In D.05-01-055 at 122 we established a policy that prohibited firms engaged in energy efficiency work from performing both program impact evaluations and program implementation:
"Specifically, we will prohibit entities from performing any program and portfolio impacts-related studies at the same time they are under contract for program delivery work. As defined in this decision, these are the types of studies that are designed to produce findings (that may be favorable or unfavorable) on program or portfolio accomplishments."
In the Straw Proposal, ED proposed making case by case exceptions to this firewall policy in order to recruit program implementers to collect data needed for EM&V, following strict protocols. All parties except SDG&E/SoCalGas support ED's proposed modifications, while SDG&E/SoCalGas opposed any changes to the current regimen. ED's approach is reasonable because it will allow a more efficient use of resources in certain situations where otherwise multiple implementers or evaluators would be needed to conduct site measurements. We will modify the firewall to allow ED, on a case by case basis, to use program implementers as a vehicle for collecting EM&V data when this would clearly be more efficient.
In the Straw Proposal, ED proposed changes to the avoided costs adopted in D.06-06-063 for the purpose of calculating benefits from the 2009 bridge funding period. Specifically, ED proposed the development of a new set of electric avoided costs using the Combined Cycle Gas Turbine (CCGT) costs from the Market Price Referent (MPR), including transmission and distribution costs and an update to the gas price forecast based upon the following options:
1. the 2006-2008 interim avoided costs from D.06-06-063 and an escalation factor for years not covered in the interim values; or
2. current market values (consistent with the approach authorized in D.06-06-063); or
3. using the market values obtained for the 2009-2011 planning values.
In comments to the proposed decision, SCE suggests a fourth option using the gas prices and capacity values that are contained in the 2008 MPR specifically for 2009 programs. SCE further recommends that ED use current gas prices (option 2) for purposes of updating the 2008 MPR's natural gas prices for evaluation of the 2010-2012 programs. We direct ED to update the avoided costs using the best of the proposed options at the time of the update.
ED also recommends that the greenhouse gas (GHG) adder be updated using the 2008 MPR value of $30 per tonne. No party opposed ED's proposal to update the avoided costs for 2009. SCE expressed concern that the GHG adder levelized cost calculation over-values short lived measures, but provided no further detail or examples. ED should ensure, to the extent possible, that the carbon adder calculation methodology does not over-value short-lived measures.
D.06-06-063 is modified to adopt a new set of electric and gas avoided costs to be applied to energy efficiency from 2009 forward. The electric and gas avoided cost should include a modified CO2 emissions adder of $30/tonne in 2009 using generation cost inputs from the most recently adopted Market Price Referent as of the date of this Decision and updating the natural gas cost forecast using data as of the date of this Decision.
In the Straw Proposal, ED proposed using results from the final 2006-2008 evaluation reports as inputs for calculating the energy impacts of 2009 programs, for those measures and programs that were evaluated during the 2006-2008 period and also extended during 2009. PG&E believes that DEER 2008 values rather than the 2006-2008 ex-post values should be used as inputs for calculating the impacts of the 2009 programs. PG&E argues that the DEER 2008 values are the most appropriate inputs for calculating the energy impacts because these were the values available to the IOUs when planning their 2009-2011 programs. SCE agrees, but recommends that ED extend the 2006-2008 evaluation contracts to gather representative samples for the 2009 programs. TURN and DRA agree with ED's proposal. TURN, DRA and PG&E disagree with SCE's proposal to conduct additional field work on 2009 programs for the purpose of calculating the energy impacts of 2009 programs.
We adopt ED's proposed approach to calculating the energy impacts of 2009. While PG&E cites language in D.08-10-027 that directed the use of 2008 DEER in calculating the savings and cost-effectiveness of 2009 programs, that directive was put into place to address discrepancies between IOU filings and certain DEER values, and not to limit the applicability of 2006-2008 evaluation results to 2009 programs. The determination to "freeze" cost and savings assumptions in D.09-09-047, cited by SCE, was made well after D.08-10-027, and was meant to apply on a forward looking basis. We therefore reject proposals not to evaluate 2009 programs using 2006-2008 EM&V studies. The energy impacts of the 2009 programs shall be reported by ED before the end of 2010, or as otherwise required by R.09-11-014, R.09-01-019, or other applicable energy efficiency docket.
D.08-10-027, which authorized the 2009 bridge funding, did not make clear how much of the authorized funding would be allocated between ED and IOU managed projects. We find that it is appropriate to use the same allocation between ED and IOUs for the 2009 EM&V funding as was used in the decision approving 2006-2008 EM&V budgets (D.05-11-011). The allocation rate adopted in that decision is 27.5% to the IOUs and 72.5% to ED.22
In D.09-09-047 at 205, the Commission deferred four energy efficiency policy rule modifications related to measurement of the codes and standards program (C&S) proposed by the IOUs in their second amended application for approval of 2010-2012 portfolios:
In their July, 2009 Second Amended Application, the utilities propose to: 1) count 100 percent of gross savings from all proceedings including pre-2006 advocacy efforts towards minimum performance standard and performance earnings basis; 2) gain credit for savings achieved through the Compliance Enhancement and Reach Code sub-programs, 3) clarify the calculation methodology of gross savings for C&S; and 4) reconsider and calculate savings resulting from non-utility territories. These issues will be deferred to the forthcoming decision in this docket on EM&V issues.
D.09-09-047 provides a summary of the parties' comments on the IOUs second amended applications and in response to questions posed in the June 9, 2009 ALJ Ruling issued in Application (A.) 08-07-021.
We make changes to the way we measure codes and standards for the 2010-2012 program cycle. In D.07-10-032, it was ordered that the current Commission policy will continue for the 2009-2011 (now 2010-2012) program cycle; i.e., we will count 50% of verified savings from the IOUs pre-2006 C&S advocacy work towards achievement of goals for 2010-2012, and 100% of verified savings from post 2006-08 C&S advocacy work. We are convinced by the IOUs and NRDC that 100% of verified savings from pre-2006 C&S advocacy work should count toward achievement of 2010-2012 goals. As PG&E points out, better technical data about savings is now available as compared to when the original 50% determination was made in D.05-09-043, including Evaluation Protocols and elimination of concerns about double-counting and base case forecasts. We clarify that this accounting is only for savings occurring within the IOU service areas.
We also clarify that gross savings should be calculated using the unit energy savings for each standard or measure adjusted for installation rates and non-compliance. The baseline for gross savings should be the previous standard or the prevailing market practice.
Net savings should be the gross savings adjusted by the rate of "naturally occurring market adoption" (NOMAD) and the attribution level for each IOU within the IOUs service territories.
It is important to clarify what is involved in the concept of a "Reach Code." By their nature, the code must be formally adopted by an enforcement jurisdiction. The code must be legally enforceable and enforced by the jurisdiction, and it must apply to all entities within the adopting jurisdiction. It may cover extensions beyond current Title -24 and Title 20 standards, or it may involve new technologies or practices. By the nature of Reach codes, all measures adopted wouldn't necessarily have to be currently cost-effective. We direct ED staff to conduct pilot evaluations of the Compliance Enhancement and Reach Code sub-programs.
22 SDG&E/SoCalGas allocated 75% to ED and 25% to the utilities in Advice Letters 2034-E/1809 G and 3912, respectively. This decision supercedes those Advice Letters.