Subject: Disposition approving Advice Letter requesting approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach Plan Attachment 1
Review and Analysis I.
Background On November 4, 2014 the Center for Sustainable Energy (CSE) filed a Tier 1 Advice Letter in compliance with Resolution E-4663. The Advice Letter requested approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach (ME&O) Plan, which CSE developed through a stakeholder process. Included in the plan was a $6.8 million budget originally allocated to CSE by D.13-09-044. This decision approved the seven financing pilots and directed CSE, as program administrator for Statewide ME&O for demand-side management, to create an integrated statewide plan for them. II.
Party Protest, Comments, and Reply Comments
On November 24, 2014, PG&E filed a protest of the plan, while SoCalGas and SDG&E jointly filed a protest of the plan. SCE commented on the plan on the same day. CSE filed replies to the protests and comments on December 2, 2014. On January 29, 2015, CSE filed supplements addressing several issues raised by the investor owned utilities. SoCalGas protested CSE’s supplement on February 4, 2015 and CSE replied on February 6, 2015. Below is a summary of the protests, SCE’s comments, CSE’s replies, supplements, and discussion of each subject:
1. Investor Owned Utilities’ (IOU) Protest of Budget - Plan proposes strategies for the IOUs to accomplish without associated budget allocation from the $6.8 million finance marketing budget
All four IOUs believe that the plan identifies efforts for them to accomplish without providing necessary funding.
PG&E believes costs could be significant for the IOUs to implement local/regional strategies in the plan that are derived from the original non-compliant IOU Program Implementation Plans (PIPs). For instance, PG&E identifies what it says are direct implementation nonincentive (DINI) costs that it believes will require additional funding if it is to accomplish them. However, PG&E proposes a solution. PG&E says it can fund most of these local/regional plan strategies by using funds earmarked in the finance pilot PIPs for DINI and administrative costs, and through costs shifts to the finance program, in accordance with existing fund-shifting rules. Funds the IOUs earmarked in the finance pilot PIPs for DINI tasks, and administration, total $8.9 million statewide. PG&E says it will provide CSE and the CPUC a budget that represents these funds and costs (both DINI and marketing costs). PG&E proposes to start work immediately on tasks that can be funded through these 1
Subject: Disposition approving Advice Letter requesting approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach Plan February 6, 2015
existing sources – fund-shifts and the PIP budgets: “To implement the proposed strategies, PG&E will first leverage existing activities and resources across programs to meet the stated goals.’’
SCE, on the other hand, believes that it needs more funding from the finance marketing budget to cover costs it will incur during the two years each pilot will run - or that it already has incurred. For instance: SCE says it has already spent, as of September of 2014, $45,000 of the $116,000 the plan allocated it, on 1) marketing staff support of the finance pilots, and 2) other tasks such as updating its website with the list of eligible measures required by D.13-09-044. SCE believes it will need more funds to meet the plan goals of incorporating finance messaging into marketing already planned for the IOUs’ energy efficiency (EE) retrofit programs because it will require “substantial work and resources’’ to revise materials for various customer segments.
The Joint Utilities are concerned that the marketing plan does not include the $340,000 they proposed for regional marketing activities. The Joint Utilities list in their protest 13 IOU strategies drawn from the original pilot PIPs, which CSE included in the plan. However, the Joint Utilities say that the plan earmarks budget amounts that will not allow either utility to fully complete the tasks. While there will be opportunities to leverage other EE program funding to co-brand with the financing pilots at little or no incremental cost, the Joint Utilities believe this will not be possible in all cases. For instance, the 13 strategies, the Joint Utilities say, will require additional labor for the IOU marketing teams “above and beyond what the utilities are currently resourced to provide.’’ Similarly, the plan assumes a matching contribution from the IOUs’ online Energy Advisor program budget. As such, the Joint Utilities propose that CSE resubmit the plan with appropriate budget allocations, in consultation with the Joint Utilities, or remove those tasks from the plan. SoCalGas’ February 4, 2015 protest of CSE’s supplement refers to the thirteen tasks as “requirements’’ and reiterates that the funds the plan provides are insufficient. The protest also asserts that the supplemented plan is proposing to redirect Energy Advisor budgets approved by CPUC Decision 14-10-046 by requiring a fund match. SCE and the Joint Utilities request the CPUC quickly develop a clear process for the IOUs and other partners to seek approval for necessary marketing expenditures in the marketing plan. The Joint Utilities recommend the details be vetted with stakeholders.
