3. Tiering/Segmentation of LIEE Population to
Maximize Energy and Bill Savings3.1. Introduction
We allow LIEE marketing and outreach efforts to focus on customers with high energy use, burden or insecurity (as defined in Footnote 16 below) or other needs. However, we expect the IOUs to install all feasible measures in the homes of customers eligible for LIEE. The installation efforts shall take place based on a "Whole Neighborhood Approach," under which the IOUs install measures on a neighborhood-by-neighborhood basis. Neighborhoods include rural communities.
This approach to customer segmentation will increase energy savings, reduce overhead and transportation costs and encourage leveraging with local entities. For each step of program delivery, the Commission directs the utilities and contractors to employ the following approaches:
· Identification: Identify neighborhoods with large numbers of low income customers with the aid of census or other demographic information. Within each neighborhood, identify customers based on energy usage. We expect the IOUs to use their customer databases to the maximum extent possible to target neighborhoods and customers before sending contractors into the field.
· Outreach: Target customers within each neighborhood based on energy usage, with high energy users targeted more aggressively.
· Enrollment: Permit targeted self-certification in certain neighborhoods.
· Assessment/Energy Audit and Measure Installation: Conduct a site-specific energy audit at each residence. Install feasible measures based on housing type and climate zone11; increase measure-level cost effectiveness.
Finally, we expect the IOUs to minimize the number of times they visit a home. We expect measure installation to occur at the same time as energy audits, except where impossible. Through the Whole Neighborhood Approach, we anticipate that audit and installation personnel will be present in the neighborhood at the same time, minimizing the need for separate trips.
3.2. Background
In D.06-12-038, which approved budgets for the most recent LIEE budget cycle, 2007-08, the Commission expressed concern that the "[u]tility budgets presented in these applications are not `goals-based.' This approach to budgeting for LIEE and CARE programs might have benefited from the KEMA Needs Assessment Report [KEMA Report], which the utilities did not have at the time they filed their applications."12 The decision required that for the next budget cycle, 2009-11, the IOUs should include participation goals in population sectors or segments, with budgets designed to meet those goals. This requirement is in line with Section 2790(d) of the Public Utilities Code,13 which reads, "Weatherization programs shall use the needs assessment pursuant to Section 382.1 to maximize efficiency of delivery."
The KEMA Report was issued in September 2007. Thus, the proposed budget applications for 2009-11 constituted the first set of LIEE and CARE budget applications able to utilize the information presented. The assessment was conducted to assess the energy-related needs of the state's low income population. Specifically, the KEMA Report makes recommendations to enhance program delivery in specific geographic areas and among specific demographic groups, implying that customer segmentation should be pursued in order to establish an optimal design for program delivery. The KEMA Report states that LIEE should target high consumption households for program participation while simultaneously offering measures to low energy users.14 Following the recommendations, the Energy Division staff prepared a program delivery model prioritizing LIEE outreach and installations according to geographic density and customer energy usage patterns, designed to ensure that all low income customers' energy needs would be met.
In D.07-12-051, the Commission held that "[t]he complementary objectives of LIEE programs will be to provide an energy resource for California while concurrently providing low income customers with ways to reduce their bills and improve their quality of life."15 In order to meet these objectives, the Commission directed the utilities to devise goals by population segments and consider the staff proposed delivery model as input for the Plan and the 2009-11 budget applications. In workshops held pursuant to D.07-12-051, the parties discussed segmentation plans with the intent of using a new model to serve more customers.
In their 2009-11 budget applications, the utilities' proposed strategies include a more segmented approach to marketing, outreach, assessment and measure installation. The utilities also seek higher budgets than in previous years in order to meet the programmatic initiative of reaching all eligible and willing households by 2020.
3.3. IOUs' Proposals
PG&E is currently gathering the data necessary to identify customer segments in order to engage in segmented marketing and outreach. Jointly with SCE, PG&E proposes a study (which we approve later in this decision) to increase the precision of targeting methods to customer segments. Target populations for this study will include high energy users, medium energy users, low energy users, in-language customers (customers with limited English proficiency), and customers with high energy burden and energy insecurity.16 PG&E intends to use this data to better target these customer segments with appropriate messages regarding the LIEE program. Until this data is readily available, PG&E plans to identify and target customers using its CARE customer enrollment lists.
