to show cost-effectiveness and/or code compliance, except for climate zones 7 and 9, when including efficiency measures.
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▪ The Team employed several CBECC ruleset modifications to support achieving cost-effective packages, especially load flexibility measures. Ruleset modifications cannot be used by the building industry for code compliance without supporting justification or alternate methods. Where jurisdictions want to encourage the adoption of Load Flexibility measures through modeling estimates, the Reach Code Team can support cities and building applicants by providing modeling approximations that may achieve similar energy and compliance total impacts, in coordination with the Energy Commission. For example, for the Demand Response Lighting measure, the Team may be able to share a TDV/ft2impact of the measure in that climate zone or provide guidance to the building applicant’s energy consultant on appropriate modeling and documentation. ▪ Results are predominantly based on the code compliance metrics that are manually calculated based on the mixed fuel baseline model and not the standard design model assumed by the current software version. The Team also provided software reported compliance metrics in the workbook for reference. The Team is in communication with software development team to resolve differences in future iterations of this study and the software and improve code compliance reporting.
Even considering the limitations, this study has identified a set of reach code pathways for all climate zones, and jurisdictions have broad discretion on how to interpret the study’s findings. Jurisdictions can adopt reach codes requiring energy efficiency via a Title 24 Part 6 local amendment, or electrification via a Title 24 Part 11 (or municipal code) amendment, or both. Jurisdictions may choose to except particular building systems from certain reach codes pathways.
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Berkeley. 2019. Local Energy Codes.
https://localenergycodes.com/download/398/local_government_adoption_ordinance/fieldList/Berkeley%20 2019%20All-Electric%20-%20Ordinance%207672.pdf.
California Building Energy Code Compliance. 2022. CBECC Title-24 Compliance Software. August 2. https://bees.noresco.com/software2022.html.
California Public Utilites Commission. 2022. "Workpaper and Disposition Archive." SWAP005. June 9. http://deeresources.net/workpapers.
California Technical Forum. 2022. THE CA ELECTRONIC TECHNICAL REFERENCE MANUAL (ETRM). June 9. http://www.caltf.org/etrm-overview.
E3. 2021. https://efiling.energy.ca.gov/GetDocument.aspx?tn=233260&DocumentContentId=65748 .
E-CFR. 2020. https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt10.3.431&r=PART&ty=HTM L#se10.3.431_197. https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt10.3.431&r=PART&ty=HTM L#se10.3.431_197.
Energy + Environmental Economics. 2019a. "Residential Building Electrification in California." April. Accessed 8 2, 2022. https://www.ethree.com/wpcontent/uploads/2019/04/E3_Residential_Building_Electrification_in_California_April_2019.pdf.
Energy and Environmental Economics, Inc. 2017. "2019 Update to the Title 24 Part 6 Building Energy Efficiency Standards: Rooftop Solar PV System." September. Accessed 8 2, 2022. file:///C:/Users/mflores/Downloads/TN221366_20171002T104342_Rooftop_Solar_PV_Stystem_Report%20( 1).pdf.
Lawrence Berkeley National Lab. 2020. Proving the Business Case for Building Analytics. October. http://smartenergy-analytics.org/assets/EMIS%20Report.pdf.
Menlo Park. 2019. Local Energy Codes.
https://localenergycodes.com/download/353/local_government_adoption_ordinance/fieldList/Menlo%20Pa rk%202019%20-%20Ordinance%201057.pdf.
Milpitas. 2019. Local Energy Codes.
https://localenergycodes.com/download/356/local_government_adoption_ordinance/fieldList/Milpitas%20L ocal%20Ordinance%20NO%2065%20148.pdf.
National Renewable Energy Laboratory. 2016. "U.S. Solar Photovoltaic System Cost Benchmark: Q1 2016." NREL.gov.
September. Accessed 8 2, 2022. https://www.nrel.gov/docs/fy16osti/66532.pdf.
Navigant Consulting. 2018. "California LED Pricing Analysis." January. https://www.calmac.org/publications/LED_Pricing_Analysis_Report_-_Revised_1.19.2018_Final.pdf.
NORESCO. 2020. "Time Dependent Valuation of Energy for Developing Building Efficiency Standards." https://efiling.energy.ca.gov/GetDocument.aspx?tn=233257&DocumentContentId=65743 .
San Diego Gas and Electric Company. 2012. "Commercial Kitchen Demand Ventilation Controls-Electric." June 15. https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.sdge.com%2Fsites%2Fdefault%2F files%2FWPSDGENRCC0019%252520Rev%2525200%252520Demand%252520Ventilation%252520Controls_0. doc&wdOrigin=BROWSELINK.
Statewide CASE Team. 2020. August. https://title24stakeholders.com/wp-content/uploads/2020/08/NR-GridIntegration_Final-CASE-Report_Statewide-CASE-Team.pdf.
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Cost-effectiveness Analysis: Nonresidential New Construction 51 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 —. 2011 C. "Fan Control and Integrated Economizers." September. https://title24stakeholders.com/wpcontent/uploads/2020/01/2013_CASE-Report_Fan-Control-and-Integrated-Economizers.pdf. —. 2020 A. Multifamily Domestic Hot Water. September. https://title24stakeholders.com/wpcontent/uploads/2020/09/2022_T24_Final-CASE-Report-MF-DHW-Dist.pdf. —. 2020 B. "Nonresidential High Performance Envelope." October. https://title24stakeholders.com/wpcontent/uploads/2020/10/2020-T24-NR-HP-Envelope-Final-CASE-Report.pdf. —. 2021 D. "Nonresidential Indoor Lighting March." March. https://title24stakeholders.com/wpcontent/uploads/2021/03/2022-T24-Indoor-Lighting_Final-CASE-Report_Statewid-CASE-Team_wAddendum.pdf.
Statewide IOU Team. 2022. "2019 Restaurants Reach Code Cost-Effectiveness Analysis." 2 18. file:///C:/Users/mflores/Downloads/2019%20Restaurants%20Cost-eff%20Report%20(10).pdf.
TRC, P2S Engineers, and Western Allied Mechanical. 2022. "2019 Reach Code Cost-Effectiveness Analysis." February
22. https://localenergycodes.com/download/968/file_path/fieldList/2019%20Restaurants%20Costeff%20Report.pdf.
U.S. Department of Energy . 2021. "A National Roadmap for Grid-Interactive Efficient Buildings." May 17. https://gebroadmap.lbl.gov/A%20National%20Roadmap%20for%20GEBs%20-%20Final.pdf.
U.S. Department of Energy. 2019 B. U.S. Department of Energy. December. https://www.energy.gov/sites/default/files/2020/02/f72/2019_ssl-energy-savings-forecast.pdf. —. 2022 A. Prototype Building Models. June 9. https://www.energycodes.gov/prototype-building-models.
WELL. 2022. wellcertified.com. June 9. Accessed June 8, 2022. wellcertified.com.
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8.1 Map of California CZs
Climate Zone geographical boundaries are depicted in Figure 5 below. An interactive GIS location based map and zipcode based search directory is available at: Climate Zone tool, maps, and information supporting the California Energy Code
Figure 5. Map of California CZs
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8.2 Utility Rate Schedules
The Reach Codes Team used the IOU and POU rates depicted in to determine the On-Bill savings for each prototype.
