Comments on Draft Decision
Rule 77.7 of the Commission's Rules of Practice and Procedure provides for public review and comment for draft decisions subject to Pub. Util. Code § 311(g). Rule 77.7(f) allows the Commission to reduce the period for public review and comment on draft decisions under various circumstances. Rule 77.7(f)(9) specifically provides for an exemption:
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 of the Commission adopting a decision before 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. "Public necessity" includes, without limitation, circumstances where failure to adopt a decision before expiration of the 30-day review and comment period would place the Commission or a Commission regulatee in violation of applicable law, or where such failure would cause significant harm to public health or welfare. When acting pursuant to this subsection, the Commission will provide such reduced period for public review and comment as is consistent with the public necessity requiring reduction or waiver.
Pursuant to Rule 77.7(f)(9), we determine that public necessity requires a reduced period for public review and comment. Time is of the essence in implementing these programs, particularly given the current electric supply shortages. Accordingly, comments shall be filed by January 11, 2001, and reply comments shall be filed by January 16, 2001. This comment period provides notice and opportunity for review and comment on this decision.
1. These applications proposing program year 2001 energy efficiency programs were filed on November 15, 2000, as required by D.00-07-017 and pursuant to the direction of the ALJ, after an extensive public planning process.
2. The PY 2001 energy efficiency program applications are compliance applications. Review of the utilities' compliance applications is limited to review of PY 2001 portfolio and program design and budgets, MA&E studies and budgets, and performance award milestones and award levels, for compliance with our goals to maximize energy savings and peak demand savings, the principles and directives set forth in D.00-07-017, D.99-08-021, and the directions given by the Assigned Commissioner and Assigned ALJ in rulings issued during the public planning process conducted in A.99-09-049.
3. California is experiencing an electric supply shortage, escalating electric prices, routine Stage II alerts, and threatened Stage III alerts, and anticipates further supply shortages in the summer of 2001 and we should act expeditiously to implement energy and demand savings programs to reduce electric demand and provide consumers with options to reduce their electric bills.
4. Measures to reduce load are the most effective means of ensuring reliability and putting downward pressure on prices in the near term.
5. The proposed programs and program portfolios have been improved over PY 2000; the utilities have modified some programs, measures, and incentives, and have proposed some new programs to meet the need for peak load savings and to enhance energy savings.
6. While there is still room for program and budget improvements to maximize energy and peak demand savings and to comply with our prior directives, these issues may appropriately be addressed in further, expedited proceedings after issuance of this Interim Decision, and may be made through mid-term modifications.
7. It is in ratepayer and public interest to authorize the utilities to implement their proposed PY 2000 energy efficiency programs and budgets on an interim basis, effective January 1, 2001, so that the programs and budgets can proceed without delay, while concurrently proceeding to review the programs and budgets to ensure that they produce maximum energy and peak demand savings and comply with prior Commission directives and statutory mandates.
8. We anticipate that there will be programmatic and budget changes made on a mid-term basis which are likely to impact the proposed program budgets.
9. It is reasonable to allow the utilities to implement their PY 2000 energy efficiency programs and 80% of the budgets effective January 1, 2001, on an interim basis, subject to potential mid-year modification on a prospective basis.
10. Approval of 80% of the budgets to provide the opportunity for full review and evaluation of program portfolios will not impact utility programs because utility administrators are given fund-shifting flexibility and because it is unlikely that the administrators will expend even 80% of the funds prior to issuance of a final decision.
11. It is reasonable to provide the utilities with flexibility to shift funds within program areas, but not between them, subject to our overarching principles of equity and targeting underserved markets, so that they can expand and accelerate, as necessary, program that achieve the maximum feasible reductions in uneconomic and peak electricity consumption as the need arises.
12. Limiting fund-shifting within program areas and subject to compliance with our overarching principles of ensuring that customers who contribute to the PGC benefit from the programs funded through the PGC and targeting underserved communities will not limit the utilities in management of the portfolios since there are substantial untapped conservation opportunities in all customer classes, communities, and program areas.
13. Programs specifically targeted toward energy efficiency in new construction are an important part of our energy efficiency portfolio, have the potential to provide much needed energy and demand savings, and are mandated by AB 970.
14. The utilities should not be allowed to combine the residential new construction budget with the residential program budget or the nonresidential new construction budget with the nonresidential budget for fund-shifting purposes.
15. New construction budgets should be a minimum of 20% of total program budgets.
16. Pub. Util. Code §399.15(b)(2) is ambiguous and subject to more than one interpretation, permitting us to look to a variety of extrinsic aids to ascertain the legislative intent in order to effectuate the purpose of the law.
