ALJ/DMG/avs Date of Issuance 4/21/2010

Decision 10-04-029 April 8, 2010

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Southern California Edison Company (U338E) for Approval of its 2009-2011 Energy Efficiency Program Plans and Associated Public Goods Charge (PGC) and Procurement Funding Requests.	Application 08-07-021 (Filed July 21, 2008)
And Related Matters.	Application 08-07-022 Application 08-07-023 Application 08-07-031

DECISION DETERMINING EVALUATION, MEASUREMENT
AND VERIFICATION PROCESSES FOR 2010 THROUGH
2012 ENERGY EFFICIENCY PORTFOLIOS

TABLE OF CONTENTS

Title Page

DECISION DETERMINING EVALUATION, MEASUREMENT AND VERIFICATION PROCESSES FOR 2010 THROUGH 2012 ENERGY EFFICIENCY PORTFOLIOS 22

1. Summary 22

2. Background 33

2.1. Energy Division Straw Proposal 55

2.2. Joint Energy Division/Utility EM&V Plan (Joint Plan) 66

2.3. Energy Division Questions and Recommendations 66

2.4. Additional Issues 77

3. EM&V Budget for 2010 Through 2012 77

3.1. Allocation for IOU EM&V Activities 88

4. The Joint Energy Division /Utility EM&V Plan (Joint Plan) 1212

5. Respective Roles and Responsibilities of ED and IOUs 1414

5.1. IOU-Managed Impact Evaluations (DEER) 1515

5.2. ED Managed Process Evaluation 1717

5.3. ED-Involvement in IOU Workpaper Development (non-DEER) 1919

5.4. IOU Involvement in ED Projects 2121

5.5. ED Review of all IOU EM&V Products 2323

5.6. ED Role in IOU Process Evaluations and Markets Assessments 2626

5.7. Stakeholder Involvement in EM&V 2626

5.8. Process for EM&V Funded From Program Dollars 2828

6. Dispute Resolution Mechanism 2929

7. Customer Participation in EM&V as a Condition of EM&V Funding 3434

8. Counting Savings from Behavior Based Programs 3636

9. Other Issues Deferred by D.09-09-047 4242

9.1. EM&V Contractor Firewall Issues 4242

9.2. 2009 Avoided Costs 4242

9.3. 2009 Bridge Funding Reporting, Budget Allocation, and EM&V 4444

9.4. Codes and Standards 4545

10. Comments on Proposed Decision 4747

Assignment of Proceeding 4747

Findings of Fact 4747

Conclusions of Law 5151

ORDER 5454

Title Page

ATTACHMENT 1 - 2010-2012 Joint Energy Division and IOU Evaluation
Measurement and Verification Plan.

ATTACHMENT 2 - Process for Commission Oversight of IOU EM&V
Project Initiation

ATTACHMENT 3 - Energy Division EM&V Questions and Recommendations
from November 2009 ALJ Ruling

DECISION DETERMINING EVALUATION, MEASUREMENT
AND VERIFICATION PROCESSES FOR 2010 THROUGH
2012 ENERGY EFFICIENCY PORTFOLIOS

1. Summary

This decision sets out the roles and relationships among the Commission's Energy Division (ED), California's investor-owned utilities (utilities or IOUs), and stakeholders regarding Evaluation, Measurement and Verification (EM&V) of energy efficiency programs for 2010 through 2012. The roles and responsibilities previously laid out in Decision (D.) 05-01-055 are clarified to improve transparency of EM&V activities, minimize conflicts of interest, and reduce duplication of effort and undue expenditure of ratepayer funds for the 2010 through 2012 time period.

Credible and effective EM&V requires a clear separation between "those who do" (the program administrators and implementers) and "those who evaluate" the program performance. Accordingly, we do not alter the fundamental division of responsibilities struck in D.05-01-055, under which the ED maintains management and contracting responsibilities for all EM&V studies used to measure and verify energy, peak load savings and cost-effectiveness for individual programs, groups of programs and at the portfolio level, while the utilities retain a limited EM&V budget to carry out studies that inform portfolio implementation and process evaluation. On the basis of experience over the past several years of EM&V activity, however, we make several process changes to improve oversight and accountability of EM&V activities carried out by both ED and the utilities.

All parties agree that we need to codify more collaborative and transparent processes as an important step towards improving the effectiveness of our EM&V efforts. In this decision we set forth new standards for transparency, coordination, and stakeholder engagement relating to EM&V projects carried out by both the utilities and ED. We believe that this more collaborative process will result in greater cost-efficiencies, more reliable results, broader stakeholder buy-in, and fewer disputed issues. In particular, we:

· Clarify process for ED review of all IOU EM&V contracting decisions;

· Grant IOU authority to develop ex ante values under limited circumstances;

· Grant ED authority to conduct process evaluations;

· Clarify process for stakeholder input on all EM&V projects; and

· Provide a new resolution process for disputes over EM&V processes and findings.

This decision finalizes the $125 million budget for EM&V activity over 2010-2012. We also approve a Joint Plan submitted by the utilities and ED, which lays out a roadmap for the EM&V studies to be performed on the 2010-2012 energy efficiency portfolios approved in D.09-09-047.

Finally, we address certain carryover policy issues, including the treatment of savings estimates from behavioral programs and codes & standards.