8. Program Guidance for the Residential Sector
D.09-09-047 approved a $635 million budget for the IOUs' Statewide Program for Residential Energy Efficiency (SPREE) and its eight subprograms-- the Home Energy Efficiency Survey (HEES), Basic Compact Fluorescent Lamps Advanced Lighting, Appliance Recycling Program, Home Energy Efficiency Rebates, Business and Consumer Electronics, Multifamily Rebates, and Whole House (now Energy Upgrade California). D.09-09-047 also approved funding for an additional $87 million in local and third-party residential programs. These residential programs are aimed at both single and multifamily buildings, and included a range of incentive, marketing and training approaches.
The Programmatic Guidance Ruling provided proposed portfolio guidance for a variety of residential efficiency programs, particularly those related to the Energy Upgrade California program. Consequently, much of the residential program guidance provided in this decision is focused on the Energy Upgrade California program, although we also provide guidance on the following residential efficiency topics: plug loads/appliances, appliance recycling program improvements, and residential new construction.
In D.09-09-047, the Commission directed the IOUs to establish a statewide whole house comprehensive energy upgrade program. The intent of this direction was for the IOUs to establish a whole house program to advance the Strategic Plan's ambitious residential sector energy use reduction goal that by 2020, all California homes reduce energy drawn from the grid by 40%.202 In 2010, the IOUs' whole house program was branded as the Energy Upgrade California program. The Energy Upgrade California program is administered by the IOUs in collaboration with the California Energy Commission and its American Recovery and Reinvestment Act grantees and partners.
Commission Staff's Energy Upgrade California proposal in the Programmatic Guidance Ruling noted several barriers that contributed to slow initial program participation levels, including contractor concerns regarding burdensome program application procedures and limited Energy Upgrade California program participation by HVAC contractors. To address these and other barriers, Commission Staff proposed many improvements to the IOUs' Energy Upgrade California programs, and parties added more recommendations in their responses to the ruling.
This decision focuses on eight areas of Energy Upgrade California improvement that we believe are relevant and applicable to the 2013-2014 transition portfolio:
1) Viewing Energy Upgrade California as a market transformation oriented program;
2) Making a long-term commitment to Energy Upgrade California, including a stepwise declining incentive approach;
3) Requiring building permit information to receive incentives for HVAC in the Energy Upgrade California program, and requiring compliance with new legislation aimed at improving code compliance;
4) Expanding the role of local governments in the Energy Upgrade California effort;
5) Increasing the emphasis on workforce training in the Energy Upgrade California program;
6) Fine-tuning Energy Upgrade California incentive design to appeal to moderate- and middle-income households;
7) Improving the Energy Upgrade California program and HERs software; and
8) Other program direction related to clarifying the definition of the program and adding specificity to the Energy Upgrade California PIPs.
The Strategic Plan reiterated the Commission's commitment to market transformation as a central objective for efficiency programs. According to the Strategic Plan, a primary goal for existing homes is to "transform home improvement markets to apply whole house energy solutions to existing homes." The overall objective 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.203
With this in mind, the Programmatic Guidance Ruling suggested that Energy Upgrade California be clearly identified as a long-term market transformation program.
Build it Green and CCSE argue that the Energy Upgrade California program is a market transformation program for the residential sector and, as such, should not be subject to current Commission cost-effectiveness tests at this stage. Build it Green states that, as a market transformation program, Energy Upgrade California should be exempt from the Commission-adopted 6% budget target on marketing, education and outreach on a portfolio basis.204 In contrast, PG&E and SCE, who support a long-term commitment to the Energy Upgrade California program, state that Energy Upgrade California is not, in their view, a market transformation program. Rather, they see appliances, electronics, and lighting programs as both producing short-term savings and driving market transformation in the residential sector. SCE's view is that Energy Upgrade California proposals should be assessed for their cost-effectiveness before being adopted.
CCSE and Gockel propose expanding the Energy Upgrade California program to include common measures currently rebated on a stand-alone basis, including pool pumps. CCSE also suggests that the Commission establish a clear set of Energy Upgrade California program goals and metrics for program success that go beyond energy savings to include job creation, health impact, water savings and improved building stock metrics. CCSE comments that:
By definition, a long-term market transformation program (like Energy Upgrade California) begins in a very different place than it ends; in a successful program, cost-effectiveness metrics improve consistently over time to the point that the new practices, technologies, etc., become something like standard practice. The existing building retrofit space is on the front-end of a 10+ year effort, and we suggest that its cost-effectiveness be evaluated periodically through a series of volume-based or other similar milestones. Such an approach would respect the coming evolution of this marketplace and keep in view the long-term goals of the Commission."205
We understand SCE's concerns regarding the cost-effectiveness of the Energy Upgrade California program, but ultimately agree with CCSE that Energy Upgrade California is a market transforming program in which cost-effectiveness will improve over time as new practices, technologies and business models become "standard practice." As such, we agree that the cost-effectiveness of the Energy Upgrade California program in the short-term should not be the only driver for decision-making about the program as long as its other objectives are clear, that the program should align with existing Commission direction and State policy, and that overall program costs should be kept reasonable as one component of the utilities' overall efficiency portfolio. The cost-effectiveness of the Energy Upgrade California program must also be periodically evaluated as it moves forward, and must be taken into account in future program policy and design.
We believe that the Energy Upgrade California program must be viewed as both a short-term resource acquisition program and a market transformation program, with clearly articulated program objectives in both areas. As discussed further below, the IOU's 2013-2014 portfolio applications shall reflect a recognition of the Energy Upgrade California program as a market transformation-oriented program.
The Strategic Plan emphasizes reducing plug loads as part of residential market transformation strategies,206 a need supported by 2010 residential end use market data, which show plug load increasing. Given the growing importance of lighting, plug, and appliance loads in residential energy use, we are sympathetic to PG&E's and SCE's argument that any residential market transformation strategy must also emphasize these end uses. The delivery of the Energy Upgrade California whole house program should be closely coordinated with the delivery of residential plug load/appliance programs. Market transformation objectives for the Energy Upgrade California program should reflect market transformation objectives for these end uses as well the broader objectives of whole house deep energy retrofits. The IOUs shall include in their 2013-2014 Energy Upgrade California proposal strategies to better leverage the program to achieve energy savings from plug loads, appliances, lighting, and/or swimming pools.
Twelve parties commented on the Staff proposal that the Commission and IOUs make a long-term commitment (5-10 years) to the Energy Upgrade California program. The intent of Staff's recommendation was to provide the market stability necessary for contractors to invest and alter their business models to ensure continued program growth.
Parties unanimously agreed that the Commission and IOUs should indicate a long-term commitment to the Energy Upgrade California program as part of the transition period application process. Efficiency First, The California Building Performance Contractors Association (CBPCA), SolarCity, and CCSE argue that a ten, not five, year commitment is needed to provide stability for the development of this market. Efficiency First, SolarCity, DRA, and Beutler support the Staff proposal for a ten-year declining incentive structure, with DRA indicating that establishment of a specific end date to incentives (e.g., in ten years) also helps drive market change. To maintain program simplicity, SCE opposes a long-term declining incentive structure and states that the Commission should recognize the goal of making the Energy Upgrade California program cost effective while balancing the long-term investment needs of the Staff proposal.
The Energy Upgrade California program has clear State energy agency and legislative support. AB 758 directs the establishment of a comprehensive residential retrofit program and reduced interest rate financing for whole house energy improvements, respectively. This has resulted in significant investments in building a statewide Energy Upgrade California program infrastructure to train contractors, establish quality assurance procedures, build a statewide web portal, and conduct marketing and outreach. The benefits gained from previous public expenditures on Energy Upgrade California should be strategically preserved in 2013-2014 and beyond to advance the State's residential energy use reduction goals.
We are sympathetic to contractors' requests that the Commission and IOUs commit to a ten-year, rather than a five-year Energy Upgrade California program period in order to truly provide market stability for contractors. We agree that five years likely is insufficient time to attract additional contractors to this program, to provide stability for those contractors that have already altered business investment and hiring strategies to participate in this program, or to allow sufficient time for market growth in response to ABx1 14. A ten-year stepwise incentive program may provide a better timeframe for contractor needs. In addition, although a stepwise declining incentive structure for a ten-year period could add to program complexity, it may hasten market development and heighten urgency amongst contractors and homeowners by providing a clear end to incentives. A ten-year stepwise declining incentive would also help reduce ratepayer costs for the program over the long-term. Any long-term incentive structure for the Energy Upgrade California program should take into account increased homeowner access to reduced interest rate financing available via the Clean Energy Upgrade loan program or other future financing programs and must maintain reasonable cost structures.
