Assembly Standing Committee on Utilities and Energy

We are going to be joined today by let's see. We are joined by Carrie Fleisher, who is the director of distributed energy resources, natural gas, and retail rates at the California Public Utilities Commission. Welcome. Claire Brako, the senior manager of energy efficiency policy shaping and technical oversight at Pacific Gas and Electric Company.

Luana Medina, the environmental initiatives division manager at the Energy and Environmental Services within the County Of Los Angeles, Laurel Rothschild, the vice president of the Energy Coalition, Spencer Lipp, a professional engineer and the director of engineering at Future Energy Enterprises, and Shelley Leiser, the senior energy program manager at the public advocates office.

Thank you all so much for joining us today. I think what we're going to do is hear briefly from each of our panelists, and then we will open it up for questions, conversation, and discussion. Okay. Thank you. And I think director Fleischer, we are going to go ahead and kick it off with you.

Thank you. Good afternoon, Chair Petrie Norris and Assembly members. I'm Carrie Fleisher, director of distributed energy resources, natural gas, and retail rates at the California Public Utilities Commission, known as the CPUC. Are slides gonna be put up on the screen soon? Okay.

Great. Thank you. The CPUC regulates the investor owned utilities in California, regulating 75% of the electric load in the state. I would like to begin with a brief overview of the CPUC's role in the energy efficiency landscape in California. Next slide.

I'm just waiting. Oh, is there a little lag? Okay. First, the stat do I have a way to click the slides myself? Okay.

Thank you. Great. First, the statute that guides the CPUC's work in energy efficiency can be found in Public Utilities Code four five four point five five and four five four point five six. I highlight a central tenant of our work, which is to identify all cost effective, achievable energy efficiency savings. We also establish goals for both electric and gas investor and utilities.

The portfolios we will talk about today stem from this authority. Energy efficiency is defined as a system or appliance upgrade that allows customers to reduce their energy use while maintaining a comparable level of service. In other words, you can cool your home, heat your water, cook your food, but you do so with less energy with more efficient equipment. This slide shows some examples of equipment, we call them measures, that have rebates available if delivered through an approved program.

The photo showed two electrification measures on the left, an electric heat pump water heater and an induction oven, as well as a smart thermostat and a chiller for a commercial building.

And energy efficiency, we call electrification measures fuel substitution because they substitute one fuel source like gas to an electric source, and they are designed to use the electric electric energy source more efficiently than they used gas. In California, there are three different entities that may request rate payer funding. As administrators of efficiency programs, we often refer to these groups as program administrators or PAs. There there are the four large investor and utilities on the left.

In addition, the CPC allows local government entities to create regional energy networks to plan and administer energy efficiency programs independent of the investor and utilities.

Finally, California allows a community choice aggregator to apply to administer rate payer funded energy efficiency programs. Currently, there is one CCA administering rate payer EE funding, marine Marin Clean Energy. Westlight Energy, formerly Peninsula Clean Energy, has applied to administer rate payer funded energy efficiency as well. To utilize rate payer funded energy efficiency, each program administrator must submit a detailed budget application. Currently, the CPC reviews energy efficiency budget applications every four years.

Starting from the left, the process typically starts almost a year before applications are submitted when we deliver either formal or staff guidance to the portfolio administrators containing their application requirements. Next, the PAs submit their applications. In 2026, 13 program administrators filed budget applications for their 2028 to 2031 portfolios. The CPC just issued the scoping memo for this budget application proceeding on July 24.

Finally, we were we review the applications to assess whether each application is just and reasonable, compliant with state law and CPC policy, and well suited to deliver on key strategic objectives.

Next, I would like to go over some recent spending figures for the energy efficiency portfolios. First, I would like to show a chart from the CPUC's response to governor Newsom's executive order to mitigate the rising cost of electricity service in California. This chart shows the electric revenue requirements from the three large investor and utilities after subtracting the climate credit. This chart groups large areas of electric revenue, which is another word for electric system costs, into generation, distribution, transmission, public purpose programs, and other.

Other comprises smaller costs like the Department of Water Resources, power charge, nuclear decommissioning, and regulatory fees.

The point that I wanna highlight here is that energy efficiency program costs fall into the thin slice at the top of this chart that represents public purpose programs. The public purpose program category represents various costs, some of which relate to energy efficiency and some of which do not. Besides costs related to energy efficiency programs we are discussing today, it also includes costs related to electric procurement investment charge known as EPIC and the California Alternate Rate for Energy program known as CARE.

Last year, our program administrators invested $795,000,000 in energy efficiency with Edison spending the most with $254,000,000 of spend in 2025. This chart rank orders all the program administrators from largest to smallest spending and groups the RENs together and all the CCAs together.

The 117 mill million dollar figure in yellow represents seven RENs covering the entire state, including remote corners of California. The 12,500,000 bar marks, marked all CCA, includes Marine Clean Energy and two other CCAs that are not yet administering programs but electing to administer programs, Ava Energy and Westlight. So let's show how the program administrators spent the $9,795,000,000 across various market segments in California, which you can see on the horizontal axis.

Energy efficiency opportunities exist in all sectors of the economy from the agricultural, commercial, industrial, public, and residential sectors. The other segments here, that are represented here, like the crosscut cutting one capture costs that apply to multiple sectors, and the segment portfolio support bar generally means cost to run the portfolio.

This chart also shows how much of the energy efficiency spending goes to providing rebates to customers in the medium blue and implementing the programs in dark blue. You can see these two are typically where most of the money goes. Other costs like administration, cost to market the programs, and cost to study the programs are the smaller cost categories. The two biggest sectors in terms of spending are the residential and commercial sectors making up 58% of the total spending in 2025.

So what is gain from spending rate payer funds on energy efficiency?

We'll go over these at a high level in the next few slides. But first, I would like to go over an important term called total system benefit or TSB. In the past, California's energy efficiency portfolios only looked at first year savings. In other words, you install some equipment, and we valued if it saved energy that year. To advance the energy efficiency portfolio from there, we adopted the total system benefit as our goal metric called TSP.

TSP values the energy savings when it happens and encourages longer term savings. Since it is a dollar number and not a kilowatt hour or therms number, this allows us to value and encourage fuel substitution of natural gas equipment for electric heat pumps. To make sure the program administrator's goals are current, the CPC adopts these new TSP goals every two years. The program administrators then design their programs to reach the goals over a four year period.

The this chart shows the CPC adopted twenty twenty five goals in blue, and the utility reported total system benefits in gold.

Last year, each utility managed their portfolio to generate more total system benefits than the goals set for them by the CPUC. The total system benefit number includes any total system benefits achieved by the regional energy networks, the RENS, or community choice aggregators in their service territory as well. This chart is an illustrative example of how the energy efficiency portfolio changes in response to the regulatory landscape.

This shows the benefits from various equipment from 2016 to 2024 for the resource acquisition segment of the energy efficiency portfolio, which acts similar to a direct procurement tool for grid reliability. Starting at the left of the chart, we can see that LED lighting made up the bulk of these energy efficiency portfolio benefits in 2017.

Then when LEDs became code in 2020, we can see the savings from LEDs are removed for the standard process by which EE programs may not offer rebates for measures that have become code. In 2021, the CPC, as I was discussing, adopted the total system benefit metric that values when savings happen and how long that saving lasts. Looking to the right, we can see how the portfolio has evolved, and more of the benefits are now coming from water heaters, including electric heat pump water heaters.

This is my, last slide. I have so far discussed energy efficiency portfolio spending and how we measure energy efficiency goals using total system benefit.

And for this slide, I'll go over some important concepts related to how energy efficiency views cost effectiveness. The slide came down, but I'll continue to read. The c p oh, I see.

There we go.

The CPUC uses the total resource cost test to quantify cost effectiveness of energy efficiency as well as other distributed energy resources. The total resource cost test is a long standing test used in many contexts, and cost effectiveness tests are a ratio of benefits divided by costs. A ratio of one point o means that for every dollar of cost, there is an equal amount of benefit delivered. The CPC requires the resource acquisition portion of the portfolio to meet cost effectiveness.

Some other programs in California address equity objectives by targeting underserved communities or by supporting the market by providing training or identifying new technologies to offer in future portfolios.

These type of programs are exempt from cost effectiveness. Finally, the CPC requires cost effectiveness at the resource acquisition portfolio level, not at the individual

program level. This is to encourage innovation and level. This is to encourage innovation and to allow new measures into the portfolio. That concludes my presentation. Thank you for the time.

Thank you. Alright. I think next up is, miss Braeko.

Good afternoon. Thank you, madam Chair and members of the committee for this opportunity to speak here. My name is Claire Braeko, and I'm with the Pacific Gas and Electric Company. My team support the policy and engineering of PG and E's EE programs. PG and E's been implementing EE programs since the seventies.

And over those years, although programs and policies have evolved, we continue to offer designs and offer portfolio that is a diverse offering to our customers. Our current portfolio operates with over 45 programs across all segments and sectors. While our resource acquisition segment, which is primarily responsible for the delivery of energy savings benefits, is required to be energy savings benefits is required to be cost effective, our overall portfolio has still been cost effective across all segments since 2022. As Carrie stated and shared, every four years, PG and E files an EE application, which includes a four year portfolio plan and an eight year business plan. This sets the four year cumulative budget cap for the four year cycles within that business plan period. And every two years, portfolio administrators have the opportunity to update that portfolio forecast that makes up that budget amount based on new measure information from policy updates. Although the authorized cap remains the same, the details of that makeup of the forecast can be updated.

PG and E reviews these updated forecasts to ensure they're realistic, achievable, and defensible before updating its budgets and associated forecasts.

Customer affordability remains focus of our portfolio, and as such, our requested budget year over year has reduced since 2016. When looking at portfolio design, there are several compliance and regulatory directives, which is here too. PG and E and all the ROUs have to forecast a cost effective resource acquisition segment and achieve the goals or TSB directed by the CPC's potential and goal study.

While also ensuring the following, at least 60% of our total portfolio is outsourced to third party implementers, No more than 30% of the total portfolio is allocated to market support and equity offerings. At least 20% of the total portfolio budget is allocated to statewide program offerings, and no more than 10% of the total portfolio budget goes towards PG and E administrative costs.

PG and E accomplishes this by having a few cornerstone programs which deliver a large amount of cost effective TSB and can help balance the portfolio of programs which may still be launching or have other primary purpose and other cost effective system benefits. Some portfolio examples include our nationally recognized home energy reports program, which reaches over 3,000,000 PG and E residential customers annually and is one of the largest in The US.

Each year, it expands providing monthly energy savings tips and suggestions as to how customers can reduce their energy uses and bring awareness to energy use and behaviors. Business energy reports has seen three successful years of growth with over a 100,000 small medium business customers now receiving them. Focused primarily on agricultural food service and retail, these reports provide dual fuel suggestions for energy history, tips, and personalized energy usage for information to the small, medium business customers participating.

And lastly, our strategic energy management program has been supporting the industrial and manufacturing sectors for nearly ten years and has been recognized nationwide as well as internationally. Over a 100 large industrial customers participate in this program, exceeding large savings in their energy usage. Customers commit to participating in a two year cycle and can stay in the program for up to eight years. SEM has seen the high attend high retention rate and customer satisfaction for a sector of customers which historically have challenges participating in EE programs.

I mentioned these programs in particular for their stability and maturity as we have come to recognize in our portfolio.

And for the past several years, PG and

E has administrative effective sorry, cost effective portfolio overall and intends to continue as as such with our most recent application. SEM in particular is an extremely cost effective program, and in combination with other cost effective programs allows PG and E to also offer newer, less cost effective programs and building electrification pilots to support customers while maintaining an overall cost effectiveness.

PG and E continues to advocate for the cost effectiveness requirements and should remain at the portfolio segment level and not at the program level to allow the space for the variability in multiyear program life cycles and multi sector offerings. Although PG and E continues to forecast and intends to deliver a cost effective portfolio to support customer affordability. Program and portfolio overlap is something which PG and E diligently works to mitigate, requiring constant communication with our other PAs and planning, to limit duplication.

Program overlap can occur when a third party program is offered by multiple PAs or a program offering targets the same customer segment even with different measures. PG and E is aware of other PAs programs when scoping new offerings and continues to seek out the best use of customer funds where possible. Portfolio overlap can also occur when multiple PAs are operating in the same geographic space and can cause customer confusion.