Like PG&E, SCE plans to use the information gathered through the customer segmentation study to target future customer groups. In the meantime, SCE plans to segment customer groups by climate zone and conduct outreach efforts accordingly. Specifically, SCE plans to set participation goals to be pursued through marketing and outreach efforts based on mild climate zones (climate zones 6, 8, 9) and more extreme, inland climate zones (climate zones 10, 13, 14, 15, 16). Thus, it will direct ¾ of its marketing dollars to households in hot climate zones, and the remaining ¼ to milder zones.17 The proposed outreach strategies to target customers in each zone include deploying mobile energy units, sending direct mail, using media and press releases, and distributing door hangers, fact sheets and brochures.
SDG&E and SoCalGas plan to identify neighborhoods with a high density of customers who are likely to meet the LIEE eligibility requirements. They will also identify CARE customers in these neighborhoods who have not enrolled in LIEE. This information will provide SDG&E and SoCalGas with a list of eligible LIEE customers, which the utilities will segment by energy usage. They plan to focus segmented outreach efforts to customers who are high energy users, believing such an approach will result in increased energy savings as soon as possible. The strategies for reaching high users include canvassing, direct customer contact by customer service representatives and telemarketing. SDG&E and SoCalGas do not intend to exclude low energy users and plan to reach this group via direct mail and email blasts. In addition, SDG&E and SoCalGas propose the development of multiple marketing materials aimed at reaching customers of various socioeconomic backgrounds.
3.3.2. Enrollment, Assessment/Energy Audit and Measure Installation
For measure installation, PG&E proposes three separate electric tiers (customers with high, medium and low usage) and two separate gas tiers (customers above baseline and customers below baseline). Though PG&E plans to serve customers in all tiers, the segmentation strategy is designed to ensure that customers receive measures depending upon their energy needs. The model also includes climate related measures and a "hardship override mechanism" through which customers with a lower energy use can receive energy efficiency measures above their energy needs.18
SCE states that customers will receive all feasible measures. However, customers may be eligible for different measures depending upon climate zone. For example, the major measures available in mild climate zones involve lighting (compact fluorescent lightbulbs (CFLs), torchieres, and hard-wired porch lights), replacement of pre-1993 refrigerators and pool pumps. Customers in more extreme climate zones are more likely to be eligible for heating, ventilation and air conditioning (HVAC) measures in addition to the aforementioned measures. Overall, SCE plans to serve 30,822 customers per year in extreme climate zones at a cost of $31 million. In mild climate zones, SCE plans to serve 44,422 customers at a cost of $11.5 million.
In terms of direct measure installation, SDG&E and SoCalGas plan to conduct a customized and detailed energy audit that focuses on the needs of each household. The audit will take into consideration a household's age and structure as well as the customer's energy consumption pattern. SDG&E will group the customers into tiers by household energy usage (high, medium, and low). SoCalGas will identify customers by high usage (above baseline) and low usage (below baseline) and install measures accordingly. Though the customers will be categorized by energy usage, SoCalGas will not reduce the number of measures low energy users receive.
3.4. Parties' Positions
DRA recommends that the Commission not approve reductions in measure delivery, claiming that this strategy is untested and will impact the welfare of lower-use customers. According to DRA, households with very low incomes who reside in smaller dwellings are most likely to be low energy users. As DRA reasons, these customers are more likely to be renters - a group that must receive LIEE treatment in proportion to their percentage of the low income population, as set forth in D.07-12-051. Additionally, DRA believes that the cost effectiveness tests presented in the applications are unreliable and that cost effectiveness should not be the only criterion used to develop utilities' portfolios.
A W.I.S.H. applauds the Whole Neighborhood Approach, which the Energy Division previewed at the July 17, 2008 workshop. Additionally, A W.I.S.H. supports the segmentation approach if used to ensure that all segments of the low income population are reached. However, A W.I.S.H. believes it is important to distinguish between segmentation in outreach and measure installation. A W.I.S.H. supports the concept that high energy households are targeted and that certain customer segments require more aggressive outreach efforts. However, A W.I.S.H. disputes the proposal to provide measures based on a customer's energy use, asserting that such an approach unfairly impacts low energy users, overlooks health and safety opportunities, results in expensive bureaucracy, and ignores the transient nature of the low income population.
Greenlining supports outreach to and selection of low income neighborhoods as a segmentation approach. The group points out the overlap of underserved ethnic groups in neighborhoods with a high density and incidence of poverty. Greenlining recommends the targeting of such groups through ethnic media, which we discuss in its own section elsewhere in this decision. Greenlining supports deploying mobile energy units at community events such as street fairs.
