California Policy Perspectives on Efficiency and Climate Session: Taking Energy Efficiency to the Next Level New England Restructuring Roundtable Boston, MA October 30, 2009 Jeanne Clinton Climate Strategies Branch Manager California Public Utilities Commission cln@cpuc.ca.gov or (415) 703-1159

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CPUC EE Goals Through 2020 Goals set for CPUC-regulated utilities from 2004 through 2020, in accordance with best available data on energy efficiency potential. Does not take into account potential within Publicly-Owned Utility Service Areas Based primarily on existing technologies and rates of adoption

California Targets for GHG Reduction

Aggressive EE/GHG Goals California Air Resources Board Scoping Plan EE Target (Nov, 2008): 32,000 GWh and 800 MMTherms/year 19.5 MMT CO2E in 2020 Utility programs, codes & standards, voluntary action EE and solar water heating 15% of AB32 Plan (Cap and trade target is 20% of Plan) CPUC 2020 interim “Total Market Gross” EE goals (July, 2008): 16,000 GWh and 620 MMTherms/year Equal to nine or ten power plants avoided

The California Long Term Energy Efficiency Strategic Plan A Strategic Plan is Necessary: Longterm and visionary – with real market-transforming market transformation (non-energy) goals: -Zero Net Energy Buildings (2020/2030); reduce existing homes energy demand 40% by 2020; make 50% of existing commercial buildings ZNE by 2030; enroll all eligible households into LIEE programs (30% of Californian’s qualify) Make energy efficiency a way of life in California by transitioning ratepayer funded programs into the marketplace without subsidies, or into building codes and standards. 2. Ensure energy efficiency programs are highly cost-effective while producing long-term, sustained energy savings in the built environment. Achieve California’s AB 32 Goals. Energy Efficiency delivering some 15% of California statewide emission reductions. www.CaliforniaEnergyEfficiency.com

Identifying Strategies to Fill in the “White Space”

2010-12 IOU EE Portfolio Highlights 12 Uniform Statewide Programs (by sector and segment) Cal SPREE (Statewide Program for Residential Energy Efficiency): 20 percent savings for up to 130,000 homes Commercial: Benchmarking all facilities touched by programs Industrial: Continuous Energy Improvement Zero Net Energy New Construction: $175 million launch HVAC: Focus on state code compliance Lighting: Phases down $ for basic Compact Fluorescent Lamps (CFLs); shifts emphasis to advanced lighting Communities: $260 million for 64 local governments for own facilities and/or innovative approaches Statewide Marketing, Education & Outreach: coordinated brand and implementation across 4 utilities

Definitional Challenges for Inter-Agency Collaboration – CAISO, CARB, CEC, CPUC Baselines, electric & gas load forecasts, moving target of generation fuel mix/GHG profiles Defining “additional” Defining EE “embedded” in energy forecasts, versus a DSM “resource” Modeling and assumptions for future resource quantitative potential, costs to acquire EE Assigning payments; e.g. electric infrastructure, tariffs, subsidies for EVs to replace gasoline

Climate/EE Policy Issues Ahead for California and the U.S. Demand-side strategies not part of Cap and Trade; no mechanism to sell GHG benefits from DSM. Cap and trade places limits on sources of GHGs; demand-side strategies not directly integrated. GHG emission price will make more DSM “cost-effective” But “offsets” typically allowed outside the cap jurisdiction only Local Governments can influence building and transportation, but how pay for increased governance? Allowance auctions may provide EE funds to expand programs &/or creative allowance “retirement” EE Institutional challenge: Need broad vision, strong leadership, over sustained period – to overcome ”friction” of diffuse markets and action venues

DSM Financing – Needs Focus, Attractive Terms, Exponential Growth California needs $8 - $25 billion in financing for EE hardware installation 2010 -2020 Statewide Utility On-bill financing (OBF): For commercial and institutional customers, w/ common caps and terms Initial $41.5 million new funds for OBF loan pool Municipal property-based financing (or “Property-Assessed Clean Energy Bonds “– PACE) The “salvation” for residential and rented/leased properties? California links to stimulus funded retrofit programs CPUC/State Treasurer’s office exploring collaboration to fund EE for state facilities Broader financing solutions report due 2010 Commercial loan cap is $100,000; 5 year or EUL loan term Institutional loan cap is $250,000 except in special circumstances, where up to $1 million may be available; 10 year or EUL loan term ARRA funding estimate is: $351.5 million for Energy Efficiency and Conservation Block Grant (EECBG) Program for local governments RE and EE programs; $226 million for State Energy Program (SEP), administered by CEC; $35 million possible for Energy Star Appliance Program (CEC); $185.8 million for Weatherization Assistance Program (WAP), administered by state Community Services and Development Department August 2009 California unemployment rate estimated at 12.2%, the highest rate since 1940.

Extra Slides

2008 Spending for Select Public Purpose Ratepayer-Supported DSM-type Activities (programs in $000s)

2010 Authorized Ratepayer Spending for Energy Efficiency

CA’s 2010-2012 Investor-Owned Utility EE Portfolio Metrics Savings Impacts Anticipated: 6,965 GWH (3rd yr cum) 1,537 MW 150.3 MM Therms 3.07 million tons of CO2e emissions avoided (3rd yr cum) Equivalent of 3 large power plants $3.1 billion cost-effective efficiency portfolios $ 41 per capita per year (combined gas and electric) Supports 15,000 - 18,000 new jobs Performance metrics to track market transformation and programmatic progress, beyond energy savings Cumulative 2012 GWh savings goals estimated at 15,910 GWh; Cumulative Peak (MW) savings goals estimated at 3,459 MW; Cumulative MMTherms savings goals estimated at 308.1 MMTherms;

EE Market-Place Challenges Market strategies need to extend beyond utility programs, leverage private resources, capture economic value Promote the business potential, capital investment opportunities Mobilize bold action and create a "movement" for EE and other demand-side actions, behavior, investment: Achieve deeper action – 20%, 40 %, 70% efficiency gains             Pull consumer and business demand; call on comparative benchmarks Marketing to reflect understanding of market segments, motivations,... Expand knowledgeable and trained providers who can successfully sell and deliver results Innovate effective financing mechanisms – long amortization terms and transferable to successive owners/occupants (OBF, PACE, ...)