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SUPPORT
BETTER ENERGY CONSERVATION IN CALIFORNIA
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The
hour of truth is coming for conservation in California,
as the California Public Utilities Commission (CPUC) reviews
proposals for new ways to deliver energy efficiency with
$400 million/yr. of ratepayer funds in the territories
of the big four investor owned utilities (PG&E, Edison, San Diego Gas & Electric
and So. Cal. Gas).
The California Coalition for
Energy Efficiency (CCEE), founded by Women's Energy Matters,
Public Citizen, Community First Coalition, Local Power and
SESCO (the top residential Energy Efficiency provider in the
US) has proposed a much-improved Energy Efficiency administrative
structure in California. See
CCEE members
We
invite you to sign on to support the CCEE proposal, and ask
you to help spread the word. Gathering support statewide is
critical. The CPUC is expected to issue draft decisions on
the issue this fall.
SEE:
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CCEE's
proposed structure, the California Standard Offer for
Energy Efficiency
is fair, transparent and highly effective. A similar
system created four years ago by local members of Public
Citizen, ACEEE and Environmental Defense Fund in Texas is
saving 40% more energy per dollar than current California
programs. The California Standard Offer:
provides greater customer bill reductions
and other benefits;
guarantees energy savings, enabling energy
efficiency to compete for the first time as a genuine resource
to offset expensive and polluting power plants (the current
system and all other proposals have no such guarantee);
greatly expands energy efficiency infrastructure and well-paid
jobs; small, innovative organizations can "get
their feet wet" with small projects and quickly expand
to larger ones. Most importantly, this proposal would give
non-utility EE providers such as cities, community-based
groups, independent companies or Native American tribes
many more opportunities to run EE programs and to develop
their own ideas.
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A
Standard Offer means the opportunity to save energy is offered
to everyone under the same terms and conditions.
In the California Standard Offer structure proposed by CCEE:
A
variety of contract sizes ($5,000 to $2 million) are offered
continuously on a first come, first served basis. (Currently,
there is a secret process where somebody else decides whether
or not your project is a good idea.)
There
is a simple 4-5 page application and a quick turnaround -
just a couple of weeks. (Currently the application process
takes 3-6 months.)
No
one party can control more than 20% of the funds at any time.
(Currently, utilities control 80% of the funds.)
Payments
are based on energy savings achieved, based on a percent
of the "avoided costs" (i.e. not building power
plants and buying fuel). (Currently, there is no direct
correlation between energy savings and funds paid.) Your
organization takes the risk — if you save energy, you
get paid. If you don't succeed within a specified time, the
money goes back into the pot for the next applicant. (Currently,
ratepayers are at risk — if the program fails, the
money is gone.) back to top |
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are only two other full proposals for administrative structure:
a joint proposal by the utilities and NRDC, and a proposal
by TURN. Although very different in some respects, both proposals
perpetuate problems in the current administrative structure:
Utilities are in a position either to manipulate
the system (utility/NRDC proposal) or undermine
it (TURN proposal).
Utilities control key aspects of energy savings
measurements. Currently, energy efficiency lacks
credibility because utilities have exaggerated energy savings
measurements.
Administrative costs are high because both
of the other proposed systems are top-down, micromanaged
structures.
Implementers must submit lengthy, detailed applications describing
what each part of their operation will cost —
a nearly impossible task, especially for innovative programs.
Proposals are evaluated once every two or three years in
a secret process. Under the current structure,
many proposals that scored high on stated criteria were
rejected based on subjective judgments open to manipulation
by utilities. Winners were subjected to arbitrary changes
to programs and budgets.
"Shareholders Incentives" may
be reinstated. In
the 1990s the CPUC awarded utilities more than $500 million
of these incentives (i.e. bribes) in a vain attempt to get
them to do better EE programs. back to
top
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| CCEE's
California Standard Offer proposal:
Easily
accommodates hundreds of implementers with many small and
medium size contracts ($5-50,000). Such a robust infrastructure
would overwhelm the current system or other proposed structures,
which rely on micromanagement to protect ratepayers from
program failure. With the Standard Offer, the risk for program
failure is borne by implementers, not ratepayers. (Currently,
there are only about 50 non-utility implementers receiving
about $100,000 to a few million each, and four utilities
receiving $50-175 million each).