Table 23. Utility Tariffs Analyzed Based on CZ – Detailed View CZs Utility
Electric Rate (Time of Use) Gas Rate
Medium
Office
Medium
Retail QSR Small Hotel All Prototypes
CZ01 PG&E B-10 B-1 B-1 B-1 or B-10 G-NR1
CZ02 PG&E B-10 B-1 or B-10 B-1 or B-10 B-1 or B-10 G-NR1 CZ03 PG&E B-10 B-1 B-1 B-1 or B-10 G-NR1
CZ04 PG&E B-10 B-1 or B-10 B-1 or B-10 B-1 or B-10 G-NR1 CZ04-2 CPAU E-2 E-2 E-2 E-2 G-2
CZ05 PG&E B-10 B-1 B-1 B-1 or B-10 G-NR1
CZ05-2 SCG B-10 B-1 B-1 B-1 or B-10 G-10 (GN-10)
CZ06 SCE TOU-GS-2 TOU-GS-2 TOU-GS-2 TOU-GS-2 G-10 (GN-10) CZ07 SDG&E
ALTOU+EECC
(AL-TOU)
AL-TOU+EECC
(AL-TOU)
ALTOU+EECC
(AL-TOU)
AL-TOU+EECC
(AL-TOU)
GN-3
CZ08 SCE TOU-GS-2 TOU-GS-2 TOU-GS-2 TOU-GS-2 G-10 (GN-10) CZ09 SCE TOU-GS-2 TOU-GS-2 TOU-GS-2 TOU-GS-2 G-10 (GN-10) CZ10 SDG&E
ALTOU+EECC
(AL-TOU)
AL-TOU+EECC
(AL-TOU)
ALTOU+EECC
(AL-TOU)
AL-TOU+EECC
(AL-TOU)
G-10 (GN-10)
CZ10-2 SCE TOU-GS-2 TOU-GS-2 TOU-GS-2 TOU-GS-2 GN-3
CZ11 PG&E B-10 B-10 B-1 or B-10 B-10 G-NR1
CZ12 PG&E B-10 B-1 or B-10 B-1 or B-10 B-10 G-NR1
CZ12-2 SMUD
CITS-1
(CI-TOD 1)
CITS-1
(CI-TOD 1)
CITS-1
(CI-TOD 1)
CITS-1 G-NR1
CZ13 PG&E B-10 B-10 B-1 or B-10 B-10 G-NR1
CZ14 SDG&E
ALTOU+EECC
(AL-TOU)
AL-TOU+EECC
(AL-TOU)
ALTOU+EECC
(AL-TOU)
AL-TOU+EECC
(AL-TOU)
G-10 (GN-10)
CZ14-2 SCE TOU-GS-2 TOU-GS-2 TOU-GS-2
TOU-GS-2 or TOUGS-3
GN-3
CZ15 SCE TOU-GS-2 TOU-GS-2 TOU-GS-2 TOU-GS-2 G-10 (GN-10) CZ16 PG&E B-10 B-1 or B-10 B-1 or B-10 B-1 or B-10 G-NR1
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8.2.1 PG&E
Figure 6. PG&E Electric Schedule - B-1
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8.2.2 SCE
Figure 9. SCE Electric Schedule – TOU-GS-1
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8.2.3 SCG
Figure 12. SCG Gas Schedule – G-10
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8.2.4 SDG&E
Figure 13. SDG&E Electric Schedule – AL-TOU
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8.2.5 CPAU
Figure 16. CPAU Electric Schedule – E-2
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8.2.6 SMUD (Electric Only)
Figure 18. SMUD Electric Schedule – CITS-0/CITS-1
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8.2.7 Escalation Rates
Utility rates are assumed to escalate over time, using assumptions from research conducted by Energy and Environmental Economics (E3) in Appendix 8.2. The 2019 study Residential Building Electrification in California (Energy + Environmental Economics 2019a) and escalation rates used in the development of the 2022 TDV multipliers Table 24 below demonstrate the escalation rates used for nonresidential buildings. 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 24. Real Utility Rate Escalation Rate Assumptions Above Inflation Source
Statewide Electric
Nonresidential Average
Rate (%/year, real)
Statewide Natural Gas
Nonresidential Core Rate
(%/year, real)
2023 E3 2019 2.0% 4.0%
2024 2022 TDV 0.7% 7.7%
2025 2022 TDV 0.5% 5.5%
2026 2022 TDV 0.7% 5.6%
2027 2022 TDV 0.2% 5.6%
2028 2022 TDV 0.6% 5.7%
2029 2022 TDV 0.7% 5.7%
2030 2022 TDV 0.6% 5.8%
2031 2022 TDV 0.6% 3.3%
2032 2022 TDV 0.6% 3.6%
2033 2022 TDV 0.6% 3.4%
2034 2022 TDV 0.6% 3.4%
2035 2022 TDV 0.6% 3.2%
2036 2022 TDV 0.6% 3.2%
2037 2022 TDV 0.6% 3.1%
8.3 HVAC and SHW System Cost Scalers
Table 25 shows the material and labor adjustment factors used to determine the costs.
Table 25. Materials and Labor Adjustment Factors by Climate Zone Materials Labor
CZ 01 0.963 0.994
CZ 02 0.963 1.387
CZ 03 1.001 1.291
CZ 04 0.998 1.298
CZ 05 0.964 0.997
CZ 06 0.960 0.997
CZ 07 0.999 0.985
CZ 08 0.998 0.996
CZ 09 0.964 0.996
CZ 10 0.998 0.996
CZ 11 1.002 0.990
CZ 12 1.000 1.000
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Cost-effectiveness Analysis: Nonresidential New Construction 72 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 CZ 13 1.000 0.990
CZ 14 0.964 0.980
CZ 15 0.963 0.996
CZ 16 0.967 0.990
Table 26 shows the contractor markup values used to determine the costs.
Table 26. Contractor Markup Values
Contractor 1 Contractor 2
General Conditions and Overhead 15% 20%
Design and Engineering 5% 10%
Permit, testing and inspection 5% 3%
Contractor Profit/Market Factor 10% 10%
8.4 Mixed Fuel Baseline Figures
Table 27. Mixed Fuel Baseline Model – Medium Office
Climate
zone
Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(therms)
Total
kTDV/ft2
Total TDV
Compliance
kTDV/ft2
Efficiency
TDV
Compliance
kTDV/ft2
GHG
Emissions
Total TDV
Compliance
Margin
Proposed
Elec
Utility
Cost
Proposed
Gas
Utility
tons/yr Cost
CZ01 PG&E 186,894 5,331 130 10 72 63 1 $67,234 $10,377
CZ02 PG&E 163,979 3,253 142 12 107 52 2 $67,798 $6,493
CZ03 PG&E 176,640 2,672 131 5 83 48 1 $67,999 $5,352
CZ04 PG&E 163,768 2,003 125 -2 107 46 1 $68,366 $4,093
CZ04-2 CPAU 163,768 2,003 125 -2 107 46 1 $30,988 $6,966 CZ05 PG&E 170,544 2,575 113 -8 76 46 1 $66,040 $5,156
CZ05-2 SCG 170,544 2,575 113 -8 76 46 1 $66,040 $4,242
CZ06 SCE 163,722 1,066 122 -7 76 39 0 $76,817 $1,980
CZ07 SDG&E 169,611 747 114 -9 76 38 0 $120,127 $1,150
CZ08 SCE 191,703 941 130 -2 76 41 1 $83,752 $1,763
CZ09 SCE 169,514 1,119 135 0 76 41 1 $82,274 $2,046
CZ10 SDG&E 185,682 1,445 141 10 76 45 2 $134,646 $2,113 CZ10-2 SCE 185,682 1,445 141 10 76 45 2 $86,338 $2,474
CZ11 PG&E 209,343 3,309 166 40 136 59 2 $81,001 $6,669
CZ12 PG&E 178,461 2,864 145 19 118 53 2 $72,381 $5,784
CZ12-2 SMUD 178,461 2,864 145 19 118 53 2 $26,576 $5,784 CZ13 PG&E 211,193 2,377 165 37 139 55 2 $81,491 $4,852
CZ14 SDG&E 156,689 3,058 147 13 139 52 3 $128,390 $4,337 CZ14-2 SCE 156,689 3,058 147 13 139 52 3 $83,690 $4,756 CZ15 SCE 209,720 662 161 32 139 47 2 $101,041 $1,311
CZ16 PG&E 177,562 5,799 127 9 94 67 4 $68,281 $11,409
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Cost-effectiveness Analysis: Nonresidential New Construction 73 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 28. All-electric Baseline Model – Medium Retail
Climate
zone
Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(therms)
Total
kTDV/ft2
Total TDV
Compliance
kTDV/ft2
Efficiency
TDV
Compliance
kTDV/ft2
GHG
Emissions
Total TDV
Compliance
Margin
Proposed
Elec
Utility
Cost
Proposed
Gas
Utility
tons/yr Cost
CZ01 PG&E 138,367 0 192 110 162 28 -8 $43,917 $0
CZ02 PG&E 131,521 0 211 125 198 28 -15 $50,499 $0
CZ03 PG&E 112,237 0 176 91 156 25 -1 $36,206 $0
CZ04 PG&E 122,256 0 197 111 193 27 -5 $47,522 $0
CZ04-2 CPAU 122,256 0 197 111 193 27 -5 $22,961 $0
CZ05 PG&E 108,753 0 159 76 146 24 -8 $35,179 $0
CZ05-2 SCG 108,753 0 159 76 146 24 -8 $35,179 $0
CZ06 SCE 111,442 0 175 89 146 24 -8 $42,572 $0
CZ07 SDG&E 109,079 0 172 87 146 23 0 $71,108 $0
CZ08 SCE 129,105 0 196 107 146 26 -10 $47,404 $0
CZ09 SCE 123,673 0 193 105 146 26 -3 $46,830 $0
CZ10 SDG&E 114,235 0 174 87 146 25 4 $77,903 $0
CZ10-2 SCE 114,235 0 174 87 146 25 4 $45,763 $0
CZ11 PG&E 144,411 0 229 144 218 30 -6 $54,592 $0
CZ12 PG&E 141,639 0 221 136 211 30 -4 $53,798 $0
CZ12-2 SMUD 141,639 0 221 136 211 30 -4 $21,079 $0
CZ13 PG&E 153,371 0 244 158 236 32 -15 $56,701 $0
CZ14 SDG&E 145,499 0 223 135 236 31 -8 $86,177 $0
CZ14-2 SCE 145,499 0 223 135 236 31 -8 $52,840 $0
CZ15 SCE 146,092 0 244 158 236 29 -24 $56,750 $0
CZ16 PG&E 157,944 0 224 144 214 34 -31 $57,190 $0
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Cost-effectiveness Analysis: Nonresidential New Construction 74 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 29. Mixed Fuel Baseline Model – Quick-Service Restaurant Climate
zone
Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(therms)
Total
kTDV/ft2
Total TDV
Compliance
kTDV/ft2
Efficiency
TDV
Compliance
kTDV/ft2
GHG
Emissions
Total TDV
Compliance
