A majority of regulators excoriated their predecessors\u2019 program that pays incentives to utility shareholders for controversial energy savings. The bonuses awarded utility investors for efficiency performance is on a slippery slope as utilities assemble their next three-year energy efficiency programs. The next round of energy efficiency plans to be filed by utilities begins 2013. \u201cIt is a failed mechanism,\u201d Mike Florio, California Public Utilities Commission member, said July 14. The commission set up a risk-reward mechanism in the last decade for saving energy. If utility-administered programs reach certain efficiency goals, shareholders are awarded bonuses. Florio urged that electricity and gas efficiency programs be put out to bid instead of kept in-house. \u201cWe need to shift the paradigm to a market-first approach,\u201d he said. Commissioners Catherine Sandoval and Mark Ferron expressed interest in eliminating incentives for claimed energy savings for Pacific Gas & Electric, Southern California Gas, and San Diego Gas & Electric. \u201cThe incentives have to be meaningful,\u201d said Sandoval. She noted energy savings at issue are worth \u201cmillions of dollars.\u201d Ferron agreed, calling the debate surrounding the current incentive process \u201cincreasingly poisonous.\u201d Commission president Mike Peevey disagreed with their stance. Peevey prefers incentive programs to stimulate energy savings in place of \u201ccommand and control\u201d--that is, rules coming from regulators to utilities with no financial or market incentives. The CPUC\u2019s efficiency risk-reward incentive program has been bitterly contested over the years. Last December, regulators approved $61 million in awards in spite of considerable opposition. As a part of the current incentive program, the commission uses changing methodologies to measure utilities efficiency results under a \u201cmeasurement and verification\u201d process. Utilities take issue with the CPUC Energy Division\u2019s methodology. \u201cThe investor-owned utilities discredit anything that negatively impacts their bottom line,\u201d said Florio. Gene Rodrigues, Edison director of customer energy efficiency and solar, stated, \u201cWe are currently reviewing the decisions and assessing the impacts on our program participants.\u201d PG&E energy efficiency programs have helped customers save money and reduce environmental impacts, said company spokesperson Katie Romans. \u201dThere remains controversy over exactly how much money and energy.\u201d She added the utility will continue to work with regulators to resolve the questions and ensure use of uniform criteria for measuring energy efficiency savings going forward. This week\u2019s debate over shareholder incentives arose during a vote setting a methodology for measuring 2010-2012 utility energy savings for non-traditional programs and measures, or those not included in what is known as the Database for Energy Efficiency Resources. The measurement at issue for 2010-2102 \u201cwill cover about 65-75 percent of the portfolio savings depending on the utility,\u201d said Terrie Prosper, CPUC spokesperson. The CPUC voted 5-0 to freeze the yardstick applied to a subset of energy efficiency measures. The ruling, the third decision on the matter, was by Florio and administrative law judge Dave Gamson. The cost-effective measurement, known as \u201cex ante,\u201d is for programs that lack historical data and\/or are highly customized and unique to utility customer sites.