17. TPI are a source for new, innovative, creative, successful, and cost-effective programs that have the potential of producing both short-term and long-term energy and demand savings. Third parties, with established community ties, can break down barriers and effectively promote energy efficiency programs.
18. The utilities have not followed our prior directives to increase funding for general and targeted TPI.
19. We should require the utilities to budget TPI at a minimum of 8% of total program budgets, across all three program areas, excluding funds committed to the Summer Initiative, to continue prior cost-effective TPI, to develop new general and targeted TPI solicitations, and to demonstrate a plan for publicizing the solicitations, to comply with prior directives.
20. It is important to have standards, protocols, and procedures governing the TPI process, selection, and evaluation and we should revisit the appropriate standards, protocols, and procedures for TPI programs prior to issuance of the final decision.
21. The utilities' proposed "Standards for Assessing cost Effectiveness of Third Party Initiative Programs" is not a consensus recommendation and does not meet the directives set forth in D.00-07-017.
22. MA&E studies should be related to the programs that are ultimately approved for PY 2001.
23. The utility-managed statewide MA&E studies have been reviewed in a public process and, for the most part, consist of continuing studies to support continuing programs so we should allow the utilities to implement these studies and budgets effective January 1, 2001, on an interim basis, subject to potential mid-year modification on a prospective basis.
24. The description of the utility-specific MA&E studies are not sufficiently detailed to provide for review and evaluation and have not been reviewed in any public process so we should defer approval of these studies and budgets until the final decision.
25. The descriptions of the studies to be performed by the CEC raise several issues that need to be reviewed prior to approval so we should defer approval of these studies and budgets until the final decision.
26. It is reasonable to adopt the utilities' proposed overall milestone structure and the weighting of awards 80% for energy savings, 10% for market effects, and 10% as a performance adder for information programs, to require that the weighting be standardized for all utilities, and to require that incentives total 100% and not 110% of the previously adopted 7% performance award cap.
27. PG&E's and Edison's estimated electric savings associated with PY 2001 programs are substantially less than both recorded electric savings in PY 1999 and projected electric savings for PY 2000. SoCalGas' estimated therms saved are substantially less than recorded therms saved in PY 1998 and 1999 and projected therms saved for PY 2000.
28. We have substantial doubts regarding the legitimacy of PG&E's, Edison's, and SoCalGas' estimated energy savings for PY 2001 programs.
29. Energy and peak demand savings should meet or exceed those savings recorded or projected for prior program years; the utilities should make every effort to maximize energy and peak demand savings for PY 2001.
30. The utilities' historical experience provides an appropriate starting place for setting milestones based on energy and peak demand savings.
31. It is reasonable to set the energy and demand savings portion of the milestones to absolute savings targets to ensure that each utility has a clear goal and clear metrics for earning shareholder incentives and so that the incentives will be based on an appropriate balance of risk and reward. We should adopt the shareholder earnings targets set forth herein for PY 2001 programs, with a minimum threshold for 50% award and a maximum threshold for 100% award, and scalable between 50% and 100%, based on the historical effectiveness of utility investment in energy efficiency programs measured in dollars per kWh or dollars per therm, and adjusted to reflect the differences in net-to-gross ratio assumptions, the likelihood that energy savings become more expensive to achieve over time, and the likelihood that higher program costs may be needed in PY 2001 to jump start efficiency activities.
32. The adopted earnings targets and earnings potential, together with the fund-shifting flexibility we adopt, provide the utilities with both the incentive and the means to earn performance awards.
33. The proposed market effects milestones and awards require further review.
34. The proposed performance adder has no parameters, assumes that each activity has value, and is virtually risk-free; it should be tied to targeted outreach of underserved communities and new distribution/marketing methods.
35. It is reasonable to defer approval of the utilities' proposed PY 2001 performance award milestones and award levels for market effects and the performance adders for information programs to the final decision in this proceeding and to permit the use of accomplishments achieved during the interim period to meet the milestones that are approved.
36. We should not adopt ORA's proposal to return to pre-1998 recorded net benefits milestones for calculating shareholder incentives based on ex post savings measurement for PY 2001 but should defer this determination to post-PY 2001 program planning.
37. There are some areas of the utilities' applications that do not comply with our prior directives, with AB 970, and with our goals of maximizing energy and peak demand savings.
38. We should give the utilities direction for further program enhancement and budget modifications to ensure that programs are designed to maximize energy and peak demand savings and to comply with our prior directives and AB 970, and to require the utilities to consider this direction and provide appropriate responses in further proceedings prior to issuance of a final decision. Our further directions are set forth in the body of this decision.