Margin
Proposed
Elec
Utility
Cost
Proposed
Gas
Utility
tons/yr Cost
CZ01 PG&E 63,187 12,237 1,974 820 820 80 5 $20,126 $23,401 CZ02 PG&E 66,343 11,170 1,989 839 839 74 20 $21,332 $21,422 CZ03 PG&E 67,877 10,605 1,922 769 769 71 1 $21,657 $20,336 CZ04 PG&E 77,615 10,277 2,062 910 910 71 -4 $24,931 $19,725 CZ04-2 CPAU 77,615 10,277 2,062 910 910 71 -4 $15,041 $30,442 CZ05 PG&E 69,442 10,655 1,898 744 744 71 -2 $22,105 $20,416 CZ05-2 SCG 69,442 10,655 1,898 744 744 71 -2 $22,105 $14,924 CZ06 SCE 78,813 9,600 1,934 778 744 67 -1 $19,698 $13,599 CZ07 SDG&E 76,653 9,425 1,898 739 744 66 18 $26,903 $13,116 CZ08 SCE 77,418 9,554 1,948 792 744 66 28 $20,356 $13,542 CZ09 SCE 77,625 9,687 1,993 837 744 67 7 $20,405 $13,709 CZ10 SDG&E 81,897 9,907 2,032 877 744 69 26 $31,166 $13,782 CZ10-2 SCE 81,897 9,907 2,032 877 744 69 26 $21,407 $13,986 CZ11 PG&E 85,725 10,748 2,259 1,109 1,109 75 -12 $27,885 $20,664 CZ12 PG&E 74,131 10,726 2,080 928 928 72 2 $24,000 $20,605 CZ12-2 SMUD 74,131 10,726 2,080 928 928 72 2 $11,272 $20,605 CZ13 PG&E 88,060 10,441 2,240 1,089 1,089 73 -2 $28,620 $20,070 CZ14 SDG&E 87,498 10,655 2,251 1,097 1,089 74 -31 $30,692 $14,728 CZ14-2 SCE 87,498 10,655 2,251 1,097 1,089 74 -31 $22,471 $14,925 CZ15 SCE 118,353 9,194 2,444 1,289 1,089 71 -13 $28,746 $13,090 CZ16 PG&E 75,373 12,242 2,143 983 983 82 2 $24,194 $23,494
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Cost-effectiveness Analysis: Nonresidential New Construction 75 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Table 30. Mixed Fuel Baseline Model – Small Hotel
Climate
zone
Utility
Annual
Electricity
Consumption
(kWh)
Annual
Natural Gas
Consumption
(therms)
Total
kTDV/ft2
Total TDV
Compliance
kTDV/ft2
Efficiency
TDV
Compliance
kTDV/ft2
GHG
Emissions
Total TDV
Compliance
Margin
Proposed
Elec
Utility
Cost
Proposed
Gas
Utility
tons/yr Cost
CZ01 PG&E 230,187 16,824 299 161 173 137 7 $72,520 $32,208 CZ02 PG&E 243,164 13,161 287 152 169 117 5 $77,188 $25,351 CZ03 PG&E 232,511 12,725 272 136 151 113 6 $73,496 $24,461 CZ04 PG&E 251,386 11,608 280 146 165 109 5 $80,034 $22,342 CZ04-2 CPAU 251,386 11,608 280 146 165 109 5 $48,175 $34,218 CZ05 PG&E 232,585 12,375 264 127 143 111 6 $73,479 $23,746 CZ05-2 SCG 232,585 12,375 264 127 143 111 6 $73,479 $17,084 CZ06 SCE 251,627 10,100 260 124 143 100 4 $53,976 $14,227 CZ07 SDG&E 250,625 9,977 257 120 143 100 3 $77,312 $13,878 CZ08 SCE 271,204 9,874 269 136 143 101 3 $60,488 $13,943 CZ09 SCE 265,607 10,246 273 140 143 103 4 $60,896 $14,411 CZ10 SDG&E 276,218 9,903 276 142 143 102 3 $91,917 $13,642 CZ10-2 SCE 276,218 9,903 276 142 143 102 3 $63,534 $13,980 CZ11 PG&E 285,482 12,457 315 179 197 118 4 $82,170 $24,172 CZ12 PG&E 263,561 11,890 293 158 176 112 2 $76,104 $23,029 CZ12-2 SMUD 263,561 11,890 293 158 176 112 2 $34,853 $23,029 CZ13 PG&E 293,124 11,309 310 175 193 113 1 $84,632 $21,924 CZ14 SDG&E 276,292 12,071 298 166 193 115 2 $89,492 $16,232 CZ14-2 SCE 276,292 12,071 298 166 193 115 2 $63,611 $16,703 CZ15 SCE 349,319 7,895 309 174 193 98 -4 $78,507 $11,458 CZ16 PG&E 228,611 17,363 310 170 195 142 9 $72,664 $33,471
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Cost-effectiveness Analysis: Nonresidential New Construction 76 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24
8.5 GHG Savings Summary
This section shows the percent GHG savings for each package. GHG multipliers in CBECC software have utility emissions multipliers assigned only to each of the California’s sixteen climate zones, does not vary by utility within each zone. Individual utility assumptions may vary widely. In the Medium Office, the GHG emissions increases in allelectric package because the proposed all-electric system is electric resistance VAV system instead of a more efficient heat pump boiler system.
Figure 19. Percentage GHG Savings – Medium Office
Figure 20. Percentage GHG Savings – Medium Retail
Mixed Fuel
EE Code Min EE EE + LF
cz01 0% 3% 4% 12%
cz02 1% 0% 1% 8%
cz03 1% 0% 1% 8%
cz04 2% -1% 1% 7%
cz05 1% 0% 2% 9%
cz06 2% 0% 2% 8%
cz07 3% 0% 3% 8%
cz08 3% 0% 2% 8%
cz09 2% -1% 2% 7%
cz10 2% -2% 0% 6%
cz11 1% -3% -1% 5%
cz12 1% -2% -1% 5%
cz13 2% -3% -1% 4%
cz14 2% -4% -2% 5%
cz15 3% -1% 2% 7%
cz16 1% 1% 2% 7%
CZ
All-electric All-electric
EE Code Min EE
cz01 -4% -2% 9%
cz02 -21% -13% 10%
cz03 -18% -8% 11%
cz04 -14% -5% 10%
cz05 -15% -5% 12%
cz06 -7% 4% 13%
cz07 -5% 7% 14%
cz08 -7% 4% 12%
cz09 -8% 3% 13%
cz10 -12% -9% 3%
cz11 -23% -21% 2%
cz12 -19% -11% 9%
cz13 -17% -8% 10%
cz14 -15% -5% 10%
cz15 -3% 0% 3%
cz16 -34% -33% 2%
Mixed Fuel
CZ
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Cost-effectiveness Analysis: Nonresidential New Construction 77 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Figure 21. Percentage GHG Savings – Quick Service Restaurant Figure 22. Percentage GHG Savings – Small Hotel
Mixed Fuel
EE Code Min EE EE + LF EE + PV Code Min EE
cz01 10% 21% 26% 28% 27% 47% 52%
cz02 7% 16% 19% 21% 21% 45% 49%
cz03 8% 14% 20% 22% 22% 45% 51%
cz04 7% 12% 17% 19% 19% 43% 49%
cz05 8% 14% 20% 22% 22% 45% 51%
cz06 7% 9% 15% 16% 17% 43% 48%
cz07 6% 8% 14% 15% 16% 43% 48%
cz08 4% 9% 12% 13% 14% 43% 46%
cz09 5% 9% 12% 13% 15% 43% 46%
cz10 5% 10% 13% 14% 15% 42% 46%
cz11 6% 13% 17% 18% 18% 43% 46%
cz12 6% 14% 17% 18% 19% 44% 48%
cz13 6% 12% 15% 16% 17% 43% 46%
cz14 6% 13% 16% 17% 18% 42% 46%
cz15 4% 7% 9% 11% 12% 40% 42%
cz16 8% 18% 23% 24% 24% 44% 49%
All-electric "HS" (HVAC+SHW)
CZ
All-electric Mixed Fuel All-electric
EE Code Min EE EE + PV Code Min (PTHP)
cz01 13% 47% 48% 50% 47%
cz02 11% 42% 44% 47% 43%
cz03 12% 43% 45% 48% 43%
cz04 11% 41% 44% 46% 42%
cz05 11% 43% 45% 48% 43%
cz06 10% 41% 43% 46% 41%
cz07 10% 41% 43% 47% 41%
cz08 10% 40% 42% 46% 40%
cz09 10% 40% 42% 46% 40%
cz10 11% 37% 39% 43% 37%
cz11 12% 39% 41% 43% 39%
cz12 12% 38% 41% 43% 39%
cz13 11% 37% 39% 42% 37%
cz14 12% 38% 40% 44% 38%
cz15 10% 33% 35% 40% 33%
cz16 13% 43% 46% 48% 45%
CZ
All-electric
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Cost-effectiveness Analysis: Nonresidential New Construction 78 Energy Code Compliance Results and Reach Code Considerations localenergycodes.com California Energy Codes & Standards | A statewide utility program 2023-03-24 Get In Touch
The adoption of reach codes can differentiate jurisdictions as efficiency leaders and help accelerate the adoption of new equipment, technologies, code compliance, and energy savings strategies.
As part of the Statewide Codes & Standards Program, the Reach Codes Subprogram is a resource available to any local jurisdiction located throughout the state of California.
Our experts develop robust toolkits as well as provide specific technical assistance to local jurisdictions (cities and counties) considering adopting energy reach codes. These include cost-effectiveness research and analysis, model ordinance language and other code development and implementation tools, and specific technical assistance throughout the code adoption process.
If you are interested in finding out more about local energy reach codes, the Reach Code Team stands ready to assist jurisdictions at any stage of a reach code project.
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17.273
From: Pauline Seales
To: City Council; Tiffany Wise-West; SC CAN discussion
Subject: Electric Reach Code Support
Date: Friday, November 10, 2023 1:48:13 PM
Attachments: banner2.png
Dear Mayor Keeley and Councilmembers,
I am writing on behalf of Santa Cruz Climate Action Network (now over 1800 local members) to express strong support of the proposed "All Electric" Reach Code.
