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HomeMy WebLinkAboutSCE - Southern Callifornia Edison - 2010-01-19 Dept ID AD-15-040 Page 1 of 2 Meeting Date 12/21/2015 7��4 -o CITY OF HUNTINGTON BEACH 40 REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 12/21/2015 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A Wilson, City Manager PREPARED BY: Antonia Castro-Graham, Energy and Sustainability Project Manager SUBJECT: Approve and authorize execution of the Third Amendment to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Edison (SCE) Statement of Issue The City of Huntington Beach approved Resolution 2009-09 and entered into a Local Government Energy Action Partnership in 2009 The City subsequently replaced that agreement on January 19, 2010, with both Southern California Edison (SCE) and Southern California Gas (SCG) for the program period of 2010-2012 and subsequently approved the first and second amendments through December 2015 Financial Impact Not applicable While there is no cost to the City by participating in the partnership, the City is eligible for additional monetary incentives for energy efficiency improvements Recommended Action A) Approve and authorize the City Manager to execute the "Third Amendment" to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Edison, and, B) Authorize the City Manager to execute any subsequent documents approved as to form by the City Attorney to advance, manage, or complete Energy Leader Partnership activities Alternative Action(s) Do not approve and direct staff how to proceed Analysis SCE has partnered with the cities of Huntington Beach, Costa Mesa, Newport Beach, Fountain Valley, and Westminster to administer the Orange County Cities Energy Partnership since 2009 The partnership framework provides enhanced incentives for energy saving projects in City facilities, technical assistance, marketing, education and outreach to support Huntington Beach's sustainability and energy efforts in the community This includes incentives and rebates for the Shorebreak Parking Garage retrofit and the retrofit of over 2,000 streetlights to LED technology throughout the City The funds come from the Public Goods charge that SCE collects from its ratepayers as required by the California Public Utilities Commission (CPUC) SCE administers these funds with CPUC Item 19. - 1 HB -212- Dept ID AD-15-040 Page 2 of 2 Meeting Date 12/21/2015 oversight to Increase energy efficiency and sustainability efforts in local communities (known as the Rolling Portfolio) The CPUC approved the extension of the Rolling Portfolio through the end of 2016 Future year approvals may be multi-year which will lead to more efficiency in managing programs for local municipalities Over the course of the program the City has received over $1 million in incentive funding for projects that have included interior lighting upgrades, LED lighting retrofits, chiller upgrades, and HVAC retro-commissioning In the future, upgrades to the Central Library and other City facilities are planned Environmental Status Not applicable Strategic Plan Goal Strengthen economic and financial sustainability Attachment(s) 1 "Third Amendment" to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Edison xs -213- Item 19. - 2 THIRD AMENDMENT THIS THIRD AMENDMENT ("THIRD AMENDMENT") TO THE AGREEMENT TO JOINTLY DELIVER THE 2010-2012 ORANGE COUNTY ENERGY LEADER PARTNERSHIP PROGRAM dated January 1,2010(as amended,the"Agreement")is effective as of January 1,2016 (the"Third Amendment Effective Date") by and between SOUTHERN CALIFORNIA EDISON COMPANY ("SCE"), AND The CITY OF HUNTINGTON BEACH ("The City"). Terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement. SCE may be referred to individually herein as the"Utility". The Utility and City may be referred to herein individually as a"Party"or collectively as the"Parties." RECITALS WHEREAS, the Parties previously executed the Agreement effective January 1, 2010 and subsequently amended the Agreement twice to extend its term through December 31, 2015 in accordance with the applicable decisions of the California Public Utilities Commission("Commission"); WHEREAS, on October 24, 2014, the Commission issued its Decision 14-10-046 approving the continuation of the Energy Efficiency Partnership Programs, consistent with the terms and conditions set forth in the Agreement ("2016 Program"),except as otherwise provided in this Third Amendment; and WHEREAS, the Parties desire to further amend the Agreement as necessary to provide an authorized budget for the 2016 Program and to update the Agreement as required to reflect the extended 2016 Program cycle. NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1. To the extent applicable, any reference in the Agreement, as amended, to the "2010-2012 Program" shall also hereby include the 2016 Program. 2. Section 11 of the Agreement is hereby deleted in its entirety and replaced with the following: 11. END DATE FOR PROGRAM AND ADMINISTRATIVE ACTIVITIES Unless this Agreement is terminated pursuant to Section 25 below, or unless otherwise agreed to by the Parties or so ordered by the Commission, the Parties shall complete all Program Administrative activities (as defined in the PIP) and all reporting requirements by no later than March 31, 2017, and all Direct Implementation and Marketing & Outreach activities by no later than December 31,2016. 3. Section 12 of the Agreement is hereby deleted in its entirety and replaced with the following: 12. FINAL INVOICES The City must submit final invoices to the Utility no later than March 31,2017. 4. Section 25.1 of the Agreement is hereby deleted in its entirety and replaced with the following: 25.1 Term. This Agreement shall be effective as of the Effective Date. Subject to Section 37, the Agreement shall continue in effect until June 30, 2017 unless otherwise terminated in accordance with this Agreement, as amended. 5. Exhibit B-1 (ENERGY LEADER PARTNERSHIP PROGRAM 2015 GOALS & PARTNER BUDGET) of the Agreement is hereby deleted in its entirety and replaced with the version of Exhibit B-1 (ENERGY LEADER PARTNERSHIP PROGRAM 2016 GOALS & PARTNER BUDGET FOR the City) attached to this Third Amendment, which attached version is incorporated herein by reference and made a part of the Agreement. 6. Section 26 of the Agreement is hereby deleted in its entirety and replaced with the following: 26. WRITTEN NOTICES Any written notice, demand or request required or authorized in connection with this Agreement, shall be deemed properly given if delivered in person or sent by facsimile, nationally recognized overnight courier, or first class mail, postage prepaid, to the address specified below, or to another address specified in writing by a Party as follows: City of Huntington Beach SCE: Fred Wilson, City Manager Southern California Edison Company 2000 Main Street Bernard Adebayo-Ige Huntington Beach, CA 92648 Program Manager 1515 Walnut Grove Avenue Rosemead, CA 91770 Notices shall be deemed received (a) if personally or hand-delivered, upon the date of delivery to the address of the person to receive such notice if delivered before 5:00 p.m. PST(or PDT, as applicable), or otherwise on the Business Day following personal delivery; (b) if mailed, three(3) Business Days after the date the notice is postmarked; (c) if by facsimile, upon electronic confirmation of transmission, followed by telephone notification of transmission by the noticing Party; or(d) if by overnight courier, on the Business Day following delivery to the overnight courier within the time limits set by that courier for next-day delivery. 7. Upon the agreement of both Parties, this Agreement will be terminated no later than 12/31/2016 and replaced with a Council Resolution which will serve as the formal arrangement between the Parties to engage in partnership activities delivering cost effective Energy Efficiency programs consistent with the state's current energy policies and goals as authorized under the relevant "Commission decisions(s). 8. This Third Amendment may be executed in one or more counterparts and delivered by electronic means, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument. 9. From and after the Third Amendment Effective Date, any reference to the Agreement contained in any notice, request, certificate or other instrument, document or agreement shall be 2 15-5029/129380 deemed to mean the Agreement, as amended by any prior amendments to the Agreement, and this Third Amendment. In the event of any conflict between the Agreement, as amended, and this Third Amendment, this Third Amendment shall prevail. All remaining provisions of the Agreement shall remain unchanged and in full force and effect. Each party is fully responsible for ensuring that the person signing this Third Amendment on that parry's behalf has the requisite legal authority to do so. IN WITNESS WHEREOF, the Parties hereto have caused this Third Amendment to be executed by their duly authorized representatives as of the Third Amendment Effective Date. SOUTHERN CALIFORNIA EDISON COMPANY CITY OF HUNTINGTON BEACH A California corporation A Californ ncipal corporation .MI) By: Varc Ulrich By: L�r� d son Vic President, Customer Programs and Services Cityana er zl(12-01(, APPROVED AS ORM: 7M' ael Gates ity Attorney J / 3 I5-5029! 129330 EXHIBIT B-1 ENERGY LEADER PARTNERSHIP PROGRAM 2016 GOALS & PARTNER BUDGET FOR Orange Coana Cities Partnership Programs 2016 Program Year Budget Funding and Goals 2016 Partner Budget(') Maximum Partner Budget Category Budget for 2016 Administrative $5,000 Marketing &Outreach $15,000 Direct Implementation(non-incentives) $29,000 Total $49,000 In addition to the 2016 Partner Budget shown above, SCE will provide project incentives, technical assistance and strategic plan activities support to achieve program goals up to the funding levels shown below in the 2016 SCE Funding table. 2016 SCE Funding Maximum SCE Budget Category Budget for 2016 Incentive $318,000 Technical Assistance $15,000 Strategic Plan(') TBD 2016 Energy Savings Goal Energy Savings(kWh) 2,026,750 Demand Reduction (kW) 8 Footnotes: (1) "Partner Budget" is utilized by all participating partners within the Partnership. (2) Strategic Plan funding will be determined in 2016 and communicated to Partners. 4 15-5029/129330 e City ®f Huntington Beach IF - 2000 Main Street ® Huntington Beach, CA 92648 (714) 536-5227 ® www.huntingtonbeachca.gov Office of the City Clerk B ` Joan L. Flynn, City Clerk December 29, 2015 Southern California Edison Company Attn Bernard Adebayo-Ige, Program Manager 1515 Walnut Grove Ave Rosemead, CA 91770 Dear Mr Adebayo-Ige Enclosed is one original of "Third Amendment" to the Agreement to Jointly Deliver the 2010- 2012 Orange County Energy Leader Partnership Program Upon complete execution, please return a copy to us Please mail the document to Joan L Flynn City Clerk 2000 Main Street Huntington Beach CA 92648 Your attention to this matter is greatly appreciated Sincerely, 4�� - Joan L Flynn, CIVIC City Clerk JF pe Enclosure Sister Cities Anjo,Japan ® Wartakere,New Zealand Dept.ID PW 14-070 Page 1 of 2 Meeting Date:2/2/2015 CITY OF HUNTINGTON BEACH REQUEST FOR. CITY COUNCIL ACTION MEETING DATE: 2/2/2015 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Travis K. Hopkins, PE, Director of Public Works SUBJECT: Approve and authorize execution of the Second Amendment to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Edison (SCE) and Southern California Gas (SCG) Statement of Issue: The City of Huntington Beach approved Resolution 2009-09 and entered into a Local Government Energy Action partnership in 2009. The City subsequently replaced that agreement on January 19, 2010, with both Southern California Edison (SCE) and Southern California Gas Company (SCG) for Program Year 2010-2012 and approved first amendments to the agreements for program years 2013-2014. The second amendments will continue the program through 2015. Financial Impact: Not applicable. Recommended Action: A) Approve and authorize the Mayor and City Manager to execute the "Second Amendment" to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Edison Company; and, B) Approve and authorize the Mayor and City Manager to execute the "Second Amendment" to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Gas Company and adjacent Orange County cities; and, C) Authorize the City Manager to execute any subsequent documents approved as to form by the City Attorney necessary to advance, manage or complete Energy Leader Partnership activities. Alternative Action(s): Do not approve the amendments and instruct staff on how to proceed. Analysis: SCE and SCG partnered with Huntington Beach and other adjacent Orange County Cities in 2010 through 2012 to implement a local government energy efficiency partnership. The partnership framework provides enhanced incentives for energy saving projects in City facilities, technical assistance, marketing, education and outreach funding to support Huntington Beach's energy and sustainability efforts in the community. JIB -63- Item 3. - I Dept. ID PW 14-070 Page 2 of 2 Meeting Date:2/2/2015 The funds are Public Goods charge funds that SCE and SCG are required by the Public Utilities Commission (PUC) to collect. SCE administers these funds with PUC oversight to increase energy efficiency, eliminating the need to build new power plants. This contract amendment will extend the effectiveness of existing and planned Capital Improvement Projects that increase energy efficiency. The PUC approved extending this program through 2014 and subsequent amendments to the original agreements were approved in 2013. The PUC recently extended the program through 2015. Over the course of the program, the City has received nearly $1 million in incentive funding for projects including interior lighting upgrades, LED lighting retrofits, chiller upgrades and City Hall HVAC retro-commissioning. Environmental Status: Not applicable. Public Works Commission Action: Not applicable. Strategic Plan Goal: Improve the City's infrastructure Attachment(s): 1. Second Amendment to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Edison Company. 