Program Guidance

Our preliminary review of the utilities' PY 2001 applications discloses that there are a few areas that may not fully comply with the directives set forth in D.00-07-017, the rulings issued in A.99-09-049, the mandate of AB 970, and our general direction that the programs be designed to maximize energy and demand savings. Accordingly, we give the utility administrators direction for further program enhancement and budget modifications. We expect that the utilities will consider this direction and provide evidence in further proceedings prior to the issuance of the final decision and to respond appropriately.

Compliance with Assembly Bill 970

AB 970 requires the Commission to "adopt energy conservation demand-side management and other initiatives in order to reduce demand for electricity and reduce load during peak demand periods." In the ACR Implementing AB 970, the utilities were directed to include programs in their energy efficiency portfolio to address the following requirements of AB 970:

1) Expansion and acceleration of residential and commercial weatherization programs.

2) Expansion and acceleration of programs to inspect and improve the operating efficiency of heating, ventilation, and air-conditioning equipment in new and existing buildings, to ensure that these systems achieve the maximum feasible cost-effective energy efficiency.

3) Expansion and acceleration of programs to improve energy efficiency in new buildings, in order to achieve the maximum feasible reductions in uneconomic energy and peak electricity consumption.

In their applications, the utilities propose the following general activities to address these requirements:

· Increased information-related efforts including residential HVAC, EMS, case studies (PG&E), and Energy Center information about peak demand (SoCalGas)

· Higher SPC program incentives (PG&E, Edison)

· Increased residential (Edison) and commercial (PG&E) inspections and audits

· Increased TPI for peak demand reduction (Edison)

· Miscellaneous changes to new construction, codes and standards, and local government programs (PG&E)

· Increased RCP focus on peak demand (Edison and SoCalGas)

· Increased Savings by Design funding (Edison)

· Expanded torchiere turn-in events (SDG&E)

· Energy Star appliances and other single family rebates (SDG&E)

· Three new hard-to-reach multifamily strategies (SDG&E)

Many parties commented on the inadequacy of the utility proposals. REECH is concerned that no program addresses commercial weatherization, and that utility residential program proposals do not represent expansion and acceleration. TURN believes additional focus is needed in the residential space conditioning market. While many of the proposals offered by the utilities have merit, taken together they do not go far enough toward addressing the requirements of AB 970. With the exception of SDG&E, the utilities have designed very few new programs. We suggest that the utilities undertake the following activities, related to the specific requirements of AB 970, if they are not already doing so.

Expansion of Weatherization Programs

In order to achieve more residential and commercial weatherization, we recommend the following additional activities, at a minimum:

· Expand the list of eligible measures under the Residential Contractor Program to include at least those measures required under their low-income energy efficiency weatherization programs.

· Design a program similar to the Summer Initiative Multifamily Hard to Reach program that targets small commercial customers and includes weatherization and other measures applicable to small commercial buildings.

Expansion of HVAC Programs

HVAC efficiency represents a huge opportunity for peak demand savings. A comprehensive program approach to HVAC could include incentives for purchase or installation of high-efficiency HVAC equipment, coupled with incentives for recycling or pick/disposal of the replaced equipment. We recommend the following activities to tap this market potential more fully:

· Extending incentives for high-efficiency HVAC equipment to individual residential consumers, through a program mechanism similar to Express Efficiency for small commercial. Rebates could be made available to individual consumers or their contractors, and should be designed to provide more incentives for higher efficiency units. Rebate levels could be phased or shifted to account for new federal HVAC standards expected soon.

· Maintaining or increasing funding for duct sealing activities (including those that are TPI funded) in both residential and small commercial buildings.

· Direct incentives to residential and small commercial consumers or their contractors for other activities that influence HVAC load, such as windows, insulation, installation of whole house fans, etc.

· Direct incentives for high-efficiency window or wall air conditioner units.

· Direct incentives for evaporative cooling, where geographically appropriate.

· Incentives for pickup, disposal, and/or recycling of replaced window, wall, or central air conditioning units.

· Incentives and/or a separate program for ongoing large commercial building commissioning.

· A building operator training and/or certification program.

