WEM renews arguments made in its December 2, 2002 motion, which was denied by ruling of the presiding Administrative Law Judge (ALJ) on March 19, 2003 and vaguely references its "comments on the workshop."¹⁹ Although WEM fails to clarify what comments it has in mind, we take this opportunity to inform WEM that some of its filings in this proceeding are comprised of frivolous and unprofessional characterizations premised on hearsay, speculation, vague assertions and accusations that are not grounded in any evidence of record or law. (E.g., WEM's December 5, 2003 "Pre-workshop Statement on Customer Needs" at 1; WEM's December 8, 2003 "comment of the draft interim opinion selecting 2004-5 programs and studies" at 3.) We cannot guess what an applicant for rehearing has in mind, nor do we countenance screed. As we have stated supra, WEM must comply with section 1732 and rule 86.1. WEM is on notice that henceforth it shall maintain professional discourse in its dealings with the Commission, as required by rule 1. WEM's allegations are without merit.

B. RESCUE

1. RESCUE has not established that the program funding allocations for IOU programs and for non-IOU programs is contrary to AB 117 or otherwise erroneous.

RESCUE declares that D.03-12-060 "cannot lawfully implement a predetermined percentage of funds to IOUs, even if the Commission states [in D.03-08-

067] that it is not an absolute limit." (RESCUE application for rehearing at 2.)²⁰ In effect, RESCUE is challenging D.03-08-067 because there is actually no discussion of the percentage of funding allocations set aside for IOUs and non-IOUs in D.03-12-060. RESCUE did not apply for rehearing of D.03-08-067 and the challenge is untimely. (§ 1731, rule 85.) In D.03-08-067 we stated:

...[T]his order changes existing policy and practice or articulates the continuation of existing policy and practice as follows:

We will consider using our funding levels of 70% of PGC funding allocated to statewide utility programs, 10% to statewide marketing and outreach and evaluation, measurement and verification and 20% allocated to other non-utility programs, with some flexibility depending on program proposals.... (D.03-08-067 at 2.)

Further:

This order does not, as suggested by some parties, eliminate or in any way limit the Commission's authority to determine the allocation of PGC funding, just as AB 117 does not preclude action by this Commission to establish a separate non-governmental entity to administer EE funding. Nor does AB 117[] require that non-utility entities be permitted to apply for the total amount of PGC energy efficiency funds without limitation.

This order seeks to maintain continuity and the stability of currently successful programs to enable the Commission and interested parties to focus on developing of [sic] an integrated energy efficiency policy framework, including integration of EE programs with procurement activities and settling the question of long-term success of California's energy efficiency programs. In addition, stability and continuity is of great importance because any major shift from current practice in the short-term could disrupt our ability to carry out integrated resource planning. (D.03-08-067 at 4.)

In addition, D.03-08-067 states:

As we learn from the experiences of non-utility programs, we will have data and information available to more accurately access the value of competitive opportunities for funding. Moreover, we do not feel it is prudent to radically change our policies and procedures from the 2003 solicitation as any major disruption could halt the substantial progress we have made so far.... (D.03-08-067 at 14.)

The actual dollars of PGC funds allocated to the IOUs and non-IOUs for PY 2004-2005 are set forth in the table at page three of D.04-02-059, which modifies, in part, D.03-12-060. Non-public utility programs were allocated a total of $99,389,399 of PY 2004-2005 PGC funds in D.03-12-060. This amount is in keeping with D.03-08-067. (D.03-08-067 at 13.) RESCUE vaguely hints at problems in D.03-12-060 but never specifically articulates actual errors or provides support for its position. RESCUE has not presented a timely challenge to D.03-08-067 and its challenge to D.03-12-060 on this point is ineffective. (§§ 1731; 1732; rules 85 and 86.1.)

RESCUE also contends that the different funding levels indicate that the program proposals were treated differently. However, this is an an unfounded conclusion. RESCUE's remaining argument is merely conjecture based on its conclusion. It provides no other information regarding this allegation. RESCUE's assertion is not borne out by the decision, wherein we stated that the programs were evaluated based on the established criteria. While nothing in AB 117 concerns funding levels for various EE program providers, RESCUE argues that even if the Commission has not allocated an absolute amount of funds for IOU programs, it must have created "some sort of limit, and any such limit is contrary to AB 117." (RESCUE application for rehearing at 2.) RESCUE's argument is vague and it fails to provide support for its assertions. Nothing in AB 117 supports RESCUE's allegation.