2. Second Amendment to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Gas Company and adjacent Orange County cities. Item 3. - 2 HB -64- ATTACHMENT # 1 SECOND AMENDMENT THIS SECOND AMENDMENT ("SECOND.AMENDMENT") TO THE AGREEMENT TO JOINTLY DELIVER THE 2010-2012 ENERGY LEADER PARTNERSHIP PROGRAM dated January 1, 2010 (the "Agreement")is effective as of January 1,2015 (the"Second Amendment Effective Date")by and between SOUTHERN CALIFORNIA EDISON COMPANY ("SCE"), AND The City of Huntington Beach ("The City").Terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement. SCE may be referred to individually herein as the"Utility". The Utility and The City may be referred to herein individually as a"Party"or collectively as the"Parties." RECITALS WHEREAS, the Parties previously executed the Agreement effective January 1, 2010 and subsequently amended the Agreement to extend its term through December 31, 2014 in accordance with the applicable decisions of the California Public Utilities Commission("Commission"); WHEREAS, on March 26, 2014,the Utility submitted its application("2015 Application") for the implementation of energy efficiency programs to be delivered to California utility customers for the years 2015, which included the a continuation of the Orange County Cities Partnership Program through 2015("2015 Program"); WHEREAS,on October 24,2014,the Commission issued its Decision D.14-10-046 approving the continuation of the Energy Efficiency Partnership Programs, which includes the 2015 Program, and the Parties desire to extend the Agreement through 2015 under the terms and conditions set forth in the Agreement, except as otherwise provided in this Second Amendment; and WHEREAS, the Parties desire to further amend the Agreement as necessary to provide an authorized budget for the 2015 Program and to update the Agreement as required to reflect the extended 2015 Program cycle. NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged,the Parties agree as follows: 1. To the extent applicable, any reference in the Agreement, as amended, to the "2010-2012 Program" shall also hereby include the 2015 Program. CE CONFIDENTIAL 1 of 5 2. Section 11 of the Agreement is hereby deleted in its entirety and replaced with the following: 11. END DATE FOR PROGRAM AND ADMINISTRATIVE ACTIVITIES Unless this Agreement is terminated pursuant to Section 25 below, or unless otherwise agreed to by the Parties or so ordered by the Commission, the Parties shall complete all Program Administrative activities (as defined in the PIP) and all reporting requirements by no later than March 31, 2016, and all Direct Implementation and Marketing & Outreach activities by no later than December 31, 2015. 3. Section 12 of the Agreement is hereby deleted in its entirety and replaced with the following: 12. FINAL INVOICES The City must submit final invoices to the Utility no later than March 31, 2016. 4. Section 25.1 of the Agreement is hereby deleted in its entirety and replaced with the following: 25.1 Term. This Agreement shall be effective as of the Effective Date. Subject to Section 37, the Agreement shall continue in effect until June 30, 2016 unless otherwise terminated in accordance with the provisions of Section 25.2 or 30 below. 5. Section 26 of the Agreement is hereby deleted in its entirety and replaced with the following: 26. WRITTEN NOTICES Any written notice, demand or request required or authorized in connection with this Agreement, shall be deemed properly given if delivered in person or sent by facsimile, nationally recognized overnight courier, or first class mail, postage prepaid, to the address specified below, or to another address specified in writing by a Party as follows: City of Huntington Beach SCE: Fred Wilson Southern California Edison Company City Manager Bernard Adebayo-Ige 2000 Main Street Program Manager Huntington Beach, CA 92647 1515 Walnut Grove Avenue Rosemead, CA 91770 Notices shall be deemed received(a) if personally or hand-delivered,upon the date of delivery to the address of the person to receive such notice if delivered before 5:00 p.m. PST (or PDT, as applicable), or otherwise on the Business Day following personal delivery; (b)if mailed,three(3) Business Days after the date the notice is postmarked; (c) if by facsimile,upon electronic confirmation of transmission, followed by telephone notification of transmission by the noticing Party; or(d)if by overnight courier, on the Business Day following delivery to the overnight courier within the time limits set by that courier for next-day delivery. 6. This Second Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument. CE CONFIDENTIAL 2 of 5 7. Exhibit B-1 and B-2 (ENERGY LEADER PARTNERSHIP PROGRAM 2010-12 GOALS & PARTNER BUDGET) of the Agreement are hereby deleted in their entirety and replaced with the version of Exhibit B-1 (ENERGY LEADER PARTNERSHIP PROGRAM 2015 GOALS & PARTNER BUDGET FOR The City-attached to this Second Amendment,which attached versions are incorporated herein by reference and made a part of the Agreement. 8. General. From and after the Second Amendment Effective Date, any reference to the Agreement contained in any notice,request,certificate or other instrument,document or agreement shall be deemed to mean the Agreement, as amended by any prior amendments to the Agreement, and this Second Amendment. In the event of any conflict between the Agreement, as amended, and this Second Amendment, this Second Amendment shall prevail. All remaining provisions of the Agreement shall remain unchanged and in full force and effect. Each party is fully responsible for ensuring that the person signing this Second Amendment on that party's behalf has the requisite legal authority to do so. [SIGNATURES FOLLOW ON NEXT PAGE] IN WITNESS WHEREOF,the Parties hereto have caused this Second Amendment to be executed by their duly authorized representatives as of the Second Amendment Effective Date. The City: CE CONFIDENTIAL 3 of 5 Citv of Huntin ton Beach By: A, WL— Nam rant/d: Fred Wilson Title: City Manager APPROVED AS TO FORM Date:2� 3 1 Michael Gates,City Attomey SCE: SOUTHERN CALIFORNIA EDISON COMPANY By: Name Printed: Kevin Payne Title: Senior Vice President, Customer Service Date: EXHIBIT B-1 CE CONFIDENTIAL 4 of 5 ENERGY LEADER PARTNERSHIP PROGRAM 2015 GOALS & PARTNER BUDGET FOR ORANGE COUNTY CITIES Program Cycle Partner Budget and Goals: Maximum Partner Maximum Partner Maximum Partner Budget Budget Budget 2013' 2014' 2015 Total : $766,851 $766,852 $850,183 Incentive: $441,851 $441,852 $634,183 Non-Incentive: (Marketing & Outreach, Technical Assistance, Direct Implementation and $325,000 $325,000 $216,000 Strategic Plan) 2015 Energy Savings Goal kWh kW 1,600,000 245 Budget Category 20152 Administrative $70,000 Marketing&Outreach $36,000 Technical Assistance $80,000 Direct Implementation $30,000 Incentive $634,183 Strategic Plan $- Total Partner Budget $850,183 1 2013 and 2014 Budget figures represent the total Authorized Budget,not the available remaining budget. The 2015 Budget was approved by the CPUC to be the third year of the 2013-2014 Program.Unspent funds from 2013- 2014 may be carried over for use in 2015,in addition to the 2015 Budget. 2 Budget category breakdowns are estimates of amounts that will be spent in each category. Actual Partner expenses may be different,to the extent permitted by program rules and applicable CPUC decisions CE CONFIDENTIAL 5 of 5 f City of Huntington Beach 2000 Main Street ♦ Huntington Beach, CA 92648 r _ (714) 536-5227 ♦ www.huntingtonbeachca.gov office of the City Clerk I7 1999 t Joan L. Flynn, City Clerk February 5, 2015 Southern California Edison Company Bernard Adebayo-Ige, Program Manager 1515 Walnut Grove Ave. Rosemead, CA 91770 Dear Mr.Adebayo-Ige Enclosed for your records are two duplicate originals of the "Second Amendment"to the Agreement to Jointly Deliver the 2010-2012 Energy Leader Partnership Program. Sincerely, a Joan L. Flynn, CMC City Clerk JF:pe Enclosures Sister Cities: Anjo, Japan ♦ Waitakere, New Zealand Dept. ID AD-13-008 Page 1 of 2 } Meeting Date:5/6/2013 CITY OF HUNTINGTON BEACH a REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 5/6/2013 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Bob Hall, Assistant City Manager SUBJECT: Approve and authorize execution of the First Amendment to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Edison and Southern California Gas Statement of Issue: The City of Huntington Beach approved Resolution 2009-09 and entered into a Local Government Energy Action partnership in 2009. The City of Huntington Beach subsequently replaced that agreement on January 19, 2010, with both Southern California Edison and Southern California Gas Company for the Program Years 2010-2012. These first amendments extend the existing contract through program years 2013 and 2014. Financial Impact: Not Applicable Recommended Action: A) Approve and authorize Mayor and City Manager to execute the "First Amendment" to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program with Southern California Edison Company; and, B) Approve and authorize Mayor and City Manager to execute the "First Amendment" to the Agreement to Jointly Deliver the 2010-2012 Orange County Cities Energy Efficiency Partnership Program with Southern California Gas Company and other adjacent Orange County cities; and, C) Authorize City Manager to execute any subsequent documents approved as to form by the City Attorney necessary to advance, manage or complete Energy Leader Partnership activities. Alternative Action(s): Do not approve the agreement and advise staff on how to proceed. Item 9. - I HB -234- Dept.ID AD-13-008 Page 2 of 2 Meeting Date:5/6/2013 Analysis: SCE and SCG partnered with Huntington Beach and other adjacent Orange County cities in 2010 through 2012 to implement a local government energy efficiency partnership. The Public Utilities Commission approved extending this program through 2014 and this amendment is necessary to continue the program. This program increases energy efficiency in both government and community-wide facilities. The Public Utilities Commission requires the collection of public goods charge funds and then tasks the utilities to administer these funds to increase energy efficiency in their territories. In the 2010-2012 program period, the city has received a total of$398,815 in incentive funding from SCE for interior lighting upgrades ($89,472), LED lighting upgrades ($22,833), chiller upgrades ($152,371), retro-commissioning ($121,504), data center virtualization and optimization ($12,635). So Cal Gas has provided $35,887 in incentives for natural gas savings in retro-commissioning at city facilities and works with the city's utility department to ensure the efficiency and effectiveness of the city's natural gas fired water pumps. In addition, both utility partners have supported community outreach efforts to save energy by participating at the annual Green Expo on Pier Plaza and other city efforts to keep HB businesses competitive by reducing utility costs and environmental impacts. The city's planned street light upgrade projects are projecting an additional $504,000 from this contract that will defray the cost of the LED street light upgrades and improve HB's infrastructure through energy efficiency projects. Environmental Status: Not applicable Strategic Plan Goal: Improve long-term financial sustainability Attachment(s): 1. First Amendment to the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership program with Southern California Edison Company 2. First Amendment to the Agreement to Jointly Deliver the 2010-2012 Orange County Cities Energy Efficiency Partnership Program with Southern California Gas Company HB -235- Item 9. - 2 ATTACHMENT # 1 FIRST AMENDMENT THIS FIRST AMENDMENT ("FIRST AMENDMENT") TO THE AGREEMENT TO JOINTLY DELIVER THE 2010-2012 ORANGE COUNTY ENERGY LEADER PARTNERSHIP PROGRAM dated January 19, 2009 (the "Agreement") is effective as of January 1, 2013 (the First Amendment Effective Date) by and arnong SOUTHERN CALIFORNIA EDISON COMPANY ("SCE"), AND The City of Huntington Beach ("The City') Terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement. SCE may be referred to individually herein as the "Utility", SCE and The City may be referred to herein individually as a"Party" or collectively as the"Parties." RECITALS WHEREAS, the Parties previously executed the Agreement to Jointly Deliver the 2010-2012 ENERGY LEADER PARTNERSHIP PROGRAM effective January 1, 2010 ( hereinafter referred to as the"2010-2012 Program"); WHEREAS, on May 18, 2012, the Commission issued a Decision Providing Guidance on 2013- 2014 Energy Efficiency Portfolios and 2012 Marketing, Education, and Outreach ("Final Guidance Decision") guiding the Utility to continue the ENERGY LEADER PARTNERSHIP PROGRAM, which included the Orange County Cities Energy Leader Partnership Program, through a two year 2013-2014 transition period (hereinafter referred to as the"2013-2014 Program"); WHEREAS, on July 2, 2012, the Utility submitted its application ("2013-2014 Application") for the implementation of energy efficiency programs to be delivered to California utility custorners for the years 2013 through 2014, which included the 2013-2014 Program, a continuation of the 2010-2012 Program; WHEREAS, on November 15, 2012, the Commission issued a Final Decision approving the 2013-2014 Application as submitted ("Final Decision"),. thereby approving continuation of the Energy Efficiency Partnership Programs, which includes the 2013-2014 Program, and the Parties desire to extend the Agreement through 2014 under the terms and conditions set forth in the Agreement, except as otherwise provided in this First Amendment; and WHEREAS, the Parties desire to further arnend the Agreement as necessary to provide an authorized budget for the 2013-2014 Program and to update the Agreement as required to reflect the extended 2013-2014 Program cycle. NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1. Except as provided herein, and to the extent applicable, any reference in the Agreement to the"2010- 2012 Program" shall hereby include both the 2010-2012 Program and the 2013-2014 Program. 