BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 765 (Wolk) - Net energy metering: eligible customer
generators
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|Version: April 6, 2015 |Policy Vote: E., U., & C. 8 - 2 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 4, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 765 would require the California Public Utilities
Commission (CPUC) to contract with an independent entity, to be
known as the California Market Transformation Administrator or
CalMTA, to coordinate the state's energy efficiency
market-transformation activities.
Fiscal
Impact:
Uncertain additional ongoing administrative costs, potentially
up to $10 million, from the Public Utilities Reimbursement
Account (special) for additional workload at the CPUC to
oversee and manage the activities at CalMTA.
Annual costs of approximately $150,000 from the Energy
Resources Program Account (General Fund) to coordinate with
the CPUC on market transformation activities.
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Background: Existing law requires the CPUC to identify all
potentially-achievable and cost-effective electricity and
natural gas efficiency savings in order to establish energy
efficiency procurement targets and ratepayer-funded programs for
electrical and gas corporations. The responsibility to meeting
this target is distributed proportionately amongst the state's
investor-owned utilities (IOUs), who administer the energy
efficiency programs. These programs are paid by ratepayer funds
that are approved by the CPUC. Currently, the IOUs are
collectively approved to collect approximately $1 billion for
various energy efficiency measures programs including financial
incentives, loans, and rebates for installing energy efficient
appliances, lighting, windows, HVAC systems, whole-house
retrofits, and specialized programs aimed at a variety of
sectors.
These energy efficiency efforts can broadly be divided as two
types- market transformation and resource acquisition. Resource
acquisition activities result in near-term energy savings,
usually through customer participation, such as LED and compact
fluorescent light bulb subsidies. Market transformation
activities on the other hand aim to create structural changes in
the market leading to long-term savings. Energy savings from
these activities are usually planned over a 5-10 year time
frame, though when the savings are achieved depends on the
market. Once the market transformation is achieved,
publically-funded intervention is no longer appropriate. A white
paper commissioned by the CPUC on market transformation noted
that the CPUC's existing energy efficiency programs often have
market transformation as an end goal, but don't use market
transformation as a tool or strategy in it itself.
Proposed Law:
This bill would require the CPUC to contract with an
independent entity by July 1, 2017 for at least five years to
serve as the California Market Transformation Administrator,
which is defined in the bill as "CalMTA," to coordinate the
planning and execution of the state's efforts to advance energy
efficiency through market transformation strategies.
Specifically, the bill would require the CalMTA to:
Advise and assist the CPUC with the coordination of
demand-side energy management programs;
SB 765 (Wolk) Page 2 of
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Perform its marketing, education, and outreach under the
Energy Upgrade California brand name;
Create market conditions that will accelerate and sustain the
market adoption of energy efficiency products, services, and
practices in California;
Meet interim and long-term targets adopted by the CPUC;
Report to the CPUC quarterly on expenditures and annually on
progress towards CPUC-established interim and long-term
targets;
Coordinate market transformation initiatives with utility
energy efficiency activities under the CPUC's jurisdiction;
and
Work with the California Energy Commission (CEC) to encourage
participation by publically owned electric utilities in the
CalMTA's planning efforts.
The CPUC would be required to provide oversight over the
CalMTA's activities to protect ratepayers from performance risk.
Specifically, the CPUC would be required to conduct, or require
the CalMTA to conduct, a "rigorous" upfront vetting process for
program concepts.
The budget for market transformation initiatives would also be
initially limited to 5-10% of the total budget for energy
efficiency activities to ensure a balance between market
transformation initiatives against resources acquisition
initiatives. The CPUC would be authorized to adjust the funding
level as it deems appropriate.
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The CPUC would also be required to consult with the CEC in order
to coordinate activities of the CalMTA with energy efficiency
activities of the CEC. Additionally, the CPCU would be required
to consult with the CEC to determine how to reflect energy
savings from market transformation initiatives.
Staff
Comments: CPUC costs - This bill requires that the budget for
CalMTA be initially set at a level between 5 and 10 percent of
the total energy efficiency budget overseen by the CPUC, which
translates to approximately $50 to $100 million. This bill
specifies that this amount is to include administrative costs
for CalMTA as well as the CPUC's costs to oversee the contract.
Based off the state's experience with the contract for Energy
Upgrade California and considering the Northwest Energy
Efficiency Alliance Program as a model, the CPUC estimates that
approximately 7-10% of the contract will be used for CalMTA's
administrative costs. Theoretically, these administrative costs
could represent some savings to the total energy efficiency
budget as it would consolidate activities currently conducted at
the separate IOUs into one program. However it is unclear
whether these savings can be quantified at a level that would
result ratepayer savings. Staff notes that the IOU programs are
not part of the state's budget and are overseen by the CPUC.
According to the CPUC, CPUC costs to oversee the CalMTA contract
are also estimated at 7-10% of the contract costs, or in this
case $3.5 million to $5 million, based on the state's experience
with Energy Upgrade California and the Northwest Energy
Efficiency Alliance Program. Oversight costs include setting
targets to guide the activities of the CalMTA and integrating
the initiatives of the CalMTA with IOU requirements for energy
efficiency. Staff notes that the CPUC currently has five
positions that oversee the IOUs' market transformation programs
that could be shifted to oversee the CalMTA contact. Staff notes
that these costs are new in the sense that there would be
additional spending from the Public Utilities Reimbursement
Account but there wouldn't necessarily be increased ratepayer
surcharges so long as the bill is redirecting existing ratepayer
funds collected by the IOUs, which is consistent with the
author's intent. Staff notes that such a redirection is not
explicitly required in the bill.
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Staff notes that the bill is not clear on the governance of
CalMTA and whether it has decision-making authority independent
of the CPUC. How the contract establishes decision making
authority could influence CPUC's administrative costs.
Staff notes that the bill only requires that the "initial"
CalMTA budget be set at a level between 5 and 10 percent of the
total energy efficiency budget. After the undefined initial
period, the CPUC would then have the authority to adjust the
budget as it deems appropriate. Future state costs may vary with
the size of the contract.
CEC costs - The CEC, which conducts and oversees a number of
energy efficiency initiatives itself, would incur costs as a
result of this bill to coordinate its activities with CalMTA and
to support the CPUC in assessing market transformation efforts.
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