VII. Measurement and Verification of Programs and Projects

D.03-01-038 set aside $10.5 million for evaluation, EM&V activities for the 2003 utility programs and related studies. This decision allocates an additional $200,000 for these activities.

D.02-05-046 authorized the utilities to carry out the statewide market assessment and evaluation (MA&E) activities for 2002, but stated our intent to reconsider this policy in the future. For 2003, the Commission will select consultants to evaluate and verify utility programs and other energy efficiency programs. We focus these efforts in 2003 on utility programs.

We intend to fund five projects for measurement and verification, described in Sections A to E below. The Commission will contract directly with firms for four projects involving audit of PGC funds, EM&V of the utilities' 2003 statewide and local programs, and an update of avoided costs. The Commission will manage all aspects of the contracts and inform utilities of amounts due to contractors. This is consistent with Section 381 directing the Commission to oversee the utilities' use of PGC funds. The Commission's Request for Proposals for these four projects are issued concurrent with this decision and posted on the Commission's website.

For the projects described in Section E, the Commission will require SCE and PG&E to conduct the solicitation and enter into contracts with the entities selected to undertake the work, coordinating with Commission staff.

The specific 2003 PGC funding levels required from each utility, for all the six projects are as follows:

A. 1998-2002 PGC Financial Audit, Program Evaluation, and Quality Assessment

The Commission will contract for a comprehensive financial audit, program evaluation and quality assessment of utility PGC fund revenue collections and program expenditures from 1998 through 2002. The purpose of this audit will be to (1) provide a comprehensive view of the effectiveness of PGC revenue collections and related energy efficiency program expenditures, (2) independently verify the milestone achievements associated with the Annual Earnings Assessment Proceeding earnings claims for 1999-2001 energy efficiency programs, (3) evaluate (pursuant to D.02-03-056) whether the providers of 2002 programs have acted reasonably to meet program goals and (4) provide baseline information to the PGC review panel pursuant to § 399.8, which directs the Governor to create in 2004. The Commission allocates up to $6,000,000 of PGC funds to this project.

B. 2003 Utility Statewide Program Measurement and Verification

The Commission will contract with a consultant to provide program measurement and verification of the 2003 utility statewide programs. The study will verify savings claims/measure installations, marketing and outreach activities, and hard to reach targets claimed by the utilities in their 2003 statewide program reports. The study will also measure energy savings and demand reductions that result from these programs.

The utilities have hired consultants to evaluate 2002 programs. Because 2003 programs will be substantially the same as 2002 programs, the 2002 evaluation of these programs is adequate. The Commission allocates up to $2,750,000 of PGC funds to this project.

C. 2003 Utility Local Program Measurement and Verification

The Commission will engage a consultant to measure and verify 2003 utility local programs. The study will verify savings claims/measure installations, marketing and outreach activities, and hard to reach targets claimed by the utilities in their 2003 local program reports. The study will also measure energy savings and demand reductions that result from these programs. This study will also involve an independent evaluation of the savings retention and persistence studies used as the basis for earnings claims in pending Annual Earning Assessment Proceedings. ¹

Because 2003 local programs will be substantially the same as 2002 local programs, an evaluation of the 2003 utility local programs is not necessary. The Commission allocates up to $750,000 of PGC funds to this project.

D. Avoided Cost and Externality Update

The Commission will contract with a consultant to update the avoided costs and "externality adders" presently used in assessing the benefits of energy efficiency programs to reflect the current societal costs of energy. This study will consider impact of including additional externality adders in program effectiveness calculations. The Commission allocates a maximum of $500,000 of PGC funds to this project.

E. Energy Efficiency Program Groupware Application

The Commission staff is overseeing implementation of multiple statewide and local energy efficiency programs. This oversight involves review of proposals, program plans, budgets, expenditures and program activity reports, as well as program monitoring, program plan modifications, and other day-to-day management assignments. The development of third-party program requires better and more consistent data from program contractors. Accordingly, we will solicit a comprehensive, groupware application to collect energy efficiency program data and assist in monitoring energy efficiency programs. The Commission will require SCE to hire a consultant to:

· Develop a Request for Proposal (RFP), coordinating with Commission staff, for development of a Web-based groupware application

· Manage the final contract

· Select and manage transactions with an application service provider that will host the groupware application and store the data.

Commission staff will supervise this project to ensure that it meets program needs. The Executive Director or his designee will have final authority to manage all activities associated with this project. Because the primary users of the groupware application will be Commission staff, selection of the project management consultant, issuance of the RFP for application development, selection of the application developer, any changes to the application developer's scope of work and any other multi-party agreement shall only be done with approval of the Executive Director or his designee.

This decision sets forth the following schedule for this project:

Event
Release of RFP for Application Developer	60-90 days after release of Final Decision
Selection of Application Developer	90-120 days after release of Final Decision

The Commission allocates up to $600,000 of PGC funds to this project.

We expect the project consultant to cost no more than $225,000. Remaining funds will be allocated to: (a) the application development phase of the project, and (b) fees to the application service provider.