A07-01-024 et al. L/nas

Decision 09-07-052 July 30, 2009

Before The Public Utilities Commission Of The State Of California

Southern California Edison Company's Application for Approval of Embedded Energy Efficiency Pilot Programs for 2007-2008. / Application 07-01-024
(Filed January 16, 2007;
reopened February 19, 2008)
And Related Matters. / Application 07-01-026
Application 07-01-029
Application 07-01-030

ORDER MODIFYING DECISION 08-11-057

AND denying rehearing of decision AS MODIFIED

This decision addresses the application for rehearing of Decision

(D.) 08-11-057 (or “Decision”), filed by Division of Ratepayer Advocates (“DRA”). We have reviewed each and every allegation set forth in the application and do not find grounds for granting rehearing. For purposes of clarification, we modify three findings of fact (“FOF”) and one conclusion of law (“COL”). We also delete three findings of fact. We modify the discussion in the Decision to ensure consistency with the above changes. Rehearing of D.08-11-057, as modified, is denied.

I.  FACTS

In D.07-12-050, we considered and approved pilot programs proposed by the largest regulated energy utilities. (Order Approving Pilot Water Conservation Programs within the Energy Utilities Energy Efficiency Programs [D.07-12-050] (2007) __ Cal. P.U.C. 3d __ (slip op.) (hereinafter, “D.07-12-050”).) Pacific Gas and Electric Company (“PG&E”), San Diego Gas & Electric Company (“SDG&E”), Southern California Gas Company (“SoCalGas”), and Southern California Edison Company (“SCE”) in Application (A.) 07-01-024, et. al., submitted proposals pursuant to an assigned Commissioner ruling in Rulemaking (R.) 06-04-010, the Commission’s energy efficiency rulemaking docket. The ruling directed the utilities to submit applications for the approval of pilot programs “to explore the potential for future programs to capture water-related embedded energy savings.” (Assigned Commissioner’s Ruling on Process Related to the Consideration of Embedded Energy Savings Related to Water Efficiency (“October 16, 2006 ACR”) filed October 16, 2006, at p. 3.) In D.07-12-050 we evaluated the proposals, identified the ones we would adopt and ordered the utilities to implement these pilot programs, “to conserve water and improve the efficiency of water use . . . .” (D.07-12-050, supra, at pp. 100 – 101 Ordering Paragraph (OP) 2, Table 7.)

The assigned Commissioner ruling setting the instant proceeding in motion identified three ways to reduce net energy consumption related to water use that it considered to be the most consistent with an energy efficiency strategy. The three methods endorsed by the ruling were:

1.  Conserve water;

2.  Use less energy-intensive water (gravity-fed or recycling versus groundwater, aqueducts or desalination); and

3.  Make delivery and treatment systems more efficient.[1]

(D.07-12-050, supra, at p. 8, citing October 16, 2006 ACR; see also D.08-11-057 at p. 3.)

D.07-12-050 repeated these three options and included them as three categories in item nine of a nine-item list that we have described as “criteria” and “objectives” to be used in evaluating the proposed programs. (D.07-12-050, supra, at pp. 34 - 35.) In that decision we expressed “disappointment” that none of the energy utilities had proposed programs involving the “third strategic category,” i.e., “make delivery and treatment systems more efficient.” (Id. at p. 33, fn. 13.) We directed the energy utilities to design programs to address the issue in their 2009 – 2011 planning.) (Ibid.) Ultimately, D.07-12-050 adopted three projects[2] that related to the 3rd category. We also noted that it is important for the energy utilities to pursue energy efficiency opportunities with regulated water companies, but none of the proposals involved regulated water providers. (Id. at p. 88.)

D.07-12-050 directed energy utilities to meet with regulated water utilities to, among other things, “[i]dentify opportunities for efficiency improvements that each water utility can pursue on its own, and those which may require a new or augment[ed] energy utility program offering.” (D.07-12-050, supra, at pp. 88 - 89.) As directed, the energy utilities held the meetings and filed reports on those efforts. (D.08-11-057 at p. 5.)

On April 30, 2008, the California Water Association (“CWA”) submitted a “Request for Approval of CPUC-regulated Water Utilities Operational Energy Efficiency Projects,” which proposed projects to be conducted by six Commission-regulated water utilities[3] and funded through the budget associated with A.07-01-024, et al. The administrative law judge (“ALJ”) denied the request on the grounds that it did not comply with the Commission’s Rules of Practice and Procedure (“Rules”),[4] but advised CWA that it could submit the proposal as a petition to modify D.07-12-050. (ALJ’s Ruling Authorizing Petition for Modification of Decision 07-12-050, June 27, 2008.) Subsequently, CWA filed a petition to modify D.07-12-050, in which it again proposed operational energy efficiency projects. (Petition of California Water Association for Modification of Decision 07-12-050 (“CWA Petition”) July 9, 2008.)

