How to Implement the Energy Efficiency Rolling Portfolio?
In March, the CPUC held three workshops on implementation of the Rolling Portfolio for energy efficiency. The first presented the work done to date by the Joint Parties (of which the LGSEC is part) on how a Rolling Portfolio would actually work. The second looked at energy efficiency potential and goals, and the third discussed third party and statewide programs. You can find the presentations from this third workshop here.
The LGSEC submitted comments on the first and third workshops. You can find those comments on our web site, www.lgsec.org. You can review all the comments submitted here.
The next step in the CPUC's process is a white paper from the Energy Division on the mechanics of the Rolling Portfolio. It is expected to provide the Energy Division's interpretation of how to proceed, hopefully informed by the work of the Joint Parties. The schedule has been delayed, and we are awaiting word from the CPUC on dates.
In the meantime, on April 28, the CPUC will host a workshop on energy efficiency baselines and "to code" incentive eligibility issues. This has been an important topic for the LGSEC for years. The purpose of the workshop is to provide parties the opportunity to provide input on the energy efficiency baseline policies and the analyses being prepared by Energy Division and Navigant Consulting in response to Decision 14-10-046. You can see the agenda, and hopefully any presentations, here .
CAEATFA Asks For Modifications to Financing Pilots
On March 9, the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) asked the CPUC to modify its prior decision on the financing programs (D.13-09-044). CAEATFA is asking for an extension of the financing pilot terms. Currently, the pilot is scheduled to end in December 2015. Given that it has taken CAEATFA longer to get the approvals it needed to move forward, the agency is now asking that the 24-month term of the pilot begin on the date the first borrower enrolls in the last pilot to launch. This is expected to occur in the final quarter of 2015, so the pilots would run in to the 2017-2018 fiscal year. CAEATFA asks the CPUC to formally acknowledge that the pilots will need administrative support after the pilots end. CAEATFA also is looking for the flexibility to partially enroll loans so that borrowers can include other home improvements and distributed generation technologies. CAEATFA suggests a more expansive definition of what qualifies as an energy efficiency measure. It also wants to be clear that government entities can participate in the financing pilot programs, and asks for more flexibility in the type of financial products that can be included.
Parties submitted comments on CAEATFA's request on April 3. Only a few parties submitted comments, and most support CAEATFA's request and do not want any further delay to the start of the financing pilots.
Integrated Demand Side Management
In March, the LGSEC participated in a two-day workshop in the Integrated Demand Side Management proceeding (R.14-10-003). The workshops were unusual for the CPUC in that they were highly interactive - not the usual presentation-followed-by-questions format. Each party was limited to one participant, meaning the voice of the utilities was much less than in a more traditional CPUC workshop. The workshop focused on a) defining the integration of demand-side resources, b) determining the problems with current integration efforts, and c) shaping a goal for integration. It is described in more detail in a ruling issued on April 15 that calls for responses to a series of questions. The comments are due May 15, with replies due May 29.
There are two sets of questions in this ruling: one set is specifically associated with the definition of integration and the goal of integration and the second is specifically associated with the breadth of the proceeding. The Ruling reminds parties that in addressing questions on the goal of the integration of demand-side resources, they should not confuse the goal of integration with the goal of this proceeding: the CPUC wants to develop a goal for the integration of demand-side resources for California.
The CPUC has a new web page for these workshops. It includes most of the presentations from the January and February Learning Sessions.
How Does the CPUC Calculate Cost-effectiveness?
On March 6, the CPUC held a webinar on how it calculates cost-effectiveness for demand side resources. A recording of the webinar and the slides used at it are available online at http://www.cpuc.ca.gov/PUC/energy/IDSM/. The materials can be found on the right side of the page, under "Recent News and Quick Links."
CPUC Takes Final Round of Comment on Tool for Evaluating New Net Energy Metering Tariffs
The CPUC on April 15 issued a ruling calling for comments on the "public tool" it is developing to help stakeholders evaluate different net energy metering tariff options. On March 30, 2015 Energy Division staff held a public workshop to demonstrate the use of the draft version of the Public Tool. Energy Division staff has also developed a section of the Commission's web site where information about the draft version of the Public Tool can be found here.
As the next (and intended to be last) opportunity for parties to participate in the development of the Public Tool, parties may make suggestions for improvements in the draft version of the Public Tool. The questions in the ruling are intended to focus parties on specific elements of the draft version of the Public Tool, based on their experience with the draft version both at the March 30 workshop and in reviewing the draft version of the Public Tool since the March 30 workshop.
Comments on the draft version of the Public Tool are due April 28, 2015. There are no reply comments.