Therefore, we direct the IOUs to include in their 2013-2014 applications a proposal for a ten-year stepwise declining incentive structure for the Energy Upgrade California whole house program. The proposal should clearly indicate suggested Energy Upgrade California incentive levels and eligible measures for the 2013-2014 period and suggest how incentives would be ramped down during the 2015-2022 timeframe. The proposal shall also indicate how Energy Upgrade California incentives levels should be coordinated with or altered to take into account increased whole house financing levels that may begin if the CAEATFA Clean Energy Upgrade loan program includes such financing, and if ratepayer-supported financing programs are adopted.
We note that Energy Upgrade California projects are currently treated as custom projects for the purposes of determining frozen ex ante savings parameters. Because this program is a different delivery method than other programs for which existing savings parameters have been derived, some or all of the parameters for specific measures included in an Energy Upgrade California project, and particularly the Net-to-Gross ratios, will likely be different than the existing parameters. Consistent with the commitment we are making to this program, we direct Commission Staff to use a default Net-to-Gross ratio of 0.85 for Energy Upgrade California custom projects (though not as a strict "floor") similar to the approach we take in this decision for Emerging Technology Net-to-Gross ratios.
The Programmatic Guidance Ruling included three basic changes to IOU HVAC programs proposed by Staff:
a. The IOUs should add incentives aimed at increasing the participation of HVAC contractors in the Energy Upgrade California program;
b. The IOUs should streamline review procedures for converting or "upselling" HVAC emergency replacement jobs into full whole house Energy Upgrade California jobs; and,
c. The IOUs should require that, for the HVAC upstream incentive and Energy Upgrade California programs, contractors represent and warrant that all applicable permits have been obtained.207
The CBPCA, TURN and Greenlining Institute support the Staff proposal to include incentive "kickers" to increase HVAC contractor participation in the Energy Upgrade California Program. Several parties (i.e., SCE, SDG&E/SoCalGas, PG&E, and Beutler) oppose this proposal. Other parties suggest that instead of additional incentives, what is most needed is streamlining the HVAC Energy Upgrade California application review and approval process (CBPCA, Efficiency First, SolarCity, Beutler, Building Performance Institute (BPI)). SMUD's emergency HVAC retrofit protocols have been identified as a model for a streamlined application review and approval process. While Building Performance Institute argues that this streamlined HVAC Energy Upgrade California job approval process should only be available to top-performing contractors with consistently strong quality assurance records and credentials, PG&E emphasizes that any streamlining must not compromise customer safety (combustion safety reviews).
Five parties comment on the Staff Proposal to require contractors to warrant that they have procured permits for access to incented high efficiency HVAC replacement units and/or to Energy Upgrade California rebates. NRDC, Building Performance Institute, TURN and the CBPCA support the proposal, while PG&E opposes it. NRDC proposes requirements in this area that go beyond those included in the Staff proposal, and argues that copies of permits should be required for access to IOU rebates, that the IOUs should create a database to track permit numbers for jobs accessing IOU incentives, that programs could "require that an approved rater certify the work and provide documentation to the utilities prior to rebate payout," and that IOUs should work to simplify program processes to reduce the burden of complying with code.208
The California HVAC replacement rate for residential and non-residential units may be as high as 800,000 units per year, for a total annual market of about $1 billion. Space cooling constitutes seven percent of residential electricity consumption and a higher percentage of peak demand.209 It is important to maximize the appeal of a "whole house" upgrade to those homeowners replacing a faulty HVAC or water heating unit, so that more efficiency improvements in more households are undertaken at the same time. We want to encourage such steps to help minimize missed or lost opportunities in the residential sector.
Streamlining the review and approval of HVAC replacement jobs that are being considered for expansion into Energy Upgrade California whole house jobs seems the most important first step towards increasing HVAC contractor participation in Energy Upgrade California and, in turn, the number of HVAC replacement jobs that expand into whole house energy improvement jobs. Several parties point to the SMUD HVAC retrofit protocols as an model to accelerate Energy Upgrade California review and approval of HVAC replacement jobs while ensuring appropriate energy savings estimation and customer safety (see Attachment B to review the provided "HVAC Emergency Retrofit Protocol").
We direct the IOUs to include a streamlined HVAC Emergency Replacement Energy Upgrade California protocol in their 2013-2014 Energy Upgrade California applications, based on the approach provided in Attachment B. We also direct IOUs to consider in their Applications whether a streamlined HVAC Emergency Replacement Energy Upgrade California protocol should be available only to top-performing contractors with consistently strong quality assurance records or those with stronger building performance certification credentials. The IOUs should include their recommendations and rationale on this point in the same proposal. Streamlined IOU HVAC Emergency Replacement Energy Upgrade California protocols shall retain appropriate Energy Upgrade California combustion safety testing and other procedures to ensure customer safety. In addition, we believe that streamlining Energy Upgrade California program application and job approval procedures more generally is essential to developing contractor support for the program. We direct IOUs to include in their 2013-2014 Energy Upgrade California proposals a "Fast Track" Energy Upgrade California job approval protocol based on the HVAC Energy Replacement Protocol. This proposal should apply more generally to the Energy Upgrade California program. The intent of such a "Fast Track" Energy Upgrade California job approval protocol is to accelerate Energy Upgrade California job approvals for experienced Energy Upgrade California contractors with strong quality assurance records.
Finally, based on party comments emphasizing streamlining and simplifying the Energy Upgrade California program, we do not direct IOUs to establish any additional Energy Upgrade California incentives aimed at increasing HVAC contractor participation in the Energy Upgrade California program at this time.
While high levels of non-compliance with current HVAC permit requirements is contributing to widespread faulty installation of HVAC units which results in significant amounts of wasted energy, new legislation enacted in 2011 seeks to address low levels of code compliance for retrofit measures, including HVAC, that require a permit. (See Pub. Util. Code § 399.4(b)(1) and Senate Bill (SB) 454, Pavley, 2011.)
The Staff proposal differs from SB 454 in that it would require contractors -- in addition to home or building owners receiving an incentive or rebate directly -- to certify or "warrant" that they have obtained applicable permits when installing HVAC equipment on behalf of customers benefiting from IOU rebates or incentives. The proposal applies when contractors obtain high efficiency HVAC units from distributors participating in the IOU "Upstream HVAC" program, as well as the downstream Energy Upgrade California program.210
SB 454 addresses code compliance problems, regardless of market sector or program delivery mechanism, "in order to ensure that prudent investments in energy efficiency continue to be made that produce cost-effective energy savings."211 We direct changes to the HVAC Upstream Incentives program, if needed to bring it into alignment with SB 454, while preserving it as a cost-effective program design for HVAC equipment.
We agree with CBPCA that "no incentives should be provided to any contractor without that contractor certifying that s/he has complied with all permit requirements."212 While we tend to agree with NRDC's view that it is preferable that recipients of rebates certify that they that they have obtained permits and used licensed contractors by providing a copy of the permit to the utilities, we are concerned about maintaining a level playing field for contractors that are participating in IOU programs and installing high efficiency HVAC units and those that are not.
We believe that IOU programs should comply with SB 454 requirements and that all applicable programs should support HVAC permit acquisition as a matter of course. SB 454 does not imply that utilities have authority or responsibility for enforcing building energy or water code standards. Requiring contractors to warrant that they have obtained applicable permits and having the IOUs collect copies of permit numbers (and/or permits, where feasible) prior to awarding incentives is reasonable and advances California's peak energy use reduction goals.
To our knowledge, the IOUs currently require homeowners receiving incentives to "self-certify" compliance with SB 454 by checking off a box to this effect on the appliance application. In addition, the Energy Upgrade California program requires contractors to indicate that appropriate permits have been or will be obtained if an HVAC unit is installed as part of the job-check. Consequently, we direct the IOUs to institute the following changes to support HVAC permit acquisition in conjunction with their HVAC and Energy Upgrade California programs:
1. Energy Upgrade California jobs involving HVAC replacements must include submittal of the HVAC permit number and a contractor certification that appropriate permits have been obtained, for inclusion in IOU Energy Upgrade California program records.
