Other Issues

Edison's Funding Proposal

Section 381(c)(1) provides for the funding of the energy efficiency programs in Edison's service territory at not less than a level of $50 million for 2001. This is a reduction from the $90 million minimum funding level established by statute for 1998, 1999, and 2000.

Considering the current energy situation and the fact that SB 1194/AB 995 reinstates the higher minimum $90 million funding level for Edison in 2002 and beyond, the ACR Implementing AB 970 directed Edison to submit PY 2001 program plans and budgets totaling $90 million instead of the $50 million PGC minimum funding level set forth in §381(c)(1).

In its application, Edison submits a $90 million budget for PY 2001 but designates funding of $50 million in PGC funds and another $40 million from accrued and projected interest from the public purpose programs energy efficiency balancing account and accrued and projected carry-over funds available after satisfying its PY 2000 Summer Initiative obligations. Edison also proposes to use PY 2002 funds for certain projects if the proposed funding sources fall short. Few parties submitted comments on Edison's proposal. Of those that did, only REECH objects to Edison's proposal. The Sierra Club, which initially raised this issue during the PY 2001 planning process, arguing that Edison should fund its energy efficiency programs at the $90 million level, did not comment.

Edison argues that requiring it to submit a 2001 budget that includes more than $50 million in PGC funds would contravene the "clear legislative intent" of §381(a) which requires the Commission to authorize the utilities to "identify a separate rate component to collect the revenues used to fund these programs" because under current market conditions, Edison has no assurance of cost recovery for any amount above the legislatively established minimum.

While we do not adopt Edison's interpretation of §381, we agree that, under current market conditions and Edison's rate freeze, it would be troublesome to order it to adjust its ratemaking to absorb an additional $40 million in PGC funding over which it has no assurance of cost recovery. We therefore approve Edison's PY 2001 program funding proposal¹⁹ using $50 million in PGC funds and $40 million from other sources, with one exception. We do not authorize Edison to use PY 2002 funds to satisfy commitments entered into in 2001 but that do not come due for payment until after 2001, if necessary to make up a funding shortfall. Edison's argument that this does not grant authority to use PY 2002 funds but is simply an accounting procedure is strained. As Edison admits, such a finding requires the Commission to "recognize that it presently intends to authorize the 2002 funding necessary to cover such commitments." (Edison Comments, p. 8.)

Applicability of Previously Adopted Energy Efficiency Policy Rules

Energy Efficiency Policy Rules (policy rules) designed to implement the Commission's previously adopted market transformation and independent administration goals have governed energy efficiency programs since 1998. The most recent rules were adopted in D.99-08-021 and are attached to that decision. These rules contain policy objectives and guidelines for program design, implementation, measurement, and incentives.

All of the parties agree that the policy rules are ripe for reconsideration since they are outdated and many of them are no longer applicable given various Commission decisions, ACRs, and new legislation. ORA and RESCUE/SESCO seek major modifications of these rules to reflect our new priorities while the utilities, NRDC, the CEC, TURN, and Primis generally support continuation of the current policy rules for PY 2001, except for minor modifications to eliminate references to the CBEE and to incorporate modifications made through Commission decisions and the planning process. They also support review and modification of the rules on a separate track

We agree that the previously adopted policy rules are outdated and should be revamped to meet our current policy objectives as well as to incorporate changes tacitly made by other decisions and events. However, this task is one that should not be undertaken lightly or in a piecemeal fashion. We have indicated our intent to undertake a full review of PGC programs for implementation post-2001. The revision of our policy rules is most appropriately undertaken at that time.

We understand the parties' request for clarity regarding the policies and principles that govern PY 2001 programs and provide this guidance: the policies that govern PY 2001 programs are those that are set forth above in this decision---the maximization of energy and demand savings; the programmatic and budgetary principles that govern PY 2001 programs are those set forth in D.00-07-017 and D.99-08-021; and the shareholder performance mechanism that governs PY 2001 programs is that set forth above.

Applicability of the RRM to PY 2001 Programs

The RRM for Post-1997 Programs was developed by ORA. It was published on March 8, 1999. The RRM states that its purpose is to set forth a common set of definitions for programs and a set of standard tables which identify the kinds of program activities and results that should be reported for each program, the latter of which is typically used for the Energy Efficiency Program Annual Report filed by the utilities in the Annual Earnings Assessment Proceeding (AEAP)²⁰ to support recovery of shareholder incentives. ORA seeks to have the utilities use the formats set forth in the RRM in the filing of the applications. The utilities object, pointing out that the RRM uses different cost effectiveness tests and that D.00-07-017 provides specific direction for collecting data and reporting for purposes of the applications and quarterly reports.

The parties, in general, agree that we should adopt a consistent, uniform format to be used both for filing applications and for evaluating programs and calculating shareholder incentives after program completion. However, the issue again, is one of timing.

We agree that it is desirable to report the information and data in the same format in both the applications and the AEAP. However, we have never fully reviewed or approved use of the RRM. Our preliminary review of the RRM indicates that there are necessary revisions that should be made prior to such approval, such as the type of information required by D.00-07-017 as well as other data. This is a long-term project and one that is not readily accomplished within the next few weeks, so as to be useful for PY 2001 programs.

Thus, we will not formally adopt the RRM for use in preparing PY 2001 applications.

We are troubled, however, by the fact that the data and formats currently used are not consistent at the application stage and for use in the AEAP. This makes it very difficult to evaluate the programs and accomplishments. While the data supporting the utilities' accomplishments for PY 1999 programs have already been filed in A.00-05-002, et. al., we should be able to correct the problem for PY 2000 as well as PY 2001 programs. Accordingly, we will direct the Energy Division to prepare a report with proposed revisions to the RRM, including formats governing the preparation and reporting of data for PY 2000 and PY 2001 programs, to be used in the 2001 and 2002 AEAPs. The Energy Division should prepare the report, post it to the Commission's website, and serve a Notice of Preparation on the service lists for this proceeding and for the energy efficiency rulemaking, R.98-07-037, by March 1, 2001. Interested parties should file comments on the proposed revised RRM in R.98-07-037 within 20 days of issuance of the Notice of Preparation. The Assigned Commissioner or Assigned ALJ in the rulemaking should issue a ruling on the revised Reporting Requirements Manual, including formats to govern the provision of data for the PY 2000 and PY 2001 energy efficiency programs, no later than April 15, 2000 so that the utilities can file their AEAP applications on May 1, 2001.