In joint comments, ACCES, the Community Action Agency of San Mateo County, Inc. (CAASM), the East Los Angeles Community Union (TELACU) and the Maravilla Foundation (Maravilla) claim that state law mandates the installation of all feasible measures in a home treated through the LIEE program. They argue that the treatment of a home should not be contingent on the type of user presently occupying the home, given transiency issues and potential health, comfort and safety concerns.
The Energy Efficiency Council suggests incrementally testing the new approach while maintaining the current program design. The Energy Efficiency Council believes the tiered/segmented approach does not give adequate consideration to the issue of transience and unfairly penalizes customers who have tried to keep their energy usage low.19
According to Bo Enterprises, a tiered/segmented approach will reduce the number of measures installed per job, thereby limiting the cost a contractor is able to recover from treating a household. The issue of cost recovery poses a concern to this party, given that the prices associated with going out on jobs average $100 per trip and are likely to increase.20
3.5. Discussion
The Commission adopts a "Whole Neighborhood Approach" to customer segmentation that takes geographic segmentation as well as energy usage into consideration in program delivery. For purposes of the Whole Neighborhood Approach, a "neighborhood" is a group of households in a particular local area. We implement the Whole Neighborhood Approach model to reduce program costs, leverage the availability of resources at a community level, and serve a greater number of customers. The IOUs may already be employing certain aspects of the Whole Neighborhood Approach in terms of segmentation by neighborhood. However, we think full implementation of this model requires a firm commitment to reducing overhead and transportation costs in carrying out this approach. The IOUs shall make a concerted effort to work directly with local governments, local agencies, local leaders and communities in segmenting by neighborhood, a key strategy in the Plan.21
Given our stated commitment to making LIEE an energy resource program, customer energy usage should be a segment in the outreach employed by the utilities and their service providers. High energy users are often faced with circumstances beyond their control. For example, high energy users are more likely to need retrofits to their housing structure in order to reduce their energy consumption. Climate zone could also be a factor resulting in high energy usage. The reduction of energy usage through targeted outreach to high energy users honors our pledge to the environment as well as reducing customer hardship.
Additionally, targeting high energy users will assist those customers who exhibit more pressing energy needs, given their higher likelihood of energy burden and insecurity. We define energy burden as the portion of total household income that goes toward paying energy bills. According to the KEMA Report, over 43% of the low income population in California spends more than 5% of its total household income on energy. Out of these households, 66% are also energy insecure, which means the customers experience difficulty in paying energy bills and actual or threatened utility shutoffs. As outlined in the chart below, energy burden and energy insecurity demonstrate a high correlation with customers with high energy usage.
Our approach to segmentation is designed to ensure that the program is delivered in an effective manner and achieves energy savings. Segmentation does not mean that willing and eligible customers within customer segments will be subsequently excluded from program delivery. As set forth in our adopted programmatic initiative, all willing and eligible customers are to be served by the LIEE program.
We expect the IOUs to work with the Energy Division in carrying out the Whole Neighborhood Approach, and delegate responsibility to Energy Division to offer additional guidance and oversight to ensure that the IOUs follow the approach in an efficient manner.
The first step in program delivery involves identifying customers for LIEE participation and reaching out to these customers. Following past Commission decisions, clear goals for population sectors must be established in order to achieve greater effectiveness in this step of program delivery. To meet the programmatic initiative of serving all willing and eligible households, we must define population segments and develop participation goals and strategies to serve each population segment.
The Commission agrees with Greenlining and A W.I.S.H. that a targeted method to locate low income neighborhoods serves as a pragmatic approach to maximize LIEE penetration. The process of identifying such neighborhoods (e.g., by Zip7 groups,22 city blocks, and similar groupings) sets the platform for the "Whole Neighborhood Approach" to be utilized in every subsequent step of program delivery. At a given point in time, an IOU will focus its program delivery efforts on a specific set of neighborhoods, maximizing LIEE penetration prior to moving on to the next set of neighborhoods.
The KEMA Report identifies the "most promising" segment for LIEE program delivery as customers exhibiting the highest levels of energy insecurity, energy burden and need for energy efficiency measures. As described above, high energy users typically fall into these categories. To reduce this type of energy hardship and in our effort to make LIEE an energy resource, we concur with the general approach set forth by the IOUs that high energy users should be identified and targeted as a customer segment. We also agree with A W.I.S.H. that high energy households should be targeted for program enrollment, though not to the exclusion of other customers.
