5. Next Steps

Today's decision approves the E3 methodology to generate new avoided cost energy forecasts to be used in the evaluation of energy efficiency programs savings. PG&E, SDG&E, SCE, and SoCalGas are directed to use the E3 methodology adopted in this decision in their evaluation of energy efficiency program proposals for program year 2006 and beyond, until further order of the Commission. Each utility should use the adopted methodology, as updated herein, and the resulting avoided cost forecasts in the appropriate SPM tests to determine the combination of programs that will best provide cost-effective energy savings and meet our adopted savings goals.

In order to comply with today's decision and utilize the adopted E3 methodology for forecasting avoided costs, the utilities may need additional guidance on the input data assumptions developed in the E3 report. As discussed above, the E3 forecast will be updated to reflect current gas and electric price forecasts and the applicable CCGT input assumptions approved for use in developing the MPR in R.04-04-026.

The Commission's Energy Division shall conduct a workshop within 10 days of the effective date of this decision for the purpose of discussing any implementation steps necessary prior to utility application of the E3 methodology we adopt today. We are informed by the Energy Division that E3 has constructed an evaluation tool (spreadsheet) that takes output from the E3 avoided cost models and then performs the various cost-effectiveness test calculations set forth in the Standard Practice Manual (SPM). We expect that the workshop will discuss this implementation advancement and address the instances in which it is appropriate to use hourly data or time-of-use data to evaluate certain EE measures. The workshop should also address the role of the Database for Energy Efficient Resources (DEER) data base³⁴ and the Energy Efficiency Programs Reporting Requirements Manual, however, the focus of the workshop should be primarily focused on work and issues necessary for the utilities to meet their upcoming compliance Advice Letter (AL) filing deadlines. Following the workshop, the utilities shall prepare and file compliance Advice Letters describing the steps taken to update the E3 methodology within 14 days of the effective date of this decision.

³⁴ DEER database, http://www/energy.ca.gov/deer.