Neutralizes
utilities’ conflicts-of-interest by requiring participants
to choose only one role — administration, implementation,
or energy savings measurement – and ensuring fair
competition on a level playing field for administrators
as well as implementers.
Greatly
reduces administrative costs by reducing the need to micromanage.
Simplifies
and speeds up the application/selection process (a few weeks
vs. 3-6 months in the current system and other proposals),
and offers ongoing opportunities to apply, rather than only
one in a two or three-year cycle.
Guarantees
results by paying only for energy savings achieved and measured.
Otherwise, funds go back into the pot for others to apply.
Emphasizes
the development of a much more rigorous and independent
system of Evaluation, Measurement & Verification (EM&V).
Currently, EE lacks credibility because utilities control
measurement contractors and the Measurement Advisory Council,
which has failed to correct known exaggerations in “deemed”
savings.
Allows
for different entities to become administrators as required
by the Community Choice law. Ensures statewide accountability
and coordination by the overall System Director, which answers
to the CPUC. CCEE recommends against utility administrators
but believes there is no need to absolutely ban them in
the California Standard Offer system.
Is
very flexible, providing tools for the System Director
to tailor incentives to ensure attention to areas with
reliability problems, and various categories of ratepayers
(for example,
"hard-to-reach" rural or inner-city residences
and small businesses, Native American reservations, or
non-profit institutions like schools, hospitals, governments).
Provides
for statewide information and education programs as well
as "market transformation" and other pilot
programs as the need arises. These programs are selected
by a Special Administrator in a non-Standard Offer process
comparable to current procedures, however the fact that
they are segregated from other programs ensures greater
independence and accountability. back to top
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Energy
Efficiency (EE) funds come from a special Public Goods Charge
on all utility bills. They finance a variety of energy saving
activities for homes and businesses such as installing or
servicing efficient lighting, insulation, heating/cooling
and industrial/ agricultural machinery, and providing EE
information and education to the public.
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California
could be saving much more energy with these programs than
we currently are. The basic problem is that the CPUC allowed
utilities to control all Energy Efficiency funds for thirty
years, although they have a huge conflict with conservation
- selling more energy raises their profits and their stock
prices. Utilities want to control EE because it's great
public relations - and they don't want conservation cutting
too deeply into their profits.
The
CPUC tried to coax and bribe utilities to do a better
job - even gave them 25% of the funds as "shareholders
incentives" (pure profit). Nevertheless, utilities
continued to waste money on ineffective overpriced programs.
Utilities
squandered up to 50% of the money on administrative costs.
Utilities
wined and dined their EE measurement contractors at
resorts — at public expense — and
gave them lucrative consulting contracts for studies
that make it look like utilities were saving much more
energy than they really were. back to top
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In
2002, on the heels of the energy crisis, then-President
of the CPUC, Loretta Lynch, set up an experimental competition
with 20% of the energy efficiency funds. Anybody except
utilities could apply. Utilities
tried everything to stop non-utility programs.They
appealed CPUC decisions, quarreled over contract language,
and sent threatening letters. In spite of all the
dirty tricks, non-utility EE providers persevered through
months of delay. They not only managed to do the job - they
saved more energy per dollar than utilities. |
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This
summer, the CPUC is deciding how EE programs will be run
for the next decade. Utilities
are fighting hard to regain control of the funds. They have
a great deal of political power because they contribute
to many community groups and nearly all political candidates.
However, there is widespread support for change
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With
a better EE system, we could make large reductions in energy
use, reduce our bills, help revive California's economy
and provide good-paying jobs at all skill levels. We could
close power plants that pollute poor communities and reduce
natural gas use. We could leverage investments in solar
and wind energy. We could slow global warming and eliminate
the justification for America's energy wars. back
to top
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ACT
NOW TO SUPPORT BETTER EE PROGRAMS IN CALIFORNIA
There is no time to lose. Our pocket books, the changing climate,
and the news from the energy wars are telling us to get real
about saving energy.
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