While we support giving IOU contractors and outreach workers flexibility to generate leads, the IOUs should be doing more up-front work to provide those involved in the outreach process with information on specific neighborhoods and households that qualify for LIEE. The IOUs have far more technical capacity and customer data at their disposal than most agencies and contractors involved in program delivery. Moreover, customer segmentation requires a strategic and deliberate approach to program delivery, which should be guided by the IOUs. All in all, the tools, analytical expertise and local contacts maintained by each utility should be employed to carefully devise a geographic approach to segmentation.
The utilities have several tools at their disposal to locate such neighborhoods and the customers in these neighborhoods. For instance, some of the IOUs already use census data (generally, ZIP7 information) and lists of customers receiving the CARE subsidy to identify pockets of low income customers in their service territory. We encourage the utilities to take additional steps to seek out data on underserved neighborhoods in their service territory. The utilities can also locate neighborhoods in need of revitalization by working with outside entities, including local governments and agencies.
SDG&E's and SoCalGas' proposal includes identifying neighborhoods with a high density of low income customers and the households within each neighborhood that have not been treated by the LIEE program. SDG&E and SoCalGas will first locate neighborhoods with a high density of low income customers and thereafter segment eligible customers within each neighborhood by energy usage. We agree with this approach and require PG&E and SCE to use it as well.
Additionally, we acknowledge concerns expressed by DRA that other customers may have unmet energy needs. For example, customers with late utility bill payment histories and customers on medical baseline are very likely to need energy efficiency services provided through the LIEE program. The IOUs should identify these customers within each neighborhood. The utilities can locate this information using the CARE databases. The CARE databases or customer lists provide important information on the customer base shared by both LIEE and CARE.
The Commission recognizes the importance of increasing LIEE outreach efforts in order to target these customer segments and meet 25% of its programmatic initiative over the next budget cycle. However, targeting each customer segment must be done in a strategic, low-cost manner in order to spend more money on the direct installation of measures. Outreach methods to pre-identified neighborhoods and the customers within each neighborhood should be conducted simultaneously, thereby supplementing one another.
Certain outreach methods will be geared toward the entire neighborhood, simultaneously reaching a wide array of customers. Greenlining suggests cooperating with community stakeholders and leaders in order to reach more customers in a specific location. SCE proposes the deployment of mobile energy units to community events, which can be used in conjunction with tabling at such events.
We require the IOUs to use these outreach methods, along with press releases and advertising in local papers, especially ethnic media, to generate publicity for LIEE in specific neighborhoods. The use of local and ethnic media should be especially effective when the utility is partnering with local governments and agencies to target a specific neighborhood, which we also require the utilities to do. We expect that outreach conducted by neighborhood segment will generate word of mouth publicity for the LIEE program, thereby making customer-to-customer referrals a more important source of new LIEE customers. The utilities may want to consider other ways of increasing their visibility in each neighborhood, such as placing highly visible signage on each vehicle deployed as part of the program.
The IOUs should consider the particular neighborhood and its population when deciding which neighborhood outreach methods to employ. According to the KEMA Report, remote rural areas (without a lot of low income households per square mile) and areas with a high concentration of low income households (typically urban areas) require different approaches to targeting customers for program enrollment. The IOUs should work with local governments and agencies to understand which strategies work best in which neighborhoods. By partnering with such entities, the utilities can take advantage of pre-existing, built-in networks that have the trust and experience in working with the pre-identified customer base.
Other outreach methods under the new program delivery model must be customer specific. Again, we support the approach put forth by SDG&E and SoCalGas to reach out to customers within each neighborhood by energy usage. We require the utilities to follow this model, using more aggressive outreach to target high energy users (and customers with late payment histories and on medical baseline), though not to the exclusion of low energy users. For example, high energy users, particularly those in the third, fourth and fifth rate tiers, may take interest in the LIEE program via direct customer contact by customer service representatives while low energy users may be targeted through less costly methods, such as direct mail and email blasts. The utilities must utilize the existing CARE infrastructure to the greatest extent possible in order to reduce the costs of such outreach methods.
