8. Assignment of Proceeding and Other Procedural Matters

Dian M. Grueneich is the assigned Commissioner in these proceedings and David M. Gamson is the assigned ALJ for this portion of this proceeding.

Findings of Fact

1. Energy savings goals established in D.04-09-060 through 2013 were to be updated in 2007. However, D.07-10-032 deferred consideration of new goals for 2009 and beyond.

2. The Itron Goals Update Study and Appendices is based upon the 2008 IOU Energy Efficiency Potential Study, and while imperfect, includes useful and valuable information which can be used to appropriately update energy savings goals for 2012 through 2020 on an interim basis.

3. Total market gross goals encompass both utility savings and savings expected through building codes, state and federal appliance standards, and market transformation programs such as the BBEES described in D.07-10-032.

4. The California Air Resources Board needs the Commission to transmit total market gross energy savings goals for use in AB 32 planning.

5. D.04-09-060 deferred consideration of whether adopted energy savings goals beyond 2008 represent gross savings or savings net of free riders.

6. Energy savings goals calculated for 2009 through 2011 do not reflect changes in underlying factors since the establishment of these goals in 2004.

7. Upon review of the 2008 IOU Potential Study, the gross potential savings for 2009-2011 in that study more closely align with the currently adopted 2009-2011 goals than do net potential savings.

8. There is an interaction between the shift to use of gross energy savings goals for 2009 through 2011 and the risk/reward incentive mechanism adopted in D.07-09-043, as well as potentially other aspects of the energy efficiency regulatory structure.

9. It is possible that the shift to use of gross energy savings goals for 2009 through 2011 may result in a mismatch of risks and rewards for utilities if changes are not made to the risk/reward incentive mechanism and other aspects of the energy efficiency regulatory structure.

10. Waiting until early 2011 to begin the 2012-2020 goals update and establish energy savings goals for utility portfolios would necessarily delay planning and implementation of 2012-2014 energy efficiency portfolios. Establishment of final goals for 2012-2020 must be completed with adequate time for portfolio planning to occur.

11. Energy efficiency reduces the need for supply side resources and not all energy efficiency occurs through utilities. In future Long Term Procurement Planning proceedings, the full effect from all delivery channels of energy efficiency will impact how much supply side resources need to be procured.

12. A three year period provides a reasonable timeframe for updating energy savings potential studies and goals, and for preparing and planning for each subsequent energy efficiency funding cycle.

13. Incorporation of both a total market gross goal and a utility program-specific goal, which measures all savings achievements within IOU service territories, begins to solve the crucial interagency need for a metric appropriate to load forecast, associated reduction baselines, and economically efficient procurement plans.

Conclusions of Law

1. The Itron Study and Appendices provide a reasonable set of figures to update total market gross energy savings goals for 2012 through 2020 on an interim basis.

2. Total market gross energy savings goals on a utility service territory basis, as shown in Table 2, should be adopted on an interim basis and transmitted to the California Air Resources Board as the Commission's interim goals for 2012 through 2020.

3. The interim total market gross energy savings goals established herein should be used in future long-term procurement planning proceedings, until superseded by permanent goals.

4. Energy savings goals for 2009 through 2011 should be gross goals, not net of free riders, to better reflect the 2008 IOU Potential Study and changes in underlying factors since the establishment of these goals in 2004, as discussed herein.

5. The interaction between the shift to use of gross energy savings goals for 2009 through 2011 and the risk/reward incentive mechanism may require revisions of the risk/reward incentive mechanism and/or other aspects of the energy efficiency regulatory structure in order to maintain reasonable rates.

6. The 2012-2020 update of Total Market Gross goals and establishment of utility-specific portfolio goals must be completed by October, 2010 to allow for adequate portfolio planning.

7. One hundred percent of the interim Total Market Gross energy savings goals for 2012 through 2020 should be used in future Long-Term Procurement Planning proceedings, until superseded by permanent goals.

ORDER

IT IS ORDERED that:

1. The total market gross energy savings goals for 2012 through 2020 in Table 2 of Section 4.1 of this decision are adopted on an interim basis. These interim goals are adopted for use by the California Air Resources Board in its Assembly Bill 32 planning process and in the Commission's long-term procurement planning process.

2. The Executive Director is directed to transmit the adopted interim goals for 2012 through 2020 to the California Air Resources Board.