39. The ACR Implementing AB 970 directed Edison to submit a budget for PY 2001 programs totaling $90 million instead of the $50 million minimum funding level provided for in §381(c)(1).
40. Edison's budget for PY 2001 programs consists of $50 million in PGC funds, plus $40 million in carry-over funds and balancing account interest. Edison proposes to make up any shortfall by accessing PY 2002 funds for certain programs.
41. Because, under current market conditions and Edison's rate freeze, it would be troublesome to order Edison to adjust its ratemaking to absorb an additional $40 million in PGC funding over which it has no assurance of cost recovery, we should authorize Edison's proposed $90 million funding proposal for PY 2001 consisting of $50 million in PGC funds plus $40 million in carry-over and balancing account interest but should not permit Edison to tap into PY 2002 funds to cover any shortfall.
42. 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 in this decision.
43. We should defer modifications to the policy rules to a post-2001 proceeding.
44. The RRM has been used as a guide for submitting program activities and data for use in the AEAP, but has not been used in preparing annual program applications.
45. The RRM needs some revisions to incorporate other data, including that required by D.00-07-017.
46. It is desirable to report the same information and data, in the same format, in both annual program applications and AEAPs.
47. We should not formally adopt the RRM for use in preparing PY 2001 applications, but should direct the Energy Division to prepare appropriate revisions to it for use in reviewing PY 2000 and PY 2001 programs in the 2000 and 2001 AEAPs, post the revisions on the Commission's website, and prepare a Notice of Preparation. The review should take place in the Energy Efficiency Rulemaking, R.98-07-037. The Assigned Commissioner or the Assigned ALJ should issue a ruling on the revised RRM, including formats to govern the provision of data, after receipt of comments, in that docket.
1. Public necessity requires that we reduce the period for public comment pursuant to Rule 77.7(f)(9) so that the proposed PY 2001 energy efficiency programs may be implemented as soon as possible.
2. We should approve the rulings made by the Assigned Commissioner and Assigned ALJ throughout the PY 2001 planning process, conducted in A.99-09-049, et al.
3. Pub. Util. Code §399.4(b)(2), as enacted in SB 1194/AB 995, does not prohibit the utilities from providing financial incentives to consumers for the purchase of qualified Energy Star refrigerators in PY 2001.
IT IS ORDERED that:
1. The public comments period is reduced so that we may consider this decision at our January 18, 2001 conference. Comments shall be filed by January 11, 2001, and reply comments shall be filed by January 16, 2001.
2. The Applications of Pacific Gas and Electric Company (PG&E), Southern California Edison Company (Edison), San Diego Gas & Electric Company (SDG&E), and Southern California Gas Company (SoCalGas) (collectively the utilities) for approval of Program Year 2001 Efficiency Programs are preliminarily approved on an interim basis at an 80% funding level, as modified herein.
3. The utilities are authorized to implement their Program Year 2001 programs on an interim basis, effective January 1, 2001, subject to mid-year modifications to programs and budgets, if necessary, after further proceedings, with the following exceptions:
a. The utilities shall be allowed to shift funds only within the three program areas (residential, nonresidential, and new construction), subject to the overarching principles of equity and targeting underserved markets. The new construction market shall remain separate for fund-shifting purposes.
b. The utilities shall budget a minimum of 20% of the total program budget for New Construction.
c. The utilities shall budget a minimum of 8% for third party initiatives (TPI), excluding funds committed for the Summer Initiative, continue prior cost-effective TPI, develop new general and targeted TPI solicitations, and demonstrate a plan for publicizing the solicitations.
4. 80% of the utilities' proposed budgets for PY 2001 programs, including carry-over funds and balancing account interest are authorized, on an interim basis, subject to mid-year modifications, if necessary, after further proceedings. Any budget modifications will be effective on a prospective basis. The approved budgets for PY 2001 are set forth in Appendix A.
5. The utilities' proposed statewide Market Assessment and Evaluation (MA&E) studies and budgets for PY 2001 are authorized, on an interim basis, subject to mid-year modifications, if necessary, after further proceedings. Any modifications will be effective on a prospective basis. CEC and utility-specific MA&E studies and budgets are not adopted at this time but shall be determined, after appropriate proceedings, in the final decision. The approved MA&E budgets for PY 2001 are set forth in Appendix A.
6. Edison's, SDG&E's and SoCalGas' proposed overall milestone structure and award weighting of 80% for energy savings, 10% for market effects, and 10% for information programs using a performance adder mechanism is authorized on an interim basis, subject to mid-year modification if necessary, after further proceedings. PG&E shall use this same structure and awards weighting. Shareholder incentives shall not exceed 100% of the previously adopted 7% performance award cap.