3.5.3. Enrollment, Assessment/Energy Audit and Measure Installation
The Commission agrees with the concern expressed by A W.I.S.H. about the high initial infrastructure costs required to reach a home. The KEMA Report also addresses this issue, stating that the LIEE programs go to considerable expense in identifying customers to target and enroll customers, only to install a few measures in many homes. The Commission calls for the reduction of such overhead costs in order to ensure that customers receive the greatest number of measures possible under the approved funding levels. With the objective to serve 25% of all eligible and willing customers in the next budget cycle, it is imperative that those involved in program delivery employ more cost effective approaches to enrollment, assessment and measure installation.
For the purpose of reducing overhead and transportation costs, we require those involved in enrollment, assessment and measure installation to focus on specific neighborhoods as segments. The focus on certain neighborhoods will reduce costs required to enroll, assess and treat a home. For example, the reduction of travel time from house to house can save contractors and outreach workers both time and cost. The approach also reduces transportation costs, in turn decreasing the program's carbon footprint, consistent with the Commission's goal of reducing statewide greenhouse gas emissions. The identification of and outreach to specific neighborhoods will lay the groundwork for this approach.
Additionally, the focus on a particular neighborhood creates important opportunities for leveraging local assistance. We encourage the utilities to devise creative ways to encourage involvement by local groups and individuals in conducting enrollment, assessment and measure installation. For instance, individuals, community groups and residents in each respective neighborhood may offer their assistance. These volunteers could complete the tasks that require minimal technical expertise, such as CFL installation.
To ensure that all eligible and willing customers are served by 2020, it is crucial to ease barriers to LIEE enrollment in order to increase LIEE program penetration. Though this issue was not discussed in the budget applications, it is an important, non-controversial component to improve program delivery.
D.05-10-044, issued in light of anticipated high natural gas prices in the winter of 2005-06, eased enrollment processes in certain areas. Specifically, the Commission allowed SDG&E and SoCalGas to use 2000 census tract data to identify neighborhoods with 80% of the households at or below 200% of the federal poverty line. In these areas, SDG&E and SoCalGas could suspend income documentation requirements and instead enroll customers in the LIEE program through self-certification.
SDG&E reported that self-certification resulted in a 21% increase in customers enrolling in the LIEE program during November and December of 2005 compared to the level of enrollment during the same period in 2004. SoCalGas reported an increase in customer enrollment by approximately 12% over the same period. In D.06-08-025, the Commission allowed SoCalGas and SDG&E to continue enrolling customers in these areas using self-certification for the rest of 2006. The self-certification proposal raised no objections and offered great appeal as it cut costs and increased program participation. Although certain risks existed that non-qualifying customers would receive program benefits, we found the benefits to be offsetting. In D.06-12-038, the Commission approved the continuation of targeted self-certification and enrollment for 2007-08.
We approve the continuation of this approach for SDG&E and SoCalGas in the 2009-11 budget cycle. Additionally, we require PG&E and SCE to also implement targeted self-certification and enrollment in areas of their service territory where 80% of the customers are at or below 200% of the federal poverty line. Given that self-certification has been met with success in increasing LIEE penetration, extending this approach through the next budget cycle will help the IOUs meet the programmatic initiative of serving 25% of the eligible population. To make LIEE an energy resource, it is important to provide energy efficiency services to as many customers as possible at the lowest possible cost.
Other than self-certification, categorical eligibility is another enrollment procedure designed to ease enrollment processes in both LIEE and CARE. The Commission approved utilities' proposals to implement categorical eligibility procedures in D.06-12-038. With categorical eligibility, customers who can provide documents proving participation in one of several state or federal programs do not need to provide additional income documentation in order to qualify for enrollment in LIEE and CARE.
To be categorically eligible for LIEE and CARE, customers must prove enrollment in the following programs: Medi-Cal, Food Stamps, Temporary Assistance to Needy Families (TANF, the successor to Aid to Families with Dependent Children (AFDC)); the Women and Infant Children program (WIC), the federal Low Income Home Energy Assistance Program (LIHEAP), administered in California by the Department of Community Services and Development (DCSD); and Healthy Families Categories A & B.
The California LifeLine Telephone Program (LifeLine),23 another low income program overseen by the Commission, also uses categorical eligibility to ease enrollment barriers. In LifeLine, customers of landline phone services receive a minimum of 50% off basic service, $10 off the connection fee, and exemption from all California telecommunications surcharges. At 150% of the federal poverty level, the threshold for qualifying for LifeLine is lower than LIEE and CARE. However, LifeLine allows customers categorical enrollment for programs that LIEE does not. Specifically, customers can be categorically eligible for LifeLine by proving enrollment in the following programs: Medi-Cal; Food Stamps, TANF; WIC; LIHEAP; Healthy Families Category A; Supplemental Security Income (SSI); Federal Housing Assistance/Section 8; National School Lunch Free Lunch Program; Bureau of Indian Affairs General Assistance; and Head Start Income Eligible (Tribal only).