Additionally, RESCUE alleges the setting aside of a portion of PGC funds for IOUs is "potentially a violation of federal antitrust law."²¹ RESCUE fails to allege any specific antitrust injury it has sustained. Without explaining its point, RESCUE asserts that allocating a portion of funds for IOUs, "regardless of the quality of non-utility proposals would, on its face, appear to be a restraint of trade forbidden by federal antitrust law." (RESCUE application for rehearing at 2.) RESCUE mentions a 1981 law review article by Phillip Areeda, entitled "Antitrust Immunity for `State Action' after Lafayette," 95 Harvard Law Review, but provides no discussion of the article.²² RESCUE does not explain why funding IOUs' qualified EE programs is a restraint of trade nor why such funding "appears" to be forbidden by federal antitrust law.²³ RESCUE references "state action" on page 2 of its application for rehearing, but does not clarify whether it believes D.03-12-060 is an example of state action. RESCUE's argument is too vague to inform us whether it is arguing that D.03-12-060 constitutes state action.²⁴ (Although RESCUE ignores section 399.4, the statute is relevant to the issue since it requires the Commission to "continue to administer cost-effective energy efficiency programs authorized pursuant to existing statutory authority.") RESCUE has not shown that we are not empowered to set aside funds specifically for IOUs. Section 381 specifically requires the Commission to allocate section 381 funds to EE and conservation programs. It is within our discretion to select appropriate programs. RESCUE cites no law in support of its general assertion of antitrust violation and the allegation is without merit.

RESCUE has not shown that we acted unlawfully in allocating a portion of PGC funds for use by qualified IOU EE programs during the 2004-2005 period, or that such action constitutes a restraint of trade in violation of federal antitrust law. While RESCUE may not be not "aware of any California statute which would support the setting aside of electric utility ratepayer [s]ection 381 funds for the utilities[']" EE programs,²⁵ its lack of awareness does not establish error by the Commission.²⁶

RESCUE additionally argues that setting aside PCG funds for IOU EE programs discriminates against minority organizations and contractors. (RESCUE application for rehearing at 3.) RESCUE does not establish that it is a qualified minority organization that has been injured, nor does it allege that any specific minority organization or contractor has been injured. RESCUE's argument that allocation of 80% of the PGC funds for qualified public utility EE programs limits the opportunity of such organizations and companies to secure a representative appears to be a policy argument. RESCUE provides no details regarding what percentage of EE proposals are submitted by minority or veteran organizations or, of that, what percent are qualified. Nor does RESCUE show what percent of minority or veteran programs are selected. RESCUE's reliance on its assumption of the possible rationale employed by the University of California system since 1960 regarding minority student enrollment is irrelevant to this proceeding.²⁷ The example is not well taken. The public interest in continuing qualified EE programs (if that is indeed what RESCUE takes issue with) that have proven to meet the Commission's EE and conservation goals is not akin to the state's interest in diversity among its state university students. RESCUE's allegation is vague and it has failed to establish legal error..

Finally, RESCUE argues that setting aside a portion of PGC funds for electric investor owned utilities (IOUs) "makes state and municipal agencies subservient to the IOUs." (RESCUE application for rehearing at 3.) RESCUE contends that the programs of such agencies that are selected for the portfolio must contract with an IOU "which has oversight responsibility," over the agencies' program activities, thereby rendering the agencies subservient to the IOUs and creating "another conflict of interest in the administration of PGC funds."²⁸ RESCUE does not provide that it has authority to raise issues on behalf of state agencies or municipal governments, nor is it likely that RESCUE has standing to do so. (See e.g., Govt. Code § 12511, which vests such authority over state matters in the State Attorney General.) No state agencies or municipalities have alleged error in D.03-12-060. In this instance, it is unclear what agencies RESCUE has in mind or on whose behalf it is arguing. In any event, RESCUE has not established that D.03-12-060 "[r]equir[es] the governmental agency to be subservient to the IOU in order to receive its energy efficiency program funding...." RESCUE presents unfounded conclusions without any showing of legal error.

2. RESCUE has not established that the Commission applied the evaluation criteria erroneously.

RESCUE appears to be challenging our decision in D.03-08-067 to permit utilities to submit proposals that would extend their current EE program offerings for two years, if such programs satisfy our public policy objectives for evaluating EE programs. D.03-08-067 issued on August 26, 2003, and challenges to that decision are untimely. (§ 1731; rule 85.)

In addition, RESCUE claims that D.03-12-060 implements evaluation criteria for IOU proposals that are different from the criteria applicable to non-IOU proposals. It further contends that PGC funding was awarded to IOU programs that it alleges received "low scores, while at the same time ... [the Commission] rejected non-utility programs with higher scores." (RESCUE application for rehearing at 1.) For reasons discussed supra the allegation is without merit.

