QUESTIONS AND ANSWERS
Program Design and Eligibility Guidelines
1. Can the Energy Division define what is a local and what is a statewide program?
The Policy Manual gives precise definitions of "local" and "statewide" programs. In general, any unit smaller than the investor owned utility (IOU) service territory is considered a local program, while programs involving the entire service territories of PG&E, SCE, SDG&E, and SoCalGas are considered statewide. Programs may be proposed as "local" that include entities (cities, counties, etc.) within multiple IOU service territories, but the Commission may choose to fund only a portion of such a proposal.
2. Are local program proposals implemented in multiple IOU service territories acceptable?
Yes, but please be specific about target areas and customers within each IOU service territory.
3. Do we need to justify why we have chosen a specific geographic area for our local program proposals? Can the geographic area covered by a local program proposal be an entire investor owned utility (IOU) service territory?
We expect the program proposals to include a description of the target customers and geographic area, including some justification as to why they are being targeted by the program. A justification would be more crucial if a proposed local program targets an entire IOU service territory.
4. Are county school districts eligible to submit proposals and get funding?
Yes, provided the district pays PGC funds.
5. Can a city, which supplies its own gas, submit proposals for gas programs?
No, unless the city collects gas surcharge funds from its residents and remits those funds to the State Board of Equalization. If gas surcharge funds are collected, then the city may submit a proposal.
6. Are large industrial customers eligible?
Yes, if the customer pays into the PGC fund. SoCalGas' non-core customers are a notable exception, since they do not pay the PGC.
7. Are customers with Distributed Generation eligible, even though they may only be getting standby service from the IOU?
There is no restriction in the decision and policy manual. As long as they are paying some contribution into the PGC fund, they are eligible in proportion to their contribution.
8. Regarding coordination of local programs with IOU statewide programs, can we assume the IOU programs as given when we write our proposals? Should proponents develop proposals to synergize with existing programs?
Although it is safe to assume that some portion of utilities' proposed plans will go forward, the Commission has yet to approve the utilities' program proposals. Nonetheless, we would like to see synergies between local and statewide programs.
9. If a measure is not listed in the Policy Manual does that mean that it is excluded from consideration?
No. The program proponent is free to include measures and suggest cost-effectiveness inputs, but must fully justify its approach, including citing sources of information and assertions included in the proposal.
10. What about incentives that move outside of the service territory of the IOU? How will the program implementer get paid if incentives move outside of the IOU territory?
We recognize that, for certain types of programs, it may be difficult to ensure that only those targeted customers in a given IOU service area receive the incentives provided by the program. We expect program implementers to market the program to their target customers within an IOU service territory and not to target customers who reside outside of the intended IOU service territory.
11. Will the Commission put together a template for proposals?
Appendices A and B to the Policy Manual contain the suggested formats for the technical and budget information that need to be included in the program proposals. The Energy Division has developed a cost-effectiveness spreadsheet that proponents may use and does not intend to provide additional templates for the narrative sections of the proposals. The cost-effectiveness spreadsheet may also be downloaded from the following Internet address:
Program Timeline, Budget and Funding
12. What is the timeline for the programs and is funding going to be available for both 2002 and 2003?
For programs funded for "two years," the programs will run from whenever they start in 2002 (potentially in April 2002) through December 31, 2003. The Commission will approve funding for the duration of the programs selected. We are allocating the $100 million set aside for local programs for 2002 and 2003. For budgeting purposes, please identify how much of the program funds will be for 2002 and how much for 2003.
13. Is there a limit to the budget for each proposal? Is there a minimum size?
There is neither a minimum nor a maximum budget, except as noted in D.01-11-066 at page 16.
14. If a program covers multiple IOU territories, should a breakdown of the budget be provided for each IOU territory?
Yes, provide a breakdown of program and budget among the IOU territories. The Commission may not necessarily award funding for all areas.
15. Should the gas and electric budgets be reported separately?
Yes, although we recognize that there may be discrepancies at the end of the program between the budgeted amounts for gas and electric vs. actual expenditures. The Commission will address this issue if need be at a later time.
16. How should the proponent decide how much gas and how much electricity to budget?
We leave it up to the discretion of the proponent, but please provide an explanation of the methodology used in your proposals.
