California Sets Off on Another Bold Path to Save Energy

The California Public Utilities Commission (CPUC) unanimously approved the first ever set of business plans developed by administrators that manage the majority of the state’s energy efficiency programs. These plans lay out short-, mid-, and long-term strategies through 2025 to help all of their customers cut even more energy waste.

This decision also allows the investor-owned utilities (PG&E, SDG&E, SCE, and SoCalGas) to start their extensive process of seeking proposals from energy efficiency providers—such as non-profits, local governments, and companies—for new, innovative, or tried-and-true programs.

These business plans are also designed to reach the 2017 CPUC-approved energy saving goals, which by 2025 will result in enough electricity savings to cut the equivalent of climate-harming pollution from over 1.3 million cars for one year, avoid the electricity needs equivalent to nearly 10 large 500-megawatt (MW) power plants, and save enough natural gas to serve more than 2 million California households for an entire year.

In addition to these incredible savings, energy efficiency programs—when partnered with organizations that place workers into good career paths—can help build the clean energy economy like no other energy sector. Finally, certain programs coming through the bidding process will also focus on those communities and customers that have historically been left behind by current energy efficiency programs or need additional help to upgrade their homes and small businesses.

All told, this decision sets into motion the next era of energy efficiency programs to help reach the state’s ambitious equity and climate goals.

How does this fit into other CPUC efficiency efforts?

While energy efficiency programs have been around for many decades, the commission has been moving in a new direction for years to create a more continuous and flexible way to plan for and implement energy efficiency. This decision advances the commission’s previous direction in 2014 that moved planning for efficiency into a “rolling portfolio” approach and set an unprecedented long-term strategy that generally approves $1 billion of energy efficiency funding each year through 2025.

The energy efficiency program administrators – including the four investor-owned utilities, three regional energy networks (which are collaborations of local governments), and one community choice aggregator, MCE, which covers all of Marin and Napa Counties, much of Contra Costa County, and the city of Benicia– can allocate their portion of this funding to programs that suit their energy and customer needs such as (but not limited to):

• Changing out inefficient equipment like energy-guzzling lightbulbs and washing machines,
• Providing technical assistance to commercial customers on how to run their energy systems better,
• Training an energy efficiency workforce, or
• Delivering energy-saving offerings specifically to small- and medium-sized businesses and residential customers that have traditionally been underserved.

In addition, the business plans incorporated new CPUC direction to the administrators, including an order from 2016 that requires the utilities to transition their portfolio of programs so that at least 60 percent of their funding goes to programs that are designed, proposed, and implemented by a non-utility entity by 2022.

The same order also aimed to create more efficiencies in statewide program delivery (such as the utilities’ partnership with the Department of Corrections or how workforce, education, and training is delivered across California) by dedicating one utility as lead for such programs to ensure program offerings are easy to participate in and are as consistent as possible.

Furthermore, since the programs are going to be predominately designed by third parties through a competitive solicitation process, earlier this year the commission approved an oversight group of non-financially interested stakeholders and an independent evaluator to ensure the bidding and contracting process is fair, transparent, meets the directives of the CPUC and the state, and builds a robust system of small, medium, and large implementers that can collectively serve all customers.

What is needed next?

The commission’s action builds on a long record of achievement through energy efficiency programs that has yielded billions in utility bill savings ($750 million alone for the 2010-2012 programs), advanced groundbreaking building codes and appliance standards to cut energy waste, and substantially reduced global-warming pollution while reinvigorating the economy.

While the continuing program portfolio and the new third-party programs (likely launching in the fourth quarter of 2019) will yield enormous benefits, the commission has a number of important policies to update, such as looking at:

• How should the CPUC best value energy efficiency in an era where energy savings is not the only benefit of a program but rather is one of many, such as increasing equity, improving air quality, and stimulating job growth?
• How can programs that focus on long-term transformation of behavior (like influencing energy managers of large buildings to focus on energy efficiency) or equipment (such as the incredible transition from using inefficient incandescent lights to LEDs) be designed, measured, and evaluated effectively?
• Where can programs best be targeted to reach those customers that have been traditionally underserved or are unable to pay the upfront cost of efficiency actions?
• What is the best way to target improvements to training programs and increase connections to efficiency careers?
• Which quality standards and training requirements should be applied to programs?
• How can the process for launching new programs and measuring the success or improvements needed in efficiency programs be integrated in a statewide manner for increased transparency and consistency across California?

Answering these questions and updating policies as soon as practicable is critical to scaling up efficiency program offerings to meet the equity goals of the state and double our energy efficiency from 2015 predictions by 2030. Leveraging the ongoing collaborative work of the California Energy Efficiency Coordinating Committee (CAEECC) and the California Technical Forum will be especially important as the commission seeks to answer these questions.

Using these forums can reduce the number of disagreements coming before the commission, improve partnerships, and speed up the pace by which the commission can address these and other critical matters. Doing so will help continue California’s leadership to reduce harmful pollution, lower customers’ bills, serve customers who can benefit most from energy efficiency, increase job opportunities in the clean energy economy, all while improving the health of all Californians and the environment.