A Brief History of the Energy
Efficiency Rulemaking & WEM’s Role
Women’s
Energy Matters has been a leading public interest participant in
the “Future Energy Efficiency” Rulemaking at the California
Public Utilities Commission (CPUC), which has been ongoing since
September, 2001.
Funding
for Energy Efficiency in California. The
Public Goods Charge on utility bills provides approximately $250
million a year for Energy Efficiency programs in the territories
of the four big investor-owned utilities (PG&E, So. Cal. Edison,
San Diego Gas & Electric and Southern California Gas Co.) Another
$150m a year is now available from utility “procurement”
funds. (Note: The Public Goods charge also provides funds for Low-Income
Energy Efficiency programs which remain under utility control and
are not part of this proceeding. Funds to support renewable energy
development (solar, wind, biomass, etc.) also come from the Public
Goods Charge and are under the separate jurisdiction of the California
Energy Commission.)
What
is Energy Efficiency? "Energy Efficiency"
refers to a variety of energy saving activities for homes and businesses
such as installing or servicing efficient lighting and appliances,
insulation, heating/ cooling equipment and industrial/ agricultural
machinery; providing information to the public about these programs;
and educating architects and contractors about energy efficient
equipment and design. The California Public Utilities Commission
makes a distinction between "energy efficiency" and "conservation"
which it defines as changes in behavior such as turning
off the lights or turning down the heat. It refuses to fund conservation
information with Public Goods Funds. ( You may have noticed a big
change in the "Flex Your Power" program. It focussed on
conservation during the Energy Crisis when it had State funding.
Now it is getting Public Goods funding and is only allowed to promote
energy efficiency. Read more>)
(Note:
Energy efficiency programs could — but currently do not — include
solar water heaters or designs for buildings that use the sun for
heating and cooling. However, they do not include alternate
energy generators such as windmills and solar photovoltaics.
Do you find this confusing and unnecessary? We think so too. Energy
efficiency and alternate (or "renewable") energy programs
became separated in the 1970s during the first Energy Crisis. The
Legislature created a new agency, the California Energy Commission,
to run both programs, but the CPUC fought to hang onto its turf,
and this unfortunate split is the result.)
Why
make a change? The Rulemaking was initiated
by CPUC President Loretta Lynch in order to examine how energy efficiency
(EE) programs will be administered through 2010. The Commission
began to make changes to the system because of a history of problems
with utility programs, and because the utilities’ monopoly
over energy efficiency is anti-competitive.
---Back to top---
The
Grand Experiment: Non-utility Programs. For
the 2002-03 program cycle, the CPUC set aside 20% of the funds for
non-utility programs run by cities, non-profits and independent
businesses. Utilities received 80% of the funds. The CPUC reviewed
proposals, selected non-utility programs and provided broad oversight
but retained the utilities to provide day-to-day “administrative”
functions for non-utility programs. Many objected to putting the
fox in charge of the henhouse, but Lynch felt it was best to get
non-utility programs running to see how they would do, and fight
the administration battle afterwards. An earlier attempt to establish
independent administration of energy efficiency had been derailed
by utility resistance after eighteen months of theoretical discussions.
The utilities set up roadblocks that delayed the start of non-utility
programs for months, but the Commission stayed firm, and independent
programs finally got going in late October 2002. (See Non-Utility
Programs Are Performing Much Better than Utilities)
Heads
Roll. The following month, Gray Davis named
Michael Peevey President of the Commission, demoting Loretta Lynch
to Commissioner. Peevey immediately reassigned the Energy Efficiency
proceeding to Commissioner Susan Kennedy, who was more sympathetic
to utility interests. A new judge was also brought into the case.
For the 2004-5 program cycle Kennedy proposed to replace most independent
programs in the 2004-05 program cycle with utility “partnerships”
with cities and other third parties (with the utilities in control).
Utilities'
"Cozy Retreat" with Their Measurement Contractors.