We considered the CWA Petition in D.08-11-057.[5] We summarized the CWA proposal as follows:

CWA proposes operational energy efficiency programs to demonstrate potential improvements in wire-to-water operational efficiency when the appropriate combination of induction motors, pumps, variable frequency drives and Supervisory Control and Data Acquisition (SCAD) systems are operated at their optimal efficiency levels. The overall goal is to achieve and document at least a 10% differential optimal energy efficiency, in line with the goal set forth in the Water Action Plan.

(D.08-11-057 at pp. 5 – 6.) The CWA Petition asked us to include the proposed projects in the group of projects that had already been approved by D.07-12-050. We denied the CWA Petition on procedural grounds, but determined that the denial did not preclude us from evaluating the proposed pilot programs contained therein. (D.08-11-057 at pp. 11, 23 Finding of Fact (FOF) 21.) Acting on our own initiative, we authorized CWA’s proposed projects and ordered that D.07-12-050 be modified accordingly. (D.08-11-057 at p. 20.)

DRA timely filed an application for rehearing of D.08-11-057, alleging that certain of the findings of fact (“FOF” or “findings”) are not supported by substantial evidence. DRA challenges the following findings: (1) “None of the programs approved by D.07-12-050 involve the third strategic category of making delivery and treatment systems more efficient,” (FOF 7); (2) “The CWA Petition provides estimated energy savings for each of the proposed programs, but no cost-effectiveness information,” (FOF 11); (3) “The Petition’s programs generally meet the nine criteria set forth for evaluating the merits of the pilot programs,” (FOF 12); (4) “Not every program adopted by D.07-12-050 had a joint funding component,” (FOF 16); (5) “Plant retirements due to the programs contained in the Petition will reduce revenues to water companies,” (FOF 18); (6) “The Petition’s pilot programs have merit and are consistent with our energy efficiency objectives,” (FOF 22) and (7) “The Petition’s pilot programs move us significantly forward in our goal of determining whether less energy intensive water measures should be funded with electric utility energy efficiency dollars,” (FOF 23). DRA challenges, as “flawed,” Conclusion of Law (“COL” or “conclusion”) 2, which states that the CWA programs have merit, and are consistent with the D.07-12-050 criteria and the strategic goals of A.07-01-024 et.al. DRA alleges further that our adoption of the projects amounts to an abuse of discretion.

CWA, PG&E and The Utility Reform Network filed responses to DRA’s application for rehearing.

II.  DISCUSSION

A.  Findings of Fact and Conclusions of Law

DRA addresses in general terms Public Utilities Code section 1705,[6] which sets forth the legal requirement for findings of fact and conclusions of law in Commission decisions. This statutory provision specifies in pertinent part:

. . . the decision shall contain, separately stated, findings of fact and conclusions of law by the [C]omission on all issues material to the order or decision.

(Pub. Util. Code, §1705.) The California Supreme Court has considered the section 1705 requirement for Commission findings and conclusions and has explained that findings are essential to:

afford a rational basis for judicial review and assist the reviewing court to ascertain the principles relied upon by the [C]omission and to determine whether it acted arbitrarily, as well as assist parties to know why the case was lost and to prepare for rehearing or review, assist others planning activities involving similar questions, and serve to help the [C]omission avoid careless or arbitrary action. (Citations omitted.)

(California Manufacturers Assn. v. Public Utilities Com. (1979) 24 Cal.3d 251, 258-259.)

D.08-11-057 contains 27 FOF’s and six COL’s related to its ultimate outcome, which is amending D.07-12-050 to include the CWA-proposed projects. These findings and conclusions comply with section 1705 because they provide a rational basis for review, reveal the principles relied upon by the Commission and are sufficient to assist parties preparing for rehearing of the Decision. DRA challenges certain individual findings and one conclusion, but does not allege explicitly that the findings and conclusions, as a whole, fail to comply with section 1705. If DRA intends to assert such a claim, it is without merit.

DRA challenges the adequacy of the record related to seven of the findings,[7] but makes no specific claim of error regarding the remaining twenty findings.[8] Each of DRA’s specific claims of error is addressed in the sections that follow.

1.  Finding of Fact 7

Finding of Fact 7 states:

None of the programs approved by D.07-12-050 involve the third strategic category of making delivery and treatment systems more efficient.