2. The IOUs shall make a showing in their 2013-2014 applications of all programs to which the requirements above apply, and present copies of the incentive/rebate applications or other documentation providing evidence that they are fully in compliance with SB 454 and this decision.
Several parties emphasize local government's role in advancing the Energy Upgrade California's deep energy retrofit and market transformation aims. CCSE states that the transition period should direct the IOUs to build on and retain the Energy Upgrade California statewide structure supported via American Recovery and Reinvestment Act funds. Rather than allowing the Energy Upgrade California program to revert to a "narrow" IOU approach, CCSE says, the Energy Upgrade California program going forward should build on its strengths and grow local government's roles. CCSE supports the Programmatic Guidance Ruling's suggestion that ratepayer funds be made available for the continuation of American Recovery and Reinvestment Act-funded local government and other state and regional Energy Upgrade California marketing and outreach programs.213 Beutler and NRDC urge a strong role for local governments in Energy Upgrade California program delivery. PG&E agrees with the idea of continuing effective local government American Recovery and Reinvestment Act-funded Energy Upgrade California activities, and recommends using the existing Local Government Partnership, Green Communities and/or Energy Upgrade California program as vehicles to support this idea.
LGSEC argues that local governments must play a lead role transforming residential energy use via Energy Upgrade California activities. It states that local governments are best suited to establish partnerships with regional entities, the private sector (contractors, retailers property managers) and other organizations (media, schools and community groups), and that existing Energy Upgrade California coordination between utilities and local governments can be expanded and strengthened.
The Strategic Plan was clear on the need for involvement of non-utility actors in residential market transformation. California Energy Commission American Recovery and Reinvestment Act-funded Energy Upgrade California programs have built tremendous capacity and innovation through local and regional government activities. The insights and strong local community connections and commitment established in this way must be sustained if the Energy Upgrade California program is to grow into the market transforming initiative we anticipate it to be. As discussed by LGSEC, the primary contributions of local and regional governments in Energy Upgrade California appear to be in the areas of building local partnerships for training, and locally-tailored outreach and marketing that builds on such partnerships and on local government's contacts with private and public sector leaders in their communities. Many of these activities appear to mirror those central to the now-suspended "Engage 360" campaign.214
We direct IOUs to consult with local governments, as well as regional and statewide government entities, and include in their 2013-2014 Energy Upgrade California proposals a budget for and a narrative description of the activities that local, state and/or regional government entities shall play in advancing Energy Upgrade California objectives in 2013-2014. The areas in which we would like to see significant government roles identified include locally-tailored outreach and marketing and contractor and technician training.
Parties support an increased emphasis on improving contractor and technician training programs for Energy Upgrade California, and on upcoming Title 24 codes and standards changes-- both are seen as central to the residential market transformation goals.215 NRDC emphasizes ensuring that residential sector training is relevant to the needs of the market, while DRA suggests leveraging local government expertise in providing training programs.
CCSE and CBPCA agree that the current Energy Upgrade California training approach was too "shallow" and was leading to a high number of loosely trained contractors. They suggest additional classroom training, mentorship, hands on field experience, and training in languages other than English, as well as improved on-the-job supervision and more transparent quality assurance and control procedures
We are persuaded that increased attention must be directed to ensuring that contractors and technicians participating in the Energy Upgrade California program have the skills necessary to ensure quality deep energy retrofit equipment installations and services across the board. We, therefore, direct the IOUs to work with the Commission Staff, the California Energy Commission and others to convene a workshop to review Energy Upgrade California workforce training needs upon completion of IOU-administered Energy Upgrade California process evaluations in 2012. This workshop shall review Energy Upgrade California evaluation findings relevant to Energy Upgrade California training programs, and seek stakeholder feedback on priority training improvements needed, and identify a timeline to put such improvements into place via both IOU and any local government administered Energy Upgrade California or related training programs. As part of this workshop, the IOUs should also propose ways to coordinate improved Energy Upgrade California trainings with any local government-led Energy Upgrade California or codes and standards (Title 24, 2013) training programs, as discussed later in this decision. The IOUs should aim to create robust, coordinated residential workforce training programs across the Energy Upgrade California, Workforce Education and Training, and other relevant residential programs, in a manner that supports improved, consistent quality installations. The IOUs should consider the training and certification requirements of the Energy Savings Assistance Program as part of this process. "Sector strategies" activities, as discussed in the Workforce Education and Training section, shall inform this review and coordinate the process.
In their 2013-2014 applications, the IOUs shall identify contractor and technician training objectives for the Energy Upgrade California program, consistent with Energy Upgrade California's role as a market transformation program, discussed above, and the Market Transformation Indicator guidance provided below.
The Programmatic Guidance Ruling proposal also suggests that IOUs:
1. Consider local government pilots aimed at building support for comprehensive energy improvements at the time of home purchase, accomplished via home energy rating and increased installation incentives; and,
2. Explore ways to improve Energy Upgrade California participation amongst moderate income households, by aligning "basic" and "advanced" incentive pathways or replacing the current "basic" approach with a "menu" of approaches, and/or increasing incentives for income-qualified households.216
The Energy Upgrade California "basic" path currently offers a $1,000 incentive to homeowners for installation of a list of six required measures estimated to save ten percent of a single-family home's energy on a statewide basis. A pre- and post- job in home audit is required to qualify for these measures, but this audit is not as stringent as that undertaken under the Energy Upgrade California "advanced" path. As discussed above, the "advanced" path offers homeowners rebates of $1,000 - $4,000 for installation of measures projected to save between 10% - 40% of a home's energy use. Under the "advanced" path, an in-home "diagnostic audit" (i.e., an audit that includes pressurization of a home and its heating/cooling system to measure air leakage levels) is required both before and after measure installation. PG&E also offers a Middle Income Direct Install (MIDI) program in some local jurisdictions, for both single and multifamily households found to be just above Energy Savings Assistance Program qualifying levels.
Build it Green, DRA, CCSE, CBPCA and SDG&E/SoCalGas propose eliminating the Energy Upgrade California basic path. Build it Green proposes aligning the basic path with the advanced path by lowering the minimum percentage savings threshold required to access Energy Upgrade California advanced incentives from fifteen percent (in PG&E service territory only) to ten percent. Greenlining Institute suggests expansion of the MIDI program to be more comprehensive and to reach more neighborhoods across the state. Environmental Health Coalition supports investment in deeper education and outreach on Energy Upgrade California in hard to reach communities.
TURN, supported by Greenlining Institute and the Environmental Health Coalition, suggests pilots of "whole neighborhood" standard packages for homes of similar construction in similar neighborhoods. No party supports Staff's proposals for increased incentives for new Energy Upgrade California contractors maintaining high audit to job conversion ratios. Only CBPCA supports the idea of pilots with local governments testing increased incentives for Energy Upgrade California work performed just after home purchase, and no party supports establishing Energy Upgrade California incentives for home energy ratings at the time of sale.
Comments on this issue note that a forthcoming California Energy Commission AB 758 "Needs Assessment"217 would review this issue more thoroughly and recommend that any Commission decision requiring HERs ratings for Energy Upgrade California program participation by homeowners be deferred until later. Several parties, including CBPCA, Build it Green and CCSE, suggest, instead, that the IOUs and the Commission should explore developing voluntary training and outreach partnerships with California's real estate industry such that real estate agents can more effectively promote Energy Upgrade California program benefits to home purchasers.
D.09-09-047 directed IOUs to take necessary steps to make the Energy Upgrade California whole-house program approach accessible to single and multifamily buildings, and to moderate and higher income households.218 The Energy Upgrade California "basic" program was designed to appeal to moderate income households considering a lower cost whole house energy upgrade investment. It was also designed as a program entry point for contractors new to the whole house energy performance business.
All ratepayers should have the opportunity to benefit from participation in California's deep energy use reduction programs such as the Energy Upgrade California program. We direct the IOUs to explore changes to the "basic" Energy Upgrade California program pathway to make it more appealing to moderate income households and to propose these changes in their 2013-2014 applications. Incentive design changes may include merging the basic and the advanced pathways, offering "menu" packages of comprehensive measures, and/or increasing incentives for moderate income households. We also direct all IOUs to establish MIDI programs in 2013-2014, if they have not yet done so, and to explore expansion of eligible MIDI measures to improve the program's comprehensiveness. IOUs shall include proposals in these areas in their 2013-2014 transition portfolio applications.