For example, where I'm based in San Luis Obispo County, there's five PAs offering EE programs in that same region. Same region of customers, but offering different programs and potentially different measures.

Both examples of program overlap and portfolio overlap can then introduce that confusion we mentioned. In addition to designing and forecasting our portfolio, PG and E is also regularly monitoring existing program performance. Our resource acquisition program implementers meet with their PG and E program implementers weekly, monthly, and quarterly to provide an update on their program pipeline, development, and delivery.

If project volume reduces or performance metrics are not being met, the PG and E program manager and portfolio manager meet with the implementer to collaborate on opportunities to improve, such as additional marketing measures, or opportunities to discuss with customers. If there's still no substantial improvement, a performance improvement plan is initiated.

PG and E has closed over 20 programs since 2021. Usually, in these cases, it's not the implementer's technical aptitude that's causing the issue, but rather the program design no longer meeting the customer segment needs anymore.

An example of this would

be our industrial custom program, business energy performance program, which the savings methodology was too onerous and the baseline methodology presented too many challenges for customers to commit to participation, and the program seemed to fail. As part of the agenda, there was an ask about potential suggestions and changes to cost effectiveness and metrics associated with the EE portfolios. He do suggest these conversations continue in the various CPC proceedings, which have been elevated to maintain robust stakeholders discussion with the right technical resources.

Cost effectiveness, for example, for programs focused on energy and benefits should continue to be addressed in the proceeding that covers valuation of demand side programs as supply side alternative resources to ensure the compliance of the statutory requirements. Market support and equity segment metrics are an active discussion in the CPC e proceeding with the fulfillment of ordering paragraph 25 of d 23 of six zero five five.

And as part of PG and E's most recent application, a stakeholder process for discussions on portfolio cost controls for regional energy network PAs was proposed. And because RENs currently don't have any cost effectiveness requirements, budget caps, or other budgetary requirements for rationalizing budget level with their unique portfolio objectives to primarily fill the gaps in the IOE portfolio offerings and serve hard to reach customers.

The CPUC identified this topic of the rent cost control as in scope for the e proceeding, but not part of the e application itself. Thank you for the opportunity to present today to you all and to share PG and E's perspective on our energy efficiency portfolio. Thank you.

Thank you. Energy efficiency portfolio. Thank you.

Thank you. Alright. Next, we're going to hear, from miss Medina from the county of Los Angeles.

Thank you so much, madam Chair and members of the committee. First, I wanna just thank you for the opportunity to testify and to speak on these topics. My name is Luana Medina. I serve as the portfolio administrative manager for the Southern California Regional Energy Network. And there are three things we're gonna talk about today in my discussion.

One is local government administration is imperative to the overall EE portfolio. Two, energy efficiency is a key tool to combating energy affordability. And then last but not least, why are rates increasing? Let's really talk and deep dive into what that is about. So next slide.

Oh, sorry. Thank you. Oh, here we go. Sorry. So Southern California Regional Energy Network, as Mister Fletcher mentioned, is one of seven regional energy networks.

Now the SoCalREN works in 13 counties. So although I'm a local government employee of the county of LA, through the fiduciary duty and authority of the California Public Utilities Commission, our regional energy network represents 13 counties across Central And Southern California. Now with regional networks, our fiduciary duty, of course, is to identify and serve those communities in which we are authorized. Our particular portfolio includes public agency, residential, agricultural, commercial, workforce education and training, finance, and previously, codes and standards programs.

Our primarily objectives our primary objectives are to deliver energy and climate impacts, so to get actual claimable savings, but also increase access to those most hard to reach, to those equity customers.

And then, of course, most importantly, as we invest these dollars into our community, making sure we're building capacity and transforming those communities by building the workforce. So really thinking about how does EE dollars drive transformative community. Now next slide. Let me see here. Sorry.

I'm used to and I'm used to standing up. I would stand up and give this to you because I'm I love to talk. So I'm maybe I is it do you guys mind if I stand up and speak?

We won't be able to hear you.

Oh, you won't because it

Or and the the folks listening at home won't be able to hear you.

That's so true. Okay. So let's talk a little bit about why local government delivery is ideally positioned to meet communities hardest hit. And first, I wanna just applaud the California Public Utilities Commission because ten years ago, they really saw this idea that diversity in administration is good for the system. Right?

It helps to bring competition. It also helps to provide diversity and nuances in meeting these communities. We're all Californians here. Right? But we're all different.

Northern Californians are different from Southern Californians. Central Valley is different from Southern California, but we all embrace and we appreciate that. In meeting those communities, you need that local nuance, that hyperlocal delivery that local governments provide. So regional energy networks were were built to do that. Right?

They were built to, one, not duplicate the utilities offering. Second, meet the most hard to reach. And then third and most important, do new innovative items that can be scaled. And I'll speak to that later about some of those things we've done in the past. And one thing I also wanna say is as local governments, every dollar in must go out.

What does that mean? Every dollar that goes out gets directly invested into the economy of that local community or region. So as we're investing in these projects or

workforce programs, they go back into the community. We do not have shareholders to speak to like the investor owned utilities. And so that's really imperative that we just rest that. Next, I'm gonna talk about because I know we only have five minutes. I'm trying to go quick.

Next, energy efficiency is a cost effective affordability tool. My colleague, Laurel, is gonna talk about the loading in order, so I won't go into that. But let's think about energy efficiency. As we apply, let's say, a new HVAC system or refrigeration, that energy saved is for the life of that measure. Meaning, if that refrigerator, you know, installed in my home last twenty years, that savings last twenty years, so throughout that.

Now we know that electric rates aren't gonna go down in our lifetime. I mean, pray, but, you know and so how do we combat that? We need a cost effective tool. And one thing I will point out to this committee, you might wanna look at all of the stats on 2025. We saw unprecedented levels of participation in EE programs.

And that is unusual because usually, we have a hard sell on energy efficiency. The last three, four years have been a hard sell. But what we're seeing is the market is demanding it. And you know why? Because those new rates are hitting bills today.

And so as people are struggling to pay their bills, they're like, what tools can I use to help mitigate that cost? They're going to energy efficiency. They're going to Edison. They're going to PG and E. They're going to the RENs.

They're looking for opportunities and programs to help them mitigate that cost. So let's talk about that cost. How is a customer bill divided up? I appreciate also the CPUC's presentation in the beginning because I think it makes a good point. Here is a bill.

Now I'm just gonna go over a very high level. So the bill is cut up in various ways. Now IOUs, just like any business, are allowed to make profit. CPC regulates that. It's around 10 to 12%.

However, as they build more and more infrastructure, they are allowed to accrue and collect revenue requirements for that, what they call, rate base. So as they make capital expenditures, that is also collected. So you'll see that more around 10 to 25%. Now public purpose program charge is about 10% of your bill. Now that includes though CARE and FARO, which are those low income rates, and that's critical and vital to energy affordability.

And about energy efficiency is about 11.5%. Now the rents, part of that 1.5% or that penny, were about point two six of that. So think of it about point two six of 1%. So that's just a little bit about the bill. And, also, I should probably tell you all that I used to work for SDG and E, Edison, and SoCalGas.

So I do know how the cookies are made. And I was very fortunate to having to work there in the past, but now I work for LA County, and I'm super proud of that as well. But let's also talk a little about what what is driving cost increases. Let's be very clear. It's not energy efficiency.

But there are a lot of challenges that all of us are battling, including our IOU partners. Wildfire mitigation costs are a huge substantial amount. And what we know is that wildfires are no longer seasonal. They're here, and they're here year round. So what can we do to help mitigate that cost?

That is a good question and something that we all should be asking. And, of course, there's utility revenue requirements that are required for them to operate. And then, of course, there's energy efficiency investments, but those, of course, have been stagnant. So that's just a high level look about, you know, what is driving cost. So let's talk a little bit about what SoCal runs so there's an understanding about how regional energy networks have been impactful.

So this here, you know, really delivering energy bill savings and greenhouse gas emissions, but most importantly, also driving economic development. So here is just a ten year look. This was between 2013 and 2023. Specifically, we were able to help over 218 public agencies install energy efficiency projects and drive 411,000,000 in bill savings. What that means is those dollars then get reinvested into those public agency communities.

That is huge. As we know all know as local governments, we're strapped for resources. So any dollar we can save and then reinvest it into public purpose programs or public services is vital and key to these communities. So really looking at that. In addition, SoCalREN, we're all about a balanced approach.

We agree with PG and E that resource acquisition programs are vital and key to getting actual claimable impacts. But we also understand as a local government, we need to serve the most under resourced and hard to reach. So you can see here as we balance about 30% equity, 30% re resource acquisition, and then, of course, 25 to 30% on market support. Really looking about that comprehensive portfolio. And last, you know, we have over a 100 metrics.

So I'm not gonna go over in detail because I only got five minutes in my spill. But something I wanted to speak to is we were able to already support over the last ten years about a 124,000 multifamily households. We've supported over 2,800 jobs. Again, here's where I'm talking about that. Energy efficiency is actually supporting new job development and projects and also to help over 1,650 building and facilities.

So this spans commercial, public agencies, and then also train our youth and young adults and disadvantaged workers. These are workers that are reentering. We really wanna help them get into the green economy. The other one is transitional workers who are one facing industries that are either shrinking or reducing, and then last importantly, helping them to get actual jobs.

The one thing I also wanna leave this committee as knowing is in 2025, SoCalREN did have a cost effective resource acquisition portfolio similar to the utilities despite, you know, really serving over 30% in equity programs.

So I just wanna highlight that, and thank you again for your time.

Thank you. Alright. Next up, miss Rothschild from the Energy Coalition.

Yes. I'll try to keep the passion going, Luana. Okay. Chair, Petri Norris and members, I'm Laurel Rothschild. Let's see. Oh, I'll start slides. Okay. Well, there is a slide that gives an overview of who I am real quick. But, my name is Laurel Rothschild, vice president of energy programs at the Energy Coalition. We compete for and run efficiency programs for utilities and regional energy networks. I also serve on the board of the California Efficiency and Demand Management Council and cochair the California Energy Efficiency Coordinating Committee. a slide that gives an overview of who I am real quick. But, my name is Laurel Rothschild, vice president of energy programs at the Energy Coalition. We compete for and run efficiency programs for utilities and regional energy networks. I also serve on the board of the California Efficiency and Demand Management Council and cochair the California Energy Efficiency Coordinating Committee.

Oh, there we go. Okay. Perfect.

Thank you. So I'm gonna start with how a program gets built from the implementer side. Begins with the commission's own goal study, as you can see on the left. The administrator designs a portfolio for third party programs, and post a competitive solicitation. We bid, we negotiate metrics and budget, and no contract is signed until the administrator has both budget authority and program approval.

Next, I'm gonna talk about once we're running. Every invoice splits into the four categories you see on the left hand side. For this example program we run, nearly all costs go straight to the customer as incentives or services direct implementation. Reporting and evaluation are continuous by us, by the administrator, and by the commission's own contractor. Any underperforming programs get immediate and rigorous attention to manage back to goal or discontinued as PG and E discussed.

I'm now gonna transition and make three points to demonstrate why this portfolio is both essential and effective for rate payers in California and explain why this portfolio is well managed, not mismanaged. It is the state's most undervalued affordability tool and how we can go from good to great. So starting with the analysis. The public advocates office has circulated what it calls a partial list of non cost effective efficiency programs, a 131 of them.

It's meant to suggest hundreds of programs you could cut, but that same list is the best explanation of how this portfolio actually works.

So there are two kinds of programs to start. Resource programs put efficient equipment into homes and businesses and generate the savings. Non resource programs provide the services that make the whole industry function. Of those a 131 programs, out of over 700 by the way, only 41 were resource programs, the ones a cost effectiveness test even applies to. 38 came in at under a TRC of one, and half of those are already closed, closed to new participants or pending closure.

Three cleared one point o in 2025, and those three programs account for more than two thirds of the spending across all 41. That is not a portfolio out of control. That is a portfolio that is being actively managed. The rest of the list is non resource programs, which no cost effectiveness test applies to. They were never designed to deliver savings directly.