CSE in its reply comments defers to the CPUC on whether additional funds should be allocated to the utilities, but in any case, asks that the CPUC require the utilities to perform all strategies in the plan. CSE goes on to note that all of the strategies earmarked for the utilities in the plan are within the scope of their existing marketing efforts for their various sector programs and that CPUC staff had indicated that financing marketing should be integrated with existing program marketing as much as possible. CSE further clarifies for
Subject: Disposition approving Advice Letter requesting approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach Plan February 6, 2015
the Joint Utilities that CSE will allocate the $1.348 million reserve in future months when priorities for additional funding are clearer - and that funds could go to other actors besides the IOUs.
Discussion of Budget Energy Division agrees that the IOUs should not be asked to perform work without funding. However, we understand the reasoning behind CSE’s request that the CPUC require the utilities to perform all strategies in the plan. Energy Division and CSE have little insight into how the IOUs are deploying CPUC-authorized funds for their local marketing, other portfolio “direct implementation, non-incentive” (DINI) expenditures, or general portfolio administrative costs, none of which were approved as part of D.13-09-044. Due to how they account for their marketing costs, the IOUs were unable to fully complete a CPUC data request made on August 19, 2014 that would have illustrated costs for media, collateral, trade show exhibitions, contractor training, sponsorships, etc. and perhaps further informed the plan that CSE submitted. The IOUs did report portfolio-wide marketing budgets approved under other energy efficiency decisions for CPUC Data Requests 16398-16401. For instance, PG&E reported $42.4 million budgeted for the 2013-2014 program years, and reported spending $12.5 million of that by the end of 2013. PG&E requested $24.4 million in marketing funds for the 2015 bridge year. SCE reported a $19.2 million portfolio-wide marketing budget for the 2013-2014 years, and that it spent 51% of that by June of 2014. In their protest, the Joint Utilities acknowledge that there will be opportunities to leverage other EE program funding to co-brand with the financing pilots at little or no incremental cost. Energy Division appreciates PG&E’s solution for funding the local/regional marketing strategies through fund shifting and use of some of its share of the $8.9 million in DINI funds, and administrative funds, in the finance pilot budgets.
Page 64 of the marketing plan introduces the local/regional strategies that the IOUs had originally identified to leverage existing programs to add messaging about financing. While the IOUs are required by OP 8 of Resolution E-4663 to comply with the finance marketing plan this letter approves, the marketing plan as supplemented on Page 64 says the IOU local/regional strategies are “recommended’’ to be implemented, but the plan does not require it. CSE allocates a total of $400,000 for one of the IOU tasks in this section. ED finds that this resolves the IOU concern that there are plan requirements the IOUs can’t fully perform due to lack of funding. ED denies the utility protests requesting the plan allocate more funds for local/regional IOU tasks that are identified but not required by the plan. Resolution E-4663 gives CSE the authority to draw up the marketing plan and allocate the budget. ED finds that per Resolution E-4663 OP 8, the IOUs should use the funds CSE has authorized in the plan to
Subject: Disposition approving Advice Letter requesting approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach Plan February 6, 2015
carry out the plan until they exhaust the funds and/or identify other sources of funding within their EE portfolios as PG&E suggested (complying with any fund shifting requirements that are triggered as a result of this re-allocation), and in the future formally request Commission authorization for new funds, if necessary.
SCE appears to have spent as of September of 2014, $45,000 of the $116,000 the plan allocates to SCE on tasks that are not in the marketing plan. These include marketing staff support of the finance pilots the first of which is not scheduled to begin until April 2015), and updating their website with the list of measures eligible for financing. As SCE says in its comments, the measure list posting was required by D.13-09-044. But that task was not part of the marketing plan. Similarly, the plan, which was not filed until November 4, 2014, did not earmark funds for early marketing staff support. Resolution E-4663 did allocate $400,000 to the IOUs to support their staff attending meetings to help create the marketing plan, but those funds are not part of the budget in the marketing plan. Energy Division finds that the finance marketing budget cannot reimburse SCE for performing tasks that are not assigned it in the plan, with an accompanying budget allocation.
