12. Assignment of Proceeding
Michael R. Peevey is the assigned Commissioner and Julie A. Fitch is the assigned ALJ in this proceeding.
1. Demonstrating the potential to produce electricity ratepayer benefits, defined as promoting greater reliability, lower costs, and increased safety, should be a mandatory and primary guiding principle for expenditure of EPIC funds.
2. The following guiding principles for EPIC expenditures, while complements to the principle of electricity ratepayer benefits, are also reasonable: societal benefits; GHG emissions reductions in the electricity sector at the lowest possible cost; the loading order; low-emission vehicles and transportation; economic development; and efficient use of ratepayer monies.
3. For purposes of the EPIC program, applied research and development should be defined as activities supporting pre-commercial technologies and approaches that are designed to solve specific problems in the electricity sector.
4. For purposes of the EPIC program, technology demonstration and deployment should be defined as the installation and operation of pre-commercial technologies or strategies at a scale sufficiently large and in conditions sufficiently reflective of anticipated actual operating environments to enable appraisal of the operational and performance characteristics and the financial risks.
5. For purposes of the EPIC program, market support should be defined as programs that seek to enhance the competitive position of certain preferred, commercially-proven technologies and approaches relative to incumbent technologies and approaches.
6. For purposes of the EPIC program, market facilitation should be defined as a range of activities including program tracking, market research, education and outreach, regulatory assistance and streamlining, and workforce development to support clean energy technology and strategy deployment.
7. The EPIC program is not similar in scope or structure to the CICS, established in D.08-04-039 and subsequently vacated by D.08-11-060.
8. The EPIC program should be administered 80% by the CEC and 20% by the utilities, with utility administration authorized only in the area of technology demonstration and deployment.
9. The CEC and the utilities should offer a coordinated approach to clean energy RD&D through Commission consideration of triennial investment plans from each administrator for 2012-2014, 2015-2017, and 2018-2020.
10. The triennial investment plan by each utility should be the primary venue for consideration of utility electric RD&D expenditures other than RD&D proposed by the utilities as part of their budget applications for energy efficiency and demand response; proposals for electric RD&D in general rate cases and/or in separate proceedings should be discontinued once the Commission renders decisions in any proceedings involving RD&D expenditures currently pending.
11. The CEC's triennial investment plans must be very detailed to support the Commission's grant to the CEC to administer the Commission's EPIC program.
12. An independent evaluation of the EPIC program should be conducted by a consultant under contract to the Commission in 2016.
13. EPIC funding should be authorized to be expended in the areas of: applied research and development, technology demonstration and deployment, and market facilitation.
14. Applied research and development should include activities that address environmental and public health impacts of electricity-related activities, support building codes and appliance standards, as well as clean transportation with a linkage to electricity sector ratepayer benefits.
15. EPIC funding should not be authorized to be expended for market support activities.
16. All clean energy technologies and approaches/methods should be eligible for EPIC funding, on both the supply side and demand side.
17. Activities that include collaboration with and leverage of closely related RD&D projects should be eligible for EPIC funding.
18. Projects should be selected for award of EPIC funding on a competitive basis unless the administrators have specifically detailed and justified exceptions to this in their approved investment plans.
19. The administrators may propose in each investment plan to expend technology demonstration and deployment funds either on a grant basis or on a pay-for-performance basis, depending on the types of investments proposed.
20. It is reasonable to set aside 20% of the technology demonstration and deployment funds for 2012-2014 being administered by the CEC to fund bioenergy projects or activities. This percentage should be re-evaluated in the second triennial investment plans.
21. Technologies previously eligible for the ERP should be immediately eligible for the SGIP consistent with the determination in D.11-09-015.
22. Consolidating the ERP and SGIP programs now is preferable to perpetuating two competing programs that serve the same types of technologies and policy purposes.
23. EPIC funds should not be used to subsidize output from existing facilities indefinitely and thus the ERFP program should be discontinued.
24. Commercialized bioenergy technologies offer the potential for benefits to the state of California that are beyond of the scope of electricity ratepayer benefits. Electricity ratepayer funds alone should not be used to pay for those non-electricity benefits.
25. Bioenergy generating technologies are eligible to participate today in the RPS program, the Renewable Auction Mechanism, and the feed-in tariff.