2. Section 1.13 of the Agreement is hereby deleted in its entirety and replaced with the following: 1.13 PIP or Program Implementation Plan: The most recent Commission decision approved and publicly available plans for implementing the Program in each Utility's service territory 3. Section 3.2 of the Agreement is hereby deleted in its entirety and replaced with the following: SCE CONFIDENTIAL I of 6 3.2. Energy Leader Partnership Level. The Program offers a tiered Incentive structure through achievement of four separate levels of participation: "Valued Partner,""Silver,""Gold" and "Platinum." The City will enter the Program at a level of participation which has been determined by the City's past participation in SCE energy efficiency and demand response programs both at the city level and at the community level. Exhibit A further explains each level and the energy savings requirements for moving to the next Energy Leader Partnership level. SCE will track the City"s performance under this Agreement against the goals and objectives set forth herein, and will notify the City when it has achieved the next incentive level. 4. Section 1 I of the Agreement is hereby deleted in its entirety and replaced with the following: 11. END DATE FOR PROGRAM AND ADMINISTRATIVE ACTIVITIES Unless this Agreement is terminated pursuant to Section 25 below, or unless otherwise agreed to by the Parties or so ordered by the Commission, the Parties shall complete all Program Administrative activities (as defined in the PIP) and all reporting requirements by no later than March 31, 2015, and all Direct Implementation and Marketing & Outreach activities by no later than December 31, 2014. 5. Section 12 of the Agreement is hereby deleted in its entirety and replaced with the following: 12. FINAL INVOICES The City must submit final invoices to SCE no later than March 31, 2015. 6. Section 25.1 of the Agreement is hereby deleted in its entirety and replaced with the following: 25.1 Term. This Agreement shall be effective as of the Effective Date. Subject to Section 37, the Agreement shall continue in effect until June 30, 2015 unless otherwise terminated in accordance with the provisions of Section 252 or 30 below. 7. Section 26 of the Agreement is hereby deleted in its entirety and replaced with the following: 26. WRITTEN NOTICES Any written notice, demand or request required or authorized in connection with this Agreement, shall be deemed properly given if delivered in person or sent by facsimile, nationally recognized overnight courier, or first class mail, postage prepaid" to the address specified below, or to another address specified in writing by a Party as follows: The City: SCE: City of Huntington Beach Southern California Edison Company Aaron Klemm Bernard Adebayo-Ige, Program Manager 2000 Main Street, 1515 Walnut Grove Avenue Huntington Beach CA 92648 Rosemead, CA 91770 Notices shall be deemed received (a) if personally or hand-delivered, upon the date of delivery to the address of the person to receive such notice if delivered before 5:00 p.m. PST(or PDT, as applicable), or otherwise on the Business Day following personal delivery; (b) if mailed, three (3) Business Days after the date the notice is postmarked; (c) if by facsimile, upon electronic confirmation of transmission, followed by telephone notification of transmission by the noticing SCE CONFIDENTIAL 2 of Party; or(d) if by overnight courier, on the Business Day following delivery to the overnight courier within the time limits set by that courier for next-day delivery. 8. This First Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument. 9. Exhibit A (ENERGY LEADER PARTNERSHIP — PROGRAM LEVEL DATA) and Exhibit B (ENERGY LEADER PARTNERSHIP PROGRAM 2010-12 GOALS & PARTNER BUDGET) of the Agreement are hereby deleted in their entirety and replaced with the versions of Exhibit A (ENERGY LEADER PARTNERSHIP — PROGRAM LEVEL) and Exhibit B (ENERGY LEADER PARTNERSHIP PROGRAM 2013-14 GOALS & PARTNER BUDGET FOR Orange County Cities attached to this First Amendment, which attached versions are incorporated herein by'.reference and made a part of the Agreement. 10. General. ;From and after the First Amendment Effective Date, any reference to the Agreement contained J1.1 any notice, request, certificate or other instrument, document or agreement shall be deemed to mean the Agreement, as amended by this First Amendment. In the event of any conflict between the Agreement and this First Amendment, this First Amendment shall prevail. All remaining provisions of the Agreement shall remain unchanged and in full force and effect. Each party is fully responsible..for ensuring that the person signing this First Amendment on that party's behalf has the requisite legal authority to do so. [SIGNATURES FOLLOW ON NEXT PAGE] SCE CONFIDENTIAL 3 of 6 IN WITNESS WHEREOF, the Parties hereto have caused this First Amendment to be executed by their duly authorized representatives as of the First Amendment Effective Date. The City City of Huntington Beach Name Printed: Connie Boardman Title: Mayor Date: S ? APPROVED AS TO FORM: ji4t y Atto ney SCE: Gs. a SOUTHERN CALIFORNIA EDISON COMPANY By: Name Printed: Erwin Furukawa Title: Senior Vice President, Customer Service Date: Cf � -17 SCE CONFIDENTIAL 4 of 6 EXHIBIT A ENERGY LEADER PARTNERSHIP - PROGRAM LEVEL Energy Leader Partnership levels are: Valued Partner Level — This level is the entry level for the partner to develop knowledge and establish goals towards the Silver Level. A budget is available for energy savings projects, for marketing, education, and outreach to the community, as well as for technical assistance toward upgrading or retrofitting partners' facilities. SCE's core program incentives will be offered directly to the partner. The partner will be expected to use the marketing and outreach funds to generate verifiable energy savings in their own facilities and in the community and will participate in demand response at a basic level. Valued Level provides the Partner with 3 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. Silver Level—To qualify for this level,the partner demonstrates past participation in SCE energy efficiency programs, develops an energy action plan, sets community and municipal energy reduction goals,targets 25 percent of its facilities to complete energy efficiency upgrades, and participates in demand response. An enhanced incentive is paid at the Silver Level. Silver Level provides the Partner with 6 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. Gold Level—To qualify for this level,the partner demonstrates higher past participation in SCE energy efficiency programs,establishes higher municipal and community program participation and energysavings goals and makes a higher commitment to participate in demand response. Incentive factors are higher for partner facilities' energy efficiency projects. Gold Level provides the Partner with 9 cents per kWh paid in addition to what is paid to the Partner under SCE's core program Platinum Level—To qualify for this level,the partner demonstrates even higher past participation in energy efficiency programs, is innovative and integrates Energy Action Plan policies, ordinances and procedures. All facilities are targeted for energy efficiency upgrades and the partner makes a higher commitment to participate in Demand Response. Incentive factors are highest for Partner facilities'energy efficiency projects and additional incentives are made available for customized community energy efficiency projects. Platinum Level provides the Partner with 12 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. EXHIBIT B ENERGY LEADER PARTNERSHIP PROGRAM 2013-14 GOALS & PARTNER BUDGET FOR OC Cities Program Cycle Partner Budget and Goals: Maximum Energy Savings Peak Demand Partner Budget Goal Reduction Goal (kWh) (kW) Total : S1,533,703 4,602,923 KWh 129 kW Incentive: $ $883,703 *Non-Incentive: S 650,000 *(Marketing&Outreach,Technical Assistance and Direct Impiementation) I City of HuntIngton Beach 2000 Main Street ® Huntington Beach, CA 92648 (714) 536-5227 ® www.huntingtonbeachea.gov K fB.i isos,P° ® Office of the City Clerk t ` Joan L. Flynn, City Clerk May 9, 2013 Bernard Adebayo-Ige, P.E., C.E.M., LEED AP Local Government Partnerships 1515 Walnut Grove Avenue, 2nd Floor Rosemead, CA 91770 Dear Mr. Adebayo-Ige: Enclosed please find two originals of the "First Amendment" to the Agreement to jointly deliver the 2010-2013 Orange County Energy Leader Partnership Program. Upon execution by the all parties, please return one complete original back to: Joan L. Flynn City Clerk 2000 Main Street Huntington Beach CA 92648 Your attention to this matter is greatly appreciated. Sincerely, Joan L. Flynn, CIVIC City Clerk JF: pe Enclosure: Agreements G:followup:agrmtltr Sister Cities: Anjo,Japan ® Waitakere,New Zealand Council/Agency Meeting Held:9 vlD D Deferred/Continued to: *Apyoed 0 Denied ��( �� it Cier s Signe re ondi io allyA r e Council Meeting Date: September 20, 2010 Depart t ID Number: AD10-028 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Administrator PREPARED BY: Bob Hall, Deputy City Administrator SUBJECT: Approve and authorize the City Administrator to execute an amendment to an agreement with Southern California Edison Company to jointly deliver the 2010-2012 Orange County Energy Leader Partnership Program Statement of Issue: The city of Huntington Beach and Southern California Edison Company entered into a Local Government Energy Leader Program on January 19, 2010. Subsequent to that agreement the Public Utilities Commission modified their direction to SCE necessitating an amendment to the agreement. Financial Impact: NIA Recommended Action: Motion to: Approve and authorize the City Administrator to execute an amendment to the agreement replacing the original Exhibit A with a new Exhibit A revised effective January 2, 2010. Alternative Action(s): Do not approve the amendment and advise staff on how to proceed. -59- REQUEST FOR COUNCIL ACTION MEETING DATE: 9/20/2010 DEPARTMENT ID NUMBER: AD10-028 Analysis: SCE and Huntington Beach are currently implementing an Orange County Cities Energy Leader partnership. This partnership provides enhanced energy efficiency incentives to Huntington Beach and marketing, education and outreach to assist citizens of Huntington Beach in using energy wisely. This amendment is administrative in nature and required to comply with the Public Utility Commission's direction. The Public Utility Commission oversees the use of public goods funds which are the fund source for these activities. Environmental Status: Not applicable for this action, but the agreement positively impacts the City of Huntington Beach's ability to reduce environmental impacts from energy use. Strategic Plan Goal: Maintain, improve and obtain funding for infrastructure and equipment Attachment(s): Description 1. January 19, 2010 RCA to enter into partnership agreement 2. Revised Exhibit A to Partnership Agreements -60- ATTACHMENT # 1 Council/Agency Meeting Held: Deferred/Continued to: pr ve ❑ Co d'tionall A provmlnLze ❑ D Hied 1, City rk' nature ounc it Meeting Date: 1/19/2010 7Department ID Number: AD 10-002 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY CO IL MEMBERS SUBMITTED BY: FRED A. WILSON, CITY ADMINST PREPARED BY: BOB HALL, DEPUTY CITY ADMINIST OPZ,�V* SUBJECT: AGREEMENT TO JOINTLY DELIVER ORANGE COUNTY CITIES ENERGY EFFICIENCY PARTNERSHIP PROGRAM Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: The city of Huntington Beach and Southern California Edison Company (SCE) approved