4. The Context for Reviewing LIEE Policy Objectives
and Program Goals

LIEE policy objectives and program goals guide program priorities, the development of LIEE program portfolios and policies, and criteria for setting LIEE budgets and evaluating program success. The Commission has not addressed policy objectives and program goals for LIEE programs in detail in recent years, although the Commission has identified LIEE programs as equity programs designed primarily to reduce the burden of energy bills of participating customers and promote their comfort and safety.21

The Commission's interest in updating LIEE policy objectives and program goals arises in part because of the urgent need to promote programs that improve the energy system infrastructure and reduce greenhouse gases. The state's energy crisis underscored the state's need for adequate and reliable energy resources. With that in mind, the Commission joined with the California Energy Commission (CEC) in developing the Energy Action Plan,22 which finds that energy efficiency is the state's most important energy resource and places it first in the loading order of utility resources.

Even more important over the longer term is the need to reduce greenhouse gases to address global climate change. The California Legislature enacted AB 32 in 2007 which requires the state to reduce greenhouse gases to 1990 levels by 2020.23 By reducing the use of fossil fuel energy resources, energy efficiency programs reduce greenhouse gases.

Most LIEE programs reduce energy use. For that reason, they are important not only to the individual customers they serve, but increasingly important in making progress toward other public policy goals and as an element of the state's energy resource portfolio.

We are also guided by our recent decision, D.07-10-032, on general energy efficiency policy and strategies. In that decision, we recognized the increasing urgency for obtaining all cost-effective energy savings in light of global warming and emphasized the need for long term, strategic efforts that go beyond the jurisdictional boundaries of the utilities. Through D.07-10-032, we have initiated a strategic planning process to engage all types of participants from government, business, non-profit organizations and utilities and which will only be successful with their commitment and contributions. We also adopted three programmatic initiatives:

· All new residential construction in California will be zero net energy by 2020;

· All new commercial construction in California will be zero net energy by 2030; and

· Heating, Ventilation, and Air Conditioning (HVAC) industry will be reshaped to ensure optimal equipment performance;24

The leadership role we take and the principles we have adopted for energy efficiency programs provide a foundation for this decision. While LIEE programs have special qualities and may serve more diverse policy objectives, LIEE programs should build upon the experience, resources and strategic thinking that is available from general energy efficiency work. Our LIEE programs can be improved to serve more customers in better ways. The LIEE programs have satisfied program goals from the standpoint of improving participating customers' quality of life and in some cases reducing their bills. However, a relatively small number of eligible LIEE customers have so far participated. Of the 5.5 million customers in California who qualify for LIEE programs, less than 170,000 received LIEE measures in 2006 and only 1.6 million have been served in the past ten years.25 LIEE programs have also achieved significant energy savings, but significant savings remain, partly because LIEE programs have not emphasized energy savings and partly because LIEE budgets have not been adequate to serve large portions of eligible customers. The energy savings from measures provided to some LIEE participants may no longer persist (such as CFLs or weather stripping) and customers who participated in previous years may not have received the benefits of some program elements or some technological improvements. For these reasons, we revise our prior guidelines for the LIEE programs to enable the utilities to serve more eligible customers and provide more benefits to the general public from energy savings.

On March 23, 2007, the Administrative Law Judge (ALJ) conducted a workshop to seek suggestions on ways to revise policy objectives and program goals. At the workshop, the parties explored how the Commission should define broad policy objectives, and how it should articulate and prioritize those objectives. They also responded to a broad goal proposed informally by the ALJ and discussed in some detail how that proposed goal might influence program design and funding. Subsequently, the parties filed comments in response to the following questions regarding LIEE policy objectives and program goals:26

Below we address three major interrelated issues. We address and clarify LIEE policy objectives. Second, we address program goals in light of adopted policy objectives and how they should be defined for purposes of program design, development and delivery. The third section adopts strategies for meeting our policy objectives and program goals and the criteria for selecting program elements.

4.1. LIEE Policy Objectives

The parties addressed whether we should change the program emphasis from the current program focus, which is mostly concerned with promoting the safety and comfort of participating customers, and, if so, how, focusing on the policy objectives identified in the scoping memo:

· Affordability of energy services by low-income customers;

· Reducing the burdens of energy bills of low-income customers;

· Equity for low-income customers;

· Safety and comfort of low-income customers;

· Energy system reliability and cost-effectiveness (LIEE as an energy resource); and

· Environmental quality and reduction of green house gasses.28

Parties' Positions. Generally, the parties supported the idea of revising the current LIEE policy objectives, which emphasize participating customer benefits, by emphasizing the importance of LIEE programs as an energy resource and thus dedicating more resources to them. Parties' differences were a matter of emphasis.

DRA,29 TURN, A WISH and Greenlining all agree that objectives relating to energy resource procurement and environmental quality are important but are concerned that the Commission not compromise the interests of low-income customers in pursuit of these other broader policy objectives. DRA would have objectives relating to environmental quality and energy system reliability guide funding levels and cost-effectiveness tests for LIEE programs, while having the other four identified objectives - affordability of energy services, lower bills, safety and comfort and equity - guide program design. TURN would make affordability and lower energy bills the highest priority program objective with the assumption that other objectives will be met when low-income customers can "afford essential electricity and gas supplies," as set forth in Section 382(b). A WISH believes all of the Commission's stated goals can be harmonized under a governing principle of "sustainability."

DisabRA agrees that at a system wide level, the several objectives addressed can be conformed. It suggests, however, that at the household level, energy resource objectives may conflict with those that address socio-economic objectives. While energy efficiency measures such as lighting and weatherization improvements serve both types of objectives, some LIEE programs - such as installations of HVAC equipment -- may increase energy usage. DisabRA believes where a conflict occurs, the needs of the household should be primary.

PG&E supports expanding program objectives beyond those that emphasize equity. It places a high value on the energy savings attributable to LIEE programs, but like TURN, DRA and A WISH, recommend retaining an emphasis on the benefits of the program to participants in terms of health, safety and personal comfort. PG&E supports an expansion of LIEE programs, but asks the Commission to consider the impact of program costs on other ratepayers. PG&E also points out the importance of meeting AB 32 objectives and LIEE program contributions to those objectives.

SCE suggests adding energy system reliability and cost-effectiveness to the list of policy objectives but generally agrees with the objectives listed in the scoping memo.

SDG&E/SoCalGas believe the Commission's policy objectives should emphasize energy savings. They state that additional low-income customer needs can be served utilizing other programs such as CARE and bill payment assistance programs. SDG&E/SoCalGas comment that safety and comfort should not be viewed as separate goals but should be considered in activities undertaken to achieve energy savings.

Southwest states its general support for all of the identified objectives.

