II. Background and Issues

The utilities currently implement two types of assistance to qualified low-income utility customers: rate assistance and energy efficiency services. Rate assistance is provided consistent with Public Utilities Code (Pub. Util. Code) §§ 739.1 and 739.2 under the California Alternate Rates for Energy (CARE) program. Under this program, eligible low-income households and group living facilities receive up to a 20% rate discount for their electric and gas consumption.2 Energy efficiency services are provided consistent with Pub. Util. Code §§ 327, 381.5 and 2790.

Direct assistance to low-income customers in the form of energy efficiency education and measures became a statutory requirement in 1990 with the passage of Senate Bill (SB) 845.3 This statute directed the Commission to require gas and electric corporations to perform home weatherization services for low-income households "if the commission determines that a significant need for those services exists in the corporation's service territory, taking both the cost effectiveness of the services and the policy of reducing low-income hardships into consideration." Weatherization measures include attic insulation, caulking, weather-stripping, low flow showerheads, water heater blankets and door and building envelope repairs which reduce infiltration.4 Relamping (i.e., replacing incandescent bulbs with compact fluorescent lamps) and refrigerator replacement has also become a standard service for the utilities. By D.01-05-033, we also authorized the replacement of inefficient air conditioners with high efficiency models, duct sealing and repair, whole house fans, the replacement of inefficient or inoperable water heaters with high efficiency units, and the installation of set-back thermostats and evaporative cooler repair, on a pilot basis. In addition, all of the utilities provide in-home energy education as part of their direct assistance programs. We refer to these direct assistance services as Low Income Energy Efficiency (LIEE) programs.

The individual utilities' LIEE programs have evolved somewhat differently since their inception. These differences range from fairly broad variations in policies and procedures to very specific technical differences in installation standards. The Standardization Project discussed herein was initiated to achieve overall consistency across LIEE programs. In addition to standardizing program policies and procedures, the Commission has also encouraged the standardization of reporting costs and program activities for low-income assistance programs, as described further below.

Since 1999, at the recommendation of the Low Income Advisory Board, we have moved towards uniform, statewide program designs and implementation of LIEE measures.5 As we stated in D.00-07-020, this effort ensures that all low-income customers served by the utilities under our jurisdiction are offered a consistent set of services and that contractors participating in the delivery of those services work under consistent rules and expectations.6 We believe that continuing this effort will improve the consistency and efficiency of providing LIEE services in a nondiscriminatory manner.

The LIEE Standardization Project is being conducted in four phases. Phase 1 and Phase 2 produced statewide weatherization installation standards and a set of common measure-specific policies and procedures, including standardized criteria for the installation of measures in a specific home. These earlier phases also produced standardized policies for customer eligibility, minor home repairs and furnace repairs/replacements, inspection procedures, insulation levels, the eligibility of master-metered units for the program, among others.7

The Standardization Project Team (Project Team) consists of the utilities and the project consultants: Regional Economic Research, Inc. (RER) and Richard Heath & Associates (RHA). The Commission's Energy Division assists in coordinating the effort.8

The objective of Phase 3 is to continue the development of consistency in LIEE programs across utilities by preparing a common, statewide policy and procedures manual and addressing the following unresolved issues:


· Policies relating to the eligibility of residential customers on a business rate.


· Policies relating to the eligibility of program measures based on the heating fuel used by the customer.


· Limitations on expenditures by housing type, including master-metered units.


· Use of pre-approvals of measures to be installed in individual homes.


· Standardization of inspection related dispute resolution procedures.


· Eligibility of renters for evaporative coolers and other equipment measures.


· Revisions to ceiling insulation levels based on updated assumptions.


· More detailed specification of the natural gas appliance testing minimum levels, and


· Post-installation sample sizes.

We address these Phase 3 issues in today's decision. In Phase 4, we will develop a uniform set of standards, policies and procedures with respect to natural gas appliance testing, and address the issue of pre-approvals as part of that review. The final Phase 4 report on these issues is currently scheduled to be submitted in April 2003. As discussed further below, we will also address installation standards for refrigerator outlet grounding during Phase 4.

Public workshops on Phase 3 issues were held on April 3 and 10, 2001. The draft workshop report was circulated for written comment among all interested parties before the project team finalized its submission to the Commission. The utilities filed the LIEE Standardization Project Phase 3 Report (Phase 3 Report) on July 2, 2001, which includes recommendations regarding the Phase 3 issues identified above as well as language modifications to comply with the Commission's Phase 2 determinations in D.01-03-028.

Comments on the Phase 3 Report were filed on August 3, 2001 by SESCO, Inc. (SESCO), Service Provider's Coalition (SPC), Insulation Contractors Association (ICA), California Energy Commission (CEC) and PG&E. Reply comments were filed on August 20, 2001 by the utilities (jointly filed), SESCO, SPC, ICA and jointly by Quality Conservation Services and Winegard Energy (QCS/Winegard).9

In response to comments, the utilities revised their recommendations on ceiling insulation levels and supplemented their filing on September 4, 2001 with information on ceiling insulation levels provided currently under LIEE and non-LIEE programs. By ruling dated September 5, 2001, the assigned Administrative Law Judge (ALJ) provided interested parties the opportunity to comment on the utilities' revised ceiling insulation recommendations, the supplemental information filed on September 4, and three additional standardization issues raised in the utilities' reply comments. In addition, the assigned ALJ requested further clarification from the utilities regarding their policies and practices for providing energy efficiency services to non low-income customers who take energy service (e.g., for home heating) from an entity other than the investor-owned utility (IOU).10 That clarification was provided on September 14, 2001.

