Regulators Would Reject Limitless Efficiency Spending

Maintaining regulatory oversight of funding is the reason the California Public Utilities Commission plans to reject Pacific Gas & Electric?s bid to eliminate a ceiling on spending for energy-efficiency programs. The draft decision is slated for a vote on August 19. The commission?s proposal comes after PG&E and San Diego Gas & Electric shut down some or all of their residential rebate programs early, citing fund depletion. Highlighting the problem is this summer?s record peak demand for electricity and calls by the California Independent System Operator and utilities for increased conservation. PG&E said money has also dried up for the photovoltaic portion of a self-generation incentive program. SDG&E reports funds for a similar program are close to tapped out because of heavy demand. Last month, PG&E said it discontinued giving rebates for efficient appliances after being overwhelmed by 60,000 applications. In fact, portions of its rebate programs closed in April, according to Christy Dennis, utility spokesperson. One month earlier, PG&E asked for discretion to spend more than its efficiency project budget and to shift more than 25 percent of funds between programs. Current rules allow utilities to transfer up to 25 percent of funds from other programs. While denying PG&E?s request, a draft plan by administrative law judges Christine Walwyn and Kim Malcolm allows the utility to move additional funds from programs that are undersubscribed or less cost-effective than its residential rebate program. They noted that PG&E may request to move additional funds. ?Authorizing PG&E to spend unlimited funds at its discretion, which its petitions imply, would eliminate the commission?s discretion and supervision of the energy-efficiency program,? concluded the judges. Hundreds of companies competed for energy-efficiency funds, and many programs went unfunded for 2004-05. There is no evidence that utilities should get preferential treatment for nonutility programs, the judges stated. PG&E has consistently underspent its energy-efficiency budget in recent years, by $4.6 million in 2002 and $7.6 million in 2003, observed Walwyn and Malcolm. ?This underspending occurred in years when PG&E had a substantially smaller budget than the one it has in 2004-2005,? they said. The utility has control over use of the $75 million it received for procurement-related energy-efficiency programs. Procurement funds and other efficiency money should not be compared, insisted PG&E?s Dennis. She quibbled over the difference between direct funds for energy-efficiency programs and money to reduce procurement demand via efficiency. PG&E wants assurances that if it moves funds from the procurement pot to the efficiency fund, it won?t be held accountable if it doesn?t meet those reduction benchmarks, she added. In July, SDG&E closed its most popular rebate programs and is now exploring whether to shift funds from less popular programs. To date, 25,000 customers have taken advantage of the programs, according to the utility. By contrast, Southern California Edison said all programs but its high-efficiency-window rebate program, which will close this month, have adequate funding to run through the end of the year. According to Edison, 41,000 applications have rolled in for residential rebate programs. Edison?s programs are running longer than those of the state?s other investor-owned utilities in part because PG&E and SDG&E, unlike Edison, provide rebates for clothes washers and dishwashers. These highly popular items soak up a lot of funding, said John Nall, Edison energy-efficiency residential program manager. The appliances reduce usage of gas, a commodity Edison does not distribute. Like energy-efficiency programs that promise paybacks, demand is soaring for the solar portion of the self-generation incentive program. Residential and business customers who install up to 1.5 MW of clean distributed generation on-site are paid either $4.50/watt or 50 percent of project costs from the state-mandated effort. PG&E at the end of July stopped accepting applications for the solar, wind, and fuel cell portion of the program, saying it received 204 applications totaling more than $136 million. The utility shut the door after moving funds from other parts of the program seven times for a total pot of funding this year of $152 million. More than 100 projects are on the waiting list, PG&E reports. SDG&E?s available funding is down to $700,000, but additional funds may be moved from less popular segments of the program, according to the San Diego Regional Energy Office, the program?s administrator. On the other hand, Edison said it still has $11.3 million in incentives for solar distributed-generation installations. The CPUC?s Energy Division is considering reducing the solar rebate to $4.05/watt and making other revisions to the self-generation incentive program, which is currently funded at $125 million annually and slated to run through 2007.

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Regulators Would Reject Limitless Efficiency Spending

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