2. Background on LIEE Programs

2.1. LIEE Program History

The history of LIEE programs dates to the early 1980s, when the Commission instituted energy efficiency programs in response to the energy crisis of the 1970s. After initiating the state's first energy efficiency programs in 1981,³ the Commission determined the utilities' programs should encourage participation by renters, the elderly, and low-income or non-English speaking persons. The Commission subsequently ordered PG&E and SoCalGas to offer low-income customers $200 in credit for energy efficiency installations and SDG&E to provide weatherization measures at no cost to the participant, all designed to help the utilities control the costs and improve the reliability of traditional utility service.⁴ D.83-04-015 laid out the requirements for free installation of energy efficiency measures, called "direct weatherization" for up to 26,400 homes in PG&E's territory. These measures included insulation, caulking, low flow showerheads and water heater blankets.⁵ The objective of the programs was to promote equity and to help relieve low-income customers of the burden of rising energy prices.⁶

The California Legislature subsequently passed Senate Bill (SB) 845, endorsing the Commission's approach and requiring the utilities' continued provision of energy efficiency measures to low-income customers in California.⁷ In 1996, the Legislature enacted AB 1890, which, among other things, guaranteed funding for energy efficiency programs serving low-income electricity customers at levels "at not less than 1996 authorized levels based on an assessment of customer need."⁸

In 1999, the Legislature passed AB 1393 mandating continued utility administration of energy efficiency programs for low-income gas and electric customers, subject to Commission oversight. The legislation was designed to ensure that "high quality, low-income energy efficiency programs are delivered to the maximum number of eligible participants at a reasonable cost." The bill required electric and gas corporations to "work with state and local agencies, community-based organizations, and other entities to ensure efficient and effective delivery of programs." AB 1393 permitted competitive bidding for program delivery and outlined criteria for utilities to use in the bidding process.⁹

In response to the energy crisis in 2000, the Commission increased LIEE program funding and began to standardize and make more consistent LIEE programs, policies and technical standards across the utilities.¹⁰ The Legislature also responded to the needs of low-income customers during the energy crisis when it passed SBX15 in May 2001, allocating $20 million to LIEE and $50 million for an energy efficient appliance purchase and replacement program targeted at low-income households. The Commission concurrently adopted a "rapid deployment" program to expand enrollment in LIEE and CARE, finding that existing programs and marketing efforts were inadequate to address the needs of low-income customers during the energy crisis. The program required that all feasible measures be installed in each LIEE participant's residence.¹¹

The Commission again stepped up LIEE program efforts in October, 2005 after an unexpected increase in energy prices.¹² It issued an emergency order expanding LIEE eligibility levels from 175% to 200% of federal poverty guidelines. The order also simplified LIEE procedures, permitted more creative enrollment procedures, and authorized the utilities to speed up the provision of energy efficient furnaces, heaters, refrigerators and light-bulbs.

In D.05-12-026, the Commission signaled an objective that utilities design budgets with the intent of achieving specific energy efficiency or penetration goals.

Overall, LIEE programs have been designed to serve the interests of participating customers and have received more attention in recent years as rates have increased. LIEE program measures have expanded from simple weatherization measures of the early 1980s to a much broader array of services which include refrigerator replacement, providing heating and air conditioning equipment and funding operation of local sites for customers to escape extreme heat called "Cool Centers."

2.2. Program Budgets, Energy Savings and
Customers Served

Today, LIEE programs offer eligible low-income customers a range of free energy efficiency measures, such as insulation, water heater blankets, CFLs, replacement of older refrigerators, repairs and replacement of air conditioning and furnaces, and energy education. Attachment B provides more information about utility LIEE measures. Nine jurisdictional energy utilities currently offer LIEE programs to California low-income customers: Alpine Gas, PacifiCorp, Sierra Pacific, Bear Valley Electric, Southwest Gas, SCE, PG&E, SDG&E, and SoCalGas. Attachment A describes each utility's program in more detail.

LIEE programs are funded by non-participating ratepayers as part of a statutory "public purpose program surcharge" that appears on their monthly utility bills.¹³ For each budget cycle, the Commission establishes LIEE funding for each utility, which includes the utility's administrative budget. The utility must live within that budget, and any unspent funds are added to the next year's prescribed budget. Two recent Commission orders, D.06-12-036 and D.06-12-038, issued in December 2006, together authorized the nine utilities to spend up to $317 million on LIEE programs serving 170,000 California customers during 2007 and 2008.¹⁴

The utilities' LIEE programs provide substantial energy savings and reduce the bills of program participants. In the past ten years, LIEE programs have served about 1.6 million low-income customers.¹⁵ Average annual bill savings from the programs in 2005 are estimated to be more than $703 a year in PG&E's territory, $669 a year for SDG&E, $780 a year for SCE and $196 a year for SoCalGas.¹⁶ Energy savings statewide in 2006 were about 13.8 megawatts (MW), 60 million kilowatt hours and 2.57 million therms.¹⁷

The following table shows the utilities' 2006 budgets, the number of homes treated, and energy savings:

COMPARISON CATEGORY	PG&E	SCE	SDG&E	SCG	Total
LIEE 2006 authorized budget	$ 88,330,000	$ 27,400,000	$13,368,000	$ 33,325,000	$162,423,000
2006 % LIEE budget of spent	100%	114.0%	108.0%	82.0%	n/a
2006 homes weatherized	48,183	515	12,270	36,843	97,811
2006 homes treated	66,043	53,017	13,771	36,870	169,701
Treated in last decade	496,221	570,695	134,454	377,806	1,579,176
Eligible LIEE participants 2006	1,800,424	1,368,584	352,737	2,039,168	5,560,913
LIEE penetration (treated)	27.6%	41.7%	38.1%	18.5%	n/a
2006 kWh saved	27,915,812	26,762,122	5,311,868	271,719	60,261,521
2006 kW saved	6,009	5,807	1,983	-	13,799
2006 therm saved	1,450,250	-	283,766	834,296	2,568,312
2006 Avrg lifecycle bill savings	$ 702.79	$ 780.00	$ 669.00	$ 196.00	n/a
Notes:
Information on this table is derived from the 2006 Annual Reports of PG&E, SCE, SDG&E and SoCalGas and D.06-12-038.

³ See D.92653, issued January 28, 1981 and D.93891, issued December 30, 1981.

⁴ See D.92653, D.82-02-135, issued February 17, 1982, D.82-11-019, issued November 3, 1982 and D.82-11-086, issued November 17, 1982.

⁵ See D.82-11-019.

⁶ D.86-12-095.

⁷ Pub. Util. Code § 2790.

⁸ Pub. Util. Code § 382.

⁹ Pub. Util. Code § 382 added by Stats 1999, Chapter 700, Section 1.

¹⁰ D.00-09-036.

¹¹ D.01-05-033 and D.01-08-065.

¹² D.05-10-044.

¹³ Pub. Util. Code § 382.

¹⁴ LIEE Annual Reports, 2006, for PG&E, SCE, SDG&E and SoCalGas.

¹⁵ LIEE Annual Reports, 2006, for PG&E, SCE, SDG&E and SoCalGas.

¹⁶ LIEE Annual Reports, 2005, for PG&E, SCE, SDG&E and SoCalGas.

¹⁷ LIEE Annual Reports, 2006, for PG&E, SCE, SDG&E and SoCalGas.