TURN suggests improved marketing and program design elements to focus on whole neighborhood delivery in a way that reduces program costs. We agree that this would, in theory, be a promising way to reduce program delivery costs. However, we have limited information to evaluate the benefits of such a proposal at this time.219 If desired, local governments may pursue such an approach with their respective utility.
Home purchases and deep energy upgrades constitute significant investments that must be carefully considered. Staff's proposals for local government pilots testing of increased incentives for Energy Upgrade California jobs undertaken immediately after home purchase, and mandatory HERs ratings at time-of-sale appear to be aimed at increasing program participation at a time when homeowners are most receptive to making significant investments in their homes. We agree that the Energy Upgrade California program and related whole-house deep energy improvement opportunities should be presented to homeowners at the times when they will be most receptive to taking action to improve their home's energy performance.
We support the idea offered by three parties of exploring voluntary training and outreach partnerships with California's real estate industry aimed at training real estate agents to understand and promote Energy Upgrade California program benefits to potential home buyers. We are particularly supportive of exploring voluntary programs in partnership with California's real estate industry since mandatory home energy ratings or upgrade mandates could deter California home purchases.
We direct the IOUs to consult with relevant stakeholder groups, experts and Commission Staff to develop a concrete proposal for implementing voluntary training and outreach partnerships with California's real estate industry in their 2013-2014 applications. This proposal shall have the objective of training real estate agents to understand and promote Energy Upgrade California program benefits to home buyers. The IOUs shall include in this proposal: (1) development and implementation timelines; (2) proposed outreach/training partners; and (3) proposed outreach/training objectives.
We believe the Staff proposal for local government pilots testing mandatory time of sale labeling ordinances and home energy rating incentives is aimed at further developing the HERs rating infrastructure that has been developed by the California Energy Commission. We agree that further marketplace testing and development of a home assessment and rating systems has great value to California and to long-term residential market transformation goals.
We, therefore, direct the IOUs to work with local governments and the California Energy Commission to identify jurisdictions wishing to pilot incentives for HERs II assessments and/or ratings as part of the Energy Upgrade California program. Based on these conversations, each IOU may include proposals for one or more HERs incentives trials in its Energy Upgrade California program implementation plan for the 2013-2014 period. Description of these trials in the Energy Upgrade California PIP shall indicate: (1) the anticipated incentive level and to whom the incentive will be offered (i.e., building owner or contractor); (2) building professional training and/or certification requirements for accessing the incentive; (3) additional outreach or coordination activities that will occur as part of the trial; (4) estimated budget for each trial; (5) hypotheses that the trials would test; and, (6) the anticipated evaluation approach.
About one third of California households reside in multifamily buildings,220 which are primarily served by the IOUs' Statewide Multifamily Energy Efficiency Rebate Program (MFEER), which is part of the Statewide Program on Residential Energy Efficiency (SPREE). Additional SPREE incentives and services (such as are offered in the Basic Compact Fluorescent Lamps, Upstream Lighting, and Appliance Recycling programs) are also fully available to multifamily building residents. The Commission authorized a MFEER budget of $81 million for 2010-2012 in D.09-09-047.
The Programmatic Guidance Ruling identified two major barriers to multifamily participation in Energy Upgrade California and similar comprehensive energy improvement programs: the "split incentive" barrier and the lack of access to capital among multifamily property owners. The Ruling proposed the following steps during 2013 and 2014 for improving IOU multifamily programs:
· Evaluate Energy Upgrade California multifamily program elements launched in the 2011 -2012 period to inform their further expansion in the 2015-2017 period;
· Consider the recommendations of the Multifamily Subcommittee of the California Home Energy Retrofit Coordinating Council (HERCC) and the approaches emerging from the Energy Savings Assistance Program (ESAP) multifamily whole building program development to refine future Energy Upgrade California multifamily program elements;221
· Pursue all avenues to overcome the split incentive barrier;
· Increase targeted outreach to multifamily building owners to drive demand; and
· Ensure that all central system measures (i.e., boilers, central air, water, and heaters) become available via the existing MFEER program, so that the complexity associated with multifamily building owner access to single measure rebates is decreased.222
CCSF, LGSEC, WEM, Green For All and the Greenlining Institute, PG&E, and SDG&E commented on Commission Staff's multifamily proposals. Greenlining Institute and WEM urge higher incentives for an Energy Upgrade California multifamily program element and increased attention to this market segment. Greenlining also recommends engaging owners and managers in program development to ensure their concerns are addressed in the program structure, and that the program is not cost-prohibitive to low-to-moderate income households living in these buildings. PG&E advanced the importance of multi-family program design efforts to be consistent with the Energy Savings Assistance Program and the Moderate Income Direct Install programs because these address similar housing stock. SDG&E pointed out it has a pilot multi-family Energy Upgrade California program underway in 2012 and expects to use the program results to inform the development of a "full program." LGSEC points to program design features that are critical and affect the services delivery model to be utilized, including permitting owners to hire their own contractors (unlike some of the existing programs) and considering the multi-family program recommendations put forward by the California Home Energy Retrofit Coordinating Council (cited in the Staff proposal).
LGSEC also states that local governments can take a more holistic approach than utilities are typically able to take on multifamily programs, and can provide a single point of customer interface for property owners. It asserts that participation in multifamily utility incentive programs will be significantly increased if local governments take on multifamily program support roles using ratepayer funding. LGSEC submits that local governments can add value to multifamily programs in the following areas:
· Targeted outreach. Local governments are in the best position to market the new whole building incentives and recruit participation in collaboration with industry partners;
· Integrated technical assistance. Local governments can help property owners prioritize their building improvements and refer them to the appropriate resources;
· Training and workforce development. Local governments can sponsor trainings for auditors/raters that serve utility programs as well as other financing programs; and
· Addressing split incentives. Local governments can create educational resources for renters and multifamily property owners.223
We understand that while SDG&E has a pilot program underway, other IOUs are still working to launch Energy Upgrade California multifamily "whole building" pilot projects in 2012. Meanwhile, multi-family programs supported by American Recovery and Reinvestment Act stimulus funds (administered by the California Energy Commission, local governments, and the Community Services Development Department) are winding down and looking to transfer their lessons learned and best practices to wider-scale programs. We welcome the numerous program design recommendations offered by parties, and commend this input to the utilities' preparation of their upcoming applications. Primary recommendations were to 1) provide for a contractor delivery entity (entities) acceptable to the building owner such as a one-stop-shop to garner greater participation,224 and 2) ensure coordination across utility, Energy Savings Assistance Program (ESAP), and Community Services Development Department's Weatherization Assistance Program and Low Income Home Energy Assistance Program, to ensure a more streamlined way to offer whole-building solutions to the owners and managers of multifamily housing (containing multiple income levels), benefits to both tenant-occupied and common-areas of a building, and utilization of programs (e.g., financing) that can address split incentives by allocating expenditures and benefits between owners and occupants.
We agree that the results of both the utility and American Recovery and Reinvestment Act-funded pilot projects would be helpful to inform guidance on a statewide Energy Upgrade California multifamily program for the 2013-2014 period. We direct IOUs to submit evaluation reports of their 2012 Energy Upgrade California multifamily pilot projects in the 2013-2014 application proceedings, no later than three months after completion of those projects. We also note two other dimensions for knowledge coordination in this market segment: 1) our direction (in the financing section of this decision) to develop financing products appropriate to the unique challenges of multi-family housing, and 2) the pending direction for the 2012-2014 Energy Savings Assistance Program cycle (coming from proceeding A.11-05-017 et al.) regarding services to multifamily buildings, including how to address the challenge of multiple programs' overlap when low income and higher-income tenants occupy a single building. We look to the 2012/2014 ESAP/CARE applications (A.11-05-017 et al.) and the Commission's related decisions for more guidance's in this regards.
The IOUs shall include a plan and timeline for proposing and implementing a statewide Energy Upgrade California multifamily program in their 2013-2014 transition period applications that addresses the Commission Staff Energy Upgrade California multifamily program recommendations summarized above and as further informed by party comments cited. This plan and timeline shall identify appropriate roles for local government support for multifamily programs, including in the areas of targeted outreach, integrated technical assistance, training and workforce development, and addressing split incentives. The plan and timeline shall also take into account recommendations on multi-family building strategies developed through activities authorized under the Energy Savings Assistance Program rulemaking (A.11-05-017 et. al.).
