Whether investor-owned utility ratepayers fund shareholder bonuses for claimed energy efficiency savings between 2010-2012 depends on which regulatory proposal wins at the end of the year. One California Public Utilities Commission proposed ruling on the utility risk reward\/mechanism would give Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric, and SoCal Gas more than $42 million for the three-year period. The other proposed decision finds the incentive mechanism failed to motivate significant action on the efficiency front and would give shareholders no bonus. The aim of the risk\/reward mechanism is to incentivize utilities to reap significant and lasting energy savings from large investments in their efficiency programs. The current three-year cycle was funded with $3 billion from ratepayer wallets. The mechanism was created in response to utilities\u2019 \u201cinherent bias\u201d towards energy supply-side profit, as pointed out by regulators and stakeholders. There have been protracted disputes for years over how to measure the energy savings that determine the amount of shareholder financial reward. \u201cWe believe that denial of a shareholder incentive payment sends the wrong signal to the greater market place,\u201d states commissioner Mark Ferron in his proposal to give shareholders bonuses. He said the reward mechanism motivates the utilities \u201cto support and commit to long-term, aggressive\u201d efficiency. Ferron would award $21 million to PG&E, $15 million to Edison, $3.3 million to SDG&E, with another $2.7 million going to SoCal Gas. His proposed incentive mechanism for the current cycle equals 6 percent of utility efficiency expenditures. Of that, 5 percent is a flat management fee accompanied by a 1 percent \u201cperformance bonus.\u201d In contrast, administrative law judge Thomas Pulsifer noted, \u201cAlthough we remain fully committed to making [energy efficiency] the highest energy resource priority, we conclude that expending further resources to devise a mechanism for incentive earnings for the 2010-2012 cycle would not advance that commitment.\u201d He called the current incentive mechanism \u201cbackward looking,\u201d and maintained that it failed to motivate \u201ceffective management of [the] 2010-2012 program.\u201d Thus, he advocates no shareholder rewards. The Utility Reform Network and Natural Resources Defense Council see the incentive as a viable way to coax more efficiency gains out of the private utilities. They differ, however, on the size of the award, with TURN calling for the proposed awards to be cut by more than half. The Division of Ratepayer Advocates objects to the mechanism. The division stated there is no correlation between incentive earnings and utility energy efficiency program performance. Ferron sets out a \u201csubjective\u201d test for determining the amount of performance award to each utility for the 2010-12 efficiency programs. \u201cEstablishing appropriate parameters for risk-adjusted earnings on a shareholder incentive mechanism is ultimately a matter of judgment, and not a precise science,\u201d Ferron states. CPUC members are to vote on the reward mechanism next month.