26. There is a strong policy rationale for continuing to fund the NSHP because it supports the state's goals for zero net energy new housing by 2020 and solar on new homes.
27. EPIC funding should not be used to fund generalized outreach and education on the basic value of renewables.
28. Market facilitation activities should not necessarily be limited to renewables, but may also include any other clean energy technologies and/or approaches.
29. EPIC funding collections should be authorized for January 1, 2013 through December 31, 2020 to coincide with the timeframe for completion of RPS and AB 32 requirements.
30. Collection amounts should be adjusted on January 1, 2015 and January 1, 2018 by the amount of the change in the average consumer price index, specifically the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter, over the previous three-year period.
31. The Commission may modify the exact budgets for each year with the adoption of the investment plans.
32. The EPIC funding amounts collected in rates are the default budgets for the EPIC program in each investment plan. These are guidelines that may be proposed to be adjusted by the program administrators in each investment plan to be considered by the Commission. Amounts that are uncommitted at the end of a triennial investment funding period should be used to offset future program funding requirements.
33. It is reasonable to allow the administrators to shift up to 5% of the budget for each category of expenses approved in an investment plan to another authorized category.
34. The Commission should require the utilities to remit from their EPIC balancing accounts administrative funding to the CEC on a quarterly basis and oversight funding to the Commission on an annual basis beginning July 1, 2012.
35. The Commission should require the utilities to remit programmatic funding from their EPIC balancing accounts to the CEC at the time that the funding is encumbered by the CEC.
36. The CEC and utilities should collaborate as soon as possible to agree on the logistics for funding remittance from the utilities to the CEC.
37. The EPIC authorized budget should be funded by each IOU in the following percentages: PG&E 50.1%; SDG&E 8.8%; and SCE 41.1%.
38. Funding authorized in D.11-12-035 for calendar year 2012 should be allocated to the first investment plan for 2012-2014 in the same proportion as the funding authorized beginning January 1, 2013.
39. The Commission should require the administrators to consult with a wide variety of stakeholders no less than twice a year to seek input on EPIC direction and progress.
40. The administrators should be required to make specific proposals for intellectual property rights in each investment plan where the specific types of projects proposed will be provided in more detail.
1. The principles articulated in law in § 740.1 and § 8360 offer useful guidance for the EPIC program. The administrators should be required to address in their investment plans how these statutory principles are applied.
2. The 2008 budget bill AB 1338 does not prohibit EPIC expenditures on a program of ratepayer-benefit-focused investments related to reductions of GHG in the electricity sector and reducing costs to ratepayers of compliance with GHG emissions reduction regulations.
3. The Commission should retain policy oversight over all EPIC electric ratepayer funds.
4. Once approved, the CEC's triennial investment plans will, for all intents and purposes, be a grant from the Commission to the CEC of ratepayer funds, with rules adopted governing sub-grants or awards by the CEC to other entities.
5. In each investment plan, the administrators should propose metrics and criteria for awarding EPIC funding in individual areas.
6. A budget of $55 million annually is just and reasonable to be allocated for applied research and development activities.
7. A budget of $75 million annually is just and reasonable to be allocated for technology demonstration and deployment activities, with 40% set aside for utility activities and the balance to be administered by the CEC.
8. The $75 million budget for technology demonstration and deployment activities is just and reasonable and should be in addition to budgets authorized separately for utilities to support energy efficiency and demand response emerging technologies.
9. A budget of $15 million annually is just and reasonable to be allocated for market facilitation activities.
10. The administrative budget for EPIC should be limited to a maximum of 10% of the funding, not including evaluation costs, unless the Commission approves a higher amount after considering the investment plans.
11. A budget amount of 0.5% should be reimbursed to the Commission by the utilities to fund program oversight, which represents a new activity for the Commission that is not currently budgeted.
12. Overall, the framework adopted herein for EPIC oversight and funding is just and reasonable in light of the whole record.
13. EPIC funds should not be used by utility administrators to fund electricity-generation-only demonstration or deployment projects.
14. Utilities should be authorized to propose generation-only projects in their triennial investment plans utilizing non-EPIC funding.