RESCUE asserts that awarding funding to "the IOUs with low scores," is a fundamental violation of due process and fair competition." (RESCUE application for rehearing at 1.) RESCUE provides no law in support of its general assertion. RESCUE has not articulated how it believes D.03-12-060 violates due process or fair competition.

In D.04-02-059 we acknowledging that certain language in D.03-12-060 may be confusing, and clarified D.03-12-060 accordingly. Beginning at page 6, D.04-02-059 provides:

...In D.03-12-060, we have strived to create a transparent process for the evaluation of program proposals. Such transparency includes the task of explaining to program proponents how their proposals will be judged. To this end, we have maintained the level of discretion the Commission has used in the past while simultaneously clarifying the scoring criteria. Our objective has been to minimize subjectivity in developing a successful statewide energy efficiency program portfolio that serves many competing objectives.

Ultimately, D.04-02-059 provides that "D.03-12-060 did not create a minimum scoring criteria...." (Id., at 9.) RESCUE has failed to establish otherwise. The allegation is without merit.

Additionally, RESCUE takes issue with the criteria applied to IOU program extension proposals, contending that the criteria are undefined and that D.03-12-060 did not clarify "whether proposed IOU program extensions were judged on the same criteria and were ranked in competition with the non-utility programs." (RESCUE application for rehearing at 4.) In numerous past decisions in this proceeding the Commission has articulated the public interest in continuing successful EE programs.²⁹ To that end, D.03-12-060 provides:

This decision supports the goals established in D.03-08-067 in which this Commission emphasized program continuity and stability of energy efficiency funding while the Commission considers establishing long-term statewide goals, new measurement and evaluation mechanisms, and potential program structure as called for in the Energy Action Plan. []

The programs we fund today build on past successes and seek to incorporate new ideas and technologies where possible as part of a larger effort to reduce the per capita use of electricity in California, reduce costs, and improve the electric system's reliability for California customers. Therefore, we authorize continuation of certain utility programs that we approved in 2003. We continue funding for existing statewide marketing and outreach efforts that provide coordination with private sector energy efficiency programs and energy efficiency messages to consumers through mass-market advertising campaigns, capitalizing on the success of the state's Flex Your Power campaign.

Furthermore, this decision supports the emphasis on integrated resource planning called for in SB 1389, AB 58, and CPUC D.02-10-062 by facilitating integration of procurement-funded energy efficiency programs with other resource acquisition and demand reduction decisions. At the same time, this decision also supports the goals of promoting innovation in energy efficiency programs by providing maximum flexibility in administration of new energy efficiency resources available through utility procurement programs. (D.03-12-060 at 2-3.)

Further, as we stated in D.04-02-059:

Consistent with the intent of D.03-12-060, all programs for which funding is awarded today are subject to the evaluation, measurement and verification procedures and all other reporting, administrative and contracting requirements adopted in D.03-12-060. Parties implementing the proposals funded in today's order shall refer to that order and comply with its requirements. (D.04-02-059 at 10.)

RESCUE has not established that we have erred on this issue.

In addition, RESCUE renews its argument that the Commission has misinterpreted section 381.1 because status as an IOU is not a criterion set forth in that statute with respect to the issue of who can become an administrator of EE programs. RESCUE does not provide authority in support of this argument. Nothing in section 381.1 in particular, or in AB 117, even suggests that IOUs may not be administrators of EE programs. Without providing any support for its argument, RESCUE declares that the decision "violates AB 117 because it implemented significant preferences for the IOUs in the allocation of PGC EE funds and failed to allocate evaluation points that correspond to the criteria adopted into law by AB 117." There is no merit to RESCUE's allegation.

3. Additional allegations of discrimination against non-public utilities.

RESCUE asserts that D.03-12-060 discriminates against non-public utility entities because such entities are not permitted to extend their existing program using 2004-2005 PGC funding. Pursuant to a July 3, 2003 Assigned Commissioner's ruling, the issue of extending public utilities' statewide and local programs for an additional two years (through the end of 2005) was introduced. (D.03-08-067 at 18-19.) D.03-08-067 determined that public utilities should be permitted to propose extensions of their EE programs for the additional two years but not on an automatic basis. (Id., at 19.) To the extent RESCUE is challenging D.03-08-067 its challenge is untimely. (§ 1731, rule 85.)