WEM crashed a two-day cozy retreat the utilities were holding at
a Sonoma resort with their sweetheart consultants in 2002. The utilities
hire the same sweethearts to measure their energy savings and to
conduct statewide studies on which those measurements are based
— compromising the credibility of the reports. WEM called
for the CPUC to immediately remove measurement and statewide studies
from utility control, and to conduct an independent financial audit
of utility EE programs. The judge agreed, but Commissioner Kennedy
decided to put off the question of independent measurement and left
the utilities in charge. The audit was ordered, however its results
have not yet been released.
Community
Choice and Genuine Competition Wins the Day.
WEM and its allies were instrumental in convincing the Commission
to preserve funds for non-utility programs, which again received
about 20% of the funds. Our arguments were based on the success
of non-utility programs, and an important law WEM helped pass in
2002, Community Choice (AB117). Community Choice allows cities and
counties or groups of cities and counties to become energy “aggregators”
— i.e. become the default provider of energy supplies as well
as energy efficiency to their communities. It is a form of public
power without the hassle of buying the wires.
---Back
to top---
The
Peculiar Story of the San Francisco “Pilot.”
WEM became deeply involved in tracking a special $16.3
m EE program proposed by PG&E in “partnership” with
the City and county of San Francisco. WEM focused attention on the
San Francisco Peak Energy Program (“PEP”, or “Pilot”)
because it is the prototype for the utility model of administration
— and because it claimed to benefit the low-income people
of color community of Bayview Hunters Point (BVHP) although it proposed
to spend all the funds downtown.
WEM
allied with the Community First Coalition (CFC) and other BVHP organizations
and residents to fight for community benefits from this program
and to put a spotlight on the relationship of energy issues to environmental
and economic justice. Together we are urgently exploring what it
would take for grid operators to actually accept energy efficiency
(and solar and wind) as reliable resources to replace fossil-fueled
power plants that pollute this community and others around the State.
One of our allies in the proceeding, SESCO, Inc., provided a detailed
analysis of PG&E’s plans, which revealed that half the
projected savings are bogus, and much of the rest will vanish in
a year, instead of the eight years PG&E claimed. WEM, CFC and
SESCO proposed changes to the Pilot that would easily meet the goal
of 16 MW savings and provide most of its benefits to residents businesses
of BVHP.
Non-Utility
Programs Are Performing Much Better than Utilities.
Since 2002, non-utility energy efficiency providers have
provided significantly more cost-effective programs in residential
categories, and were at least tied with utilities in commercial/industrial
programs. (Non-utilities were actually more cost-effective in commercial
programs, if several unfair utility advantages are taken into account.)
Several parties, notably WEM and SESCO, Inc., have analyzed utility
vs. non-utility achievements and the many ways the utilities have
“cooked the books” over the years to make their programs
appear more effective than they are.
Now
is the Time to Support Better Energy Efficiency Programs
in California.
In 2004-5, the CPUC is finally getting around to considering
the long-term “administrative structure” for energy
efficiency. The utilities are fighting to regain control of the
funds, while non-utility program providers and public interest
organizations are working to establish independent administration
and open up all funds for genuine competition. WEM and its allies
proposed the California Standard Offer system for administrative
structure, which best fulfills these goals, and founded the California
Coalition for Energy Efficiency to support the proposal.
During the holidays, December, 2004, with local and state
officials on recess, the Commissioner in charge of the Energy
Efficiency proceeding is trying to ram through a proposed decision
that would turn over control of the energy efficiency system
to utilities.
The proposed decision ignores the superior record of non-utility
energy efficiency programs and suppresses the first-ever Audit
of utility programs, which found exaggerated energy savings claims,
excessive administrative costs, rampant favoritism and negligence.
The proposed decision also suggests canceling energy efficiency
funds for Community Choice cities, rather than allowing them
to administer programs as the law requires.
WEM issued an alert asking our allies to contact Commissioners
to request an alternate decision that creates a fair, independent
and cost-effective administrative structure for energy efficiency
— and ask them to delay the vote (currently planned for Jan.
13th).
