6. Program Monitoring, Measurement, and Evaluation

The DG cost-benefit methodology adopted in this decision shall be used to evaluate our ratepayer supported DG programs, namely the SGIP and CSI incentive programs, which involve support to DG facilities up to 5 MW in size. Authorized funding for the portion of CSI overseen by this Commission amounts to $2.16 billion in expenditures from 2007 through 2016, all provided by utility ratepayers. The current funding level for SGIP is $83 million per year, also paid by utility ratepayers. The methodology adopted herein will allow the Commission to measure the costs and benefits of our DG programs. This will be one element of measuring the success of various SGIP and CSI program elements and allow the Commission to tailor incentives accordingly.

With regard to CSI, a detailed Program Evaluation Plan was established in a July 2008 ruling.²⁵ The CSI evaluation plan, as set forth in Appendix A of that ruling, includes cost-effectiveness studies which shall be conducted periodically using the methodology adopted in this decision. (Id., Appendix A, Section 3.3.6.) The CSI evaluation plan calls for the first cost-effectiveness studies to be completed in early 2009, evaluating 2007 and 2008 program data. Energy Division may either contract directly with an independent entity to perform this cost-effectiveness analysis, or it may direct the CSI program administrators to contract for the work. (Id., Section 1.3.) A Project Coordinator will work closely with Energy Division staff to facilitate this program evaluation effort.
(Id., Section 3.3.1.) We herein direct our Energy Division to ensure the cost-effectiveness studies of CSI are performed according to the guidance and methodology set forth in this decision. Energy Division should initiate efforts to retain a contractor to perform these studies within 30 days from the date of this order.

We direct the utilities and SGIP and CSI program administrators to obtain, facilitate the obtainment of, or supply all program data, participant (or DG customer) data, or other relevant information requested by Energy Division, or its contractor, for this analysis.

For SGIP, we direct our Energy Division to ensure the SGIP administrators hire independent contractors within six months of this order to perform a cost-effectiveness analysis of SGIP for all prior program years.

For both SGIP and CSI, we will review the results of the SPM tests discussed in this decision - namely the Participant Test, Program Administrator Cost Test, TRC Test and Societal Test - and not specify a primary test. We prefer to include the perspective embodied by each of these SPM tests in the overall evaluation of DG programs. Together, these SPM cost-benefit tests can be a tool to assist in ongoing program evaluation and to suggest improvements in design and administration of ratepayer-supported DG programs in the State.

The Energy Division should oversee the cost-effectiveness analysis work to ensure the appropriate application of the methodology described herein. If data to perform the tests described in this decision is not readily available, or if it is cost-prohibitive to obtain it, Energy Division may exercise its discretion and direct the contractors to use alternative data sources. Any such deviations from the data sources described in this decision and Attachment A must be transparently communicated and justified in the resulting study. Energy Division and its contractor should seek to obtain the most recent data available to ensure accurate analyses.

Once the cost-effectiveness analysis work is complete, the ALJ shall allow parties an opportunity to comment on the completed analysis and, in consultation with the assigned Commissioner, shall hold additional workshops or hearings as deemed necessary to consider refinements or modifications to any portion of the analysis.

While the Commission's primary purpose in adopting this methodology is to assess ratepayer-supported DG programs, the Commission may wish to apply this methodology to evaluate other forms of DG, in addition to those funded through the SGIP and CSI programs. The Commission may, at a future date or in another proceeding, explore application of this methodology to other forms of DG. At such time, the Commission may consider whether modifications to any cost or benefit inputs are needed to fulfill that purpose.

²⁵ See "Assigned Commissioner's Ruling Establishing Program Evaluation Plan for the California Solar Initiative," R.08-03-008, July 29, 2008.