Discussion. Energy efficiency is the state's most important energy resource and the Commission has put its ratemaking and policy-making authority behind that policy. This commitment to energy efficiency as an energy resource has so far not extended to LIEE programs, largely because we have emphasized the programs' role in promoting participant equity, cost savings and comfort.30 From a practical standpoint, however, LIEE programs are distinguishable from other energy efficiency programs only insofar as they serve a targeted group with a particular need for assistance, and they are offered at no charge. These program characteristics are not a barrier to treating LIEE programs as a reliable and essential energy resource.

As a threshold matter, we consider the statutes that govern LIEE programs. Four sections of the Public Utilities Code refer to specific policy objectives for LIEE utility programs, all emphasizing the need to reduce utility bills and the need for affordable energy.31 Section 2790 requires the utilities to provide weatherization measures to low-income customers to serve a "policy of reducing energy-related hardships facing low-income households." Section 382(b) refers to the provision of energy efficiency (and other) programs that would "meet legitimate needs" of customers who are "unable to pay their electric and gas bills," recognizing that "all residents of the state should be able to afford essential electricity and gas supplies" and should not be "overburdened by monthly energy expenditures." Finally, Section 327 directs the utilities to implement LIEE programs in ways that `reduce consumers' electric and gas consumption, and bills."

This emphasis on reducing energy bills and relieving customers of associated financial hardships is especially relevant because so few eligible customers have so far participated in LIEE programs. LIEE programs serve only about 3% of eligible customers a year and less than one third of eligible customers have received the benefits of LIEE programs over the past ten years, although utility rates have increased dramatically during that time.

The statutes' emphasis is also consistent with treating LIEE programs as an energy resource: when LIEE programs result in lower energy bills, they do so as a result of lower energy use. Lower energy use means a more reliable and less costly energy infrastructure. Accordingly, a policy objective that treats LIEE as an energy resource complements those identified in the statutes that govern LIEE programs. This objective complements policy objectives that address other societal values, such as customer safety, comfort, and environmental protection.

Placing a greater emphasis on LIEE programs as an energy resource need not overwhelm other policy objectives. The needs of LIEE program participants remain important to us and certainly to the broader community LIEE programs are designed to serve. Energy rates have increased substantially over the past 10 years while the average incomes of low-income customers have not.32 As the parties observe, low-income customers need LIEE programs and those programs serve important social objectives. We do not intend to downplay those needs or objectives. Moreover, increasing the emphasis of the role of LIEE programs to produce energy savings justifies a more comprehensive program that can serve more customers in need and, by implication, larger budgets for providing cost-effective programs. For all of these reasons, treating LIEE programs as energy resource better serves both eligible customers and the public interest.

Although we have occasionally referred to the "safety and comfort" provided by LIEE programs, we recognize that energy efficiency measures can affect a customer in several ways depending on the customer and his or her circumstances. For example, the installation of a new furnace could motivate the customer to increase personal comfort by making the environment warmer, while forgoing a lower bill. Alternatively, the customer could keep the same level of comfort and pay a lower utility bill, which would provide more disposable income for other needs. The customer could also reduce the use of heating equipment in response to understanding more and better ways to conserve and use energy. Thus safety and comfort are benefits among several that improve the customer's "quality of life," a phrase which recognizes the customer's discretion to choose how an LIEE measure may affect his or her energy use and spending.

To conclude, we clarify that the key policy objective for LIEE programs, like that of our non-LIEE energy efficiency programs, is to provide cost-effective energy savings that serve as an energy resource and to promote environmental benefits. Concurrently, we retain our commitment to ensuring the LIEE programs add to the participant's quality of life, which implicates equity, energy affordability, bill savings and safety and comfort for those customers who participate in LIEE programs. Overall, the shift in LIEE policy objectives as programs that provide energy resources should result in increased customer participation and thereby bring the benefits of the programs to those who need them most.

4.2. LIEE Program Goals

Having articulated our key LIEE policy objectives, we turn to clarifying LIEE program goals. Our adopted policy objectives will be best served by articulating a program goal that will guide portfolio development, budgets, and program strategies.

Following a workshop discussion on a broad goal for LIEE program implementation, the scoping memo in this proceeding asked the parties to comment on the following goal:

To assure that the residence of every low-income customer in California is energy efficient by 2015.33

The ruling also asked the parties to discuss how the terms of this goal might be defined and what the goal might include in terms of LIEE program elements or energy efficiency measures. The answers implicate the criteria used to design utility LIEE programs and portfolios. Such criteria might include cost-effectiveness, maximizing energy savings, equity considerations or targeting identified demographic groups.

Parties' Positions. No party raises objections to the proposed program goal. LIF, DRA, TURN, A WISH and Bo Industries support it and, in some cases, suggest that related program expansion is consistent with the Commission's pursuit of other clean energy solutions such as solar, energy efficiency, and demand response programs. TURN believes the goal articulates the "scope, pace and direction" of LIEE. TURN recommends defining the goal to include all measures that improve the affordability of energy services to low-income customers.

Consistent with its comments on policy objectives, DisabRA raises concerns that the definition of energy efficiency should not require each household installation to result in reduced energy use. A WISH states that energy efficiency should be defined to encompass health and safety. Similarly, TURN notes that if health and safety warrant additional measures, the definition should not prohibit their implementation.

PG&E does not object to the proposed goal but suggests it needs to be defined in a way that is more specific and measurable. It suggests, for example, that the terms "residence," "every low-income customer" and "energy efficient" be defined, although PG&E does not recommend any particular definitions at this time.

PG&E suggests that some program elements or measures be included in the broad goal and others be offered outside the constraints of the goal. It recommends program elements to achieve the goal be considered in light of several criteria, such as cost-effectiveness, equitable allocation of program benefits, and rate impacts.

PG&E also urges that the Commission recognize that the goal is unlikely to ever be met because of changes in customers' status and residences. Finally, PG&E would change the date to 2020 to conform to the greenhouse gas reduction target date of 2020 as established in AB 32. SDG&E/SoCalGas makes similar comments, and urge the Commission to conduct working sessions to refine the goal. They believe that all LIEE program elements should be selected and designed to accomplish the Commission's primary goals and objectives, which they would identify as energy savings. SDG&E/SoCalGas also requests that the Commission address cost-effectiveness tests and related issues as soon as possible, to guide portfolio design and evaluation.

SCE does not object to the proposed 2015 goal but recommends modifying it to state that residences are "more" energy efficient rather than just "energy efficient" because technologies continually change. Like PG&E, SCE suggests a process to clarify or define terms in the goal including "every low-income customer," "residence" and "energy efficiency." SCE proposes to define the target group of customers as those already participating in the CARE program. SCE urges the Commission to emphasize that utilities are only responsible for serving low-income customers in their respective service territories and not all of California.

