State Energy Performance Standard. The State Energy Performance Standard (Standard), often referred to as the Clean Buildings Performance Standard, requires the Department of Commerce (Commerce) to establish rules for energy performance standards for covered buildings, to collect data on compliance, and report on outcomes. The Standard seeks to maximize reductions in greenhouse gas emissions from the building sector. 

The Standard includes energy use intensity targets by building type. The energy use intensity targets are no greater than the average energy use intensity of a building type and must consider regional and local building energy use data. The Standard must also allow a conditional compliance method that includes investment criteria to ensure energy efficiency measures, identified through energy audits, are being implemented to meet the targets.

Commerce may impose penalties on building owners for failing to demonstrate compliance with the Standard.

Covered Buildings under the Standard.  There are two types of covered buildings:

• Tier 1 covered buildings include existing buildings where the sum of nonresidential, hotel, motel, and dormitory floor areas exceeds 50,000 gross square feet, excluding the parking garage area; and
• Tier 2 covered buildings include multifamily residential, nonresidential, hotel, motel, and dormitory floor areas that are greater than 20,000 square feet and less than 50,000 square feet, excluding the parking garage area. Tier 2 buildings also include multifamily residential buildings where the floor areas are equal to or greater than 50,000 square feet, excluding the parking garage area. 

Tier 1 buildings must comply with the Standard, and the tiered compliance, and reporting begins June 2026 for buildings greater than 220,000 square feet. 

All Tier 2 buildings must report on benchmarking, implementation of energy management plans, and operations and maintenance programs; they are not currently responsible for complying with the energy use intensity targets. Reporting for Tier 2 buildings begins by July 1, 2027. 

Exemptions from the Standard. The owner of a covered building is exempt from the Standard if the building:

• did not have a certificate of occupancy or a temporary certificate of occupancy for a year before the compliance schedule;
• did not have an average occupancy of at least 50 percent throughout the calendar year before the compliance schedule;
• contains conditioned space which is less than 50,000 square feet;
• is primarily used for manufacturing or industry;
• is an agricultural structure; or
• meets certain conditions of financial hardship.

For buildings that are listed on state or national historic registers or designated as historic under local or state law, no individual energy efficiency requirement must be met that would compromise the historical integrity of the building.

Utility Requirement to Provide Energy Consumption Data. All electric and gas utilities serving less than 25,000 customers in the state must either upload a covered commercial building's energy consumption data to the United States Environment Protection Agency (EPA) Energy Star Portfolio Manager or provide building owners with the consumption data. These utilities must provide building owners with monthly energy consumption data to benchmark the building. For buildings with three or more tenants, utilities must provide this data without requiring prior consent from tenants. 

The bill as referred to committee not considered.

Alternative Metric. Commerce may adopt additional compliance pathways for building owners to comply with the Standard by meeting an alternative metric, rather than the energy use intensity target. Commerce may develop alternative metric targets related to energy use and greenhouse gas emissions if alternative metrics are included in the ANSI/ASHRAE/IES Standard 100-2018 or subsequent versions.  Alternative metrics apply in most instances in lieu of energy use intensity targets, except alternative metrics do not apply to the early adoption incentive program. 

Exemption from the Standard.  Exemption criteria is added under the Standard for a covered building that: 

• has spaces with nonexempt occupancy classifications that are within the manufacturing or industrial building if its use is designated a high hazard group in the international building code; 
• is a K-12 school building within a school district or a private school that has financial hardship related to capital construction or improvements, including a failed bond or levy, limited school district debt capacity, or is actively correcting a violation of State Board of Health rules;
• is a public hospital in a public hospital district that lacks the debt capacity to cover the cost of compliance; and    
• has extenuating conditions, as approved by Commerce prior to the building's reporting date, including buildings where meeting the Standard would impair the historic integrity of the building, impair national security interests, or where buildings have had significant losses in assessed value since the COVID-19 pandemic, or those identified by Commerce by rule that may still require benchmarking, operations and maintenance programs, and energy management plan reporting. 