resolution 2009-09 and entered into a Local Government Energy Action Resources partnership in January 2009. SCE recently received Pubic Utilities Commission (PUC) approval for programs from 2010-2012. This agreement replaces the expiring prior agreement approved by council in January 2009. The council is asked to approve updated energy efficiency partnership agreements with SCE and Southern California Gas Company (SCG). Funding Source: N/A Recommended Action: Motion to: 1. Approve 'and authorize Mayor and City Administrator to execute Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership program between the City of Huntington Beach, California and Southern California Edison Company and the Orange County Cities Energy Efficiency Partnership Program by and among The City of Costa Mesa, The City of Huntington Beach, The City of Westminster and Southern California Gas Company Alternative Action(s): Do not approve the agreement and advise staff on how to proceed. -62- s REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 1/19/2010 DEPARTMENT ID NUMBER: AD 10-002 Analysis: SCE and SCG have chosen to partner with Huntington Beach and other adjacent Orange County cities to implement an Orange County local government energy efficiency partnership. The partnership framework provides enhanced incentives for energy saving projects in city facilities, technical assistance and marketing, education and outreach funding to support Huntington Beach's energy and sustainability efforts in the community. The funds are Public Goods charge funds that SCE and SCG are required by the Public Utilities Commission (PUC) to collect. SCE administers these funds with PUC oversight to increase energy efficiency, eliminating the need to build new power plants. This contract will provide additional funds to the city when the city invests in energy savings projects in our facilities and infrastructure. This contract will extend the effectiveness of existing and planned Capital Improvement Project (CIP) funding that increases energy efficiency. Huntington Beach has received an award from the Federal government for $1.78M in energy efficiency projects. Strategic Plan Goal: Maintain, Improve, and Obtain Funding for Public Improvements Environmental Status: Not applicable for this action, but the agreement positively impacts the City of Huntington Beach's ability to reduce environmental impacts from energy use. Attachrnent(sD: He �. o ®- m 1. Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program between the City of Huntington Beach, California and Southern California Edison Company. 2. Agreement to Jointly Deliver the 2010-2012 Orange County Cities 2-3 PO Energy Efficiency Partnership Program By and Among The City of 6e z Costa Mesa, The City of Huntington Beach, The City of Westminster and Southern California Gas Company. 3. 1 Insurance and Indemnification Waiver Modification Request -2- 115/2010 9:57 AM -63- ATTACHMENT # 1 AGREEMENT TO JOINTLY DELIVER THE 2010-2012 ORANGE COUNTY ENERGY LEADER PARTNERSHIP PROGRAM BETWEEN THE CITY OF HUNTINGTON BEACH and SOUTHERN CALIFORNIA EDISON COMPANY Dated: January 19 ,200_2010 This program is funded by California utility ratepayers and administered by Southern California Edison under the auspices of the California Public Utilities Commission. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT -65- THIS AGREEMENT TO JOINTLY DELIVER THE 2010-2012 ORANGE COUNTY ENERGY LEADER PARTNERSHIP PROGRAM (the "Agreement") by and between SOUTHERN CALIFORNIA EDISION COMPANY ("SCE") and the City of Huntington Beach (the "City"), which Agreement shall be effective as of 01/01/2010 ("Effective Date"). SCE and the City may be referred to herein individually as a "Party" and collectively as the "Parties." The Orange County Energy Leader Partnership may be referred to herein as the "Partnership." WHEREAS, on July 21, 2008 (and as amended on March 2, 2009), SCE submitted its 2009-2011 Application for Approval of its Proposed Energy Efficiency Program Plans and Public Goods Charge and Procurement Funding Requests to the California Public Utilities Commission (the "Commission"), which application included the Energy Leader Partnership Program in which SCE will partner with cities, counties, and other local government organizations that have a vision for energy efficiency sustainability and a desire to provide energy efficiency leadership to their communities; WHEREAS, on July 2, 2009, SCE amended its aforementioned application to the Commission, requesting approval of an extended 2010-2012 Program cycle for its proposed plans and funding requests, including the Energy Leader Partnership Program; WHEREAS, on September 24, 2009, the Commission authorized certain energy efficiency programs, including the Partnership's Energy Leader Partnership Program for the 2010-12 program cycle (the "Program"); WHEREAS the City has expressed a commitment, and has qualified, to participate in the Program through the Partnership, allowing the City to demonstrate energy efficiency leadership in its community while helping residents and businesses achieve sustainable reductions in energy use within SCE's service territory; WHEREAS, the Partnership's Program is designed to encompass several local government jurisdictions in Orange County, including Westminster, Fountain Valley, Costa Mesa, and Huntington Beach("Program Participants"),provided however that each Program Participant shall execute individual agreements for the performance of their respective obligations in connection with the Program; WHEREAS, the City, on February 2 , 2009, passed, approved and adopted a Resolution supporting and endorsing the Program, approving the City as a Program Participant, and authorizing execution of a Partnership Agreement, in substantially similar form as this Agreement; and WHEREAS, the Parties desire to enter into an agreement that supersedes any and all previous agreements, and sets forth the terms and conditions under which the Program shall be implemented with respect to the Parties. NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 2 -66- r T J 1. DEFINITIONS All terms used in the singular will be deemed to include the plural, and vice versa. The words "herein," "hereto," and "hereunder" and words of similar import refer to this Agreement as a whole, including all exhibits or other attachments to this Agreement, as the same may from time to time be amended or supplemented, and not to any particular subdivision contained in this Agreement, except as the context clearly requires otherwise. "Includes" or "including" when used herein is not intended to be exclusive, or to limit the generality of the preceding words, and means "including without limitation." The word "or" is not exclusive. 1.1. Agreement: This document and all exhibits attached hereto, and as amended from time to time. 1.2. Authorized Partnership Budget: The Commission approved maximum budget for funding the Partnership and performance by all of the Program Participants' performance of the Authorized Work, which total amount shall be apportioned among the Program Participants, including the City,by SCE in its sole and absolute discretion(see"Partner Budget"). 1.3. Authorized Work: The work authorized by the Commission for the Program as set forth in this Agreement and as more fully described in the Program Implementation Plans attached hereto as Exhibit C, and as agreed to be performed by the Parties. 1.4. Business Day: The period from one midnight to the following midnight, excluding Saturdays, Sundays, and holidays. 1.5. Calendar Day: The period from one midnight to the following midnight, including Saturdays, Sundays, and holidays. Unless otherwise specified, all days in this Agreement are Calendar Days. 1.6. Contractor: An entity contracting directly or indirectly with a Party, or any subcontractor thereof subcontracting with such Contractor, to furnish services or materials as part of or directly related to such Party's Authorized Work obligations. 1.7. Customers or Eligible Customers: Those customers eligible for Program services, which are SCE customers located in the City. 1.8. Energy Efficiency Measure (or Measure): As used in the Commission's Energy Efficiency Policy Manual, Version 4, August 2008 . 1.9. EM&V: Evaluation, Measurement and Verification of the Program pursuant to Commission requirements. 1.10. Incentive: As used in the Commission's Energy Efficiency Policy Manual, Version 4, August 2008. 1.11. Partner Budget: That portion of the Authorized Partnership Budget, which represents the maximum budget and maximum allocation by period, for funding the ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 3 -67- F� 4 1 y performance of the Program by the City and as set forth in Exhibit B, subject to amendment by SCE consistent with the terms of this Agreement. 1.12. Program Expenditures: Actual (i.e., no mark-up for profit, administrative or other indirect costs), reasonable expenditures of the City that are pre-approved, directly identifiable to and required for the Authorized Work in accordance with Section 10.3. 1.13. PIP or Program Implementation Plan: The implementation plan specific to this Partnership, together with the Energy Leader Partnership Master PIP, which include the anticipated scope of the Program in SCE's service territory, approved by the Commission and attached hereto as Exhibit C. 1.14. Public Goods Charge (PGC): The funds which make up the Partner Budget and which are collected from electric utility ratepayers pursuant to Section 381 of the California Public Utilities Code for public purposes programs, including energy efficiency programs approved by the Commission. 2. PURPOSE The Program is funded by California utility ratepayers and is administered by SCE under the auspices of the Commission. The purpose of this Agreement is to set forth the terms and conditions under which the Parties will jointly implement the Program. The work authorized pursuant to this Agreement is not to be performed for profit. This Agreement is not intended to and does not form any "partnership" within the meaning of the California Uniform Partnership Act of 1994 or otherwise. 3. PROGRAM DESCRIPTION 3.1. Overview. The Energy Leader Partnership Program is designed to provide integrated technical and financial assistance to help local governments effectively lead their communities to increase energy efficiency, reduce greenhouse gas emissions, protect air quality and ensure that their communities are more livable and sustainable. The Program provides a performance-based opportunity for the City to demonstrate energy efficiency leadership in its community through energy saving actions, including retrofitting its municipal facilities as well as providing opportunities for constituents to take action in their homes and businesses. By implementing measures in its own facilities, the City will lead by example as the City and SCE work together to increase community awareness of energy efficiency and position the City as a leader in energy management practices. The Program will provide marketing, outreach, education, training and community sweeps to connect the community with opportunities to save energy, money and help the environment. The Program Participants will leverage the strengths of each other to efficiently deliver energy and demand savings. Delivering sustainable energy savings, promoting energy efficiency lifestyles, and achieving an enduring leadership role for the City through this Program design is rooted in an effective relationship between the City, other Program Participants, their constituents,and SCE. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 4 -68- o 3.2. Energy Leader Partnership Level. The Program offers a tiered Incentive structure through achievement of four separate levels of participation: "Valued Partner," "Silver," "Gold" and "Platinum." The City will enter the Program at the level indicated on Exhibit A hereto, which has been determined by the City's past participation in SCE energy efficiency and demand response programs both at the city level and at the community level. Exhibit A further explains each level and the energy savings requirements for moving to the next Energy Leader Partnership level. SCE will track the City's performance under this Agreement against the goals and objectives set forth herein, and will notify the City when it has achieved the next incentive level. 4. AUTHORIZED WORK 4.1. Scope. The work authorized by the Commission is set forth broadly in the PIP (Exhibit C) and shall be performed pursuant to the terms of this Agreement. The Parties shall collaborate and mutually agree upon specific Program implementation consistent with the PIP, and the Parties shall document such details in a "Planning Document" which is intended to evolve throughout the term of the Program. 