New Rulemaking for Renewables Portfolio Standard
The CPUC at the end of February moved its work on the Renewables Portfolio Standard (RPS) to a new docket, R.15-02-020. As a successor docket to Rulemaking 11-05-005, the new proceeding addresses ongoing oversight of the RPS program. This includes reviewing RPS procurement plans submitted by retail sellers; providing tools for analyzing and reporting on progress of retail sellers and the RPS program as a whole; assessing retail sellers' compliance with their RPS obligations; taking enforcement action if necessary; and integrating new legislative mandates and administrative requirements into the administration of the RPS program.
This rulemaking also provides a forum to lay the groundwork for possible further development of the RPS program, through exercise of the Commission's authority to increase the percentage of RPS-eligible electricity sold to retail end-user customers, looking at the relationship of the RPS program to other state mandates that include the electricity sector (e.g., reduction in emission of greenhouse gases), and coordinating with other proceedings and initiatives at the CPUC.
In prehearing conference statements submitted March 26, and at a prehearing conference on April 16, some parties suggested this new proceeding should look at how to meet the Governor's target of 50% renewables by 2030. Some parties also suggested that the proceeding should be including distributed generation in its discussion of strategies related to the RPS.
Guidance For Distribution Resources Plans
On February 6, 2015, CPUC President Picker, the lead Commissioner on the distribution resources plan proceeding, issued a ruling that provides guidance to the utilities for the plans they are required to submit by July 1. The Ruling notes there are five areas the distribution resources plans must address. The plans also will provide a "platform for future investments in energy delivery infrastructure." Specifically, the plans should reflect how they will achieve these related goals:
- Modernize the electric distribution system to accommodate two-way flows of energy and energy services throughout the utilities' networks;
- Enable customer choice of new technologies and services that reduce emissions and improve reliability in a cost efficient manner; and
- Animate opportunities for distributed energy resources to realize benefits through the provision of grid services.
The Ruling talks about distributed energy resources being sited in locations with the "greatest net benefits to the grid." The Ruling states that the Commission will institute a biennial distribution resources plan review, in order to keep tabs on whether things are working as intended. The Ruling also makes clear that in this proceeding, the CPUC will not consider reinventing the utility distribution services model. The focus rather is on integrating distributed energy resources in to the grid, recognizing that in the long run there may need to be changes to the utility business model. The Ruling anticipates discussion on this latter topic could commence in 2 or 3 years.
The Ruling describes the work of the More Than Smart initiative as foundational for the proceeding. It also acknowledges overlap with a large number of other ongoing proceedings. And it indicates that the CPUC will need to coordinate closely with other regulatory entities, and the utilities. The Ruling includes as an attachment a final version of guidance issued in November. The 15 page attachment outlines what the Plans must include.
New Rulemaking on Energy Storage
On March 26, the CPUC opened a new proceeding on energy storage. Rulemaking 15-03-011 considers recommendations included in the California Energy Storage Roadmap, an interagency guidance document which was jointly developed by the California Independent System Operator, the California Energy Commission, and the CPUC. The CPUC will continue to be guided by the following guiding principles:
- Optimization of the grid, including peak reduction, contribution to reliability needs, or deferment of transmission and distribution upgrade investments;
- Integration of renewable energy; and
- Reduction of greenhouse gas emissions to 80 percent below 1900 levels by 2050, per California goals.
The new proceeding continues work begun several years ago in response AB 2514 (Skinner, 2010), which directed the Commission to determine appropriate targets, if any, for each load serving entity to procure viable and cost-effective energy storage systems and sets dates for any targets deemed appropriate to achieve. In response to AB 2514, the CPUC took immediate action to advance energy storage through a stakeholder process and three subsequent energy storage decisions in 2012, 2013, and 2014. The new proceeding will build on the work initiated previously.
CPUC To Look at Energy Options for Disadvantaged Communities
The CPUC on March 26 opened a new proceeding to identify disadvantaged communities in the San Joaquin Valley and to evaluate economically feasible options for affordable access to energy in those communities (R.15-03-010). Under Assembly Bill 2667 (2014), the CPUC must identify disadvantaged communities in the San Joaquin Valley meeting specific income, geographic, and population requirements, and evaluate the economic feasibility of options intended to improve affordable access to energy for the identified communities. The Rulemaking expects any solution will coordinate with existing low-income ratepayer programs.
Communities under consideration are located in the counties of Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislaus, and Tulare. In a "disadvantaged community," at least 25% of the residential households with electrical service are enrolled in the CARE low-income program. The community must have a population greater than 100 persons within its geographic boundaries as identified by the most recent survey, and have geographic boundaries no further than seven miles from the nearest natural gas pipeline operated by a gas corporation.