15. The EPIC program should be the primary vehicle for utility electric RD&D proposals other than the proposals submitted by the utilities for demand response and energy efficiency RD&D projects, and such investments should be removed in the future from the GRC proceedings and requests, unless specifically authorized in an EPIC-related proceeding. If utilities propose any additional RD&D funding outside of EPIC, they will face a burden to show why a proposal outside of the EPIC process should be considered immediately and not simply included in the next cycle for EPIC funding consideration by the Commission. RD&D funding requests outside of the EPIC process should also be required to explain how they meet the objectives and metrics of EPIC as outlined in this decision.
16. The appropriate venue for changes to the program design of either the CSI or SGIP is R.10-05-004 or its successor and not this proceeding.
17. The Commission should support Legislative action in 2012 to augment the SGIP budget to accommodate additional projects that were previously eligible for the ERP.
18. Bioenergy technologies represent significant potential benefits to California that are not necessarily exclusively electricity-related. The Commission should support multi-agency action on bioenergy development and explore alternative funding sources beyond electricity rates.
19. Section 2851(e)(1) limits the Commission's ability to utilize EPIC funding, or any other electric ratepayer funding, to support continued investment in the NSHP because it caps the total budget available to the Commission to fund the CSI and activities related to furthering its goals.
20. The Commission should support Legislative action in 2012 to authorize funding for the NSHP or otherwise remove the CSI budget cap that currently limits general market program and NSHP funding.
21. The Legislature should return any funding borrowed from the CEC's PGC accounts to fund the NSHP and obviate the need for collection of additional ratepayer funding for this purpose.
22. If an administrator wishes to shift more than 5% of the budget for a given category of expenditure authorized in an investment plan, or to fund a new category of expenditure, the administrator should be required to apply to the Commission to approve such a change.
23. The Commission should protect EPIC funding from potential diversion by having the utilities remit funding to the CEC on a quarterly basis for administrative funding and when the funding is encumbered for programmatic purposes.
24. Eligibility to receive EPIC funding should not exclude entities located in POU service territories, so long as their activity can be demonstrated to provide the potential for IOU electricity ratepayer benefits.
25. The Commission should consider the investment plans by the administrators in a public proceeding.
26. The Commission should not set up a formal advisory committee structure for EPIC because it risks inappropriate delegation of authority that rests with the Commission itself.
27. The Commission should require the administrators of EPIC to consult with interested stakeholders no less than twice a year, both during the development of each investment plan and during its execution. The following types of stakeholders shall be consulted, at a minimum:
a. Members of the Legislature, to the extent their participation is not incompatible with their legislative positions;
b. Government, including state and local agency representatives;
c. Utilities;
d. Investors;
e. The California Independent System Operator;
f. Consumer groups;
g. Environmental organizations;
h. Agricultural organizations;
i. Academics;
j. The business community;
k. The energy efficiency community;
l. The clean energy industry and/or associations; and
m. Other industry associations.
28. Intellectual property rules should be tailored to the specific types of projects proposed.
29. The Commission should decline to adopt an overall policy on intellectual property rights at this time.
30. The staff proposal and parties' comments and reply comments on it constitute a "hearing" before the Commission with respect to the requirements of § 729.
IT IS ORDERED that:
1. Consistent with Decision 11-12-035 which established the Electric Program Investment Charge (EPIC) program on an interim basis in 2012, the Commission establishes the EPIC program to continue from 2013 through 2020, for the purpose of funding electric public interest investments in applied research and development, technology demonstration and deployment, market support, and market facilitation of clean energy technologies and approaches, for the benefit of electricity ratepayers of Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company.
2. The primary and mandatory guiding principle of the Electric Program Investment Charge shall be to provide electricity ratepayer benefits, defined as promoting greater reliability, lower costs, and increased safety, with the following complementary guiding principles:
a. Societal benefits;
b. Greenhouse gas emissions mitigation and adaptation in the electricity sector at the lowest possible cost;
c. The loading order;
d. Low-emission vehicles/transportation;
e. Economic development; and
f. Efficient use of ratepayer monies.