4.2. Objectives. The Program is designed to meet the specific goals and milestones set forth in Exhibit B of this Agreement, while implementing the Program strategies and meeting the general objectives and goals set forth in the PIP, attached hereto as Exhibit C. 5. LIMITATION ON SERVICE TERRITORY — The Parties agree that Authorized Work shall only be performed in SCE's service territory, with energy savings and demand reduction claims applicable solely to SCE's utility system. No Authorized Work shall be performed for any customers that receive electricity from a municipal utility corporation or other electricity service provider or that do not directly receive electricity service from SCE. 6. OBLIGATIONS OF THE PARTIES 6.1. Obligations of SCE and the City 6.1.1. Each Party will be responsible for the overall progress of its Authorized Work, to ensure that the Program remains on target (including but not limited to achieving the Program's specific energy savings and demand reduction goals as set forth in Exhibit B). 6.1.2. The Parties shall jointly coordinate and prepare all Program-related documents, including all required reporting pursuant to Section 9, and any such other reporting as may be reasonably requested by SCE. 6.1.3. To the extent practicable and with coordination by SCE, the Parties shall use the Program as a portal for other existing or selected programs that SCE offers, including programs targeting low-income ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 5 -69- customers, demand response, self-generation, solar, and other programs as described in the PIP, with a goal to enhance consistency in rebates and other Program details, minimize duplicative administrative costs, and enhance the possibility that programs can be marketed together to avoid duplicative marketing expenditures. 6.1.4. Consistent with those contained in the PIP, SCE and the City will work together to develop and accomplish additional mutually agreeable goals. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 6 _70- 6.2. Obligations of the City. 6.2.1. The City will appoint an "Energy Champion" who will be the primary contact between the City, other Program Participants, and the SCE Energy Efficiency Representative (defined in Section 6.3.1), and who will be authorized to act on behalf of the City in carrying out the City's obligations under this Agreement. Such appointment shall be communicated in writing to SCE within 10 Business Days following execution of this Agreement. The City shall communicate regularly with the SCE Energy Efficiency Representative in accordance with Section 7.2 and 7.3 hereof, and shall advise SCE immediately of any problems or delays associated with its Authorized Work obligations. 6.2.2. The City shall perform its Authorized Work obligations within the Partner Budget and in conformance with the schedule and goals associated with such Authorized Work as set forth in this Agreement, and shall furnish the required labor, equipment and material with the degree of skill, care and professionalism that is required by current professional standards. 6.2.3. The City will be actively involved in all aspects of the Program. The City will use its best efforts to (a) dedicate human resources necessary to implement the Program successfully, (b) providing support for the Program's marketing and outreach activities, and (c) working to enhance communications with SCE to address consumer needs. 6.2.4. The City shall obtain the approval of SCE when developing Program marketing ,materials and prior to their distribution, publication, circulation, or dissemination in any way to the public. In addition, all advertising, marketing or otherwise printed or reproduced material used to implement, refer to, or that is in any way related to the Program must contain the respective name and logo of SCE and, at a minimum, the following language: "This Program is funded by California utility ratepayers and administered by Southern California Edison under the auspices of the California Public Utilities Commission." 6.2.5. The City shall obtain the approval of SCE prior to conducting any Program public outreach activities (exhibits, displays, public presentations, canvassing, etc.) and any marketing materials used in connection with such outreach activity shall comply with the requirements of Section.6.2.4. 6.2.6. The City shall submit to SCE, upon its request, all contracts, agreements or other requested documents with the City's Contractors (including subcontractors) performing Authorized Work in connection with the Program. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 7 -71 6.2.7. The City acknowledges and agrees that the Program has other Program Participants, and that no one Program Participant is entitled to the entire Authorized Partnership Budget, and that the City shall work with SCE and each other Program Participants to achieve the goals and accomplish the Authorized Work of the Program. 6.3. Obligations of SCE. 6.3.1. SCE will appoint a Partnership representative ("SCE Energy Efficiency Representative") who will be the primary contact between SCE, other Program Participants, and the City, and who will be authorized to act on behalf of SCE in carrying out SCE's obligations under this Agreement. Such appointment shall be communicated in writing to the City within 10 Business Days following execution of this Agreement. 6.3.2. SCE will oversee the activities and implementation of the Program, in accordance with this Agreement. 6.3.3. SCE will be actively involved in all aspects of the Program. SCE will use its best efforts to add value to the Program by (a) dedicating human resources necessary to assist the City in implementing the Program successfully and providing and maintaining an SCE presence in the City, (b) providing support for the Program's marketing and outreach activities, and (c) working to enhance communications with the City to address consumer needs and provide SCE information and services. 6.3.4. SCE shall provide, at no cost to the City, informational and educational materials on SCE's statewide and local energy efficiency core programs. 6.3.5. SCE shall work with the City as requested to help identify cost- effective energy efficient projects in the City's qualifying municipal facilities within SCE's service territory. 6.3.6. SCE shall administer the PGC funds authorized by the Commission for the Program in accordance with this Agreement, and SCE shall reimburse the City for Program Expenditures in accordance with Section 10 below. 6.3.7. SCE shall be responsible for coordinating and ensuring compliance with all reporting and other filing requirements. 6.3.8. SCE shall be responsible for tracking performance of the City in accordance with Section 10.1.2, and for verifying all energy savings and demand reduction claims of the City, and for monitoring and ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 8 -72- verifying achievement of the Partner Levels as described in Exhibit A. 6.4. EM&V. Once the Commission has approved and issued an evaluation, measurement and verification ("EM&V') plan for the Program, such EM&V plan shall be attached to this Agreement as Exhibit D and shall be incorporated herein by this reference. Any subsequent changes or modifications to such EM&V plan by the Commission shall be automatically incorporated into Exhibit D. The City shall provide and comply with all Commission/SCE requests regarding activities related to EM&V. The City and its Contractors shall cooperate fully with the SCE Energy Efficiency Representative and will provide all requested information, if any, to assure the timely completion of all EM&V Plan tasks requiring the City's involvement or cooperation. 7. ADMINISTRATION OF PROGRAM 7.1. Decision-making and Approval. 7.1.1. Except as specifically provided in this Agreement, the following actions and tasks require consent of both Parties: a. Any material modification to the Authorized Work in connection with the Program. b. Any action that materially impacts the agreed-upon schedule for implementing the Program. C. Selection of any Contractor not previously approved by SCE. 7.1.2. Unless otherwise specified in this Agreement, the Parties shall document all material Program decisions, including, without limitation, all actions specified in Section 7.1.1 above, in meeting minutes or if taken outside a meeting, through written communication, which shall be maintained in hard copy form on file by the Parties for a period of no less than five (5) years after the expiration or termination of this Agreement. 7.2. Regular Meetings. During the term of this Agreement, the Program Participant representatives of the Partnership identified in writing pursuant to Section 6.2.1 and 6.3.1 respectively, along with such members of the Partnership team as the Parties deem necessary or appropriate, shall meet monthly at a location reasonably agreed upon by the Parties. In addition to any other agenda items requested by either Party, the agenda shall include a review the status of the City's performance against Partner Budget, toward achievement of the goals set forth in Exhibit B, and the Partnership's progress towards meeting overall Partnership goals set forth in Exhibit C. Any decision-making shall be reached and documented in accordance with the requirements of Section 7.1 above. 7.3. Regular Communication. Regular communication among Partnership representatives is critical for the long-term success of the Partnership and achievement of Partnership goals and objectives. Notwithstanding Section 7.2, ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 9 -73- above, the Partnership representatives identified in writing by each Partner pursuant to Sections 6.2.1 and 6.3.1, respectively, including other Program Participants, shall communicate regularly with each other to review the status of the Program's goals, deliverables, schedules and budgets, and plan for upcoming Program implementation activities, and to advise the other Party of any problems associated with successful implementation of the Program. Any decision-making during this communication process shall be reached and documented in accordance with the requirements of Section 7.1 above. 7.4. Non-Responsibility for Other Party. Notwithstanding anything contained in this Agreement in the contrary, a Party shall not be responsible for the performance or non-performance hereunder of the other Party, nor be obligated to remedy any other Party's defaults or defective performance. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 10 -74- a 8. DOUBLE DIPPING PROHIBITED In performing its respective Authorized Work obligations, the City shall implement the following mechanism and shall take other practicable steps to minimize double-dipping: 8.1. Prior to providing incentives or services to an Eligible Customer,the City and its Contractors shall obtain a signed form from such Eligible Customer stating that: 8.1.1. Such Eligible Customer has not received incentives or services for the same measure from any other SCE program or from another utility, state, or local program; and 8.1.2. Such Eligible Customer agrees not to apply for or receive Incentives or services for the same measure from any other SCE program or from another utility, state, or local program. Each Party shall keep its Customer-signed forms for at least five (5) years after the expiration or termination of this Agreement. 8.2. No Party shall knowingly provide an incentive to an Eligible Customer, or make payment to a Contractor, who is receiving compensation for the same product or service either through another ratepayer funded program, or through any other funding source. 8.3. The City represents and warrants that it or its Contractors has not received, and will not apply for or accept Incentives or services for any measure provided for herein or offered pursuant to this Agreement or the Program from any other SCE program or from any other utility, state or local program. 8.4. The Parties shall take reasonable steps to minimize or avoid the provision of incentives or services for the. same measures provided under the Program from another program or other funding source ("double-dipping"). 9. REPORTING 9.1. Reporting Requirements. The Parties shall implement those reporting requirements set forth in Exhibit E attached hereto, as the same may be amended from time to time, or until the Commission otherwise requires or issues different or updated reporting requirements for the Program, in which case and at which time such Commission-approved reporting requirements shall replace the requirements set forth in Exhibit E in their entirety. 10. PAYMENTS 10.1. Partner Budget ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 11 -7J® 10.1.1. Maximum Budget: The Partner Budget is set forth in Exhibit B to this Agreement and represents the City's maximum share of the Program's three-year Authorized Partnership Budget. Additionally, Exhibit B sets forth the maximum non-Incentive budget on a periodic basis during the Program. The City shall not be entitled to compensation in excess of the Partner Budget (either on a periodic basis or in total), without written authorization by SCE and receipt of a revised Exhibit B. Consistent with Commission directives to maximize cost-effectiveness and energy savings, the Partner Budget set forth in Exhibit B may be reallocated or adjusted at any time by SCE in its sole discretion, based upon SCE's evaluation of the City's commitment to, and progress toward the City's energy savings goals set forth herein. 