3. Energy utilities shall use one hundred percent of the interim Total Market Gross energy savings goals for 2012 through 2020 in future Long-Term Procurement Planning proceedings, until superseded by permanent goals.

4. Energy savings goals for 2009 through 2011 shall be gross goals, not net of free riders.

5. The 2012 through 2020 interim goals shall be updated and utility portfolio goals shall be established after the 2006 -2008 Impact Evaluation studies are completed (expected to be March 2010) and the inquiry shall be completed by October of 2010. The assigned Commissioner and/or Administrative Law Judge may adjust the schedule for updating and establishing new energy savings goals for 2012 through 2020.

6. Commencing in late 2008, Energy Division shall study the interaction of using gross energy savings goals for 2009 through 2011 and the risk/reward incentive mechanism, leading to a limited review of the risk/reward incentive mechanism and/or other aspects of the energy efficiency regulatory structure in a Commission proceeding.

7. Energy Division shall manage the scheduling details of the 2012-2020 Total Market Gross update and establishment of utility portfolio goals, including the review of market effects protocols, and the vintage of data used. In addition, the update process must include at a minimum a rerun of the Itron ASSET model with 2006-2008 ex-post DEER numbers, and the 2009 adopted market price referent.

This order is effective today.

Dated July 31, 2008, at San Francisco, California.

MICHAEL R. PEEVEY

President

DIAN M. GRUENEICH

JOHN A. BOHN

RACHELLE B. CHONG

TIMOTHY ALAN SIMON

Commissioners

APPENDIX:

IOU Individual Service Territory Goals for 2012-2020

In a hybrid goal structure, goals are established for all energy efficiency actions taken across the market within a utility service territory, referred to as Total Market Gross (TMG), and for the savings associated specifically with each utility energy efficiency portfolio (utility program-specific). Each utility service territory will have an annual and cumulative TMG goal for MW, GWH, and million therms. These goals presented below include the savings from future utility programs, new state and federal building codes, appliance standards, market transformational efforts, and currently mandated efficiency regulations initiated by the Legislature.

Only the TMG goals presented in Table A-1 are adopted by the Commission in this Order. Utility program-specific goals will be adopted in a future Commission Order, as set forth herein. For a further breakdown of the savings associated with each delivery mechanism described above, see the Itron Goals Update Report, Mid-Case scenario rows for the years 2012-2020 in the following tables: C1-18, C2-18, and C3-18 for GWH savings; E2-18, E3-18, E4-18 for MW savings; and G1-18, G2-18, G3-18 for gas savings.

The following tables are a presentation of the breakdown of savings expected in each service territory which make up the TMG goals. Each IOU is represented with its individual GWH, MW, and million therms goals and the portions expected by each delivery mechanism.

Table A-2: Total Market Gross Goals: IOU Total (annual)

GWh	2012	2013	2014	2015	2016	2017	2018	2019	2020
Total Market Gross Energy Savings Goals (cumulative)	2,164	4,075	5,816	7,484	9,205	10,950	12,727	14,510	16,298
Total Market Gross Energy Savings Goals (annual)	2,164	1,911	1,741	1,669	1,720	1,745	1,778	1,783	1,788
IOU "Expansive Net" Goal (cumulative)	1,396	2,544	3,502	4,326	5,151	5,988	6,830	7,670	8,508
IOU "Expansive Net" Goal (annual)	1,396	1,148	959	824	825	838	842	840	838
IOU % TMG Responsibility (cumulative)	65%	62%	60%	58%	56%	55%	54%	53%	52%
IOU % TMG Responsibility (annual)	65%	60%	55%	49%	48%	48%	47%	47%	47%
MW	2012	2013	2014	2015	2016	2017	2018	2019	2020
Total Market Gross Energy Savings Goals (cumulative)	513	991	1,445	1,918	2,428	2,942	3,474	4,008	4,542
Total Market Gross Energy Savings Goals (annual)	513	477	455	472	510	514	533	533	534
IOU "Expansive Net" Goal (cumulative)	277	521	738	938	1,137	1,338	1,541	1,742	1,943
IOU "Expansive Net" Goal (annual)	277	243	217	200	200	201	202	202	201
IOU % TMG Responsibility (cumulative)	54%	53%	51%	49%	47%	45%	44%	43%	43%
IOU % TMG Responsibility (annual)	54%	51%	48%	42%	39%	39%	38%	38%	38%
Million Therms	2012	2013	2014	2015	2016	2017	2018	2019	2020
Total Market Gross Energy Savings Goals (cumulative)	42	114	185	258	330	400	473	545	619
Total Market Gross Energy Savings Goals (annual)	42	72	71	73	73	70	72	73	73
IOU "Expansive Net" Goal (cumulative)	24	48	71	94	116	138	160	181	203
IOU "Expansive Net" Goal (annual)	24	24	23	23	22	21	22	22	22
IOU % TMG Responsibility (cumulative)	58%	42%	39%	37%	35%	34%	34%	33%	33%
IOU % TMG Responsibility (annual)	58%	34%	33%	31%	30%	31%	30%	30%	30%

