V. Comments on Draft Decision
Pursuant to Rule 77.7(f)(9), comments on the draft decision and alternate draft decision may be reduced. Here, reduction is appropriate due to the need to put local energy efficiency programs in place in time for Summer 2002. Comments were due May 31, 2002. No reply comments were allowed.
A. Enron Subsidiary
Two parties dispute the decision to deny the Enron subsidiary energy efficiency funding. Both are associated with the program. They acknowledge Enron's woes, but claim there are adequate safeguards and sufficient distance between Portland General Electric, Efficiency Services Group and Enron to mitigate the risk of program failure. As we said in the draft decision, there is far too much uncertainty for us to be able to conclude that the Efficiency Services Group program will be able to serve California ratepayers through 2003. It makes no sense for us to fund a program posing so much uncertainty when there are so many other comparably qualified and necessary programs seeking the same funding.
Moreover, the Enron investigation does include direct allegations against Portland General Electric. We take official notice of an Order to Show Cause issued by the Federal Energy Regulatory Commission (FERC) on June 4, 2002.5 It orders Portland General Electric (among others), to show cause why its authority to charge market-based rates should not be revoked retroactively to February 13, 2002. The order is based on Portland's actions in connection with the investigation noted in footnote 1 of Portland's comments. It is unnecessary for us to find whether the FERC's allegations are true. The mere existence of the Order to Show Cause creates further uncertainty for this Commission as to the financial viability of Portland General Electric.
Moreover, Portland concedes that Enron has some access to Portland cash "through dividends or otherwise," even though such access is "limited." Further, Portland states that it can make cash distributions to Enron as long as the distributions do not cause Portland's "equity capital" to fall below 48% of total Portland General Electric capitalization. With the approval of its Oregon state regulator, Portland General Electric can send additional "equity capital" to Enron. Finally, all Portland can say about the possibility it will enter bankruptcy with Enron is that it "believes that substantive consolidation of Portland General Electric in the bankruptcy of Enron is unlikely." Once again, we are not here to predict the future with certainty. It is sufficient that there is enough uncertainty surrounding Enron and Portland General Electric to allow the Commission to choose another comparably qualified provider whose business affairs do not raise the same concerns.
B. Other Comments
Other commenters claim our chosen energy efficiency portfolio does not provide adequate services to various constituents - for example, residential new construction programs. While we agree that the residential sector is especially hard to reach, we cannot justify granting funding to proposals that do not meet our criteria. We relied on the Commission's Energy Division to select qualified proposals, and if the proposals for hard-to-reach areas and customers were not qualified, they were not selected.
Edison claims we did not allocate adequate funding to cover the IOUs' administrative expenses associated with administering the programs. We disagree. We have set aside $4,880,984 for potential IOU administrative fees, which includes $4,462,052 approved in D.02-05-046 and $418,932 approved here. The total amount reserved for IOU administrative fees represents approximately 4.7% of the total funds approved for third-party local programs.
Other proposers continue to seek funds - or increased funding - for their programs. It is too late for such changes, and we reject these arguments.
We have considered and rejected all other comments submitted.
1. The programs funded herein offer comparably qualified services to those recommended in the draft decision.
2. The funded programs offer needed energy efficiency services not covered by the remaining portfolio of programs selected in D.02-05-046.
3. Each funded program meets the program criteria set forth in D.01-11-066.
4. We take official notice of the fact that Enron Corporation is in bankruptcy and currently is under investigation for activities that contributed to California's recent energy crisis.
5. Efficiency Services Group is a subsidiary of Portland General Electric, which is an Enron subsidiary.
6. Efficiency Services Group's proposal only mentions Enron on one page of its proposal (page 33), and suggests there that it will soon not be part of Enron.
7. Energx no longer has an outstanding California state tax lien.
8. We take official notice of an Order to Show Cause issued by the FERC on June 4, 2002, available at
http://www.ferc.gov/electric/bulkpower/pa02-2/showcause-06-04-02.pdf.
9. Enron has some access to Portland cash "through dividends or otherwise," even though such access is "limited."
10. Portland General Electric can make cash distributions to Enron as long as they do not allow Portland's "equity capital" to fall below 48% of total Portland General Electric capitalization. With the approval of its Oregon state regulator, Portland General Electric can send additional "equity capital" to Enron.
11. Portland General Electric can only state that it "believes that substantive consolidation of Portland General Electric in the bankruptcy of Enron is unlikely."
Conclusions of Law
1. The financial precariousness of Enron renders the Efficiency Services Group program ineligible for program funding. The program may be unable to meet the first criterion set forth in D.01-11-066: "[t]he most important goal of any Commission energy efficiency program is to create permanent and verifiable energy sayings over the life-cycle of the relevant energy efficiency measures." There is too much uncertainty surrounding Enron for us to be able to select its program given the quality of the other programs also seeking funding.
2. In-state programs more closely satisfy the criterion in D.01-11-66 that require that energy efficiency programs take advantage of synergies or coordination of other existing programs, including those run by other state agencies, private entities, municipal utilities, or the federal government than programs headquartered out-of-state.
3. In-state programs offer greater promise than out-of-state programs of meeting the policy preference set forth in D.02-05-046 that programs provide a local presence and leave lasting change or infrastructure at the local level.
4. In-state and community-based programs can more effectively engage in training/capability-building and outreach efforts in local communities across the state, and build infrastructure and strengthen institutions in order to expand the capability for energy efficiency delivery than out-of-state programs.
5. The Commerce Clause is not violated if the state acts as a market participant, which in turn does not require the state have a contract with the party alleging the violation. The Commission in this case is acting as a market participant.
SECOND INTERIM ORDER
IT IS ORDERED that:
1. We award the remaining 2002-03 local energy efficiency funding to the following programs:
Program Administrator |
Program Title |
Approved Budget |
New Programs: |
||
Alliance to Save Energy |
Green Schools, Green Communities |
$1,314,286 |
Energx Controls Inc |
Local Small Commercial Energy Efficiency & Market Transformation Program |
$1,142,857 |
EnSave Energy Performance Inc |
California Variable Speed Drive Farm Program |
$484,977 |
Geothermal Heat Pump Consortium |
Proposal to Promote Geoexchange to SCE Customers |
$1,287,531 |
PECI |
Proposal for Delivering Energy Efficiency Services to Local Independent Grocery Sector |
$3,838,485 |
SBW Consulting, Inc. |
Compressed Air Management Program |
$1,569,524 |
SESCO, Inc. |
The Gas-Only Multi-family Gas Program |
$2,380,952 |
Additional Funding: |
||
California State University Fresno |
Agriculture Pumping Efficiency Program |
$1,487,351 |
Global Energy Services |
Chinese Language Efficiency Outreach (CLEO) |
$345,666 |
State & Consumer Services Agency |
Proposal for a Local K-12 Schools Energy-Efficiency Program |
$1,487,351 |
TOTAL |
$15,338,979 |
2. We set aside an additional $418,932 to cover IOU administrative costs that may result from the inclusion of the foregoing programs.
3. Each selected program shall be bound by the terms and conditions in D.02-05-046, with the exception of certain due dates set forth therein, revisions of which are set forth in Attachment 2 to this decision.
This order is effective today.
Dated June 6, 2002, at San Francisco, California.
HENRY M. DUQUE
CARL W. WOOD
GEOFFREY F. BROWN
MICHAEL R. PEEVEY
Commissioners
I dissent.
/s/ LORETTA M. LYNCH
President
5 The Order is available at
http://www.ferc.gov/electric/bulkpower/pa02-2/showcause-06-04-02.pdf.