17. On page 32 of the Interim Decision, $100 million is said to be the funding floor. What does that mean? Can we propose projects with budgets that exceed $100 million, individually or collectively?
The $100 million is all the funds we have at this point to allocate across programs. We should note that the Commission is not obligated to allocate any level of funding; in other words, we do not have to accept any proposals, if we do not receive any that merit being funded. Further, the Commission is always looking at ways to increase total funding for Energy Efficiency programs. If it makes additional funding available, it will notify the parties how to apply for such funding.
18. What happens to the funds that are freed up if some programs are discontinued midway? Is there going to be another round of solicitation? Is there going to be a waiting list of programs to be funded with these funds?
We do not have a response at this time, but the Commission will notify the parties of its plans at an appropriate time.
19. Should the funds be spent or can they be simply committed by the end of 2003? Will funds committed by the end of 2003 be considered legitimately used for the program?
Yes, commitments of all funds will be required by the end of 2003. We will provide definitions of "actual spent" and "committed" funds in the revised reporting requirements manual, which the Energy Division will prepare and make available prior to program implementation.
20. Can we collect the 15% final payment in increments throughout the life of the program as we gather reliable measurement and verification (M&V) data?
No. The final payment will be made after the end of the program.
21. President Lynch has indicated that proponents who are not awarded contracts in this round will be able to apply for funding in 2003. Will there be a similar process towards the end of 2002 for programs beginning in 2003?
The Policy Manual (p. 35) sets forth a sample procedural schedule for program submission and approval cycle on a going-forward basis. We cannot say at this point what the final schedule will be for the 2003-2004 program cycle. The Commission will notify parties of its plans at an appropriate time.
22. What will be the payment timeline given that either CPUC or the IOUs (or both) will review the reports and that the IOUs have a lengthy payment schedule?
The answer depends on the results of the IOUs'/third parties' "meet and confer" process on contracting, which is taking place in a separate track in this rulemaking.
Program Cost Proposal Format
23. Is the "IOU Administrative Fee" of "no more than 5%" subject to negotiation? What amount should we show in our budget proposal?
We expect that the IOU administrative fee will vary depending on the efforts the IOU expends on each third-party program, with a cap of 5%. For budgeting purposes, please assume 5% as the IOU Administrative Fee and show it as a line item at the end, after the program budget is subtotaled.
24. Should profit or shareholder incentive be separately shown or can it be loaded into labor?
Please show it separately.
25. On page 28 of the Policy Manual, it states that the CPUC retains the right to audit any and all expenditures for which the funding source is either the electric PGC or the gas PGC. How is this audit to be implemented if payments are progress payments based on deliverables, but not based on submission of costs? What then is the purpose of the audit? Is it a "fraud" audit vs. an audit of costs as in the case of the CEC's grants?
If payments are based on progress reports and program performance, what are the consequences if actual costs do not closely match budgeted costs (for example if the labor costs turned out to be only 50% of original estimate)? (Participants noted that the Commission should distinguish between the "price" to the Commission for having a particular energy efficiency program versus the "cost" to the program implementer. If payment is based on progress payments and deliverables, then the "cost" to the program implementer is not that relevant.)
The Commission reserves the right to conduct all means of audits of program funds, regardless of the payment structure for the programs. We expect that program implementers will keep the necessary records to support all program expenditures, and will include in their quarterly reports information on program expenditures and accomplishments.
There are currently no explicit consequences for instances when the projected costs (as per the proposed budgets) are not in line with actual expenditures. Nevertheless, we expect that the progress payments will more or less track program accomplishments. However, the Commission reserves the right to discontinue funding for programs that are not performing according to set objectives and to consider appropriate action in instances where unreasonably wide discrepancies between actual expenditures and budgeted costs occurred.
26. Regarding reporting the cost of capital or financing: How does the proponent account for this, particularly if there's still uncertainty about how the 15% hold back is going to be recovered by program implementer?
There is a line item in Appendix B to show financing costs.
27. Should we submit budget sheets separately for residential and non-residential programs
This is preferred, but not required. The $100 million allocated for third-party local programs is not broken down by customer class.