In order to cut greenhouse emissions drastically we need to take decisive action.
One good step is to commit to all electric power in any new buildings and this is what the reach code will provide
A later step will be to plan for retrofits or older buildings, gradually reducing and eliminating so called "Natural Gas" which is mostly Methane with a huge Global warming potential 80x that of Carbon Dioxide.
Thankyou for taking action to reduce Climate Change
Pauline Seales
https://scruzclimate.org/
17.274
New Buildings
Energy Reach Code
City Council - First Hearing
November 14, 2023
17.275
Policy Background
Resolution NS-30-042 (2022) adopts a
community-wide goal of carbon neutrality by
2035; legal target of 40% reduction in
emissions by 2030 from 1990 levels.
Ordinance 2020-06 adds Chapter 6.100
(Natural Gas Prohibition in New Building
Construction) to the Municipal Code
requiring all new buildings be all-electric with
certain limited exceptions
17.276
Ninth Circuit Ruling
•California Restaurant Association v. City of Berkeley ruling said that a Berkeley ordinance requiring all-electric new buildings was pre-empted by the federal Energy Policy and Conservation Act of 1975 (EPCA) and was therefore
invalid.
• Resolution NS-30, 156 (June 13) temporarily suspended enforcement of the SCMC 6.100 Prohibition of Natural
Gas Infrastructure in new buildings.
17.277
Alternative Approach Justification
• The California Restaurant Association v. City
of Berkeley appeal is not likely to be
resolved in a timely manner;
• There are no imminent statewide fixes for
the problem
• The City has already started to receive
mixed-fuel building permit applications
17.278
Proposed Alternative Approach
Adopt increased building energy performance
requirements via local amendments to the
California Energy Code (aka a “reach code”)
• The California Restaurant Association v.
City of Berkeley decision limits how the
City can regulate emissions
• Local amendments to the California
Energy Code are expressly allowed by
state law and are consistent with federal
law
17.279
California Energy Code Basics
• The California Energy Code has the benefit of
reducing emissions by regulating energy demand
caused by buildings
• “Reach Code” refers to the local amendments to
energy standards that cost effectively reduce
energy from new buildings in compliance with
state and federal law
• "Source energy" represents the underlying fuel
sources such as coal, natural gas or solar used to
power building systems and equipment.
17.280
Approaches to Compliance
Example Single Family Building Design under current Code
17.281
Proposed
Reach Code
17.282
Exceeds the Standard EDR1 Source Energy Score by at least 9 points Example Single Family Building Design under Reach Code
17.283
Proposed Standards
Building Type Amended Performance Requirement
Single Family Residential buildings Exceed the standard EDR1 Source Energy requirement by at least 9 points
Multi-Family Residential (Low - < 3 floors) Exceed the standard Source Energy requirement by 10%
Multi-Family Residential (High - > 3 floors) Exceed the standard Source Energy requirement by 4%
Non-Residential Exceed the standard Source Energy requirement by 7%
Nonresidential and Multi-Family Residential Buildings
w/Central Water Heating
Where gas appliance is installed, illustrate reserved physical space and ventilation paths for future all-electric equipment, and install sufficient electrical panel and transformer capacity.
17.284
Gas Furnace
Standard
Design
Single
Family
Building
Building
Envelope
House Illustration source: Southern California Edison
17.285
Example 1
:
Reach Code
Compliant
Single
Family
Building
Design
Source
Energy
(EDR1)
+9.0
Building
Envelope
House Illustration source: Southern California Edison
17.286
Gas Furnace Building
Envelope
House Illustration source: Southern California Edison
Standard
Design
Single
Family
Building
17.287
Gas Furnace
Example 2:
Reach
Code
Compliant
Single
Family
Building
Design
Source
Energy
(EDR1)
House Illustration source: Southern California Edison >9.0 Building
Envelope
17.288
Standard Design Building --
Example 1
Reach Code Compliance:
Add Heat Pump HVAC
+10%
Example 2
Reach Code Compliance:
Keep gas furnace and add
efficiency, additional
solar, and a battery
storage system
>10%
Illustration source: Public Service Enterprise Group
Low Rise
Multi Family
(Compliance EDR > 10%)
17.289
Standard Design
Building --
Example 1
Reach Code Compliance:
Add Heat Pump HVAC
+7%
Example 2
Reach Code Compliance:
Keep gas furnace and
add efficiency and
additional solar
+4%
illustration source: Public Service Enterprise Group
High Rise
Multi Family
(Compliance EDR > 4%)
17.290
Standard Design Building --
Example 1
Reach Code Compliance:
Add Heat Pump HVAC
+7%
Example 2
Reach Code Compliance:
Keep gas furnace and
add efficiency and
additional solar
>7%
Office illustration source: Institute for Market Transformation Non-Residential
Building
(Compliance EDR > 7%)
17.291
2022 Income
• The City is required to illustrate cost effectiveness and energy savings
• California Energy Codes and Standards Statewide Utility program develops cost effectiveness studies
• The City finds that all of the proposed local
amendments that affect energy use are:
-More efficient than the base code
-Cost effective on a Time Dependent Valuation basis
Cost Effectiveness
17.292
Resources for Lower Cost All-Electric Bldgs
California Electric Homes
• Direct rebates for new all-electric market rate residential units (including ADUs and manufactured homes)
BUILD
• Direct rebates for deed restricted all-electric affordable housing TECH
• Rental multifamily properties, affordable housing, deed restricted for heat pump HVAC and water heater
• Contractor rebate passed on as “instant discount” to customer Central Coast Community Energy
• Direct rebates for all-electric affordable housing and market rate ADUs
Inflation Reduction Act (launches 2024)
Local Renewable Energy Network (to launch by AMBAG in 2024)
17.293
Public
Engagement
Extensive outreach in 2019, 2020, 2021 and 2022.
In support of the proposed reach code, staff conducted
community outreach as follows:
- Developer’s Roundtable (e.g., developers, architects, engineers, design professionals, and property owners)
- Community Climate Action Task Force
- Planning Commission Meeting
17.294
Next Steps
Task Timeframe
First hearing of the Ordinance
Second hearing of the Ordinance
November 14, 2023
November 28, 2023
Receive approval from the
California Energy Commission February, 2024
Reach code goes into effect March 1, 2024
17.295
Recommendation:
Introduce an Ordinance entitled “AN
ORDINANCE OF THE CITY COUNCIL OF
THE CITY OF SANTA CRUZ, CALIFORNIA,
ADOPTING LOCAL AMENDMENTS TO TITLE
24, PART 6 OF THE CA CODE OF
REGULATIONS (OR THE CA ENERGY CODE),
2022,” amending Santa Cruz Municipal Code
Chapter 18.15 – “Amendments – Energy
Standards”.
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City Council
AGENDA REPORT
DATE: 10/26/2023
AGENDA OF: 11/14/2023
DEPARTMENT: Planning & Community Development
SUBJECT: FY 2023 Development Impact Fee Annual Report for Childcare and Public Safety Impact (Police and Fire) Fees (PL)
RECOMMENDATION: Motion to:
1) Accept and approve the attached FY 2023 Impact Fee Report for the Childcare and Public Safety Impact Fees; and
2) Provide feedback to staff on the potential applicability of the Public Safety Impact Fee to 100 percent affordable housing projects.
BACKGROUND: In April 2021, the City Council adopted the Childcare and Public Safety Impact fees. The fees were effective as of June 26, 2021. California Government Code Section 66006 requires annual reporting requirements for development impact fees to occur within 180 days after the close of the fiscal year and includes specific reporting requirements as more fully described in the Attachment FY 2023 Development Impact Fee Annual Reports.
The statute requires that the City produce a report on the developer impact fees and make it available to the public at least 15 days prior to the regularly scheduled City Council meeting. In addition, for anyone who provided a written request to be notified, the City shall mail them notice of the time and place of the meeting at least 15 days prior to the meeting. Staff has made available the report at the Planning and Community Development Department public counter as of October 27, 2023. The report will remain at the public counter throughout the end of January 2023 for members of the public to view.
DISCUSSION: From July 1, 2022 to June 30, 2023, the Impact Fees collected were:
Public Safety Impact Fee – Police Fund (Fund 215): $90,627.20 Public Safety Impact Fee – Fire Fund (Fund 217): $88,557.66 Childcare Impact Fee (Fund 218): $51,690.67
18.1 Childcare Impact Fee Funds Reallocation
Staff received previous City Council direction at the December 13, 2022 City Council Meeting to utilize the funds collected from the Childcare Impact Fee to help fund the pre-development and development costs associated with the childcare facility in the Library and Affordable Housing Project being contemplated for Lot 4 at the northeast corner of Cedar and Cathcart Streets. The Library and Affordable Housing Project is expected to commence at the end of 2024, and funds would be expended in FY 2025.
The Childcare Impact Fee funds collected for FY 2023 totaled $51,690.67. While this report focuses on FY 2023, the Childcare Impact Fee fund balance also includes revenues from FY 2021 to 2023. As of October 20, 2023, the total Childcare Impact Fee balance is approximately $78,183. As this report occurs on an annual basis, staff will report back to Council as to the disbursements of the Childcare Impact Fee towards the childcare facility within the Library Affordable Housing Project on at least an annual basis, and Council could direct staff to repurpose any unencumbered funds as part of those annual reports. After the total amount of fund disbursement to the childcare component of the Library Affordable Housing Project is specified through a future report to and action by the Council, funding would then go towards the previously-identified approach of preparing a childcare facility assessment.