RESCUE also asserts that under AB 117, IOU and non-IOU programs should have the same opportunities for extension of existing programs. RESCUE does not discuss how AB 117 supports its claim. RESCUE does not allege any harm suffered by non-public utility entities whose programs were or were not extended. Nothing in AB 117 concerns this issue and as discussed above, the allocation of funds is a matter within the Commission's discretion. Further, neither D.03-12-060 nor D.03-08-067 addressed the issue of extensions for non-public utility EE programs. Therefore, this issue now presented by RESCUE was not a material issue in this proceeding.

Next RESCUE contends that D.03-12-060 discriminates against some non-public utility entities, but not others, arguing that the decision grants a "preference to any project proposed by a partnership of an IOU and a local government...." (RESCUE application for rehearing at 5.) RESCUE cites page 15 of the decision, in which the Commission "affirm[s] our position in the July 3 ACR that we strongly encourage proposals from municipalities and local governments that would seek to partner with the utilities...." RESCUE's allegation appears to be based on an assumption that the quoted sentence supports its preference theory, because it fails to provide any evidence of the alleged preference and provides nothing more than conclusory statements about AB 117. The statement does not grant a preference.

RESCUE infers, without actually proving that any preference was in fact granted, that a preference was granted. Based on that unfounded inference RESCUE jumps to its next premise that "[t]o the extent that partnerships between local government and IOU's were granted preference over partnerships between local government and non-utilities, D.03-12-060 violated the provisions of AB 117...." (Id.) RESCUE does not say why. RESCUE concludes this assertion by claiming that "[t]his discrimination also runs afoul of the Commerce Clause of the U.S. Constitution ...." (Id., at 5.) RESCUE cites, but does not discuss, Associated Industries of Missouri v. Lohman (1994) 511 U.S. 641, 646-647, and Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore. (1994) 511 U.S. 93, 98, for the proposition that "[t]he U.S. Constitution does not allow state regulation to favor penalize [sic] companies because of their interstate nature." (RESCUE application for rehearing at 5.) ³⁰ RESCUE provides no argument or other discussion concerning why the cited decisions are applicable. As discussed above, section 1732 and rule 86.1 require parties to provide allegations of legal error, not vague assertions. The argument offered by RESCUE is based on unfounded assumptions and impermissible inferences and fails to adequately inform the Commission what about D.03-12-060 it believes is erroneous. The allegation is entirely without merit.

4. RESCUE fails to establish that public utilities are prohibited from receiving funding for EE programs under AB 117.

RESCUE reasserts an argument it raised in its application for rehearing of D.03-07-034, that AB 117 does not permit public utilities to act as administrators. RESCUE's challenge to D.03-07-034 is not timely. (§1731, rule 85.) In any event, contrary to RESCUE's assertion, it is immaterial that status as a utility is not a criteria set forth in section 381.1 and to that extent, RESCUE's contention is without merit. Section 381.1(a) provides in pertinent part:

... In determining whether to approve an application to become administrators, the commission shall consider the value of program continuity and planning certainty and the value of allowing competitive opportunities for potentially new administrators. The commission shall weigh the benefits of the party' s proposed program to ensure that the program meets the following objectives:

(1) Is consistent with the goals of the existing programs established pursuant to Section 381.

(2) Advances the public interest in maximizing cost-effective electricity savings and related benefits.

(3) Accommodates the need for broader statewide or regional programs.

Not only is there no prohibition against public utilities applying to become administrators, but also the law vests the Commission with the discretion to determine whose program meets its criteria, as long as the programs meet the objectives set forth in section 381.1(a). (See also, §§ 399.4; 701.) Further, the Legislature's noting the importance of program continuity and planning indicates that the Legislature intended public utility EE programs to be included. RESCUE contends that AB 117 states a preference for increasing competition and claims that the Commission cannot comply with AB 117 if it precludes non-IOUs from applying to administer/implement a large share of the PGE EE funds. However, nothing in the statute supports RESCUE's contention that we misinterpreted AB 117. Further, D.03-12-060 succeeds in increasing competition because when AB117 was enacted, non-public utility entities had not participated in any statewide EE programs. Under D.03-12-060, non-public utility proposals for statewide programs were both permitted and accepted.

In addition, RESCUE takes issue with the October 1, 2001 edition of the Commission's Energy Policy Manual. That version was adopted by D.01-11-061 and RESCUE's challenge of that decision is not timely. (§1731; rule 85.) RESCUE also raises issues concerning allocation of funds in past year solicitations, which are similarly precluded from attack at this late date. (§ 1731; rule 85.) The issue is without merit.

5. RESCUE is using this application to impermissibly reargue positions raised in its application for rehearing of D.03-07-034.

