Energy Efficiency
Review of Utilities’ 2006-2008
Risk/Reward Incentive Mechanism

 

Background

This proceeding was reopened to examine three decisions involving the investor owned utilities’ energy efficiency shareholder incentive awards for their 2006-2008 energy efficiency portfolios.  In September 2007, the CPUC issued Final Decision adopting a Risk Reward Incentive Mechanism under which the utilities would be awarded profits to their shareholders based on energy savings achieved in their 2006-2008 Energy Efficiency programs. Achievements were to be determined based on a rigorous Evaluation, Measurement, and Verification (EM&V) process managed by the CPUC’s Energy Division staff.      

In December 2010, the CPUC issued a Decision, which approved the final shareholder rewards for 2006-2008 programs. The Decision based the rewards on utility reported savings rather than on CPUC staff’s Evaluation Reports. The utilities received total rewards of.   

  • PG&E:          $104.1 million   
  • Edison:         $74.4 million  
  • SDG&E:        $16.2 million  
  • SoCalGas:    $17.2 million  
     

Ratepayer Advocates Petition CPUC to Modify Utility Rewards

On November 19, 2014, ORA filed a Petition (as did TURN) with the CPUC to modify its December 2010 Decision, requesting the CPUC rescind the utilities' energy efficiency rewards based on improper ex parte communications between PG&E and a commissioner, which violated state law and the CPUC’s rules. The ex parte communications addressed pending proposed decisions for the final incentive award for the 2006-2008 program years. ORA's petition requested, in the alternative, that the CPUC grant ORA and TURN's longstanding Application for Rehearing of the 2010 Final Rewards Decision.  
 
 

The CPUC Reopens the Risk Reward Incentive Proceeding

In September 2015, the CPUC issued a Decision reopening the proceeding to review all utilities’ shareholder rewards to ensure that they were reasonable and based on verified calculations by CPUC staff, as the Commission had originally ordered. The Decision also ordered the reopened proceeding to consider whether refunds should be made to ratepayers.   

On January 22, 2016, the CPUC issued a Ruling setting the scope of the proceeding to ensure that all shareholder incentives awarded are “just and reasonable and based on calculations verified by the Commission, via its Energy Division.”   

On March 18, 2016 PG&E, Edison, SDG&E, and SoCalGas each filed Proposals seeking to retain their full incentive awards for 2006-2008 on the grounds that it was reasonable for the CPUC Final Decision to use the utility’s reported savings.    

 

The issue was revisited individually for each utility: 
 

  •  PG&E:  Visit this ORA page to read more about the Settlement that was reached in this case.
     
     
  •  Edison:  Visit this ORA page to read more about the Settlement that was reached in this case. 
      
     
  •  Sempra - SDG&E & SoCalGas:  This case is still in litigation.  
  

 

 

Resources 

TURN’s January 2, 2010 Application for Rehearing.  

ORA and TURN’s March 6, 2009 Joint Application for Rehearing   

ORA and TURN’s February 2, 2009 Application for Rehearing