Public Safety Impact Fees Allocation
The Departments of Fire and Police will allocate the Public Safety Impact Fees funds for new fire and police facilities, apparatuses, vehicles, and equipment to adequately serve the residents and employees in new development. Funds will be expended within five years of their receipt.
Exploration of Exemption for Affordable Housing Projects When the City Council adopted the Childcare and Public Safety Impact fees in April 2021, housing projects that are 100 percent affordable were exempted, as defined in Santa Cruz Municipal Code (SCMC) 18.49.050 and 18.48.050. Affordable housing projects are projects where 100 percent of the units, excluding managers units, within the development are dedicated to lower income households. The affordable units within the development are subject to a recorded affordability restriction for a minimum of fifty-five years or per local inclusionary requirements, whichever is greater.
While those projects are exempt from the public safety impact fees, those projects increase the public safety demands for the Departments of Police and Fire. While the exemption of 100% affordable housing projects has facilitated affordable housing projects through reduction of fees, the developments have not paid impact fees to address the increases in public safety services demanded from the new occupants. The same is true for childcare services, where new affordable housing creates demand for childcare services but does not contribute impact fees towards supplementing childcare services in the community.
18.2 As such, City staff would be interested in better understanding whether the City Council has any interest in modifying the exemptions in SCMC 18.49.050 and 18.48.050 such that the Public Safety Impact Fee and/or the Childcare Impact Fee, in whole or in part, would be charged to 100 percent affordable housing projects. The preliminary discussion will inform whether City staff presents Council with potential modifications to the SCMC related to the current Public Safety Impact Fee and Childcare Impact Fee exemptions for 100% affordable housing projects.
HEALTH IN ALL POLICIES (HiAP): The proposed fees are consistent with the Health in All Policies pillars of equity, public health, and sustainability in that they will assist the City in dedicating funding towards public safety, childcare, and, through achievement of greater fiscal sustainability, broader equity, public health, and sustainability efforts.
FISCAL IMPACT: The preparation of this report has no fiscal impact to the General Fund. The Public Safety Impact Fees directly offset what would otherwise be General Fund expenditures.
The Childcare Impact Fee could reduce costs that the City would need to seek through grants or could provide matching funds towards grants that the City would seek in providing funding for the larger Library Affordable Housing Project, though funds from the Childcare Impact Fee would only go towards the childcare facility component of the project. Future Childcare Impact Fee funding is expected to first go to a needs assessment study, and based on the results of that study, Council would provide direction on use of the funds.
Prepared By:
Viviane Pearson
Principal Management
Analyst
Submitted By:
Lee Butler
Planning & Community
Development Director
Approved By:
Matt Huffaker
City Manager
ATTACHMENT:
1) FY 2023 Development Impact Fee Annual Reports for Childcare Impact Fee and Citywide Public Safety Impact Fee (Police & Fire) Ending June 30, 2023 (Also posted on https://www.cityofsantacruz.com/government/city-departments/staff-reportsmemos in compliance with Government Code Sec. 66006(a).)
18.3 City Council Meeting – November 11, 2023 | Page 1
CITY OF SANTA CRUZ
FY 2023 Development Impact Fee Annual Reports for
Childcare Impact Fee and Citywide Public Safety Impact Fee (Police & Fire) Fund Fiscal Year Ending June 30, 2023
Government Code Sec. 66006(a) requires local agencies to produce an annual report, within 180 days of the fiscal year end. The annual report must be made available to the public at the Planning and Community Development Department at least 15 days prior to the City Council meeting.
This report summarizes the following information for each of the development fee programs:
1 – Description of fee
2 – Amount of fee
3 – Beginning and ending fund balances
4 – Amount of fees collected and interest earned
5 – The amount of refunds paid
6 – Identification of projects on which fees were expended and the amount for each improvement that was expended
7 – The total percentage of the cost of the public improvement that was funded with fees 8 – The approximate date by which construction of the improvements will commence for any incomplete improvements for which sufficient funds to complete financing for the improvements have been collected
9 – Description of each interfund transfer or loan made from the fund, if any The following fee programs are included in this report:
Section A – Citywide Childcare Impact Fee for Fiscal Year Ending June 30, 2023 Section B – Citywide Public Safety Impact Fee (Fire & Police) for Fiscal Year Ending June 30, 2023
18.4 City Council Meeting – November 11, 2023 | Page 2
Section A – Citywide Childcare Impact Fee for Fiscal Year Ending June 30, 2023 1 – Description: A Childcare Impact Fee is assessed in connection with the issuance of certain development permits in the City designated by City Council Resolution NS-29,812. This fee was effective on June 26, 2021. While the education of children has been acknowledged as a public responsibility, the pre-school and after-school care of children traditionally has been seen as a private issue for families, especially women, and not of public concern; however, consideration for the needs of children is a critical part of community planning and is part of an integrated system that supports human development, labor force participation, and job opportunities. The benefits of early childcare development and care in the community speak to the labor market, business recruitment, and retention; improved school readiness and success; and reduced public cost for remediation, prison, and welfare. As such, the City’s General Plan calls for accessible, high-quality childcare facilities and services and includes objectives and policies to encourage an adequate and diverse supply of childcare facilities and services citywide and includes a Childcare Impact fee on new residential and nonresidential development due to its impacts on childcare needs.
2 – Fee Amount: The Childcare Impact Fee in FY 2023 was defined as:
Childcare Impact Fee (Fund 218)
Residential Use Maximum per Dwelling Unit Cost Per Sq. Ft Single-Family - $0.56
Multi-Family - $0.42
Commercial Use Cost Per 1,000 Sq. Ft Cost Per Sq. Ft
Retail $1.53
Office $1.78
Industrial $0.71
Hotel $0.54
3 & 4 – Fund Balances, Fees Collected, & Interest Earned:
The total funds collected in FY 2023 for Child Impact Fee was $51,690.67 Childcare Impact Fee (Fund 218) – Fund Balance
Collections
Fees Collected 7/1/22 to 6/30/23 $51,014.42
Interest $676.25
Total $51,690.67
Disbursements
Administrative Expenses
Total Disbursements
% of Cost Funded
0 0
0 Ending Balances (Fees Collected + Interest)
Ending Available Fund Balance is unaudited and is before consideration of remaining interest accrual.
As of 6/30/2021
As of 6/30/2022
As of 6/30/2023
$1,459.98
$21,373.09
$71,970.85
18.5 City Council Meeting – November 11, 2023 | Page 3
5 – Refund: The refund amount in FY 2023 for Child Impact Fee was $53.59. 6 – Identification of Project on Which Fees Were Expended & Amount for Each Improvement Expended: Not applicable for FY 2023.
7 – Total Percentage of The Costs of The Public Improvement Funded with Fees: Not applicable for FY 2023.
8 – Approximate Date by Which Construction of Improvements Will Commence: Not applicable for FY 2023.
9 – Interfund Transfer or Loan Made from Fund: Not applicable for FY 2023.
18.6 City Council Meeting – November 11, 2023 | Page 4
Section B – Citywide Public Safety Impact Fee (Fire & Police) for Fiscal Year Ending June 30, 2023
1 – Description: A Public Safety Impact Fee (Fire and Police) is assessed in connection with the issuance of certain development permits in the City as designated by City Council Resolution NS29,813. The fees were effective on June 26, 2021. The City’s General Plan includes objectives and policies to ensure adequate fire and police training and resources and to maintain rapid and timely response to all emergencies and services. A developer voluntary choosing to create new development will place new, additional, and cumulatively overwhelming burdens on public safety services, a network of integrated services that serves existing and planned residential and non-residential development. New development in the City will increase the service population and therefore the need for new fire and police facilities, apparatuses, vehicles, and equipment to adequately serve new residents and employees.
In accordance with the General Plan, the fees shall be used to pay costs associated with the mitigation of fire and police impacts attributable to the development that is the subject of the permit. 2 – Fee Amount: The Public Safety Impact Fee in FY 2023 was defined as:
Public Safety Impact Fee – Police (Fund 215)
Residential Use Maximum per Dwelling Unit Cost Per Sq. Ft.
Single-Family $852 $0.530
Multi-Family $635 $0.910
Non-Residential Use Cost Per 1,000 Sq. Ft Cost Per Sq. Ft.
Retail $516 $0.516
Office $601 $0.601
Industrial $421 $0.241
Hotel $180 $0.180
Public Safety Impact Fee – Fire (Fund 217)
Residential Use Maximum per Dwelling Unit Cost Per Sq. Ft.
Single-Family $841 $0.530
Multi-Family $627 $0.900
Non-Residential Use Cost Per 1,000 Sq. Ft Cost Per Sq. Ft.
Retail $509 $0.509
Office $594 $0.594
Industrial $237 $0.237
Hotel $178 $0.178
18.7 City Council Meeting – November 11, 2023 | Page 5
3 & 4 – Fund Balances, Fees Collected, & Interest Earned:
The total funds collected in FY 2023 for Public Safety Impact Fee – Police Fund was $90,627.20 Police Program Fees (Fund 215) – Fund Balance
Collection
Fees Collected 7/1/22 to 6/30/23 $89,843.72
Interest $783.48
Total $90,627.20
Disbursements
Administrative Expenses
Total Disbursements
% of Cost Funded
0 0
0 Ending Balances (Fees Collected + Interest)
Ending Available Fund Balance is unaudited and is before consideration of remaining interest accrual.
As of 6/30/2021
As of 6/30/2022
As of 6/30/2023
$2,575.85
$18,388.02
$109,015.22
The total funds collected in FY 2023 for Public Safety Impact Fee – Fire Fund was $88,557.66.
