AB2182 - Energy efficiency: financing options: custom agricultural and industrial efficiency projects.

Amended IN Senate June 25, 2026 Amended IN Assembly April 13, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 2182 Introduced by Assembly Member Irwin February 19, 2026 An act to add Chapter 8.6 (commencing with Section 1550) to Part 1 of Division 1 amend Section 381.2 of the Public Utilities Code, relating to energy. LEGISLATIVE COUNSEL'S DIGEST AB 2182, as amended, Irwin. Electrical corporations: Industrial Decarbonization and Energy Efficiency Program. Energy efficiency: financing options: custom agricultural and industrial efficiency projects. Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law requires the commission to require electrical corporations to implement various programs, such as energy efficiency programs, that are funded by electrical ratepayers. This bill would require, on or before August 1, 2027, each large electrical corporation, as defined, to file a Tier 2 advice letter with the commission establishing an Industrial Decarbonization and Energy Efficiency Program with funding allocated from energy efficiency charges collected from eligible facilities, defined as industrial or manufacturing facilities that meet specified requirements, as specified. The bill would require the program to award grants to eligible facilities for eligible projects, including, among others, energy efficiency projects that meet certain requirements. The bill would require each large electrical corporation to administer its program, as provided, and require the Governor’s Office of Business and Economic Development to provide independent review and approval of grants awarded pursuant these provisions. Existing law vests the Public Utilities Commission (PUC) with regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to establish a regulatory proceeding to develop and implement a comprehensive program to achieve greater energy savings in California’s existing residential and nonresidential building stock. Existing law requires the PUC to investigate the ability of electrical corporations and gas corporations to provide various energy efficiency financing options to their customers for the purpose of implementing the program developed by the Energy Commission. Existing law imposes requirements for custom projects and other custom programs for industrial, agricultural, commercial, residential, and public sector customers. Existing law requires the PUC to develop and maintain rules for custom energy efficiency projects that include eligibility criteria or metrics for determining if a project is eligible for funding. This bill would delete the requirement on the PUC to develop and maintain those rules, and would instead require the commission, as part of the approval of the next Tier 2 advice letters submitted after January 1, 2027, by program administrators for mid-cycle review pursuant to a specific commission decision, to revise the rules adopted for custom agricultural and industrial efficiency projects to replace the commission’s ex ante review process with a process that ensures the provision of incentives pursuant to these provisions for custom agricultural and industrial efficiency projects, as specified. Under existing law, a violation of the Public Utilities Act or an order, decision, rule, direction, demand, or requirement of the commission PUC is a crime. Because the above provisions would be part of the act and a violation of a commission PUC action implementing this bill’s requirements would be a crime, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. Chapter 8.6 (commencing with Section 1550) is added to Part 1 of Division 1 of the Public Utilities Code , to read: 8.6. Industrial Decarbonization and Energy Efficiency Program 1550. For purposes of this chapter, all of the following definitions apply: (a) “Eligible facility” means an industrial or manufacturing facility that meets all of the following requirements: (1) Takes bundled, direct access, or community choice aggregation electrical service within the service territory of a large electrical corporation. (2) Is enrolled in a medium or large energy customer electric tariff, including TOU-8, B-19, B-20, or successor tariffs. (3) Meets a minimum peak load requirement of 500 kilowatts or more. (4) Is not identified as a residential, state, or local government customer. (b) “Eligible project” includes, but is not limited to, all of the following projects: (1) Energy efficiency projects using commercially available technology that reduce energy consumption by at least 20 percent compared to the replaced technology, and result in reduced emissions of greenhouse gases. (2) Projects for industrial process heat recovery, as defined in Section 451.7. (3) Carbon capture technologies, subject to any limitations or eligibility criteria established by the large electrical corporation to ensure cost-effectiveness and reduced emissions of greenhouse gases that are sited, installed, or expanded at the eligible facility. (c) “Large electrical corporation” means an electrical corporation with more than 3,000,000 customer accounts in California. (d) “Office” means the Governor’s Office of Business and Economic Development. (e) “Program” means an Industrial Decarbonization and Energy Efficiency Program established pursuant to Section 1551. 1551. (a) (1) On or before August 1, 2027, each large electrical corporation shall file a Tier 2 advice letter with the commission to establish an Industrial Decarbonization and Energy Efficiency Program with funding allocated from energy efficiency charges collected from eligible facilities, as described in paragraph (2). (2) Each large electrical corporation shall allocate an amount for its program equal to the amount it would otherwise collect from eligible facilities for energy efficiency pursuant to commission-approved tariffs. (b) The commission shall act on a Tier 2 advice letter filed pursuant to subdivision (a) on or before November 1, 2027. (c) (1) Each program shall award grants to eligible facilities for eligible projects. (2) Each program shall prioritize grants for eligible projects that do all of the following: (A) Deliver durable and verifiable reduced emissions of greenhouse gases. (B) Reduce overall electricity or fuel consumption. (C) Improve electrical grid efficiency or reduce peak demand impacts. (d) Each large electrical corporation shall administer the program, including by establishing eligible project intake and data validation requirements, evaluating the eligibility of facilities and projects, and administering grant payments. (e) The office shall provide independent review and approval of grants awarded pursuant to each program and may clarify eligibility criteria for each program to ensure the program serves eligible facilities with significant potential for energy savings and reduced emissions of greenhouse gases. (f) Grants awarded pursuant to each program shall fund up to, and shall not exceed, 50 percent of the documented costs of the eligible project. (g) (1) Each eligible facility’s cumulative grant awards shall not exceed the total amount collected from