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Energy legislations heats up commercial real estate industry

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Due to an unseasonable heat wave that drifted across the state recently, the fear of a blackout loomed over California as a Stage I electrical emergency was declared. Demand for electricity rose as the temperature escalated increasing air conditioning usage and causing electricity reserves to fall below seven percent.

Ensuring a reliable supply of energy is one of the Building Owners and Managers Association's (BOMA) top legislative priorities. Finding ways to save energy during the workday can have a huge impact on the region's energy supply and also on consumer's utility bills. It is important for BOMA members to continue their part by reducing energy consumption wherever possible.

Ways to conserve energy in the office

According to Anne Silva, communications manager for San Diego Gas & Electric, there are many ways office managers and tenants can conserve energy.

? Reduce lighting where possible. Turn off lights in unoccupied areas, remove excess lighting, and turn off signage and other lights not necessary for security and safety.

? Install occupancy sensors. These inexpensive devices can reduce lighting costs by up to 40 percent by turning off lights in unoccupied areas.

? Replace incandescent lights in exit signs with LED fixtures, which can reduce costs of these signs by up to 95 percent.

? Adjust the thermostat down in winter and up in summer. Even a few degrees can significantly reduce heating and air conditioning costs. The recommended temperature to maintain in the office is 78 degrees.

? Install programmable thermostats or time clocks to automatically control temperature settings.

? Turn off or set office equipment to power down when not in use. Turning off one computer nightly and on weekends can save up to $80 a year. Setting PCs, monitors and copiers to use sleep mode when not in use can help cut energy costs by up to 50 percent.

Current legislation focused on deregulation

Recent state legislation was introduced to attempt to stabilize California's energy industry. Last year, legislators considered returning to a fully-regulated market similar to that which dominated the industry for decades before initiating deregulation in 1998. Two pieces of legislation that are being considered this year suggest that California keep certain aspects of a deregulated market model.

The first bill, AB 2006, sponsored by Southern California Edison and carried by Assembly Speaker Fabian Nunez (D) of Los Angeles, would allow large energy users to split from contracts with the three major utility companies and sign contracts with private energy suppliers.

The second bill, AB 428, was co-authored by Assemblyman Keith Richman (R) of Northridge and Assemblyman Joe Canciamilla (D) of Pittsburg, Calif. This bill would allow small demand non-core consumers to leave their utility and sign contracts with a private energy supplier.

Utilities have warned legislators that new power plants are needed to come on line by 2006 or California could once again suffer power outages. The goal of both AB 2006 and AB 428 is to set clearly stated rules for the utilities and private energy companies so they know how many customers they will be serving in the near future, which in turn could help persuade bankers to loan money for construction of new power plants.

Last year a bill by Sen. Joe Dunn (D) of Santa Ana, aimed at re-regulating the market, was defeated by the Assembly utilities committee. Dunn has until June of this year to decide if he would like to reintroduce the bill.

BOMA position on the energy market

"BOMA believes that the state should allow energy markets to operate in a manner which produces a steady and reliable flow of electricity to all consumers at prices which are affordable," said Mary Youngman of Allied Plaza and member of the BOMA CAL Energy Committee. "Maintaining a constant level of private investment in generation capacity, transmission and distribution networks is a key aspect to reliable energy."

BOMA advocates believe the following reforms could help return the California energy market to a functional state.

? Lift the suspension on new direct access for customers using over 500 kilowatts.

? Recognize that electric consumption of an office building appears to be one large consuming entity, but actually is comprised of many small consuming businesses, which make up the tenants.

? Allow office buildings to elect their class of either "core" or "non-core" and allow them to periodically alter that decision as building owners and managers come to better understand how the rules of core and non-core customers affect the tenants of their buildings.

? Allow buildings to generate part of their own power supply through on-site generation without penalties and departing load fees, which have hindered the expansion of a clean, self-sustaining distributed generation network of electric consumers.

? Modify California Public Utilities Commission's regulations to permit building owners to install electric sub meters allowing their tenants to pay only for the electricity that they consume, rather than basing how much they pay on the amount of office space they use. This will promote energy use accountability by tenants and could, therefore promote conservation.

Fairly design demand response programs encouraging tenants to reduce demand loads during peak hours, consistent with office building use.

BOMA will continue local and state efforts of ensuring that building owners, managers and tenants have an adequate supply of energy at a reasonable rate. BOMA will also maintain its efforts to advocate for federal energy policy that calls for a competitive market and a reliable infrastructure system will also continue.


Benedetto is the legislative advocate for BOMA San Diego and co-owner of Benedetto Communications Inc.

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