They are the programs that Luana touched on, workforce training, evaluation and verification, the work that confirms savings are real, and financing that makes projects pencil. It's about a third of the portfolio spending, the overhead of any business. You wouldn't shut down finance for not generating revenue. That was never its job. And it's working.

The statewide portfolio as a whole with all those costs included is cost effective with the TRC over one in twenty twenty five. Second, it's easy to hear efficiency programs and think nice to have. That's not what this is. Every unit of demand we take off the system is generation, transmission, and distribution the rate pace never has to build. As this chart shows, efficiency is the lowest cost resource on the board, well below every supply side option.

That's why it's the most undervalued affordability lever the state has. Less grid investment lowers the bill for everyone, not just participants. Electrification spreads fixed cost across more units or one real chance at lower rates. Affordability, decarbonization, reliability. This portfolio carries all three at once.

I'm gonna give one quick example. Santa Barbara Unified replaced aging gas water heaters with heat pumps through SoCalREN. As an implementer for that program, we can tell you, they told us the program was the only reason the district completed the change outs. Over $300,000 in total system benefit, a TRC over one, and zero out of pocket for the district. Third, the recommendations, and I can expand on these in discussion.

First, change the total resource cost test. It counts the customer's out of pocket cost, but not the customer's bill savings, And it scores the higher efficiency equipment worse than the lower. You'll hear about this from Spencer in a moment. We're not asking for a friendlier number. We're asking for one that points programs in the right direction.

Second, use the same ruler on both sides of the meter. Efficiency savings get discounted by a factor that other resources don't face. Solar, storage, demand response, and the publicly owned utilities all count savings differently. Same grid, different math. And where the underlying analysis hasn't been done, efficiency gets the placeholder.

Third, finish defining success for the programs whose primary purpose isn't direct energy savings. The commission directed administrators to propose those metrics. They filed last year and the metrics that will govern the twenty twenty eight portfolios are being set right now. We're at the table asking for it. And to highlight something that is working, the four year budget cycle is what makes competitive solicitation, multiyear contracts, and bulk procurement possible, and those are what produce cost effectiveness.

To close, California is leaving energy savings on the table because the rules for measuring them are out of date. Every efficiency dollar is a dollar rate payers don't spend on the grid, and this portfolio works as a whole. Carve it up for parts and it delivers less. Fix how we measure it and it goes from good to great. Thank you.

Thank you. Mister Lipp.

Hi. Good afternoon. Thank you for the opportunity. I'm Spencer Lipp. I'm with Cal TF staff.

I just wanna make clear that the the views expressed are of LTF staff and not the LTF members and the LTF policy advisory committee. Can you can we put my slides up?

I just wanna make clear that the the views expressed are of LTF staff and not the LTF members and the LTF policy advisory committee. Can you can we put my slides up?

Yeah. Thank you. Cal TF creates data-driven solutions to streamline, reduce costs, and create statewide efficiencies. We do this through the California Technical Form, which may include working groups and subcommittees. And really, we're bringing different perspectives to inform those solutions. So you need those different perspectives to provide a balance between some different objectives of folks to find the right solution in the middle. We are guided by our Policy Advisory Committee, the PAC, not to be fused with the cost-effectiveness metric. The top row there, it's-- oh, I didn't-- sorry.

I didn't move the slide. The top row there are our funders, and the first four provide funding through the PPP Program, and then LADWP, a public utility, also is a funder, and that PAC really guides and oversees our work. One of those solutions was the eTRM, which we maintain, and it's the database of record for common energy efficiency values, savings, and costs.

Prior to the eTRM, each utility was doing independent engineering analysis, resulted in different approaches, data sources, and values for the same measure. So you had four different utilities potentially doing duplicative work in the Central Valley where PG&E and SoCalGas and NSEE kinda combine in there. You could have somebody across the street having a different savings value for the exact same measure. The eTRM eliminated that overlap and inconsistency and now has broad use access across the world.

So, let's talk a little bit about why the metrics matter. The metrics help us to define the investment decisions of energy and around energy efficiency programs. So that's the measures offered, programs offered, customers served. It defines for the ratepayers, who are paying into this, what is a good program. There are multiple options to do this. We're gonna talk about them today. Each one really aims to answer different questions.

It's not that one may be-- one may be better in one situation and another one better in another situation. And it's really important to understand what the objective of that you're trying to get out of the energy efficiency programs in order to find the appropriate mechanism. The National Standard Practice Manual, which identifies a process for determining cost-effectiveness, the first step in there is to identify your intended outcome for the metric.

Now might be the time to reflect on what we need from EE programs. We've been using TRC for a long time. Things have changed. Maybe TRC is not the right metric at this point to move us forward to the grid that we wanna have. So TRC is the most common primary metric across the United States. Sixteen states use TRC as the primary metric.

But an equal-- actually 17 use other tests, such as the PAC and other tests, as their primary metric. So while it is certainly the most common, it doesn't-- it's not isolated as the metric to use. You see the chart there? That tries to simplify a very complicated calculation and inputs, and it's meant to try to show a little bit of the differences.

The supply-side benefits, while it's shown to be equal, there are some nuances and differences that we can talk about here as to what is, is not, and should be included in there, but the main difference between those two metrics is the bottom row, which TRC includes those customer costs. So that's where, as Laurel was talking about, a higher efficiency equipment that may cost more may often result in a lower TRC than a lower efficiency equipment. There's some slides in the appendix I'm not gonna go through that have more detail on that aspect. But the PAC also includes the utility incentives on that side.

So there is a balance. There is a balance. Okay. We've touched a little bit on total system benefits. It really provides an equivalency for gas and electric fuels and different DER strategies. So it's that monetary value that was referenced earlier. It allows us to claim savings for grid flexibility, which is critically important. We have more and more equipment that is mixing these different DER strategies with load shifting included with efficiency, and so being able to categorize those and claim savings in a common way is critically important. Customers don't see the difference.

They don't see the difference between that heat pump water heater and those controls that take it off the peak, the 4:00 to 9:00 period. They don't know the difference. Right now, we bifurcate those into different programs, but the TSB does allow us to combine those together. But there are are other policies and perhaps outdated policies that hinder the use of TSB. An example of that is just the definition of energy efficiency, which requires a reduction in electric or gas usage.

But when we go to TSB, you may have a really great-- a really great project that has positive TSB, but it may consume a little bit more energy at that 2:00 to 6:00 period when energy is cheap. That currently would not be eligible under today's policy. The final metric is Net-to-Gross Ratio that I'm gonna talk about, and it attempts to define how influential was the program on the actual grid savings.

There are issues with the way that this ratio is-- this metric is used in terms of inconsistency, subjectivity, and applicability that may warrant consideration of changes. I'm not gonna go into the details in this opening where we certainly can talk about those details, but we do have two possible considerations to help, and this involves increasing the benefits that programs are able to claim.

Currently, we heard about codes and standards and the programs, and the programs are limited by what is above the Title 24, the codes and standards. That's what they claim despite maybe doing all that work to influence the customer to do that project. Some of that-- some of those savings automatically go to a different program, and perhaps that is a mechanism to reward the program for all the savings that they're actually impacting on the grid.

The other is just how we use the Net-to-Gross Ratio. It's used to fractionally reduce those benefits that-- those benefits that the programs claim and perhaps shifting the use of Net-to-Gross as some other jurisdictions do to only inform improvements to the program and identify places for improvement and inform those improvements.

So just to recap, modification to cost-effectiveness is a high priority in the community, and really, we need to define our objectives to drive the cost-effectiveness metric, not the other way around. We shouldn't have a cost-effective metric that we're asking the implementers and the customers to find a program that meets that, especially since our-- since the grid has changed so much.

And those programs getting credit for all the savings, that's really a discount of the benefits that are able to be claimed for the programs. So, for all that work that they do, there's no increase in program costs in order to do that. It's how we count the savings for the different programs that matters, and that could greatly increase cost-effectiveness. Thank you. I won't go through the appendix, but certainly open to questions and comments.

And thank you. All right. And then our last speaker is Ms. Lyser.

Good afternoon, Chair Petrie-Norris and members of the committee. My name is Shelly Lyser. I'm the program manager over the Electricity Pricing and Customer Programs Branch for the Public Advocate's Office. Our office represents utility customers across electricity, natural gas, communications, and water, and with a focus on affordability, safety, and reliability. Thank you for the opportunity to present today.

And I see my slides are up. Great. So energy efficiency remains an important part of California's energy and climate strategy. Effective programs can reduce energy use, lower demand on the grid, and help avoid other system costs. At the same time, these programs are primarily funded through charges paid for by utility customers.

That funding comes at a time of real affordability pressure for customers. California's electricity rates have nearly doubled over the past decade, well beyond inflation. Rising rates also hinder progress towards the state's climate goals. For these reasons, ratepayer funding for energy efficiency programs should be guided by one basic principle. Programs funded by ratepayers should produce greater ratepayer benefits than costs.

In other words, they should help affordability and not drive rates higher or have a return on their investment. So, next slide. All right. So, we've done some analysis on the budgets that are associated with the current energy efficiency programs that did not meet these cost-effectiveness thresholds. In other words, these programs cost more to achieve energy savings than procuring other clean energy resources.

The dark bars on the chart show the annual budgets authorized for programs that have not been proven to be cost-effective, and the yellow trend line there shows their share, their percentage of the total energy efficiency budgets. So you can see those budgets rose from approximately 270 million in 2021 to $557 million in 2027 or a 107% increase over the seven-year period.

So important context here as we're looking at this data is that California-strengthened building codes and standards have delivered incredible dividends. For example, we have more efficient building designs, broad availability of highly efficient lighting technologies, and this means that California has the ability to improve its overall energy efficiency without requiring ratepayer-funded programs. Our point is not that every program below a particular cost-effectiveness threshold should automatically be discontinued, as a program may serve a legitimate public purpose.

The question is whether utility customers should be required to fund it through their bills. All right. So looking at where the funding goes, this is overall energy efficiency budgets for 2026, and as you can see, there's 87% program costs roughly if you're grouping together implementation and incentives. And then if you group together the kind of overhead categories, it's 17%. But looking at a simple administrative cost percentage may not tell the whole story. So some of these costs that are categorized as direct implementation will not support activities that are designed to produce energy savings or reduce demand.

For example, career development programs currently funded through energy efficiency budgets have implementation costs but they don't necessarily directly result in quantifiable savings in a given program year. So this leads me to four high-level opportunities for reform that we wanted to present to the committee today. So from the ratepayer perspective, here are four options that could help.

So first, apply consistent performance standards across programs that are paid for with ratepayer dollars to measure whether the benefits to ratepayers equals or exceeds the costs of a program. Second, projected benefits should be compared with quantifiable results so that future ratepayer funding reflects demonstrated program performance.

Three, energy efficiency and other demand-side programs should be coordinated to deliver increased savings, decarbonization, and grid reliability benefits. For example, a heat pump water heater can be programmed to reduce energy use during times of grid stress. This can also help reduce duplicative administrative costs across different programs.

And finally, before approving ratepayer funding for a program that repeatedly fails to produce measurable benefits for ratepayers, it should be determined whether ratepayer funding should be phased out or the program can instead be supported through a more appropriate funding source. So overall, different administrators can serve different customers and use different delivery models, but all ratepayer-funded programs should be subject to a common expectation of performance.

Where a program serves a worthwhile purpose but does not provide sufficient benefits to utility customers, it should be supported through a more appropriate funding source, not through customers' utility bills. California does not need to choose between energy efficiency and rate affordability. Well-designed, effective energy efficiency programs can advance both. Thank you for your time.

All right. Thank you, and thank you to all of our panelists. I know I have a bunch of questions. Are there questions from other committee members before I jump in? Assembly Member Irwin, did you have?

So I just wanna be clear that the energy efficiency programs-- like, everybody agrees that it's 1.5% of the bill, right, with this slide?

Yes. I believe I did--

Oh. Yes, sorry.

Okay.

Does anyone disagree?

Just roughly, it's the revenue requirement, so it's a good proxy, but not quite the bill.

