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ALJ/DMG/avs Date of Issuance 6/4/2009

Decision 09-06-016 June 4, 2009

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Develop the Commission's Energy Efficiency Strategic Plan.

Rulemaking 08-07-011

(Filed July 10, 2008)

Joint Application of Pacific Gas and Electric Company (U39E), Southern California Edison Company (U338E), San Diego Gas & Electric Company (U902E), and Southern California Gas Company (U904G) Submitting the California Energy Efficiency Strategic Plan.

Application 08-06-004

(Filed June 2, 2008)

DECISION GRANTING INTERVENOR COMPENSATION
TO NATURAL RESOURCES DEFENSE COUNCIL, GREENLINING INSTITUTE, AND WOMEN'S ENERGY MATTERS FOR SUBSTANTIAL CONTRIBUTION TO DECISION 08-09-040 AND TO COMMUNITY ENVIRONMENTAL COUNCIL FOR CONTRIBUTION TO DECISION 08-09-040 AND DECISION 08-07-047

TABLE OF CONTENTS

Title Page

DECISION GRANTING INTERVENOR COMPENSATION TO NATURAL RESOURCES DEFENSE COUNCIL, GREENLINING INSTITUTE, AND WOMEN'S ENERGY MATTERS FOR SUBSTANTIAL CONTRIBUTION TO DECISION 08-09-040 AND TO COMMUNITY ENVIRONMENTAL COUNCIL FOR CONTRIBUTION TO DECISION 08-09-040 AND DECISION 08-07-047 33

Title Page

Findings of Fact 5858

Conclusions of Law 5959

ORDER 6060

APPENDIX - Compensation Decision Summary Information

DECISION GRANTING INTERVENOR COMPENSATION
TO NATURAL RESOURCES DEFENSE COUNCIL, GREENLINING INSTITUTE, AND WOMEN'S ENERGY MATTERS FOR SUBSTANTIAL CONTRIBUTION TO DECISION 08-09-040 AND TO COMMUNITY ENVIRONMENTAL COUNCIL FOR CONTRIBUTION TO DECISION 08-09-040 AND DECISION 08-07-047

This decision awards Natural Resources Defense Council (NRDC) $15,692.50, Greenlining Institute (Greenlining) $7,688.70, and Women's Energy Matters (WEM) $11,432.50 for their substantial contributions to Decision (D.) 08-09-040 and to Community Environmental Council (CEC) $59,358.85 for its substantial contribution to D.08-07-047 and D.08-09-040. The request by The Utility Reform Network (TURN) is resolved by separate decision.

1. Background

In 2005, the Commission and the California Energy Commission issued California's Energy Action Plan II, which reflected the policy that energy efficiency was to be the resource of first choice to meet California's growing energy demand and the requirement of Public Utilities Code Section 454.5(b)(9)(C) that utilities first meet their "unmet resource needs through all available energy efficiency and demand reduction resources that are cost effective, reliable, and feasible." Energy efficiency was also projected to deliver a large portion of the greenhouse gas emissions reductions necessary to achieve the goals of the California Global Warming Solutions Act of 2006.1

In April 2006, the Commission initiated a rulemaking (Rulemaking (R.) 06-04-010) to review and update energy efficiency programs and policies that anticipated six Phases for the proceeding: (1) Shareholder Risk/Reward Incentive Mechanism, (2) Evaluation, Measurement and Verification (EM&V), (3) Refinements to Policy Rules and Reporting Requirements, (4) Updates to Energy Efficiency Potentials Studies and Savings Goals, (5) Implementation of 2006-2008 Portfolio Plans and Planning Process for 2009-2011 Program Cycle, and (6) Transition Issues and Filings Related to Pre-2006 Programs. (May 24, 2006 Scoping Memo (Scoping Memo) at 2.) The Commission set immediate schedules for Phases 1 and 2, and delayed the other phases which by nature required a slower development process. (Scoping Memo at 24.) Phase 5, covering the energy efficiency planning process for 2009-2011, was among phases considered at a PHC in February 2007. After the PHC, assigned Commissioner Grueneich issued a Scoping Memo and Ruling covering Phases 3, 4 and 5.

