1. Strategies for moving away from subsidies for basic CFLs Presentation to the CPUC Energy Division June 16, 2009 Reuben Deumling Associate, Energy Economics Inc. and TURN Consultant

2. Review of CA IOU’s CFL Status I Est. # CFLs in storage in CA: 42M Est. remaining sockets available for CFLs in CA: ~net 28M that could be cost effectively rebated after subtracting CFLs in storage PG&ESCESDG&Eall IOUs CFL portfolio share: 06-08 approved 30% CFL portfolio share: 06-07 reported 59% Res/Non-res CFL: 09-11 projected34%27%20%29% What the IOUs say they will do and then do are two different things – CFL portfolio share 30% vs 59%

3. Review of CA IOU’s CFL Status II Breakdown of 06-08 CFL buydowns by category and IOU: PG&ESCESDG&Eall IOUs standard CFLs62%48%44%53% specialty CFLs0%5%0%3% other CFLs int.7%4%6%4% LEDs1% linear fluorescents5%17%16%12% int. light retrofits1% 0% int. light replacements0%5%0%3%

4. Reasons why a phaseout is timely Market Transformation has already occurred Federal legislation (EISA 2007) bans incandescent bulbs starting 2012 Other States shifting away from CFLs before market fully transformed

5. When is the market transformed? When CFL prices in PNW are higher than in CA but more CFLs sold per household Energy Independence and Security Act will soon make CFL the de facto standard lamp Other States recognize that prioritizing CFLs over all else no longer tenable

6. Strategies for moving beyond subsidies IOUs should shift focus to specialty CFLs and next generation lighting products Refocus on HTR (households with few or no CFLs) Pursue “green” CFL manufacturing facility Shift from Socket to systems approach

7. Specialty: dimmable, 3-ways, candelabras, globes, high-heat reflectors, daylight bulbs, etc. –Others (NEEA, Energy Trust of OR, BPA) are already doing this Next Generation: cold cathode CFLs, Solid State Lighting (LEDs, OLEDs, plasma lights) –Federal research programs already focusing on building a domestic industry Product quality: light quality, bulb quality, matching bulb to application IOUs should shift focus to specialty CFLs and next generation lighting products

8. Conduct market research to learn who doesn’t buy CFLs and why Improve marketing: better labels, improve sales staff training, emphasize Non Energy Benefits (NEB) Pay more attention to product quality Reconsider expansion into 99¢ stores Refocus on Hard To Reach (households with few or no CFLs)

9. Lower life cycle energy costs from local production Higher quality lighting products Meet or exceed domestic env. production standards Address Workforce Education & Training (WE&T) requirements Pursue “green” CFL manufacturing facility

10. Direct install programs currently focus on sockets: short list of lighting products Instead: customized comprehensive approach to retrofit; calculated rather than deemed savings Advantages are: –Achieve higher savings –Eliminate lost opportunities & cream skimming –Better lighting Shift from socket to systems approach

11. The umbrella organizations in the PNW: NWPPC, NEEA, Energy Trust of OR, BPA have or are beginning to shift away from standard CFLs and to specialty CFLs; CPUC doing same The IOUs, by contrast, have grown fond of the standard CFL buydown model and are pushing back, for 3 reasons: 1.Evaluation criteria: the evaluation criteria in place suggest CFL buydowns are the most cost effective measure on the books 2.Financial rewards: structure and scale of programs make them very lucrative to the IOUs 3.Inertia: easier to defend status quo than to switch to something different/new IOU resistance to phaseout

12. Conclusion Shifting extent to which & how CFLs are rebated promises more diverse portfolio, higher savings, and Explore hurdles to manufacturing CFLs in CA In commercial realm, shift to comprehensive, customized, calculated savings approach