CSE has supplemented the plan to make clear that its funding of $400,000 for IOU Energy Advisor programs is meant to augment them to include support specifically for the finance pilots. CSE deleted text that called for a fund match from the IOUs. Instead, the supplemented plan, in its section on recommended tasks for the IOUs, asks that the IOUs use Energy Advisor budgets to support the non-finance aspects of Energy Advisor, “if available.’’ ED finds that this resolves the Joint Utilities’ protest that CSE required a funding match that they cannot meet and SoCalGas’ protest that CSE was proposing to redirect Energy Advisor budget approved under a different Decision. While the Joint Utilities say that the use of Energy Advisor is inappropriate, they also say that the plan recognizes the ability of Energy Advisor-type services to “close deals.’’ And in other comments they request that ED redirect funds budgeted for the Financial Concierge Service to pay for Energy Advisor.
We agree with CSE that the $1.348 million in reserve funds it will allocate should be used to cover gaps and needs that emerge during pilot operation - and that CSE may allocate these funds to actors besides the IOUs as it did with the plan this letter approves. CSE has supplemented its plan to reflect the fact that it will file a Tier 1 Advice Letter to identify the budget allocation of the $1.348 million reserve by March of 2016, which reflects the authority granted to CSE by Resolution E-4663 and the process for the marketing plan this letter approves. In its supplement, CSE has removed a reference in the plan to a process by which the IOUs might submit proposals for review and approval in order to receive funds allocated to them by the plan. Instead, the IOUs and CSE will work out a more direct means to distribute the funds to the IOUs that are allocated to them in the plan. ED finds that this addresses the
Subject: Disposition approving Advice Letter requesting approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach Plan February 6, 2015
IOUs request that CSE and the CPUC identify a funding mechanism. ED finds that all of the budget-related protests are either resolved or denied for the reasons stated above. 2. PG&E Protest Regarding Contractors PG&E cites discrepancies in the plan that could reflect a lack of coordination with and recognition of “existing, highly engaged’’ IOU contractor networks. PG&E cites Page 68, where Strategy 11 says the IOUs are responsible for leading contractor finance program trainings.
CSE asserts that throughout the plan are references to coordination and cooperation with the utilities, and utilizing all existing networks and relationships, and cites several examples. CSE requests the CPUC deny this request.
Discussion of Contractor-related Strategies In the plan, Strategy 11 on Page 68, which PG&E refers to in its protest, is in a section on possible tasks for the IOUs called “Collaboration with Strategic Partners.’’ It is one of 13 strategies that CSE pulled from the original IOU PIPs. Strategy 11 refers to the IOUs “leveraging existing relationships with all sectors of the contractor community and trade associations to support the goals and objectives of the financing program . . . .’’ Further, CSE has identified in the plan that it and CAEATFA will need to coordinate with the IOUs on contractor-related issues. Energy Division sees these aspects of the plan as explicitly recognizing and “leveraging’’ existing IOU relationships with contractors, and does not see it as contradictory to have related, coordinated, roles for CSE and CAEATFA. In its reply comments, CSE provided four citations from its plan of references to how CSE will coordinate efforts with the IOUs to leverage their relationships with contractors. Energy Division found several more references, as well as the blanket statement on Page 7: “Success depends upon ongoing collaboration and cooperation between the IOUs, RENs, CSE, CAEATFA, the Commission, and other relevant actors working to execute the financing marketing plan and support the availability of financing pilots into all California households and businesses.’’ Energy Division denies this protest.
3. Protest Regarding Performance Metrics PG&E and SCE believe that the CSE plan should provide baseline and target values by which to measure success. SCE says this would also support real-time changes to programs. In particular, the Joint Utilities say these called-for clarifications should focus on whether the marketing plan increases participation in the finance pilots, not just on awareness. PG&E is concerned that some of the metrics the plan does identify are not appropriate. PG&E and the Joint Utilities suggest the CPUC have CSE work with stakeholders and the evaluation team studying the finance pilots to make the metrics more robust. SoCalGas in its protest of the supplement reiterates its request that CSE develop more robust metrics to measure campaign effectiveness through a stakeholder process. SoCalGas also asserts that D.13-12-
Subject: Disposition approving Advice Letter requesting approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach Plan February 6, 2015
038 requirements for performance metrics for the Energy Upgrade California statewide marketing plan are also required here, due to Resolution E-4663’s reference to CSE’s work on the finance marketing plan following the “governance structure and other tenets of D.13-12-038.’'1
CSE in its reply asks that the CPUC deny this request saying that neither D.13-09-044 nor Resolution E-4663 included such requirements or provided CSE a budget for them. Where the Energy Upgrade California statewide marketing does have a process for refining metrics, it was specifically ordered by D.13-12-038. Further, CSE points out that the utilities’ ME&O for energy programs traditionally has only been measured in terms of building awareness and has not been evaluated on contributions to program participation. CSE notes that it did consult with Opinion Dynamics Corporation, the evaluation firm the CPUC has assigned to study the finance pilots, in order to develop the metrics in the plan. Further, because the pilots are new, CSE argues that the baseline is zero.