On September 20, 2001, ICA filed comments in response to the ALJ's September 5 ruling.11 Reply comments were filed on October 3, 2001 by the utilities (jointly) and SESCO. By ruling dated November 9, 2001, the ALJ requested further comment on two Phase 3 standardization issues, which were addressed by parties in their comments on the draft decision.

The Reporting Requirements Manual (RRM) is the repository for the definitions, the formats and the methodologies for recording costs and effects of energy efficiency programs, including low-income assistance programs. The initial RRM resulted from the Commission's direction, provided in D.86-12-095, for Commission staff to develop a consistent and common framework for reporting on demand-side management activities for all major utilities. An ad hoc RRM Working Group (Working Group) was formed to assist in this task, and has convened periodically through the years to address reporting issues. The group usually consists of Commission staff and representatives from the utilities, but is open to all interested parties.

The RRM has been revised several times since 1986. Most recently in D.01-03-028, we adopted the Working Group's Phase 1 recommendations on reporting low-income assistance program information, with certain modifications. In Ordering Paragraph 15 of that decision, we directed the Working Group to develop recommendations on the following issues related to low-income assistance programs in a second phase report:

Working Group members for the Phase 2 effort included utility program managers and staff involved in the utility-administered low-income assistance programs, representatives from the Energy Division and Office of Ratepayer Advocates (ORA). Representatives from the Community Action Agency of San Mateo County (CCA) and Insulation Contractors Association (ICA) also attended the March 19, 2001 Working Group meeting. The RRM cost-effectiveness technical committee included utility personnel and consultants with expertise and background in the measurement of cost-effectiveness results.12

The RRM Working Group Report and accompanying report of the cost-effectiveness technical committee were filed on April 9, 2001. No comments were filed on either submittal. However, ICA and SESCO included brief comments on cost-effectiveness issues in their comments on the Phase 3 Report.

During our review of LIEE program year (PY) 2000 issues in Application (A.) 99-07-022 et al., we found our inquiry "limited by the lack of consistent data on program bill savings, expenditures and cost-effectiveness calculations, with which to evaluate the relative performance of the utilities' LIEE programs."13 We therefore directed the utilities to develop improved, standardized methods for developing and presenting this information in future Commission proceedings. With regard to bill savings and expenditures, in D.00-07-020 we required the utilities to:

"jointly develop standardized methods for producing data on bill savings and expenditures for LIEE programs on an overall program and per unit basis, by utility. The methods used to produce this information shall be consistent with the methodologies used to evaluate energy efficiency costs and savings in the Annual Earnings Assessment Proceeding [AEAP]. The utilities shall coordinate with Energy Division on all aspects of methodology design and implementation." (D.00-07-020, Ordering Paragraph 7.)

The utilities' final joint report was filed on March 12, 2001. Workshops were held on November 16, 2000 and January 16, 2001 to obtain public input for the report. Attendees included representatives from the utilities, ICA, ORA, Energy Division and several energy research and consulting companies. No comments were filed on the report. In today's decision, we address the report recommendations on cost definitions, energy saving sources and bill savings calculations, and summarize the results for PY1997, PY1998, PY1999 and the first half of PY2000.

2 The CARE discount was recently increased from 15% to 20% per Decision (D.) 01-06-010. 3 Some of the utilities, such as PG&E and SDG&E, provided weatherization services to low-income customer prior to the passage of SB 845. 4 Throughout this decision we use the term "ceiling" and "attic" insulation interchangeably. 5 See Resolution E-3586, D.99-03-056, mimeo. p.18. 6 D.00-07-020, mimeo. p. 86. 7 See D.00-09-036 and D.01-03-028. In D.00-09-036, Ordering Paragraph 5, the Commission instructed the utilities as part of Phase 2 to "jointly develop a standardized customer `bill of rights' for low-income assistance programs, which includes a description of the consumer complaint process", and to describe how they will disseminate this document to customers." We will address the utilities' proposal on this remaining Phase 2 issue, and parties comments, in a separate decision.

8 In our discussion below, we refer to all Phase 3 recommendations submitted by the project team in this proceeding as the utilities' recommendations, even though the project consultants assisted in their development.

9 The reply comments of ICA, SESCO, SPC and QCS/Winegard were filed one workday late. As explained in their motion for acceptance of late-filed reply comments, the QCS/Winegard courier was unable to reach the Commission on the afternoon of Friday, August 17 due to severe traffic problems on the Bay Bridge. Nevertheless, copies were sent electronically and by US mail to all parties on the due date. We find that no parties have been prejudiced by this delay, and grant the motion. 10 See ALJ Ruling dated August 24, 2001 in R.98-07-037 and R.01-08-027. 11 ICA's comments were filed two days late. In their filing and motion for late acceptance, ICA explains that it misread the ALJ's ruling extending the time for filing of replies. The ALJ granted the motion, and we affirm it, finding that no parties were prejudiced by this extension. 12 The technical consultants were TekMRKT Works, Skumatz Economic Research Associates, Inc. and Megdal & Associates. 13 D.00-07-020, mimeo. p. 64.

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