CONCURRENCE OF COMMISSIONER WOOD

TO D.02-03-056

This decision identifies the statewide energy efficiency programs for 2002 and builds on the policies adopted in a Commission decision issued last November. In that November decision (D.01-11-066), the Commission established policies and set criteria for the regulated energy utilities' post-2001 energy efficiency programs. In reviewing a draft of D.02-03-056, I came to realize that the November decision had eliminated the shareholder incentive mechanism for energy efficiency programs. I take issue with the manner in which that mechanism was eliminated.

The November decision included a policy manual that set forth the Commission's guiding principles to use in evaluating energy efficiency program proposals and rules to establish the Commission's approach to all aspects of the development of energy efficiency programs. The manual at page 29 stated, "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." Nowhere else in D.01-11-066 was there a discussion of the elimination of the shareholder incentive mechanism.

Prior to eliminating the incentive program, the question of whether it is possible to construct an incentive mechanism that would result in improved, effective energy efficiency programs should have been raised and discussed. I would have benefited from parties' and staff's analysis on this subject. Having stated these concerns, I believe that in the very near future the Commission should review the concept of a shareholder incentive mechanism for these programs.

On another matter, I disagree with the artificial distinction made between "energy efficiency" and "conservation". The decision defines energy conservation as primarily behavioral changes. This includes turning off lights, unplugging a second refrigerator, or using dishwashers at non-peak times. Energy efficiency is defined as permanent changes that are closely tied to the installation of energy efficient equipment, such as purchasing compact fluorescent light bulbs or an energy saving refrigerator. Based on this distinction, the decision provides funding for marketing and outreach programs that focus on energy efficiency messages and rejects a proposal to allocate some funding to conservation activities.

Behavioral and permanent (or equipment-oriented changes) are inextricably connected. The same factors that cause customers to make behavioral changes often lead them to make equipment changes as well. I am concerned that making this arbitrary distinction is counterproductive and will lead to less effective use of advertising and outreach funds.

Despite these concerns, I believe that it is most important that the Commission not delay the initiation of the 2002 energy efficiency program adopted by this decision.

/s/ CARL WOOD CARL WOOD Commissioner

March 28, 2002