27 May Hold On to Your Saddle… Big Changes Proposed for California Energy Efficiency Programs
There are big changes proposed in the latest rulemaking provided by the CPUC on California’s rolling portfolio. If these ideas move forward it’ll be time to hold on to your saddle for sure. Since it’s still bike to work month, I’m thinking a classic Brooks B-17. But it’s probably more of the bucking bronco variety. So far the proposals are just proposals for discussion, but you have to see these as an indication of where the CPUC may be headed, and it could be a bumpy road.
The ruling, issued May 24th by Administrative Law Judge Julie Fitch, essentially proposes two overall changes, the second change having two possible options.
Change #1: Shift administration of all statewide programs to single entities for each statewide “subprogram” – with each subprogram area bid out separately.
This change would consolidate administration of all statewide programs – the largest EE pipelines in the state – under single entities. These programs (or “subprograms” in the ruling) have historically attempted consistent application across the state but are currently administered in each IOUs territory separately. These “subprograms” include the Deemed Incentives (i.e. rebate catalogs), Savings By Design, Customized Incentives, Upstream programs, Codes and Standards – essentially all the largest programs in the state for Res, Com, Industrial and Ag.
Change #2: For 3rd Party Program Implementation the decision proposes to either:
- Eliminate the IOU’s requirement of 20% for 3rd party programs, OR
- Require all commercial party programs to be run by 3rd parties
Option A could more or less be status quo. IOU’s in CA have previously been required to contract with 3rd party implementers for a minimum of 20% of their program portfolios. In reality, they exceed that threshold and some of the work of the other 80% is contracted out to 3rd party contractors as well. In practice I doubt that the IOUs would eliminate those 3rd party programs, and the decision proposes that the Innovative Design for Energy Efficiency Activities 365 program (IDEEA) process would remain the central mechanism for new program introduction and innovation.
Under Option B all administration in the commercial market would be transferred to 3rd parties (in addition to statewide programs). This would essentially put each IOU (at least in the commercial sector) into a contracts administrator role and eliminate energy efficiency as a direct service offering that IOUs have with their customers. My wild guess is that they are not going to be crazy about that proposal. The IOUs have maintained for many years (and probably correctly) that their relationship with their customers gives them a unique role as a trusted advisor with those customers. I’ve witnessed the apparent contradiction myself that while many customers complain about the big IOUs in the state when it comes to rates and service, they still trust their advice when it comes to how to reduce their costs with energy efficiency.
This decision still has my head spinning. The proposals are likely to have some big 3rd party administrators salivating, and other market players, including the IOUs, crying foul. My hope is that in the ongoing conversation, what’s best for California ratepayers isn’t lost in the fray.