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ALJ/MEG/tcg Mailed 9/29/2004
Decision 04-09-060 September 23, 2004
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Examine the Commission's Future Energy Efficiency Policies, Administration and Programs. |
Rulemaking 01-08-028 (Filed August 23, 2001) |
INTERIM OPINION: ENERGY SAVINGS GOALS FOR
PROGRAM YEAR 2006 AND BEYOND
TABLE OF CONTENTS
Title Page
INTERIM OPINION: ENERGY SAVINGS GOALS FOR
PROGRAM YEAR 2006 AND BEYOND 1
1. Summary 2
2. Procedural Background 4
3. Joint Staff's March 26 2004 Recommendations 7
3.1. Electricity Savings Goals 8
3.2. Natural Gas Savings Goals 12
4. Positions of the Parties 14
5. Joint Staff's Response to May 2004 Comments and Revised Recommendations 18
6. Discussion 22
7. Comments on Draft Decision 39
8. Assignment of Proceeding 44
Findings of Fact 44
Conclusions of Law 49
INTERIM ORDER 51
List of Tables and Figures
Table 1A - PG&E Total Electricity and Natural Gas Program Savings Goals
Table 1B - SCE Total Electricity Program Savings Goals
Table 1C - SDG&E Total Electricity and Natural Gas Program Savings Goals
Table 1D - SoCalGas Natural Gas Program Savings Goals
Table 1E -Total Electricity and Natural Gas Program Savings Goals (all IOUs)
Table 2 - Joint Staff Electricity Savings Goals Recommendations
Table 3 - Joint Staff Initial Recommendations for Natural Gas Savings Goals (March 26, 2004)
Table 4 - Fraction of Incremental Electricity Needs Met by Energy Efficiency
Programs (%)
Table 5 - Joint Staff Evaluation of Natural Gas Therm Savings Potential (by 2014)
Under Various Program Funding Levels
Table 6 - NRDC Recommended Natural Gas Savings Targets
Table 7 - Joint Staff Projection of Gross Revenue Requirement and Levelized
Cost of Recommended Program Goals for 2006
Figure 1: Natural Gas Savings Potential
List of Attachments
Attachment 1 - List of Acronyms and Abbreviations
Attachment 2 - Impact of Removing Self Generation Production (kWh)
and Sales to Resale Cities from the CEC Consumption Forecast for PG&E
Attachment 3 - Impact of Removing Self Generation Production and Sales to Resale Cities from the CEC Consumption Forecast for SCE on Per Capita Electricity Use Rates
Attachment 4 - Impact of Removing Cogeneration and Resale Cities from CEC Forecasts of Natural Gas Consumption
List of Attachments
(Cont'd)
Attachment 5 - Joint Staff Response to Parties' May 2004 Comments and Revised Natural Gas Savings Goals
Attachment 6 - Joint Staff's Analysis of Rate Impacts Associated with Proposed Natural Gas Program Savings Goals
Attachment 7 - Commission-Adopted Savings Goals for PY2004 and PY2005
Attachment 8 - Comparison of Disaggregated Secret Energy Surplus Study Results and Joint Staff Recommendations for GWh and MW Goals
Attachment 9 - Workpapers and Calculations for Adopted Savings Goals
INTERIM OPINION: ENERGY SAVINGS GOALS FOR
PROGRAM YEAR 2006 AND BEYOND
1. Summary1
The Energy Action Plan, adopted by this Commission, the California Energy Commission (CEC) and the California Consumer Power and Conservation Financing Authority (CPA), identifies reduction of energy use per capita as one of six sets of actions that are of critical importance.2 By today's decision, we have translated this mandate into explicit, numerical goals for electricity and natural gas savings for the four largest investor-owned utilities (IOUs): Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Edison Company (SCE) and Southern California Gas Company (SoCalGas). Electric and natural gas savings from energy efficiency programs funded by ratepayers through the public goods charge (PGC) and procurement rates will contribute to these goals, including those achieved through the low-income energy efficiency (LIEE) program.
Our adopted annual and cumulative goals for energy savings through the year 2013 are presented in Tables 1A-1D, by IOU service territory. Table 1E presents the savings goals for PG&E, SDG&E, SCE and SoCalGas, combined. For the three electric IOUs, today's adopted savings goals reflect the expectation that energy efficiency efforts in their combined service territories should be able to capture on the order of 70% of the economic potential and 90% of the maximum achievable potential for electric energy savings over the 10-year period, based on the most up to date study of that potential. These efforts are projected to meet 55% to 59% of the IOUs' incremental electric energy needs between 2004 and 2013.For natural gas, our adopted savings goals are designed at this time to capture approximately 40% of the maximum achievable potential identified in the most recent studies of that potential. This level of expectation recognizes the fact that natural gas program funding levels have dropped substantially over the last five years, and that ramping up those efforts to meet the full savings potential may take more time than on the electric side. It also recognizes some uncertainty over the level of achievable savings in the non-core sector. Nonetheless, today's adopted natural gas savings goals represent substantial "stretch goals" by anyone's standards: They reflect an increase in savings by 244Mth over the 210 Mth in savings that would be achieved if current funding levels and program effectiveness (therms per dollar) remained constant. In other words, today's adopted goals for natural gas energy efficiency represent a 116% increase in expected savings over the next decade, relative to the status quo.
In sum, we believe that our expectations for energy efficiency savings over the next decade are appropriately aggressive and in keeping with the objectives of the Energy Action Plan. At the same time, they recognize that there may be some practical limits to effectively increasing program funding and ramping up programs to capture the full economic potential of energy efficiency at this time, particular with respect to natural gas savings.
Today's adopted goals will be updated every three years, in concert with a three-year program planning and funding cycle for energy efficiency ("program cycle"). In preparation for the program year (PY) 2006-2008 program cycle, we are in the process of designing the future administrative structure for energy efficiency in a separate phase of this proceeding. The program administrator(s) that we select under this structure will be required to submit energy efficiency program plans and funding levels for PY2006-PY2008 in the coming months to meet the electric and natural gas savings goals we adopt today. Future updates to these goals will be considered for the PY2009-PY2011 program cycle, based on updated savings potential estimates, accomplishment data and other evaluation studies, as appropriate.
Our upcoming decisions in Rulemaking (R.) 04-04-003 concerning the long-term procurement plans and 2005/2006 ongoing procurement authorizations of PG&E, SCE and SDG&E will be made in full recognition of the aggressive energy savings goals we adopt today. For the procurement plans that will be filed in 2006 and during subsequent procurement plan cycles, or for any updating to the long-term procurement plans required by the Commission before then, PG&E, SDG&E and SCE shall incorporate the most recently-adopted energy savings goals into those filings.
More generally, in any application or other filing in which PG&E, SCE, SDG&E or SoCalGas present projections of supply-side resource needs, pipeline or transmission needs, propose new facilities or otherwise utilize projections of energy demand, they must demonstrate that such filings are fully consistent with and reflect today's adopted energy savings goals, or updates to these goals as adopted by the Commission.