28. Are we going to be paid on a time and material or are we going to get advance payments?
Please refer to pages 28-30 of the Policy Manual for discussion about compensation and payment schedules.
29. Can we include program-tracking costs (e.g. costs of database, etc.) in the program budget?
Yes.
30. Do we need to show labor hours and labor rates?
Yes.
31. Are fully loaded labor rates acceptable?
Yes, but we would prefer that you show the breakdown of the overhead costs.
Cost Effectiveness Calculation
During the workshop, the Energy Division distributed hard copies of the cost effectiveness spreadsheet that it has developed, which parties may use in preparing their proposals. The Energy Division sent out the electronic version of the spreadsheet to the workshop participants and service list on December 20, 2001. Subsequently, The Energy Division revised a few errors it noted in the spreadsheet. The revised version is available for downloading at the Internet address shown in response to Q.11 above. Please make sure that you are using the revised version in your cost-effectiveness calculations, and contact Eli Kollman at ewk@cpuc.ca.gov or (415) 703-5649 if you have questions about the spreadsheet.
32. Are both kW and kWh included as program benefits in the spreadsheet? How can we get credit for peak demand reduction if we are using an average kW value in the calculation?
The spreadsheet uses kWh as the basis for program benefits. The Commission will take into consideration reductions in demand (kW) on a qualitative basis, not in the cost effectiveness calculations. Demand reductions and cost-effectiveness are separate criteria in the evaluation.
33. Can the proponents use their own forecast retail prices that they justify in doing the Participant Test?
No, use the avoided costs in the Policy Manual.
34. Participant test is supposed to direct programs to customers paying relatively higher rates, so if we use the same retail prices (i.e., the avoided costs in the Policy Manual) for all customers this distinction would be lost. What is then the purpose of the Participant Test?
The Participant Test will give another perspective to the cost-effectiveness calculation.
35. Incentive and rebates - are these included in the spreadsheet?
Yes, there is a column for incentives and rebates.
36. Is cost effectiveness calculation required for information type programs?
The Interim Decision and Policy Manual do not preclude information program proposals from providing cost-effectiveness data, although the Evaluation, Measurement &Verification (EM&V) section of the Policy Manual (page 31) does exclude information-only programs from including cost-effectiveness as part of their EM&V studies. Proponents should provide cost-effectiveness calculations where they can be justified, and should provide an explanation of their approach.
37. Discount rate in the SPM and Policy Manual is not the same, which one should we use?
Use 8.15% as shown in the Policy Manual.
38. What are the criteria for information programs? Will information programs be disadvantaged if cost effectiveness is low?
We will evaluate Information programs relative to one another using the appropriate criteria set forth in the Interim Decision and Policy Manual.
39. Where can we get information on saturation and penetration studies?
See the CALMAC website: http://www.calmac.org
40. Should M&V costs be included in the TRC calculations?
Yes.
41. Should we show energy savings by measure or can we lump them, since there are interactions among measures?
Measures may be lumped together where appropriate.
Evaluation, Measurement, and Verification
42. Should we include M&V in the budget even if we use the utilities or third party to do it?
Yes.
43. Does the proponent have to do its own M&V or hire a third party?
The proponent may propose either one. Which is acceptable will depend upon type of project/program. In general, the Commission prefers independent M&V.
44. Utility-hired M&V experts - how will they get paid? What's the relationship with the program implementer?
We expect that the utility-hired M&V experts to provide non-utility implementers with advice on designing EM&V plans for their respective programs. Payments for these experts could come from the IOUs' Market Assessment and Evaluation budgets or from the particular program, or both. We cannot respond at this point about the particular details of these arrangements. Nevertheless, program proponents should present an itemized budget for full M&V costs in their program proposals as required in Appendix B of the Policy Manual.
45. If we agree on the energy savings for particular measures and can provide verification of installation, does the M&V stop there?
It depends on the program. For some measures like lighting, verified installation may be sufficient; for others, it may require actual measurements of savings. Proponents should propose an approach.
46. Can we use Title 24 as a given in measuring energy savings?
That will be an acceptable standard of measurement for baseline.
47. Should ex-ante or ex-post measurement be applicable to all programs, including IOUs, and will it be consistent across programs?
