Energy Division Verification Reports

Decision 07-09-043 and 08-01-042, the California Public Utilities adopted a Risk/Reward Incentive Mechanism to encourage the utilities to invest in energy efficiency. The mechanism enables the investor owned utilities to earn rewards on energy efficiency programs in amounts comparable to what the companies would otherwise earn through supply side investments. The Decisions establish a performance standard for the utilities, under which the utilities earn incentives if their energy efficiency program portfolios achieve certain quantitative energy efficiency savings goals.

Decision 07-09-043 establishes the earnings claim and recovery process. There are two interim earnings claims during the 2006-2008 three-year program cycle that are "progress payments" towards total expected earnings, and one final "true-up" payment after the programs cycle is completed. Under the process adopted in Decisions 07-09-043 and 08-01-042, Energy Division is required to verify the costs and installations of the energy efficiency program activities, update the ex-ante parameters used to estimate program savings and benefits, and publish a report which calculates earnings the utilities are eligible to claim. This Verification Report applies to the first interim incentives claim for the 2006-2008 program period, and covers program years 2006-2007.

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