On October 18, 2007, the Commission issued D.07-10-032, an Interim Opinion in R.06-04-010 from Phase 5 that "created a framework for sustainable energy efficiency and other demand-reducing programs and a process for accomplishing extensive energy savings through long-term strategic planning." (D.07-10-032 at 4.) The regulated energy utilities were required, inter alia, to:

· Engage in long-term strategic planning, in particular to develop a single, statewide Investor-Owned Utility (IOU) strategic plan for energy efficiency through 2020 and beyond to be included with each utility's application for approval of 2009-2011 energy efficiency portfolios;

· Collaborate with others who engage in planning and delivery of energy efficiency related goods and services, or who receive such services; and

· Integrate customer demand-side programs, such as energy efficiency, self-generation, advanced metering, and demand response, in a coherent and efficient manner. (D.07-10-032 at 5, 138.)

With substantial detail, the Commission stated the Strategic Plan was to identify specific activities and program areas, including focus on new residential and commercial construction and heating/ventilation/air conditioning (HVAC) programs, as well as provide implementation milestones for the 2009-2011 program cycle. (D.07-10-032 at 6.) The Commission provided comprehensive direction to IOUs, other stakeholders, staff, and others involved as to the process for, and content of, the Strategic Plan, including discussion of Program Initiatives, Marketing, Education, Outreach and Training, Portfolio Design, and Measurements of Success. The Commission also set forth a schedule for development of the 2009-2011 Utility Portfolio Applications and Review. (D.07-10-032 at 130.)

During November and December 2007 and January 2008, working groups for four "vertical" market sectors - residential including low income, commercial, industrial, and agricultural - and seven cross-cutting areas - Heating, Ventilation and Air Conditioning (HVAC) systems; DSM Coordination and Integration; Workforce Education and Training (WET); Marketing Education and Outreach (ME&O); Research and Technology; Codes and Standards; and Local Governments - held 36 public stakeholder workshops. The objective of these workshops was to facilitate information exchange and develop an action plan for each market sector and each cross-cutting sector. In January 2008, these "Convener Reports" were provided to the IOUs to inform their strategic planning efforts.

Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), Southern California Gas Company (SCG), and San Diego Gas & Electric Company (SDG&E) (collectively "Utilities") presented an initial draft of their California Energy Efficiency Strategic Plan (IOU Draft) to Commission staff and other interested parties in February 2008, and subsequently revised it.

On June 2, 2008, the Utilities jointly filed Application (A.) 08-06-004 seeking approval of their California Energy Efficiency Strategic Plan (CEESP). As directed by the Commission in D.07-10-032, the proposal included goals, outcomes, and strategies to positively affect California energy market decisions and was the result of an extensive collaborative process with the California Energy Commission and included dozens of workshops and hundreds of participants.

However, the Commission concluded it wanted to incorporate the efforts made by all participants in developing the CEESP "into a Commission-approved plan on behalf of the state of California." (R.08-07-011 at 2.) On July 10, 2008, the Commission opened a new rulemaking, R.08-07-011, to develop a Commission-sponsored California Strategic Plan for Energy Efficiency through 2020 and beyond (now called the California Long-Term Energy Efficiency Strategic Plan) and consolidated the proceeding with A.08-06-004. The rulemaking was to provide a procedural vehicle to consider the CEESP application as part of a larger Commission Strategic Plan. "This rulemaking will allow for development of a record and consideration of ideas above and beyond the detailed strategies and implementation plans discussed in the Utilities' CEESP application." (R.08-07-011 at 3.)

On July 9, 2008, the Division of Ratepayer Advocates (DRA) and The Utility Reform Network (TURN) filed protests to the IOU's CEESP, while the Natural Resources Defense Council (NRDC) filed a response.

On July 14, 2008, assigned Commissioner Dian M. Grueneich and Administrative Law Judge (ALJ) David Gamson issued a Ruling in the consolidated proceeding seeking comments on a Commission Draft Long-Term Energy Efficiency Strategic Plan (Commission Draft) that drew from the joint utility filing in A.08-06-004, the July 9 comments on that filing, and the Commission directives in D.07-10-032.

