7. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Pub. Util. Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. Comments were filed on October 6, 2008, and reply comments were filed on October 13, 2008 by Joint Utilities (including SCE), SCE (in separate comments), DRA/TURN (reply only), Trane, City and County of San Francisco, East Bay Energy Watch Partnership, Portland Energy Conservation, Inc., Quantum Energy Services & Technologies, National Association of Energy Service Companies, Lockheed Martin, Enovity Inc., Sonoma County Energy Watch Partnership, and Silicon Valley Leadership Group Partnership. Several of the parties urged the Commission to approve the proposed decision so as to provide bridge funding in a timely manner to ensure continuation of valuable energy efficiency services and programs. Some parties requested changes that would accelerate funding for certain programs, or provide higher levels of funding for some or all programs during the bridge funding period.

In response to comments, the proposed decision has been modified to decide the issues raised by SCE in its Motion regarding unspent, unallocated funds. The proposed decision has also been modified to add language regarding accounting for revenues and costs during the bridge funding period. The proposed decision has also been clarified to allow utility contracts with new third parties for only those activities previously authorized by the Commission for 2006-2008.

Findings of Fact

1. Bridge funding is needed to ensure that no hiatus occurs when authorization for energy efficiency program funding expires at the end of 2008.

2. The Utilities have proposed certain ongoing energy efficiency programs previously approved by the Commission to continue during the bridge funding period.

3. The average monthly budgets for current programs reflect the Utilities' program budgets in 2006-2008.

4. The Utilities, with the exception of SDG&E, had their energy savings goals increased by the Commission for 2009 as compared to 2008.

5. The Commission has previously approved EM&V funds at 8% of Utility monthly program budgets. The EM&V for the Transition Programs is well underway under Energy Division supervision. It is unclear how much additional work is needed for the continuation of these existing programs, but we expect that the amount will be significantly less than 8% of the total program budgets.

6. The Utilities should adjust their proposed EM&V budgets for 2009-2011 to reflect the lower levels of EM&V needed for the Transition Period.

7. It is necessary to re-calculate the anticipated savings and the cost-effectiveness of the Transition Programs. Therefore, it is necessary to take a fresh look at the energy savings estimates and cost effectiveness values of the Transition Programs.

8. SCE's Comprehensive HVAC Program, Express Efficiency, Industrial Energy Efficiency and Standard Performance Contract energy efficiency programs have exhausted their budgets and would be shut down before the end of 2008 without additional funding.

9. SCE has an estimated $62 million in pre-2006 unspent, uncommitted energy efficiency funds.

10. Energy savings are counted towards the savings goals when the measures are installed.

11. The savings from the enhanced funding added to an adopted portfolio budget should be counted towards the PEB, but should not be counted towards achieving the MPS.

12. SCE should track the actual savings associated with enhancing the 2006-2008 budget under its existing tracking system.

Conclusions of Law

1. It is in the public interest to provide a smooth transition for programs which are likely to continue into 2009 and beyond, without interruption, in order to maintain contractual agreements, retain skilled workers, complete existing projects, and continue to bring the considerable benefits of energy efficiency programs to businesses and residents of California.

2. Average monthly budgets for 2006-2008 should be used in the bridge funding period for the Transition Programs, and should be modified to account for adopted 2009 energy savings goals on a Utility-specific basis. EM&V funds should be included in the Utilities' monthly program budgets; however, we do not have sufficient information to determine the appropriate funding levels.

3. There is insufficient rationale to ascribe the term "successful" to the Utilities' proposed energy efficiency programs for the bridge funding period.

4. Our approval of bridge funding for the Utilities' Transition Programs is not equivalent to approval of the Programs themselves, and should not be construed as a guarantee of continued funding in the 2009-2011 portfolios or as a judgment on the merits of any individual Transition Program.

5. We reiterate our holding in D.05-04-051 that the Utilities must use all applicable DEER values to preserve the integrity of our processes.

6. As discussed in this decision, it is reasonable to allow an increased revenue requirement to account for increased energy efficiency savings goals on a utility-specific basis.

7. It is reasonable to allow utility contracts with new third parties who will limit bridge period activity to only those activities previously authorized by the Commission for 2006-2008.

8. SCE has demonstrated a need for continued funding for four energy efficiency programs for the remainder of 2008.

ORDER

IT IS ORDERED that:

1. The Utilities' Bridge Funding Request is adopted, except that:

a. The term "successful" is not ascribed to programs authorized in the bridge funding period;

b. The average monthly budgets for each Utility portfolio shown in Table 2 are adopted;

c. The Utilities are directed to work with Energy Division to improve existing programs during the bridge funding period as warranted, to reflect recommended changes to 2006-2008 programs originating from completed process evaluations such those contained in the 2006-2008 ME&O process evaluation directed by the Commission; and,

d. The Utilities are directed to continue current work on the Web Portal under the direction of the assigned Commissioner as provided in D.07-10-032. The Utilities shall provide amended Marketing and Outreach budgets in their advice letter filings. Should this funding source be insufficient, then the Utilities are directed to propose the use of EM&V funds for this purpose in their advice letter.

2. Each utility shall file an Advice Letter within 10 days of the effective date of this decision with 2009 average monthly budgets for each Transition Program, consistent with Ordering Paragraph 1(b) and as described herein. Each Advice Letter shall:

a. list the 2009 Transition Programs with the 2009 average monthly budgets authorized to book into the balancing accounts; and

b. modify the Preliminary Statement to include a memo account called the "Energy Efficiency 2009-11 Memo Account" to track the difference between the revenue requirement adopted for the Bridge Funding period and the revenue requirement requested in 2009-2011 Energy Portfolio applications.

The Advice Letters shall be effective on January 1, 2009 subject to Energy Division determining they are in compliance.

3. We hereby authorize the assigned Commissioner and the Administrative Law Judge, working with Energy Division, to provide further direction as necessary on content and schedule for the Utilities' re-calculation of Transition Program savings, including clarification of the discrepancies in 2006-2008 program savings calculations.

4. The Utilities shall include the program accomplishments achieved during the bridge funding period toward the cumulative goals of their 2009 programs.

5. The bridge funding period shall begin January 1, 2009, regardless of whether the Advice Letters have been determined to be in compliance. The bridge funding period shall end three months after the effective date of a final decision on 2009-2011 energy efficiency programs in this docket, or December 31, 2009, whichever comes first.

6. The Utilities shall adjust their total 2009-2011 EM&V budgets as provided herein.

7. During the bridge funding period, the utilities are authorized to continue to collect revenues from Public Goods Charge rates and procurement surcharges for electricity, and Public Purpose Program surcharges for gas, at revised rates required to meet the revenue requirements adopted herein effective January 1, 2009 for the purposes set forth in this Order.

8. The utilities may enter into contracts with new third parties during the bridge funding period for only those activities previously authorized by the Commission for 2006-2008.

9. SCE's September 8, 2008 Motion to spend $27 million in pre-2006 unspent, uncommitted energy efficiency funds is approved.

10. SCE shall track the actual energy savings associated with its 2006-2008 program budget enhancements to distinguish between savings to be counted under the PEB and savings not to be counted under the MPS, as described herein.

11. As of December 31, 2008 and the close of all 2008 transactions, the account balance and all other unspent, uncommitted funds from the 2006-2008 budget cycle shall be reported in a supplemental filing to A.08-07-021, et al. for final disposition.

This order is effective today.

Dated October 16, 2008, at San Francisco, California.

Commissioners

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