California utilities dinged over efficiency goal

CPUC Energy Efficiency Shortfall outlines a CPUC audit of investor-owned utilities, energy savings goals, and ratepayer advocates, revealing overstated results, reduced net benefits, disputed shareholder bonuses, and the need for independent verification amid customer rates.

California's investor-owned utilities were rebuked for failing to reach energy efficiency goals over a three-year period, putting them at risk for penalty payments.

The four utilities — Pacific Gas and Electric Co, Southern California Edison Co, and Sempra Energy's San Diego Gas & Electric Co, which has offered lower bills for conservation to qualifying customers, and Southern California Gas Co — achieved only 70 percent of the targeted energy savings in the 2006-2008 period, according to an independent consumer advocacy division of the California Public Utilities Commission, the state's energy regulator.

In stark contrast, the utilities had reported they achieved 160 percent of their goals, the commission's Division of Ratepayer Advocates DRA said, adding that the investor-owned utilities should not be entitled to any shareholder bonus payments from the CPUC even as other regulators approve public solar deals in Oregon to drive transparency.

The CPUC had put in place a program allowing the utilities to earn bonuses similar to a plan to pay utilities more if energy use falls that was widely discussed for achieving CPUC-established energy savings goals. The utilities could earn as much as $450 million in bonuses if the utilities exceeded goals.

The CPUC awarded the utilities $82 million in bonuses in 2008 based on self-reporting on energy efficiency programs, according to the DRA.

Also, the CPUC allowed the utilities to spend $2 billion of customers' money on energy efficiency programs in 2005 with the expectation that would generate $2.7 billion in net benefits for customers.

But the CPUC staff report said customers only received $426 million in net benefits, excluding $144 million of bonuses paid to utility shareholders amid a trend where utilities seek money for less power across markets, the DRA said.

"The CPUC staff report illustrates why independent verification of energy efficiency program achievements is so crucial," said DRA Director Dana Appling, in a statement. "The report shows that customers didn't get what they paid for, yet the utilities earn massive bonuses while customer energy rates continue to increase and some are left in the dark more often in California as well."

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