In R.04-12-001, the Commission addresses LifeLine and ways to pursue synergies and coordinate subscribership between the Commission's low income programs. For the sake of coordinating subscribership between low income programs overseen by the Commission, the categorical eligibility requirements that apply to LifeLine should be the same as those for LIEE and CARE. The IOUs shall allow customers receiving federal means-tested SSI to qualify for LIEE and CARE categorically. This allowance will ease the enrollment process and reduce the transaction costs that can limit customer participation in LIEE.
Additional state or federal programs should be included under the LIEE and CARE categorical eligibility processes, thereby achieving greater coordination in subscribership between LifeLine and the state's low income energy programs. In doing so, we permit the utilities to also use SSI as a program through which customers can qualify for both LIEE and CARE by demonstrating proof of enrollment. Additional programs may also be added to further achieve coordination in subscribership and ease enrollment processes; the IOUs should seek such additions by a Tier 2 Advice Letter under General Order 96-B.
The IOUs shall immediately implement the directive that the programs that allow categorical eligibility for LifeLine and LIEE/CARE be the same. The IOUs may contact Energy Division for information that will enable them to learn more about the relevant benefits programs from Commission staff and others responsible for LifeLine eligibility determinations. The IOUs shall also investigate the eligibility requirements of each of the benefits programs. We reject the IOUs' request in comments on the proposed decision in this case for a workshop before they are required to implement categorical eligibility. However, if the IOUs find that certain listed programs have eligibility requirements that differ from the requirements applicable to LIEE and CARE, they may renew their request for a workshop, listing the programs that present problems, the problems at issue, and their proposed response. If Energy Division finds the workshop request has merit, it may schedule a workshop at that time, but is not required to do so.
3.5.3.2. Assessment/Energy Audits, Measure Installation
and Inspections
In these final stages of program delivery, we require the IOUs to utilize geographic segments in carrying out assessment/energy audits, measure installation and inspections. By following the Whole Neighborhood Approach, the utilities should continue to demonstrate reduced overhead, transportation and installation costs. The utilities should serve all willing and eligible customers in a targeted geographic area prior to moving on to the next targeted geographic area.
However, and for several reasons, customers should not be segmented by energy usage in the direct installation of measures. Instead, we require a "whole house" approach to meeting customer's energy needs. This approach focuses on making the state's entire housing stock energy efficient, rather than installing small measures in a scattering of homes on a piecemeal basis.24 Each house receives an individualized energy audit so that it receives all feasible measures necessary for maximal energy efficiency.
Utilities will install measures in a customer's home based on housing type and climate zone. This approach will require additional funding as utilities strive to meet the programmatic initiative of serving all willing and eligible customer. Ultimately, however, the Whole Neighborhood Approach will reduce programmatic costs required to carry out this provision. Moreover, the new programmatic focus on cost effectiveness (discussed in the next section of this decision) eliminates certain measures from program installation, thus further reducing costs.
The Plan states that residential energy efficiency programs should move from a "widget" based approach to a "whole house" approach that installs a comprehensive menu of energy efficiency measures in homes based on individual home energy audits. For purposes of achieving greater integration and coordination between the Energy Efficiency program and LIEE, the whole house approach should also apply to LIEE.
DRA states that measure installation based on customer energy usage misses opportunities to invest in the state's low income housing stock. We agree with this statement, especially given the pertinence of improving the housing stock in the context of the Plan. Additionally, DRA points out that "[t]reating more homes now will also increase future bill savings for LIEE customers and result in CARE program cost savings because energy savings from LIEE is accumulated over time."25 The same can be said for measure installation, as giving homes with mobile occupants more measures now will allow for future bill savings and energy savings.
The transiency of the low income population further justifies the installation of all feasible measures. According to the KEMA Report, "overall, 38% of California's low income households have lived in their current home for two years or less and 11% have lived in their current home for 20 or more years."26 This high rate of transiency undermines the rationale for segmenting each household for measure installation purposes by energy usage. As A W.I.S.H. points out, one cannot assume that a home weatherized for a low energy user will remain occupied by such users for a long period of time. In order to achieve long-term and enduring energy savings, a home should be treated with long-term occupancy patterns in mind, thus resulting in the installation of all feasible measures.
