STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

August 26, 2003

TO: ALL PARTIES OF RECORD IN RULEMAKING 01-08-028

Decision 03-08-067 is being mailed without the Concurrence of
Commissioner Kennedy, and without the dissent of Commissioner Lynch.

Sincerely,

______________________

Angela K. Minkin, Chief

Administrative Law Judge

ANG:bb1

Attachment

MAILED 8/26/2003

COM/SK1/bb1

Decision 03-08-067 August 21, 2003

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Examine the Commission's Future Energy Efficiency Policies, Administration, and Programs.

Rulemaking 01-08-028 (Filed August 23, 2001)

INTERIM OPINION

SOLICITING 2004-2005 ENERGY EFFICIENCY PROGRAM

PROPOSALS AND ADDRESSING SCOPE OF PROCEEDING

154665

Table of Contents

Title Pages

INTERIM OPINION 22

SOLICITING 2004-2005 ENERGY EFFICIENCY PROGRAM 22

PROPOSALS AND ADDRESSING SCOPE OF PROCEEDING 22

I. Summary 22

II. Background 44

III. 2004-2005 Programs 66

A. Program Funding Cycle 77

B. 2004-2005 PGC Funding Allocation 88

C. Types of Programs 1717

D. Extending Utility Programs 1818

E. Criteria and Policy Rules for 2004-2005 Program Selection 2020

E. Marketing and Outreach Programs 2828

F. Market Assessment and Evaluation 2828

G. Contracts and Program Administration 2929

H. Extending Non-utility Programs 3131

I. Program Review Process and Schedule 3434

IV. Comments on Draft Decision 3535

V. Procedural Matters 3535

Findings of Fact 3535

Conclusions of Law 3535

INTERIM ORDER 3838

Attachment 1

INTERIM OPINION

SOLICITING 2004-2005 ENERGY EFFICIENCY PROGRAM

PROPOSALS AND ADDRESSING SCOPE OF PROCEEDING

I. Summary

This order solicits Energy Efficiency (EE) program proposals from utilities and non-utility parties for 2004 and 2005. For that solicitation, this order adopts program evaluation criteria, sets the funding cycle for a two-year period, and addresses how funds may be allocated among different types of entities and between program types. In addition, the order describes the process by which the Commission will review and select EE program proposals for funding.

In summary, this order changes existing policy and practice or articulates the continuation of existing policy and practice, as follows:

· We will consider using our funding levels of 70% of PGC funding allocated to statewide utility programs, 10% to statewide marketing and outreach and evaluation, measurement and verification and 20% allocated to other non-utility programs, with some flexibility depending on program proposals.

· The Commission has established policies and procedures by which any party may apply to become administrators of cost-effective EE and conservation programs that meet the qualifications described in the most recent version of the Policy Manual, funded by public goods charge (PGC) revenues for a two year cycle, 2004-05. Program funding must be approved by a subsequent Commission order;¹

· The Commission will award funding to entities and programs that are most likely to fulfill public policy goals and program evaluation criteria;

· Utilities may submit proposals that would extend their current program offerings for two years. These programs will be required to satisfy public policy objectives set by the Commission for evaluating EE programs. As the utility programs will be evaluated alongside non-utility proposals, the utilities will be required to submit the same types of documents and follow the same instructions required of other proposing entities. Extensions to existing utility programs as well as new programs must be approved by Commission order;

· Non-utilities implementing existing programs may request an extension through June 2004, with justification showing program success, in order to complete their programs with existing funding, which requests the Executive Director may approve or deny;

· Program selection criteria for 2004-05 include cost-effectiveness, long-term annual energy savings, equity, ability to overcome market barriers, ability to reduce peak demand, innovation, coordination with other programs, and demonstrated success implementing EE programs.

This order finds that Assembly Bill (AB) 117 provides guidance to the Commission to develop the necessary policies and procedures for administering the PGC energy efficiency programs in the context of community choice aggregation. The Commission has already ruled, in D.03-07-034, that its existing policies and procedures fulfill those portions of AB 117 that require the Commission to permit non-utilities to apply for program funding in the context of community choice aggregation territories. In addition, the Assigned Commissioner's Ruling on July 3, 2003 by establishing a process and policies by which all parties will be allowed to propose to become administrators, complied with the directive to the Commission in AB 117. This order does not, as suggested by some parties, eliminate or in any way limit the Commission's authority to determine the allocation of PGC funding, just as AB 117 does not preclude action by this Commission to establish a separate nongovernmental entity to administer EE funding. Nor does AB 117, require that non-utility entities be permitted to apply for the total amount of PGC energy efficiency funds without limitation.

This order seeks to maintain continuity and the stability of currently successful programs to enable the Commission and interested parties to focus on developing of an integrated energy efficiency policy framework, including integration of EE programs with procurement activities and settling the question of long-term administration, to create a stable platform that will ensure the long-term success of California's energy efficiency programs. In addition, stability and continuity is of great importance because any major shift from current practice in the short-term could disrupt our ability to carry out integrated resource planning.