CSE believes the metrics in the plan do move toward measuring the customer journey from awareness to action. For example, metrics measure the volume of customers who enter the financing pipeline by taking initial action, such as requesting more information from financial institutions, and applications, pre-applications, etc.
Discussion of Metrics Energy Division agrees with CSE. The plan on Pages 12-13 includes a table CSE developed with the assistance of Opinion Dynamics Corporation. The table outlines data CSE will collect on strategic partner and target customer awareness, and initial actions taken by target customers. There are no requirements or specified budget for CSE to develop more elaborate metrics or targets as part of the plan. Resolution E-4663’s reference cited by SoCalGas refers to the governance structure developed in D.13-12-038, not to performance metrics. Energy Division would also like to point to PG&E’s 2010 comments on energy efficiency performance metrics for its own programs, concerning PG&E Advice 3120G/3675-E. The Division of Ratepayer Advocates (DRA) had protested PG&E’s Advice Letter setting performance metrics for its energy efficiency programs in part because according to DRA, “no articulate long-term metrics are provided.’’ In its response on June 24, 2010, PG&E provided a position that seems counter to what is it now asking CSE to do: “The IOUs propose metrics for outcomes within the utility control. The IOU metrics will focus on each program’s Short Term Outcomes, not activities or linkages, per revised criteria from ED.’’ Energy Division denies this request.
4. Customer Journey/Coordination of SW and Local Efforts PG&E cites the need for CSE to coordinate with PG&E to ensure that efforts are responsive to the feedback of customers, contractors and financial institutions and follow best practices in the emerging field of finance marketing. CSE’s coordination with PG&E is needed, PG&E says, because CSE developed outreach tactics without the IOUs assessing 1
Page 11, Resolution E-4663
Subject: Disposition approving Advice Letter requesting approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach Plan February 6, 2015
their ability to conduct them. An example is the single customer journey that the plan outlines, which PG&E says it not consistent with best practices. Customers might want to follow a different path to action than the one CSE imagines, which PG&E says relies on the Energy Upgrade California website.
CSE asks the Energy Division to deny this request. CSE acknowledges that IOU Strategy #13, on the increased role of the Energy Advisor, does refer to guiding the customer to the statewide marketing website. However, the plan overall, CSE says, does not require customers to move away from IOU proprietary pages to the statewide website. CSE says it would defer to the working group of stakeholders (including IOUs) that helped guide CSE’s creation of the plan, if they determine that ushering customers to the statewide website is a good idea, as long as customers aren’t confused. CSE expects the stakeholder group to continue to collaborate on successful integration of financing into the IOU programs, according to Page 64 of the plan. Discussion of Customer Journey/Coordination of SW and Local Efforts While Energy Division supports the stakeholder group coordination that CSE identifies in its reply comments, ED also recognizes that CSE’s role in creating the plan was not focused on IOU proprietary websites. Rather, Decision 13-09-044’s vision of marketing called for coordination of finance marketing “with the larger umbrella platform the Commission is expected to adopt’’ in what became D-13-12-038, the decision on the Energy Upgrade California statewide marketing performed by CSE. Energy Division sees it as compliant with D.13-09-044 that CSE is creating a finance section of its statewide Energy Upgrade California website for the statewide finance pilots to, as the finance marketing plan says on Page 3 “provide a central online repository for financing information and a consumer decision-making tool that will aid customers in choosing how to finance an energy project.’’ Energy Division denies this request.