AB 2672 directs the CPUC to consider options that include extending natural gas pipelines to the communities, increasing residential rate subsidies, and other options that would increase access to affordable energy. Parties wishing to comment on the new rulemaking are directed to submit comments by May 4, with reply comments due May 19.
New Interactive Report on Where Utility Services are Located
The CPUC on April 14 released a comparative analysis of California's public utility services -electricity, gas, water, and broadband-by examining the cost and usage by customers for each utility service at the ZIP code level. Using a smaller geographical level provides the CPUC a better picture of utility cost and usage in California, and allows it to gather information and identify important relationships, patterns, and trends in each utility that could serve as a resource to inform the public and improve utility regulation by the CPUC. Using the bill and usage data, together with the data on median income, number of customers, low-income programs, and population, the report tries to answer following questions:
- What is the average bill for electricity, gas, and water;
- Where are the largest electric, gas, and water users in the State;
- How do income and climate affect utility usage;
- Where does the cost of utility bills fall the heaviest on low-income households; and
- What areas are most in need for low income services and/or outreach about conservation.
The byproduct of this analysis is the development of a series of interactive maps that present the collected utility data and socioeconomic data at the ZIP code level. Although many of these data are publicly available, they are not presented in a form that ordinary consumers can understand and explore easily. By translating complex utility data into simpler, more usable, and intuitive interactive maps, the CPUC hopes to help ratepayers visualize and understand many of the utility issues-from cost to consumption to efficiency and more-that California faces today.
You can find the report here.
CPUC Issues Largest Fine in History on PG&E
On April 9, the CPUC fined PG&E $1.6 billion related to the fatal 2010 San Bruno explosion, and hinted at possible structural changes for the utility to make it operate more safely. The CPUC had opened three investigations related to the incident and approved three decisions from those proceedings-plus the penalty decision-with 4-0 votes (D.15-04-021, D.15-04-022, D.15-04-023, D.15-04-024). Commissioner Mike Florio abstained, having recused himself from the proceedings. The decisions include the largest penalty levied against a utility in California. Of the $1.6 billion total, PG&E shareholders will pay $850 million toward gas transmission-infrastructure safety improvements, $300 million to the state's general fund as a fine, $400 million to ratepayers in a one-time bill credit, and $50 million toward various pipeline safety-related remedies.
CPUC President Michael Picker noted the commission's desire to avoid making penalties so high that a utility cannot raise capital cheaply enough to finance infrastructure that ratepayers then fund over many years. A commission study had previously found that PG&E could withstand an approximately $2.4 billion San Bruno penalty without harming its borrowing ability. Picker said that between the penalty and previous disallowances from pipeline work, costs to PG&E shareholders total about $2.2 billion. But Picker also noted that PG&E can claim any disallowances - funds that it cannot collect from ratepayers - in taxes in order to lower its state and federal income taxes. Saying that shareholders should pay for gas-system improvements and noting that the CPUC cannot change tax policy, he advised the CPUC to inform tax boards, the state Legislature and the IRS about the nature of the San Bruno penalty so that those agencies can evaluate any future tax filings by PG&E related to the penalty. The other commissioners agreed.
Picker also spoke at length about concerns that PG&E has not adequately changed its culture. He wondered whether PG&E is simply too big. Picker noted that PG&E continues to experience safety lapses, and he expressed concerns about a market view that sees a penalty as a cost of doing business, noting that PG&E's shareholder value increased after he issued his draft penalty decision last month. Stressing that the commission represents ratepayers, not shareholders, he wondered whether the commission could develop more tools besides just penalties. Picker plans to open a new investigation into PG&E's safety culture and practices.
CPUC Proposes New Residential Rate Structures
On April 21, two CPUC Administrative Law Judges issues a proposed decision that would reduce the number of tiers for residential electricity customers. The decision comes from 2013 legislation (AB 327) that directed the CPUC to take steps to eliminate the rate freeze that was instituted more than a decade ago in the wake of the energy crisis.
The more than 300 page proposed decision directs that in the short term the utilities:
- Continue the tier consolidation process, including adjusting low-income programs;
- Implement a minimum bill for summer 2015;
- Institute a special outreach program to educate lower tier customers on no-cost and low-cost conservation measures;
- Promptly begin the process of improving rate comparison tools and educational materials so that customers can more readily understand their energy bills; and
- Promptly begin the process of designing time-of-use pilots (both opt-in and default), as well as study design for time-of-use opt-in rates.
The Proposed Decision anticipates that the utilities will also institute new fixed charges or time-of-use rates. The utilities are directed to form various working groups to address elements of the decision after it is approved, which could happen on May 21.