4. Positions of the Parties
In their May 2004 comments on the Joint Staff report, the IOUs recommend that the following technical issues be resolved before finalizing energy efficiency savings goals: (1) reconciling various consumption and population data, (2) removing electricity and natural gas sales to "resale cities"12 (3) removing usage by self-generators, (4) removing natural gas sales to private marketers, to cogenerators and to thermally enhanced oil recovery customers, and (5) removing usage by direct access customers.
PG&E also argues that the Commission needs to address how non-utility generation at customers' premises ("private supply") will be accurately measured on an ongoing basis for the purpose of defining usage within a utility service territory. SESCO concurs with the IOUs that municipal utility customers
and other non-PGC paying customers should be excluded from the calculation of savings goals, as long as the savings achieved by those customers are also removed from the calculation of savings accomplishments.13
Based on their post-workshop comments, SDG&E/SoCalGas and PG&E appear to generally support the magnitude of the electricity goals presented in the Joint Staff. SCE, on the other hand, argues that the Joint Staff recommendations for electricity savings goals for its service territory are not reasonably attainable because they would exceed the "maximum achievable potential" by the year 2012. SCE contends that additional analysis is needed to determine that level of energy efficiency that would represent stretch goals, but could also be counted on for resource planning purposes.14
Some parties take issue with Joint Staff's recommendations for natural gas savings goals, arguing that they are far too low relative to the achievable, cost-effective potential for savings. In particular, ORA points out that there is a large disparity in the aggressiveness of Joint Staff's recommended goals for electricity and natural gas savings. Whereas the electricity report recommends a long-term goal on the order of 90% of the maximum achievable savings potential, the natural gas report recommends a long-term goal that represents only 27.5% of that potential.15
NRDC echoes these observations in its pre-workshop comments, and presents an alternative proposal for natural gas savings goals for consideration. In NRDC's view, a more appropriate savings goal for all three IOUs combined would be a cumulative annual savings of 750 million therms by 2014, or three-quarters of the achievable, cost-effective savings potential presented in the Xnergy studies. Under NRDC's proposal, the savings target would increase by 10 million therms every year until 2010, and then 8 million therms thereafter. Table 6 presents NRDC's proposal for annual and cumulative annual savings over the 2005-2014 period.
SESCO supports the NRDC proposal for a more aggressive natural gas savings goal. SDG&E and SoCalGas recommend that the Commission adopt the Joint Staff recommendations, arguing that the underlying program ramp up rate would be achievable and would result in an acceptable impact on customers' rates.16 However, if the Commission should adopt NRDC's recommended natural gas savings goals, SDG&E and SoCalGas recommend a slower ramp-up in the first two years of the program, equal to the Joint Staff recommendations.
In addition, the IOUs argue that the specific metric used to determine the cost-effectiveness of energy efficiency measures and/or programs, and the avoided costs used for calculating these metrics require further consideration in the process of setting goals for energy efficiency. In its post-workshop comments, SESCO takes issue with the levelized cost method used in the Joint Staff report, and argues that the total resource cost test continues to be the most important cost-effectiveness consideration.
More generally, the IOUs contend that the Joint Staff report needs to also address how savings goals will be established in a forum in which the cost and rate impacts of the goals, as well as their relationship to other policy objectives, can be properly assessed. The IOUs, NRDC, SESCO and Intergy also request further clarification on how the energy savings goals will be used, the applicable timeframe for establishing them, and how they will be updated and coordinated with procurement funding cycles. NRDC also urges the Commission to reaffirm that the purpose of this goal-setting process is to translate into numerical targets the overriding policy goal of pursing all cost-effective energy efficiency opportunities.
Whatever energy savings goals the Commission adopts in this decision, parties appear to be in agreement that they should be updated on a regular basis. Consensus among workshop participants was reached that updating should occur every three years, consistent with a three-year program cycle. In particular, the IOUs recommend that the Commission establish a process whereby adjustments can be made to account for changed circumstances, such as economic growth, community choice aggregation and other significant demand forecasting parameters, and to take into account the existing supply portfolio so that ratepayers do not procure redundant resources.17 NRDC suggests that the Commission update the studies of the full potential for cost-effective gas energy efficiency across all sectors every three years, and then update the natural gas savings targets accordingly. SESCO prefers that the Commission set a
cumulative ten-year savings goal along with annual values needed to achieve that goal, and undertake revisions of the goals as frequently as new data is available. Intergy recommends that energy savings targets be continuously adjusted and refined with accomplishment data, and the results of measurement and evaluation studies.