A W.I.S.H. claims the provision of measures contingent upon one's energy usage undermines overall programmatic cost effectiveness. The utilities must spend a great deal of funding to locate, enroll and assess a customer's home prior to measure installation. We agree with A W.I.S.H. in their recommendation that such efforts not be wasted. Moreover, the cost of weatherizing a home now is less than it will be in the future. It makes sense to treat a household with all feasible measures now given the significant energy challenges the state now faces.
Furthermore, we require the IOUs to minimize the number of times they visit a home. We expect measure installation to occur at the same time as energy audits, except where impossible. It may be, for example, that personnel assessing a household for its LIEE measure needs are not trained to install LIEE measures. We hope that through the Whole Neighborhood Approach, the installation contractors will be deployed in a neighborhood at the same time as audits are taking place. However, we realize that this will not always be possible, and allow for separate trips in these instances. Further, installation of LIEE measures may require more than one trip, because contractors that specialize in, for example, installing weatherization measures will not be able to install large appliances. We understand this constraint, but again expect that through a Whole Neighborhood Approach, LIEE installation events occur all at once for a neighborhood, so that different personnel visit affected homes in a short period of time.
Nothing in this decision is intended to dictate that an IOU serve only one neighborhood at a time. We encourage them to simultaneously serve as many neighborhoods as possible. However, in choosing which neighborhoods to target first, they should always use the list of high energy use/burden/insecurity homes in order to set priorities.
Finally, more contractors and Community Based Organizations (CBOs) will be required to carry out the new demands of this program. The IOUs should post information on their LIEE webpage about how a contractor or a CBO can become involved in program delivery.
3.5.4. Segmentation is a Lawful Means of Focusing LIEE Resources
Some parties claim that any focus on customer segments violates the LIEE statutes' requirements that all eligible customers receive "all feasible measures." While this argument is mooted by our requirement that IOUs not use energy usage or other segmentation to install fewer measures in certain homes, we address the issue here to clarify what "all feasible measures" means in Commission practice.
ACCES/CAASM/Maravilla/A W.I.S.H. jointly contend that installation of different measures based on energy usage may violate § 453(a)'s prohibition on utility discrimination and the LIEE statutory provisions of §§ 2790(a)-(b).27 A W.I.S.H. supports measure differential based on climate, hardship and energy burden/insecurity, but raises a concern that differentiating between high and low energy users in measure installation constitutes unlawful discrimination in violation of Pub. Util. Code § 453.
Section 2790 does not contain the language "all feasible measures."28 Instead, it states that "the commission shall direct any electric or gas corporation to provide as many of these measures29 as are feasible for each eligible low income dwelling unit." (Section 2790(b)(2) (emphasis added).) The statute further states that:
"Weatherization" may also include other building conservation measures, energy-efficient appliances, and energy education programs determined by the commission to be feasible, taking into consideration for all measures both the cost effectiveness of the measures as a whole and the policy of reducing energy-related hardships facing low income households. (Section 2790(c) (emphasis added).)
Thus, under the statute, several principles guide Commission decisions. First, the Commission has discretion to determine what measures are feasible. Second, feasibility depends in part on the cost effectiveness of measures. Third, feasibility must also focus on reducing energy-related hardships facing low income households. While the legislation does not define "energy-related hardships," at least three such hardships affecting low income households are high energy usage and thus energy bills, energy burden, and energy insecurity.
Thus, the statute enables the Commission to determine what is feasible, taking into account cost effectiveness and hardships. We have exercised this discretion in many past decisions. We have, for example, prohibited households from receiving any measures if they do not need a minimum of three measures. (We modify the 3 Measure Minimum rule elsewhere in this decision, in favor of an approach that allows installation of as little as one measure if it produces significant energy savings.) We have not allowed IOUs to treat homes that were treated within the prior 10-year period. (We also discuss the 10 Year Go Back rule in this decision.) The 2006 LIEE Policy and Procedures Manual (P&P Manual)30 contains 25 pages of conditions that render each measure in the LIEE program infeasible under certain circumstances.