10.1.2. Tracking: SCE will track the City's performance against the objectives set forth in Section 4.2 hereof, including tracking (or estimating) achievement towards the specific energy savings and demand reduction goals set forth in Exhibit B, and will provide such tracking information to the City on a regular basis, but in no event less than quarterly. The tracking will enable SCE, to (i) properly allocate the Authorized Partnership Budget among all the Energy Leader Partnerships according to their individual performance and achievement of respective goals and objectives, (ii) confirm or amend the Partner Budget, set forth in Exhibit B hereto, based on the City's performance of the goals and objectives set forth in this Agreement; and (iii) determine/verify the City's eligibility to move to a new Energy Leader Level as described in Section 3.2 hereof. 10.1.3. Partner Budget Adjustment: The Parties acknowledge that this Program is offered in furtherance of the Commission's strategic energy efficiency goals for California and is based on the City's commitment to attain such goals and its desire to provide leadership to its community. To this end, in the event that SCE determines, in its sole discretion and through the tracking mechanism set forth in 10.1.2 above, that the City is not performing in accordance with the goals and objectives set forth in Section 4.2 hereof, then SCE shall have the unilateral right to reduce, eliminate, or otherwise adjust the Partner Budget for the remaining Program year or years (other than for Program Expenditures previously approved by SCE) by amending Exhibit B and providing the amended Exhibit to the City. Pursuant to this Section, any such amended Exhibit B shall automatically be incorporated into this Agreement and take effect immediately upon delivery from SCE to the City. 10.1.4. Partner Budget Categories a. Non-Incentive Budget: The Partner Budget is comprised of a non-incentive portion which includes separate categories for Marketing, Education & Outreach, Technical Assistance [and ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 12 -76- Direct Implementation], all of which are more fully described in the Program Implementation Plan (Exhibit Q. b. Incentive Budget: As part of the Partner Budget, the City shall be eligible to receive certain enhanced Incentives through partnership participation in SCE core programs, as well as additional incentives consistent with the City's tier level of program participation, including completion of municipal retrofit projects further described in this Agreement and in the Program Implementation Plan. The additional Incentives will be made available as the City reaches higher Energy Leadership Partnership Levels in accordance with Exhibit A. 10.2. Program Expenditures of City. The City, with SCE's prior approval, shall be entitled to spend PGC funds, within the limits of the Partner Budget, on Program Expenditures. The City shall not be entitled to reimbursement of Program Expenditures for any item (i) not specifically identifiable to the Program, (ii) not previously approved by SCE, (iii) not expended within the term of this Agreement, or (iv) not otherwise reimbursable under this Agreement. 10.3. Payment to the City. In order for the City to be entitled to PGC funds for Program Expenditures: 10.3.1.The City shall submit monthly activity reports to SCE in a format acceptable to SCE and containing such information as may be required for the reporting requirements set forth in Section 9 above ("Monthly City Reports"), by the tenth (loth) Calendar Day of the calendar month following performance, setting forth all Program Expenditures. 10.3.2.The City shall submit to SCE, together with any Monthly City Report (if required), a monthly invoice for reimbursement of reported Program Expenditures, in a format acceptable to SCE, attaching all documentation reasonably necessary to substantiate the Program Expenditures, including, without limitation, the following: a. Contractor Costs: Copies of all Contractor invoices. If only a portion of Contractor costs applies to the Program, the City shall clearly indicate the line items or percentage of the invoice amount that should be applied to the Program as provided in Exhibit E. b. Marketing, Education & Outreach: A copy of each distinct marketing material produced, with quantity of a given marketing material produced and the method of distribution. C. Other expenditures: As pre-approved by SCE, with I sufficient documentation to support the expenditure. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 13 -77- d. Allowable Costs: Only those costs as listed in the Allowable Cost Table contained in the Reporting Requirements attached as Exhibit E can be submitted for payment. All invoices submitted to SCE must report all costs using the allowable cost elements shown on the Allowable Cost Table. The City understands and acknowledges that all of the City's invoices for the Program and the Monthly City Report shall be submitted to SCE. 10.3.3.SCE reserves the right to reject any City invoiced amount for any of the following reasons: a. The invoiced amount, when aggregated with previous Program Expenditures, exceeds the amount budgeted therefore in the Partner Budget for such Authorized Work (as set forth in Exhibit B). b. There is a reasonable basis for concluding that such invoiced amount is unreasonable or is not directly identifiable to or required for the Authorized Work, and/or the Program. C. The invoiced amount, in SCE's sole discretion, contains charges for any item not authorized under this Agreement or by the Commission, or is deemed untimely, unsubstantiated or lacking proper documentation. 10.3.4.The City shall maintain for a period of not less than five (5) years all documentation reasonably necessary to substantiate the Program Expenditures, including, without limitation, the documentation set forth in Section 10.3.2 above. The City shall promptly provide, upon the reasonable request by SCE, any documentation, records or information in connection with the Program or its Authorized Work. SCE shall review and either approve, dispute or reject for payment reported Program Expenditures within twenty (20) Calendar Days of receipt of the Monthly City Report and corresponding invoice. SCE shall pay all undisputed amounts after the ten (10) Calendar Day period described in Section 10.3.1, but within thirty (30) Calendar Days of receiving the Monthly City Report and corresponding invoice. 10.3 Payment of Incentives. Payment of Incentives to the City shall be made in accordance with the applicable SCE program requirements, including terms and conditions, and only after appropriate program documents have been submitted and approved, and the appropriate inspections of each Project have been completed to SCE's satisfaction. 10.4. Shifting Funds. SCE may shift funds within the Authorized Partnership Budget among Program Participants, and/or may shift funds within the Partner ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 14 -78- K y Budget among budget categories (Marketing, Education & Outreach, Technical Assistance, [Direct Implementation] and Incentives), which categories and budget amounts are set forth in Exhibit B. Such shifting may be made by SCE to the maximum extent permitted under, and in accordance with, Commission decisions and rulings to which the Program relates. 10.5. Reasonableness of Expenditures. The City shall bear the burden of ensuring that its Program Expenditures are objectively reasonable. The Commission has the authority to review all Program Expenditures for reasonableness. Should the Commission, at any time, issue a finding of unreasonableness as to any Program Expenditure and require a refund or return of the PGC funds paid in the reimbursement of such Program Expenditure, the City shall be solely liable for such refund or return. 11.END DATE FOR PROGRAM AND ADMINISTRATIVE ACTIVITIES Unless this Agreement is terminated pursuant to Section 25 below, or unless otherwise agreed to by the Parties or so ordered by the Commission, the Parties shall complete all Program Administrative activities (as defined in the PIP) and all reporting requirements by no later than March 31, 2013, and all Direct Implementation and Marketing & Outreach activities by no later than December 31, 2012. 12. FINAL INVOICES The City must submit final invoices to SCE no later than March 31, 2013. 13.INDEMNITY 13.1. Indemnity by the City. The City shall indemnify, defend and hold harmless SCE, and its respective successors, assigns, affiliates, subsidiaries, current and future parent companies, officers, directors, agents, and employees, from and against any and all expenses, claims, losses, damages, liabilities or actions in respect thereof (including reasonable attorneys' fees) to the extent arising from (a) the City's negligence or willful misconduct in the City's activities under the Program or performance of its obligations hereunder, or (b) the City's breach of this Agreement or of any representation or warranty of the City contained in this Agreement. 13.2. Indemnity by SCE. SCE shall indemnify, defend and hold harmless the City, and its respective successors, assigns, affiliates, subsidiaries, current and future parent companies, officers, directors, agents, and employees, from and against any and all expenses, claims, losses, damages, liabilities or actions in respect thereof (including reasonable attorneys' fees) to the extent arising from (a) SCE's negligence or willful misconduct in SCE's activities under the Program or performance of its obligations hereunder or (b) SCE's breach of this Agreement or any representation or warranty of SCE contained in this Agreement. 13.3. LIMITATION OF LIABILITY. NO PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 15 e79. DAMAGES WHATSOEVER WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR STRICT LIABILITY INCLUDING, BUT NOT LIMITED TO, LOSS OF USE OF OR UNDER-UTILIZATION OF LABOR OR FACILITIES, LOSS OF REVENUE OR ANTICIPATED PROFITS, COST OF REPLACEMENT POWER OR CLAIMS FROM CUSTOMERS, RESULTING FROM A PARTY'S PERFORMANCE OR NONPERFORMANCE OF THE OBLIGATIONS HEREUNDER, OR IN THE EVENT OF SUSPENSION OF THE AUTHORIZED WORK OR TERMINATION OF THIS AGREEMENT. 14. OWNERSHIP OF DEVELOPMENTS The Parties acknowledge and agree that SCE, on behalf of its Customers, shall own all data, reports, information, manuals, computer programs, works of authorship, designs or improvements of equipment, tools or processes (collectively "Developments") or other written, recorded, photographic or visual materials, or other deliverables produced in the performance of this Agreement; provided, however, that Developments do not include equipment or infrastructure purchased for research, development, education or demonstration related to energy efficiency. Although the City shall retain no ownership, interest, or title in the Developments except as may otherwise be provided in this Agreement, it will have a permanent, royalty free, non-exclusive license to use such Developments. 15.DISPUTE RESOLUTION 15.1. Dispute Resolution. Except as may otherwise be set forth expressly herein, all disputes arising under this Agreement shall be resolved as set forth in this Section 15. 15.2. Negotiation and Mediation. The Parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiations between the Parties' authorized representatives. The disputing Party shall give the other Party written notice of any dispute. Within twenty (20) Calendar Days after delivery of such notice, the authorized representatives shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary to exchange information and to attempt to resolve the dispute. I£ the matter has not been resolved within thirty (30) Calendar Days of the first meeting, any Party may initiate a mediation of the dispute. The mediation shall be facilitated by a mediator that is acceptable to both Parties and shall conclude within sixty (60) Calendar Days of its commencement, unless the Parties agree to extend the mediation process beyond such deadline. Upon agreeing on a mediator, the Parties shall enter into a written agreement for the mediation services with each Party paying a pro rata share of the mediator's fee, if any. The mediation shall be conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association; provided, however, that no consequential damages shall be awarded in any such proceeding and each Party shall bear its own legal fees and expenses. 15.3. Confidentiality. All negotiations and any mediation conducted pursuant to Section 15.2 shall be confidential and shall be treated as compromise and ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 16 .80. settlement negotiations, to which Section 1152 of the California Evidence Code shall apply, which Section is incorporated in this Agreement by reference. 15.4. Iniunctive Relief. Notwithstanding the foregoing provisions, a Party may seek a preliminary injunction or other provisional judicial remedy if in its judgment such action is necessary to avoid irreparable damage or to preserve the status quo. 15.5. Continuing Obligation. Each Party shall continue to perform its obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement. 15.6. Failure of Mediation. If, after good faith efforts to mediate a dispute under the terms of this Agreement as provided in Section 15.2 above, the Parties cannot agree to a resolution of the dispute, any Party may pursue whatever legal remedies may be available to it at law or in equity, before a court of competent jurisdiction and with venue as provided in Section 15,.2. 