BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 806 (Wiggins) Hearing Date: 05/18/2009 Amended: 04/29/2009 Consultant: Brendan McCarthy Policy Vote: EU&C 8-3 _________________________________________________________________ ____ BILL SUMMARY: SB 806 would require the Public Utilities Commission to limit investor owned utility administrative costs for energy efficiency programs to 5 percent of total costs. The bill requires the Commission to ensure that incentive payments made to the utilities meet specified criteria. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2009-10 2010-11 2011-12 Fund Regulatory oversight $192 $192 Special * * Public Utilities Commission Reimbursement Account _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense file. Under current law, the Public Utilities Commission oversees energy efficiency programs administered by the investor owned utilities. Under current practice, the Commission provides financial incentives (both additional payments and penalties) to the utilities based on their achievement of energy efficiency goals. SB 806 would require the Commission to limit utility administrative costs to 5 percent of total costs. (The Commission indicates that administrative costs currently range from 8.8 percent to 15.1 percent of costs.) The bill would also require the Commission to ensure that no incentive payments are made unless the efficiency savings have been verified by an independent audit, that incentive payments are made only based on actual achievement of specified goals, that incentive payments are awarded only for long-term energy efficiency gains, and that any overpayment of incentives are repaid to consumers. The Commission indicates that in order to comply with the requirements of the bill, it would have to reopen the proceeding that established the goals and incentives for the 2009-2011 program cycle. The Commission also indicates that the bill would require the utilities to renegotiate some existing contracts with service providers. In order to oversee the revision of the program requirements and changes to contracts, the Commission estimates total costs of $384,000.