The second phase of the California Energy Commission’s (CEC) Nonresidential Building Energy Use Disclosure Program takes effect on July 1, 2014 (the first phase took effect on January 1, 2014 and applies to nonresidential buildings of at least 10,000 square feet). Provided below is practical guidance for building owners on complying with the Disclosure Program.
Compliance with the Disclosure Program is required only where the answer to all three of the following questions is affirmative:
Is an entire nonresidential building being sold, leased, financed or refinanced?
Is the gross square footage of an individual nonresidential building at least 5,000 square feet?
Does the nonresidential building have one of the following building code types identified on its building occupancy permit: A, B, E, I-1, I-2, R-1, M, S or U (parking garages)?
If compliance with the Disclosure Program is required, then as soon as the building is listed for sale or lease, or the building owner elects to pursue financing or refinancing, we recommend that the owner complete Steps 1 through 3 below in order to avoid delays. The owner must complete Steps 4 through 6 at least 30 days before executing the agreement for the sale, lease, financing or refinancing. The owner must complete Step 7 at least 24 hours before executing the agreement.
Step 1: Create an account at the ENERGY STAR® Portfolio Manager website. One account can serve multiple buildings.
Step 2: Identify all sources of energy (electricity, natural gas, propane, or other) for the building.
Step 3: Contact each utility to confirm its procedure for providing energy use data for the building (including tenant spaces).
Step 4: Ask the utilities to release energy use data for the entire building for the most recent 12 months.
NOTE that while the CEC has mandated that utilities release energy data use for an entire building upon request by the building owner, some utilities may still require individual data release authorizations from tenants. If a building owner has made reasonable efforts to receive data but some or all the actual energy use data is unavailable (i.e., due to partial vacancies, missing data, lack of tenant cooperation, etc.), then in order to avoid transaction delays, the CEC has provided Missing Data Protocols.
Missing Data Protocols enable a building owner to substitute approximate energy use data when the actual energy use data is not available. Many sources of energy use data can be accepted. For example, when all tenant authorization releases have not been obtained, (i) if all the tenants are of the same type, then the building owner may use the per-square-foot energy usage for those tenants for whom releases have been obtained in order to estimate the energy usage for those tenants for whom releases have not been obtained; or (ii) if the tenants are of different types, then the building owner may estimate usage based on available data for energy usage by occupancy type. If either approximate data or ENERGY STAR Portfolio Manager default values are used, then the building owner must include a signed statement revealing which Missing Data Protocols were used.
Missing Data Protocols are covered in greater depth on the Energy Commission’s Frequently Asked Questions webpage.
Step 5: Within 30 days of a building owner’s request, utilities must provide the entire building’s energy use data for the most recent 12 months. Larger utilities will upload the data into the building owner’s account. Smaller utilities will provide a spreadsheet with data that the building owner must then input manually.
Step 6: The building owner must use Portfolio Manager to generate a Data Verification Checklist (DVC), which expires 30 days after it is generated. The DVC is used by multiple programs, some of which require more information than the Disclosure Program requires. Only the information listed in (a) through (f) below must be provided in order to generate a Disclosure Program–compliant DVC:
(a) Building owner name and email address;
(b) Building name and address (street, city and ZIP code);
(c) Building construction year and square footage;
(d) All sources of energy for the entire building for at least the most recent 12 months;
(e) Space use characteristics as specified by Portfolio Manager for all space types in the entire building; and
(f) All energy use data for the entire building for at least the most recent 12 months.
NOTE that (i) pop-up blockers must be disabled in order for Portfolio Manager to generate the DVC; (ii) once the DVC is generated by the Portfolio Manager, it is unclear whether the building owner needs to answer any of the yes/no questions on the DVC (based on some guidance received from the CEC, it appears that once the information listed above in (a) through (f) is submitted, the generated DVC will be Disclosure Program–compliant, without the need to manually answer any questions on the DVC); and (iii) for purposes of Disclosure Program compliance, the signature and stamp of a verified license professional are not required.
Step 7: The DVC is the actual disclosure that must be (a) turned over to a prospective buyer, lessee or lender at least 24 hours before the relevant agreement is executed; and (b) submitted to the CEC via email at AB1103report@energy.ca.gov within the same time frame.
For shopping centers comprising multiple buildings, the building owner may, at its option, either benchmark each qualifying building individually or combine the square footages of each qualifying building into one DVC.
The CEC holds periodic training workshops (via webinars and in-person presentations) on the implementation and enforcement of the Disclosure Program. Please visit the CEC website for helpful resources. Several of the major utilities have also set up training programs. Please contact counsel with any questions regarding the program, or contact the Portfolio Manager hotline with any technical issues at 888.782.7937 or 703.412.3086.