Regulatory Update for Annual Meeting

Jody London October 4, 2013

Today’s Report

n California Public Utilities Commission n Property Assessed Clean Energy n California Energy Commission n California Air Resources Board n  Legislation

California Public Utilities Commission

n  Energy Efficiency

n  Shareholder Incentives – Decision 13-09-023 n  Establishes new mechanism: Energy Savings and Performance

Incentive (“ESPI”) n  Awards in four performance categories:

n  Energy efficiency resource savings – the utilities can earn up to 9% of the amount spent in this area (less funding for administrative activities, codes and standards programs, EM&V, and funds directs to regional energy networks and community choice aggregators);

n  Ex ante review performance – the utilities can earn up to a 3% of resource program expenditures;

n  Building codes and standards energy efficiency programs – the utilities can earn a management fee of up to 12% of expenditures approved for codes and standards advocacy (less administrative costs); and

n  Non-resource management fee – the utilities can earn up to 3% of expenditures in this area (less administrative costs).

n  First claims will be filed for 2013 via advice letter in 2014

California Public Utilities Commission

n  Energy Efficiency Financing Programs Approved n  $66 million in pilot programs, in addition to $75 million approved

November 2012 n  Lower-income residential property owners n  On-bill financing for business customers with no-interest loans n  On-bill repayment of third-party energy efficiency loans n  BayREN program targeting multi-family properties n  $9 million held aside to be allocated after a mid-program review

n  California Hub for Energy Efficiency Financing (CHEEF) n  Simple, streamlined interface for any person or organization involved in

financing energy efficiency projects n  Administered by the California Alternative Energy and Advanced

Transportation Financing Authority (CAEATFA) n  Allows the approved funding and pilots to continue through 2015

California Public Utilities Commission

Community Choice Aggregation and Energy Efficiency n October 1 Proposed Decision find CCAs can administer energy efficiency programs subject to same standards and policies as the investor-owned utilities, including to customers outside the CCA territory (Public Utilities Code § 381.1 (a) – (d)) n CCAs also can file advice letters to administer EE programs for just their own customers n Only for electricity programs, not natural gas “This decision gives CCAs the chance to become full-fledged energy efficiency program administrators, and an initial start-up period to get up to speed.”

California Public Utilities Commission

n  Strategic Plan Update n  Original Strategic Plan adopted in 2008 n  Update starting now n  Local government chapter is one of first sections

n  Draft local government chapter circulating n  Workshops last month n  CPUC will publish entire draft Strategic Plan for comment before it is

adopted, probably early next year n  CPUC will also develop action plans for each industry segment n  LGSEC is participating in update process

California Public Utilities Commission

Energy Efficiency after 2014 n Long Term Collaborative re EE Program Structure

n  September 18 communication to CPUC from ~ 20 parties, including LGSEC

n  Urges Assigned Commissioner Ferron to move to a rolling cycle model, instead of applications every three years

n  LGSEC instrumental in this topic and the letter being first “deliverable” for the collaborative group

n  Many committees: n  Coordinating Committee-- 20+ stakeholders n  Rolling cycle framework n  EM&V n  Contracting n  Stakeholder Participation

n New Rulemaking expected to be issued end of October

California Public Utilities Commission

n  Energy Usage Data n  Waiting on Proposed Decision n  CPUC and CEC hosted discussion in the State Capitol two weeks

ago n  Emphasis on value of energy usage data, ways in which data can help

achieve State policy goals

California Public Utilities Commission

n  Distributed Generation n  Net metering cost study released September 26

n  Prepared by E3 n  Finds over $1 billion/year shifted to customers who don’t have net

metering n  Strongly disputed by solar advocates

n  PG&E proposal in general rate case to reduce threshold for A-6 customers from 500 kW to 75 kW, making solar a less attractive investment for A-6 customers

Property Assessed Clean Energy

n  Federal Government to Revisit Residential PACE n  September 23 proposal from Governor Brown

n  Reserve fund for PACE programs created and administered by CAEATFA.

n  A municipality, county, or joint powers authority would be required to enter into an agreement with CAEATFA whereby the program would make Fannie and Freddie whole if they suffered losses from a PACE loan.

n  Acting Director of FHFA agreed September 24 to consider proposal

California Energy Commission Integrated Energy Policy Report n Workshops have been occurring all year n October 15 – workshop on draft report n December 11 – CEC to adopt electricity and natural gas demand forecasts for 2014-2024 n January 8 – CEC to adopt final report Comparing Renewable Resources n CEC developing research roadmap that will allow address the potential co-benefits and dis-benefits of renewable power and fuels on energy, air quality, water and climate change

California Energy Commission n  Prop 39

n  Draft guidelines issued September 27 n  Written comments due October 25 n  Workshops and webinars in October:

n  Thursday, October 3, 11:30 AM -3:00 PM, Lemon Grove (San Diego) n  Monday, October 7, 1:00 PM - 5:00 PM, Fresno n  Wednesday, October 9 9:00 AM - 12:00 PM, Webinar via WebEx

https://energy.webex.com Meeting Number: 924 633 535 Meeting Password: prop39@9

n  Thursday, October 10, 1:00 PM - 5:00 PM, Oakland n  Monday, October 14, 1:00 PM - 5:00 PM, Los Angeles n  Wednesday, October 16, 9:00 AM - 12:00 PM, Webinar via WebEx

https://energy.webex.com Meeting Number: 924 494 933 Meeting Password: prop39@9

n  Tuesday, October 22, 1:00 PM - 5:00 PM, Sacramento

California Air Resources Board

Draft AB 32 Scoping Plan Update n Released October 1 n Focuses on three questions:

1.  How have we done over the past five years? 2.  What is needed to continue the prescribed course of action to

2020? 3.  What steps must California now take to meet the state’s climate

goals beyond 2020? n Workshop (with web) October 15 n Written comments allowed through November 1 n LGSEC will continue to be active on this

Legislation n  AB 327 (Perea) – Electricity Rates and Net Metering (pending)

n  CPUC to develop net metering tariffs, approve utility distributed resource plans

n  SB 43 (Wolk) – Community Solar (signed) n  Allows customers to invest in solar projects in their community and

receive credit on bills. n  Up to 600 MW n  CPUC to approve tariffs by 7/1/14 (program goes until 2019)

n  AB 719 (Hernandez) – Streetlights (pending) n  Allows local governments to make efficiency improvements on

streetlights owned by the utilities n  CPUC to develop tariff by 7/1/2015

NOTE: These are only a few of the energy-related bills that are on the Governor’s desk.