Ordering Paragraph 12: Non-Energy Factors, Market Effects Multipliers

Ordering Paragraph 12 provides:

"For PY 2001, the utilities, jointly with interested stakeholders, shall engage in a public process to discuss and review the basis for the development of any non-energy factors and market effects multipliers they seek to include in the PY 2001 applications. The review shall include a follow-up on the Regional Economic Research, Inc. (RER) study and shall consider the mitigations proposed in Policy Rule V-4. The utilities shall report on that process, including agreements reached and areas of remaining disagreement, the PY 2001 applications."

No consensus was reached on the use of non-energy factors and market effects multipliers for PY 2001 programs. The utilities contend that the non-energy factors and market effects multipliers used in the cost-effectiveness calculations for PY 2000 are reasonable and propose to use them in the cost effectiveness calculations for PY 2001, in compliance with OP 13.⁸ The utilities consider their proposed methodology for determining non-energy factors and market effects multipliers a good "first step," but acknowledge that additional work is needed.

The CEC recommends use of MA&E funds in 2001 to conduct a pilot for one program in PY 2001 to implement or test the proposed market adoption model. It sees little justification or benefit in continuing to use the same market multipliers for the PY 2001 planning process if there is not utility commitment to estimate either market effects multipliers or more generally energy savings estimates for the other programs that have neither first year or multi-year savings estimates. The CEC expects that at least some funds from the PY 2001 MA&E budget will address this need.

ORA opposes the use of these specific market effects values or similar values for the purposes of authorizing and verifying utility forecasted and reported costs and benefits. ORA also objects to the continued use of MA&E funds to develop estimates of market effects for future use.

The utilities refer to the proposed model as set forth in Discussion Paper No. 7, attached as Appendix C7 to the Workshop Report. However, neither Discussion Paper No. 7 nor Appendix C7 was attached to the Workshop Report as served. PG&E, as the MA&E project manager, clarified that there was insufficient information presented on the model at the time of the workshop and indicated that a formal presentation of the methodology would be presented at an October 6, 2000 workshop. However, no synopsis of the model has been submitted. Thus, there is an insufficient basis upon which to evaluate the utilities' proposed model. If they have not done so, the utilities are directed to serve on the service list Discussion Paper No. 7 and Appendix C7, together with any updated analysis, by November 1, 2000. The utilities should ensure that they address appropriate mitigations for use of market effects multipliers as set forth in Policy Rule V-4, and consider the findings of the follow-up RER study.