SCE comments that requiring programs to be cost-effective will influence the types of programs that may be offered. It suggests the Commission undertake additional analysis of the use of cost-effectiveness methodologies but would not slow down the progress of LIEE program and policy development. It believes cost-effectiveness tests are useful ways to compare LIEE program options even if the methodology requires work.

SWGas believes the program goal should not constrain the utilities from installing LIEE measures that may remediate a hazardous condition or modifying the premises to conform to building codes as required prior to the installation of program measures.

For purposes of calculating achievement toward the goal, ACCES would include all customers who are eligible for CARE or Low-Income Home Energy Assistance Program (LIHEAP) programs.

Discussion. The parties generally support the ALJ's proposed program goal to provide energy efficiency measures to all eligible low-income customer residences by 2015. They do, however, raise concerns about how the elements of the goal would be defined, how the goal would be applied and its overall significance. Based on the parties' comments, we modify the goal to clarify that it would apply to all eligible customers who wish to participate in LIEE programs and only incorporate energy efficiency measures that are, using our adopted methodologies, cost-effective. We therefore adopt the following:

To provide all eligible customers the opportunity to participate in LIEE programs and to offer those who wish to participate all cost-effective energy efficiency measures in their residences by 2020.

The statement serves important purposes. It provides a target for developing utility programs, budgets and delivery strategies. It signals to energy efficiency markets and the broader community our ongoing commitment to LIEE programs and to their more aggressive deployment. We recognize that cost-effective energy efficiency technologies will change over time and may change quickly. Moreover, the population of eligible customers will change continually so the goal to serve all eligible customers may never be fully achieved. In recognition of these limitations, we refer to this statement not as a goal, but rather as a programmatic initiative reflective of those adopted in D.07-10-032.

We include reference to cost-effectiveness in determining what measures and strategies should be included as part of the programmatic initiative.34 We do so partly on behalf of non-participants who support these programs and because we can justify larger budgets and more comprehensive programs based on cost-effectiveness criteria. Cost-effectiveness tests may need refinement in order to reflect the value of LIEE programs, as our rulemaking states, and cost-effectiveness is certainly not the only criteria the utilities should use in developing their overall portfolios.

The programmatic initiative we adopt here signals where we expect the utilities to focus their efforts. However, we will continue to authorize funding for measures that serve important social objectives but may not be cost-effective, as long as they serve our primary objective of reducing energy use and promote other values such as participants' quality of life. Although we intend to apply the adopted programmatic initiative to programs that emphasize energy savings, other program measures that provide other benefits may still be justifiable. We will address this issue in detail when we have more information about individual program costs and benefits that is presented in utility LIEE portfolio applications for 2009-2011 programs.

We revise the target date of the programmatic initiative to 2020 to conform to the timing adopted for the programmatic initiatives in our recent energy efficiency decision, D.07-10-032. Further, we agree with PG&E that the LIEE target date should conform to that of AB 32.

We do not adopt SCE's proposal to define "customer" as customers who subscribe to CARE. Defining LIEE customers as those who are CARE customers would unnecessarily limit efforts to increase LIEE participation. We adopt a definition of "customer" as any eligible utility customer who wishes to participate in the LIEE program and is able to participate in the program. This eliminates from inclusion in the programmatic initiative those customers who, for whatever reasons, may not wish to participate or cannot participate in the LIEE program and therefore does not impose unreasonable expectations on the utilities in their efforts to achieve the initiative.

We agree with SCE that jurisdictional utilities should not be required to serve customers outside their own service territories. As we will discuss later in this order, we do expect the utilities to leverage the resources available to them within and outside their territories and jurisdictions to the extent practical.

We agree with SWGas that, notwithstanding the types of measures that might be employed to achieve the programmatic initiative or the criteria for what measures and program elements to employ, the utilities should be permitted to take the following steps in homes where they are installing LIEE measures:

Modifying the premises or installing equipment that would reduce or eliminate a hazardous condition where the equipment or modification is related to the LIEE measure, and

Modifying the premises or installing equipment that would conform the premises to existing building codes and standards where the equipment or modification is related to the LIEE measure.

We expect the utilities to undertake these types of building modifications and repairs when they are perceived to be cost-effective or where they are minor and do not impose significant cost. In cases where there is NGAT failure, the utilities should make repairs according to adopted policy for NGAT installations.

The LIEE programmatic initiative we adopt today sets the stage for more aggressive and innovative LIEE programs. It should serve as guidance for the LIEE portion of the long-term statewide strategic plan directed in D.07-10-032 which will, in turn, guide the development of the utilities' 2009-2011 portfolio applications.

4.3. Strategies for Attaining Our LIEE
Objectives and Today's Adopted
Programmatic Initiative

In this proceeding, the parties have discussed ways to increase LIEE program participation, make progress toward an adopted programmatic initiative (formerly a program goal), and improve program cost-effectiveness. We address them here in several subtopics, some of which are interrelated: A Longer Term Strategic Approach; Integrating LIEE with Energy Efficiency Programs; Leveraging Available Resources; LIEE Program and Portfolio Focus; LIEE Program Implementation Strategies; Education and Outreach; Budgets and Administration; Cost-benefit Methodologies; and The Ten Year Rule.

4.3.1. A Longer Term Strategic Approach

D.07-10-032 sets out a roadmap for more strategic and comprehensive energy efficiency programs in California. The foundation for such an approach is more strategic thinking and the development of a single, comprehensive statewide energy efficiency strategic plan. The reasoning for that approach is relevant to LIEE programs - California's opportunity to maximize the benefits of energy efficiency requires a focused effort that leverages all available resources, looks beyond the jurisdictional boundaries of the regulated utilities, and emphasizes long-term impacts. As we stated in D.07-10-032:

Our emphasis on long-term, collaborative planning and implementation implies several broad themes, which we rely upon in evaluating the best ways to approach energy efficiency efforts over the next several years:

1. We will achieve maximum savings by providing
integrated customer demand-side programs.
Integrating our numerous customer demand-side programs will avoid duplication of efforts, reduce transaction costs and diminish customer confusion. We must understand how the programs intersect and take advantage of the interactions.

2. We commit to strategies, programs, measures and
institutional structures that provide long-term results.
We consider energy efficiency a long-term resource and utility programs and our regulatory oversight must prioritize long-term planning. Energy efficiency strategies cannot be selected solely on the basis of short-term payback periods or quick results. Accordingly, we direct the utilities to develop a single strategic plan and adopt three long-term programmatic initiatives for consumer demand-side programs in residential new construction, commercial new construction, and HVAC systems.

3. We will use all available regulatory and market
based tools.
Our utility energy efficiency portfolios employ a wide range of programs, including research and development, emerging technologies, codes and standards, public education and marketing, rebates and subsidies, and market transformation. The integration of each of these necessary tools can maximize impact and should be clearly articulated.

