Conclusions of Law

1. In light of the energy supply shortage, rapidly escalating electric prices, routine State II alerts, and threatened Stage III alerts, 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.

2. 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.

3. It is in ratepayer and public interest to authorize the utilities' proposed PY 2001 energy efficiency programs effective January 1, 2001, so that the programs and budgets can proceed without delay.

4. It is reasonable to authorize the utilities' PY 2001 energy efficiency programs effective January 1, 2001.

5. 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.

6. 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.

7. New construction budgets should be a minimum of 20% of total program budgets.

8. 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.

9. 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.

10. It is reasonable to authorize the utilities' statewide PY 2001 MA&E studies and budgets effective January 1, 2001.

11. We should defer approval of the utility-specific and the CEC's MA&E studies and budgets pending further review.

12. 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.

13. 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

14. The utilities' proposed performance adder should be tied to targeted outreach of underserved communities and new distribution/marketing methods.

15. It is reasonable to approve the utilities' proposed PY 2001 performance award and market effects awards.

16. 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.

17. We should give the utilities guidelines for further program enhancement and budget modifications to ensure that programs are designed to maximize energy and peak demand savings.

18. 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.

IT IS ORDERED that:

1. The public comments period is reduced so that we may consider this decision at our January 18, 2001 conference.

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) for approval of Program Year 2001 Efficiency Programs are approved, as modified herein.

3. The utilities are authorized to implement their Program Year 2001, effective January 1, 2001, with the following modifications:

4. The utilities' proposed budgets for PY 2001 programs, including carry-over funds and balancing account interest, are authorized.

5. The utilities' proposed statewide Market Assessment and Evaluation (MA&E) studies and budgets for PY 2001 are authorized. CEC and utility-specific MA&E studies and budgets are not adopted at this time but shall be determined, after further review. Within 60 days of the approval of this decision, the utilities should present their proposed MA&E plans. The presentation should include a full description of the study plans, objectives, and budgets, and a discussion of the rationale and need for these particular studies.

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. 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 shareholder earnings targets, maximum earnings potentials, and total budgets are approved as set forth herein.

8. The utilities shall provide estimations of energy demand savings for the first half of 2001 in their June quarterly reports.

9. The utilities' proposed performance adder and market effects award levels are adopted.

10. Edison's $90 million funding proposal consisting of $50 million in PGC funds and $40 million from other sources is authorized. Edison is not authorized to use PY 2002 funds for any purpose.

This order is effective today.

Dated January 18, 2001, at San Francisco, California.

Previous PageTop Of PageGo To First PageNext Page