California’s major private-sector utilities won a victory of sorts from regulators Thursday, getting partial incentive rewards, totaling $82 million, for their energy efficiency programs. The four investor-owned utilities (IOU) had solicited more from the California Public Utilities Commission (CPUC), which denied part of the joint request.
The action on a four-to-one vote by the five-member CPUC sparked a barrage of criticisms from two major consumer organizations — the CPUC’s independent Division of Ratepayer Advocates (DRA) and the nonprofit The Utility Reform Network (TURN). At issue was the utilities’ request for part of incentive rewards for their 2006 and 2007 conservation programs ahead of those efforts being fully reviewed and measured for their results.
Dissenting commissioner Dian Grueneich proposed giving the utilities only 15% of the possible rewards, or about $47 million, but an alternative proposed by CPUC President Michael Peevey raised those totals to 35%, or about $82 million. He contended that anything less would be too much of a disincentive.
Calling it a windfall for the utilities — Southern California Edison Co.(SCE), Southern California Gas Co. (SoCalGas), Pacific Gas and Electric Co. (PG&E), and San Diego Gas and Electric Co. (SDG&E) — the DRA said regulators had given the utilities rewards for still-unverified achievements. TURN called it the CPUC’s “Christmas Giveaway,” allowing the four utilities to reap what it called “excessive profits” with no objectively proven results.
Saying the California utilities continue to “lead the way in energy savings through efficiency,” the CPUC authorized energy efficiency payments to each of the utilities as part of the state’s risk-reward incentive mechanism established last year. The utilities wanted just 35% of the estimated rewards held back, but the CPUC, following the Peevey proposal, held back 65%.
Utilities are eligible for rewards only if the programs achieve at least 85% of their pre-set goals; they receive nothing if the results are in the 65-85% range, and if they fall below 65% of the stated goals a penalty is imposed according to a scale of how far below the 65% the results fall.
With Thursday’s decision, the CPUC apportioned the interim rewards, subject to refund upon completion of ongoing reviews, as: $41.5 million for PG&E; $24.7 million for SCE; $10.8 million for SDG&E; and $5.2 million for SoCalGas.
“If there was a silver lining in the CPUC’s original decision allowing the utilities to collect extra money from customers as a reward for adequate energy efficiency performance, it was that the CPUC agreed with TURN that utility rewards would be linked to actual energy savings, not just claims of savings,” said TURN Executive Director Mark Toney. “This commission is giving the utility companies a free ride. The truth is that the utility companies have not met their energy efficiency goals, so there is nothing to reward them for.” TURN continues to urge the CPUC to find other, more effective energy service providers than the utilities in the future.
DRA said energy efficiency programs have the potential to be the “most expedient and cost-effective weapons” to fight climate change’s impact, but “only if the energy savings are real and sustainable,” said DRA Director Dana Appling, who urged for more accountability of the utilities to ensure that savings are “real and sustainable.”
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