Okay. I just wanted to clarify that. So I-- you know, I think that the chart that--I guess it was from the PUC-- the-- it's still kind of disturbing when you look at the-- and I know there's all sorts explanations for implementation, but when you are-- let's say for residential, only a third of the cost is going to an actual rebate, and so maybe there's a lot of money that needs to be spent on implementation.

But wouldn't it be better to look at programs that have much lower implementation costs? Because most folks would look at that and say that's not very cost-effective to have that much going to administration and outreach and evaluation and implementation.

Let me just ask a clarifying question to-- did that include direct install?

The--

Or is that just incentives?

The direct-- the rebate incentives were separate bars.

So let me speak to that, Jacqui, because I think-- you know--

That that-- you know, this chart. Yes.

Because what we see in energy efficiency, it's not just rebates. I would-- you know, if you want a cost-effective portfolio that you just do single rebates and we're giving, let's say, all Californians the all fixed standard rebates, then sure. That would work great on a homogeneous type of state. We are not that. Californians are not homogeneous, right?

Now, what isn't included in there is all those equity direct install measures. So what we do is also provide no-cost upgrades to, let's say, customers who could not even afford a project with a rebate, right? So let's say I need a new refrigeration, and I'm gonna be a little bit-- you know, tell you a little bit about some studies and some examples of customers that we've worked with.

You know, one of the things we do find, especially for small commercial businesses, is that these small bodegas or local grocers, what they do on replace on burnout--maybe they have a refrigeration equipment that hasn't been working--they will go out into the third-party market and buy an old refrigeration equipment that's cheap and easy and replace it. And what they're doing essentially is contributing to their energy burden.

So what we come and do as local governments, regional energy networks, utility providers of energy efficiency for those type of customers and low-income or DAC or rural communities like City of Lindsay, even Mammoth Lakes--I know I'm gonna-- I can go into that--but we provide them these incentives to help them replace them into new refrigeration equipment.

So that equipment upgrade will go to them at no cost and can have significant impacts on their bills. I'm talking about cutting their bills in half. Because what we do know about refrigeration, what we do know about HVAC usage is those type of measures contribute significantly to the energy burden. So what you might not see is it's not just rebates. It's other things.

In addition, what you probably don't see on the residential-- and hey, I'm a single mom with two kids. I have-- I live in a DAC. I have a home that was built in 1920. I have a beautiful big window that I refuse to replace, but, you know, I don't know a lot about retrofitting or upgrading my home and so I seek programs to help me.

And that technical assistance that's provided and may not be captured in there, I would otherwise not know, like, okay, well, what windows do I need to apply to my home? What type of measures like a tankless water heater, or if I did get a mini split heat pump, how do I know where to go? Or who do I know to find and what rebates are available? All of these support activities help to contribute to get me to actually install that project. Or if not, I would just otherwise be like, okay, well, let's hope and pray for the best and turn off your lights and, you know, keep as is or status quo.

So I don't think all of our data captures all of that in one particular graph, but I do believe there are metrics out there that we need to convey more regularly, not only to the CPUC, but to the state about these, you know, performance metrics that are actually contributing to the community's growth and well-being and combating energy affordability. And they exist. They're data points, and we need to provide them.

Oh, and thanks, Lujuana. I did wanna also say that I'm assuming for that rebates, it's-- beyond that, there's what we call direct implementation costs, and that goes to what Lujuana was saying around the services that are really essential to get to the replacement. Also, you know, I mentioned earlier things like financing, technical assistance, et cetera. But I just wanna highlight a program Claire raised earlier, the Home Energy Report.

That doesn't provide a single incentive or rebate, and it's one of your most cost-effective programs and of value. So it-- just to show that balance, programs to provide value and have a high TRC in this case don't even need to provide rebates. That support can come in other ways. So I wanna highlight that. And so it's about the services that the customer receives, whether it's financial or other.

Got it. Does anybody else have any comments? All right. Thank you.

I will say I am still very confused about the math, and I think that that's a really, like, important foundational piece for us to all get alignment on. And I remember when I first started asking some of these questions, like, two years ago, I was surprised-- I'm still surprised that it's so confusing because it feels to me that we should be able to have a definition of-- I mean, the definition of cost is very-- should be simple. I mean, it's simple. It's like the number of dollars you're taking off of people's bills.

That to me is the cost. The benefit-- I totally agree that there are grid benefits to energy efficiency. We should be able to quantify those and agree on what that benefit is. It doesn't feel like we're all agreed on the math. Is that correct? And can you just explain to me, like, what is the math? Like why-- I guess, why does there have to be a complicated calculation for the cost instead of just the cost is how much it's costing repairs? I mean, I'm asking-- I guess I'll ask the PUC first to help explain. Let's just talk about the cost piece and then let's talk about how do we calculate the benefit piece.

Yes. Thanks for the question. So, you know, there are different metrics here that we've been talking about today. I think if we're-- we've been talking about cost-effectiveness, and that's measured by the Total Resource Cost test, and that is a test that's from the Standard Practice Manual, as Mr. Lipp was saying earlier, and that lays out very clearly, you know, what are-- what's in the numerator, where are all the benefits, and then what are all the costs.

And so, I don't think there's any disagreement as to the categories of cost that go in the denominator of the TRC test. I think maybe the question at hand is, some folks are saying there might be a different metric or a different test that could be the primary test instead of the TRC test, but the costs that go into that are both the Participant Cost test, so, like, the cost to the customer, cost to the grid, cost in terms of program administration. The TRC is a macroeconomic test that looks globally at, you know, what are the benefits to the grid, taking into account a wide set of factors, but they're very well-defined.

But isn't that more the benefit or-- like, the cost is just literally, like-- I gave-- you know, we spent $795 million as the State of California. Like, why is that not the cost?

So, I think you're saying why should the cost not be strictly limited to what the ratepayer funded collections from the PPP?

Well, for purposes of us thinking about are these programs-- do these programs merit funding from California ratepayers, shouldn't that be the way that we evaluate-- make that assessment?

I think that, you know, it's worthwhile to think about what are the different perspectives and ways you could slice and dice it and what is the most appropriate. We have two rulemakings open right now. One is the business application rulemaking and the other one is our rulemaking looking into a a different set of policy issues. And these issues are scoped into the proceedings, so cost-effectiveness generally, and if we wanna relook at that and how we apply the test to our energy efficiency programs, that is scoped into the proceeding.

Parties have put some ideas already in the record in the application proceeding, and so I think that, you know, we welcome a lot of party comments and a diverse array of perspectives on this because it is really complicated and it is very much worth our time looking to see if it's worth refining anything.

And I can understand why the benefit might be. I guess I feel like we're kind of over-- I feel like we're sort of overcomplicating this. I don't really know why it takes, like, proceedings to figure this out, but, yeah. I don't understand why it's taking us, you know, months or potentially years to get to the bottom of these assessments.

I CPUC can is possible. Can I

Yeah? Go ahead. I actually wanna hear other people's because I thought I I understand that the benefit calculation is more complicated, so I would love to hear others' perspectives on how do we accurately calculate the benefit for these programs.

And and to your point, if you I mean, if you go to the a reference appendix, which was printed not on the screen, I did list there the 2025 spend and the TSB, and you can see that the spend on in 2025 for energy efficiency, not the budget, but the spend, was $794,000,000. The total system benefit, which is that complicated piece you just highlighted, it was 921,000,000. Yet, the ratio TRC was just over one.

But we can we all know if we were to put those over each other, it would be much more than one. So just that just highlights the imbalance you can see, and that's because the costs right now include participant costs.

That's not on you know, that's what the person spent to install a measure, for example, that's being included. But those benefits experienced from that participant is not on the benefit side. So it's an imbalance. Does that if that makes sense.

Okay. So alright. So let's let's can we dig in a little bit then to, like, what is and, again, I'd love everyone's perspective because I think understanding what the math is today, maybe what the math should be tomorrow, I think is just really, really important. So what can you just help us? I know that there were a couple slides talking about it, but, like so I think yes.

So total system benefit, dollar figure that represents the life cycle energy capacity and GHG benefits of energy efficiency activity in California using avoided cost values. So help us understand, like, what does that mean in terms of, like, actual how do you calculate that? And then where do you see areas where that's not accurate?

Be able to get into the calculations. I defer to the technical expert, but I could speak to some recommendations. But you start. I apologize.

Yeah. No no problem. So, you know, that metric, I'll try to I'll try to just boil it down and simplify it. It's complicated. But that metric attempts to understand the cost of the cost to maintain the grid.

And so there's TMD costs, there's avoided capacity costs, there's some environmental costs, There's things like that. And so and so that that that's a dollars per KWH or therms value. The imbalance happens with the TRC when you include that measure cost, the participant cost that they're paying for that widget, and not including all of the benefits from that from that in the numerator from that energy efficiency. And so that's where the balance that's where the imbalance happens.

And that same that same National Standard practice manual indicates that you should find that balance so that it's so that it's so that it's it's a ratio that you can Right.

So you either need to include both the participant benefit in the numerator and the participant cost in the denominator or exclude it from both the numerator and the denominator.

But those participant benefits are very complicated and change based on regionality, types of customers, the type of measures. So, like, you could see production benefits, that's one of them. You could see, you could see health benefits, that's another. And so, trying to actually quantify those is will take another ten years in a proceeding, and we might get it right, or we might get it close. Right?

Like so, you know, to me, and this is just my opinion, the easiest way is to just is to just exclude Right. The customer side altogether.

And I think yeah. Okay. So I agree with you on that. Does everyone agree with what he just said?

Wait a minute.

I was I was just gonna add one more thing to help with the total system benefit side. And when I explain this to folks, I say it's the energy use, like, Luana's example. So it's the energy savings of that device over however many years we agree it can remain in service, the effective useful life, and then where and when on the grid those savings will occur. So it's more than just, we'd say, like, the gross savings of that.

So it it really company companies more than just, yeah, I've saved this many k w h.

Right.

It's like the net present value of those savings over time.

Yeah. Right. Yeah. And so it's it

can be quite large for certain measures that are gonna be in place for twenty years and see those savings.

Got it. Yeah. Okay. So alright. I think I understand.

So it sounds like perhaps with the exception of the PC, everyone thinks that the TRC or whatever it's called, the TRC

Yeah.

Should exclude the program participant costs.

Public advocates office supports use of the TRC, including the program or the participant cost.

Okay. So tell us why.

So if you take out so that there's the alternative. There's the total resource cost test, comparing cost and benefits, or you can use, you know, other other types of tests like the PAC. And if you exclude the participant cost, I mean, there's a lot of ripple effects from that. One that we see, which concerns us is that you could be steering the portfolio towards, like, the most expensive options.

Like, if there's a $1,000 rebate for a $50,000 appliance that could get just marginally better energy efficiency compared to, like, a you know, hopefully, appliances don't cost $30,000, but a $30,000 appliance, the pack just wouldn't show the difference between the two costs.

So it it masks a lot, and so we don't we've historically been supportive of the CPC's approved TRC.

Can I just make a couple of comments on the TRC? And, you know, we're I just wanna say this is a SoCal REN position, and not necessarily my fellow REN positions. But, you know, one thing we we have advocated, madam Chair, is that, you know, we do believe in accountability. The TRC has been and I'm gonna age myself. Nobody laugh.

Has been around for longer than I've been in the industry, and I've been in the industry twenty one years. It's utilized across multiple type of distributed energy resources. So, you know, solar demand response, so different. And I understand, you know, the position that the California Public Utilities Commission, as an oversight public agency, they need a tool in which they can provide oversight and accountability metric right down to their administration. As a local government, that is their fiduciary duty.

And so, you know, I think as the CPC has in the past advocated that the TRC be utilized for specific programs, which is resource acquisition, that means programs that actual claim savings, and that's their primary objective, like rebate programs, should continue. But what we do need to understand is that TRC cannot be applied to equity and debt type of programs because it inherently or regressively appears that they are not beneficial to one, the industry, the system as a whole when they are. Right?

So I think that is really the difference. Right?

We really need to understand that programs serving low income or disadvantaged communities may have a higher per unit cost. And thus, if you apply the TRC to them, this, you know, metric will disproportionately not look well, but still have the same benefits that we can't capture. Like, we can't capture all the time. Actually, we're trying to work to capture data and quantify, but it's gonna take a long time. Like Spencer said, health, comfort, and safety.