4. We will engage a wider range of entities and
institutions in developing and delivering programs.
In the past, we have emphasized utility programs, utility funding and utility customers. This is logical given the limits of our legal jurisdiction, but this approach has resulted in fractured energy efficiency program development and delivery. Cost-effective use of resources for maximum reductions in energy demand will require the commitment of the most influential decision-makers who can affect comprehensive change. In order to reach a goal of making energy efficiency an integral part of "business as usual," we need a pronounced commitment from business and government leaders and a more collaborative approach that involves all key stakeholders. We emphasize the need for enhanced cooperation and collaboration and commit to a leadership role in reaching out to key leaders to engage participation in this effort and direct the Investor-owned Utilities (IOUs) to do likewise.35

We reiterate these four themes here as equally appropriate to LIEE programs. Most notably, we reiterate the directive in D.07-10-032 that the utilities' comprehensive long-term statewide strategic energy efficiency plan include a section on LIEE. That decision laid the groundwork for this decision and directed that "the strategic plan shall address the use of LIEE programs both as stand alone programs and in conjunction with general energy efficiency and customer-side programs."36 D.07-10-032 determined that further guidance would be provided in this decision. The following sections of this decision describe the elements that are to be included in the LIEE portion of the statewide strategic plan. We also provide a list of required elements later in this decision.

4.3.2. Integrating LIEE with Energy Efficiency
Programs

This rulemaking and the associated scoping memo states our goal to better integrate LIEE programs with energy efficiency programs. Achievement of the policy objective we adopt today -- that LIEE programs are primarily energy resource programs and not subsidy programs -- can only be successful if the utilities and the Commission take advantage of the expertise, resources and momentum that is available by better integrating LIEE programs with energy efficiency programs. Doing so will assure that LIEE programs can take advantage of the visibility, lessons and resources of energy efficiency programs.

We direct the utilities to integrate more completely their LIEE and energy efficiency programs through approaches that complement both programs and with an eye toward eventually managing them as part of a single program. Our own staff should do likewise and consider ways to integrate the two programs. The utilities' statewide strategic plan should identify ways the utilities can and will integrate LIEE programs with existing or future utility energy efficiency infrastructure.

4.3.3. Leveraging Available Resources

Another effective method to improve and increase energy services to customers cost-effectively is to employ all available resources and coordinate with others in pursuit of those resources. The parties suggested some ways of doing that.

ACCES recommends the utilities strive to leverage utility-provided LIEE funds with funding from the Low-Income Household Energy Assistance Program (LIHEAP), the federal Department of Energy's Weatherization program, community development block grants, municipal utility and local programs, and the CSI. DRA would also look beyond utility-only programs and investigate ways to improve energy efficiency by coordinating with building industry and manufacturers, and developing cooperative efforts with other government agencies, businesses, and publicly-owned utilities.

In response to the ALJ's May 22 ruling addressing renter issues, PG&E, Sierra Pacific, PacifiCorp, and SWGas argue that no Commission action is needed since they each contract already with CBOs who work to secure LIHEAP and Department of Energy funding. SCE suggests that utilities should offer all measures, not just refrigerators, to LIHEAP contractors at no cost. SDG&E/SoCalGas comment that utilities work with the California Department of Community Services on creative approaches to improving access to both LIHEAP and LIEE programs. A WISH urges the Commission to compile a comprehensive list of all potential federal and state funding sources and then work with all entities that fund energy efficiency programs to leverage California's access to that funding. A WISH also suggests that the Commission set leveraging goals for each utility.

Discussion. In setting forth a strategic direction for energy efficiency, D.07-10-032 emphasizes the need to leverage resources by looking beyond the boundaries of utility territories, Commission jurisdiction, and the confines of existing energy efficiency programs. We adopt that emphasis here for LIEE programs. That is, we expect the utilities to broaden the scope of their efforts, and coordinate with other agencies and businesses in designing, delivering and implementing LIEE programs. We also expect them to take advantage of the resources, marketing and advertising efforts of other utility demand-side management programs, such as the CSI and energy efficiency programs. D.07-11-045 recently approved $108 million as part of the CSI program to provide owner-occupied, single family low-income homeowners access to solar photo voltaic systems. To receive the monetary incentives to participate in this program, applicants must enroll in LIEE and have LIEE measures installed. This cannot be accomplished without coordination between the two programs. The LIEE portion of the utilities' state wide strategic plan should address how the low-income element of the CSI program will be coordinated with LIEE. To the extent LIEE programs are integrated with energy efficiency and other demand side programs, the utilities will be able to take advantage of the broader community with regard to more strategic ways to approach LIEE programs.

The LIEE portion of the utilities' strategic plan should propose ways to leverage resources, whether across utility programs or by way of the broader community. We plan to explore this and other LIEE issues that will be addressed in the strategic plan and 2009-2011 LIEE utility portfolio applications in workshops and other collaborative forums. We direct the utilities to include as an appendix to the strategic plan A WISH's list of resources for low-income programs and other tools to better coordinate with other organizations and businesses.

4.3.4. LIEE Program and Portfolio Focus:
Cost-Effective Methodologies

Next we address whether and how the utilities' current portfolios of LIEE programs should change to implement today's decision.

SCE comments that its current program addresses a variety of policy objectives by providing comprehensive energy efficiency improvements that contribute to system reliability while reducing participants' energy costs and increasing their comfort. SCE states that the benefits of these programs are especially pronounced in extreme climate areas. SCE proposes to continue to include education, lighting and cooling as essential elements of its LIEE program.

ACCES and A WISH urge that the following measures be included in the utilities' portfolio to meet the programmatic initiative adopted today:

· All current measures provided by the utilities

· All weatherization measures provided under LIHEAP and the Department of Energy's Low-Income Weatherization Program

· Solar measures

· Energy education

· Water conservation measures

· Measures and programs designed to minimize casualties related to extreme weather

Greenlining urges us to ensure that LIEE programs emphasize advanced energy technologies, such as solar, hydrogen and wind energy. Greenlining also emphasizes the need for energy savings as a way of reducing financial burdens and improving quality of life.

Discussion. Our programmatic initiative that all eligible and willing customers will be served by cost-effective LIEE programs by 2020 is likely to require a significant shift in LIEE program and portfolio design. As SCE observes, however, it is premature for the Commission to determine exactly which energy efficiency measures can or should be included. We do not know how expansion of measures beyond those currently offered might affect utility budgets and energy rates, and we do not know whether the utilities could even manage a substantially bigger portfolio of programs in the near term.

The list of measures A WISH and ACCES would include to implement the programmatic initiative is thoughtful but perhaps unrealistic, especially programs for installing solar equipment and water conservation measures, which have not been demonstrated to be cost-effective and which may be very expensive.

Similarly, we are not prepared to commit to funding installation of all advanced energy technologies in all LIEE households, as Greenlining proposes, because we are considering the implementation of CSI in R.06-03-004. We are also mindful that the deployment of advanced technologies should not foreclose less expensive and more basic energy efficiency applications.