8.1.9. Energy Upgrade California: Whole House
Home Energy Rating System (HERs) and
Energy Upgrade California Approved Software
The Strategic Plan states that a "key driver" for the goal of getting home improvement markets to apply whole-house energy solutions to existing homes is to create market demand for efficient homes by increasing awareness of, and information on, energy efficiency.225 The Strategic Plan also calls for market research to assess the impact of energy or carbon labeling, campaigns to raise demand for efficient homes, supporting local governments considering residential energy conservation ordinances at time of sale, and pilot projects based on the HERs program.226
In D.09-09-047, the Commission directed the IOUs to create a "whole house" energy improvement program that would "support pre installation assessments and post-installation verification consistent with the California HERs program." The Commission stated that the IOUs' whole-house program should "establish approaches to coordinate with the California Energy Commission HERs Providers regarding training and certification of HERs raters and quality assurance."227
Public Resources Code Section 25942 directed the California Energy Commission to establish a statewide HERs program for residential dwellings by 1995. The HERs program aims to create a consistent, accurate, and uniform rating system based on a single statewide rating scale that can identify the energy efficiency levels of California homes and help prioritize the investment in cost-effective home energy efficiency measures.
In June 1999, the California Energy Commission established "HERs I" regulations pertaining to HVAC installations in newly constructed and existing homes. The regulations require contractors or developers to obtain permits indicating correct installation of HVAC equipment according to Title 24.228
In 2009, the California Energy Commission promulgated a HERs regulations update which established a California "Whole-House Home Energy Rating System" (HERs II). HERs II ratings can be applied to existing and newly-constructed residential buildings, including single-family homes and multifamily buildings of three stories or less. The HERs II rating works on a 0 -250 scale, with a lower score indicating a more efficient home.229 The HERs tool uses a "time dependent valuation" metric to weight energy use by its time of use, in this way incorporating into its rating the higher generation and delivery costs associated with energy use during peak periods.
HERs II software and services provide two main functions: (1) energy assessments, with recommendations for energy efficiency improvements and return on investment estimates, and (2) energy ratings.
To align themselves with both California Energy Commission objectives and this Commission's direction in D.09-09-047, the IOUs presently require contractors submitting Energy Upgrade California job applications to utilize either Energy Pro or HERs II software to model projected energy savings from the proposed installation of measures.
Many parties commented on the software used in the Energy Upgrade California program in response to Staff's proposal that the Energy Upgrade California program should test approaches likely to be used as part of AB 758 implementation during the 2013-2014 transition period. CBPCA, Efficiency First, and SolarCity object to Staff's proposal for a local government pilot program where incentives for HERs II ratings would be made available in jurisdictions where local government adopted mandatory time of sale HERs II ratings.
Several additional parties voice concerns about the HERs system itself.230 These parties contend that the Energy Pro and HERs II software rely on average energy usage patterns and regional assumptions, and do not take into account variations in homeowner behavior. These parties state that this leads to significant variance between predicted and actual savings estimates under the Energy Upgrade California program, undermines the credibility of the industry, and hampers its growth. Build it Green states that limiting Energy Upgrade California software to Title 24 code compliance functionality (part of both Energy Pro and HERs II) does not help the homeowner understand the likely bill impacts of Energy Upgrade California jobs, or help contractors with the calculation of rebates and job sales.231
The aforementioned parties unanimously agree on the need to broaden eligible software allowed for use under the Energy Upgrade California program. These parties state that expanding software options would foster competition and software improvements, and reduce hours of duplicative contractors' time per completed project. Many parties point to national residential home energy performance modeling standards, the National Renewable Energy Lab (NREL) "Best Test" standards, and standards adopted by the voluntary, national "RESNET" organization as informative.232
Several parties, including Build it Green, Efficiency First, CBPCA, SolarCity, and Building Performance Institute, suggest adding data reporting requirements to ensure that whatever software is approved can calculate energy savings in a manner consistent with all other software. Beutler states that it would be best if software is calibrated to a homeowner's individual location and that a California Energy Commission funded Energy Upgrade California low-interest rate financing project demonstrated that this was possible. CBPCA refers to the federal "Cut Energy Bills at Home Act," introduced by Senators Feinstein, Snowe and Bingaman, as a model to consider for the Energy Upgrade California in California. CBPCA states that a broad stakeholder coalition supported the federal bill, which requires software calibrated to individual energy bills.233 CBPCA also states that Energy Upgrade California software should support but not require integration of code compliance features within energy modeling software. PG&E suggests that this Commission and the California Energy Commission jointly approve software for use in the Energy Upgrade California program.
While we do not understand all the technical details of the HERs software in the context of the Energy Upgrade California program at this time, it is clear from party comments that significant concerns exist about limiting the software allowed under the Energy Upgrade California.
The American Recovery and Reinvestment Act programs were designed to "create a foundation for future energy efficiency and renewable energy work" in California. We believe that American Recovery and Reinvestment Act-funded investments in HERs II and other Energy Upgrade California infrastructure should -- ideally -- be strategically built upon, until the anticipated benefits of the initial investment are realized or until alternative pathways towards the desired outcome become clear. However, we also believe that marketplace and contractor acceptance of a home energy rating system is absolutely critical to its success in raising consumer awareness and driving demand for more efficient homes.
Consequently, we reconsider our direction in D.09-09-047 that the IOUs ensure that the statewide whole house program (now the Energy Upgrade California) include activities "consistent with the California HERs program." Parties make a compelling case to broaden the software permitted in the Energy Upgrade California program. Therefore, we will not require mandatory HERs II ratings at this time because we want the Energy Upgrade California to garner continued contractor support and to grow into the comprehensive market transformation program envisioned in the Strategic Plan.
We direct Commission Staff and the IOUs to work collaboratively with the California Energy Commission and other Energy Upgrade California stakeholders to identify approaches to adequately broaden allowable software under the Energy Upgrade California program while containing costs required for needed Commission Staff reviews. In this effort, Commission Staff and the IOUs shall consider relevant findings and activities on building energy rating and labeling systems occurring as part of the AB 758 program development process. Commission Staff should report its recommendations on this issue to the service list of this proceeding or its successor, and the service list of the IOUs' 2013-2014 transition applications, as soon as feasible. In their deliberations, Commission Staff and the IOUs shall consider party input regarding whether allowable Energy Upgrade California software:
1) Should be required to meet national NREL Best Test and/or RESNET standards;
2) Include standardized data reporting requirements to ensure that each approved software calculates energy savings in a manner consistent with other software in the program;
3) Support, but not require, integration of code compliance features within the energy modeling software; and
4) Should allow reflection of the occupants' actual energy usage, i.e., should not rely solely on averages.
The Programmatic Guidance Ruling proposes that the IOUs be directed to share Energy Upgrade California program data with the California Energy Commission and specific local governments. The Ruling states that this step is needed to continue to document actual energy savings and associated costs from whole house energy upgrades, and that this information will help accelerate development of residential energy efficiency project financing offerings. In the Ruling, Commission Staff made the following recommendations on data sharing:
1) The IOUs should be directed to share Energy Upgrade California aggregated and customer specific data, including projected and actual savings, and all-in job costs;
2) Data should be shared with the California Energy Commission and specific local governments conducting Energy Upgrade California marketing, outreach and research activities;
3) Aggregated data should be provided in a manner that prevents identification of a single customer's energy usage and at the finest level of granularity possible;
4) Non-disclosure agreements and data security protocols should be required as needed prior to data sharing with any entity; and
5) Data should be provided in aggregated and disaggregated form and in industry standard electronic formats.
Of the twelve parties that commented on this topic, seven support Staff's proposal on sharing aggregated data (Build it Green, DRA, LGSEC, CCSE, Beutler, Greenlining Institute, and NRDC). DRA supports the release of Energy Upgrade California aggregated data by the IOUs to local governments and other building energy efficiency programs, stating that aggregated data does not pose privacy concerns. DRA and LGSEC recommend that the Commission direct the IOUs to provide data not just on the Energy Upgrade California program, but also for other building energy efficiency programs, and in support of local government efforts to develop climate action plans, or otherwise meet their legal obligations under AB 32. LGSEC asserts that a major barrier to tracking performance in multifamily buildings is access to utility usage information directly from the IOUs and recommends that the Commission direct the utilities to provide aggregated anonymous tenant usage data to building owners where tenants are individually metered.