16. REPRESENTATIONS AND WARRANTIES 16.1. Representation of both Parties. Each Party represents and warrants, as of the Effective Date and thereafter during the term of this Agreement, that: 16.1.1.The Authorized Work performed by a Party and/or its Contractors shall comply with the applicable requirements of all statutes, acts, ordinances, regulations, codes,.and standards of federal, state, local and foreign governments, and all agencies thereof. 16.1.2.The Authorized Work performed by a Party and/or its Contractors shall be free of any claim of trade secret, trade mark, trade name, copyright, or patent infringement or other violations of any proprietary rights of any person. 16.1.3.Each Party shall conform to the applicable employment practices requirements of (Presidential) Executive Order 11246 of September 24, 1965, as amended, and applicable regulations promulgated thereunder. 16.1.4.Each Party shall contractually require each Contractor it hires to perform the Authorized Work to indemnify each other Party to the same extent such Party has indemnified each other Party under the terms and conditions of this Agreement. 16.1.5.Each Party shall retain, and shall cause its Contractors to retain, all records and documents pertaining to its Authorized Work obligations for a period of not less than five (5) years beyond the termination or expiration of this Agreement. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT I7 -81- 16.1.6.Each Party shall contractually require all of its Contractors to provide the other Parties reasonable access to relevant records and staff of Contractors concerning the Authorized Work. 16.1.7.Each Party will maintain, and may require its Contractors to maintain, the following insurance coverage or self insurance coverage, at all times during the term of this Agreement, with companies having an A.M. Best rating of "A-, VII" or better, or equivalent: (i) Workers' Compensation/Employer's Liability or Equivalent: statutory minimum. (ii) Commercial General Liability: $2 million minimum per occurrence/$4 million minimum aggregate. (iii) Commercial or Business Auto (if applicable): $1 million minimum. (iv) Professional Liability (if applicable): $1 million minimum. 1.6.1.8 Each Party shall take all reasonable measures, and shall require its Contractors to take all reasonable measures, to ensure that the Program funds in its possession are used solely for Authorized Work, which measures shall include the highest degree of care that such Party uses to control its own funds, but in no event less than a reasonable degree of care. 17. PROOF OF INSURANCE 17.1. Evidence of Insurance. Upon request at any time during the term of this Agreement, a Party shall provide evidence that its insurance policies (and the insurance policies of any Contractor, as provided in Section 16.8) are in full force and effect, and provide the coverage and limits of insurance that the Party has represented and warranted herein to maintain at all times during the term of this Agreement. 17.2. Self-Insurance. If a Party is self-insured, such Party shall upon request forward documentation to the other Party that demonstrates to the other Party's satisfaction that such Party self-insures as a matter of normal business practice before commencing the Authorized Work. Each Party will accept reasonable proof of self-insurance comparable to the above requirements. 17.3. Notice of Claims. Each Party shall immediately report to the other Party, and promptly thereafter confirm in writing, the occurrence of any injury, loss or damage incurred by such Party or its Contractors or such Party's receipt of notice or knowledge of any claim by a third party of any occurrence that might give rise to such a claim over $100,000. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 18 -82- 18. CUSTOMER CONFIDENTIALITY REQUIREMENTS 18.1. Non-Disclosure. Subject to any disclosures required pursuant to the Public Records Act, the City, its employees, agents and Contractors shall not disclose any Confidential Customer Information (defined below) to any third party during the term of this Agreement or after its completion, without the City having obtained the prior written consent of SCE, except as provided by law, lawful court order or subpoena and provided the City gives SCE advance written notice of such order or subpoena. 18.2. Confidential Customer Information. "Confidential Customer Information" includes, but is not limited to, an SCE customer's name, address, telephone number, account number and all billing and usage information, as well as any SCE customer's information that is marked "confidential". If the City is uncertain whether any information should be considered Confidential Customer Information, the City shall contact SCE prior to disclosing the customer information. 18.3. Non-Disclosure Agreement. Prior to any approved disclosure of Confidential Customer Information, SCE may require the City to enter into a nondisclosure agreement. 18.4. Commission Proceedings. This provision does not prohibit the City from disclosing non-confidential information concerning the Authorized Work to the Commission in any Commission proceeding, or any Commission-sanctioned meeting or proceeding or other public forum. 18.5. Return of Confidential Information. Confidential Customer Information (including all copies, backups and abstracts thereof) provided to the City by SCE, and any and all documents and materials containing such Confidential Customer Information or produced by the City based on such Confidential Customer Information (including all copies, backups and abstracts thereof), during the performance of this Agreement shall be returned upon written request by SCE. 18.6. Remedies. The Parties acknowledge that Confidential Customer Information is valuable and unique, and that damages would be an inadequate remedy for breach of this Section 18 and the obligations of the Parties are specifically enforceable. Accordingly, the Parties agree that in the event of a breach or threatened breach of this Section 18 by the City, SCE shall be entitled to seek and obtain an injunction preventing such breach, without the necessity of proving damages or posting any bond. Any such relief shall be in addition to, and not in lieu of, money damages or any other available legal or equitable remedy. 19. TIME IS OF THE ESSENCE The Parties hereby acknowledge that time is of the essence in performing their obligations under this Agreement. Failure to comply with milestones and goals stated in this Agreement, including but not limited to those set forth in Exhibit B of this Agreement, may ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 19 -83- constitute a material breach of this Agreement, resulting in its termination, payments being withheld, Partner Budgets being reduced or adjusted, funding redirected by SCE to other programs or partners, or other Program modifications as determined by SCE or as directed by the Commission. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 20 -84- 20. CUSTOMER COMPLAINT RESOLUTION PROCESS The Parties shall develop and implement a process for the management and resolution of Customer complaints in an expedited manner including, but not limited to: (a) ensuring adequate levels of professional Customer service staff; (b) direct access of Customer complaints to supervisory and/or management personnel; (c) documenting each Customer complaint upon receipt; and (d) directing any Customer complaint that is not resolved within five (5) Calendar Days of receipt by the City to SCE. 21. RESTRICTIONS ON MARKETING 21.1. Use of Commission's Name. No Party may use the name of the Commission on marketing materials for the Program without prior written approval from the Commission staff. In order to obtain this written approval, SCE must send a copy of the planned materials to the Commission requesting approval to use the Commission name and/or logo. Notwithstanding the foregoing, the Parties shall disclose their source of funding for the Program by stating prominently on marketing materials that the Program is "funded by California ratepayers under the auspices of the California Public Utilities Commission." 21.2. Use of SCE Name. The City must receive prior review and written approval from SCE for the use of SCE's name or logo on any marketing or other Program materials. The City shall allow five (5) Business Days for SCE review and approval. If the City has not received a response from SCE within the five (5) Business Day period, then it shall be deemed that SCE has disapproved such use. 21.3. Use of the City's Name. SCE must receive prior review and written approval from the City for the use of the City's name or logo on any marketing or other Program materials. SCE shall allow five (5) Business Days for the City's review and approval. If SCE has not received a response from the City within the five (5) Business Day period, then it shall be deemed that the City has disapproved such use. 22.RIGHT TO AUDIT The Parties agrees that the other Party, and/or the Commission, or their respective designated representatives, shall have the right to review and to copy any records or supporting documentation pertaining to the their performance of this Agreement or the Authorized Work, during normal business hours, and to allow reasonable access in order to interview any staff of the City or SCE who might reasonably have information related to such records. Further, the Parties agrees to include a similar right of the other Party and/or the Commission to audit records and interview staff in any subcontract related to performance of the Authorized Work or this Agreement. 23. STOP WORD PROCEDURES SCE may suspend the Authorized Work being performed in their service territory for good cause, including, without limitation, concerns relating to program funding, ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 21 -85- implementation or management of the Program, safety concerns, fraud or excessive customer complaints, by notifying the City in writing to suspend any Authorized Work being performed in SCE' service territory. Any performance of Authorized Work by the City in SCE's service territory shall stop immediately, and the City may resume its Authorized Work only upon receiving written notice from SCE that it may resume its Authorized Work. 24.MODIFICATIONS Except as otherwise provided in this Agreement, changes to this Agreement shall be only be valid through a written amendment to this Agreement signed by both Parties. 25.TERM AND TERMINATION 25.1. Term. This Agreement shall be effective as of the Effective Date. Subject to Section 37, the Agreement shall continue in effect until June 30, 2013 unless otherwise terminated in accordance with the provisions of Section 25.2 or 30 below. 25.2. Termination for Breach. Any Party may terminate this Agreement in the event of a material breach by the other Party of any of the material terms or conditions of this Agreement, provided such breach is not remedied within sixty (60) days written notice to the breaching Party thereof from the non-breaching Party or otherwise resolved pursuant to the dispute resolution provisions set forth in Section 15 herein. 25.3. Effect of Termination. Any termination by the City or by SCE shall constitute a termination of this Agreement in its entirety (subject, however, to the survival provisions of Section 36). 25.3.1. Subject to the provisions of this Agreement, the City shall be entitled to PGC Funds for all Program Expenditures incurred or accrued pursuant to contractual or other legal obligations for Authorized Work up to the effective date of termination of this Agreement, provided that any Monthly City Reports or other reports, invoices, documents or information required under this Agreement or by the Commission are submitted in accordance with the terms and conditions of this Agreement. The provisions of this Section 25.3.1 shall be the City's sole compensation resulting from any termination of this Agreement. 25.3.2.In the event of termination of this Agreement in its entirety, the City shall stop any Authorized Work in progress and take action as directed by SCE to bring the Authorized Work to an orderly conclusion, and the Parties shall work cooperatively to facilitate the termination of operations and of any applicable contracts for Authorized Work. 26. WRITTEN NOTICES ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 22 -86- Any written notice, demand or request required or authorized in connection with this Agreement, shall be deemed properly given if delivered in person or .sent by facsimile, nationally recognized overnight courier, or first class mail, postage prepaid, to the address specified below, or to another address specified in writing by a Party as follows: The City: SCE: City of Huntington Beach Southern California Edison Company Aaron Klemm Jim Hodge 2000 Main Street. 