3. The Electric Program Investment Charge program shall fund investments in the following defined areas:
a. Applied research and development. Activities supporting pre-commercial technologies and approaches that are designed to solve specific problems in the electricity sector.
b. Technology demonstration and deployment. The installation and operation of pre-commercial technologies or strategies at a scale sufficiently large and in conditions sufficiently reflective of anticipated actual operating environments to enable appraisal of the operational and performance characteristics and the financial risks.
c. Market facilitation. A range of activities including program tracking, market research, education and outreach, regulatory assistance and streamlining, and workforce development to support clean energy technology and strategy deployment.
4. The Electric Program Investment Charge shall not fund investments in the following defined area, unless the Commission subsequently modifies this requirement during its consideration of an investment plan:
a. Market support. Programs that seek to enhance the competitive position of certain preferred, commercially-proven technologies or approaches relative to incumbent technologies or approaches.
5. The California Energy Commission (CEC) shall administer its portion of the Electric Program Investment Charge (EPIC) program as a grant from the Commission in accordance with Ordering Paragraph 2 through 8, 11, 12, and 14 through 16, and in accordance with Commission-approved investment plans. The CEC shall be designated as the administrator for 80% of the EPIC funds, with 20% of the program funding reserved for Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company, collectively, to administer on behalf of their customers in the area of technology demonstration and deployment. Administrative expenses shall be capped at no more than 10% of the total budget, not including evaluation expenses. Program oversight expenses for the Commission shall be capped at no more than 0.5% of the total budget.
6. Twenty percent of the total Electric Program Investment Charge funding authorized for technology demonstration and deployment to be administered by the California Energy Commission shall be set aside during the first investment plan period (2012-2014) to fund investments in pre-commercial bioenergy technologies and strategies.
7. Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), and Southern California Edison Company (SCE) shall collect funding for the Electric Program Investment Charge (EPIC) in the total amount of $162.0 million annually beginning January 1, 2013 and continuing through December 31, 2020, unless otherwise ordered or adjusted in the future by the Commission. The total collection amount shall be adjusted on January 1, 2015 and January 1, 2018 commensurate with the average change in the Consumer Price Index, specifically the Consumer Price Index for Urban Wage Earners and Clerical Workers for the third quarter, for the previous three years. Responsibility for collection of the funding for the EPIC shall be allocated to the utilities in the following percentages: PG&E 50.1%; SDG&E 8.8%; and SCE 41.1%. No later than 30 days after the effective date of this decision, PG&E, SDG&E, and SCE shall each file a Tier 1 Advice Letter modifying their tariff sheets to reflect the EPIC surcharge in accordance with this decision and to authorize them to record authorized EPIC budgets and expenditures and to collect the EPIC funds through December 31, 2020 or as otherwise authorized by the Commission.
8. Funding for the Electric Program Investment Charge (EPIC) collected in 2012 as required by Decision 11-12-035 shall be allocated to the 2012-2014 EPIC program cycle in the same proportion as funding for 2013-2020.
9. Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company shall remit one-quarter of the annual administrative budget for the California Energy Commission (CEC) to the CEC quarterly beginning July 1, 2012 from their Electric Program Investment Charge (EPIC) balancing accounts. Programmatic funding shall be transferred periodically to the CEC from the EPIC balancing accounts when funds are encumbered by the CEC.
10. Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company shall remit the annual oversight budget to the Commission by July 1 each year, beginning July 1, 2012.
11. By no later than November 1, 2012, the administrators of the Electric Program Investment Charge program (the California Energy Commission, Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company) shall file coordinated triennial investment plans in applications covering 2012-2014 to the Commission for consideration. The applications shall be served on the service list for this proceeding and the service lists for each utility's pending or most recent general rate case.
12. In their applications for the triennial investment plan for the Electric Program Investment Charge, the administrators (the California Energy Commission, Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company) shall include the following elements:
a. A mapping of the planned investments to the electricity system value chain, which includes:
i. Grid operations/market design;
ii. Generation;
iii. Transmission;
iv. Distribution; and
v. Demand-side management.
b. Identification of at least the following elements:
i. The amount of funds to be devoted to particular program areas (applied research and development, technology demonstration and deployment, and market facilitation);
ii. Policy justification for the funding allocation proposed;
iii. For the utilities: an informational summary of the research, development, and demonstration activities they are undertaking as part of their approved energy efficiency and demand response portfolios.
