Starting January of 2017, California will become the first state in the country to mandate annual energy benchmarking for both commercial and multi-family residential buildings. Benchmarking is the process of measuring energy use over time and is used as a way to encourage overall reduction in energy usage. AB 802, which was signed into law in October, will solve many of the problems that were encountered with the current benchmarking program, AB 1103, which has been in effect since 2007 for commercial buildings only. The main problem with AB 1103 was that for owners of commercial buildings with numerous separately metered tenants, it was very difficult to obtain accurate whole-building usage information from utilities, making true benchmarking nearly impossible. As such, the benchmarking requirements were never fully implemented while the legislature attempted to address some of these problems. AB 802 reflects those efforts, and effectively removes many of the legal and regulatory burdens on utilities and owners and will allow whole-building energy use data to be shared publicly on an annual basis.

The release of this information to the public is expected to encourage owners to make investments to make their buildings more energy efficient either during original construction or through upgrades to existing buildings. Commercial and residential buildings amount to approximately 40% of all energy consumed in the U.S. annually. Owners that have the ability to track their energy usage save on an average 2.4% annually on their energy bills according to the U.S. Environmental Protection Agency. AB 802 will also encourage energy efficiency by authorizing investor owned utilities (IOUs) to use direct financial incentives to bring buildings up to and beyond code.

The California Energy Commission will begin the process of defining AB 802’s program next month. This will include standardizing the reporting around the EPA’s building owners’ energy-use tracking tool, the Energy Star Portfolio Manager, and will ensure that state and city benchmarking programs align.

Looking down the road, once this benchmarking data is readily available, it is foreseeable that this data may be used by owners of newly constructed buildings to go back to their design and construction teams and make claims regarding energy efficiency based on how their building is performing compared to similar buildings in the same area. We have already seen owners of buildings that have been in operation for the past 3-4 years come back to the general contractor and make complaints about overall efficiency of systems in LEED certified buildings where the actual efficiency was not meeting the designed efficiency levels required by under LEED. With more readily available information about benchmarked energy usage for various buildings, it will become easier for owners to develop a claim if they so desired. Designers and contractors in California should be aware of this potential and take precautions, particularly in their contracts, to protect themselves from these kinds of claims.