BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 765|
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THIRD READING
Bill No: SB 765
Author: Wolk (D)
Amended: 6/2/15
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 8-2, 4/21/15
AYES: Hueso, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley,
Wolk
NOES: Cannella, Morrell
NO VOTE RECORDED: Fuller
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: Energy: California Market Transformation
Administrator
SOURCE: The Utility Reform Network
DIGEST: This bill requires the California Public Utilities
Commission (CPUC) to contract with an independent entity, to be
known as the California Market Transformation Administrator
(CalMTA), to coordinate the state's energy efficiency
market-transformation activities.
ANALYSIS: Existing law requires the CPUC to identify all
potentially achievable cost-effective electricity and natural
gas efficiency savings and to establish energy efficiency
procurement targets and ratepayer-funded programs for electrical
and gas corporations. (Public Utilities Code §§ 454.55 and
454.56.)
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This bill:
1)Defines "market transformation" as a strategic process to
intervene in a market to create lasting change in market
behavior by removing identified barriers or exploiting
opportunities to accelerate the adoption of all cost-effective
energy efficiency as a matter of standard practice.
2)Requires the CPUC, by July 1, 2017, to contract with an
independent entity to serve as the CalMTA, pursuant to a
contract of at least five years, to coordinate planning and
execution of the state's energy efficiency efforts through
long-term market transformation strategies.
3)Sets the budget for market transformation activities -
including CalMTA's budget and the CPUC's costs to manage the
contract with CalMTA - at no more than 10 percent of the total
budget for energy efficiency activities overseen by the CPUC,
excluding low-income energy efficiency programs.
4)Requires CalMTA to meet interim and long-term targets set by
the CPUC and to submit quarterly expense reports and annual
progress reports.
5)Directs CalMTA to work with the California Energy Commission
to encourage local publicly-owned electric utilities to
participate in the CalMTA's planning efforts and provide
funding and support for CalMTA's market transformation
initiatives.
6)Requires the CPUC to consider whether energy savings expected
to be delivered through CalMTA market transformation
initiatives should be excluded from the targets established by
the CPUC for investor-owned utilities (IOUs).
Background
Energy Efficiency Programs. California's IOUs administer energy
efficiency programs with ratepayer funds approved by the CPUC.
Currently funded at about $1 billion per year, the programs
include a portfolio of financial incentives, loans, and rebates
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for installing energy efficient appliances, lighting, windows,
HVAC [heating, ventilation, and air conditioning] systems,
whole-house retrofits, and specialized programs aimed at a
variety of sectors.
This bill follows a white paper by consultants to the Energy
Division of the CPUC on energy efficiency market transformation.
[Building a Policy Framework to Support Energy Efficiency
Market Transformation in California, Ralph Prahl and Ken
Keating, December 2014.] That work notes that CPUC energy
efficiency programs oftentimes have as an end goal "market
transformation," meaning long-lasting, sustainable changes in
the structure or functioning of a market achieved by reducing
barriers to the adoption of energy efficiency measures to the
point where continuation of the same publicly-funded
intervention is no longer appropriate in that specific market.
The paper notes that energy efficiency programs often pursue the
end goal of market transformation through the use of resource
acquisition, such as the offering of rebates.
However, the paper contends that resource acquisition and market
transformation are oftentimes incompatible. This is because
resource acquisition programs tend to focus on relatively
certain near-term savings, whereas market transformation is
risky and slow to be realized. Bureaucratic and market
incentives therefore too often focus on resource acquisition to
the detriment of market transformation.
The paper recasts market transformation from an end goal to a
tool or strategy, rather than simply an end goal. The concept
behind SB 765, and most of its particulars, flows directly from
the white paper.
Recent Amendments. The Senate Appropriations Committee amended
this bill to change the funding parameters of the CalMTA
program. Previously, this bill directed CPUC to fund the
program at between five percent and 10 percent of the total
budget for energy efficiency activities overseen by the CPUC,
excluding low-income energy efficiency programs. The
amendments, in contrast, direct the CPUC to fund the program at
no more than 10 percent of the total budget for energy
efficiency activities overseen by the CPUC, excluding low-income
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energy efficiency programs
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
Annual costs of up to $730,000 to 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.
SUPPORT: (Verified5/29/15)
The Utility Reform Network (source)
Center for Sustainable Energy
Office of Ratepayer Advocates
Sierra Club California
The Greenlining Institute
OPPOSITION: (Verified6/3/15)
Pacific Gas and Electric Company
San Diego Gas and Electric
Southern California Edison
Southern California Gas Company
ARGUMENTS IN SUPPORT: According to the author, market
transformation and resource acquisition are two separate energy
efficiency tools with differing applicability. The energy
efficiency programs overseen by the CPUC should be administered
accordingly. Further, the most-successful models of energy
efficiency programs that distinguish between market
transformation and resource acquisition rely on third-party
market transformation administrators. The CPUC should follow
this successful model.
ARGUMENTS IN OPPOSITION: The IOUs (opponents) argue that
establishing a third party to implement energy efficiency market
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transformation adds unneeded bureaucratic costs that take
funding from other energy efficiency programs and, in its
establishment, distracts from those programs; and ignores the
momentum and market knowledge of the IOUs. The IOUs contend
that they are best positioned to implement a program focused on
market transformation, should the CPUC wish to require an energy
efficiency program distinct from resource acquisition programs.
Prepared by:Jay Dickenson / E.U. & C. / (916) 651-4107
6/3/15 9:48:54
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