Under our general energy efficiency rules, utility portfolios must include measures that provide long term, enduring energy savings, and we emphasized this policy in our recent decision, D.07-10-032. Examples include programs for installations of refrigerators, changes in codes and standards, and building modifications. Lighting programs can provide short-term benefits, but the utilities should not rely on CFLs as a primary program focus, especially if the installation and actual use of those products are not assured.

In general, the types of elements that should be used to achieve our LIEE programmatic initiative should maximize energy savings37 while promoting participants' quality of life and increasing the number of program participants. Otherwise, we are currently agnostic about the types of measures included as program elements to implement our adopted programmatic initiative as long as they are cost-effective and serve the needs of program participants.

The LIEE portion of the utilities' statewide strategic plan and the 2009-2011 LIEE applications should propose all cost-effective energy efficiency measures that could assist in achieving the programmatic initiative. We expect the utilities to consider cost-effective energy efficiency measures that they may not now offer. To assist the utilities, we plan to conduct a workshop addressing methods the utilities currently employ in evaluating the cost-effectiveness of LIEE measures and to ensure that such analytical methods are applied consistently across utilities. The workshop will also discuss methodologies to evaluate and value the non-energy benefits of the program measures. We understand that extensive technical work on cost-effectiveness methodologies and the application may impose disproportionate financial burdens on the small utilities. For that reason, we will also consider during these workshop alternative ways to promote cost-effective program priorities and delivery for the small companies.

4.3.5. LIEE Program Implementation Strategies

Today's decision may affect how the utilities approach program implementation, that is, the way they market LIEE programs to various customers, how they target market segments and the way they match program elements to various types of customers and geographic areas.

Relevant to this topic is a Needs Assessment report drafted under the Commission's direction by KEMA.38 The report presents the findings of the second phase of the Commission's Low-Income Needs Assessment Study. KEMA conducted the study over two phases with the first phase being a scoping study to guide the needs assessment, identify data sources, and design methods to collect data not already available. During the second phase, KEMA executed the needs assessment which included an analysis of existing data and the collection and analysis of additional primary data.

KEMA's objectives of this second phase were to identify needs not being met by existing programs, service gaps not being addressed by existing programs, and the barriers causing the service gaps. KEMA provided several recommendations to the Commission that can be divided into three themes: (1) establishing an optimal CARE program penetration target, (2) determining the optimal LIEE program design, and (3) achieving optimal program delivery through targeted outreach that addresses the unique characteristics and needs of California's low-income population.

On September 27, 2007, the ALJ issued a ruling seeking the parties' comments on how the KEMA report could be used to develop LIEE program strategies.39 The ruling asked parties to respond to KEMA's recommendations and provide specific implementation ideas. The ruling also asked parties to comment on a staff proposal for program delivery that would match geographic characteristics and energy usage patterns with delivery strategies.

Parties' Comments. In its report, KEMA recommended that the Commission develop strategies to increase LIEE participation in areas with no unique challenges. When asked for their ideas, parties responded with a variety of strategies.40 SCE provided a list of methods that could augment current marketing and outreach strategies such as home-to-home canvassing, categorical eligibility, and the use of census-based demographic information. SCE claims that categorical eligibility, determined using census-based demographic analysis, could decrease concerns customers have about sharing personal information and reduce problems encountered with inadequate documentation. SCE further believes that the use of demographic information, consistent with "block weatherization," could dramatically increase program penetration. SCE also recommended investigating auto-enrollment if a house receives social security or disability benefits. ACCES and A WISH submitted comments calling for automatic enrollment. DisabRA suggests that the Commission consider automatic enrollment for customers who are on SSDI.

Program Design: Partnerships with Other Entities. In its discussion on program design, KEMA recommended that utilities coordinate their LIEE programs with those of other regulated utilities and municipal utilities. The ALJ's ruling asked the parties to suggest ways to achieve this coordination. Some parties have already begun this effort. PG&E, SDG&E, SoCalGas, and SCE currently coordinate with other utilities, thus saving costs in some cases, for energy education and income qualification documentation. PG&E notes it also works with LIHEAP agencies and has begun discussions with municipal utilities.

ACCES and A WISH recommend that the Commission form a taskforce to integrate the efforts of regulated utilities, municipal utilities and LIHEAP providers. DRA suggests an existing outlet-the quarterly utility meetings adopted in D.06-12-038-to discuss these issues and share ideas. Richard Heath and Associates (RHA) requests that the Commission order utilities to cooperate with one another. Taking a different approach, PacifiCorp recommends a single statewide campaign that enables customers who relocate the ability to access assistance in a new service territory.

Noting that California's diverse population requires various types of efforts to increase participation, DRA recommends maintaining partnerships with local and state government agencies, CBOs, and educational institutions. DRA also suggests that there be improved coordination between LIEE and the Commission's other public programs. RHA and SCE agree that utilizing CBOs provides the best results. RHA comments that weatherization provided by CBOs as well as privately-owned contractors bring unique strengths to the LIEE programs.

Targeted Outreach. During its discussion on targeted outreach, KEMA recommended targeting specific types of households. Parties are divided when confronted with the idea of targeting, depending upon the target. SDG&E, SoCalGas, ACCES, A WISH opposed targeting customers based on ethnicity due to concerns about discrimination. However, DRA believes that these types of targeting programs should be further developed and expanded. RHA proposes targeting large energy users given the Commission's goal of decreasing energy use. It cautions, however, that customer energy usage information would be needed thus raising privacy concerns. RHA, ACCES, A WISH and PG&E recommend targeting geographic areas. RHA suggests geographic targets should not require the utilities to exclude other areas. PG&E recommends that LIEE should continue to serve all eligible customers but notes that it is considering a tiered approach targeting high energy users while offering programs to all eligible customers.

Parties offered cost-reducing proposals for outreach. PG&E currently markets the LIEE program through multiple efforts, including its Energy Efficiency program, "Free Services," phone and counter customer service representatives, and contractors. SCE utilizes small geographic area targeting in order to find the "needle in the haystack." SDGE and SoCalGas utilize targeted direct mailings with follow up phone calls and recommend that all utilities leverage with service providers and organizations that have experience in working with LIEE households. SDG&E, SoCalGas and PacifiCorp state they currently leverage existing marketing efforts between CARE and LIEE.

Non-utility parties offer several ideas for reducing outreach costs. DRA suggests utilizing social networks and common gathering places when targeting low-density areas. ACCES and A WISH recommend auto-enrolling all CARE customers for LIEE measures. RHA suggests that we simultaneously consider the costs for locating, marketing, and educating customers and points out more expensive marketing strategies often result in higher conversion rates.

