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Michael Wheeler, Analyst California Public Utilities Commission

Michael Wheeler, Analyst California Public Utilities Commission. Energy Efficiency Goals 2012 – 2020 Policy Matters Within the ED Staff Recommendation. April 4, 2008 . Goal Purpose Transformation. Reduction in per capita energy use is cheaper than supplying continued or increasing energy use

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Michael Wheeler, Analyst California Public Utilities Commission

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  1. Michael Wheeler, AnalystCalifornia Public Utilities Commission Energy Efficiency Goals 2012 – 2020 Policy Matters Within the ED Staff Recommendation Goals Update 2012-2020 April 4, 2008

  2. Goal Purpose Transformation • Reduction in per capita energy use is cheaper than supplying continued or increasing energy use • “The Energy Action Plan,… identifies reduction of energy use per capita as one of six sets of actions that are of critical importance. By today’s decision, we have translated this mandate into explicit, numerical goals for electricity and natural gas savings.” D. 04-09-060 • Energy efficiency is already the most cost effective strategy to meet CA’s growing demand, it is the least cost, most immediate strategy to meet AB 32, and effective strategic planning will enable the value evolution to expand across regulatory and programmatic boundaries. • “…energy efficiency is the resource of first choice to meet California’s growing energy demand…Energy efficiency is also projected to deliver a large portion of the greenhouse gas emissions reductions necessary…Today’s decision creates a framework for sustainable energy efficiency…and a process for accomplishing extensive energy savings through long term strategic planning. To do this well requires an approach that transcends regulatory, programmatic and jurisdictional constraints, and emphasizes a broader view of the energy efficiency landscape.” D. 07-10-032 Goals Update 2012-2020

  3. Goal-Setting Criteria • The goals should further enable the bold steps taken by the utilities and outlined in the draft Statewide Energy Efficiency Strategic Plan to participate in innovative and cooperative efforts; • The goals should set appropriate expectations for the emissions to be reduced through energy efficiency for use in the California Air Resources Boards emerging regulatory framework for AB 32, the state’s global warming law. • The goals should more transparently address the interaction between procurement authorizations resulting from the Commission’s long-term procurement proceeding (LTPP) process and cumulative energy savings achievements Goals Update 2012-2020

  4. Recommendation 1 Energy Division recommends that the Commission adopt, for each IOU service area, a hybrid goal consisting of both a total market gross and utility-specific goal. • Formally recognizes indirect impacts occurring between utility programs and other market players • Enables the Statewide Strategic Plan • Set appropriate expectations for emission reductions • Improves transparency within Long Term Procurement Proceeding • Holds utilities accountable for the PGC dollars they use for EE programs • Provides a neutral stance on a possible transition to second generation Penalty/Incentive Mechanism Goals Update 2012-2020

  5. Recommendation 2 & 3 Energy division recommends that the Commission adopt “expansive net” as the utility specific goal and commit staff and contractor resources to develop and/or refine EM&V protocols to properly attribute savings influenced by IOU program innovation. • Recognizes the need for IOU accountability for the use of ratepayer funds • Recognizes that to enable market transformation achievements an appropriate ability to claim savings through non-traditional partnerships will be necessary • Requests resources to develop tools that will be available before the 2012 – 2014 program cycle • Founded upon the notion that greater cost effective savings may be possible when IOU rebate programs are not relied upon as sole source of savings Goals Update 2012-2020

  6. Recommendation 4 & 5 Energy Division recommends the Commission adopt as the 2012-2020 Energy Efficiency Goals the model and inputs associated with Itron’s Mid-Level Scenario Goals Update 2012-2020

  7. Policy Matters- Key Questions • Why move to a hybrid goal from a net goal? What are the functional assumptions between the TMG and the IOU expanded net? • What is the real world use of a total market gross (TMG) goal? How will it be measured? • What is the definition of expansive net? What counts toward it? • How do the proposed goals interact with a reauthorized incentive mechanism? Goals Update 2012-2020

  8. Goal of the Goals: A Conceptual Framework • Attempts to capture CPUC & CEC rhetoric • “EE as a way of life”, “Innovation, Integration, Collaboration” • Effort to value awareness of total market savings • Optimize “A” through appropriate amplification of “B” and “C” such that “D” is as small as possible Goals Update 2012-2020