Yes.
48. Do we recalculate the net-to-gross ratio (NTGR) once we do the M&V?
If, in the course of conducting M&V, a new NTGR is developed, it should be reported. It will not be applied retroactively to the cost-effectiveness of the current program, however.
49. How will the program implementers get the 15% holdback?
We expect that there will be a review process where the Commission will determine the eligibility of program implementers to receive all or part of the 15% holdback.
50. How do program implementers have access to utility billing data if required for program?
This issue needs to be worked out in the contract negotiations.
51. Can the Energy Division recommend a budget for M&V? What percentage of the program budget should be devoted to M&V?
It is up to the program proponents to recommend an appropriate and reasonable budget for M&V for their respective programs. There is no explicit limit to the proportion of the budget that should be devoted to M&V.
Procedures for proposal submission
52. Given the change in the "rolling submission" process (as per the ALJ's ruling cited above), can the program proponents supplement their proposals after submission, but prior to the January 15, 2001, deadline?
Proponents may supplement their proposals prior to the January 15, 2002, deadline, but not after that date.
53. Can the IOUs still submit local program proposals on or before January 15, 2002?
No, the IOUs should have filed their local program proposals on December 14, 2001, as ordered in the Interim Decision. Only non-utility local program proposals will be considered for the $100 million that the Commission has set aside.
Reporting requirements
The Energy Division indicated at the workshop that it plans to revise the reporting requirements manual referenced in the Policy Manual (page 3) and issue the revised version at the time of Commission approval of the programs. The reporting requirements manual will contain suggested formats and information required for the quarterly, annual, and final reports for the energy efficiency programs beginning in 2002.
Contractual provisions and relationships
54. If a program covers multiple IOU territories will there be several different contracts (with different IOUs)?
Separate contracts may need to be signed with each IOU, although it may also be possible to have the contract with one IOU, as was done in the Summer Initiative Programs that the Commission authorized in D.00-07-017 in another proceeding (A.99-09-049, et.al.).
55. Can a proponent choose which IOU would administer the contract?
The proponent can propose it, but we cannot guarantee the outcome.
56. Can third parties subcontract with utilities, for instance to do the EM&V or implement certain portions of the program?
The Interim Decision or the Policy Manual does not explicitly disallow this. We would prefer that this did not occur. PG&E indicated that it might sign bilateral contracts where the roles of the signing parties are specified, which would be acceptable. SCE, on the other hand, indicated that it does not have such contracts. The answer may depend upon the utility and should be worked out in the course of contract negotiations.
57. Who will be reading the quarterly reports?
Commission and IOU staff, at the very least. (See also response to Question 22 above.)
58. Can the implementers subcontract with one utility to work in another utility's territory?
The Interim Decision or the Policy Manual does not explicitly disallow this, but we would prefer that this did not occur.
59. Will the Energy Division make suggestions for dispute resolutions?
See page 34 of the Policy Manual for discussion on dispute resolution and consumer protection.
Use of CPUC name on program materials
60. The Policy Manual states that in order to use the name of the CPUC on program materials, it is necessary to have the materials pre-approved by the CPUC. Isn't it required that a standard notice of where funds are coming from appear on program materials?
Pre-approval will be required if the program implementer intends to use the CPUC name prominently in program materials, other than the standard fine print acknowledgement as the funding source.
Proposal Review Process
61. How are information and education programs going to be scored given that so many points in the proposal rating system are devoted to energy savings and cost- effectiveness?
We will evaluate Information programs relative to one another using the appropriate criteria set forth in the Interim Decision and Policy Manual.
62. Is the Energy Division going to make the scores for individual proposals public?
We will respond to this question at an appropriate time.
63. How are you going to give weight to M&V plans in the program evaluation?
We will consider the M&V plans together with the other criteria set forth in the Interim Decision and Policy Manual.
64. Will losing program proponents be debriefed? If so, in what manner?
We will respond to this question at an appropriate time.
California Power Authority (CPA) Presentation on Financing Instruments
The Energy Division is sending the two-page document that the CPA representatives (Jeanne Clinton and Virginia Rutledge) distributed during the workshop as separate Adobe pdf files. Please direct questions on this matter to the CPA.
