AB 1103: California's Nonresidential Building Energy Use Disclosure Program - Lessons Learned

By Zach Brown, Sustainability Manager with CBRE and former Chair of BOMA San Francisco's Energy & Environment Committee.

California Assembly Bill 1103: Nonresidential Building Energy Use Disclosure Program, commonly known as AB 1103, promised forward-thinking, game-changing regulations intended to bring non-residential energy use transparency to the market. Unfortunately, six months into the initial compliance period and a whopping seven years after the initial draft of the bill, stakeholders are looking back and seeing mostly frustration and missed opportunities in the rearview mirror.

AB 1103 is triggered by a real estate transaction (an entire building being sold, refinanced or leased). This law can become increasingly complicated as in addition to the two the buyer and seller, a real estate transaction in California now involves – at a minimum - brokers, attorneys, lenders, and escrow agents as part of the energy disclosure duties. Because of this explosion of stakeholders now gathered around benchmarking duties, it is more important than ever to know and master to nuances of AB 1103 as to not encumber a multi-million dollar real estate deal.

The San Diego Energy Desk website (http://www.sdenergydesk.com) has a well-worded, concise criticism of AB 1103 titled “AB 1103: Too Little Too Late” available here: http://www.sdenergydesk.com/Communications.html. I encourage you all to read it.

Despite its many shortcomings, AB 1103 is the law, so we must learn how best to comply. If needed, please review the essential mechanisms of the ordinance before reviewing my lessons learned after 6 months of active compliance by visiting the AB 1103 FAQ available here.

Lessons Learned:

• The ordinance is not about energy efficiency. AB 1103 is about transparency of energy data.
• There is still confusion; do not be surprised if you encounter unexpected resistance due to lack of understanding.
• The exact moment one must disclose the Data Verification Checklist is 24 hours prior to the execution of the sales contract; however, anticipate that an eager buyer might request disclosure by an earlier deadline.
• Start early! Given that buyers might be eager to receive the required documentation, you certainly do not want to encumber the sale of your asset! 30 days before the anticipated execution of the sales contract is the minimum timeframe; it is never too early to begin benchmarking and collecting the necessary energy data.
• Even though tenants are not legally obligated by AB 1103 to disclose proprietary energy data to the building owner, they are becoming increasingly open to sharing data; it never hurts to ask!
• Utilities (PG&E in-particular) are requiring tenants to authorize the release of proprietary data to the building owner in order to comply with AB 1103. If a tenant approves of sharing data, use this as an opportunity to excel in tenant engagement by helping them complete the online authorization form. As all of the necessary information is readily available on the tenant’s utility invoice, simply request one recent invoice and complete the online form on their behalf. To learn more, visit www.pge.com/benchmarking and read about PG&E’s Web Services Data Authorization Form.
• Document everything. Save all requests for data (whether from tenants or utilities) as well as all responses. This back-up should be included in the disclosure documentation to both the transactional counterparty as well as California Energy Commission.
• It is not necessary to have a licensed professional stamp the Data Verification Checklist. There is no need to fill it out it in any way beyond simply generating it and providing a copy to the counterparty and CEC.
• Do not forget to find and select the appropriate 'property contact' and 'property owner' from the pull-down menus in step 4, 'Select Contacts for Report' when generating the Data Verification Checklist. If the appropriate contacts cannot be found in the pull-down menus, print-out a copy of the Data Verification Checklist and write-in the appropriate information; the California Energy Commission will not accept the documentation without these two pieces of information.
• Though it is not a necessary component of the ordinance, draft a cover letter clearly identifying the property (or properties) being disclosed, all enclosed back-up documentation showing good faith attempts to gather data, and (if applicable) where estimates were applied and how they were determined.
• Make your voice heard and keep informed! Subscribe to the AB 1103 listserv at http://www.energy.ca.gov/ab1103/ to remain updated of new developments as well as opportunities to offer feedback and criticism.
• Shift your perspective. Use this mandate as an opportunity to benchmark for performance, rather than simply regulatory compliance

For more information, please visit http://www.energy.ca.gov/ab1103/

Sources:

The San Diego Energy Desk website (http://www.sdenergydesk.com)