III. Selection Criteria

A. Proposal Scoring

In D.01-11-066, we established a points system to use in evaluating statewide proposals. We rated each program according to the criteria described below.

1. Long-Term Annual Energy (Gas and Electric) Savings

Points: 25

The most important goal of any Commission energy efficiency program is to create permanent and verifiable energy savings over the life-cycle of the relevant energy efficiency measures. Programs are not required to create immediate short-term energy savings, so long as there is a clear, logical, and verifiable link between program activities and eventual energy savings. In other words, the Commission will strive for sustainability in the consumption behaviors and investment choices its programs are designed to stimulate. In general, long-term energy savings are those that continue over at least a three-year period.

2. Cost Effectiveness

Points: 20

All proposals for energy efficiency programs will be required to provide an estimate of life-cycle benefits and costs from various points of view, using the assumptions detailed in the [Energy Efficiency Policy Manual], Chapter 4, [Attachment 1 to D.01-11-066]. The Commission will use this information to compare and rank program proposals designed for similar uses, markets, or customer segments.

3. Addressing Market Failures or Barriers

Points: 17

Any program proposed for Commission approval should include a description of the type of barrier it is designed to address or overcome. The following examples of barriers are listed in order of importance; programs may also address other barriers not listed below:

· Higher start-up expense for high-efficiency measures relative to standard-efficiency measures




· Lack of consumer information about energy efficiency benefits




· Lack of financing for energy efficiency improvements




· Split incentives (between owners/landlords and tenants)




· Lack of a viable and competitive set of providers of energy efficiency services in the market




· Barriers to the entry of new energy efficiency service providers




· Lack of availability of high-efficiency products

4. Equity Considerations

Points: 15

The Commission will generally prioritize programs that provide access to energy efficiency alternatives for underserved or hard-to-reach markets. Although those customers contribute equally to the funds collected to support program activities, in the past, they have had access to fewer program alternatives than other customers. [The Energy Efficiency Policy Manual] provides a more detailed definition of underserved and hard-to-reach markets, either from the point of view of customer class (e.g., multifamily building residents, small businesses) or geography (e.g., rural customers).

5. Electric Peak Demand Savings

Points: 10

Programs paid for by electric PGC funds should emphasize long-term and permanent peak demand savings. Such programs may include, for example, installation of permanent measures to reduce peak demand, such as variable-speed drives on motors, but should not include programs that create peak demand savings only through temporary behavioral change, such as air conditioner cycling or programs that encourage consumers to turn off lighting or air conditioning.

6. Innovation

Points: 8

The Commission will prioritize programs that present new ideas, new delivery mechanisms, new providers of energy efficiency services, or new and emerging technologies to address new program areas, to overcome existing shortcomings, or to improve the effectiveness of existing programs.

7. Synergies and Coordination With Programs Run by Other Entities

Points: 5

To minimize confusion and overlap for consumers, the Commission desires program proposals that take advantage of synergies or coordination with other existing programs, including those run by other state agencies, private entities, municipal utilities, or the federal government.

B. Importance of Statewide Programs

As stated in D.01-11-066, statewide programs are essential to the Commission's energy efficiency strategy and such programs should be uniform around the state to avoid customer confusion:

Statewide programs will continue to be the backbone of the energy efficiency approach for 2002. These programs serve the Commission's policy goals and objectives by allocating funding equitably across customer classes and geography, providing consistent and recognizable program reach and securing both short- and long-term energy savings and peak demand reduction.

Statewide programs must be uniform, with consistent terms and requirements throughout all the utilities' service territories. These consistent terms should include identical application procedures, financial incentives (if applicable), and other program implementation details. If the utilities cannot align their statewide program proposals, the Commission will choose the elements it prefers from those proposed.³

As we discuss below, many of the IOUs' proposed programs are not uniform. We have modified those proposals to achieve consistency across IOU programs to enhance energy savings statewide. Moreover, while each IOU proposed similar programs, consistent with the requirements of D.01-11-066, they did not categorize all program expenses in the same way. As part of their Program Implementation Plans, discussed more fully later in this decision,⁴ we will require the IOUs, the Department of Consumer Affairs, and Univision Television Group to submit budgets that are more detailed and that categorize expenses consistently across both programs and utilities.

C. Statewide Program Mix

In D.01-11-066, we provided that the program mix for 2002 should consist of the following statewide program types:

· Statewide Residential Programs

o Statewide Residential Retrofit

o Statewide Residential New Construction

· Statewide Nonresidential Programs

o Statewide Nonresidential Retrofit

o Statewide Nonresidential New Construction

· Statewide Cross-Cutting Programs

D. Available Funding

We allocated the following potential funding amounts to each category in D.01-11-066:

Statewide Programs Types	PG&E	SCE	SDG&E	SoCalGas	Total
Residential
Retrofit (existing buildings)	18,700,000	12,750,000	5,897,000	4,248,000	41,595,000
New Construction	6,520,000	4,000,000	2,058,000	1,484,000	14,062,000
Nonresidential
Retrofit (existing buildings)	22,615,000	18,900,000	7,134,000	5,133,000	53,782,000
New Construction	8,700,000	6,974,000	2,743,000	1,973,000	20,390,000
Cross-Cutting
Res/Nonres Retrofit/New Constr.	8,697,000	6,700,000	2,743,000	1,974,000	20,114,000
Statewide Marketing Campaign	4,348,000	3,350,000	1,372,000	987,000	10,057,000
Total Statewide	69,580,000	52,674,000	21,947,000	15,799,000	160,000,000

We discuss each statewide program category and the awarded funding in order below.