But those things actually do occur when energy efficiency is applied, especially those hardest hit by energy affordability. So we're looking at, let's say, multifamily residents who are struggling with rent increases. And so really thinking about how do we drive down their unit so it's a high performance unit, meaning most efficient, and those type of benefits. And then, additionally, you know, as we face climate risk ongoing, meaning higher and higher temperatures, you know, we're gonna see more and more HVAC systems installed.

What do we do with that?

How do we ensure that those equity and customers are installing energy efficiency equipment? We need these programs. And if you apply the TRC onto those type of programs, what you will see is that they look ineffective or nonperforming because their TRC is so low, because we have to provide so much assistance to those type of participants. So I don't think that there is a one solution, and, unfortunately, I wish we did have that for you all.

But I do think under the CPC guidance, they have provided avenues in which one, TRC applies to resource acquisition programs, meaning programs that are rebate based and really for affluential or moderate income constituents.

And then there are proportion of programs that are equity and focused on those most under resourced. And those are not obligated under the TRC requirement, but they still need to be held accountable. And working with the CPC, we are identifying what metric we can utilize to identify is that equity program performing and affecting that community. And we should be held accountable for that. We should be held accountable for our our market support programs actually supporting the market.

And we need a metric tied to that that says that. And so we're working together collaboratively with the utilities, CALPA, implementers, and other stakeholders.

And I think the PAO wanted to comment.

Yeah. I'll just directly underscore something really important that miss Medina said. So seconding her point, about the TRC having a being a consistent metric to compare across demand side programs, I think that's a really important point. So I'm I'm grateful that she raised it. It's when you're comparing, you know, the benefits of demand response versus energy efficiency versus other

types of procurement, like procuring more solar or more wind. That's the common metric that tells you which is the cheapest for the system to reach those clean energy goals. So having using TRC for energy efficiency and used in other demand side programs really helps get that comparison and that consistency.

Yes. Yeah. And on that point, but there is inconsistencies which I didn't go into in my open opening statement around how those DERs use the net to gross, which is a component that goes into the TRC. So it's not always equal between the DERs. And I also wanted to say that, you know, going back to what do we want out of the grid, if we want electrification, then clearly the the the TRC is a lower metric than some alternatives like the pack.

That high efficiency equipment, that's another that's another one I that I opened up on. And the reason is that as you get higher higher efficiency, oftentimes, those costs for that equipment outweigh those benefits that are gonna be also in the numerator. And so the TRC goes down because you're getting you're getting the you're getting the the the best in class. So oftentimes, the the price rises faster than the incremental savings benefit.

And so the TRC actually goes down if you if you look at the at the appendix.

And then the last thing that that I wanna point out is is what we call accelerated replacement or early retirement. And so, what that is is a a operating piece of equipment that could be retrofit, is is retrofit. That's the early retirement part. Or you wait for it to actually fail in say, three, five years. Getting those equipment off the grid, I think, is a good thing, an efficient equipment.

Let's get them changed out sooner. The way the TRC handles the cost of that of that the participant cost of that drives the cost effectiveness down for replacing equipment early versus waiting for it to fail.

This is this this is this TRC impacts on high efficiency equipment.

Yes.

Slide you included in the appendix. Correct. Can you just explain that math to us

so that we can understand? So you see there the difference, the TSB, for the 14.4 SEER. 14.4 SEER is a lower efficiency equipment. It's still a good a good efficiency equipment, but it's the lowest tier that we offer. The higher efficiency equipment is 17.3 SEER.

So you see that incremental DSP difference, of I think this is on a per ton basis, but, anyway, of about what $42 approximately. So the cost of that equipment is greater than $42 So therefore therefore, that TRC must go down. Because because the cost of equipment increases increases more than the $42. The $42 difference is in the numerator. So if you think about if you think about it, it's the benefits over the costs.

You so this is making the point that you were making earlier where the additional cost is in is calculated, but the benefit is not being fully reflected.

Right.

The benefit is is reflected. It's just the benefit the benefit isn't as isn't as high as the extra cost. The incremental benefit is lower than the incremental cost. You don't have that same that same situation with the pack and and likely some other some other cost tests.

Alright. I does anyone? I have a couple other follow-up questions, but I'm gonna allow miss Calderon to jump in.

Yeah. I I greatly appreciate all of you being here. I don't understand why this the math has to be so overly complicated. I I would be hard pressed to explain how this works to any of my constituents. Like, if I were asked at a town hall or something, and I should be able to explain this.

It shouldn't be this difficult or complicated. So I guess, you know, I appreciate you you digging in because I feel like I need

to a deep dive

on this, like, half a day or something to be able to really figure this out. We've got all these great slides that you've worked so hard in putting together, but I I'm just a little frustrated. And but I appreciate all the work you're doing. I'm more frustrated that I can't there's no simple way to explain it to me. And usually, I get things pretty quickly.

So but thank you for being here.

Is can I respond to that?

Yes, please.

Yes. I've been in the industry for twenty years. I am still learning things every day. And and so I I sympathize with you on that one. It it's tough.

And when I talk to people and try to explain this, you know, in my life, I I hear the same thing. So I I did Wanna Kinda tie it back though. I think it is it's just you can explain that it's imbalanced right now, and I think that's the simplest way to think about it. And I I do Wanna Kinda tie together a couple points made here because a lot we we kinda jumped into a lot of things through this discussion.

So first of all, EE is treated differently than other demand side management programs.

The math is different for different programs. It would be great to have same math across, so we gotta get there. There are two proceedings working addressing this where it's scoped right now in the regulatory process. And just right here talking through and and recognizing how complicated it is, I would recommend that going to something like PAC, for example, is not legislatively mandated because of all the nuance and recognizing it's scoped.

Instead, I would recommend something like a timeline to get to an end state where we do have shared math and integration because that's where we can get into all the nuance and try to clear that up.

But I don't know if that's gonna happen through moving just to PAC because the reason I'm not gonna sit here and say I think PAC is absolutely the solution is partly because what, you know, Shelley Miss Leiser said about why she was talking about TRC and making those selections.

Well, going to TRC does keep into account from the customer perspective that cost, but the customer is not seeing necessarily all the benefits and being able to really emphasize some of those other benefits that the customer is seeing. So I just wanna highlight there's, I think, arguments and value to thinking up both adjusting both sides of the equation, but I don't think that's gonna we're gonna solve that today, unfortunately. But there are two proceedings. I think a timeline could be set.

We've been talking about it for years. Years.

Let's just get

the timeline and force people to make it happen.

So

Yeah. No. And I really appreciate those recommendations. And I guess also just to, I guess, pull back a little bit and set context. You know, I think several people made the point that these programs are a small slice of the the utility bill, which I think we all recognize.

Now, we understand there's other, very big fish to fry when we're trying to tackle affordability. That being said, when we look at the fact that California families are spending $795,000,000 a year on these programs, we need to be able to go back to our constituents and say, yep. These are good investments, and your money is being well spent.

And so I think it's very, very important for us to get to, yeah, map that we think accurately reflects the the true cost of the programs and accurately reflects the true benefits of the program so that we can collectively make that assessment and collectively communicate that to the California families who, you know, are funding this stuff as part of the utility bills that they're paying. And I know Mister Rogers had a a question.

I appreciate it, Chair. Originally, I was gonna ask some questions about inputs into the equation, like stranded assets and other things. And I'm I'm watching this discussion thinking that that's probably not actually a good use of our time given some of the disagreements. So I I think I'm gonna kinda just make a statement about how this discussion comes across to me and open it up for you all to disagree with me, tell me where I'm wrong, or to help guide it a little bit.

But it feels like part of the challenge in understanding this equation is that we have different objectives or goals that we are trying to accomplish that are sometimes very different that we're trying to capture in one analysis or one equation, where if you think that the energy efficiency programs should be used to drive innovation and create emerging markets that might lead to more reduction that could potentially score on the scale better in the future but need some upfront cost, then you might think that it's unfair the the way that we're currently analyzing it.

If you're looking at how do the most quickly decarbonize, you'd put many of these programs in wealthier communities, but then you leave behind the equity conversation and in particular rural communities and the assistance part of the equation.

But it seems like we have an equation that's trying to capture what amounts to a split brain from the legislature, frankly, on what our primary goal is and how best to evaluate these programs. So I'll pause there and see if anybody wants to tell me I'm wrong.

No. I totally agree. I absolutely agree to Assembly member Calderon's comment. So as working for LA County, you know, I mentioned I work for three of the four utilities. Didn't have the pleasure of working PG and E, but I would have.

You know, I have to convey all the time to the LA County board of supervisors or their deputies and, you know, or even my LA County leadership. And trying to convey the work that we do is often challenging because as you noted, Assemblymember, trying to fit all the work, the benefit, the cost, the challenges, the opportunities into one metric can often skew what the true value or cost is. Right? So you're trying to fit everything into the small sliver.

But I think and I'm gonna bring it back.

I think that there is something there that the CPUC is trying to do and identify across their portfolio metrics. So it's not gonna be a single metric. And I'm gonna pass it over to Lucy.

Yeah. Thank thanks for that. I just wanna point out that I agree. I think the CPC has actually recognized over a series of many decisions, you know, from the early two thousands up to today that energy efficiency really is about having a diverse portfolio. Just take the fact that the cost effectiveness, we've been talking about the TRC, that's applied at the resource acquisition.

So it's the part of the portfolio that's designed to generate savings. It's it's applied at that portfolio level to encourage, innovation and new technologies to be experimented with. So it's not program by program, but it's across that portfolio. And so you can have one objective and goal, but different routes to get there. And I think that there are a number of steps we've taken to really emphasize that diversity is important in the energy efficiency space.

We're not sure it's happening. The robots have taken over. Alright.

And then I'll and then I'll say the other the other part of this conversation, that was very, palpable for me as well is the interplay between policy development policy development and these incentives. And so I think the PAO, I think, mentioned the interplay between or the question of should the efficiency programs be on the bill for everybody when you've also seen corresponding building code adjustments that have been perhaps more effective?

It's worth noting the legislature just paused building code adoption for five years because of the affordability side of the equation around, home creation, for housing production. So the affordability conversation and that interplay in different policies is impacting whether this program is viewed as effective in some ways. There was a a slide that showed that the switch to the LEDs was a huge chunk of the incentive up until the policy change of we're no longer going to have these LEDs.

So it can lead in a way, I guess, I'm trying to get to where even less efficient programs can lead towards policy acceptance that then can further the ultimate goals from the legislature as well. So not sure if anybody wanted to comment on that.

Thank you. I'll just say that on the LED example specifically, you know, because the codes and standards changes occurred, those benefits were seen by all customers. And it didn't you know, the adoption curve had already expelled to the point where it didn't need a $50 rebate anymore. People were buying LEDs. They weren't buying induction anymore or fluorescence.

And, I think our codes and standards programs that are currently funded by PPP programs do support the all the Californians. They don't have to participate in a program to see building codes advance and have a more efficient home to live in from the get go and not have to retrofit it down the way and get a rebate. So different end uses, different cost tests for those programs than than what we've been talking about, but I appreciate all the comments. Thank you.

Yeah. Yeah. And I actually I that's how I see many of these incentive programs is they should reach an inevitable point where the market has caught up, has caught up to what we are trying to accomplish. And perhaps that calculation is then skewed because the overall effectiveness of the program is not nearly what it was at the beginning because we've done a such a good job of adoption. The last thing that I'll I'll mention just kinda defending a little bit some of the the programmatic budgets.

And I know, Sonoma Clean Power is not one of the CCAs that, utilizes them or was not listed as one of them. But one thing that we did do on that CCA board was create the advanced energy center, which if none of you have had an opportunity to see it yet, go see it. It's in Downtown Santa Rosa.

It's literally a building you can walk through if you know nothing about energy efficiency or kind of emerging technologies, and you can see an induction stove that is being used. You can see what a heat pump is.

You get a list of what your incentive programs are. So even if you know nothing about energy efficiency, you have experts and people who are available to help you in being a part of climate solutions without having to do a whole bunch of research. They have it as a one stop shop. So sometimes the actual implementation of these strategies is, in effect, the most effective part of these strategies. So I just wanna put out a a little bit of a defense for that as well.