Fire Program Fees (Fund 217) – Fund Balance
Collection
Fees Collected 7/1/22 to 6/30/23 $87,780.40
Interest $777.26
Total $88,557.66
Disbursements
Administrative Expenses
Total Disbursements
% of Cost Funded
0 0
0 Ending Balances (Fees Collected + Interest)
Ending Available Fund Balance is unaudited and is before consideration of remaining interest accrual.
As of 6/30/2021
As of 6/30/2022
As of 6/30/2023
$2,515.96
$16,347.98
$107,421.60
5 – Refunds:
The refund amount in FY 2023 for Public Safety Impact Fee – Police Fund was $125.87. The refund amount in FY 2023 for Public Safety Impact Fee – Fire Fund was $62.97. 6 – Identification of Project on Which Fees Were Expended & Amount for Each Improvement Expended: Not applicable for FY 2023.
7 – Total Percentage of The Costs of The Public Improvement Funded with Fees: Not applicable for FY 2023.
18.8 City Council Meeting – November 11, 2023 | Page 6
8 – Approximate Date by Which Construction of Improvements Will Commence: Not applicable for FY 2023.
9 – Interfund Transfer or Loan Made from Fund: Not applicable for FY 2023.
18.9 FY 2023 Development Impact Fee
Annual Report for Childcare and Public
Safety Impact (Police and Fire) Fees
Planning and Community Development Department
City Council Meeting | November 11, 2023 | Item #18
18.10 2
Revenue: Ending Balances by Impact Fee from FY 2021 to FY 2023 $0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Childcare Impact Fee Public Safety Impact Fee -
Police
Public Safety Impact Fee -
Fire
FY 2023
FY 2022
FY 2021
$71,971
$107,422
$51,691
$21,373 $18,388
$90,627
$109,015
$88,558
$16,348
18.11 3
Consideration of Exemption of 100% Affordable Projects:
Current Exemption SCMC 18.48.050 (Childcare) & 18.49.050 (Public Safety):
#
Exempted
Projects
Potential Public
Safety Impact Fee –
Fire
Potential Public
Safety Impact Fee –
Police
Potential Public
Safety Impact Fee –
Childcare
Estimated exempted
since adoption 6/2021
4 $108,000 $151,000 $70,000
Estimated exempted
projects in pipeline
4 $221,000 $224,000 $120,000
$329,000 $375,000 $190,000
Exemption Definition:
• Affordable housing projects are projects where 100 percent of the units, excluding managers units, within the development are dedicated to lower income households. • The affordable units within the development are subject to a recorded affordability restriction for a minimum of fifty-five years or per local inclusionary requirements, whichever is greater.
18.12 FY 2023 Development Impact Fee
Annual Report for Childcare and Public
Safety Impact (Police and Fire) Fees
Planning and Community Development Department
City Council Meeting | November 11, 2023 | Item #18
18.13 5
Past Projects Exempted
Exempt Projects
due to 100%
Affordability
Component
Permit
Number Issued Date # of Units Square Foot Square Foot / Units
Budget Fiscal
Year
Estimated Impact
Revenue for
Fire
Estimated Impact
Revenue for
Police
Estimated Impact
Revenue for
Childcare
818 Pacific Ave B21-0431 6/28/2022 70 62,730 896.14 FY 22 $33,000 $60,000 $27,000 532 Cedar/525
Center B22-0079 8/24/2022 65 59,457 914.72 FY 23 $41,000 $55,000 $26,000 314 Jessie St B22-0409 4/13/2023 50 27,357 547.14 FY 23 $26,000 $27,000 $12,000 415 Natural
Bridges Dr B22-0396 5/11/2023 20 8,663 433.15 FY 23 $8,000 $9,000 $5,000 Total 205 $108,000 $151,000 $70,000
18.14 6
Future Projects in Pipeline Exempted
Pipeline Projects
Exempted due to
100% Affordability
Component
Permit
Number Issued Date # of Units Square Foot Square Foot / Units Estimated Impact
Revenue for
Fire
Estimated Impact
Revenue for
Police
Estimated Impact
Revenue for
Childcare
902 Pacific B23-0557 N/A 128 111,638 872.17 $85,000 $86,000 $50,000 119 Coral TBD N/A 120 41,972 349.77 $40,000 $40,000 $19,000 136 River
(Outdoor World) TBD N/A 51 33,120 TBD $28,000 $28,000 $15,000 119 Lincoln
(Library Project) TBD N/A 124 TBD TBD $68,000 $70,000 $36,000 Total 423 $221,000 $ 224,000 $120,000
18.15 City Council
AGENDA REPORT
DATE: 11/03/2023
AGENDA OF: 11/14/2023
DEPARTMENT: City Council
SUBJECT: An Ordinance Requiring Delivery Companies to Provide a Service Enabling Customers to Tip Delivery Drivers (CN)
RECOMMENDATION: Introduce for publication an ordinance adding Chapter 5.11 to the Santa Cruz Municipal Code to require delivery companies to offer a tipping option to residential delivery customers.
BACKGROUND: Delivery drivers provide an essential service to our community. They deliver food, medicine and other packages in bad weather and busy traffic. However, there is no option for residents to economically reward these workers with a tip; this stands in stark contrast to other delivery drivers, such as those that deliver meals and passenger rides, where tipping is a standard customary practice.
DISCUSSION: In December, 2022, Amazon added a temporary feature to its website that enabled customers to tip their delivery drivers over the holidays, and thereby demonstrating that technology enabling customers to tip delivery drivers is already in place and workable.
This proposed ordinance would require delivery companies to provide residential customers the ability to tip their delivery drivers. Under the proposed ordinance, this option could be provided to customers when ordering the product at check out, through a hyperlink attachment in an SMS or e-mail notifying the customer the delivery was completed, or on printed materials (like a QR code) either affixed to the delivery box or within the package supplying instructions on how to leave a tip.
The requirement for delivery companies to provide the option to tip would not apply to delivery companies with six or fewer employees, delivery drivers who are independent contractors, delivery companies or drivers who are subject to a valid collective bargaining agreement that addresses tipping, the United States Postal Service, or to business-to-business delivery drivers.
The delivery drivers at UPS and DHL are unionized and are subject to a valid collective bargaining agreement. Currently, FedEx residential drivers are employees of logistics companies that contract with FedEx to deliver packages. Amazon has two tracks of delivery drivers: Amazon Flex and the Delivery Service Partner Program. Currently, Amazon Flex is not available in Santa Cruz. The Delivery Service Partner Program drivers, like FedEx, are employees of logistics companies. The companies then contract with Amazon to deliver
19.1 packages. The proposed ordinance would apply jointly to delivery companies like Amazon and FedEx, and to logistics companies that contract with them.
The City currently does not have access to information or the resources to implement an enforcement program for this ordinance. Accordingly, it is anticipated that enforcement would entail providing delivery drivers with a legal basis or cause of action to seek damages and/or injunctive relief against companies that fail to adhere to the ordinance’s requirements, along with a provision enabling a successful plaintiff to recover their respective attorneys’ fees and costs.
Based on research by the City Attorney, it does not appear that such an ordinance would be preempted by state or federal law. As written, however, the proposed ordinance would not take effect until six months after its final adoption, during which time the City will conduct outreach to affected companies, and potentially bring back to Council any necessary revisions or refinements.
Health in All Policies (HiAP) – The proposed ordinance is consistent with the HiAP framework, particularly equity and sustainability.
FISCAL IMPACT: No significant fiscal impact anticipated.
Submitted By:
Martine Watkins
Councilmember
Submitted By:
Sonja Brunner
Councilmember
Submitted By:
Shebreh Kalantari-Johnson
Councilmember
ATTACHMENTS:
1. ORDINANCE.DOCX
19.2 ORDINANCE NO. 2023-XX
AN ORDINANCE OF THE CITY OF SANTA CRUZ ADDING CHAPTER 5.11 TO THE
SANTA CRUZ MUNICIPAL CODE REQUIRING DELIVERY COMPANIES TO OFFER
TIPPING OPTION FOR DELIVERY CUSTOMERS
BE IT ORDAINED By the City of Santa Cruz as follows:
WHEREAS, the City of Santa Cruz recognizes the significant contributions made by delivery drivers who deliver goods or packages to customers at residential addresses within the City of Santa Cruz; and
WHEREAS, the City of Santa Cruz believes it is important to ensure fair compensation for these delivery drivers, who often provide exceptional service to the residents of our city; and WHEREAS, tipping is a common practice in many service industries and provides customers with an opportunity to show appreciation for outstanding service; and WHEREAS, it is in the interest of the City of Santa Cruz to encourage and promote fair compensation for delivery drivers while fostering a positive working relationship between customers and delivery companies;
NOW THEREFORE, BE IT ORDAINED by the City Council of the City of Santa Cruz as follows:
SECTION 1. Chapter 5.11 (Delivery Driver Tipping) is hereby added to the Santa Cruz Municipal Code, and it shall read as follows:
“CHAPTER 5.11 – DELIVERY DRIVER TIPPING
5.11.010 – DEFINITIONS.
(a) "Delivery company" shall refer to any company engaged in the business of shipping and/or delivering goods or packages to customers at residential addresses within the City of Santa Cruz.
(b) "Delivery driver" shall refer to an individual employed by a delivery company for the purpose of delivering goods or packages to customers at residential addresses.
5.11.020 – TIPPING OPTION REQUIREMENT.