Extension to the Standard. Covered buildings may apply to Commerce for an extension no earlier than six months before and up to six months after the building's compliance date. Commerce may approve extension requests for conditions including conditions beyond the control of the building owner. An extension is valid for two years beyond the compliance date, and after two years the building can apply for an extension renewal or file for an exemption. 

Additional Changes to the Standard. Penalties cannot be passed to tenants, so long as tenants are providing access to utility usage data, physical spaces in the buildings, and being responsive to building owners to facilitate compliance with the Standard. Commerce may adopt by rule a subsequent version of the ANSI/ASHRAE/IES Standard 100 as its model for standard development. The term "covered commercial building" is changed to "covered building" throughout the chapter. 

Utility Requirement to Provide Energy Consumption Data. Gas and electric utilities that must provide consumption data to the EPA or building owners for very large buildings must now also provide that data for Tier 2 buildings. The utilities must provide building owners with monthly energy consumption data to benchmark the building without requiring prior consent from tenants. 

• Expands the exemption under the Standard for covered buildings primarily used for manufacturing or industry to include spaces with nonexempt occupancy classifications that are within the manufacturing or industrial building. This does not include tenant spaces that are not associated with the primary manufacturing or industrial use of the building.
• Clarifies that an exemption from the Standard for financial hardships apply to:
  1. a K-12 school building in a school district or a private school with financial hardships related to capital construction or improvements, including a failed bond or failed levy or both; limited district debt capacity, or the building is actively correcting a violation of State Board of Health rules; or
  2. the building is a public hospital in a public hospital district that lacks the debt capacity to cover the cost of compliance.

• Adds that exemptions from the Standard for extenuating conditions include buildings where: 

  1. meeting the Standard would impair the historic integrity of the building;
  2. there have been significant losses in assessed value since the COVID-19 pandemic preventing owners from securing loans; or
  3. other extenuating circumstances are identified by Commerce by rule that may still require benchmarking, operations and maintenance programs, and energy management plan reporting.  
• Makes an extension, approved by Commerce, valid for two years beyond the compliance date, which can be renewed.
• Clarifies that penalties incurred from noncompliance may not be passed to tenants, so long as tenants are providing access to utility usage data, physical spaces in the buildings, and being responsive to building owners to facilitate compliance with the Standard.

The committee recommended a different version of the bill than what was heard. PRO: The bill provides flexibility for public and private buildings to comply with this law. The built environment is 30 percent of existing greenhouse emissions. We are looking at alternative compliance pathways, timeline extensions, and the financial state of schools. Doing this work reduces costs in utility bills. Schools do not have access to upfront funding for costly upgrades and are subject to environmental health and safety rules, but the bill provides flexibility for building owners. School districts face numerous challenges and struggle with how to comply when voters must authorize funding before the work can be done.

We appreciate the financial hardship language and are working on additional language for how to document this. The barriers to compliance are time and money and the bill address both. The bill better meets the needs of building owners, to increase energy efficiency, decrease operating costs, and reduce emissions. We continue to work with the State Board of Health to ensure laws do not conflict. In lieu of full exemptions for historic buildings listed on a national register, consider a process for a five-year exemption and create alternative compliance options to enable the use of buildings for housing and retail.   

CON: The hardship exemptions are too broad, almost all schools have failed bonds. Many workers are out of work and want to work on school projects. Many projects pay for themselves and save money in the long run. It is important to invest in schools to prolong the lifecycle of the building itself, protect our children, and get more people back to work.

OTHER: We support the intent of the bill. We would like to clarify the prioritization of schools' work on both health and safety standards and lower energy usage. We should prioritize certain health and safety risks first. Hospitals should be added with the school exemptions; they use bonds as well. Financial hardships are real for all public buildings. We would like an exemption for storage. Warehouses are designed to receive products, keeping doors open. It is important to grant flexibility for compliance. We support providing exemptions for failed bonds but the language is too broad. Building owners do not always bear responsibility for maintenance of equipment and owners should be able to pass along penalties to induce compliance.