Background of the Current Energy Efficiency Program Structure
In the wake of the California electricity crisis of 2001, Energy Efficiency strategies took on a more prominent role at the CPUC. By 2005, a Commission decision had returned management of energy efficiency portfolios to the investor owned utilities. The Commission made a decision to invest an unprecedented $2.1 billion in EE for the 2006-2008 program cycle and committed to an IOU shareholder incentive mechanism by which the Commission declared would influence the utilities to optimally cause energy to be saved in California.
DRA was originally a proponent of Independent Administration given the inherent conflict of interest of IOU management to sell less of a product upon which their revenues are based. Additionally, DRA does not support the risk/reward incentive mechanism in its current form. The interaction of these two policies has caused the utilities to focus on short-term energy savings.
Future of California Energy Efficiency Programs
DRA is a strong proponent of the Commission's recent evolution in energy efficiency policy to pursue market transformation strategies and to develop a 2020 strategic plan that would seamlessly integrate customer energy programs. DRA's position on these topics is explored in greater detail by proceeding component.
Ultimately, DRA's objective in the EE proceeding is to provide customers with the information, tools, and an infrastructure to change Californian's culture to more efficiently and conservatively consume energy.
Energy Efficiency (EE) Issues
EE programs are typically funded in 3-year cycles. Portfolios are a compilation of a diverse selection of energy efficiency programs that address a wide variety of measure and strategies. Portfolios for program cycles for 2004-05; 2006-08; and 2009-11 are all currently in some stage of review, implementation, or development.
The EE incentive mechanism was finalized in September 2007 with a modification approved in January 2008. The mechanism was designed to symmetrically balance penalties and rewards, but Petitions for Modifications (PFMs) by the Utilities have been tilting this balance in the favor of rewards. Cumulatively, all four IOUs may earn upwards of $450 million for a 3-year period. DRA does not support the current incentive mechanism as the recently submitted energy efficiency portfolios for 2009-2011 illustrate that IOUs are motivated to design programs that maximize shareholder earnings, but not long-term energy savings for California.
DRA supports the Commission's efforts to undertake a long-term strategic planning process through 2020 that will serve as a roadmap to market transformation.
The Commission is in the process of testing the apparent connection in the ability to conserve energy by conserving water due to the energy required to move water throughout its infrastructure. DRA recommended and supported the development of pilot programs to test and evaluate several methods by which water conservation programs might become eligible to be implemented as part of Energy Efficiency portfolios. DRA actively advocated to ensure that all investment of ratepayer dollars would result in energy savings that directly benefited ratepayers. As a result, the IOUs have each partnered with municipal water companies to form various partner programs, which will be implemented by July 2008. Pilots will run for one a year and then be evaluated to determine whether the water-energy programs can be cost-effectively successful.
DRA supports the development of key components of the energy efficiency landscape that can ensure optimal success for energy savings and mitigation of GHG emissions including focus on:
- Product Life Cycle
- Local Governments as a key component to market transformation
- The appropriate use of CFLs to obtain energy savings
- Appropriate disposal of CFLs
- On-bill Financing
- Emerging Technologies
Links of Interest
Many of the CPUC's Decisions / Background can be found on the Commission's EE Page.
Materials for the current planning process for the 2009-2011 portfolios and long-term strategic plan can be found at: www.californiaenergyefficiency.com