CALIF UTILS FLOP ON EE

DRA Says CPUC Staff Report Confirms $2 Billion Utility Energy Efficiency Programs Failed Significantly to Meet Goals
May 4, 2010 (California Division of Ratepayer Advocates)

"The Division of Ratepayer Advocates (DRA), an independent consumer advocacy division of the California Public Utilities Commission (CPUC), …said that the state’s investor owned utilities should not be entitled to any shareholder bonus payments and may owe penalties due to their failure to reach 2006-2008 energy efficiency goals based on an independent CPUC staff report…

"The Energy Division’s staff report finds that on average the utilities - Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company, and Southern California Gas Company – reached only 70 percent of their 2006-2008 CPUC-prescribed energy savings targets. In contrast, the utilities’ self-reported achievements claim they achieved 160 percent of their goals."

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"In 2005, the CPUC approved the utilities’ request to spend $2 billion of customers’ money on energy efficiency programs with the expectation that the investment would reap $2.7 billion in net benefits for customers. Yet, the CPUC staff report shows customers only received $426 million in net benefits, or about 16 cents for every ratepayer dollar spent – without accounting for an additional $144 million in bonuses paid to utility shareholders…

"The CPUC implemented a reward program in 2006 allowing the utilities to earn bonuses for achieving as little as 80-85 percent of CPUC-established energy savings goals. The utilities could earn as much as $450 million in shareholder bonuses if the utilities exceeded goals. The CPUC deemed the shareholder bonus program a win-win for customers and shareholders, which would lead utilities to maximize energy savings and protect ratepayers."

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"In 2008, the CPUC acknowledged that the incentive mechanism was broken, yet simultaneously awarded the utilities $82 million in bonuses despite a previous Energy Division staff report that showed the reward was undeserved. Instead of protecting ratepayers, DRA believes the CPUC has prioritized expedient, regular incentive payments to shareholders based on utility self-reporting, and has justified undeserved bonus payments to utilities by consistently changing its own rules…

"Based on a recent ruling by the assigned Commissioner, DRA believes the CPUC may once again pay out shareholder bonuses despite poor utility performance. The ruling, released last month, opens the door to alter the shareholder bonus mechanism…DRA believes this ruling has set the foundation for the CPUC to continue to decrease the utilities’ energy savings goals after-the-fact…Ironically, this comes at a time when the state’s climate change plan calls for significantly increased energy savings from energy efficiency…DRA believes that energy efficiency programs are essential to achieving California’s climate change goals, but programs must be well-managed and cost-effective."