California Public Utilities Commission Faces Ambitious Energy Efficiency Goals

The California Public Utilities Commission is trying to figure out how to invest $4 billion a year to achieve the ambitious energy efficiency goals the regulator has set over the next two decades.

To that end, the CPUC held workshops on energy efficiency and financing over three days in February. The workshops, which were open to the public, focused on financing for residential customers, non-residential customers and financing implementation.

“In my mind, I see energy efficiency financing not as a panacea or a silver bullet,” said Mark Ferron, CPUC Commissioner, in taped remarks from the workshop. “Rather, I see this as an extension of our strategy, another tool to achieve deeper levels of energy savings across all sectors by leveraging private capital in addition to rate-payer funds.”

Ferron said the CPUC spends $1 billion a year on energy efficiency but needs to figure out how to invest more.

“Sources of public funding for energy efficiency measures are clearly finite,” Ferron said. “We need to find ways to leverage these scarce public funds along with public sources of capital to finance future energy efficiency measures like deep retrofits.”

The CPUC is currently asking those in the clean-tech industry and those who aren’t traditional members to comment on proposals regarding how the state will meet its efficiency goals during the next few years, how to bridge the financing gaps currently facing the projects, and on-bill financing. (On-bill financing allows customers to pay for efficiency upgrades without incurring up-front costs.)

In January, an administrative law judge issued a ruling proposing a larger energy efficiency program supported by both ratepayer funds and private capital. In response, the CPUC requested comment on three related reports on the state’s energy efficiency programs and goals. The workshops and requests for comment from the public are the result of the ruling. In January, CPUC staff published its own proposal on how to address energy efficiency in the 2013-2014 cycle.

The proposal includes five elements: develop an on-bill repayment (OBR) framework; develop and roll out ratepayer-supported credit enhancements; continue on-bill financing on an interim basis; and create an energy loan performance database. The staff also proposed a $130 million “straw man” loan portfolio of credit enhancements to get the dialogue moving on the issue.

An analysis of California’s energy efficiency programs published this summer found that in order for the state to achieve its 30-year plan, it has to invest $4 billion per year. Currently, however, the state is investing only half that amount, an analysis of financing conducted by Harcourt Brown & Carey found.

The long-range goals include reducing energy consumption in homes by 20% by 2015 and in government buildings by 20%, relative to 2003levels. The plan also seeks to ensure that all newly constructed homes have zero net energy by 2020 and that energy certification and benchmarking are standard practice by 2020. It also aims to reduce energy use by local governments by another 20% by 2020.

By 2030, California seeks to ensure that all new commercial buildings are zero net energy and that 50% of existing commercial buildings are zero net energy.

Comments should be directed to the Public Utilities Commission at 505 Van Ness Avenue San Francisco, CA 94102.


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