7. The utilities shall be eligible to earn shareholder awards on proven energy savings based on absolute savings targets, with a minimum threshold for 50% award and a maximum threshold for 100% award, and scalable between 50% and 100%, based on the adjusted historical effectiveness of utility investment in energy efficiency programs measured in dollars per kWh or dollars per therm. The approved shareholder earnings targets and maximum earnings potentials are set forth in Appendix B The total budget approved at this time for shareholder incentives is set forth in Appendix A.
8. The utilities' proposed program-specific performance award milestones and award levels for market effects and performance adders are not adopted at this time and shall be determined, after appropriate proceedings, in the final decision. This decision does not preclude the utilities from counting accomplishments achieved during the interim period to meet milestones that are ultimately approved.
9. The utilities shall consider the direction for further program enhancement and budget modifications provided herein and shall provide appropriate responses in further proceedings prior to issuance of a final decision.
10. Edison's $90 million funding proposal consisting of $50 million in PGC funds and $40 million from other sources is authorized, except that Edison is not authorized to use PY 2002 funds for any purpose.
11. The policies that govern PY 2001 programs shall be those that are set forth above in this decision---the maximization of energy and demand savings; the programmatic and budgetary principles that govern PY 2001 programs shall be those set forth in D.00-07-017 and D.99-08-021; and the shareholder performance mechanism that governs PY 2001 programs shall be that set forth in this decision.
12. By March 1, 2001, the Energy Division shall prepare revisions to the Energy Efficiency Reporting Requirements Manual, for use in reviewing the PY2000 and PY 2001 energy efficiency programs in the 2000 and 2001 Annual Earnings Assessment Proceedings, post it on the Commission's website, and serve a Notice of Preparation on the service lists in this proceeding and in R.98-07-037. Interested parties shall file comments in that docket within 20 days of issuance of a Notice of Preparation. The Assigned Commissioner or Assigned ALJ in R.98-07-037 shall issue a ruling on the revised manual, including formats to govern the provision of data, no later than April 15, 2000.
13. The rulings made by the Assigned Commissioner and Assigned ALJ throughout the PY 2001 planning process, conducted in A.99-09-049, et al., are approved.
14. These proceedings shall remain open for final consideration of the utilities' applications as detailed herein.
This order is effective today.
Dated __________________, at San Francisco, California.
Appendix A
|
Program Area |
Interim Budget Authorization ($ million) | |
PG&E | ||
Residential |
$40.22 | |
Nonresidential |
$49.71 | |
New Construction |
$22.48 | |
MA&E |
$3.01 | |
Shareholder Incentives |
$6.29 | |
Total PG&E |
$121.71 | |
SCE | ||
Residential |
$23.17 | |
Nonresidential |
$27.94 | |
New Construction |
$12.78 | |
MA&E |
$1.17 | |
Shareholder Incentives |
$3.58 | |
Total SCE |
$68.64 | |
SDG&E | ||
Residential |
$11.82 | |
Nonresidential |
$12.58 | |
New Construction |
$6.52 | |
MA&E |
$0.50 | |
Shareholder Incentives |
$1.73 | |
Total SDG&E |
$33.15 | |
SoCalGas | ||
Residential |
$7.19 | |
Nonresidential |
$11.69 | |
New Construction |
$4.91 | |
MA&E |
$0.10 | |
Shareholder Incentives |
$1.33 | |
Total SoCalGas |
$25.22 | |
Appendix B
Shareholder Earnings Targets
(based on 80% of authorized budget)
Minimum/Threshold (50% earnings) |