---Back to top---
Descriptions and Links to
Key Documents
We
include thumbnail descriptions and links to documents in the following
categories:
- The
California Standard Offer proposal for Administrative Structure
- Comparisons
of non-utility vs. utility programs
- How
utilities cook the books on energy efficiency
- The
San Francisco "Pilot" or Peak Energy Program
- The
battle over Community Choice energy efficiency
Note: we are posting only a few of the hundreds
of documents filed in the proceeding by dozens of parties. Link
to CPUC webpage where you can read Commission Rulings and
Decisions, see a list of all documents in the proceeding and descriptions
of utility and non-utility programs chosen for the 2004-5 cycle.
- The
California Standard Offer Proposal for Energy Efficiency
- WEM
Comments on the CA Standard Offer Proposal. WEM discusses
the features of the CA Standard Offer Proposal compared to other
proposals.
- WEM
Reply Comments. WEM answers questions from other parties about
the CA Standard Offer proposal and summarizes some of the issues
the Standard Offer addresses that remain unresolved in other proposals.
- Comments
of Quality Conservation Services, Inc. QCS provides information
about how the Standard Offer system works in Texas. QCS has first-hand
knowledge from its work in Texas EE programs as well as in California.
QCS is also active in New Jersey and Maine, where it has pioneered
an alliance with labor unions including the Int’l Brotherhood
of Electrical Workers (IBEW) to improve the quality of EE installations
by utilizing well-trained union workers and to increase the union’s
understanding of the opportunities for their members in this field.
New Jersey is another state using a Standard Offer system.
- Reply
Comments of Quality Conservation Services, Inc. This document
replies to questions and comments about the California Standard
Offer proposal. It compares the results of current EE programs
in Texas vs. California, showing Texas achieves 40% more EE savings
per dollar.
- Comments
of TEDCO Energy Services. TEDCO describes its experiencing
providing EE services to rural hard-to-reach customers under the
Texas Standard Offer Systems. As a small business based in Amarillo,
TX, it discusses the opportunities available in the Texas Standard
Offer system to enter the EE market with a small-scale program
and rapidly expand with larger contracts as those programs prove
successful. TEDCO notes that before the Standard Offer began,
utilities hired a few large out of state companies for all programs;
now there are thirty local companies providing EE in just this
one area, and hundreds more statewide. Texas provides only 1/10
as much funding for EE as California, but California has only
approximately 50 non-utility programs and four large utility programs,
statewide.
- Comments
of SESCO, Inc. on the CA Standard Offer Proposal. SESCO, Inc.
has over 20 years’ experience running EE programs in the
US as a subcontractor to utilities, and currently runs independent
non-utility programs in California, Texas and New Jersey. It specializes
in residential and small business programs which are widely regarded
as the best in the country. SESCO is one of the authors of the
California Standard Offer proposal.
---Back
to top---
- The
Myth of IOU Cost-Effectiveness I (August 8, 2003). This landmark
report by SESCO, Inc. analyses the “cost-effectiveness”
of 2002-3 utility programs compared to those run by non-utility
third parties (such as cities, non-profits and independent businesses).
(“Cost-effectiveness” is a ratio of energy-savings
benefits — i.e., bill reductions — compared to
the cost of the programs. The CPUC requires all EE providers to
track cost-effectiveness in their reports, and requires the EE
“portfolio” — all programs run by one entity,
and all programs statewide — to be cost-effective. WEM and
SESCO believe each program should be cost-effective.)
Nearly all non-utility residential programs were more
cost-effective than utility programs, many by large margins.
Most utility residential programs were not cost-effective. In
non-residential programs, utilities were about even with non-utilities.
Note, however, that cost-effectiveness calculations do not reflect
the considerable advantages utilities enjoy over non-utilities:
(1) the utilities have had 30 years to perfect their programs
and develop relationships with manufacturers, while this is the
first time the CPUC chose non-utilities to run independent programs
funded by the Public Goods Charge; (2) utilities should have had
significant economies of scale, since their programs are much
better funded and can operate anywhere in their territories while
non-utilities are confined to small programs in specific local
areas; (3) utilities benefit greatly from statewide marketing
and information programs run by other parties which heavily promote
utility programs and offer only the sketchiest information about
non-utility programs. This means non-utilities must include all
marketing costs within their “cost-effectiveness”
data, while utilities’ marketing costs are largely off the
books.
