III. Funds Available for Summer Initiative

In D.00-07-017, the Commission directed the utilities to make the following funding sources available for the Summer Initiative: (1) funds unexpended in 1999 carried over into PY 2000 and 2001;² and (2) funds reallocated from original utility shareholder incentive budgets for PY2000. (Id., at p. 202.)

At that time, the Commission estimated these two sources to provide a total of $67.7 million across the four utilities as follows:

· PG&E: $30.191 million

· SCE: $21.28 million

· SDG&E: $12.25 million

· SoCalGas: $4.00 million

A. Pre-1998 DSM Funds

In D.00-07-017, the Commission also directed the utilities to provide details on any rollover funding still being held from demand-side management (DSM) programs for the period prior to 1998. (Id., at p. 201.) PG&E, SDG&E, and SoCalGas provided information regarding pre-1998 rollover funding. Edison did not comply with this order in its filing.

Of the four utilities, it appears that only PG&E has rollover pre-1998 DSM funds that should be used to supplement the Summer Initiative. While SDG&E identified pre-1998 DSM funds, it appears that SDG&E has returned the unspent funds to ratepayers. Edison now represents that it does not have any pre-1998 DSM rollover funds.³ And, SoCalGas' rollover funds are all attributed to gas, which has been excluded, for the most part, from the Summer Initiative program.

PG&E, on the other hand, represents that it has pre-1998 DSM program rollover funds totaling approximately $10 million, of which approximately $4.5 million was collected from electric ratepayers and $5.5 million was collected from gas ratepayers.

It was the Commission's intent that the pre-1998 DSM rollover funds be included in the funds available for the Summer Initiative. As we explain further below, because the Commission directed the Summer Initiative to focus on reducing electric demand and not gas demand, we will include the electric portion of the pre-1998 program rollover funds in the Summer Initiative funding and not the gas roll-over funds. Thus, we add $4.5 million to the funding available in PG&E's service territory, for a total of $34.78 million.

B. Summer Initiative Funds Are a Fixed Amount and Any
Shortfall Will Be Trued Up From Future Public Goods
Charge Program Funds

While the funding level set forth in D.00-07-017 was simply an estimate of available funds at one point in time, it is clear that the Commission intended that we maximize the funds available to fund the Summer Initiative. Thus, we use the $67 million, as divided among the utilities in D.00-07-017, as the intended funding level, plus electric rollover funds from pre-1998 DSM programs, and approve program spending at this level.

We maintain this funding level notwithstanding the fact that the exact amount of funds available may change over time, as better estimates of carryover funds become available or because of other Commission directives. For example, it has come to our attention that the $67 million earmarked for the Summer Initiative includes gas as well as electric carryover funds. The Commission's intention in adopting the Summer Initiative was to reduce electric peak demand and energy consumption. To the extent that there are synergies between electric and gas efficiency (for example, in a residential comprehensive program where one contractor could install both electric and gas efficiency measures at a single residence), we should and will take advantage of them.⁴ However, we do not believe that it is appropriate to use funds contributed by gas ratepayers to pay for electric efficiency measures, and will not do so. Not only would it be inequitable to do so, but we note that gas prices are rising and supplies tightening; thus, we anticipate that gas efficiency measures may become increasingly important in the future.

Thus, our decision to maintain the funding at this level will require that funds come from other sources. It is also possible that funding the shortfall may impact PY 2001 energy efficiency programs, which are currently being planned. This will require a truing up of the accounting for purposes of PY2001 planning. We will direct the utilities to true up future budgets as necessary outside the Summer Initiative process.

We anticipate that any shortfall in funding will be redirected from two sources: (1) unspent funds from PY 2000 public goods charge (PGC) program budgets remaining on December 31, 2000; and (2) to the extent that unspent funds from PY2000 are insufficient, from unspent PY2001 program budgets remaining on December 31, 2001. Based on a preliminary review of the PY 2000 Second Quarter Reports submitted by PG&E and SCE on August 16, 2000, it appears that there could be substantial unspent program budgets for some programs at the end of 2000.

In order to facilitate a complete accounting of all energy efficiency public purpose and DSM funds available at each utility, we direct the utilities to file, by October 16, 2000, a report setting forth a complete accounting of current and projected unspent funds as of September 30, 2000, segregated by electric and gas, for: (1) pre-1998 DSM funds; (2) PY1998 unspent funds; (3) PY1999 unspent funds; and (4) projected PY2000 unspent funds.

In sum, we direct the four utilities to fund the Summer Initiative in the following amounts:

· PG&E: $34.78 million

· SCE: $21.28 million

· SDG&E: $12.25 million

· SoCalGas: $4.00 million

These funds should be expended between September 1, 2000 and December 31, 2001. The utilities should track budgets and spending associated with the Summer Initiative separately from their other energy efficiency program expenditures.

The Summer Initiative proposals have been evaluated through first, a set of threshold criteria, and second, ranked criteria. Since the funding requested greatly exceeded the available funds, the criteria were designed to prioritize proposals, as well as to capture the Commission's objectives.