Maximum (100% earnings) | |||||
PProgram Area |
Million kWh |
MW |
Million therms |
Million kWh |
MW |
Million therms |
PG&E | ||||||
Residential |
98.0 |
37.3 |
2.3 |
122.5 |
46.6 |
2.9 |
Nonresidential |
249.1 |
40.6 |
4.1 |
311.4 |
50.8 |
5.1 |
New Construction |
24.9 |
6.3 |
0.2 |
31.1 |
7.9 |
0.2 |
Total |
372.0 |
84.2 |
6.6 |
464.9 |
105.3 |
8.3 |
SCE | ||||||
Residential |
69.8 |
26.6 |
87.2 |
33.2 |
||
Nonresidential |
155.0 |
25.3 |
193.7 |
31.6 |
||
New Construction |
55.2 |
14.0 |
69.0 |
17.5 |
||
Total |
280.0 |
65.8 |
349.9 |
82.3 |
||
SDG&E | ||||||
Residential |
14.9 |
5.7 |
0.6 |
18.7 |
7.1 |
0.7 |
Nonresidential |
37.5 |
6.1 |
0.2 |
46.8 |
7.6 |
0.3 |
New Construction |
26.6 |
6.7 |
0.1 |
33.2 |
8.4 |
0.2 |
Total |
79.0 |
18.5 |
0.9 |
98.7 |
23.2 |
1.1 |
SoCalGas | ||||||
Residential |
2.7 |
1.0 |
2.5 |
3.4 |
1.3 |
3.1 |
Nonresidential |
1.4 |
0.2 |
6.0 |
1.7 |
0.3 |
7.4 |
New Construction |
4.5 |
1.2 |
0.5 |
5.7 |
1.4 |
0.6 |
Total |
8.7 |
2.4 |
8.9 |
10.9 |
3.0 |
11.1 |
Grand Total |
739.5 |
171.0 |
16.4 |
924.4 |
213.7 |
20.5 |
Maximum Earnings Potential ($ million) | ||||
PProgram Area |
kWh savings |
Peak MW savings |
Therm Savings |
Total |
PG&E | ||||
Residential |
1.35 |
0.45 |
0.45 |
2.25 |
Nonresidential |
1.67 |
0.56 |
0.56 |
2.78 |
New Construction |
0.76 |
0.25 |
0.25 |
1.26 |
Total |
3.78 |
1.26 |
1.26 |
6.29 |
Weighting |
60% |
20% |
20% |
|
SCE | ||||
Residential |
0.97 |
0.32 |
1.30 | |
Nonresidential |
1.17 |
0.39 |
1.56 | |
New Construction |
0.54 |
0.18 |
0.72 | |
Total |
2.68 |
0.89 |
3.58 | |
Weighting |
75% |
25% |
||
SDG&E | ||||
Residential |
0.40 |
0.13 |
0.13 |
0.66 |
Nonresidential |
0.42 |
0.14 |
0.14 |
0.70 |
New Construction |
0.22 |
0.07 |
0.07 |
0.37 |
Total |
1.04 |
0.35 |
0.35 |
1.73 |
Weighting |
60% |
20% |
20% |
|
SoCalGas | ||||
Residential |
0.08 |
0.08 |
0.24 |
0.40 |
Nonresidential |
0.13 |
0.13 |
0.39 |
0.65 |
New Construction |
0.05 |
0.05 |
0.16 |
0.27 |
Total |
0.27 |
0.27 |
0.80 |
1.33 |
Weighting |
20% |
20% |
60% |
|
Grand Total |
7.77 |
2.77 |
2.40 |
12.94 |
Appendix C
List of Acronyms
Acronyms |
Names |
AB |
Assembly Bill |
AEAP |
Annual Earnings Assessment Proceeding |
ALJ |
Administrative Law Judge |
ARCA |
Appliance Recycling Centers of America, Inc. |
CALMAC |
California Measurement Advisory Council |
CBEE |
California Board for Energy Efficiency |
CEC |
California Energy Commission's |
CEERT |
Center for Energy Efficiency and Renewable Technologies |
CEUS |
Commercial End Use Surveys |
D. |
Decision |
DEER |
Database of Energy Efficiency Resources |
DSM |
demand side management |
Edison |
Southern California Edison Company |
HVAC |
heating, ventilation and air-conditioning |
LED |
light emitting diode |
MA&E |
market assessment and evaluation |
Mowris |
Robert Mowris and Associates |
NAESCO |
National Association of Energy Service Companies |
NRDC |
National Resources Defense Council |
OP |
Ordering Paragraph |
ORA |
Office of Ratepayer Advocates |
PG&E |
Pacific Gas and Electric Company |
PGC |
Public Goods Charge |
Acronyms |
Names |
PHC |
prehearing conference |
policy rules |
Energy Efficiency Policy Rules |
Primis |
Primis, Inc. |
PY |
Program Year |
RCP |
Residential Contractor Program |
REECH |
Residential Energy Efficiency Clearing House, Inc. |
RESCUE |
Residential Energy Service Companies' United Effort |
RESCUE/SESCO |
Residential Energy Service Companies' United Effort (RESCUE) and SESCO, Inc. (jointly) |
RRM |
Reporting Requirements Manual |
SB |
Senate Bill |
SDG&E |
San Diego Gas & Electric Company |
SoCalGas |
Southern California Gas Company |
SPC |
nonresidential Standard Performance Contract |
TPI |
Third Party Initiatives |
TURN |
The Utility Reform Network |