(Note: this is the only comparison of utility vs. non-utility
programs that has been done to date. No analysis has been offered
by the CPUC staff nor the utilities — who are familiar with
all the data because the CPUC placed them in charge of administrative
services for non-utility programs run by their competitors).
- Myth
of IOU Cost-Effectiveness II
(May 8, 2004). SESCO expands and updates its analysis of 2002-3
programs.
- WEM
wrote many comments over the two and a half years of the proceeding
discussing why non-utility programs should be expanded, and how
to accomplish this task. The comments also addressed other issues
in the proceeding at the time. WEM’s Comments
and Reply
on the Draft Decisions Selecting 2004-5 programs contributed to
a key victory for non-utility programs in the Commission’s
August 21, 2003 Decision.
(Note to readers: the multitude of filings in
summer 2003 provide a sometimes entertaining glimpse of the
new assigned Commissioner’s frantic schedule that seemed
designed to leave public interest groups and other non-utility
participants in the dust, but ended up by confusing even the
utility regulatory departments. 7/16/03
WEM Comment, 7/23/03
WEM Reply.)
---Back
to top---
(See also the section above and the next section
(the PG&E/San Francisco Pilot) for detailed examples of cooked
books.)
- Ask
Cher-EE, Advice for Healthy EE Partnerships. WEM’s comment
for the February 2004 Partnership Workshop on why cities should
avoid utility partnerships and partner with non-utilities instead
is a spoof of “relationship advice” columns. It sums
up many of the things we learned while investigating PG&E’s
partnership with San Francisco.
- WEM
has been monitoring the Pilot ever since PG&E first requested
CPUC approval of the program in December, 2002. Beginning in February,
2003, WEM and the Community First Coalition of Bayview Hunters
Point have coordinated our investigation, filed numerous comments
at the CPUC and participated in many Pilot-related meetings, in
our efforts to secure the promised energy savings and benefits
for the BVHP community. SESCO, Inc. has provided technical analysis
for us and has also filed separate comments. Its 7/29/03
Comment caused the judge to question PG&E/SFE's projected
savings, especially its reliance on installing CFLs in commercial
facilities. Our 10/23/03 Joint Motion contains a detailed proposal
for modification of the Pilot in order to meet the energy savings
goals and benefit the community. CFC/WEM's
2/18/04 Comment recaps the whole story, again asking the Commission
to modify the Pilot. The judge's Draft Decision promised to address
this question, but the final Decision postponed it. Nevertheless,
our work has resulted in a lot more EE work in the Bayview Hunters
Point community, and more attention on environmental justice for
communities suffering from power plant pollution both in San Francisco
and statewide.
- The
Community Choice law provides for “any party to apply to
administer cost-effective energy efficiency programs,” and
required the CPUC to write rules to implement this law by July
15, 2003. Community Choice became a key battleground in the Future
Energy Efficiency proceeding when the Commission chose to redefine
“administer” as “implementer” —
which could allow utilities to administer Community Choice EE
programs. WEM teamed up with Paul Fenn of Local Power (the original
author of the Community Choice law) and others to fight these
provisions. Our lawyer Dan Meek has taken the issue all the way
to the California Supreme Court, where it currently awaits hearing.
For the whole story and the legal questions pending, see WEM's
8/13/03 Application for Rehearing, our 2/13/04
Writ of Review and 5/20/04
Reply to Utility Response to WEM's Writ of Review.
The “Community Choice” law, AB117,
allows cities and counties or groups of cities and counties to
become energy “aggregators” — i.e. become the
default provider of energy supplies as well as energy efficiency
to their communities. It is a form of public power without the
hassle of buying the wires. The law contains key passages that
support independent administration of energy efficiency programs
by Community Choice Aggregators as well as other non-utility parties.
WEM helped pass this bill in the Legislature
with non-utility energy efficiency opportunities intact. WEM works
closely with the originator of the law, Paul Fenn of Local Power,
who created similar laws that were adopted in Massachusetts and
Ohio (where 80% of the State is now Community Choice). The law
is designed to give cities control over their energy future similar
to “Direct Access,” which primarily allows large businesses
to bypass monopoly utilities and buy cheaper energy elsewhere.
|
