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Report on the “Administrative Pilot” Proposal Cover Letter Commissioner Susan P. Kennedy California Public Utilities Commission 505 Van Ness Avenue San Francisco, CA 94102 January 11, 2005 Dear Commissioner Kennedy: At our last meeting in August of 2004, both our agencies stressed the importance of ensuring that California establishes a strong and unifying Energy Efficiency Administrative structure – one capable of achieving the state’s ambitious goals as a major means to a balanced, clean, and reliable energy future with strong support from the diverse and creative energy efficiency community. This month, the CPUC under R.01-08-028, is scheduled to make a major decision on the administrative structure for energy efficiency that would allocate an estimated $400,000,000 in ratepayer dollars annually. The proposed plan under consideration turns full responsibility for how these funds are spent over to investor-owned utilities. A different option that has been proposed suggests a third party, independent administrator manage the allocation of contracts and services provided through this ratepayer-based annual fund. During early discussions (before the current draft decision was presented and in subsequent discussions) this option was dismissed primarily because of perceived risks of creating a new administrative structure for the entire state. The San Francisco Foundation (TSFF) believes that these concerns are reasonable; however, it does not mean that the idea is without merit. Therefore, as we discussed in our August meeting, the foundation commissioned a study to explore the possibility of a limited, San Francisco Bay Area Pilot program to test the claims of benefits of an alternative administrative structure. Rita Norton & Associates, in consultation with TURN and a group of local governments, has prepared the attached Working Paper, which presents the rationale behind creating an Administrative Pilot and how one could operate effectively in the Bay Area.. The z Pilot would function under the leadership of the CPUC and in full collaboration with the IOUs and interested community partners. The proposal calls for 5% of the total EE funds or $20 million be designated to the administration of the pilot program, which is limited by geographic area and by market sector. The CPUC could establish this entity via a competitive process or alternatively assign the task to a willing organization. The San Francisco Foundation will seriously consider serving as the Pilot Administrator, should the CPUC move forward with this pilot. As we have discussed before, TSFF (as a nonprofit community leader with a current asset base of over 750 million dollars) already functions as an effective grants administrator and evaluator; is accountable to the communities we serve, rather than to shareholders; and could provide an effective avenue for utilities, local governments, and other third parties to apply for energy efficiency funds through an unbiased, transparent, resourceful, and independent process. Over the years the foundation has administered complex environmental grants including projects on energy conservation. The foundation believes the arguments for an Administrative Pillot presented in the Work Paper are sound and compelling. The concept of using a small percentage of funds to explore new avenues for capturing energy savings and to test new methods is prudent planning. Should the Pilot go forward, the CPUC would have a tested alternative that can be evaluated for effectiveness, savings, and costs. Then the CPUC can carefully compare and contrast services administered under the investor-owned utilities to those under alternative administrative structure to devise the best strategies that capitalize on the strengths of the respective parties. . The concept would be a wise investment in California’s energy future that, at a minimum, should warrant a hearing. Please do not hesitate to contact me if you have any questions regarding the work the foundation commissioned, or the foundation’s future role in assisting the CPUC move towards the best future for securing California’s energy security. Regards, Arlene Rodriguez Program Officer, Environment The San Francisco Foundation
The San Francisco Foundation 225 BUSH STREET SUITE 500 SAN FRANCISCO, CA 94104-4224 |
