Guest Editorial: Playing Utilities’ Efficiency Ball Game

By Published On: January 16, 2005

<i>By Rita Norton, independent consultant</i> California needs and supports energy efficiency as a major means to achieve a balanced, clean, and reliable energy future. This week, the California Public Utilities Commission postponed a major decision on the administrative structure for energy efficiency, under which an estimated $400 million in ratepayer money is annually allocated in contracts and services. The CPUC makes decisions such as this after a long process. There is no need to rush to a vote when two seats are vacant. This decision deserves the attention of a fully engaged CPUC. This delay until both new commissioners are on board provides for the deliberative process expected of public servants. The proposed plan under consideration turns over full responsibility for how these funds are spent to investor-owned utilities (IOUs) tasked with making energy efficiency a first priority in their portfolios. The CPUC will almost certainly provide IOUs with financial incentives for achieving goals under the plan. The plan is supported by a number of organizations and professionals who say they believe that this approach returns California?s energy future to a system not beset with problems encountered during the tumultuous period of utility restructuring and competition. However, this approach has some very serious transparency problems, supposedly dealt with by the formation of advisory committees and moving toward a separate system of evaluation, measurement, and verification of programs. Historically, the full record of all IOU accomplishments warranting incentive payments has been reported out by contractors hired by utilities themselves. Notwithstanding the appearance of support, if the CPUC adopts the proposed plan, utilities would hold all contracts for energy efficiency funded by ratepayer funds, and dissent could become a basis for exclusion of new ideas and silencing of criticism. With utilities holding essentially all program funds, an unstated criterion for funding would be a willingness to play ball under rules written by and for the IOUs, rather than rules designed to serve the broader public interest. San Francisco and The Utility Reform Network (TURN) have proposed that the draft decision that would adopt this plan, sponsored by commissioner Susan Kennedy, be modified to include a pilot that would set aside a small percentage of total funds for administration by an independent entity. The pilot would be unencumbered by the institutional prerogatives that govern preferences manifested by investor-driven corporations. The CPUC would establish this entity, under a competitive process, to run worthy and innovative projects that might not otherwise be selected if utilities were to administer all program funds. Anyone the least bit interested in a fair approach should review the CPUC?s draft decision for administrative structure (in CPUC proceeding number R01-08-028) and support the efforts of the city and county of San Francisco and TURN to modify the plan to require that at least some energy-efficiency funds be under independent rather than utility administration. <i>Rita Norton can be reached at www.ritaconsulting.com or 408-354-5220.</i>

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