Staff Proposal for Program Delivery. The September 27 ALJ ruling asked parties to comment on an Energy Division staff proposal for program delivery (See Attachment D to this decision). The proposal provides a way to prioritize LIEE installations according to geographic density and customer energy usage patterns. While parties raised significant concerns about the potential impacts of the proposal, many commented that it provides a useful catalyst for further discussion. Sierra notes that judging the cost-effectiveness of outreach measures is difficult when the pay-off is uncertain. SDG&E, SoCalGas and PG&E have concerns that the proposal may be too prescriptive. SCE states the proposal would significantly change current program delivery and that such changes require further discussion among stakeholders. PG&E comments that strict adherence to the proposal could affect LIEE services to many eligible customers.

Discussion. When determining strategies for program delivery, we must consider the objectives and programmatic initiative we adopt today. We have concluded that while we will focus on cost-effective measures for purposes of reaching the programmatic initiative, we will not abandon provision of non-cost effective measures, provided they can be justified.

Parties' comments regarding cost-effective strategies for program delivery generated a theme of coordination and leverage. Parties provided several ways in which utilities could coordinate and leverage efforts within individual utilities, with other utilities, and other agencies. As discussed in the prior section on leveraging, the LIEE portion of the statewide strategic plan as well as the utilities' 2009-2011 applications should include ways to increase coordination with each of these entities.

Parties recommended categorical eligibility and automatic enrollment, both potential cost-effective methods of delivering the program to more customers. The LIEE portion of the statewide strategic plan should consider all cost-effective methods of delivering the LIEE program to eligible customers including automatic enrollment options suggested by DisabRA, A WISH and ACCES, categorical eligibility as well as coordination with other Commission public programs.

We support further consideration of the staff proposed program delivery model. We will address the proposed model in the workshops to be held to implement this decision and revise it in ways that make it most useful for effective program delivery. We direct utilities to utilize the subsequently revised model as input for the LIEE portion of the statewide strategic plan and 2009-2011 LIEE applications.

4.3.6. Marketing, Education and Outreach

ME&O are essential elements of the LIEE program. Greenlining emphasizes the importance of customer education on program success and suggests making "energy literacy" programs a priority. Such programs would address energy conservation, environmental awareness and advanced energy technologies. DRA and ACCESS offer similar comments.

D.07-10-032 emphasized the need for improved ME&O energy efficiency efforts, stating;

We favor a coordinated ME&O effort across utility territories and consumer demand side options. Increased coordination will optimize the development and delivery of energy efficiency messages that inform consumers and motivate energy-saving activity. Such efforts can reduce costs while increasing the impact of energy efficiency measures, information and offerings.41

We directed the utilities and third parties to expand their current efforts to achieve several goals:

Coordination of related marketing, education and outreach programs, such as incentives for solar and other distributed generation installations, demand response programs, conservation and low-income programs;

Coordination of providers with similar or related interests and services, such as local governments, community-based organizations, firms and municipal utilities;

Comprehensive approach to motivating all types of energy efficiency investments and behaviors; and

Cost- effective, high impact plan to drive maximum energy savings-both long term and short term-tailored to reflect the values, habits and demographics of different target communities and populations, particularly low-income and ethnic groups.

For example, the utilities should undertake joint marketing of energy efficiency programs with other customer energy technologies, such as demand response and solar installations.42

We endorse a similar approach to ME&O for LIEE programs. We recognize that such efforts may not be attainable overnight. To that end, and as part of the LIEE portion of the statewide strategic plan, we adopt PacifiCorp's recommendation for a single statewide marketing campaign for the LIEE program. We will address this and all other ME&O matters during workshops convened to implement this decision. We also recognize that some marketing efforts will need to be local and take into account demographic and geographic characteristics. During the course of a ME&O workshop(s), parties should also consider whether and how ME&O should be tailored to promote program participation by customers with disabilities, as DisabRA suggests.

One problem with a statewide marketing campaign for LIEE is potential consumer confusion because the utilities refer to the LIEE program in different ways. While we do not wish to be overly prescriptive in our oversight of the LIEE program, we do want to develop ways to be more cost-effective and statewide marketing is a cost-effective solution. The workshop(s) should develop a brand name for the LIEE program that all utilities will use as a tag line that each utility would add to its own LIEE program name.

We expect the LIEE portion of the utilities' statewide strategic plan and 2009-2011 LIEE applications to address ways to improve the effectiveness of their ME&O efforts, consistent with the principles adopted in this decision.

We are especially interested in more coordinated ME&O efforts with the general utility energy efficiency programs. Marketing the LIEE programs and energy efficiency programs together presents several types of benefits. The utilities could take advantage of economies of scope and scale in the implementation of a statewide marketing campaign. Similarly, the utilities should look at economies of scope and scale when developing energy education programs.

At least as importantly, a statewide marketing campaign might be conducted in ways that could reduce the stigma some potential participants may attach to participating in the program. Instead of LIEE programs being marketed as programs for low-income customers, customers would be offered energy efficiency services and informed that some measures would be offered at no charge, depending on the customer's income. Of course, this format would depend on the way energy efficiency programs are marketed and the types of implementers who may conduct outreach and marketing.

In addition to ME&O, D.07-10-032 addressed a slightly different educational need-that for trained personnel working in various fields of energy efficiency. There, we directed the utilities to "expand their on-going efforts for a coordinated, comprehensive, expedited approach to training, utilizing partnerships with related private and public efforts" and to include a training section in the Strategic Plan and portfolio applications. We emphasize here that "minority, low-income, and other disadvantaged communities could benefit greatly from targeted outreach and training efforts that teach these communities the skills they need to succeed at these critical jobs." Consistent with D.07-10-032, the LIEE portion of the statewide strategic plan should include specific training strategies for reaching disadvantaged communities. Utilities should also work with community stakeholders to assist them in the development of training strategies.

We will address all of these ME&O and training issues in the workshops to implement this decision. The results of these workshops will guide both the utilities' LIEE 2009-2011 applications and the LIEE portion of the statewide strategic plan.

4.3.7. LIEE Budgets

Changes to LIEE policy objectives and program strategies, the adoption of a programmatic initiative, and development of the LIEE portion of the statewide strategic plan will likely justify changes in budgets and programs rules.

In their comments, and at the request of the assigned Commissioner and ALJ,43 each utility provided an estimate of the cost of achieving the originally proposed goal, "To assure that the residence of every low-income customer in California is energy efficient by 2015." The utilities provided estimates with the understanding that their estimates would be very rough, partly because the proposed goal was not precise and partly because the estimates have to assume many variables regarding program design and strategies. The utilities do not necessarily endorse setting their budgets at the cost estimates, notwithstanding their accuracy.

