Over the protest of the state’s major utility consumer watchdog group, California regulators on Thursday authorized an additional $61.5 million in energy efficiency program incentive rewards to four major investor-owned utilities (IOU). The Utility Reform Network (TURN) argued that the utilities had not proven they deserved the windfall.
The focus by the California Public Utilities Commission (CPUC) was on energy efficiency programs the four utilities carried out in 2006 through 2008, and for which they had earned $82 million in rewards already for the first year of the three-year period.
Contrary to TURN’s contention, CPUC Commissioner John Bohn argued that the third-party verification used to assess the utility results are “the best available information to use in establishing consensus” on the rewards. Bohn made some modifications in the methodologies used to compare utility goals to their results and calculate the rewards earned from those results.
“This has been a controversial exercise that has been pleasing to no one,” said Bohn, who urged the utilities and stakeholders such as TURN to hash out differences next year when the rewards process is subjected to a final review and true-up.
Under what is called the Risk/Reward Incentive Mechanism (RRIM), if the major IOUs — Pacific Gas and Electric Co. (PG&E), Southern California Edison (SCE), Southern California Gas Co. (SoCalGas), and San Diego Gas and Electric Co. (SDG&E) — meet or exceed certain CPUC-adopted energy efficiency targets, they can earn incentive payments. These payments come in two interim amounts for the first two years of a three-year period and a final payment based on a full true-up of the program results for the three years.
A year earlier the utilities received the first interim rewards, and Thursday’s decision provided the second phase. For this second interim payout, based on independently verified utility savings resulting from efficiency programs, the CPUC approved $33.4 million for PG&E; $25.7 million for SCE; $300,000 for SDG&E; and $2.1 million for SoCalGas. As part of the program the CPUC holds back 35% of each reward, pending the final true-up next year.
“The commission is twisting itself into a pretzel to justify huge rewards for mediocre programs,” said TURN Executive Director Mark Toney. “Too many consumers are struggling with high bills and getting no help from their utility company in lowering those bills. Absent evidence the rewards are deserved, the commission appears to be bribing utilities to administer programs they are already paid handsomely to run.”
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