Program and Budget Approval

As initial matter, we address a procedural issue. Rule 77.7(f)(9) of the Commission's Rules of Practice and Procedure provides for waiver or reduction of the comment period in the following circumstances:

"for a decision where the Commission determines, on the motion of a party or on its own motion, that public necessity requires reduction or waiver of the 30-day period for public review and comment. For purposes of this subsection, "public necessity" refers to circumstances in which the public interest in the Commission adopting a decision before the expiration of the 30-day review and comment period clearly outweighs the public interest in having the full 30-day period for review and comment. . . ."

Approval of these applications meets this standard. As we discuss further below, in view of the electric supply shortage and coincident rapidly escalating electric prices, we must act expeditiously to implement energy and demand savings programs to reduce electric demand and provide consumers with viable options to reduce their electric bills. Thus we will reduce, but not waive, the comment period. We also note that the parties have had the opportunity for both comments and reply comments prior to the issuance of this Interim Order, both in response to ALJ rulings, and during the public planning process that preceded the filing of these applications.

We agree with the majority of participating parties that PY 2001 programs and overall budgets should be instituted immediately in January of 2001 and thus authorize the utilities to implement their proposed PY 2001 programs and 80% of the proposed budgets effective January 1, 2001, with certain modifications and directions as set forth below.

Given the urgent need to reduce demand in California, it is critical that there be no delay in implementing the PY 2001 programs. During the last year, electricity demand has exceeded supply and electricity prices have risen to unprecedented heights. While we initially focused on achieving savings by the summer of 2001, by implementing the Summer Initiative, the electricity supply shortfall has now caused routine Stage II alerts and regularly threatened Stage III alerts. California consumers are now potentially facing continued curtailments and rolling blackouts throughout the year.

To help in 2001, it is important that these programs begin as soon as possible. Measures to reduce load are the most effective means of ensuring reliability and putting downward pressure on prices in the near term. Consumers can best participate by undertaking measures that produce long-term reductions in demand. The PGC was designed to assist customers in doing so; we should ensure that the utility programs are quickly implemented to provide consumers with this assistance. Further, the legislature has indicated its continuing and expanded support for energy conservation activities through the passage of AB 970 to meet the challenges of peak demand reduction and Senate Bill (SB) 1194/AB 995 to continue PGC funding post-2001.

Further, a preliminary review of the applications indicates that the proposed programs and program portfolios have been improved over the PY 2000 programs. While we believe that there are more improvements to be made to maximize energy and peak demand savings and to comply with our directives, as we discuss further below, the utilities have modified programs, measures, and incentives, and have proposed new programs to meet the need for peak load savings and to enhance energy savings. Further, the utilities have made some changes to comply with the mandates set forth in AB 970 and the directives set forth in D.00-07-017 and the other rulings and decisions that govern these programs. Most importantly, the programs were modified during the public planning process to be more consistent on a statewide basis and were designed using revised, consistent cost-effectiveness input values to facilitate better evaluation and comparison.

We see no downside to issuing this Interim Decision. We recognize that there are legitimate disputes regarding whether the utilities' programs are the most effective or whether they could be improved, and indeed we make several suggestions in this decision. However, these issues can be addressed after the start of the year, on a mid-term modification basis. We will look in more depth at programs, measures, incentives, and budgets to ensure that they are designed to maximize energy and demand savings, in expedited proceedings following the issuance of this decision, and will make changes, as necessary, in the final decision. We note that we took this same approach with respect to PY 2000 programs, where we granted interim approval by decision issued on December 16, 1999 (D. 99-12-053). No significant problems occurred with this approach.

The scope of our interim approval is set forth below, together with our guidance for program enhancements based upon our preliminary review of the applications. After further proceedings, we may modify the utilities' programs and budgets, as appropriate in our final decision. Mid-year modifications will be effective on a prospective basis, which will provide an orderly and measured transition and reduce the potential for confusion. Our further review will also protect ratepayers because of the opportunity provided for full review and modification of the programs on a prospective basis.