Stimulus Money Could Boost Utility Bonuses

By Published On: July 31, 2009

A flood of federal money may advance California toward its energy efficiency goals. Along the way, it could boost utility profits by making it easier to obtain ratepayer-funded energy saving bonuses authorized by the California Public Utility Commission. While the bestowal of bonuses is complicated, regulators are supposed to scrutinize energy saving credits claimed by utilities to guard against double counting and make any needed discounts to utility efficiency claims through “net-to-gross adjustments.” At issue is the impact between now and 2012 of $276 million in federal money California is to receive for energy efficiency and renewable energy projects--such as rooftop solar panels. The California Energy Commission is supposed to distribute the money granted to the state under the American Recovery & Reinvestment Act of 2009, enacted earlier this year. The commission is planning to send much of the money to cities interested in retrofitting their buildings for energy efficiency. The funds put the two commissions--the CPUC and the CEC in discreet roles. The Energy commission is a pass-through organization for federal economic stimulus funds geared in part toward municipal buildings. The CPUC controls utility efficiency programs and is charged with giving utility shareholders bonuses for outstanding work in creating energy efficiency. Under CPUC policy, utilities may claim credit toward their state energy efficiency goals for all the energy saved through projects funded jointly by the federal money and utility energy efficiency programs, according to Kathleen Romans, Pacific Gas & Electric spokesperson. “PG&E will get credit for the full project savings toward its CPUC goals,” Romans explained, “as it would with any other project that is funded in part by a PG&E rebate or incentive.” Southern California Edison spokesperson Vanessa McGrady was more hesitant, noting that the CPUC is weighing “how it will count and attribute energy efficiency savings from projects that receive funding from both utility programs and the American Recovery & Reinvestment Act.” However, she said, the utility does not believe the commission should bar projects that receive federal money from being eligible to participate in utility energy efficiency programs. Edison also does not want the commission to institute restrictions that “make it more difficult” for recipients of the federal money to become more energy efficient, she said. McGrady added that on jointly funded projects Edison expects that the commission will adjust the credit it allows utilities to claim toward their goals. CPUC staff did not respond to inquiries about how it would treat federal recovery act money in the context of utility energy efficiency programs. Under the commission’s energy efficiency policy, utilities devise three-year plans to advance energy conservation. Pending draft plans the state’s investor-owned utilities submitted earlier this month outline more than $3 billion in spending over the next three years on incentives for customers and other programs to bolster energy efficiency. The federal money will boost statewide spending on energy efficiency above and beyond this level. Under the CPUC policy, utilities that reach 80 percent or more of their savings goals become eligible for hundreds of millions of dollars of bonuses financed by ratepayers. Consultant Jody London, who represents a group of cities on energy matters before the CPUC, said allowing utilities to claim credit for efficiency gains financed jointly by the new federal money and utility funds would be consistent with past practice. Cities have long financed their share of energy efficiency work with a combination of money from utilities and other sources, including state and federal grants, she noted. However, never before have cities stood to get so much energy efficiency money from sources other than utilities at once. “I don’t know it’s been given adequate attention,” said Cynthia Mitchell, consulting economist on energy efficiency for the The Utility Reform Network, regarding the influx of federal recovery act funding. She suggested that the utility programs should be scaled back a bit in light of the new federal money because history has shown the companies have had a hard time spending efficiency funds productively in the past. The CPUC is expected to decide the matter when it rules on the pending utility energy efficiency plans this fall.

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