While we agree that "all feasible measures" should continue to be the standard, we must acknowledge that the term does not mean "all available measures." The IOUs have in the past installed different measures in different homes, and nothing in this decision prohibits them from continuing to do so. It may not be "feasible" within the meaning of § 2790, for example, to install a high cost measure such as air conditioning in a home with low energy usage in a mild climate. Such a measure is neither cost effective - one criterion the statute considers essential to a determination of feasibility - nor does it reduce "energy related hardship" - another factor on which § 2790 hinges a feasibility determination.
We have tried to take the guess-work out of future feasibility determinations in our discussion of tiering and segmentation in this decision, but we must acknowledge that some level of subjective judgment has always existed in this program. We expect the IOUs to treat all customers fairly, including low energy users, but the LIEE program has never consisted of a cookie cutter set of measures in every home.
11 To the extent the energy audit also examines a customer's energy usage, this information should not be used to determine which measures are "feasible." Feasibility relates to the topics we discuss in the Section entitled "Segmentation is a Lawful Means of Focusing LIEE Resources," below.
12 D.06-12-038, p. 62, citing KEMA Report, submitted to the Commission on September 7, 2007. On September 27, 2007, the ALJ issued a ruling seeking the parties' comments on how the KEMA Report could be used to develop LIEE program strategies. ALJ Ruling Seeking Comments on Issues Raised in the KEMA Report and on Natural Gas Appliance Testing Issues, filed September 27, 2007 in R.07-01-042. Thus, we disagree with the assertion of the Energy Efficiency Council in its August 1, 2008 brief that the "KEMA report has never officially been scrutinized by public hearings or public comment." Opening Briefs (sic) of the Energy Efficiency Council on the Utility Applications for Approval of the 2009-2011 Low income Energy Efficiency and California Alternate Rates for Energy Programs and Budgets, filed August 1, 2008, p. 7.
13 Unless otherwise stated, statutory references are to the California Public Utilities Code.
14 Id.
15 D.07-12-051, p. 5.
16 Energy burden represents the portion of a household's total income that is spent on energy bills. Those customers spending a large portion of their total income on energy bills have a high energy burden. High energy insecurity refers to customers who have trouble paying their bills, late payments, and actual or threatened utility shutoffs.
17 We allow this split, as long as SCE installs all feasible measures in all homes.
18 As noted below, we disapprove segmentation in measure installation, including any program that delivers measures with less cost effectiveness only to customers with high energy use, as PG&E proposes.
19 Comments of the Energy Efficiency Council, filed June 16, 2008.
20 Prehearing Conference Statement of Bo Enterprises, filed June 10, 2008.
21 Plan, p. 93.
22 ZIP7s are sub zip-codes and serve as the smallest geographical area for which reliable income and demographic data is available. The analysis of sub zip-codes allows the utility to locate small pockets of low income households. ZIP7s can be thought of as "neighborhoods" for purposes of this program delivery model.
23 LifeLine provides discounts to basic telephone service for eligible California telephone customers.
24 The Plan (p. 17) describes the whole house approach as follows:
The overall objective [of the approach] is to reach all existing homes and maximize their energy efficiency potential through delivery of a comprehensive package of cost-effective, whole-house energy efficiency retrofit measures-including building shell upgrades, high-efficiency HVAC units, and emerging deep energy reduction initiatives- with comprehensive audits, installation services and attractive financing. This can be achieved through parallel and coordinated initiatives among utility programs, private market actors, and state and local government policies.
25 Brief of the Division of Ratepayer Advocates on the Applications of PG&E, SDG&E, SoCalGas and SCE for Approval of 2009-11 LIEE and CARE Programs and Funding, filed August 1, 2008, p. 8.
26 KEMA Report, p. 4-24.
27 Joint Reply Brief of The Association of California Community and Energy Services (ACCES), The Community Action Agency of San Mateo County (CAASM), The East Los Angeles Community Union (TELACU), the Maravilla Foundation, and A World Institute for a Sustainable Humanity (A W.I.S.H.), filed August 13, 2008, p. 4.
28 While we have occasionally stated that the LIEE program requires that IOUs install all feasible measures, we have not cited the statute in doing so. See, e.g., D.02-12-019, 202 Cal PUC LEXIS 854, *10.
29 The referenced measures are attic insulation, caulking, weather-stripping, low flow showerheads, water heater blankets, and door and building envelope repairs that reduce air infiltration.
30 The P&P Manual is available at http://www.liob.org/docs/2006%20Low%20Income%20Energy%20Efficiency%20Program%20Statewide%20Policy%20and%20Procedures%20Manual%2010-25-05.pdf.