Expansion of New Construction Programs

AB 970 recognized the continued growth in electricity demand by specifically emphasizing the need for expanded new construction programs. It provides for the: "[e]xpansion and acceleration of programs to improve energy efficiency in new buildings, in order to achieve the maximum feasible reductions in uneconomic energy and peak electricity consumption." (§399.15(b).) We note that a substantial percentage of new construction program funds have been designated for information programs. We recommend that the utilities consider the following activities, at a minimum:

· An Energy Star or other similar high-efficiency new construction homes program, coordinated with the CEC to assist in phasing in the new Title 24 standards expected to become effective beginning in June 2001.

· Additional budget for the Savings by Design program.

· Close coordination between Savings by Design and the new Title 24 standards.

· Emphasis, in all new construction programs, on measures that reduce cooling load, such as high efficiency windows, insulation, duct sealing, etc.

· A program for high-performance manufactured homes, similar to the Northwest Energy Efficiency Alliance program, which provides assistance and incentives to manufacturers of well-insulated and low-energy-consuming manufactured housing.

Compliance with D.00-07-017 Directives

Targeted Outreach and Information

D.00-07-017 (OPs 18, 46, 66); and the ALJ Ruling on Planning direct the utilities to develop and explain in the applications new and creative plans for reaching targeted consumers, including underserved and hard-to-reach customers. The utilities state that they have made changes to their information programs to direct the information more to identified hard-to-reach or underserved communities. However, preliminary review of the applications discloses very little change in delivery mechanisms. Thus, for the most part, the utilities' refer to the use of more bill inserts and do not disclose specific plans for developing other outreach methods. Where they do reference use of community-based organizations, the applications generally preface the statement with a "may" and not a "will."

We expect the utilities to minimize the use of bill inserts and to expand the use of other delivery methods to reach targeted and underserved communities and specifically to link information programs to available assistance and incentives. Such targeted information should include, at a minimum:

· Use of community-based organizations, cultural organizations, minority media, and local government entities, including boards and commissions, such as community development district boards.

· Targeting of home improvement and big box retail stores and local grocery and drugstores.

· The development and expansion of the joint utility website.

The utilities should work with local government entities to obtain information that can be used to design further targeted efforts. For example, city and county planning departments generally maintain lists of neighborhood organizations and other community groups that regularly participate in development issues in their communities. They may also maintain lists of contractors who have pulled building permits over some period of time. Another source of information is the Contractors' State License Board.

Local Government Initiatives

In D.99-08-021 and D.00-07-017 we stated that the utilities should be doing more to partner with local governments to achieve energy efficiency at the local level. We see very little additional effort in these applications and believe that these efforts should be stepped up, with increased funding. In particular, we recommend that the utilities pursue the following activities:

· Augmenting the Summer Initiative light emitting diode (LED) program budgets to provide funding to more cities and communities that wish to replace their traffic lights. We believe there are many applicants on the waiting list for this funding with several utilities.

· Translating PG&E's success with the City of San Jose TEEM-UP partnership to other cities and/or expanding efforts with cities with which the utilities already have relationships.

· Replicating the City of Oakland's innovative Summer Initiative program that provides design assistance to all types of construction at the time of local permitting. This program concept has the potential to influence all types of new building construction, as well as remodeling, through targeted intervention. This can also be coordinated with the CEC's updated Title 24 standards.

Other Programs to Maximize Energy and Demand Savings

In addition to the ideas suggested above, we recommend that the utilities explore these some additional activities designed to increase availability of energy efficiency programs to consumers.

Residential remodeling

We are concerned that for several utilities, the RCP program is the primary vehicle for delivering energy efficiency to existing residential consumers. This program, even if successful, is only one strategy that belongs in a portfolio of options for residential customers. While a number of specialist contractors are enthusiastic participants in the RCP, evidence suggests that the program does not reach the bulk of general contractors who typically undertake remodeling and renovation of existing residential buildings.

As described above, we recommend that the utilities make a significantly wider range of end-use rebates available to residential customers directly or to their general contractors responsible for remodeling or renovation. A program for single family residential customers could be modeled after the successful nonresidential Express Efficiency program for small commercial customers. Further suggestions include kiosks in home improvement centers, which have been successfully used by SDG&E in its service territory as well as programs with local governmental entities to provide information through local government permitting and planning offices, as discussed further above. Direct rebates for residential customers for appliances would also be beneficial.

Commercial Cooling

Although there has been controversy in the past over offering incentives for installation of thermal energy storage systems in commercial buildings, we believe there are sufficiently large peak demand and small energy savings benefits to be gained from offering assistance to building owners wishing to install these systems. We therefore recommend that the utilities add thermal energy storage as an eligible cooling measure to the Large SPC program.