2. Background
2.1. Procedural Background
This decision is the most recent in a series of Commission actions that have sought to change the paradigm for utility energy efficiency programs in California. Public Utilities Code Section 454.5(b)(9)(c), the Energy Action Plan and past Commission decisions have established a policy to procure all cost-effective conservation and energy efficiency resources before adding generation resources.2 For example, in Decision (D.) 04-09-060, we articulated our goal to pursue all cost-effective energy efficiency opportunities in support of the Energy Action Plan commitment that conservation and energy efficiency are first in the "loading order" of electricity and natural gas resources. In accordance with this overarching goal, D.04-09-060 established short- and long-term numerical targets for electricity and natural gas savings. We stated that these targets must be aggressive and must stretch the capabilities and efforts of all those involved in program planning and implementation.
D.04-09-060 specified that the achievement of the goals must reflect actual installations of energy efficiency measures, not simply commitments to install them. We ordered the utilities to reflect our adopted goals in their resource acquisition and procurement plans so that ratepayers do not procure redundant supply-side resources over the short- or long-term.3 To encourage longer term planning and funding, we authorized a three-year program implementation and funding cycle for electric and natural gas energy efficiency.
In D.04-09-060, D.05-01-055 and D.05-04-051, we created a framework for utility-administered energy efficiency programs. These decisions made significant changes to the then-existing programs, including:
· Adoption of aggressive annual and ten-year cumulative goals for measured and verified electricity and natural gas savings by megawatt hour, megawatt, and therm;
· Allowing the utilities to develop their own programs and portfolios. Commission oversight of portfolio design was limited generally to determining whether each portfolio as a whole was cost-effective according to the Total Resource Cost and Program Administrator tests and achieved the utilities' numerical savings goals; and
· Requiring the Commission Staff to develop, launch and implement an extensive evaluation, measurement and verification (EM&V) program to ensure that the utility programs actually produced electricity and natural gas savings that could be relied on to offset the utility's electricity and natural gas purchases. The EM&V program is unprecedented both in the scope and scale of the undertaking and in the nature of the responsibilities placed on this Commission's regulatory Staff.
In D.05-09-043 and D.05-11-011, we committed $2.2 billion in ratepayer funds to procure energy efficiency savings over the 2006-2008 program cycle and approved the utilities' program portfolios, including utility efforts to better integrate their programs at a strategic level. For example, we approved the development of a joint plan on statewide marketing and outreach; a sustainable communities program incorporating higher performance energy efficiency and demand reduction technologies, along with clean on-site generation, water conservation, transportation efficiencies and waste reduction strategies; and programs to assist customers in choosing and implementing a package of demand-side management measures such as conservation, demand response, and self-generation.
In D.07-10-032, we directed the utilities to prepare a comprehensive, long-term energy efficiency Strategic Plan (discussed below). D.07-10-032 also provided specific policy guidance to the utilities on the development and composition of their 2009-2011 energy efficiency portfolios. D.07-10-032 stated:
Assuring a more comprehensive, integrated model for energy efficiency will require a significant shift in the utilities' approach to program design, development and implementation. Although we have consistently encouraged the utilities to think and act strategically in designing and delivering energy efficiency programs, the utilities and indeed other leaders in business and government must adopt a conceptual framework that is more comprehensive and forward looking.
In 2008, the Commission adopted the landmark California Energy Efficiency Long-Term Strategic Plan (Strategic Plan).4 Adopted in D.08-09-040, the Strategic Plan sets forth a statewide roadmap to maximize achievement of cost-effective energy efficiency in California's electricity and natural gas sectors between 2009 and 2020, and beyond. The unifying objective of the Strategic Plan was to compel sustained market transformation to move California towards long-term, deeper savings achievable only through high-impact programs.
More recently, in D.09-09-047 the Commission authorized three years of ratepayer-supported energy efficiency programs in step with California's energy policies and greenhouse gas (GHG) mitigation strategies. Specifically, D.09-09-047 approved the 2010-20125 energy efficiency programs that would be managed by California's Investor-Owned Utilities (IOUs), and supported with approximately $3.1 billion of ratepayer funding. D.09-09-047 represented a commitment to streamlining our EM&V efforts with the goal of increasing their usefulness while lessening the contentiousness witnessed in recent times. In D.09-09-047, we committed to holding the savings assumptions used in planning the portfolio constant over the course of the program cycle for the purpose of tracking reported savings against goals, contingent on compliance and consistency in utility-submitted data. In D.09-09-047, the Commission established a general framework for rolling budget cycles, for instances where there was a lag in the regulatory decision making process, so that we could avoid unnecessary market impacts. We also articulated renewed goals for EM&V activities to guide the development of specific EM&V plans for the upcoming program cycle.
In order to set California on course to ensure an effective EM&V framework post-2012, in D.09-09-047 we directed Commission Staff to initiate a comprehensive review of California's current technical and institutional EM&V frameworks and the extent to which they can meet our needs in the future. Commission Staff worked diligently to conduct its comprehensive review of California's current technical and institutional EM&V frameworks.
On November 25, 2009, we initiated R.09-11-014 to address the policies, programs and evaluation, measurement and verification activities related to the post-2008 energy efficiency activities. As the successor to Rulemaking (R.) 06-04-010, our post-2005 rulemaking on Policies, Programs, Evaluation, Measurement and Verification, and Related Issues, R.09-11-014 sought to address updates to our energy efficiency savings goals based on further studies of energy efficiency potential and consideration of other energy resource and climate action strategies. This Rulemaking also served as the forum for our continued implementation of the Strategic Plan, to consider adjustments to the methodologies used to inform decision-making on investments and budgets, in light of the Strategic Plan and other factors, and as the forum for initiating the next planning cycle for 2013-2015 energy efficiency program plans, funding levels, and related issues.
The assigned Commissioner and Administrative Law Judge (ALJ) issued various rulings over the course of R.09-11-014 in furtherance of the objectives above.
2 Public Utilities Code Section 454.5(b)(9)(c) states: "The electrical corporation will first meet its unmet resource needs through all available energy efficiency and demand reduction resources that are cost effective, reliable, and feasible."
3 D.04-09-060, Ordering Paragraph 6.
4 http://www.californiaenergyefficiency.com.
5 In this decision, we changed the timeframe of this portfolio from 2009-2011 to 2010-2012.