the eligible facility pursuant to the allocation described in subdivision (a). (2) (A) Moneys that have not been awarded to an eligible project within five years may be made available to other eligible facilities on a first-ready, first-served basis. (B) Moneys made available pursuant to subparagraph (A) and awarded to an eligible facility shall be excluded from the maximum allowable cumulative grant award limit established pursuant to paragraph (1). SECTION 1. Section 381.2 of the Public Utilities Code is amended to read: 381.2. (a) (1) The commission shall investigate the ability of electrical corporations and gas corporations to provide various energy efficiency financing options to their customers for the purposes purpose of implementing the program developed pursuant to Section 25943 of the Public Resources Code. (2) It is the intent of the Legislature that the commission implement this section by establishing applicable rules, within a reasonable period of time and in an open process, that are clear and operate on a prospective basis. (3) It is the intent of the Legislature that the commission implement this section in a cost-effective and time-efficient manner. (b) Recognizing the already underway 2015 commission work to adopt efficiency potential and goals, the Energy Commission work on its 2015 energy demand forecast, and the need to determine how to incorporate meter-based performance into determinations of goals, portfolio cost-effectiveness, and authorized budgets, the commission, in a separate or existing proceeding, shall, by September 1, 2016, authorize electrical corporations or gas corporations to provide financial incentives, rebates, technical assistance, and support to their customers to increase the energy efficiency of existing buildings based on all estimated energy savings and energy usage reductions, taking into consideration the overall reduction in normalized metered energy consumption as a measure of energy savings. Those programs shall include energy usage reductions resulting from the adoption of a measure or installation of equipment required for modifications to existing buildings to bring them into conformity with, or to cause them to exceed, the requirements of Title 24 of the California Code of Regulations, as well as operational, behavioral, and retrocommissioning activities reasonably expected to produce multiyear savings. The commission shall authorize an electrical corporation or gas corporation to count all energy savings achieved through the authorized programs created by this subdivision, unless determined otherwise, subdivision toward overall energy efficiency goals or targets established by the commission. The commission may adjust the energy efficiency goals or targets of an electrical corporation or gas corporation to reflect this change in savings estimation consistent with this subdivision and subdivision (d). (c) Effective January 1, 2016, electrical corporations and gas corporations are authorized to may implement the provisions of subdivision (b) for high opportunity projects or programs. The commission shall provide expedited authorization of high opportunity projects and programs to apply the savings baseline provisions in subdivision (b). (d) In furtherance of subdivision (b), the commission, in consultation with the Energy Commission, shall consider all of the following: (1) The results of any interagency baseline assessment. (2) Any available results from electrical corporation and gas corporation baseline pilot studies ordered in commission Decision 14-10-046 (October 24, 2014), Decision Establishing Energy Efficiency Savings Goals and Approving 2015 Energy Efficiency Programs and Budgets. (3) Information necessary to ensure consistency with the energy forecast and planning functions of the Energy Commission and the Independent System Operator. (e) The commission may direct electrical corporations and gas corporations to make filings that are necessary to ensure coordination with the energy forecast and planning functions of the Energy Commission and the Independent System Operator. (f) The commission shall prioritize energy efficiency activities consistent with Sections 454.55 and 454.56. (g) (1) This subdivision imposes the operative requirements pursuant to this section for custom projects and other custom programs for industrial, agricultural, commercial, residential, and public sector customers. This subdivision shall become operative on July 1, 2019, and applies only to those programs and projects. (A) The commission shall authorize electrical corporations and gas corporations to provide financial incentives, rebates, technical assistance, and support to their customers to increase the energy efficiency of industrial, agricultural, commercial, residential, and public sector customers based on nationally recognized measurement and verification standards, such as the International Performance Measurement and Verification Protocol. (B) All energy savings achieved through the programs authorized pursuant to this subdivision shall count toward the overall energy efficiency goals or targets established by the commission for an electrical corporation, gas corporation, or program administrator. (C) The commission may adjust the energy efficiency goals or targets of an electrical corporation or gas corporation to reflect a change in the forecast energy savings consistent with this subdivision and subdivision (d). (2) The commission shall develop and maintain rules for custom energy efficiency projects that include eligibility criteria and other metrics for determining whether a project is eligible for funding pursuant to the program. (2) (A) As part of the approval of the next Tier 2 advice letters submitted after January 1, 2027, by program administrators for mid-cycle review pursuant to commission Decision 21-05-031 (May 20, 2021), Assessment of Energy Efficiency Potential and Goals and Modification of Portfolio Approval and Oversight Process, the commission shall revise the rules adopted for custom agricultural and industrial efficiency projects to replace the commission’s ex ante review process with a process that ensures the provision of incentives pursuant to this section for custom agricultural and industrial efficiency projects that exceed existing California Building Standards Code requirements and provide measurable benefits to the electrical grid. (B) The commission shall not adopt any project approval criteria for custom agricultural and industrial efficiency projects beyond those criteria specified in this section. (C) For purposes of this paragraph, “benefits to the electrical grid” include avoided transmission and distribution costs or reductions in peak load demands that support reductions in utility costs. (D) This paragraph shall not result in cost shifts between rate classes. (A) (3) (A) The commission shall review and circulate for public review and comment statewide eligibility criteria or metrics at least 30 days prior to before changes, including posting on the commission’s internet website. (B) After the initial 30-day period for public revi [Text truncated for display. Full text available on Congress.gov.]