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CA Sets Revamped Energy Efficiency Program; Gives It Top Priority

In a state that has given energy-saving programs priority over both alternative and traditional forms of creating energy, California regulators Thursday approved a new approach to utility energy efficiency programs by establishing policies, processes and an administrative framework to guide future programs. The state expects future programs to provide almost 60% of the incremental energy supplies of the state's major private sector utilities over the next 10 years.

The latest action to streamline commission policies on energy efficiency is being watched closely by other states, many of which are skeptical of California's ability to rely on savings as the top means of meeting additional future energy demand. Clear measurement of the effectiveness of demand-side management programs (DSM) in the past has been hard to do.

Part of the difficulty involves finding universally accepted cost-effectiveness measures for the various alternative ways to reduce energy use. An updated avoided-cost methodology adopted by the California Public Utilities Commission (CPUC) earlier in the month was specifically designed to address this area.

Thursday's action was the follow-up to CPUC action last September that established energy-saving goals for the major utilities that are designed to reduce over time per-capita energy use statewide. "The energy-savings in those goals represents as much as 59% of the utilities' incremental electric energy needs over the next decade," said Commissioner Susan Kennedy, who sponsored the CPUC's action. "It also represents a 116% savings in natural gas relative to the status quo over the same period."

This action's process is expected to fully integrate energy efficiency as the top priority in the state's so-called energy procurement process (or "loading" process), with renewable energy-produced electricity being next, and traditional thermal-based power generation being third in priority. All of this in turn is supposed to help meet what the CPUC considers the "aggressive goals" in a statewide Energy Action Plan carved out two years ago.

A key issue addressed by the CPUC's action is the always questionable means of measuring the results of energy-saving approaches and whether they meet their target goals. In the future, CPUC energy division staff -- and not outside consultants hired by the major utilities -- will make those assessments, which usually carry potential monetary rewards for the utility companies. "There now will be a clear separation between those who operate the programs and those who measure them," Kennedy said.

"The three [CPUC] decisions taken together -- savings goals, administrative structure, and the evaluation/measurement structure -- provides a foundation that will allow us to use energy efficiency as a viable and tangible resource for California," Kennedy said.

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