(a) All delivery companies, as defined in Section 5.11.010, operating within the City of Santa Cruz shall offer a tipping option to their customers, either through their website, mobile application, or other means of electronic communication. Companies engaged in the shipping or delivery of products or packages on their own behalf or on behalf of third parties from the point of origin to the final residential destination shall, jointly and
19.3 severally, be responsible for compliance with this Chapter including, but not limited to third-party contractors such as, for example, Amazon Delivery Service Partners. (b) The tipping option shall be prominently displayed and easily accessible to the customer by one or more mechanisms that may include, but are not limited to, any of the following:
a. During the checkout or order placement process;
b. Through a hyperlink in an SMS or e-mail notifying the customer of the delivery status; c. On printed material affixed to the delivery box or within the package with instructions on how to leave a tip;
d. On an order/delivery tracking page that a customer has access to; or e. A generally available website that customers are directed to at which a tip can be given for a specific delivery by providing a tracking number or other unique identifier to the delivery company. This website must be easily accessible and discoverable such as, for example, by including its web address and instructions on the delivery company’s packing label.
5.11.030 – EXCEPTIONS.
(a) This ordinance shall not apply to:
a. Delivery companies with six (6) or fewer employees;
b. Delivery drivers who are independent contractors;
c. Delivery companies or delivery drivers who are subject to a valid collective bargaining agreement;
d. The United States Postal Service; or
e. Business-to-Business deliveries.
5.11.040 – CIVIL ENFORCEMENT.
(a) Any aggrieved person may enforce the provisions of this chapter in a civil action filed in Santa Cruz Superior Court for injunctive relief and damages. (b) Any person who violates any provision of this chapter or who aids in such a violation is liable for each violation. Whoever is found to have violated this chapter shall be subject to appropriate injunctive relief and shall be liable for one hundred dollars ($100) per day per driver in damages, plus costs and reasonable attorney's fees as determined by the Court. (c) Any person who commits, or proposes to commit, an act in violation of this chapter may be enjoined therefrom by any court of competent jurisdiction. An action for equitable relief under this subsection may be brought by any aggrieved person. (d) In any civil action brought pursuant to this Chapter, it shall be an affirmative defense if the defendant delivery company establishes that the failure to comply was due to short-term technical outages (malfunctions, outages, or integration issues) that prevented the option to tip from being delivered to customers, provided such outage was resolved within five
19.4 (5) business days, and the delivery company has otherwise made good faith efforts to maintain the tipping service generally.”
SECTION 5. Severability.
If any section or portion of this chapter is found to be invalid by a court of competent jurisdiction, such finding shall not affect the validity of the remainder of the chapter, which shall continue in full force and effect.
SECTION 6. Effective Date.
This ordinance shall be in force and take effect one hundred eighty (180) days from the date of its final adoption.
PASSED FOR PUBLICATION this 14th day of November 2023, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: __________________________
Fred Keeley, Mayor
ATTEST: ________________________________
Bonnie Bush, City Clerk Administrator
PASSED FOR FINAL ADOPTION this ___ day of ______, 2023 by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: _____________________
Fred Keeley, Mayor
ATTEST: ___________________________
Bonnie Bush, City Clerk Administrator
19.5 This is to certify that the above and
foregoing document is the original
of Ordinance No. 2023-10 and that
it has been published or posted in
accordance with the Charter of the
City of Santa Cruz.
________________________________
Bonnie Bush, City Clerk Administrator
19.6 From: Bonnie Bush
To: City Council
Subject: Fwd: Proposed Santa Cruz Tipping Ordinance
Date: Monday, November 13, 2023 10:10:16 AM
Attachments: image002.png
image003.png
image004.png
image006.png
Town of Santa Cruz Tipping Ordinance 11092023.pdf
Bonnie Bush
City Clerk
City of Santa Cruz
809 Center St., Room 8, Santa Cruz, CA 95060
Phone: 831-420-5035
Email:[email protected] Web: www.cityofsantacruz.com Begin forwarded message:
From: Chris Shimoda <[email protected]>
Date: November 13, 2023 at 9:37:26 AM PST
To: Fred Keeley <[email protected]>, Bonnie Bush
<[email protected]>
Cc: Eric Sauer <[email protected]>
Subject: Proposed Santa Cruz Tipping Ordinance
Good Morning,
Attached are the California Trucking Association’s comments on Santa Cruz’s proposed delivery driver tipping ordinance.
Thank you.
Chris Shimoda |Senior Vice President, Government Affairs California Trucking Association
4148 East Commerce Way
Sacramento, CA 95834
C: (916) 284-1785
E: [email protected]
W: www.caltrux.org
We drive for a living. Safety is our priority.
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19.7 A one-stop-shop for all things testing? Your search is over.
Visit www.TSCtesting.com or email Levi Ochotorena at [email protected] to learn more.
19.8 Anthony Condotti
City Attorney
City of Santa Cruz
P.O. Box 481
Santa Cruz, CA 95061-0481
Dear Mr. Condotti:
On behalf of the California Trucking Association (CTA) and its over 1,000 members, we appreciate the opportunity to provide written comments in reference to the proposed Ordinance Requiring Delivery Companies to Provide an Option to Tip Delivery Drivers (Ordinance). The California Trucking Association is the nation’s largest statewide trade association representing the trucking industry. Our members range from small, California based businesses to motor carriers in the Fortune 500 and operate in nearly every trucking market in California, including agriculture, construction, parcel delivery, and much more.
Our association has been made aware that the City of Santa Cruz is considering a local ordinance that would require “delivery companies” (as defined by the Ordinance) to offer tipping options for delivery customers within the City. Any non-compliance would subject violators to fines as well as civil enforcement from “any aggrieved person,” including undefined injunctive relief.
Respectfully, CTA opposes the Ordinance for the following reasons:
• The Ordinance will not just cover local delivery companies, but also global and interstate trucking and transportation network companies operating world-wide networks, in which Santa Cruz is only the first or last stop on a shipment’s journey through the supply chain.
Some of these companies are specifically named in the Ordinance. • Under the definition of “delivery company,” not only would residential delivery services provided by global, interstate and intrastate trucking and transportation network companies be included, other residential deliveries covered by the Ordinance and provided by businesses with delivery services would also include:
o Grocery and liquor stores.
o Medical supplies and pharmaceuticals.
o Furniture and appliance stores.
o Hardware and construction supply stores.
o On-line car sales.
o Oil and gas products.
o Services providing residential customers with delivered supplies and products (e.g., solar, home heating and air conditioning services, home improvement, home repair and landscape companies).
• In the majority of deliveries related to on-line/e-commerce purchases, the “customer” who pays for the delivery of packages is typically the shipper/vendor, not the ultimate
19.9 recipient of the shipment. Is it fair to expect a resident that did not initiate and pay for the shipping of a product(s) to tip the driver who is acting on behalf of and paid for by the shipper/vendor?
Examples of other deliveries not initiated or paid for by residents include gifts sent by others. Is it fair for the City Council to suggest, by passing this Ordinance, that residents should tip delivery drivers for receiving gifts they were not expecting? • In the case of deliveries made by “gig” delivery companies such as DoorDash, Instacart, and UberEats (referred to here as “Internet Delivery Services” or IDS”), including such items as consumer goods from local stores, groceries, prepared food, etc., the recipient of the shipment is also the “customer” of the IDS. The customer directly purchases the delivery service from the IDS. To the extent the IDS has enabled its delivery drivers to accept tips, the recipient would be tipping for a service for which the recipient personally requested and paid. That is not the case when comparing such deliveries with those made by trucking companies and transportation networks.
Trucking companies and transportation networks utilize a common or contract carrier model is fundamentally different from IDS companies. These common and contract carriers operate regional, nationwide and worldwide point-to-point transportation and logistics services. In the majority of deliveries made by such carriers, it is the shipper/vendor that initiates and pays the carrier for the shipping of the goods, not the recipient of the shipment.
• The proposed Ordinance could result in creating undue and unanticipated issues for the citizens of Santa Cruz – A city ordinance that promotes/facilitates tipping could result in a poor customer experience for residential shipment recipients. o Unlike dining out or the occasional app-based meal delivery, it is not uncommon for people to receive package deliveries at their homes on a near-daily or daily basis. An electronic prompt to tip for deliveries made on a near-daily or daily basis could quickly become a source of resentment for citizens. Moreover, that resentment will be directed at the individual drivers because most people will not be aware that this electronic request for the tip has been mandated by a city ordinance under threat of penalty to the driver’s company, or even the driver herself, as the ordinance is currently written.
o In the case of vendors that offer free shipping to consumers at the time of on-line purchase, citizens may also respond unfavorably towards the City Council for creating a means for citizens to provide tips via electronic means for delivery services that citizens did not seek or pay for. Those concerns would be magnified for citizens who receive multiple shipments per week and thus are repeatedly prompted to provide tips.
o Citizens could face backlash from drivers not or minimally tipped - Think of going to the same restaurant each day or several times a week. Every single time, you leave a minimal tip or do not leave a tip. Do restaurant employees remember who among their regular customer do and do not tip well?
19.10 o Under the proposed ordinance, if tips are now expected by drivers and tips are either minimal or not always provided, driver service could deteriorate. How long before you start to understand that a tip is expected every single time for fear that if you do not tip, you’ll be marked and receive bad or minimal service? Think of the delivery driver who regularly delivers to your home being less timely and possibly less accommodating in the placement of packages. o The tipping option via electronic means proposed to be mandated on delivery companies by the City Council may raise equity issues for the citizens of Santa Cruz. As an example, people conscious of personal and/or family budgets certainly can make choices when patronizing restaurants, hair salons or using the convenience of grocery delivery services, and thus have some control over tip expenses. But some citizens often have no choice when it comes to certain deliveries, such as medicine, infant supplies, or other necessities. In some instances, a request for a tip may place citizens in an awkward position when they simply cannot afford to tip each driver who comes to the door. • Mandating the availability of tipping via electronic means for residential deliveries also creates inequitable compensation among drivers performing the same or similar work.
