11. 3 Measure Minimum Rule

We eliminate the 3 Measure Minimum rule (which prohibits IOUs from installing measures in a home that does not require at least three measures) in favor of a rule that allows IOUs to install one or two measures in a home, as long as the measures achieve energy savings of at least either 125 kWh/annually or 25 therms/annually. (Attachment G to this decision specifies, based on the data the IOUs provided with their applications, which measures qualify.)

11.1. Introduction

In D.01-03-028, the Commission granted IOUs permission not to treat homes needing only a few measures, on the ground that such a rule was necessary to maintain reasonable, programmatic cost effectiveness. The Commission and the utilities also concurred that such a provision would allow funding to be geared toward homes that had not yet received energy efficiency upgrades.

Known as the "3 Measure Minimum," this provision appears in the P&P Manual. Specifically, Section 2.9 of the P&P Manual states: "A home must need a minimum number of Program services in order to be eligible for participation in the Program." The following eligibility conditions apply to IOUs:

· In areas served by a combined gas and electric utility, the minimum is ceiling insulation, window/wall air conditioning, evaporative cooling, refrigerator replacement or three other measures.

· In areas served by a gas utility but not an electric utility, the minimum is ceiling insulation or three other measures.

· In areas served by multiple gas and electric utilities, the minimum is defined as if the home were served by a combined electric and gas utility.⁸¹

11.2. Parties' Proposals

In their recent budget applications, PG&E, SoCalGas and SDG&E propose the elimination of the 3 Measure Minimum, outlining several reasons for its elimination.

PG&E claims that the elimination of this provision will allow for more leveraging opportunities with the DCSD and LIHEAP. Under current guidelines, LIHEAP requires that a minimum of four measures be installed in a home in order for it to qualify for treatment. A home requires at least seven measures to qualify for treatment jointly by LIEE and LIHEAP, leaving out homes that do not require seven measures.

Certain housing types, such as multi-family homes, do not generally need this many measures. This barrier to leveraging will be eased by removing the 3 Measure Minimum. In cases where leveraging with LIHEAP providers is not an issue, PG&E states that the comprehensive energy education and measure assessment conducted during enrollment will ensure that a home receives all feasible measures for which it qualifies.

SoCalGas claims that the comprehensive energy audit will result in an adequate number of measures in each home, regardless of whether or not the 3 Measure Minimum is eliminated. SoCalGas estimates that 10%-15% of the homes served in 2009-11 could receive fewer than three measures, based on the total number of gas and electric measures installed in a dwelling in its shared service area with SCE. The majority of these homes would be multi-family homes, according to SoCalGas. The utility plans to begin documenting the status of every home contacted by an outreach specialist, thereby allowing for the identification of any home not served because it does not meet the 3 Measure Minimum. SoCalGas has begun documenting the status of every home currently ineligible under this provision, in hopes of following-up with these customers in 2009.

SDG&E asserts that many of its customers only need a small number of measures to improve energy efficiency. Based on historic data and SDG&E's proposed approach for the upcoming budget cycle, SDG&E estimates that approximately 12%-15% of the homes served in 2009-11 may receive fewer than three measures, the majority of which would be multi-family homes. The elimination of the 3 Measure Minimum would allow for greater involvement of outreach personnel in measure installation, as these workers can install most minor measures. With more outreach personnel involved in measure installation, more customers could be served. Like SoCalGas, SDG&E has begun documenting the status of every home currently ineligible under this provision, in hopes of following-up with these customers in 2009.

DRA states that the Commission should not allow utilities to reduce the number of measures delivered to certain customers, as doing so could negatively impact the welfare of such households. Under the IOUs' budget proposals, DRA claims that low energy users residing in rental units are likely to receive fewer than three measures. DRA argues the elimination of the 3 Measure Minimum runs counter to the Commission's mandate that renters receive LIEE treatment in proportion to their percentage of the low income population, as outlined in D.07-12-051.

Other parties also take issue with the elimination of this provision. A W.I.S.H. claims that the elimination of the 3 Measure Minimum undermines the whole house approach and results in increased overhead costs per measure. A W.I.S.H. points out that the installation of minimal measures may reduce the program's cost effectiveness. Citing the comments of insulation contractors at the July 17 workshop, A W.I.S.H. states that "the cost for minimal services is almost as great as the full spectrum of work needed with a much lower cost-benefit ratio."⁸²

Similarly, Greenlining states that effective weatherization requires the use of an array of different measures, as opposed to individual measures.

11.3. Discussion

We recognize that certain households may need fewer than three measures to adequately improve energy efficiency. However, the Commission also remains in agreement with our finding in 2001 that a provision to ensure households receive a minimal level of measures is necessary to maintain overall programmatic cost effectiveness. The costs of outreach, enrollment and assessment are already quite substantial. Given these costs, the IOUs should ensure that a household receives sufficient measures when being treated.

In an effort to balance these competing issues, we agree to allow certain exceptions to the 3 Measure Minimum. Specifically, we permit the utilities to deliver fewer than three measures to a home, as long as at least one measure results in measure-level energy savings amounting to either 125 kWh/annually or 25 therms/annually. (See Attachment G.) The measures that qualify under this new provision will be updated each budget cycle.

By making this modification, the Commission also ensures a base level of energy savings. The program remains in compliance with the goal of achieving long-term and enduring energy savings and increased leveraging opportunities with LIHEAP. In addition, the new energy savings threshold ensures increased program-level cost effectiveness and measure provision to all eligible and willing customers.

⁸¹ Id., pp. 2-15 - 2-16.

⁸² Comments by A W.I.S.H., filed August 1, 2008, p. 12.