New regulatory framework for energy efficiency in California


San Francisco, CA, U.S.A. — (METERING.COM) — August 13, 2007 – The California Public Utilities Commission (PUC) has issued an energy efficiency Proposed Decision that presents an innovative, new regulatory framework for achieving and exceeding the state’s energy efficiency goals. This action extends California’s commitment to efficiency as the highest priority energy resource in advancing policies to reduce greenhouse gas emissions.

The proposal establishes a new system of incentives and penalties to drive investor-owned utilities above and beyond California’s 2006-2008 energy savings goals. The new ‘risk/reward incentive mechanism’ provides an estimated return to consumers of over 100 percent on consumer investment in energy efficiency.

The proposed decision outlines potential shareholder earnings and penalties at various levels of energy efficiency performance by California’s investor-owned utilities (Pacific Gas and Electric Company, Southern California Edison Company, Southern California Gas Company, and San Diego Gas and Electric). The proposal also explains how ratepayers are guaranteed against financial losses on their investment in energy efficiency and presents estimated levels of net benefits that accrue for consumers. Meeting the Commission’s energy efficiency goals for just the current period alone (2006-2008) will reduce global warming pollution by an estimated 3.4 million tons of carbon dioxide in 2008, equivalent to taking about 650,000 cars off the road.  

Not everyone supports the new system, however. Consumer watchdog group The Utility Reform Network (TURN) believes that Californians are already paying enough for energy efficiency initiatives, and says that utilities shouldn’t need the amount of money offered as an incentive. The investor-owned utilities could earn as much as $323 million over the next three years for achieving energy savings; on the other hand, if they aren’t successful they could be penalized by even more than that amount.

The PUC’s action builds upon California’s landmark policies to advance clean air and energy, such as the Global Warming Solutions Act (Assembly Bill 32), the Low Carbon Fuel Standard (Executive Order S-01-07) and Emissions Performance Standard (Senate Bill 1368), and follows the direction of the state’s Energy Action Plan.

The PUC anticipates a vote on this issue at its meeting on September 20, 2007.