CCSE supports the proposal and states that data should also be provided on relative measure uptake and cost, project level savings (therms, kWh, dollars), ancillary benefits realized, project location, and contractor. Beutler and Build it Green propose that the IOUs be directed to share Energy Upgrade California data with contractors who are investing their own funds in marketing the program. TURN states that data sharing should generate an inventory of technical project opportunities and financial analysis information via streamlining data gathering and analysis.
SCE argues that the proposal on data sharing contradicts D.11-07-056, adopted recently in the Smart Grid Rulemaking (R.08-12-009). SDG&E/SoCalGas state that any data sharing or tracking systems should be consistent with D.11-07-056. DRA states that any data sharing must recognize privacy interests of utility customers. Specifically, DRA argues that, to the extent that personally identifying information or more granular data is requested--known as "covered information" in D.11-07-056--the Commission's Privacy Rules must apply. And where PG&E advocates the use of non-disclosure agreements with the California Energy Commission and local governments for any data shared regarding meritorious energy efficiency programs, DRA notes that customer privacy may not be adequately protected by non-disclosure agreements when local governments respond to public records act requests. Though DRA supports third-party access to information, it believes these privacy and security issues would be more appropriately addressed in the Smart Grid Rulemaking, R.08-12-009.234
D.11-07-056 adopted privacy rules governing IOU release of the customer-specific data, and required that IOUs share the data on an aggregated basis.235 Before D.11-07-056, the Commission addressed the sharing of aggregated customer data in D.97-10-031, which adopted what is commonly referred to as the "15/15 rule."236
We believe that it would be helpful to address the release of customer data regarding the Energy Upgrade California and related energy efficiency programs. While the parties refer to D.11-07-056 and D.97-10-031, with its "15/15" rule, we recognize the limited scope of those decisions. Because data sharing is not directly related to the guidance needed for the 2013-2014 applications, we do not resolve data sharing issues at this time. These issues are important, however, and we intend to examine energy efficiency-related data sharing in a subsequent decision. We intend to examine appropriate conditions and restrictions that may be appropriate for the sharing of energy efficiency-related data, including data that has been aggregated or anonymized,237 and the sharing of customer-specific data.
We direct the IOUs to clearly define the "whole house" program in their Energy Upgrade California PIP for the 2013-2014 transition portfolio and include in their 2013-2014 Energy Upgrade California program estimates of the number of single-family homes they plan to participate in the program in the 2013-2014 transition period.238 The IOUs shall provide low, medium and high customer participation scenarios for 2013-2014 in their applications, a summary of the assumptions underlying these scenarios, and an associated budget for each scenario. These Energy Upgrade California participation scenarios shall take into account possible CAEATFA and other residential energy efficiency financing that may support Energy Upgrade California program growth in the 2013-2014 period, as well as additional Energy Upgrade California activities.
8.2. Plug Loads/Appliances
The Statewide Program on Residential Energy Efficiency's (SPREE) Home Energy Efficiency Rebates subprogram, the Business and Consumer Electronics subprogram, and the Appliance Recycling Program (ARP) address appliances, plug loads, and appliance recycling respectively. During 2010-2012 these programs were funded at the levels of $142 million, $45 million, and $67 million respectively, for a combined total of $255 million or 40% of the total SPREE budget.239 In this subsection, we address these programs as a group.240
The Programmatic Guidance Ruling proposed merging the existing Home Energy Efficiency Rebates, Business and Consumer Electronics and appliance recycling subprograms into a single "Plug Loads/Appliances" program with the aim of simplifying and reducing complexity in the IOUs' portfolios. The Staff Proposal suggests that this would reduce administrative costs and maximize synergies in the IOUs' work with manufacturers and retailers and identifies the goals of the consolidated Plug Loads/Appliances program as being to:
1) Move all "feasible" plug load and appliance subsidy programs upstream to manufacturers to reduce program administrative costs, and develop clear criteria for the appropriate incentive delivery channel for all incented measures;
2) Reduce program costs by capturing efficiencies in the development of retailer partnerships across appliance types;
3) Reorient appliance recycling program activities to reflect market changes; and
4) Strive to rapidly transition technologies from the Plug Load program into Title 20 codes.241
Seven parties commented on the proposal outlined above. While TURN recommends "fully implementing the plug load proposals in 2013-2014," and SDG&E/SoCalGas also generally support integrating the three existing SPREE subprograms into one larger program, other parties are less supportive of the integration proposal. SCE opposes the proposal, noting that cost-effective interventions in the plug loads/appliances area include a range of up-, mid- and down-stream incentive delivery points. SDG&E/SoCalGas state that articulating clear criteria to determine the best delivery channel for any given plug load or appliance incentive would be beneficial. CCSE calls for continued strong focus on plug loads/appliances due to the "inexorable increase in the proportion of overall residential energy consumed by a very diverse group of small devices." Gockel echoes CCSE's comments, while voicing concerns about pool pump requirements and rebate practices,
NRDC supports much more aggressive IOU plug load and appliance programs to support California's residential Zero Net Energy 2020 goals. It states that some 100 plug load types could be considered in the IOU program and that the Commission and IOUs should consider "horizontal standards" that allow energy savings across many product categories with one standard, such as: low power modes, internal power supplies, and power factor correction.
Plug load, appliances and "miscellaneous" uses comprise about 66% of current California home electricity usage, with plug loads (televisions, personal computers, and office equipment) accounting for about 20% of home electricity usage alone.242 Clearly, strategic intervention to reduce energy use by these devices remains important. PG&E and SCE state that they see residential market transformation as driven by lighting, plug load, and appliance programs.
We direct the IOUs to include the criteria they use to determine the best delivery channel for any given plug load or appliance incentive or intervention in their plug load and appliance program PIPs for the 2013-2014 transition period. The IOUs shall also clearly identify the selected delivery channels for all measures included in the Home Energy Efficiency Rebates and Business and Consumer Electronics programs and identify where synergies allow for more coordinated engagement work with retailers and manufacturers across the Home Energy Efficiency Rebates and Business and Consumer Electronics programs.
We direct the IOUs to simplify and streamline their plug load and appliance programs to maximize synergies with manufacturers and retailers and reduce administrative costs. The IOUs shall seek to ensure the provision of integrated information on high efficiency appliances and appliance recycling at retail partner outlets. In their 2013-2014 Home Energy Efficiency Rebates PIPs, the IOUs shall identify the steps being taken to ensure that the Home Energy Efficiency Rebates program is in compliance with Title 20 pool pump requirements and that expert stakeholder concerns regarding IOU pool pump rebating practices have been sought out and clearly addressed.
We are persuaded by NRDC's proposal that a more aggressive plug loads program would benefit California's residential Zero Net Energy aims. This suggestion seems in line with the Programmatic Guidance Ruling proposal that the IOUs ensure a "rapid transition of technologies from the Plug Load program into Title 20 codes."243 We direct the IOUs to explore how their Business and Consumer Electronics and Home Energy Efficiency Rebates programs can support manufacturers' implementation of voluntary product specifications that support the development of mandatory "horizontal standards" (i.e., product standards that lead to energy savings across many product categories) for plug loads and appliances. The IOUs shall explore this approach through discussions with interested parties and in conjunction with their statewide Codes and Standards program and shall report on these discussions and any resulting program design changes in their 2013-2014 applications.
Finally, in line with PG&E's and SCE's statements regarding market transformation opportunities in these areas, the IOUs shall include in their Home Energy Efficiency Rebates and Business and Consumer Electronics 2013-2014 program proposals a strategic discussion of how they will use these programs to advance market transformation toward Title 20 codes and standards changes.
8.3. Appliance Recycling Program
The Phase IV Scoping Memo suggested that the Appliance Recycling Program (ARP) be "reconsidered" based on recent Commission Staff evaluation and U.S. Department of Energy reports indicating declining levels of per-unit energy use and savings from recycled refrigerators. The subsequent Programmatic Guidance ruling included a unified proposal for reorienting ARP based on a summary of party suggestions in response to the Scoping Memo.244
Parties generally support reorienting the ARP program to improve its ability to capture incremental savings, reduce costs, leverage retailer-purchaser relationships, improve participation from multifamily building owners, and emphasize removal and recycling of secondary and high consumption units.