PG&E. PG&E estimates 1.8 million of its customers are eligible to participate in LIEE programs. Of those, about 500,000 have received LIEE services in the past ten years. PG&E removed past program participants from its cost calculations because of the existing program rule (discussed below) that a customer be eligible to participate only once every ten years.44 It then estimated the cost of providing LIEE measures to 1.4 million participants over seven years, or 200,000 customers a year. At an estimated cost of $1,335 per dwelling, PG&E estimates the cost of meeting the goal would be about $261 million per year through 2015. If the goal were to be extended to 2020, the annual cost would be $152 million, a little less than twice its 2006 authorized LIEE budget.

SCE. SCE estimates the total LIEE population in its territory is about 1.35 million customers. Of those, 350,000 have been provided LIEE measures in the past eight years and about 7% of its customers would qualify for education only programs. It therefore removes these types of customers from its cost estimates, leaving a total of about 937,000 eligible customers. To serve this population, SCE estimates an annual LIEE program cost of about $108 million, about three times its annual budget for 2007. SCE notes that the estimate includes the assumption that all existing measures would be installed at the existing frequency. If SCE calibrates program costs to account for the increasing penetration rate of energy efficient refrigerators, the annual program cost would be closer to $64 million, or about double the currently-authorized LIEE budget.

SDG&E/SoCalGas. With similar caveats, SDG&E/SoCalGas offer an estimate of program costs. Assuming the same per household cost incurred in 2006, SDG&E/SoCalGas estimate that to meet the 2015 goal, SDG&E would need to treat about 24,500 households per year at a cost of up to about $29 million (SDG&E's current program treats about 10,000 residences per year and its 2006 budget was about $13 million). For SoCalGas, the annual budget would have to increase from $33.5 million up to about $109 million to treat 145,000 residences (an increase from the current target of 50,000 per year.)

SWGas. SWGas estimates it would need to provide energy efficiency assistance to about 5,700 residences per year over seven years in order to meet the 2015 goal. This would cost about $5.7 million at the current average household cost of about $1,000. SWGas raises a concern that this cost would increase its Public Purpose Program surcharge from about $.13 per therm - about double that of other California utilities -- to almost $.20 per therm, which would impose a significant burden on residential customers.

In addition to the utilities' estimates, ACCES proposes that the Commission commit at least $300 million annually to LIEE programs, which is based on its estimate of spending $2,500 per unit for 120,000 units. Generally, DRA believes meeting the proposed program goal would require much larger budgets.

Discussion. Changing program emphasis and committing to more aggressive LIEE program deployment implicates the way programs are managed, regulated and budgeted. In general, pursuing the programmatic initiative we adopt here will require larger LIEE budgets, although potentially less than the estimates provided because of the extension of the programmatic initiative from 2015 to 2020. Increasing utility LIEE budgets to fund cost-effective programs is appropriate and consistent with our general energy efficiency rules.45 In cost-effective programs, non-participating customers are better off contributing to the program than they would be if the programs did not exist and non-participant benefits increase with program expansions, so long as the overall program remains cost-effective. Because the LIEE program offers all measures at no cost to participants, some measures will not be cost-effective, which we accept for the sake of keeping energy services affordable to those customers who are least able to pay for them but overall programs are cost-effective because of the resource savings to non-participants.

We direct the utilities to submit applications for 2009-2011 aimed at achieving one quarter of the programmatic initiative by 2011. We recognize that the result of the statewide strategic planning effort may indicate a modification of this direction and authorize the utilities to submit applications with an additional, alternative budget if consistent with the statewide strategic plan.

We also wish to encourage long-term LIEE investments and avoid program interruptions that might result from budgeting conventions. We addressed this issue in D.07-10-032 for energy efficiency programs in hopes of relieving the utilities of unnecessary rules or procedures that may conflict with those objectives. D.07-10-032 adopted changes to existing rules to promote program continuity, as follows:

We will therefore modify our fund-shifting rules to permit the utilities to spend next-cycle funds in the current budget cycle (once the next-cycle portfolio has been approved) to avoid interruptions of those programs continuing into the next cycle and for start-up costs of new programs. We authorize the utilities to borrow funding without Commission approval up to 15% of the current program cycle budget. Beyond that amount, the utilities are required to seek approval by filing an Advice Letter. The utilities should tap into the next-cycle funds only when no other energy efficiency funds (i.e., unspent, uncommitted funds from previous program years, or 2006-2008 funds that will not be needed) are available to devote to this purpose. This requirement is consistent with the Commission's treatment in D.05-09-043 of "carry back" funding from 2006 for use in 2005.46

If bridge funding is necessary to avoid interruptions in the continuity of 2006-2008 programs that will continue into 2009-2011, measures (costs and savings) installed during the 2008 should count towards the 2006-2008 goals even if the funds supporting these measures are borrowed from 2009-2011.47

D.07-10-032 also changed funding rules in ways to promote longer term energy efficiency investments, as follows:

...we will allow the utilities to commit funds from the next program cycle to fund programs that will not yield savings in the current cycle. Long-term funding commitments will be subject to the following conditions:

· Long-term projects that require funding beyond the three-year program cycle shall be specifically identified in the utility portfolio plans and shall include an estimate of the total costs broken down by year and associated energy savings;

· Funds for long-term projects must be actually encumbered in the current program cycle;

· Contracts with all types of implementing agencies and businesses must explicitly allow completion of work beyond the end of a program cycle;

· Encumbered funds may not exceed 20% of the value of the current program cycle budget to come from the subsequent program cycle, except by approval in an advice letter process;

· Long-term obligations must be reported and tracked separately and include information regarding funds encumbered and estimated date of project completion; and

· Energy savings for projects with long lead times will be calculated by defining the baseline as the applicable codes and standards at the time of the issuance of the building permit.

We adopt these rules for the LIEE programs and direct the utilities to include a proposal in their 2009-2011 portfolio plans for encumbering funds from the next program cycle for long-term projects, subject to the conditions above.48

4.3.8. Cost-Benefit Methodologies

Discussion. This decision emphasizes the need for cost-effective program elements in order to justify program expansion and promote LIEE programs as an energy resource. In 2002, the Commission established methodologies for LIEE program cost-effectiveness analysis and set forth general principles for its application that are relevant here. D.02-08-03449 adopted two cost-effectiveness tests: one that emphasizes benefits to participating customers and one that measures total resource costs compared to total resource benefits, called the "utility cost" test, which values some non-energy benefits of the program. The Commission has also used the TRC test for some resource programs because it values program impacts most broadly, for example, by estimating environmental costs and benefits.

D.02-08-034 provided the following general guidance for LIEE programs:

· Measures that have passed both tests are included in the LIEE program. This applies for both existing and newly proposed measures.

· Existing measures that pass one of the two tests are retained in the program. New measures meeting this criterion are not accepted because of the substantial effort required to integrate a new measure.