I'll just add to that that it's true we haven't been talking about any of the elect to administer CCAs, today. There would be a whole another category of PAs that that do offer portfolios and and have program offerings for their customers that, weren't captured in these slides, I don't believe.

But can I make one last comment? But to your example, like, if we apply the TRC to that type of product, it would probably be zero because there's no claimable statements. But walking into that center, it's gonna drive change. Right? I'm a if I was a Sonoma County resident, it would drive me to say, I know how what I can do to my home and how I can make it high performance.

So with otherwise without that investment. Right? Yeah. It's making change. And so I appreciate that example.

Even just shifting the mindset. Right? Watching professional chefs cook on an induction stove without having to outlay the capital to put one in your own home and see if you like it really is an effective way to sell the technology. Yeah.

Yeah. That is a great point, Luana. And I'll I'll just comment on the fact that codes and standards are fantastic and, look, it's part also along with energy efficiency, why we are where we are. Programs under an energy efficiency also help with compliance, which I believe you're probably aware is challenging with codes and standards. And so that's also funded through the work that is happening.

And, the regional energy networks do this work, and they also don't get any credit as far as the TRC. So just again to highlight something that's very important to the portfolio. And I energy efficiency is currently first in the loading order. Maybe there's a future where things change with the codes. We don't need as much, but we need to think about these integrated portfolios.

Demand side management is going to be very important. The time we use energy, and all those other interacting pieces as we move forward. And and, you know, I don't think we knew 15 ago where we'd be today. And so the investments we're making in these programs today is really where we're going to see ourselves in fifteen years. So I think that's important to highlight.

Yeah. And so I didn't put it in my bio, but I'm I'm the Chair of the Sonoma Clean Power Community Advisory Committee. And the Advanced Energy Center is fantastic. And they're right. You can't you're not able to claim savings unless you do a bunch of surveys and figure out what people did, which is probably not a very good use of of people's of people's of people's money.

But back to the title '24, it's fantastic. It creates a floor. It doesn't say when we talk about LEDs in 2020 or 2021, it doesn't say that all LEDs are off the table. I designed programs that specifically had LED measures in there to go above and beyond title 24.

And, to my point in the opening, when I do that and I get somebody to make make that investment to go above and beyond title 24, I only get those incremental savings above title 24 even though I influence them to to do something that they that they wouldn't have done.

So, so there's there's a aspect of Title 24 that is curtailing some of the benefits that some of these programs are able to claim. There is a without getting too complicated, there is a mechanism to claim partial benefits there. But it's still it's still not giving adequate credit for the for that program work that was done.

And then my my last comment, and I'll kick back to you, Chair, is I just want to appreciate miss Frostchild's chart on page seven. I think it was IPCC, I think, that put out a a report about a month and a half ago saying that even still today, the most efficient use of dollars for addressing climate change is energy efficiency. So that that's what this chart ends up showing. So thank you for that.

And I actually wanna dig into your slide number 9. I know while you've noted that your three recommendations are all currently in process at the PUC, you've mentioned a couple times the need for the shared math in both sides of the meter and the fact that these programs are being valued differently than, like, some of the demand side programs. Can you just say a little bit more about that?

Yeah. And and, again, I want Spencer, you can chime in as well. So right now, energy efficiency is it's really let's talk about the benefits side, especially, where we talked about all the inputs. You talked about net to gross. Net to gross isn't which is, you know, eliminating the free ridership concept where folks would have made that investment anyway without the program.

You know, that's not applied in other demand side management programs. So that's just one example. Another example is you see at there's this is where it gets there's actually a active proceeding in the high DER. And I and by the way, I I I include sources in the appendix you have so you can reference those those proceedings if you'd like.

But there currently, there's a proposed decision out right now, and they're actually talking about the inputs to valuing the GHG for supply side versus the demand side and energy efficiency in particular.

And so there's this kind of thought that it it it looks like the comments from, from parties has worked, that the the proposed decision just came out, so I haven't fully analyzed it. But when the when it was still in process, the staff proposal was suggesting that energy efficiency should actually receive a GHG adder that was disadvantaged it from the supply side. So essentially, supply side resources got a higher GHG adder than the energy efficiency, if that makes sense.

So, again, an off balance when you're looking at different resources and how you apply their benefits. So, essentially, energy efficiency keeps getting guilty until proven innocent, right, is what it feels like.

And where many other resources don't receive that same treatment. And that's but, Spencer, I'd like you to chime in on anything I see there.

Mister Lipp and then miss Leiser.

She she categorized it very well. I don't I don't think I have anything to add unless there's questions specific questions.

Miss Leiser.

I just wanted to clarify. So other demand side programs like demand response, they have their own, methods for setting baselines. They don't necessarily use, like, the same net to gross calculation, but there is a process for setting, like, what would have happened, like, the counterfactual, to say what is actually due to the program versus what customers would have done anyway to reduce their load. So they are different calculations.

I wouldn't necessarily say that the other demand side programs don't face any similar, but, you know, not identical requirements.

Okay. Thank you. And then, I guess, coming back to the the PUC, several of a lot of this conversation is focused around, apparently, the proceedings that you have underway. So what what is the anticipated timeline for this to be concluded?

Thanks for that question. So the business application proceeding, we recently had a PHC, put out a scoping memo, and, we testimony is due next. That's in a few months. And then there's an depends on if we have evidentiary hearings or not, but, there should be a proposed decision expected. I believe the scoping memo says either q two or q three of next year.

And then the other rulemaking, which is looking at policy oriented issues, we've already taken a number of steps in that proceeding. We recently released a staff proposal on a very small issue related to the calculation for CCAs that elect to administer. There's gonna be an upcoming proposed decision on multifamily homes, and there's been a series of workshops. There's a lot of issues there, including cost effectiveness with the scoped in. So that's more of an ongoing proceeding that isn't limited in in time.

It just depends on the the sequence of issues that are taken up.

Okay. But from this first proceeding that's expected to be concluded q two or q three, you're digging into this the question of, you know, is TRC the right measure as well as are we, effectively incorporating the full benefit assessment in the case?

That, issue is actually scoped into the rule making. So the second of the two bushings that I was just discussing because that's more of a policy issue that's long term would have impacts, beyond just this one four year portfolio. Right? That's a a larger issue that would be taken up kind of in a different setting and which is the rulemaking.

Okay. And sorry. So then when is that part of the rulemaking gonna be complete?

There hasn't been anything put out by the administrative law judge on the specifics of that. Keep in mind the business applications and this that just came in where a lot of the issues you're hearing about today were raised by various parties as well as a number of other issues, of course. I think in scope for that proceeding is about 30 different issues.

The that recent scoping ruling just came out in July, and it said that cost effectiveness issues in terms of applying the test to the e energy efficiency portfolios, that is in scope in the rulemaking. So this is all very recent actions in terms of statements that have been put out recently on this topic by the CPUC.

Okay. So we don't know.

That is a fair assessment. Okay. Yes. Alright.

Okay. And now and I think that was yes. That was, I think, miss Rothschild, some of your your your additional recommendation not written written on here. Okay. Thank you for that.

So just I wanna look I wanna dig into a couple of the other recommendations. So, Mister not Mister Lipp. Let's see. I I kinda wanna know if if other people agree with these recommendations. So clearly established state policy objectives.

So d DEREE portfolio and program objectives are clearly aligned to support affordability, grid resilience, reliability, and decarbonization. Yes. Does everyone agree? Thumbs up on that. Okay.

Programs should get credit for all savings that they are influencing. Yes. Okay. Anyone want to comment differently on that? Alright.

And now I'm gonna turn us to the recommendations from our PAO. And I think that some of the disagreement on whether we should be applying the cost of effectiveness standard to EE programs has been rooted in the fact you don't think cost effectiveness assessment is accurate. Right? So if we get to a place where we have an effective an effective cost effectiveness evaluation, do you agree that we should apply consistent performance standards across all programs paid for with rate payer dollars? And if not, why not?

You

No. Go ahead.

I I will comment that there's you know, miss Madida spoke at length about the value of things about programs that need to reach all areas of the state, and you want a high number of participants for these programs to really show success and that there's also investments in things like the finance workforce education and training where I currently am challenged to see a single metric working across, especially things like also emerging technologies. There's also, again, looking for the long term success of the portfolio.

So I would say a single metric for all programs is a future I'm I'm I'm struggling to see how that will play out. With that said, I think that we should be we should be refining that metric, and I think we should be looking at the portfolio as a whole, as I mentioned. Because despite all of these challenges we talked about today, the statewide portfolio is successful.

And And so I think continuing to look at the statewide performance is important and using a single metric. So that I guess the counter to that is like Yes.

Yeah, maybe everything's kind of, you know, overall it's working. But I think, you know, we live in a world whether we're talking about our state budget dollars or we're talking about energy efficiency dollars, we have limited dollars. So wouldn't you rather, like, identify the programs that are really, like, crushing it, doing great, and double down on those rather than kinda say, oh, overall, everything kinda together works.

Yeah. I think what you'd end up seeing is you'd see consolidation of services under single programs. So programs that are currently stand alone to support the pull portfolio would need to probably be considered how to be absorbed into those high performing programs and still pencil out as potentially how that play out. Got it.

Yeah. And then you could almost structure it because I understand some of what, you know, what what a lot of of of folks have commented that there are some programs, you know, Mister Rogers gave an example. You've given a number of examples where you're never gonna look at it and say, oh, I'm getting, you know, dollar for dollar. It's quote unquote cost effective, but you still think that that's, you know, worthwhile. And perhaps this is how you structure your portfolio approach, but you could say, alright.

For 75% of the dollars, those are gonna go into programs that we can actually look at and say, yep. Check the box. Like, these are the most cost effective things we could do. And then 25% of the dollars are some of these kind of, you know, enablers. And and I I know that our, you know, our low income equity programs are are subject to a different kind of assessment.

But I think you you have said everyone has said, we do need to have kind of clear standards that we're trying to deliver on for those programs as well.

Yeah. And I I think, you know, Rogers, you said it well where it's, you know, perhaps a cup just maybe two metrics and thinking about those programs that are really truly designed to deliver for the grid. And then what are, you know, one or two other metrics for those other programs is is actually where I my recommendation would go.

And something that translates to the public. So madam Chair, I think, you know, to Assembly member Calderon and everybody on this committee, you know, you have the fiduciary duty to the public and to advocate or not so much advocate, but inform them about where dollars are being spent. Now these are not public dollars because they're rate payer dollars. So they're specific to whatever rate they are under in the utilities. For instance, LADWP customers, which I am one, were not a part of this particular conversation.

Right? But to the public, there does has to be some type of information about what is happening and and how can they visually see that number.

And so I think maybe that is a recommendation that I would say is if the state legislators were interested in what the EE portfolio or where it's at, then maybe, you know, the recommendation is that you tell the PAs and the CPC together to come together to identify five or six metrics that can be conveyed to the public and inform them about how these dollars are contributing to the benefit of them in their communities. Like, one I think about is jobs created.

That is super important to the public.

You're spending these dollars. Where are they going and how are they being spent? How are they creating more jobs? How are they creating more benefit? Maybe it's also number of projects completed.

I need to know in my community, have you done some projects in my community? What are the number that you're doing? These are data points that are collected by all of us. So they're not insignificant or they're not an unknown. So just clear cut metrics that are understandable by the public and things that we have in our pocketbooks, so to speak, to give, and then working together collaboratively with the CPC to make sure that we pass that information and they pass it on to you.

Something like that. Go ahead. Sorry. I might have interrupted miss Leiser.

No. Please go first.

Oh, I was just gonna highlight. Mass saves has a fantastic website, if you have never seen that, from Massachusetts that really have have you seen it? No. Okay. Check it out.

Anyone can go to it, and it's really hyper clear what the benefits of the energy efficiency programs are. So thanks.

So I

was just gonna add that whatever cost effectiveness test we apply, we just need to make sure it comes back to the primary purpose of that program. You know, remember Robert Rogers talked about the energy center where you're not giving a rebate to a person who walks in the door, you're not giving them a survey or maybe you are, but, that's much different than a program that delivers, you know, a twenty year boiler that's energy efficient that's gonna be in an induction industrial facility.

