The decision starts out with a much needed dose of reality, put a number of very real issues on the table, including the fact that energy efficiency is getting less cost effective, and that overhead costs are fundamentally out of control.
Looking ahead to Phase III of this proceeding, many important policy issues remain before us. Energy savings goals continue to go up, while we are to some extent a victim of our own success: the low-hanging fruit has largely been harvested. Energy efficiency portfolios as we know them are on the verge of no longer being cost effective. Program Administrator expenditures on costs other than customer rebates appear excessive, as they have come to represent approximately half of portfolio expenditures. The rate of observed savings compared to forecast savings is distressingly low in some market sectors. Ex ante review continues to be a source of controversy.
You can read the full text of this decision, and please comment if you see anything in there that represents the kind of substantive and strategic changes that hold the promise of changing our trajectory.
If energy efficiency is going to deliver on its great promise as a low carbon capacity resource we need to fundamentally rethink the approach. Its time to move from reguelated programs to markets that can drive private investment and encourage real innovation. This process is underway in a number of key states including CA and NY, but progress is slow and made less certain by regulators and the weight of large entrenched interests in current programs -- program administration costs are clearly overhead when it comes to delivering efficiency, but also the core business model for many well funded firms.
Unfortunately, I don’t see ideas in this latest opus that stray from far from the status quo. We need big bold and aggressive change that is frankly unlikely to emerge from the current process without political leadership.
For ideas on a different path, check out my GreenTechMedia article on moving from Programs to Markets.