VI. Other Issues

A. Program Implementation Plans

We expect each IOU whose programs we have chosen, as well as the DCA and Univision, to file and serve Program Implementation Plans (Plans) no more than 60 days after the Commission approves this decision. Each party shall also post their Plans on their websites in a prominent and easy-to-find location. Edison, the IOU chosen to administer the DCA and Univision programs, shall oversee the filing and service of these entities' Plans. Each Plan shall contain the following information for each program funded (IOUs shall submit one document containing separate Plans for each individual program):

· Title of individual program

· Plans to implement this decision's changes to original proposals

· Revised energy and peak demand savings targets, as well as per-unit energy savings and unit-count projections, as applicable

· Revised cost-effectiveness calculations, as applicable

· For information-only programs with no energy savings targets, other objective measures for evaluating program progress

· Hard-to-reach targets and goals. Where this decision does not specify such targets and goals, the program implementer should define them in its Plan. Where this decision specifies such targets, they should appear in the Plan

· Budget (in the format and following the guidelines set forth in the following section and in Attachment 6 to this decision.)

The Commission will monitor and evaluate the statewide programs using the Plans as a benchmark. No party shall delay program preparations or commencement while preparing or after submission of the Program Implementation Plans.

B. Budgets

The Energy Efficiency Policy Manual required program proposers to submit budgets according the following guidelines:

Any program proposal submitted for Commission consideration should include an itemized budget including the following elements . . . , as applicable:

Administrative Costs

· Labor

· Benefits

· Overhead

· Travel Costs

· Reporting Costs

· Materials and Handling

· General and Administrative costs

· Subcontractor costs

· IOU Administrative Fee (only for non-IOU programs)

Marketing, Advertising, and Outreach Costs

· Itemized (e.g., 6 brochures, 1000 copies @ $10 each)

Direct Implementation Costs

· Itemized financial incentives (e.g., 100 water heaters @ $75 each)

· Itemized installation costs (e.g., 100 14 SEER Central AC units @$2000 each, installed)

· Itemized activity costs (e.g., 100 walk-through audits @ $500 each)

Evaluation, Measurement and Verification Costs

· Itemized, including subcontractor costs

Other Costs

· Financing costs

· Other

The manual also contained a sample budget format.

While the budget information the IOUs, DCA and Univision provided allows us to approve those programs provisionally, we will require that the IOUs and others submit new budgets as part of their Program Implementation Plans before we authorize the first payments. These parties shall follow the budget format found in Attachment 6 to this decision, entitled "Budget Format for Implementation Plan."

We seek budgets with a higher degree of detail than those already provided. Many of the budgets submitted, both by the IOUs and other proposers, did not provide the level of itemization that was called for by the Policy Manual, especially in the area of subcontractor costs. In addition to providing itemization where it is required, we need explanatory material either within the budget table or in footnotes. For instance, formulas for allocating costs to overhead should be explained. If a party uses historical or experiential information to allocate certain costs, it should explain the basis for its allocation. These parties should explain their budgets in straightforward and easily understood language.

So that each budget category reflects comparable information, we will require that program implementers allocate costs in the same manner. Although the "Program Cost Definitions" that the IOUs provided with their statewide proposals were similar, they were not identical; rather, the IOUs and others apportioned like costs under different categories. The IOUs, DCA, and Univision shall meet and confer, and within 60 days of the Commission approval of this decision, file and serve a uniform plan for the allocation of costs within categories, which should be also reflected in their Program Implementation Plans.

Finally, some IOUs noted that certain program costs will be paid by sources other than public purpose funds. Where this is the case, the IOU shall include the costs it expects to recover from another source as a line item so that each budget is comparable.

C. Hard-to-Reach Program Issues

As we note several times in this decision, the IOUs' proposals often fail to include specific targets for hard-to-reach market sectors. We have adjusted their proposals where possible to include such targets, and will require the IOUs to make reasonable attempts to adhere to them. The IOUs should begin this compliance process by submitting the Program Implementation Plans described in Section VI(A) of this decision.

Because we are attempting to use scarce energy efficiency dollars to reach new sectors of the California economy, we will be especially vigilant with the final 15% payment in the area of hard-to-reach consumers. However, no provider will face an all-or-nothing risk with its 15% payment. Rather, amounts at risk will be proportional to the extent to which the providers meet their goals, and all cases will be tested by a reasonableness standard, as further explained in Section VII below. Moreover, IOUs, DCA and Univision will receive 100% of funding during the program period, subject to refund once the Commission evaluates program performance. In this way, programs can continue uninterrupted during the entire program period.

D. Information and Training Programs-Accountability

In connection with marketing and outreach programs - and other, primarily local programs that will focus on providing information and training rather than delivering specified energy savings - D.01-11-066 did not provide for a 15% holdback at the end of the contract term. Rather, we will ensure that such programs achieve the desired results by scrutinizing their quarterly reports. If the final quarterly reports do not demonstrate project success, the final quarterly payment may be subject to refund if the lack of success is due to the provider's failure to take reasonable steps to meet its program goals. We discuss this issue more fully in Section VII below.

We acknowledge that this approach is in some ways stricter than the approach we take with programs that deliver targeted energy savings. We have taken this approach intentionally, because of the potential for information and training programs to be low on substance and high on expense if we do not impose a measure of accountability.

E. Utility Shareholder Incentive Payments

In the past, the IOUs have received shareholder incentives for delivering the energy savings they promise in their annual programs. These incentives are profit for the IOUs' shareholders. In this regard, we stated in the Energy Efficiency Policy Manual that:

In the past, the Commission has offered shareholder incentives to large IOUs for successful program delivery, in lieu of a profit margin. The Commission will no longer make a special provision for shareholder earnings. Both utility and non-utility entities are free to propose program budgets they feel are necessary for their organizations to complete the program delivery successfully.⁴⁸

We assume, based on this statement, that the IOUs and non-utilities have proposed program budgets they feel are necessary to program success. We will not authorize additional incentives to the IOUs or to third parties in connection with their statewide programs. We have subtracted the 7% incentive PG&E and Edison included in their budgets. Because SDG&E and SoCalGas did not include these incentives in their proposals, but rather deferred consideration of profit for energy efficiency programs to their next General Rate Case, we need not adjust these IOUs' budgets.

We will require PG&E and Edison to recalculate their budgets to reallocate the 7% incentive amounts included with each program to direct program implementation costs. These amounts should not disappear into the administrative or overhead categories. Rather, the IOUs should ensure that they devote such amounts to direct program benefits such as rebates.

F. Shifting of Funds

We will not allow the IOUs to shift program funds across program categories except as set forth in this section. Within the following categories, the IOUs may shift no more than 10% of one program's funds into another program in the same category. The IOU may only make the shift if and when it appears that, after substantial efforts, the IOU will be unable to use the program funding for the intended purpose.

Categories:

· Statewide Residential Retrofit

· Statewide Residential New Construction

· Statewide Nonresidential Retrofit

· Statewide Nonresidential New Construction

· Statewide Cross-Cutting (except Codes and Standards Advocacy)

The IOUs shall prominently disclose any such program fund shifting in their quarterly reports. If the IOUs discover that they cannot adhere to this limitation, they may make a motion to the assigned ALJ, to whom we delegate authority to alter the 10% limitation where proven necessary for program success or to avoid program failure.