And perhaps they shouldn't be treated under the same test, but there has to be some way we look at them and say, is that a good use of dollars? Right.

Yep.

Yeah. Just tying it back to the purpose. So

Alright. And I actually have a a follow-up question, miss Badita. So you said you're you're an LADWP customer. So are your so are your neighbors. So how do you think your neighbors would feel if you went knocking on their door and said, you know what?

I'm gonna, like, I I'm gonna set up a program with LADWP, and everybody needs to kick in a $100 extra of their utility bill to set up this program. What do you think you'd need to show them to get your neighbors to say, yeah. I'm in. I'll give you my $100.

No. And that's a great question, and I deal with this on a daily basis. So it's really what am I getting back Yeah. In return for that $100? I mean, essentially, that is the message that we are having to drive.

Because I'm gonna tell you firsthand, madam Chair, selling energy efficiency to people that this is not a commodity that is vital to our living. Right? Like, we know we need food. We need housing. Well, we need to pay for electricity.

We need energy. Right? But energy efficiency is this additional, you know, investment that doesn't necessarily come off as, like, what do I need to need to do it right now? Because I have so many other challenging priorities I have to obtain to. So really, taking what does that $100 value give me?

That's half of our job is conveying that, and we have to demonstrate that benefit. And we do it through data. We have a lot of data points that we start. It's just so hard, again, to put it into one metric. And I think it calls on to us to give you that information and to be more transparent about it.

We do need to. We need to tell our neighbors. Alright. You're giving me a $100. Here's what I'm gonna get you, a, b, c, and D.

And this is the long term benefit you will experience, and that's what we need to be held accountable to.

Did you wanna come

in? Yeah. So, overall, the and I wanted to explain more the intention behind this opportunity that we outlined. So we don't dispute that there are benefits to programs that help with access and, you know, local communities. That's not something that, hopefully, nobody disagrees with here.

The issue is that there are also statewide harms due to how rates are designed. If programs are paid for through rates, the rate payers and customers in all communities pay into them, you know, low income customers, moderate income customers, high income customers. And so it's the most regressive way of paying for these public purposes if we're billing it through rates to get to these objectives.

And as I showed in my chart earlier, you know, you see the trends with the increased in increase in cost in non cost effective spending. The percentage of the energy efficiency budgets that they represent, which is growing and growing and growing over the years, that's not sustainable.

It may be a small portion of the bill today. But right now, without having this consistent performance standard, there's I I don't really see there being a limit to how much that can grow.

Yeah. Thank you. And I guess my yes. I do hear our other panelists saying that for most programs, everyone agrees there should be a performance standard. Correct?

And that these programs should be delivering, you know, a bang for their buck. Correct? I think that the discrepancy is related to the current metric that's being utilized, if I understand. Okay. And our friends at the PC are going to swiftly be working to fill that.

I think it's really important to, like, to just get that figured out, and I would hope that it doesn't mean, if it needs to kind of come out of if some other a proceeding that has 400 other things in it, and then it's gonna take us five years. Like, that just seems nuts to me. Like, while this is a complicated subject matter, like, you could stick, like, five smart people in a room, and we could have an answer by next week.

So that would be some you know, an approach I would respectfully suggest to our commissioners. Alright.

Before we wrap up, any closing thoughts or comments or reflections from any of our panelists?

Before we wrap up, any closing thoughts or comments or reflections from any of our panelists?

Alright. Go for it.

I just really wanna extend my gratitude for you creating the space for this conversation. Know a lot of us have been looking forward to this opportunity to have this frank discussion with you. So I just really appreciate it and just, again, wanna highlight despite all of these complications and challenges, you have an industry with folks that are incredibly passionate in delivering benefits to all Californians as we stand right now. So it's it's a working system, but with we could be so much better. So thank you.

Well, thank you. And I wanna thank each of our panelists for being here, you know, for for spending the time with us today, for all the work that you've done to prepare and the work that you're doing on on this issue, and certainly look forward to continuing the conversation as as we move forward. And I also wanna say a huge thank you to Alexa. So Alexa has been a science fellow. She's a science fellow with utilities and energy committee all year.

She's been absolutely amazing, and she has worked very closely with all of all of you and all of our panelists to pull together this hearing. So thank you, Alexa. Okay. I think that we can go ahead and say thank you to our panelists, let you all get on with your afternoons, and we will go ahead and turn now to public comment. So if anyone is with us and wants to provide public comment, you can go ahead and form a line at this microphone.

Go ahead and when you begin, please first state your name and organization, and each of our commenters will be given two minutes to share your perspectives. Thank you.

Great. Thank you. Good afternoon, Madam Chair. Vince Wiraatmaddja with MCE. First off, we wanna say thank you for the opportunity to have such an in-depth conversation about EE, and thank you again to Alexa for such a wonderful backgrounder.

MCE is a community choice aggregator who provides clean electricity service and clean energy programs to the 38 member communities across Contra Costa, Marin, Napa, and Solano Counties. We are a program administrator for energy efficiency, Doctor, DCAR programs, and serving residential, commercial, and industrial and agricultural communities for over ten years. We're presently an apply to administer CCA, which is one of the folks that wasn't talked about earlier, with a 2028 application submit it in March of this year.

We do, from the outset, just wanna state that we strongly believe there is a strong nexus between EE funding and the commensurate benefits for all rate payers. You know, we don't bat an eye as a policy body about using rate payer funds to procure solar panels, natural gas turbines, lines and wires, etcetera.

As the first resource dictated in loading order, EE is a resource that is on par with these pieces of hardware. And given that it is the cheapest and cleanest resource to procure amongst those other resources in loading order, it makes absolute sense for the rate payer to continue funding these programs. In twenty twenty twenty three alone, EE saved rate payers from having to purchase about 1.9 gigawatts since a gigawatt doesn't really mean anything to me.

That translates into about 84% of the output of Diablo Canyon, which is a metric that we are all familiar with at this juncture. If we're to put it in old COVID language, EE bends the cost curve when it comes to rates.

And nonetheless, we do believe that there is always room for improvement in programs, and we do have a few suggestions to better optimize the programs and especially better align them with the modern energy market, which frankly did not exist when the TRC was first adopted over a decade ago. These suggestions include, one, better integrate EE with demand side management and other better integrate EE with demand side management and Doctor

into the EE portfolio.

On those on those specifics, I think if you can email them to us, I just in the interest of of everyone's time, wanna Yep. Stick with our two minutes. So Absolutely. Thank you so much.

Thank you.

Thank you, Madam Chair. My name is Nate Doerd, and I'm from Energy Solutions. We have offices in Oakland and Orange, and we are employee owned with 500 staff. And we've been implementing energy efficiency for over thirty years, in programs in California, and I've been part of the team for half that time. And I'm part part warned by the title of this this hearing.

The savings you don't see, amen to that. Thank you for shining a light on this invisible asset that we have that I've been fortunate to be part of. And in the case you know, this is ultimately a case of a well planned public policy as you have laid out, and I'm really grateful for, you know, this comprehensive review. So, yes, energy bills are rising and EE is not the cost, you know, the primary cost and the reason for that, and we all agree on that.

And I think it's, as as you've noted, a really good important time to take a look closely at streamlining processes and expediting where possible and just support all that that effort to do that.

And especially, the you know, replacing TRC with a balanced cost effective business test. We'll follow-up with some ideas about that, sharing the math, the things that Laurel shared. So I'd say invest more in this asset, not less. So thank you.

Thank you.

Good afternoon, Madam Chair. Thank you, you Madam Chair and the committee staff for holding this hearing today. I'm here on behalf of a San Diego Community Power, a community choice aggregator that administers the San Diego Regional Energy Network, SD WAN, in participation with the, County Of San Diego. Through SD WAN, we provide 10 energy efficiency and the demand management programs rooted in the communities that we serve. I wanted to highlight three key points for your consideration today.

First, energy efficiency programs provide cost effective bill and the system savings. The American Council of Energy Efficient Economy recently found that energy efficiency and the load flexibility programs are among the lowest cost options for reducing electricity consumption and a peak demand when compared with the generation other, new generation resources. Second, energy efficiency programs are foundational to California's world leader, reliable clean energy transition. Energy efficiency, programs avoid Clean House Gas Emissions while offsetting rising electric demand from data centers and electrification. Finally, successful EE programs depend on reliable foreseeable and a for a multiyear funding for a that would allow, the program administrator should plan ahead with some more confidence.

Thank you again for holding this hearing. We'll look forward to more discussions on sustainable energy efficiency programs to advance our regional and statewide clean and reliable energy goals. Thank you.

Thank you.

Of course, I followed the tallest people here. Good afternoon. My name is Becky Menton with the Building Decarbonization Coalition Action Fund. I wanna echo comments made by others that energy efficiency portfolio is across the board extremely cost effective while presenting only pennies on customer bills. By reducing demand, these programs help us avoid costly investment and infrastructure projects like transmission distribution and new power plants.

These programs have shown incredible success in California, driving $4 in benefits for every rate payer dollar invested. I also wanna note that the energy system we have today has changed dramatically from when these portfolios first launched, and the goals of our rate payer programs should correspondingly shift as well.

For example, building decarbonization, which places downward pressure on utility rates and helps households transition to zero emission appliances, perform very well according to the total system benefit metric, showing that they provide net value and affordability for our electric system. These same measures often score very poorly on existing metrics such as the total resource cost test at TRC.

Meanwhile, we continue to subsidize nearly tens of millions of dollars every year in new gas appliances, investments which commit Californians to the enormous future stranded asset of our natural gas system.

We both recognize the incredible value that our existing portfolio has provided to rate payers while acknowledging that there are smart reforms we can make to align these investments with both our climate goals and long term grid and affordability benefits. Thank you very much for your time today.

Thank you.

Thank you, Madam Chair, for the opportunity to comment. Alicia Priego on behalf of San Jose Clean Energy. At San Jose Clean Energy, our PPP funded programs have deliver delivered more than $13,000,000 in customer savings and reduced GHG emissions, helping households and small businesses lower their energy bills while reducing demand on the grid and avoiding more costly energy investments. Reliable funding is essential to keeping energy efficiency programs operational.

As California modernizes its energy systems, we should strengthen these programs to better align incentives with energy market conditions and unlock greater electrification opportunities without increasing costs.

Thank you, and happy to opportunities without increasing costs. Thank you, and happy to follow-up with, San Jose Clean Energy specifics at another time. Thank you.

Good afternoon. I'm Caitlin McGee, senior key accounts program manager here on behalf of Clean Energy Alliance or CEA. We are a community choice aggregator serving approximately 255,000 customers across the cities of Carlsbad, Del Mar, Solana Beach, Oceanside, Vista, Escondido, and San Marcos in the San Diego area. In addition to providing residents and businesses with renewable energy at competitive rates, CEA is committed to developing local energy programs that reflect community needs. Our customers have expressed a strong desire for meaningful energy efficiency program in a programming.

In April 2025, a survey of CEA customers showed 83% of respondents identified improving the energy efficiency of buildings to reduce energy bills as a priority. In light of this customer feedback, energy efficiency is a critical pillar of CEA's current energy programs plan, which was developed to help reduce energy costs at a time when promoting affordability is more important than ever.

CEA is actively engaging with the CPUC to advocate for improvements to the current framework for CCAs like CEA to elect to administer energy efficiency programs and strongly believes that energy efficiency must remain a key strategy in making California's clean energy transition affordable and cost effective. Thank you.

Thank you.

Hi. Thank you. My name is Julia Hatton. I'm the CEO of Rising Sun Center for Opportunity, which is a workforce focused nonprofit, in Oakland and Stockton and serving the Greater Bay Area in Central California. And I a whole thing I was gonna say, but mostly, I just agree with everything that folks just said.

And I wanna we are one of the implementers of, some of these energy efficiency funds. And we use these dollars to employ local low income youth from Sonoma to Fresno to provide free energy efficiency services to local homes and underserved and disadvantaged communities. And we've been doing this for, since 2020. I'm sorry, since 2000. And it's everything that people are talking about.

It's the workforce development. It's the preparation for a clean energy future. It's preparing the next generation for clean energy careers, and it's also delivering direct energy savings to local homes. We've served over, 2,000 households. I'm sorry.

