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Shareholder Incentive Mechanism

D.13-09-023 directs Commission staff to identify deemed measures with sufficiently uncertain ex ante savings parameters such that the savings claim should be subject to ex post verification in order to be included in the incentive payment.  For the purposes of the Efficiency Savings and Performance Incentive (ESPI) mechanism, “sufficiently uncertain” measures are defined as those measures for which the Commission believes the net lifetime savings of the current DEER or non-DEER savings estimate may be as much as 50% or more under- or over-estimated.  The final ESPI Uncertain List for 2015 is here.

Rulemaking (R.) 12-01-005 – Incentive Mechanism – continued implementation of reforms to the incentive mechanism as a successor docket to R.09-01-019.  Under this Rulemaking, the 2010-12 and 2013-14 incentive mechanisms were adopted in D.12-12-032 and D.13-09-023, respectively.  

In D.11-12-036, the Commission adopted 2009 Incentive earnings awards.

In D.12-12-032, the Commission approved a 2010-12 incentive mechanism to award the utilities with a management fee equal to 5% of actual energy efficiency portfolio expenditures plus a performance bonus of up to an additional 1% of portfolio expenditures for conformance with the Commission-adopted ex ante review requirements. 

In D.13-09-023, the Commission adopted the Efficiency Savings and Performance Incentive (ESPI) mechanism.  The ESPI awards the IOUs for performance in both non-resource and resource activities, as follows:

1.   Non-resource programs – management fee equal to 3% of non-resource program expenditures, not to exceed authorized expenditures;

2.   Codes and standards programs – management fee equal to 12% of codes and standards program expenditures, not to exceed authorized expenditures;

3.   Ex ante performance – performance-based award of up to 3% of resource program  expenditures (minus codes and standards program expenditures); and

4.   Energy savings – performance-based award of up to 9% of resource program expenditures (minus codes and standards program expenditures)

All expenditure amounts would exclude funding dedicated to administrative activities; regional energy networks (RENs); community choice aggregator (CCA); and EM&V activities.

The Commission closed R.12-01-005 with the approval of D.13-09-023.

R.09-01-019 - Risk/Reward Incentive Mechanism (RRIM) - In D.07-09-043, the Commission authorized a RRIM, under which utilities would be rewarded/penalized based on evaluated energy savings for the 2006-2008 and subsequent program cycles.  See R.09-01-019 for all Commission decisions regarding incentive payments for the 2006-2008 program cycle and modifications to D.07-09-043.  

Energy Division 2009 RRIM White Paper - Energy Division proposal for reworking the Risk Reward Incentive Mechanism established in D.07-09-043.



Last Modified: 12/2/2014

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