RESCUE alleges that we failed to establish policies and procedures for parties to apply to become administrators for cost-effective EE programs. RESCUE raised this issue in its application for rehearing of D.03-07-034. Challenges to D.03-07-034 are not timely. (§ 1731, rule 85.) RESCUE assserts the very same argument, without adding anything new. For all of the reasons set forth in D.04-01-032 on this topic, RESCUE's argument is without merit.

C. CONSORTIUM ET AL.

Like WEM and RESCUE, the Consortium et al., takes issue with the scoring methodology employed, declaring it "arbitrary," and claiming that it impermissibly amends D.03-08-067 in violation of section 1708.³¹ Section 1708 provides:

The commission may at any time, upon notice to the parties, and with opportunity to be heard as provided in the case of complaints, rescind, alter, or amend any order or decision made by it. Any order rescinding, altering, or amending a prior order or decision shall, when served upon the parties, have the same effect as an original order or decision.

The Consortium also takes issue with the description in D.03-12-060 of the scoring process used to compile lists. As discussed supra, D.04-02-059 clarified that it had used inadvertent language that may have led to confusion regarding the process actually used. By D.04-02-059 we clarified D.03-12-060 on this point and corrected inadvertent language that may have suggested the evaluation process employed departed form that we adopted in D.03-08-067. Unauthorized selection criteria was not used to arrive at the EE programs selected for PY 2004-2005, and we did not depart from the process adopted in D.03-08-067. The allegations by the Consortium et al., are without merit.

Therefore, IT IS ORDERED that:

1. The application for rehearing of Decision 03-12-060 filed by Women's Energy Matters is denied.

2. The application for rehearing of Decision 03-12-060 filed by Residential Energy Service Companies' United Effort is denied.

3. The joint application for rehearing of Decision 03-12-060 filed by Consortium for Energy Efficiency, Inc., Efficiency Partnership, The Energy Coalition, Coalition of Utility Employees, Latino Issues Forum, League of Women Voters, National Association of Energy Services Companies, Natural Resources Defense Council, American Council for an Energy-Efficient Economy, Pacific Gas and Electric Company, San Jose Silicon Valley Chamber of Commerce, Silicon Valley Manufacturing Group, Southern California Edison Company, Southern California Gas Company, San Diego Gas & Electric Company, University of California, and California State University, is dismissed with respect to the non-parties and is otherwise denied.

This order is effective today.

Dated September 2, 2004, at San Francisco, California.

MICHAEL R. PEEVEY

President

CARL W. WOOD

GEOFFREY F. BROWN

SUSAN P. KENNEDY

Commissioners

I reserve the right to file a dissent.

/s/ LORETTA M. LYNCH

Commissioner

²³ RESCUE never states that it is alleging an actual legal error. Rather it raises the "potential" for error. There is no way of knowing what RESCUE has in mind in arguing that D.03-12-060 may potentially violate federal antitrust law. Like WEM, RESCUE fails to either provide coherent, intelligent allegations of legal error in D.03-12-060 or support its arguments with relevant legal authority. Section 1732 and rule 86.1 require an applicant for rehearing to present its issues to the Commission with specificity. RESCUE has failed to do so.

²⁴ RESCUE asserts that in allocating the funding, "the Commission is acting in a regulatory role, not in a proprietary role." (Id.) The statement is nothing more than a vague conclusion. RESCUE does not provide insight as to its relevance. Whether the reference is to be used in conjunction with its later state action argument is unclear.The Commission is a regulatory agency, charged with regulating public utilities and is acting in a regulatory role. In this instance, the Legislature has directed the relevant public utilities to collect funds from their ratepayers pursuant to section 381 (for electric utilities) and to hold those funds in special utility accounts for use in energy efficiency and conservation programs approved by the Commission. RESCUE does not explain what it means by, or the relevance of, its parenthetical comment that the Commission would act in a proprietary role if it were spending money from the state's treasury. The Commission is not acting in a proprietary role in this proceeding, since it is not the proprietor of the funds. Moreover, the funds at issue are ratepayer funds and the electric utilities, pursuant to section 381, are acting as trustees of those funds. RESCUE's contention is vague and unsupported, contrary to the requirements of section 1732 and rule 86.1.

²⁹ One of our oft-stated goals in this proceeding is to: "Award funding to entities and programs that are most likely to fulfill established energy savings and public policy goals, and program evaluation criteria." (D.03-12-060 at 6.)

³¹ This rulemaking proceeding has been conducted to date upon notice and an opportunity to comment in workshops and written filings, thus it is not axiomatic that a hearing must be afforded if we alter a regulation under consideration in this proceeding. (§ 1708.5.)