We've served over 68,000 households and employed over 2,000 young people, and they've been able to save $36,000,000 on people's utility bills. So, you know, we're we have teams of two, you know, people who've never had a job before going into into folks' homes and their own communities and helping them actively save energy and reduce their bills.

And the transformation that you see both at the household level, the community level, and that individual youth level is sort of a piece of all of this that I think does not get talked about enough. And what is really special and rare and unique about this funding source is that it is stable and reliable, and that that is rare and crucial.

So, yes, there are tons of things that we could do a lot better with how the funding is structured and the administration and all of that, but it really is having this direct impact on the communities you care about.

Thank you.

Good afternoon, Madam Chair. Clifton Wilson on behalf of the Marin County Board of Supervisors in support of energy efficiency programs overall because they empower the community to lower greenhouse gas emissions, save on utility bills, and improve comfort in indoor air quality in homes and businesses. Marin has been focused on directing these resources to their older adult population, many of whom live on fixed incomes and would not be able to accomplish these same goals without this added these energy efficiency programs.

This includes programs such as the BayREN multifamily program that recently assisted 100 low income seniors in Marin to lower their utility bills and improve air quality, and then continued support for energy efficiency programs helps ensure that the benefits of California's clean energy policies are broadly accessible, and then the cost savings are available to customers across all income levels. Thank you.

Thank you.

Good afternoon. Dylan Hoffman on behalf of StopWaste for a local JPA in Alameda County that helps our partner jurisdictions and residents, as the name implies, reduce waste and improve efficiency. And we're strong supporters of the energy efficient efficiency programs that were discussed today. We believe they're a critical affordability tool for both individual customers, and the energy system as a whole. It helps support overall grid reliability by reducing demand and shaping load curves to benefit the wider grid itself.

And they play a crucial role in California strategic energy and climate plans, but significantly rely on reliable, predictable funding that they can plan around in order to continue providing these benefits. So wanted to voice our strong support for those. Thanks.

Thank you.

Hi, Chair. My name is Jennifer Aguilar, and I am here on behalf of the county of San Mateo in support of California's energy efficiency programs. Energy efficiency is one of the most cost effective tools we have to keep energy affordable while improving greater reliability and advancing the state's climate goals. These programs help residents, businesses, and local governments lower energy costs, reduce peak demand, and avoid the need for more expensive energy infrastructure.

California's energy efficiency portfolio delivers approximately $4 in system benefits for every $1 invested and supports more than 312,000 energy jobs and 54,000 small businesses across the state.

San Mateo County supports continued investment in these programs along with thoughtful updates to ensure they better reflect today's energy markets and support building electrification. Energy efficiency is already delivering real benefits for Californians, and modernizing these programs will only make them stronger. Thank you so much.

Thank you.

Good afternoon, Madam Chair. My name is Ella Acker, and I market Bay Run Regional Energy Network or Bay Run programs for Solano County. I'm currently working with our local first five children and families commission to provide in home childcare centers with access to no cost weatherization upgrades, thanks to the funds available through our Bay Run residential rebate program.

With over half of our cities in Cal EnviroScreen health burden zones greater than the sixtieth percentile, these opportunities translate to decreased childhood asthma cases, greater comfort during extreme heat events, and lower financial burden on childcare providers. It isn't just energy we're saving, it's improving the quality of lives.

If the decision is made to move these funds to the general fund and the fluctuating state budget is what determines whether energy programs can be delivered to our communities, we will not be able to dedicate the staff needed to maintain relationships and build the links between energy efficiency, public health, and community resilience.

Keeping these funds where they are signals you trust local governments to serve our residents and continue to continue to nurture the community networks that are fundamental pieces of making energy more affordable, accessible, and reliable. Thank you.

Thank you.

Afternoon, Chair. My name is Luke Wansen. I also implement BayREN programs for Solano County. I like to share a quick example of the work that we do. BayREN's business program supports hard to reach businesses by providing incentives for decarbonization.

Recently in Solano County, we had a small local business make upgrades that saved them over 30,000 kilowatt hours annually, and that translates to about $13,000 annually on their bills. Now for small businesses like this, these kind of savings can mean the difference between staying open and closing their doors. Projects like this are also only possible because of Bayron's deeply integrated community driven networks. Moving energy efficiency funding to the general fund at a time when GGRF auction proceeds aren't stable could be catastrophic for our programs.

We've long led the nation on energy efficiency and decarbonization, And right now, we are at risk of backsliding on our goals, so I urge you to keep finding where it's at.

Thank you.

Thank you.

Hello. My name is Annette Beidle. I am president and founder of a woman owned, clean energy consultancy, Future Energy Enterprises. We are not in California either a program administrator or an implementer, but we did found and run the California technical forum and also developed and implement the electronic TRM, which, Spencer spoke about earlier today. First of all, I wanna say thank you for the questions that you're asking.

From my perspective, I'm not sure that you got very clear answers, but I do believe you're asking the right questions. I I should mention that I started my career in in energy efficiency at PG and E as an attorney in 1994, so I've really seen the evolution of energy efficiency over time. We also work in other states, which I'm gonna get to in in a moment. So number 1, it was painful to hear you say the math is really complicated.

You can't get a straight and I'd like to just give you a simple answer on the math.

So, number 1, we talked about two cost effectiveness tests, the PAC and the TRC. I don't think there's dispute about the math. I think there's a dispute about which is the right test, and the answer really depends on what are the policy objectives. So number 1 on the cost, you are absolutely right. From the perspective of a rate payer, the costs are how much the utility is spending, and that's the denominator of the pack.

What are rate payers spending? Okay? And then for the TRC, it's both what the rate payers are spending and then what the customers are spending. And I like to share perspective even though even though I respect many of the points that the public advocate's office is making about cost being too high and looking at them carefully.

So I think one of the concerns they raised, or she raised, was that, you know, you might get more expensive appliances if you, you know, don't take into account customer cost.

I'll give you an example from my old life. So I purchased an induction stove, and there are cheaper induction stoves on the market. I chose to get a fancy schmancy induction stove. It costs a lot more, buddy. I spend a lot more sorry.

Should I

And then yes. I'm sorry. And then we can we'll follow-up with you to get your other recommendations, but that's

okay. Sorry.

Okay. Thank you.

Hi. Good afternoon, Chair. I'm Jane Elias. I'm the director of energy programs with the Association of Bay Area Governments and the lead for BayREN. In addition to the the results of what BayREN performed through the the 2025 portfolio, I also want to share with you another example of energy savings that you don't see.

In 2025 alone, Bay Area jurisdictions leveraged BayREN resources to secure or use an additional $12,500,000 from non rate payer funded sources for energy projects, including securing a $1,670,000 farmworker housing, rehabilitation, and electrification project. When you couple that with BayREN's 2025 expenditures of 35,500,000, what BayREN brings to the region is the ability to Couple Energy Efficiency Dollars with other funding sources to provide community members with more comprehensive and holistic improvements.

We utilize our channels and resources to increase climate and energy results, helping the state reach its climate goals. That's progress. It's showing how the power of local governments running energy programs can further benefit the rate payers.

And that that $12,500,000,000, like, that's another 40% of what our portfolio was of 31,500,000,000 in 2025. So I really wanna thank you for having the hearing today and answering or asking some of these really tough questions and trying to get to the bottom of this. Appreciate it. Thank you.

Good afternoon, Madam Chair. My name is Casey Dailey. I serve as the Director of energy and environmental programs for the Western Riverside Council of Governments. We are the lead administrative agency for the Inland Regional Energy Network or IRAN. And so our territory is exclusively focused on Riverside, and San Bernardino Counties.

So I wanted to just touch on a couple of things. First of all, thank you. I know this is a lot, and there was a lot of dense, complicated stuff. That's the life that I have to live explaining what we do as a Wren to my 24 elected officials throughout the well, actually, 52 cities throughout Riverside and San Bernardino County. But I wanted to just touch on a couple of things.

One, the importance of, keeping energy efficiency funding with the rate payers, because that creates and you've heard it multiple times already, but that creates stability and certainty for us in local government to be able to stand these programs up, put the work into it. But, also, we work with local governments. And so a lot of our programs are focused on helping cities, counties, school districts, special districts reduce their energy consumption across their entire jurisdiction.

And as you might be able to appreciate, local government doesn't always move super fast, and so it takes time for us to help them develop a project with our technical assistance, our site audits, energy modeling, project design. All of those things we offer to help support our local governments in their energy efficiency journey, and that that takes time.

And so having that stability and certainty over four year periods is is essential for us. And it kinda ties back to something that you all were talking about earlier, as far as resource versus non resource. So for us, we have an incentive program, and that incentive program is based on actual metered savings of your energy, net meter energy consumption, NMAC.

But to get to that, we have all of these other pieces of technical assistance and energy modeling and project design and help helping them get to that pot of gold at the end of the rainbow. And so it's the incentive that counts as the resource.

I'm gonna need to sorry. Just

I need to wrap wrap you wrap it up. So if you can follow-up with our team with your other recommendations, we'd really appreciate it.

Yes, ma'am.

Yes thank you very much.

Thank you.

Good afternoon, Madam Chair. Brandon Garcia with Advanced Energy United. We are a clean energy trade association that has members that operate all around the different aspects of the energy supply chain, many of which work on energy efficiency or demand response programs. I wanna hear to be here in support of energy efficiency programs and making sure that they have, certain funding on a long term basis.

I think any business in California would tell you that certainty in your business is what layers you'd be able to plan out for the future and see how we can do those on efficiency stop start programs don't always help.

And, certainly, not knowing where that funding comes from is not a way for us to plan around our business models. We wanna really make sure we emphasize the cost savings that we think the interview efficiency programs provide. The you know, in reference in our letter that we signed on to, 1.5% of the revenue generated in 2024 was from energy just energy efficiency programs, which is increase like, increasingly low.

And I think if the legislature truly is interested in wanting to reduce race, reduce downer pressures, this feels like we're attacking same things on the margin that you produce savings when you can address things, directly at the root. And we all know that wildfire and all these other costs are made biggest drivers of rates.

We would argue that those are probably the more appropriate place to try to find more cost savings there. And we would certainly support a lot of those different kinds of policies and actions. I think the last thing I would say is energy efficiency and demand response are really some of the only tools available to rate payers to reduce their energy cost given that many Californians live in the utility model construct.

There's not really a way to get reduced energy cost for yourself unless you're able to get into energy efficiency programs or reduce your own energy consumption. And given where the affordability crisis is today, we feel like that is an incredible tool, and the legislature should be finding ways to promote and incentivize that rather than draw that back.

And we're happy to work with you all and the other members on that. Thank you.

Thank you.

Hi. Mark Costa from the Energy Coalition. I'm speaking today as part of the Energy Coalition, and we've heard a lot of great information there. But I've also been involved in the CalPF. I've been part of utility programs.

I work with the RENS, and I'm a municipal utility customer. So I've seen all spectrums of what's going on here today. And to really round off what we've heard today, I think it was a collection of perspectives, and it really shows how you come into the situation and where you're sitting sometimes dictates how you make sense of all the numbers that are out there.

And I think we're all looking at the same numbers coming at this with different conclusions at the end of the day, but I think there's enough information there to to have some good takeaways. One, I think that we clearly show that there are these are all energy programs.

These all have to directly have to do something with energy. Some are direct, some are indirect. That's one thing. And the statute clearly says that we can do this, not only the cost effective, but showing the related benefits. The energy commission depends on these as well.

Should the stuff be on the bill? Well, I would say, we, at the bottom line, heard today the numbers that show these at the end of the day, we spend $794,000,000 on all this stuff, and we have more benefit that we measure directly on that. And that's the most stringent test we have, and it has that. I think that's the clear takeaway. Now you can chop these up in a different ways, and the numbers will grow.

The benefits will just grow as we measure the benefits that we don't see. So I think that's the clear takeaway that if you need to boil all this down to one thing, there's more value than than we're spending, and that number will grow. And I will say with that, we look forward to finishing that work and showing those numbers and having a very good story to tell in the 3264 reports that are now starting to uncover this. So thank you for all that.

Thank you. Alright. With that, I wanna once again thank, all of our panelists for joining us for today's hearing, for everyone who joined us to provide public comment. And, with that, our hearing is adjourned.