Understanding Energy Disclosure Laws: A Guide for Property Owners in Southern California

In recent years, energy disclosure laws have become increasingly prevalent across various jurisdictions in Southern California. These regulations aim to promote transparency in energy consumption and encourage improvements in building efficiency. For building owners, understanding and complying with these laws is crucial to avoid potential penalties and to enhance property value.

As part of our Owner Strategy Series, GM Properties consulted with Marika Erdely, CEO of Green Econome to provide building owners with guidance on navigating energy regulations and optimizing property performance.

KEY ENERGY DISCLOSURE REQUIREMENTS

Complying with energy disclosure laws is crucial for property owners looking to maintain compliance and optimize efficiency. Key regulations include:

• City of Los Angeles: buildings over 20,000 sf must benchmark and disclose energy use under the Existing Buildings Energy & Water Efficiency Program (EBEWE).
• State of California AB 802 (California’s Benchmarking Law): since 2018, buildings over 50,000 sf must disclose energy use annually. AB 802 (California’s Benchmarking Law) also requires reductions in energy and water consumption over time. While fines for non-compliance can reach $2,000 per day, enforcement has been limited so far. Some exemptions exist but must be requested annually.
• Santa Monica: Requires benchmarking for commercial buildings over 20,000 square feet.
• State of California SB 48 (Building Energy Savings Act) – Building Energy Savings Act: expected to take effect in late 2025 or early 2026, SB 48 (Building Energy Savings Act) expands existing disclosure laws with stricter carbon emission reduction requirements. Final details are pending, but property owners should prepare for increased enforcement.

Required Data for Compliance

Energy disclosure reports rely on the EPA Energy Star Portfolio Manager software, which collects key data in three areas:

• General building information: includes location, square footage, age, usage type, and the number of buildings.
• Tenant energy use: data provided directly by tenants with their authorization.
• Utility data: collected from service providers, requiring tenants to sign a Customer Information Service Request (CISR) form for each utility. The CISR is a legal document that authorizes the utility company to release a tenant’s energy usage data to the building owner or their consultant. This authorization is essential for compiling accurate benchmarking reports and complying with energy disclosure requirements.

Impact on Building Owners

Energy disclosure laws present opportunities for building owners to improve efficiency, reduce expenses, and enhance property value. Compliance can lead to lower utility costs, eligibility for financial incentives, and improved marketability of energy-efficient buildings.

Tenant cooperation is an important factor in compliance. Integrating CISR forms into lease agreements simplifies data collection and ensures timely reporting. If reductions are mandated under AB 802 (California’s Benchmarking Law) or SB 48 (Building Energy Savings Act), owners must collaborate with tenants on strategies such as energy-efficient retrofits or operational changes like limiting HVAC use after business hours.

Benchmarking also provides significant benefits for property owners looking to optimize their buildings’ energy performance:

• Performance comparison: evaluates efficiency relative to similar buildings and national benchmarks.
• Increased property value: energy-efficient buildings tend to have higher valuations and lower operating costs.
• Operational insights: identifying inefficiencies and eliminating waste can lead to substantial long-term savings.

Actionable Steps for Property Owners

• Proactively improving energy performance can help you stay compliant and maximize efficiency. Here’s what you can do:
• Upgrade lighting systems: transitioning to LED lighting lowers energy use and HVAC demand while offering customizable settings.
• Invest in smart thermostats: advanced thermostats reduce waste by adjusting settings based on occupancy and usage patterns.
• Prioritize equipment maintenance: regular HVAC and system maintenance improves efficiency, extends equipment lifespan, and prevents costly breakdowns.