TURN and DRA raised concerns about high levels of free ridership in the ARP program. TURN states that the ARP was characterized by "100% free ridership" because major retailers such as Sears, Home Depot and others offer free refrigerator and freezer removal. DRA asserts that high rates of free ridership in the ARP make it unclear that a ratepayer subsidized recycling program is justified. DRA also notes that, if the Commission determines the program does not warrant ratepayer support, DRA would lend its support to the suggestions by other parties to reorient the program.
It appears that, while per-unit savings of recycling refrigerators have declined, savings opportunities remain from refrigerator and freezer recycling, particularly for older and secondary units.
While we agree with TURN and DRA that there is cause for concern regarding free-ridership levels in the program, the 2006-2008 evaluation findings suggest that the ARP has mid-range ex post evaluated net to gross ratios, and a range of program level cost-effectiveness estimates.
ARP 2006-2008 Evaluation Results
SCE |
0.52 |
2.40 |
SDG&E |
0.51 |
1.13 |
PG&E |
0.52 |
N.A.245 |
These data suggest that, while ARP NTG ratios are middle range, in at least two cases (SCE, SDG&E), the ARP program remains cost-effective.246 SCE states that it continues to explore ways to reduce overall program costs in an ongoing trial that directs retailers to pick up units for recycling and emphasizes collection of vintage and secondary units. PG&E reports an ARP trial aimed at improving the program's cost-effectiveness. SDG&E states that it intends to use findings from the SCE and PG&E trials to improve its collaboration with retailers and in this way to reduce program costs and increase program energy savings.
In light of these efforts, and in particular those of SCE, we are convinced that the ARP can continue to remain cost-effective. We direct IOUs to include a reoriented ARP program in their 2013-2014 transition period proposals, as outlined below.247 The IOUs shall minimize ARP program costs while maximizing savings by implementing the following program changes:
1) Add New Appliances: Expand recycling efforts to include clothes washers and air conditioners;
2) Switch to Distribution Center Pick-Ups: Reduce overall program costs by directing retailers to pick up units for recycling. IOU program collections of appliances in the home could be replaced by collections at partner retailer distribution centers. IOUs must avoid duplicating existing efforts with these strategies;
3) Emphasize High Consumption and Secondary Units: Target units with highest savings potential and emphasize collection and recycling of vintage models, secondary units, and extra freezers;
4) Influence Appliance Purchaser's Decision: Use the results of current recycling retailer trials to determine the best approaches to partnering with retailers. These partnerships could seek to cost-effectively capture savings through influencing a new appliance purchaser's decision to retire their old units. IOU retailer partnerships could include delivering new appliances at the same time as collecting old units for recycling. The IOUs should seek to coordinate collection of old units with appliance manufacturers and recyclers;
5) Participants Receive Appliance Incentives upon Surrender of old Appliance: Condition the provision of appliance incentives upon surrender of older units for recycling;
6) Transition of Recycling to Market Actors: Transition the current appliance recycling program to market players by a specific date;
7) Highest Standard of Recycling: Require ARP participating recyclers to comply with highest standards of recycling, including for GHG emissions in refrigerants and foam insulation; and
8) Properly Target Multifamily Residences: Develop new recycling approaches for the multifamily sector, including a bulk exchange approach.
8.4. Residential New Construction
D.09-09-047 approved $63 million for two IOU Residential New Construction (RNC) subprograms within the statewide New Construction Program during the 2010-2012 program cycle. These programs are the California Advanced Homes Program (CAHP) ($51 million statewide budget) and the Energy Star Manufactured Homes Program ($12 million statewide budget).
The Programmatic Guidance Ruling proposes substantial changes to the IOU Residential New Construction programs that are intended to expand the support the program gives to the objective that all new homes be zero net energy homes by 2020. The Programmatic Guidance Ruling proposes that IOU Residential New Construction programs:
1) Use incentive design to encourage the early adoption of base and "Reach" 2013 Title 24 Standards;248
2) Increase incentive levels to make the program more attractive to participating home builders;
3) Emphasize measures that incorporate future code cycles in Residential New Construction design curriculum, and technical and design templates; and
4) Support development of a Zero Net Energy Roadmap that identifies efficiency measures likely to be adopted into Title 24 Standards in 2017 and 2020 for inclusion in the IOU Residential New Construction program.
The ruling noted that Title 24 2013 residential codes are likely to require a thirty percent higher residential building energy efficiency level than the Title 24 2008 codes.249 The first three components of the Residential New Construction proposal are addressed in the following subsection, followed by a separate discussion of the fourth component (Zero Net Energy Roadmap).
SCE believes that the Staff proposal to increase Residential New Construction incentives in 2013 (in order to prepare the industry for the 30% increase in the Reach 2013 Title 24 (Title 24) standards that are expected to become effective in January 2014) will be difficult to implement. Among other things, SCE notes that there is limited time to adjust incentives and other program elements between the time of the adoption of the Title 24 codes sometime in 2012 and 2013. SCE further contends that the cost-effectiveness of the Residential New Construction program would be reduced if only builders that can achieve extremely aggressive savings goals are targeted for participation. SDG&E/SoCalGas recommend that parties and Commission Staff collaboratively develop a cost-effectiveness methodology to reflect the anticipated market transformation benefits of the proposed approach. The Staff proposal states that the costs of transforming California's residential new construction can be reduced in a slower construction market through focusing on a smaller set of builders wishing to position themselves competitively for renewed growth when the market expands.
SDG&E/SoCalGas also indicate a general interest in developing a Zero Net Energy Roadmap which SCE states should include elements beyond Title 24. NRDC also supports a Zero Net Energy Roadmap, but states that it should be based on best the estimates of the cost effective potential for energy efficiency and renewable technologies available within buildings.
D.07-10-032 first adopted the residential Zero Net Energy 2020 target that "by 2020 all new housing in the California IOU service territories will be built to consume "zero net energy," calling this a "Big Bold Energy Efficiency Strategy" (D.07-10-032 at 42). D.08-09-040 reiterated this residential 2020 Zero Net Energy target and adopted it as part of the California Long-Term Energy Efficiency Strategic Plan.250 D.08-09-040 directed IOUs to align their 2010-2012 energy efficiency portfolios with the Strategic Plan.251 As noted in the Programmatic Guidance Ruling, several other state energy policy documents endorse the residential Zero Net Energy 2020 goals.252
Policies and programs supporting California's Zero Net Energy residential goals should support marketplace stability and long-term planning. Program cost containment is also important, and ratepayer-funded Residential New Construction programs must strive to support development of Zero Net Energy compliant residential buildings across the market segments, including multifamily, single family, and affordable housing developments.
We direct the IOUs to include in their 2013-2014 applications a timeline by which increased levels of incentives supporting the 30% more efficient building codes expected to be adopted in Title 24 can be incorporated into their Residential New Construction program. The date proposed for inclusion in the Residential New Construction program of higher incentives supporting the increased Title 24 efficiency levels should be no later than March 1, 2013. The IOUs shall consult with the California Energy Commission, Commission Staff, builders and other stakeholders regarding appropriate incentive levels for this increased building efficiency performance. The incentive design and increased incentive levels identified in this process should encourage the early adoption of base and reach (Title 24) codes.
To support this direction, several additional policy support steps are needed. First, we affirm that the unique IOU RNC program approaches needed to support California's aggressive residential Zero Net Energy 2020 goals clearly make this a market transformation program. Long-term market changes that the program should support with this new direction include increased skills development for building professionals and technicians and increased homeowner demand for high efficiency homes. As such, we direct the IOUs, in accordance with guidance on Program Performance Metrics and Market Transformation Initiatives elsewhere in this document, to identify (1) market barriers to achieving residential Zero Net Energy homes by 2020 and (2) mechanisms that the RNC program will employ to address these barriers starting in 2013.
Second, the IOUs shall review policies and programs supporting residential Zero Net Energy programs in other states for potential new and innovative program design approaches to increase homeowner demand and marketplace change, consulting with relevant experts in this area. They shall report at least preliminary results in their 2013-2014 applications, and may report more complete findings of this effort through an Informational Advice Letter served on the application service lists no later than April 1, 2013. The IOUs shall identify potential pilot projects or trials to test new program designs that would improve marketplace innovation and engagement and homeowner awareness within the 2013-2014 timeframe.
