The California Public Utilities Commission (CPUC) on May 10, 2012 (in the final Guidance Decision for 2013-2014 Energy Efficiency programs) authorized the California investor-owned utilities – Southern California Gas, San Diego Gas & Electric, Pacific Gas and Electric, and Southern California Edison – to develop, design and implement new energy efficiency financing products.   To assist in this important initiative, on August 1, 2012 the Utilities hired a team of energy efficiency financing consultants led by Harcourt Brown & Carey.

The CPUC’s and Utilities’ goals for the Energy Efficiency Financing Program is to:

  • Overcome the “first cost” of energy efficiency upgrades;
  • Leverage ratepayer funds by bringing in additional private capital;
  • Increase sales of energy efficiency products and services;
  • Reach a broader set of customers and market segments;
  • Encourage customers to invest in projects that will achieve deeper energy savings.

The CPUC directed the utilities and the expert consultant to pursue the design and development of financing program options in a few selected, promising market segments to be piloted in 2013 and scaled up in 2014.  These are:

Residential Market:

  1. A credit enhancement strategy for the single-family residential market.
  2. A financing program strategy designed specifically for the multi-family residential market that includes both a credit enhancement and a possible on-bill repayment option (and/or tariff-based energy efficiency improvement reimbursement mechanism).

Non-residential Market:

  1. A credit enhancement strategy for the small business market.
  2. An on-bill repayment (OBR) strategy for all non-residential customers.

In addition, the utilities and consultant are pursuing the design or development of a financing-related database for collection and sharing of relevant data.  Finally, for each of the new program areas described above, the utilities and consultant are identifying the types of functional roles and structure to be used and the entities that can perform these roles.

The CPUC also articulated that the new programs should be designed so that each finance product can be part of a uniform statewide program, or with standard statewide terms, documents, and procedures, and that the overarching principal of “Keep it simple and fast” be followed – e.g., contractors are the most likely marketing agents and will need to be able to present finance information to the borrower/energy-user to drive transactions.

Key to this project’s successful design and implementation is obtaining the input of experts, market participants, advocates and other stakeholders around the State and beyond.  The California Energy Efficiency Financing Team will use all means at its disposal to do so, including this Web site, meetings and direct communications, formal Working Groups, and a public Workshop.

The schedule for this project is quite aggressive.  For example, the CPUC directed the utilities’ expert consultants to, by the end of the third quarter of 2012, present 2013 pilot program design details in a written program plan and the public Workshop.  Accordingly, the utilities and the California Energy Efficiency Financing Team in advance greatly thank all interested parties for their input, assistance and appreciation of the importance and immediacy of this effort.  We look forward to working with you.