The proposed ordinance, in such cases, could promulgate:
o Pay inequity and internal morale issues.
o Decline in service and productivity.
As an example, some drivers will be serving recipients or locations without the means to provide substantial tips. Many delivery companies also service both residential and commercial stops, which again would create compensation inequities depending upon whether a driver had a route that was principally or exclusively commercial versus one that had a route that was principally or exclusively residential.
Further, for large parcel and less-than-truckload carriers than move goods from shippers located around the country and around to globe to Santa Cruz locations, there are multiple “drivers” responsible for the movement of a shipment from origin to destination.
The proposed ordinance would cause driver compensation inequities when only the “last mile” driver is able to receive a tip while other drivers, handlers and sorters all involved in getting a package through a carrier’s network to complete a residential delivery all had equal responsibility for the timely and safe delivery of the shipment. • Privacy/Data Collection Considerations – To create an electronic means for delivery recipients to be able to tip via electronic means, affected delivery companies may now need to collect and input sensitive resident information into the system (software) installed to enable on-line tipping, including names, credit card information and email addresses; sensitive resident information that the delivery company would typically not otherwise need to collect and input. While some trucking and transportation network companies have strong information security protections and data privacy policies and
19.11 procedures, capturing and using sensitive resident information does give rise to incremental risk.
Moreover, the State of California is especially mindful of the unnecessary collection of personal and financial information; and while the Ordinance does not directly contravene California’s data protection laws, it certainly violates their spirit, as it places delivery companies covered by the Ordinance in the position of collecting information that is not typically necessary in order to provide their normal delivery services. • Potential federal legal considerations addressing goods movement and interstate commence – In regard to the federal laws and regulations addressing the global and national supply chain and interstate commerce, it can be argued that the proposed ordinance is not enforceable against air and motor carriers. o The Federal Aviation Administration Authorization Act (“FAAAA”) and the Airline Deregulation Act (“ADA”) preempt the enforcement of state or local laws that are related to the “price, route, or service” of air and motor carriers, which include many trucking and transportation network companies. A tipping mandate has a direct connection to carrier “prices” and “services” and thus could be argued is an improper regulation of both.
For all the reasons stated above, CTA requests that the City Council reject the proposed Ordinance “Requiring Delivery Companies to Provide Tipping Option for Delivery Drivers.” Thank you, in advance, for your consideration.
Respectfully submitted,
Eric Sauer, CEO
California Trucking Association
[email protected]
19.12 From: Bonnie Bush
To: City Council
Subject: FW: Santa Cruz Ordinance Letter
Date: Monday, November 13, 2023 12:48:18 PM
Attachments: image002.png
Santa Cruz Ordinance Letter 11.13.23.pdf
Bonnie Bush
City Clerk
City of Santa Cruz
809 Center St., Room 8, Santa Cruz, CA 95060
Phone: 831-420-5035
Email: [email protected]
Web: www.cityofsantacruz.com
Public Records Requests may be submitted online via the Public Records Request form, by email, or by hard copy form available at the City Clerk’s Office located at 809 Center Street, Room 9, Santa Cruz, CA 95060.
Please note: Public Record Act Requests submitted via email, fax, USPS, or dropoff after 5:00 p.m. on a business day, Saturdays, Sundays, or holidays will be processed as received on the next open business day. The 10-day response period begins when the request is received.
From: Matthews, Ariana <[email protected]> Sent: Monday, November 13, 2023 12:37 PM
To: Fred Keeley <[email protected]>; Bonnie Bush <[email protected]> Cc: Hoffman, Ashley <[email protected]>
Subject: Santa Cruz Ordinance Letter
Good afternoon,
Attached is a letter of concern regarding the Ordinance Requiring Delivery Companies to Provide a Service Enabling Customers to Tip Delivery Drivers.
Thank you,
Ariana Matthews
Policy Assistant
California Chamber of Commerce
1215 K Street, 14th Floor
Sacramento, CA 95814
19.13 T: 916.930.1220
Visit calchamber.com for the latest California business legislative news plus products and services to help you do business.
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19.14 November 13, 2023
TO: Members, Santa Cruz City Council
FROM: Ashley Hoffman, Policy Advocate, California Chamber of Commerce SUBJECT: LETTER OF CONCERN: ORDINANCE REQUIRING DELIVERY COMPANIES TO PROVIDE A SERVICE ENABLING CUSTOMERS TO TIP DELIVERY DRIVERS – AS DRAFTED PER OCTOBER 10, 2023 CITY COUNCIL AGENDA
SCHEDULED FOR HEARING – NOVEMBER 14, 2023
The California Chamber of Commerce appreciates the opportunity to provide feedback regarding the proposed Ordinance of The City of Santa Cruz adding Chapter 5.11 to the Santa Cruz Municipal Code requiring delivery companies to offer tipping option for delivery customers, as drafted for the October 10, 2023 City Council Meeting.
The Proposed Ordinance Interferes in Existing Markets
The parcel delivery market is a highly competitive, low-margin industry with a wide range of national and regional competitors. Our concern is that the proposed ordinance targets certain businesses by name and interferes in the market by dictating specific compensation practices. While the council has stated that the proposed ordinance would not be preempted by federal law, the council has not specifically stated how or why it reached that conclusion.
Further, the rationale to impose this requirement on all delivery companies simply because meal delivery and rideshare drivers can be tipped is misplaced. The delivery drivers for the companies named in the report may earn a higher wage than meal or rideshare drivers and may be classified differently under California law. It is also unclear why workers under a collective bargaining agreement are exempt.
We also believe the scope of the ordinance is broader than described in the analysis. While the analysis for this bill focuses on parcel delivery, this ordinance as drafted would actually apply to a very large number of other businesses who offer delivery services but are not engaged in delivery as their primary business. “Delivery company” as defined in this ordinance refers to “any company engaged in this the business of shipping and/or delivering goods or packages to customers at residential addresses[…].” That would include grocery stores, furniture stores, landscapers, construction material suppliers and home improvement stores, dry cleaners, caterers, moving companies, medicine delivery companies, newspaper companies, propane and heating fuel suppliers. The proposed ordinance does not appear to take this into account.
The Proposed Ordinance May Deter Local Business Growth and Increase Costs to Consumers We also have general concerns about the cost, implementation, and mechanics. First, the ordinance proposes to exempt business-to-business deliveries. However, there may not be a realistic way for companies to separate those deliveries from business-to-consumer deliveries. Therefore, the proposed ordinance would effectively impact the cost of all deliveries, driving up costs considerably for small businesses that ship significant parcel volume. And because most residential deliveries are generated by businesses paying for the shipment, they could likely be the party expected to add a gratuity, possibly resulting in that cost being passed on to the consumer. We are concerned about the impact this increased cost to consumers would have on fixed income residents who rely on e-commerce for medical supplies and other critical services.
19.15 Further, given that this ordinance would only apply in Santa Cruz to companies who have a broader reach and have existing payment and billing systems in place, the administrative burden of compliance makes it even more likely that they would be forced into utilizing add-on, third-party vendors to handle tipping payments. This cost may deter the expansion of companies to the Santa Cruz area.
Tip Fatigue is Growing Nationally
We believe that “tip fatigue” is an important factor the council should consider. A number of major news outlets ran stories this year citing surveys showing that Americans are increasingly experiencing tipping fatigue, noting that fears of a recession, combined with rising inflation and an influx of more services asking for larger tips is leading to consumer burnout and unfavorable opinions among new entities that solicit tips.1 We urge the council to consider the financial impact of the proposed ordinance on consumers, especially in light of current inflation, and whether tipping actually benefits workers or stagnates wages.
Ordinance Creates New Data Privacy and Wage Liabilities In order to comply with this ordinance, delivery companies may have to end up sharing their customers’ data, including financial data, with third-party vendors. This poses a considerable expansion of liability for delivery companies under the new California Privacy Protection Act, as it would hold delivery companies liable for how vendors treat such customer data, including if and how fast they delete requested information.
Further, if delivery companies are required to provide the tipping service, they may have to share data with vendors such as package tracking numbers, which include customer addresses, even if the customer has requested to have such data deleted, putting delivery companies in a position making compliance impossible.
Finally, we are concerned regarding enforcement and the included private right of action. California employers already face considerable litigation in light of state laws that incentivize the filing of shakedown lawsuits. Given the complexity of implementing this ordinance, we are concerned about litigation that may arise based on good faith processing errors.
Thank you for your consideration.
1 See, for example https://www.usatoday.com/money/blueprint/credit-cards/tipping-fatigue-growing-inamerica/;https://www.forbes.com/sites/jackkelly/2023/08/01/tipflation-americans-think-tipping-culture-is-out-ofcontrol-and-employees-should-be-paid-more/?sh=28db8ff43ae4;https://www.cnbc.com/2023/06/08/americanshave-tip-fatigue-resent-tip-creep.html;https://thehill.com/homenews/nexstar_media_wire/4222664-tip-screenfatigue-heres-how-much-americans-are-actually-tipping-survey/;https://apnews.com/article/tipping-fatiguebusiness-c4ae9d440610dae5e8ff4d4df0f88c35
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