The Commission Draft described four specific goals, known as the "Big Bold Energy Efficiency Strategies (BBEES)," or programmatic initiatives, established by the Commission in D.07-10-032 and D.07-12-051:2

1. All new residential construction in California will be zero net energy by 2007;

2. All new commercial construction in California will be zero net energy by 2030;

3. Heating, ventilation and air conditioning will be transformed to ensure that its energy performance is optimal for California's climate; and

4. All eligible low-income customers will have a meaningful opportunity to participate in the Low-Income Energy Efficiency program and will be provided all cost-effective energy efficiency measures in their residences by 2020.

At a prehearing conference (PHC) and workshop held on July 18, 2008, the issues in the proceeding were identified in a series of questions for parties to address. On July 31, 2008, the Utilities filed Reply Comments. Also, on July 31, 2008, over a dozen parties filed initial comments on the Commission Draft. On August 7, 2008, parties filed replies to comments on the Commission Draft. Parties' comments and replies to the Commission's Draft are summarized, respectively, in Appendixes 1 and 2 to D.08-09-040.

On September 19, 2008, in D.08-09-040, the Commission adopted the California Long-Term Energy Efficiency Strategic Plan (Plan) and required that the strategies be incorporated into energy efficiency program planning and implementation beginning in 2009. The Plan sets forth a roadmap for energy efficiency in California through the year 2020 and beyond. It articulates a long-term vision and goals for each economic sector and identifies specific near-term, mid-term and long-term strategies to assist in achieving those goals.

The decision was the result of an extensive collaborative process that involved the major regulated energy utilities (IOUs) in addition to more than 500 individuals and organizations. The utilities, stakeholders, parties, and other interested persons primarily contributed to the Commission's decision-making process by their participation in workshops and meetings, and by filing protests, comments, and responses particularly those related to the questions proffered in the July 14, 2008 Ruling. Those questions are as follows:

· What strategies encompassed in the CEESP application should be adopted in a Commission Strategic Plan?

· What strategies delineated in the CEESP application should be modified for adoption in a Commission Strategic Plan, and how?

· What strategies not discussed in the CEESP application should be added and adopted in a Commission Strategic Plan?

· What strategic roles should the Commission take in working with other governmental agencies and other non-jurisdictional stakeholders in support of a Commission Strategic Plan?

· What market transformation strategies, including new or different organizational structures, should a Commission Strategic Plan address or contemplate?

· How should a Commission Strategic Plan coordinate energy efficiency plans with demand response plans and solar programs?

· What specific low-income energy efficiency strategies should be encompassed in a Commission Strategic Plan?

· What process should be used to update the Commission Strategic Plan?

In D.08-09-040, the Commission discussed all of these topics in light of the comments received and how the matters were treated in the final Plan. The Plan, Attachment A to D.08-09-040, implements the Commission's prior direction that "a key element of the Strategic Plan would be that it articulates how energy efficiency programs are or will be designed with the goal of transitioning to the marketplace without ratepayer subsidies, or codes and standards." (D.07-10-032 at 33.) It affirms that market transformation is a unifying objective of the Plan, but due to time constraints the Commission postponed any decision on identifying the process to track progress of program efforts and the metrics to measure that progress. (D.08-09-040 at 10.)

The Plan incorporates the four "Big Bold" energy efficiency program goals and delineates strategies, technologies and an implementation plan for the residential -- including low income, commercial, industrial, agricultural, and HVAC sectors. It also identifies goals, strategies and implementation plans for:

1. improvement of energy codes and standards;

2. demand-side management coordination and integration;

3. workforce education and training;

4. research and technology;

5. marketing, education and outreach; and

6. involvement of local governments, state agencies and other stakeholders.

Finally, the Commission stated the Plan adopted in D.08-09-040 has elements that should be initiated between 2009 and 2011. The utilities have now filed applications seeking authorization for over $3.7 billion worth of energy efficiency programs for 2009-2011, including many programs consistent with the June 2, 2008 joint CEESP application. The Commission directed the utilities to file amendments to their 2009-2011 program applications to "achieve closer integration with the Plan" as directed by the assigned Commissioner and ALJ in the other proceedings. (D.08-09-040 at 17.)

1 California Health & Safety Code, §§ 38500 et seq. (AB 32).

2 Decision 07-12-051 (December 20, 2007) is a companion to D.07-10-032, titled Decision Providing Direction for Low-Income Energy Efficiency Policy Objectives, Program Goals, Strategic Planning and the 2009-2011 Program Portfolio and Addressing Renter Access and Assembly Bill 2140 Implementation.

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