While utilities await a California Public Utilities Commission decision on receiving $77 million in incentive bonuses for their 2009 energy efficiency program performance, regulators are moving to change the very foundation and assumptions of the state\u2019s efficiency program. Finding more efficient ways to use energy is the first priority under California\u2019s \u201cloading order.\u201d That policy lays out a hierarchy of approaches to meeting the state\u2019s power demand. With diminishing returns in savings per dollar of energy efficiency money invested, plus growing pressure to put a lid on electricity bills, regulators are looking to squeeze more savings from efficiency programs. They\u2019ve created a process in which short-term two-year bridge authorization for the programs may be approved while they take a deeper look at the program\u2019s long-term worth. \u201cMy intent with the bridge cycle is to begin a transition away from programs that offer only temporary and shallow energy savings\u201d towards \u201cdeeper retrofits\u201d and \u201cmore reforms,\u201d commissioner Mark Ferron ruled Oct. 25. Looking into the risk-reward mechanism \u201cwith an increasing emphasis on longer term strategic programs rather than short-term savings\u201d is Ferron\u2019s claimed goal. Regulators instituted a risk-reward program for efficiency measures after deregulation. The concept was to lure investors to rely on utility income with a \u201ccarrot\u201d approach after Pacific Gas & Electric emerged from bankruptcy in 2003 and other investor-owned utilities were on financially uncertain terms. Despite a pushback from community-based organizations that wanted to administer efficiency programs at a more local level, utilities were authorized to run the programs across their large geographic territories and reap rewards for their efforts. In the intervening years, the commission has been embroiled in how to evaluate and measure utility performance. Assumptions are constantly changing and the methodologies applied to determine the bonuses are perpetually under review. Currently, regulators are trying to decide whether to use assumptions made as utilities took on the programs (ex ante) or whether to apply measurements of efficiency after customer installations (ex post). Utilities embrace the ex ante approach because they operated on assumptions made going into developing the programs. Consumer advocates lean to the ex post scale of measuring final results. The ex ante approach was frozen in December, 2010, in order to reexamine it. Utilities also want to remain as program administrators. At least one environmental group, Natural Resources Defense Council, agrees. Not so with consumer advocates. \u201cThe Division of Ratepayer Advocates believes in non-utility administration,\u201d Diana Lee, DRA attorney, said. Although utilities want to keep the program--and get bonuses for administering it--Southern California Edison, for one, agrees that the historic approach has its problems. The commission \u201caccurately and painfully\u201d notes that the current method of risk-rewards has channeled funds away from actual efficiency measures into disputes over methodology, according to the utility. The commission\u2019s past bonus program was not only meant to get results in efficiency, but to assure investors in California utilities that ratepayers continue to pay shareholders for perceived results. The \u201cstable investment climate\u201d was a mantra for the commission after its attempt to deregulate resulted in the 2000-01 energy crisis and the state\u2019s takeover of many wholesale electricity contracts. The uncertainty looming over future incentive payments could put a crimp in that investment stability, allege some stakeholders. In the 2006-08 cycle, the commission approved $211 million for utility bonuses. The $77 million pending for 2009 is expected to be voted upon by the end of this year.