iv. The type of funding mechanisms (grants, loans, pay-for-output, etc.) to be used for each investment area;
v. Eligibility criteria for award of funds in particular areas;
vi. Any suggested limitations for funding (per-project, per-awardee, matching funding requirements, etc.);
vii. Other eligibility requirements (technologies, approaches, program area, etc.); and
viii. A summary of stakeholder comments received during the development of the investment plan and the administrator's response to the comments.
c. Metrics against which the investment plan's success should be judged, including at least the following:
i. Quantification of estimated benefits to ratepayers and to the state, such as:
· Potential energy and cost savings;
· Job creation;
· Economic benefits;
· Environmental benefits; and
· Other benefits.
ii. Identification of barriers or issues resolved that prevented widespread deployment of technology or strategy.
iii. Effectiveness of information dissemination.
iv. Adoption of technology, strategy, and research data by others.
v. Funding support from other entities for EPIC-funded research on technologies or strategies.
d. A recommended approach to intellectual property rights depending on the specific types of projects and funding proposed.
e. How the investment plan addresses the principles articulated in Public Utilities Code Sections 740.1 and 8360.
13. Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company may include in their triennial investment plan applications for the Electric Program Investment Charge (EPIC), any proposals to fund electricity generation-only projects, including for bioenergy projects, that utilize another appropriate non-EPIC funding source that is not collected from all distribution customers. EPIC funds may not be used to fund generation-only projects, except by the California Energy Commission.
14. The administrators of the Electric Program Investment Charge (the California Energy Commission, Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company) shall be authorized to shift up to 5% of funds in each authorized funding category without additional Commission approval. Any additional fund shifting beyond 5% or to new categories of funding must be approved separately by the Commission.
15. The administrators of the Electric Program Investment Charge (the California Energy Commission, Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company) shall consult with interested stakeholders no less than twice a year, both during the development of each investment plan and during its execution. The following types of stakeholders shall be consulted, at a minimum, and a notice shall be provided to the parties on the service list of this proceeding and any subsequent related proceedings:
a. Members of the Legislature, to the extent their participation is not incompatible with their legislative positions;
b. Government, including state and local agency representatives;
c. Utilities;
d. Investors;
e. The California Independent System Operator;
f. Consumer groups;
g. Environmental organizations;
h. Agricultural organizations;
i. Academics;
j. The business community;
k. The energy efficiency community;
l. The clean energy industry and/or associations; and
m. Other industry associations.
16. The administrators of the Electric Program Investment Charge (EPIC) (the California Energy Commission, Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company) shall file annual reports annually on February 28, 2013 through February 28, 2020 with the Director of the Commission's Energy Division. Annual reports shall be served on all parties in the most recent EPIC proceeding, all parties to the most recent general rate case of each electricity utility named above, and each successful and unsuccessful applicant for an EPIC funding award during the previous calendar year.
17. Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), and Southern California Edison Company (SCE) shall no longer include technology demonstration and deployment expenditures in their general rate cases (GRCs) unless specifically directed by the Commission to do so in a proceeding related to the Electric Program Investment Charge (EPIC). The investment plans for the EPIC program shall become the primary vehicle for considering utility proposals for electric research, development, and deployment (RD&D) purposes. PG&E, SDG&E, and SCE may continue to request separate funding for electric RD&D in their energy efficiency and demand response budget applications. If PG&E, SDG&E, or SCE propose other such expenditures outside of the EPIC investment plans, the utility will face a burden to explain why such expenditures could not have been considered within the EPIC program. Any such requests should explain how they meet objectives and metrics of the EPIC program. Any such applications shall be filed on the service list of the most recent EPIC proceeding and the most recent GRC proceeding of the relevant utility.
18. Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company shall record the authorized 2012-2014 Electric Program Investment Charge (EPIC) budget to their EPIC balancing accounts, which will track actual program expenditures to the authorized budget, as authorized in Decision 11-12-035 and by this decision.
19. Rulemaking 11-10-003 is closed.
This order is effective today.
Dated May 24, 2012, at San Francisco, California.
MICHAEL R. PEEVEY
President
TIMOTHY ALAN SIMON
MICHEL PETER FLORIO
CATHERINE J.K. SANDOVAL
MARK J. FERRON
Commissioners
