ALJ/DMG/rbg Date of Issuance 8/1/2008

Decision 08-07-047 July 31, 2008

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Examine the Commission's Post-2005 Energy Efficiency Policies, Programs, Evaluation, Measurement, and Verification, and Related Issues.

Rulemaking 06-04-010 (Filed April 13, 2006)

DECISION ADOPTING INTERIM ENERGY EFFICIENCY SAVINGS
GOALS FOR 2012 THROUGH 2020, AND DEFINING ENERGY
EFFICIENCY SAVINGS GOALS FOR 2009 THROUGH 2011

TABLE OF CONTENTS

Title Page

DECISION ADOPTING INTERIM ENERGY EFFICIENCY SAVINGS GOALS FOR 2012 THROUGH 2020, AND DEFINING ENERGY EFFICIENCY
SAVINGS GOALS FOR 2009 THROUGH 2011 22

1. Summary 22

2. Background 33

2.1. D.04-09-060 33

2.2. D.07-10-032 55

2.3. California Air Resources Board 66

2.4. Itron Goals Update Report and March 25 Ruling 77

2.5. Energy Division Recommendations 1010

2.6. Goals for 2009 Through 2011 1414

2.7. PHC and Comments 1515

3. Positions of Parties 1616

4. Discussion 1919

4.1. Total Market Gross Goals for 2012 through 2020 1919

4.2. Use of Total Market Gross Goals in Procurement Planning 2424

4.3. Gross Goals for 2009 through 2011 2626

5. SDG&E Energy Savings Goals 3232

6. Updating Goals for 2012 Through 2020 3333

7. Comments on Proposed Decision 3535

8. Assignment of Proceeding and Other Procedural Matters 3535

Findings of Fact 3636

Conclusions of Law 3737

ORDER 3838

APPENDIX IOU Individual Service Territory Goals for 2012-2020

DECISION ADOPTING INTERIM ENERGY EFFICIENCY SAVINGS
GOALS FOR 2012 THROUGH 2020, AND DEFINING ENERGY
EFFICIENCY SAVINGS GOALS FOR 2009 THROUGH 2011

1. Summary

Today's decision addresses two areas related to energy efficiency savings goals.

First, this decision sets interim energy efficiency savings goals for 2012 through 2020 for electricity and natural gas on a total market gross basis. For 2012 through 2020, total energy savings are expected to reach over 4,500 megawatts, the equivalent of nine major power plants. Further, we expect savings of over 16,000 gigawatt-hours of electricity and 620 million therms over that period. Our adopted goals for the first time include recognition of savings beyond investor-owned utility (IOU) programs from aggressive state building standards and expected federal appliance standards, our Big Bold Energy Efficiency Strategies, and Assembly Bill (AB) 1109 (Huffman)¹ (requiring improvement in general service lighting).

The interim goals we adopt today will be transmitted to the California Air Resources Board (CARB) for use in implementation of AB 32, California's landmark climate change statute.² We believe the goals are generally compatible with the energy efficiency goals in CARB's draft scoping plan, released June 26, 2008. The interim goals also will be used in the Commission's long-term procurement planning process. Energy savings goals will be updated in 2010 and include utility-specific goals as well as total market gross goals.

Second, for 2009 through 2011, this decision clarifies that our currently adopted energy efficiency savings goals will be defined as "gross"-- inclusive of free riders -- in order to better reflect changes in underlying energy efficiency calculations since 2004 and to assist utilities in developing portfolios consistent with the upcoming long-term Energy Efficiency Strategic Plan and Decision (D.) 07-10-032. We plan to consider changes to the risk/reward incentive mechanism adopted in D.07-09-043 later this year, in order to mitigate any potential mismatch of risks and rewards to the utilities which may occur as a result of establishing energy savings goals on a gross basis for 2009 through 2011.

¹ California Lighting Efficiency and Toxics Reduction Act. Statutes 2007, Ch. 534.

² The California Global Warming Solutions Act of 2006. Statutes 2006, Ch. 488.