CPUC Hopes Efficiency Pilots Attract Capital

By Published On: September 19, 2013

An attempt to draw private capital investment into California’s energy efficiency market won approval Sept. 19 by the California Public Utilities Commission. By creating a centralized energy efficiency state office through what is being dubbed a “hub,” the commission and the state’s California Alternative Energy & Advanced Transportation Financing Authority are being set up for a “standardized open market,” said commissioner Mark Ferron. “It’s a platform to scale up market activity,” he added. “A centralized entity is essential” in order to attract non-ratepayer funds through private capital sources, noted the commission in its formal decision. The state has $75 million already authorized through 2014 for efficiency measures to existing buildings—paid for by ratepayers. After that, the “hub” is supposed to concentrate market funding for efficiency to be paid back in a manner dictated by the lenders. Commissioner Mike Florio called it a “big step,” but not enough. “As big a step as it is, it’s only a step to an energy efficiency revolution in this state,” he added. He said that bringing in private capital to effect efficiency goals is “essential.” The commission expects to sign an official memorandum of understanding with the governor’s office to start the “hub,” but no timeline is set. This decision comports with another commission vote on demand-response. Recognizing “deficiencies” in the state’s demand-response program, the California Public Utilities Commission opened up a docket Sept. 19, aimed to encourage smaller customer nuances to the vagaries of the grid when generation is low, and demand is high. Ultimately, the move is set to avoid blackouts. The concept is to “retool” demand-response “to align with the grid’s needs and enhance” demand-response in energy policy, according to the decision. “Progress has been painfully slow” in trying to reduce load through demand-response, said commissioner Mike Florio. He said that the plan is to adopt technology that dims lights or cycles an air conditioning system instead of an industrial customer, like a processing plant, that uses demand-response to shut down the plant and send its workers home for the day. “We’re really trying to keep up with change,” Mike Peevey, commission president, said. At the moment, demand-response programs are ratepayer-funded with “bridge” money through 2015, then the programs are to be re-set. California is seen as behind in demand-response compared to other areas of the nation. This move opens up a discussion to get the state to become more aggressive in shaping the way consumers use electricity to fit when it is available. For instance, the commission would decide at a regulatory level what to consider as customer-focused programs and how to delegate to the wholesale market. It would set a preference of what, for instance, to offer customers to decrease electricity use in times of grid constraint. This measure expands previous attempts at demand-response programs. Before, the focus was on large industrial consumers that could drop near a megawatt of load upon command from the grid operator, in return for a lower electricity rate during the year. The California Independent System Operator is expected to have a new market for demand-response in its wholesale bidding by year end. Until that works, the grid operator has been ineffective, according to the commission. “None of the 2,400 MW” from utilities’ retail demand-response programs participated in the grid operator’s market, noted the CPUC. The grid operator isn’t the only one targeted by this commission decision. Southern California Edison and San Diego Gas & Electric “underutilized” demand-response, according to the commission. And then there are the free riders. The commission estimates that over $35 million in ratepayer funded plans for demand-response from large customers were for naught. Many customers signed up for the program, for instance, and while receiving a lower rate for it, they failed to drop load on demand. Also, the commission is poised to move from a utility-centric mode that is now responsible for moving or dropping demand, to one that is more focused on consumers. Customers “need to be educated, motivated, and engaged,” noted the decision. In other action, the CPUC without comment approved applications from the state’s investor-owned utilities to provide third parties access to customer data when requested by the customer. The move comes as customers increasingly can choose to have their energy usage and billing data transferred to avail themselves of energy management and savings services—including demand-response programs—offered by a growing number of non-utility companies. Under the approval, the utilities will be able to recover in rates the estimated cost of setting up the programs needed to share information at customer request. Pacific Gas and Electric Company can recover up to $19.4 million in costs and Southern California Edison up to $9.1 million. SDG&E plans to share the data under an existing program it’s already set up.

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