5. Finance Concierge System(FCS) SCE supports the development and use of a simple tool to help customer and contractor decision making – as long as it is limited to providing ratepayer funded EE financing options during the pilot period. The Joint Utilities support the basic approach but not any elements of Phase II that would pre-approve a loan, collect personally identifiable data, and compare real-time loan offerings. Further, the Joint Utilities believe some elements of the FCS could be out of scope for a marketing effort because they fit the definition of direct implementation expenses in the EE Policy Manual. They also object to the citation of a report produced by their contractor when the contractor was working for the CPUC. The Joint Utilities propose that funds allocated to the FCS should be shifted to further enhance the IOUs’ Energy Advisor program. The Joint Utilities say the plan recognizes the opportunity to use Energy Advisor to “close deals’’ but that it doesn’t provide nearly enough funds to pay for the labor intensive work needed in the pilot period for all pilot sectors.
Subject: Disposition approving Advice Letter requesting approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach Plan February 6, 2015
SCE wants CSE to identify the cost for the two phases of FCS tool development.
In its reply, CSE asks that the CPUC deny this request. CSE says the Joint Utilities assertion that the FCS is a direct implementation cost, not a marketing cost, misinterprets the manual, which specifically excludes financing programs from DINI cost caps. CSE said it reflected prior input of the Joint Utilities in the plan filed on Nov. 4, 2014 by revising it so that Phase II of the FCS does not include any of the three elements that the Joint Utilities protested. A Phase III, however, would include a pre-approval function, CSE says, but as they say, that phase is not in scope at this time.
Budget for FCS Tool CSE notes that the $250,000 budget for the FCS tool is in fact for Phase II, and that Phase I is funded through the statewide ME&O budget, and so is a no-cost item. CSE’s supplement fixed a typo in the budget table to make this clear, and also further clarified the plan narrative to make more explicit that the three functions that most concerned the Joint Utilities would not be included in Phase I or II. Including non-IOU finance products in the FCS tool CSE replied that it is best for the customer to be able to choose the financing tool that best meets their needs, especially given the finance pilots are meant to stimulate energy projects rather than being a goal unto themselves. Hence, the FCS should include non-IOU finance products.
Contractor citations CSE says it removed one of the protested citations before submitting the final draft plan. The other citation refers to a point-of-sale process, which is not part of the plan given that the plan sees contractors and Energy Advisors as key ambassadors, beyond the FCS tool. Hence, CSE says, the citation is included for information only, not to support the FCS tool.
Discussion of FCS Tool Energy Division understands the utilities’ concerns and agrees with the Joint Utilities that comparisons of real-time loan offerings, loan pre-approval, and collecting sensitive personally identifiable data are beyond the scope of the tool envisioned for Phases I and II (unless as CSE notes on Page 62, the stakeholder group that includes the IOUs decides it is a good idea and worthy of the expense.) CSE in its reply comments verifies that Phase II does not compare real-time loan offerings, personally identifiable information, or pre-approval of loans – and their supplement further clarifies this. On other counts, Energy Division agrees with CSE and denies the utility protests.
Energy Division denies the Joint Utilities’ request to shift FCS funds to the Energy Advisor program. Besides undercutting the FCS tool, the plan notes that Energy Advisor is not cost effective as a stand-alone approach, and isn’t a statewide approach. Energy Division denies
Subject: Disposition approving Advice Letter requesting approval of the Energy Upgrade California Statewide Financing Pilots Marketing Education & Outreach Plan February 6, 2015
the SCE request that finance solutions offered by other administrators be excluded from the FCS. ED agrees with CSE, and finds their inclusion will support AB 758.
Energy Division denies the Joint Utility protest that the FCS tool is not an ME&O cost allowed in the Policy Manual. In fact, the Policy Manual has a line item under ME&O costs for “marketing-specific IT costs.’’2
6. Utility Bill as a Savings Account 7. SCE and the Joint Utilities want references to this proposed tagline to be removed from Page 80 of the plan. CSE replied that it removed discussion of it from the plan, except for an oblique reference on Page 80, which CSE removed in its supplement. Energy Division finds that this protest is resolved by the supplement. 7. Customers Targeted for Education PG&E is concerned that Strategy 7 is missing some customers or groups of customers and that it needs to enhance the list of customer groups based on near-term outreach efforts. In its replies, CSE points out that in introducing a list of groups of customers, Strategy 7 states “including, but not limited to,’’ which signifies that the list of current and past customers is already open to the inclusion of additional customers. ED agrees with CSE and denies this protest.
2
Page 93, Appendix F: Cost Categories and Related Cap and Targets, Energy Efficiency Policy Manual Version 5, July 2013.