  9. Key Questions: Why a hybrid goal? • TMG goals are necessary for cross-agency planning • Utility specific goals are necessary for measuring program efficiency, effective use of PGC funds • Utility specific goals set higher than can be achieved through BAU implicitly requires participation/partnership in other savings mechanisms – such participation should amplify savings beyond baseline savings expectations • Partnership/participation by multiple efficiency actors maximizes rate and scope of savings to society • Assess administrator performance through measurement of both TMG and utility specific goals Goals Update 2012-2020

  10. Key Questions: Real world use of TMG? • Planning: Emissions Regulation, Long Term Procurement, Load Forecasting • Influence cost-effective actions beyond traditional program design • Maximize coordination of efforts • Measurable requires improved collection and processing of both baseline trend and market saturation data, but simpler than “net” Goals Update 2012-2020

  11. Key Question: Definition of Expansive Net? • Expansive Net = Current Net Program savings + Utility program induced market effects Where Utility program induced market effects = Utility share of the savings from new Codes and Standards + utility share of any new compliance enhancement program + utility share of any market transformation programs such as the big and bold strategies Expansive net would align goal setting policy with the Statewide Strategic Plan by recognizing the positive direct and indirect effects of utility programs & partnerships. The Commission cannot concertedly promote a broadened field of energy efficiency strategies without the awareness and productive use of successful market effects. “MARKET EFFECT - A change in the structure or functioning of a market or the behavior of participants in a market that result from one or more program efforts.” -CA Evaluator’s Protocols Goals Update 2012-2020

  12. Visualization of Expansive Net • Expansive Net diagram wedges = Portion of Wedge A + Wedge B + Portion of Wedge C + Portion of Wedge D Goals Update 2012-2020

  13. Key Question: Hybrid goal interaction with RRIM? • Staff recognizes that this issue needs careful consideration with the benefit of evaluation data • Staff recommends that a hybrid goal structure be developed prior to discussion of extending/adjusting the RRIM • Measurement at the TMG, Expanded Net, and Current Net level allows for multiple options for future discussion of appropriate MPS and PEB thresholds • A goal level revision in 2010-11 would be the appropriate time to discuss in detail the interaction between a hybrid goal and a reauthorized RRIM Goals Update 2012-2020

  14. Dynamic Inputs: Directional Impact on Goal Revision prior to 2012 Goals Update 2012-2020

  15. Appendix Slides Goals Update 2012-2020

  16. Clarifying the Recommendation from D. 07-10-032 • “First, what should be done with regard to any changes in the goals we have adopted for 2012-2013…” (D. 07-10-032 p.117) • Staff recommends that the adopted goals for 2012 and 2013 are adjusted to be in line with the goals set through 2020 • “…and second, what approach should we take in setting goals further out, to 2020.” (D. 07-10-032 p.117) • Staff recommends that the Mid-level Case is the most appropriate approach for setting goals from 2012 - 2020 Goals Update 2012-2020

  17. Goal Setting Schedule: Part II IEPR Proceeding: Solve the EE overlap in Load Forecast -attempt to fit better with EE goals and CPUC use in Procurement Staff Recommendations Energy Efficiency Goals adopted July 2008 2009-2011 Program Cycle begins April May June July August Sept. Oct. Nov. Dec. January February March Input replaced in E3 climate model E3 presents to public stakeholders E3 model goes to CARB to establish a baseline Goals and new Load Forecast plug into LTPP proceeding Strategic Plan Filed Strategic Plan Adopted Goals Update 2012-2020

  18. Why does EUL matter to Regulators? BAU focus on Utility Lighting Impacts • EUL (effective useful life) of lighting is relatively low compared with other residential systems. • Longevity of whole house improvements avoids powerplants Goals Update 2012-2020

  19. Goal Setting Schedule: Part 1 • April 4 Workshop on Itron Report and Staff Recommendation (Energy only) • April 11 Itron Report Appendix posted on related Demand Scenarios • April 21 Comments due on Energy and Demand Scenarios and Staff Recommendation • End of April Gas Scenario Appendix posted –May 19 comments due • June 09 Draft Decision mailed • June 30 Comments on Draft Decision due • July 10 or 31 Aiming for Commission Decision Goals Update 2012-2020

  20. Regulatory History • Decision (D.) 04-09-060, the Commission set annual and cumulative energy efficiency savings goals through 2013. • Decision (D.) 07-10-032 determined the use of the current goals through 2011. • The Staff Recommendation for Goals would take effect January 1, 2012 Goals Update 2012-2020

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