· Existing and new measures that do not pass either test will be excluded from the LIEE program unless substantial argument can be made that significant non-energy benefits are not currently being accounted for in the test values, or there are other policy or program considerations that require the measure to be retained.50

In D.03-11-020, the Commission subsequently refined the LIEE cost-effectiveness methodologies and applied them to adopted LIEE programs. The order adopted a "modified participant test" and a "utility test," which essentially measured the impact of LIEE programs on utility ratepayers generally.

The parties believe we may need to refine the existing rules and methodologies in order to assure that they reflect all relevant economic and social values. A WISH proposes that the cost-benefit methodology reflect the social values attributable to LIEE programs, such as health and safety, and equity. Similarly, DRA suggests cost-benefit calculations consider avoided costs and environmental benefits in addition to energy savings over the life of installation. We will pursue this issue during January workshops and are especially interested in whether and how existing tests might be modified to better reflect the value of LIEE programs from the standpoint of environmental effects as well as societal values. In the meantime, the utilities' applications for 2009-2011 LIEE portfolios should provide an evaluation of costs and benefits for each program using methodologies adopted in D.02-08-034. Their applications should explain assumed values and variables and other model components. The utilities' applications shall also follow the guidance provided in D.02-08-034 with respect to treatment of program measures according to their cost-effectiveness.

4.3.9. The Ten Year "Go Back" Rule

Currently, the utilities apply a rule that a customer who is otherwise eligible for LIEE programs may not participate if the residence of that customer received LIEE measures within the previous ten years.51 Part of the justification for this rule was to promote equity (e.g., continuing expansion of dwellings previously not provided LIEE measures), considering the utilities' constrained budgets. PG&E comments that this rule may no longer be valid. It observes, for example, that some appliances may move with the customer and some appliances may have shorter or longer useful lives. PG&E observes that this rule should be considered or reconsidered in light of the LIEE programmatic initiative.52

While we understand the concern over equity, the rule eliminates opportunities to deliver cost-effective energy efficiency measures to about 1.5 million customers who have received LIEE services over the past ten years. As PG&E suggests, the rule may also inadvertently foreclose energy efficiency installations where appliances are no longer located or should be replaced. Because we are looking for all cost-effective energy efficiency installations and efforts - and because we anticipate significant increases to LIEE budgets, thereby addressing the equity issue -- we intend to modify or eliminate this rule for the 2009-2011 program period and thereafter. As the comments of PG&E and SDG&E/SoCalGas suggest, the utilities' applications should clarify how they will implement programs in ways to avoid duplicative installations and promote the installation of new measures and technologies in all households so that this rule does not preclude the achievement of broader program objectives or the programmatic initiative.

21 See, for example, D.05-12-026, D.05-10-044, D.86-12-095, D.87-12-057, D.95-05-045
and D.99-03-056.

22 The Energy Action Plan was originally adopted in May, 2003 by the Commission, the CEC, and the California Power Authority. This Commission and the CEC updated it in October 2005 and refer to it as Energy Action Plan II.

23 Chapter 488, September 27, 2006.

24 D.07-10-032 issued in R.06-04-010 on October 18, 2007.

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

26 The following parties filed comments on the issues raised in this portion of this proceeding: PG&E, SCE, SDG&E/SoCalGas, Southwest Gas Company (SWGas), Disability Rights Advocates (DisabRA), Latino Issues Forum (LIF), Division of Ratepayer Advocates (DRA), The Utility Reform Network (TURN), Association of California Community and Energy Services (ACCES), Greenlining Institute (Greenlining), A World Institute for Sustainable Humanity (A WISH), Bo Enterprises (Bo).

27 These questions were posed in the assigned Commissioner's ruling and scoping memo issued March 28, 2007.

28 See Assigned Commissioner's Ruling and Scoping memo issued March 28, 2007.

29 Unless otherwise stated, all of the parties' comments in the sections on LIEE policy objectives and goals refer to filings dated April 27, 2007, which are opening comments on these issues, or filings dated May 8, 2007, which are reply comments on these issues.

30 See, for example, D.89-12-057, D.95-05-045, D.99-03-056 and D.05-12-026.

31 The complete text of these code sections is included as Attachment C to this order.

32 See for example, "A Generation of Widening Inequality: The State of Working California 1979-2006," published August 2007 by the California Budget Project, which states that the wages of the state's low income earners fell by 7.2% between 1979 and 2006. In addition, analysis conducted by the UC Berkeley Center for Labor Research and Education, using data from the Current Population Survey (Census Bureau and Bureau of Labor Statistics) estimates that between 2003 and 2006, real wages declined by 1.2% for the members of California's workforce who earn amounts less than the lowest third of wage levels.

33 See Assigned Commissioner's Ruling and Scoping Memo dated March 28, 2007.

34 Section 2790 requires that we take cost-effectiveness "into consideration," although it does not explicitly require that all utility LIEE programs be cost-effective.

35 D.07-10-032, pp. 6-7.

36 D.07-10-032, p. 34.

37 Energy Efficiency Policy Manual, Version 3, adopted as Attachment 3 in D.05-04-051. The manual was updated most recently by an assigned Commissioner ruling issued on November 7, 2007 in R.06-04-010, pursuant to D.07-10-032. It is titled Energy Efficiency Policy Manual, Version 3.1.

38 The report, titled "Final Report on Phase II Low Income Needs Assessment" was published on September 7, 2007. http://www.cpuc.ca.gov/PUC/energy/consumers/liee.htm

39 "ALJ Ruling Seeking Comments on Issues Raised in the KEMA Report and on Natural Gas Appliance Testing Issues," September 27, 2007.

40 Unless otherwise stated, all comments in this section on strategies refer to filings dated October 16, 2007 which are opening comments on these issues, or filings dated October 26, 2007 which are reply comments on these issues.

41 D.07-10-032, p. 61.

42 D.07-010-032, pp. 61-62.

43 Scoping Ruling in R.07-01-042, dated March 28, 2007, p. 7.

44 Comments of PG&E, filed April 27, 2007, p. 5.

45 The Commission has elaborated on cost-effectiveness as it applies to energy efficiency programs in D.05-04-051 and more recently in D.06-06-063 and D.07-09-043. In general, the "total resource cost" or TRC model measures whether society is better off as a result of a given investment, and includes values that measure environmental effects and other impacts. It is the model we usually use to determine the reasonableness of an energy efficiency program.

46 D.05-09-043, Ordering Paragraph 6.

47 D.07-10-032, pp. 94-95.

48 D.07-10-032, p. 97.

49 Issued August 9, 2002 in R.01-08-027.

50 D.02-8-034, p. 2.

51 See D.01-03-028, Ordering Paragraph 1 and Attachment 3, and D.01-12-020, Ordering Paragraph 5. See also Section 2.8 of the 2006 LIEE Program and Policy Manual.

52 Comments ofPG&E filed April 27, 2007, p. 5.

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