$82M Efficiency Awards to Utilities Challenged

By Published On: February 6, 2009

Two ratepayer advocate groups jointly filed for a rehearing this week of the California Public Utility Commission’s decision granting investor-owned utilities $82.2 million for unverified energy savings. The Division of Ratepayer Advocates and The Utility Reform Network argued that the 4-1 ruling issued by the commission was “a radical departure from previous decisions that awarded incentives only for independently verified energy savings assessments.” The investor-owned utilities pushed for a non-refundable interim payout for their 2006-08 energy efficiency programs by the end of 2008 so they could include them in their end of year earnings reports. Under the December 18 ruling, the CPUC agreed to launch a rule making to provide transparency to the controversial ratepayer mechanism, which could result in minor changes or a new mechanism. The ruling altered the traditional risk reward incentive. A draft report by the CPUC’s Energy Division released four months late—in November of last year—concluded that SoCal Gas should reap $3.6 million, but that Pacific Gas & Electric and San Diego Gas & Electric were not entitled to interim incentive payments. Southern California Edison was said to owe a $6.9 penalty. Prior to the report’s finalization, the regulators voted to award utilities incentive payments based on their self-reported energy savings. DRA and TURN claimed the CPUC failed to ensure rates were just and reasonable. “It is unconscionable for the commission to ignore the independent results that it set in place as part of the incentive mechanism in the absence of substantial evidence that such a significant step is warranted,” the two organizations said in their filing.

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