We find compelling arguments that the IOUs and other residential sector stakeholders should participate in developing a Zero Net Energy Roadmap that identifies efficiency measures likely to be adopted in the Title 24 Residential New Construction Standards in 2017 and 2020, for inclusion in the IOU Residential New Construction program cycles beginning in 2015. Early expert coordination will reduce costs to ratepayers and consumers of achieving Zero Net Energy residential building codes by 2020 and will support market stability and long range planning.
We agree with NRDC that a Zero Net Energy Roadmap should include and be based on best estimates for cost-effective combinations of onsite renewable energy and energy efficiency for the range of building types. Failure to do so could result in the oversizing of on-site renewable energy when considerable energy efficiency measures could be more cost effective. The Staff proposal noted that residential energy use from miscellaneous, plug load, lighting and appliance end uses remains proportionally high, so we are sympathetic to SCE's recommendation that such a roadmap should be broadened to include elements beyond Title 24.
We, therefore, direct IOUs to collaborate with the California Energy Commission, Commission Staff, and other expert stakeholders to develop a Zero Net Energy Roadmap that identifies efficiency measures likely to be adopted into Title 24 Residential New Construction Standards in 2017 and 2020 for inclusion in future IOU Residential New Construction program cycles. This collaboration shall start within a timeframe relevant to support Title 24 2017 code cycle development activities, but shall, at a minimum, begin no later than June 2014. This Zero Net Energy Roadmap collaboration would be led by Commission Staff and the California Energy Commission, or their designees, and would include the IOUs and other stakeholders. IOUs shall bring to the collaborative effort proposals for appropriate ways that the roadmap might include elements beyond Title 24, as well as proposals and/or a study plan to develop best estimates for cost-effective combinations of onsite renewable energy and energy efficiency for the range of building types included in this roadmap. The IOUs shall include in their 2013-2014 Residential New Construction program proposal a budget estimate sufficient to fund these steps.
202 Strategic Plan at 11.
203 Programmatic Guiding Ruling (December 12, 2011) at 7.
204 D.09-09-047 at 73: "This is not a hard cap, ... but a budget target." See also Programmatic Guidance Ruling (December 7, 2011) at A32.
205 CCSE Reply Comments on Programmatic Guidance Ruling (January 6, 2011) at 4; and, CCSE Comments on Phase IV Scoping Memo (November 8, 2011).
206 Strategic Plan at 11 and 18.
207 Programmatic Guidance Ruling (December 7, 2011), at A33.
208 PG&E's minimum energy savings threshold for Energy Upgrade California advanced path rebates is 15%, whereas SDG&E and SCE/SoCalGas apply a 10% minimum threshold (see "Statewide Residential Program Implementation Plan" at http://eega.cpuc.ca.gov/Main2010PIPs.aspx ).
209 Environmental Health Coalition Reply Comments to Programmatic Guidance Ruling at 2.
210 We note that the 2010-2012 Upstream HVAC Incentive Program is currently operated as a commercial program. The Staff proposal was silent as to whether it applied to residential only. Therefore, we address commercial, as well as residential, in this discussion. Further, we extend this discussion to include any statewide, third-party, or utility local programs offering incentives for HVAC equipment requiring a permit, including but not limited to the Energy Upgrade California, MFEER, Home Energy Efficiency Rebates, Deemed Incentives, and Calculated Incentives programs, etc.
211 PUC 399.4(a)(1).
212 CBPCA Comments on Programmatic Guidance Ruling (December 23, 2011) at 5.
213 Programmatic Guidance Ruling, Attachment A at A32.
214 Statewide Marketing and Outreach Ruling at 1.
215 NRDC, Greenlining, Ella Baker Center for Human Rights, Green for All, CILMT, DRA, CBPCA, and BPI.
216 Programmatic Guidance Ruling at A33.
217 See "Technical Support Contract" for AB 758 Program Development, CEC, at http://www.energy.ca.gov/ab758/documents/AB_758_Technical_Support_Contract_Scope_of_Work.pdf.
218 D.09-09-047 at 120.
219 We understand that some CEC American Recovery and Reinvestment Act-funded Energy Upgrade California pilots are testing the "whole neighborhood" approach, and would prefer to see evaluation results from these pilots before mandating them on a broader scale.
220 Residential Appliance Saturation Survey (2010). CEC.
221 "Improving California's Multifamily Buildings: Opportunities and Recommendations for Green Retrofit and Rehab Programs: Findings from the Multifamily Subcommittee of the California Home Energy Retrofit Coordinating Council. (April 2011).
222 Programmatic Guidance Ruling at A34.
223 LGSEC, Comments on Programmatic Guidance Ruling; D 09-09-047 at 120.
224 The one-stop-shop should apply to the forthcoming multifamily Energy Upgrade California program. Program implementers should also be adequately trained to ensure that the one-stop-shop includes relevant non-utility incentives for multifamily buildings and/or units that quality as low income.
225 Strategic Plan at 18.
226 Strategic Plan at 20.
227 D.09-09-047 at 120.
228 Officially known as "HERs for Field Verification and Diagnostic Testing," the 1999 Home Energy Reports I regulations established the basic framework for Home Energy Reports rater training, certification, and quality assurance systems. See http://www.energy.ca.gov/HERS/.
229 A residence in compliance with Title 24 in the year it is rated is awarded a Home Energy Reports II score of one hundred, and is considered a "reference home" against which other homes are compared. A Home Energy Reports II score of "zero" is intended to indicate a "zero net energy home." A typical range of Home Energy Reports scores for homes built before 2008 would be 101 - 250.
230 CBPCA, Efficiency First, CCSE, SolarCity, BPI, and DRA.
231 BIG Comments on Programmatic Guidance Ruling.
232 RESNET (the Residential Energy Services Network) was founded in 1995 by the National Association of State Energy Officials and Energy Rated Homes of America to develop a national market for home energy rating systems and energy efficient mortgages. RESNET's standards are recognized by the federal government for verification of building energy performance for such programs as federal tax credits, the EPA's ENERGY STAR program, and the U.S. DOE's Building America Program. See http://www.resnet.us/about.
233 This coalition includes American Council for an Energy Efficient Economy; Alliance to Save Energy, NRDC, RESNET, and Efficiency First.
234 DRA Comments on Programmatic Guidance Ruling (December 23, 2011) at 5.
235 See D.11-07-056 at 143: "Availability of Aggregated Usage Data. Covered entities shall permit the use of aggregated usage data that is removed of all personally-identifiable information to be used for analysis, reporting or program management provided that the release of that data does not disclose or reveal specific customer information because of the size of the group, rate classification, or nature of the information."
236 Roughly stated, the "15/15" approach adopted in D.97-10-031 requires that aggregated information provided by an IOU without customer written authorization must be aggregate data of at least 15 customers, and that a single customer's load must be less than 15% of the aggregated data. D.97-10-031 addressed non-residential customer information only.
237 "Anonymized" data does not reveal the specific identity or location of the customer.
238 We discuss multifamily elements of the Energy Upgrade California program separately.
239 This excludes the Multifamily Energy Efficiency Rebate (MFEER) program budget. MFEER includes rebates for some appliances, and is discussed in the Energy Upgrade California multifamily section above.
240 Excluding the Appliance Recycling Program which is addressed in a separate subsection.
241 Programmatic Guidance Ruling, at A30.
242 Programmatic Guidance Ruling at A5.
243 Programmatic Guidance Ruling at A39.
244 Programmatic Guidance Ruling, Attachment A at A40.
245 PG&E's ARP program was not a free-standing program during this period, so there is no ARP program specific total resource cost estimate available.
246 Note that D.11-07-030 updating ex ante energy savings values will impact these reported Total Resource Costs during the 2010-2012 period, mostly downward. We do not have access to the updated ARP Total Resource Costs based on these updated ex ante values at this time, however.
247 See Programmatic Guidance Ruling (December 7, 2012) at A40 for information on the party making each of these recommendations.
248 "Reach" codes are 15% and 30% more efficient than "base" Title 24 codes, as articulated in California's Green Building Standards Code's voluntary Tier 1 and Tier 2 standards respectively. See: http://www.hcd.ca.gov/CALGreen.html.
249 Programmatic Guidance Ruling at A37.
250 Strategic Plan at 6.
251 D.08-09-040 at 16, 18, and 19.
252 Programmatic Guidance Ruling at A37.