(D.08-11-057 at p. 22, FOF 7.) In challenging the record support for FOF 7, DRA disputes the accuracy of the word “none” and asserts that D.07-12-050[9] “approved two programs to explore ways to improve the efficiency of water delivery and treatment systems,” which is the subject of the “third strategic category.” (Reh. App. at pp. 9 – 10, see item 9, category (c), D.07-12-050, supra, at p. 35, D.08-11-057 at p. 13.) DRA identifies the SoCalGas proposal for the “Pump Engine Testing evaluation partnership with Crestline Lake Arrowhead Water Agency, and the Eastern Municipal Water District” and PG&E’s “Emerging Technologies to Improve Water System Efficiency” (“Emerging Technologies”).[10] (Reh. App. at p. 10, citing D.07-12-050, supra, at pp. 72, 75, also p. 97, FOF 31 and p. 98, COL 6.)

Initially, applicants did not propose projects relating to the third strategic category, however, we adopted programs and directed more activity in that area. FOF 7 appears to contain a drafting error related to this distinction between “proposed” and “approved” programs. We stated our disappointment about the lack of proposals involving the third category and directed the utilities to “design programs to address this issue as part of their planning for 2009 – [2]011.” (D.07-12-050, supra, at p. 33, fn.13.) We also directed the energy utilities to, among other things, contact and meet with regulated water utilities to pursue energy efficiency opportunities that could be accomplished within the bounds of existing energy efficiency programs and to identify opportunities that each water utility could pursue on its own and those which may require a new or augmented energy utility program. (D.07-12-050, supra, at p. 89.)

For these reasons, we modify FOF 7 to say:

In D.07-12-050 the Commission called for more activity in relation to the third strategic category.

The text of the Decision also refers to a “void” in the third strategic category and identifies projects related to each category in a manner that we believe is confusing.[11] Where such statements appear, we modify the text consistent with the above discussion. As modified, FOF 7 and the related text are consistent with D.07-12-050 and with our desire to see additional activity relating to the third strategic category. DRA’s request for rehearing on the basis of FOF 7 is without merit.

2.  Finding of Fact 11

DRA challenges Finding of Fact 11, which states:

The CWA Petition provides estimated energy savings for each of the proposed programs, but no cost-effectiveness information.

(D.08-11-057 at p. 23, FOF 11.) DRA alleges that the record contains “no reasonable basis” for CWA’s energy savings estimates. (Reh. App. at pp. 12 – 13.)

There is no confusion or disagreement about the lack of supporting calculations for the energy savings estimates. (D.08-11-057 at pp. 15 – 16.) The issue is addressed fully in the text of the Decision and we have directed staff to collect the data. (D.08-11-057 at p. 20.) The fact that FOF 11 does not address the matter of supporting calculations is not a basis for granting rehearing. However, because we did not rely on the estimates and we ordered staff to collect energy efficiency and cost effectiveness data, FOF 11 does not state a fact that is material to our decision. For that reason, we will delete the finding.

We will modify the text of the Decision, consistent with the above discussion.

3.  Finding of Fact 12

DRA challenges FOF 12, which states:

The Petition’s programs generally meet the nine criteria set forth for evaluating the merits of the pilot programs.

(Reh. App. at pp. 11 – 12; see D. 08-11-057 at p. 23, FOF 12.) DRA also references and challenges a similar statement in the text of the Decision. (See D.08-11-057 at p. 13.) DRA’s evidentiary challenge is without merit because there is record support for FOF 12. The record of the proceeding includes the CWA proposal detailing the individual projects. (CWA Petition; D.08-11-057, Appendix.) The nine criteria are set out and discussed in both D.07-12-050 and D.08-11-057. The list includes:

  1. Reduce energy consumption related to water use in a manner that should prove to be cost effective.
  2. Create a methodology for calculating cost-effectiveness and evaluating water-derived energy efficiency programs;
  3. Determine if, in fact, it is cost-effective to save energy through programs that focus on cold water;
  4. Better understand how energy is used in the California water system;
  5. Test a diverse set of water energy programs and measures, with particular emphasis on new technologies and low-income customers;
  6. Better understand what programs and measures are likely to save water and energy;
  7. Provide the basis for meaningful ex-post project assessment;
  8. Stimulate new partnerships; and
  9. Better understand the potential benefits of pursuing each of the strategies identified in the October 16, 2006 ruling:
(a)  Conserving water;
(b)  Switching to less energy-intensive water sources; and
(c)  Increasing the energy efficiency of current water delivery.

(D.07-12-050, supra, at pp. 34 – 35, 57 – 63 and D.08-11-057 at pp. 12 – 13.)