California PUC realigns energy efficiency to increase equity and long-term focus

The California Public Utilities Commission (CPUC), in a late May decision, reformed its approach to energy efficiency programs to better align them with greenhouse gas (GHG) emissions reduction, support for customer equity, and long-term grid stability.

The decision, Docket #: R.13-11-005, changes how the goals for energy efficiency programs in the state are set and evaluated and the processes for setting those metrics.

The CPUC released the proposed decision in April.

The decision calls for a shift in energy efficiency goals to long-term GHG reductions and grid benefits and away from setting goals based on savings of kilowatt-hours, kilowatts, and therms. The new “total system benefit” metric, expressed in dollar value, takes lifecycle energy, capacity into account to better target “high value” load reduction and “longer-duration energy savings while being fuel agnostic,” according to the decision.

The decision also changes the way energy efficiency programs are measured, shifting cost effectiveness evaluations away from an assessment of energy efficiency portfolio-wide economic benefit to an approach that segments the portfolio into categories and evaluates each category based on the primary purpose of the program. The new method is aimed at supporting the continuation of programs that “serve important functions but whose benefits are not appropriately captured by cost effectiveness ratios.”

In terms of process, the decision replaces the 10-year business plan and yearly utility filings with the CPUC with a 4-year application that includes a strategic planning component.

The decision calls for Investor-owned utilities to file new energy efficiency program applications in February 2022 that will take effect by January 2024.

The CPUC said that this summer it would continue to work to improve energy efficiency programs through the consideration of new energy efficiency goals and the addition of details to the changes implemented in the new decision.

“This decision helps to continue California’s leadership in energy efficiency by reducing the conflict between cost-effectiveness and other equally or more important policy objectives that address equity and provide market support for our energy efficiency programs,” Commissioner Genevieve Shiroma said in a statement. “It further maximizes energy efficiency measures for longer duration greenhouse gas reductions in support of our integrated resource plan and in delivering grid benefits.”