Table A-3: PG&E (cumulative)

GWH	2012	2013	2014	2015	2016	2017	2018	2019	2020
Huffman Bill	216	432	649	865	1,081	1,297	1,513	1,730	1,946
T24+Federal Standards	97	199	317	458	632	812	999	1,191	1,390
BBEES	83	157	225	300	364	426	498	565	629
IOU Programs	582	1,057	1,448	1,780	2,113	2,451	2,791	3,131	3,469
Total Market Gross	978	1,845	2,638	3,404	4,190	4,987	5,801	6,617	7,434
MW
Huffman Bill	28	57	85	113	142	170	199	227	255
T24+Federal Standards	47	96	151	217	305	396	489	586	686
BBEES	58	112	161	220	274	325	384	441	494
IOU Programs	120	225	320	407	494	582	671	759	847
Total Market Gross	253	490	717	958	1,215	1,473	1,743	2,013	2,282
Million Therms
Huffman Bill	3	7	10	15	20	26	32	39	46
T24+Federal Standards	0	7	15	22	30	37	45	52	60
BBEES	5	14	23	32	41	48	56	64	72
IOU Programs	12	23	35	46	57	67	78	88	99
Total Market Gross	20	52	83	115	148	178	211	243	276

Table A-4: SCE (cumulative)

GWH	2012	2013	2014	2015	2016	2017	2018	2019	2020
Huffman Bill	151	302	453	604	755	906	1,057	1,207	1,358
T24+Federal Standards	83	170	270	390	546	708	874	1,046	1,223
BBEES	66	127	183	245	299	353	413	471	528
IOU Programs	673	1,236	1,713	2,129	2,546	2,969	3,394	3,818	4,241
Total Market Gross	973	1,834	2,618	3,368	4,146	4,935	5,737	6,543	7,350
MW
Huffman Bill	20	40	61	81	101	121	142	162	182
T24+Federal Standards	29	60	94	136	199	265	332	402	473
BBEES	37	71	104	143	178	214	253	292	329
IOU Programs	129	243	345	438	531	625	720	814	908
Total Market Gross	215	415	604	797	1,010	1,225	1,447	1,670	1,892

Table A-5: SoCal Gas

Million Therms	2012	2013	2014	2015	2016	2017	2018	2019	2020
Federal Standards	3	5	8	12	16	20	25	30	35
T24	0	11	23	34	46	57	69	80	92
BBEES	6	15	25	35	45	53	61	70	78
IOU Programs	10	20	30	40	49	58	67	76	86
Total Market Gross	18	52	86	121	155	188	222	256	291

Table A-6: SDG&E

GWH	2012	2013	2014	2015	2016	2017	2018	2019	2020
Huffman Bill	39	79	118	157	196	236	275	314	354
T24+Federal Standards	19	39	63	91	124	158	193	229	267
BBEES	14	25	36	48	57	66	76	86	95
IOU Programs	140	252	342	417	492	568	645	721	798
Total Market Gross	212	395	559	713	869	1,027	1,189	1,351	1,514
MW
Huffman Bill	6	11	17	23	28	34	40	45	51
T24+Federal Standards	6	11	18	26	37	47	59	70	82
BBEES	6	11	16	21	26	31	36	41	46
IOU Programs	28	53	74	93	112	131	150	169	188
Total Market Gross	45	86	125	163	202	243	284	326	367
Million Therms
Federal Standards	0	1	1	2	2	3	3	4	5
T24	0	2	4	6	8	10	12	14	15
BBEES	1	2	4	6	7	9	10	11	13
IOU Programs	2	5	7	9	11	13	15	17	19
Total Market Gross	3	10	16	22	28	34	40	46	52

(END OF APPENDIX)