6042-A N. Irwindale Ave. Huntington Beach, CA 92648 Irwindale, CA 91702 Notices shall be deemed received (a).if personally or hand-delivered, upon the date of delivery to the address of the person to receive such notice if delivered before 5:00 p.m., or otherwise on the Business Day following personal delivery; (b) if mailed, three (3) Business Days after the date the notice is postmarked; (c) if by facsimile, upon electronic confirmation of transmission, followed by telephone notification of transmission by the noticing Party; or (d) if by overnight courier, on the Business Day following delivery to the overnight courier within the time hmitsset by that courier for next-day delivery. 27. CONTRACTS Each Party shall, at all times, be responsible for its Authorized Work obligations, and acts and omissions of Contractors, subcontractors and persons directly or indirectly employed by such Party for services in connection with the Authorized Work. Each Party shall require its Contractors to be bound by terms and conditions which are the same or similar to those contained in this Agreement, as the same may be applicable to Contractors. 28. RELATIONSHIP OF THE PARTIES The Parties shall act in an independent capacity and not as officers or employees or agents of each other. This Agreement is not intended to and does not form any "partnership" within the meaning of the California Uniform Partnership Act of 1994 or otherwise. 29. NON-DISCRIMINATION CLAUSE No Party shall unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of sex, race, color, ancestry, religious creed, national origin, physical disability (including HIV and AIDS), mental disability, medical condition (cancer), age (over 40), marital status, and denial of family care leave. Each Party shall ensure that the evaluation and treatment of its employees and applicants for employment are free from such discrimination and harassment, and shall comply with the provisions of the Fair Employment and Housing Act (Government Code Section 12990 (a)- (f) et seq.) and the applicable regulations promulgated thereunder (California Code of Regulations, Title 2, Section 7285 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code Section 12990 (a)- (f), set forth in Chapter 5 of Division 4 of Title 2 of the California Code of Regulations, are incorporated into this Agreement by reference and made a part hereof as if set forth in full. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 23 -87- Each Party represents and warrants that it shall include the substance of the nondiscrimination and compliance provisions of this clause in all subcontracts for its Authorized Work obligations. 30. COMMISSION/SCE AUTHORITY TO MODIFY OR TERMINATE This Agreement and the Program shall at all times be subject to the discretion of the Commission, including, but not limited to, review and modifications, excusing a Party's performance hereunder, or termination as the Commission may direct from time to time in the reasonable exercise of its jurisdiction. In addition, in the event that any ruling, decision or other action by the Commission adversely impacts the Program, SCE shall have the right to terminate this Agreement in accordance with the provisions of Section 25 above by providing at least ten (10) days' prior written notice to the City setting forth the effective date of such termination. Notwithstanding the right to terminate, as partners in the Program, the Parties agree to share in the responsibility and to abide by Commission energy policy supporting this Program. The Parties agree to use all reasonable efforts to minimize the adverse impact to a Party resulting from such Commission actions, including but not limited to modification of the required energy savings goals set forth in Section 4.2 which are fundamental to this Agreement. 31. NON-WAIVER None of the provisions of this Agreement shall be considered waived by either Party unless such waiver is specifically stated in writing. 32.ASSIGNMENT No Party shall assign this Agreement or any part or interest thereof, without the prior written consent of the other Party, and any assignment without such consent shall be void and of no effect. Notwithstanding the foregoing, if SCE is requested or required by the Commission to assign its rights and/or delegate its duties hereunder, in whole or in part, such assignment or delegation shall not require the City's consent and SCE shall be released from all obligations hereunder arising after the effective date of such assignment, both as principal and as surety. 33. FORCE MAJEURE Failure of a Party to perform its obligations under this Agreement by reason of any of the following shall not constitute an event of default or breach of this Agreement: strikes, picket lines, boycott efforts, earthquakes, fires, floods, war (whether or not declared), revolution, riots, insurrections, acts of God, acts of government (including, without limitation, any agency or department of the United States of America), acts of terrorism, acts of the public enemy, scarcity or rationing of gasoline or other fuel or vital products, inability to obtain materials or labor, or other causes which are reasonably beyond the control of such Party. 34. SEVERABILITY ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 24 o88® In the event that any of the terms, covenants or conditions of this Agreement, or the application of any such term, covenant or condition, shall be held invalid as to any person or circumstance by any court, regulatory agency, or other regulatory body having jurisdiction, all other terms, covenants, or conditions of this Agreement and their application shall not be affected thereby, but shall remain in full force and effect, unless a court, regulatory agency, or other regulatory body holds that the provisions are not separable from all other provisions of this Agreement. 35. GOVERNING LAW; VENUE_ This Agreement shall be interpreted, governed, and construed under the laws of the State of California as if executed and to be performed wholly within the State of California. Any action brought to enforce or interpret this Agreement shall be filed in Los Angeles County, California. 36. SECTION HEADINGS Section headings appearing in this Agreement are for convenience only and shall not be construed as interpretations of text. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 25 _89® 37. SURVIVAL Notwithstanding completion or termination of this Agreement, the Parties shall continue to be bound by the provisions of this Agreement which by their nature survive such completion or termination. Such provisions shall include, but are not limited to, Sections 9, 10, 13,.14, 15, 18, 22, 35 and 38 of this Agreement. 38.ATTORNEYS' FEES Except as otherwise provided herein, in the event of any legal action or other proceeding between the Parties arising out of this Agreement or the transactions contemplated herein, each Party in such legal action or proceeding shall bear its own costs and expenses incurred therein, including reasonable attorneys' fees. 39. COOPERATION Each Party agrees to cooperate with the other Party in whatever manner is reasonably required to facilitate the successful completion of this Agreement. 40. ENTIRE AGREEMENT This Agreement (including all of the Exhibits and Attachments hereto which are incorporated into this Agreement by this reference) contains the entire agreement and understanding between the Parties and merges and supersedes all prior agreements_ , representations and discussions pertaining to the subject matter of this Agreement. 41. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument. [INTENTIONALLY LEFT BLANK] ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 26 -90- SIGNATURE PAGE IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives. The City: HUNTI O BEACH Na e: red A. Wilson APPROVED AS TO FORM Ti e: City Administrator JENNIFER MoGRA g '� On'� B SCE: Depu itiY Vo SOUTHERN CALIFORNIA EDISO ' COMPANY Lynda Zie ter Cj : Senior Vice esident, Customer S rvi OVAM OVA" ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 27 -91 EXHIBIT A ENERGY LEADER PARTNERSHIP - PROGRAM LEVEL City 2003 City 2003-2008 Participation/ City's Retrofit Community Baseline Energy Savings Savings Energy Energy Energy Consumption* Percentage Savings Saving Leader Required Required Program Required next for next Level: Level Level Municipal Facilities 19,195,114 310,974 kWh 2 % Valued 648,782 0 kWh kWh net Partner kWh net Community 1,104,674,684 74,260,407 6.7 % N/A N/A 0 kWh kWh kWh net 2010—2012 __ _ _ _ - - - - - - - - - - Valued 648,782 0kWh Partner kWh net *Baseline numbers are mutually agreed upon for purposes of this Agreement only. Energy Leaders Partnership levels are: Valued Partner Level—This level is the entry level for the partner to develop knowledge and establish goals towards the Silver Level. A budget is available for energy savings projects, for marketing, education, and outreach to the community,as well as for technical assistance toward upgrading or retrofitting partners' facilities. SCE's core program incentives will be offered directly to the partner. The partner will be expected to use the marketing and outreach funds to generate verifiable energy savings in their own facilities and in the community and will participate in demand response at a basic level.Valued Level provides the Partner with 3 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. Silver Level—To qualify for this level,the partner demonstrates past participation in SCE energy efficiency programs, develops an energy action plan,sets community and city energy reduction goals,targets 25 percent of its facilities to complete energy efficiency upgrades,and participates in demand response.An enhanced incentive is paid at the Silver Level. Silver Level provides the Partner with 6 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. Gold Level—To qualify for this level,the partner demonstrates higher past participation in SCE energy efficiency programs, establishes higher city and community program participation and energy savings goals and makes a higher commitment to participate in demand response.Incentive factors are higher for partner facilities'energy efficiency projects.Gold Level provides the Partner with 9 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. Platinum Level—To qualify for this level,the partner demonstrates even higher past participation in energy efficiency programs,is innovative and integrates Energy Action Plan policies,ordinances and procedures.All facilities are targeted for energy efficiency upgrades and the partner makes a higher commitment to participate in Demand Response.Incentive factors are highest for Partner facilities'energy efficiency projects and additional incentives are made available for customized community energy efficiency projects.Platinum Level provides the Partner with 12 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 28 -92- EXHIBIT"B" ENERGY LEADER PARTNERSHIP PROGRAM 2010-2012 GOALS & PARTNER BUDGET Program Cycle Partner Budget and Goals: Maximum Partner KWh Energy Savings kW Peak Demand Budget Goal Reduction Goal 2010-2012: $400,292 1,118,389 KWh 241 kW Gross Gross Incentive: $190,126 Non-Incentive: $210,166 (Marketing,Education& Outreach,Technical Assistance[and Direct Implementation]) Minimum Performance % vs. Expenditures of Non-Incentive Partner Budget: Performance 12 months 24 Months 30 Months 36 Months Category into Program into Program into Program into Program: Non- NTE 40% NTE 65% NTE 90% NTE 100% Incentive Budget Expended (ME&O) Minimum 15% 50% 70% kWh Achieved Minimum 15% 50% 70% kW Achieved *NTE=Not To Exceed Explanation of non-Incentive Partner Budget allocation against goals: Maximum Percent of total non-incentive Partner Budget expended by the end of year 1: 40% Minimum kWh achieved by the end of year 1: 15%of 3-year goal Maximum Percent of total non-incentive Partner Budget expended by end of year 2:65% Minimum kWh achieved by end of year 2:50%of 3-year goal Maximum Percent of total non-incentive Partner Budget expended by end of the 2nd quarter of year 3:90% Minimum kWh achieved by the end of 2nd quarter of year 3:70%of 3-year goal In accordance with Section 10 of this Agreement,SCE reserves the right to assess the progress made by the City at any time with respect to the above goals, and may in its sole discretion elect to shift funds among categories or redistribute all orpart ofthe funding budgeted herein to other energy efficiency programs orpartnerships in accordance with the Agreement.. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 29 -93- ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 30 -94- EXHIBIT C PROGRAM IMPLEMENTATION PLANS COMMUNITY ENERGY PARTNERSHIP PROGRAM AGREEMENT -95- Orange County Cities Enemy Leader Partnership 1. Program Name: Orange County Cities Energy Leader Partnership 2. Projected Program Budget Table Table I —Refer to Table 1 in ELPP Master PIP. 3. Projected Program Gross Impacts Table Table 2—Refer to Table 2 in ELPP Master PIP. 4. Program Element Description and Implementation Plan a) List of program elements: The three core program elements are those identified in the Energy Leader Partnership Program Master PIP: Element A—Government Facilities,Element B— Strategic Plan Activities,and Element C—Core Program Coordination. Core Program Element A- Government Facilities A.1)Retrofit of county and municipal facilities The four cities participating in the Orange County Cities Energy Leader Partnership (Partnership)with Southern California Edison (SCE) are developing detailed lists of facilities that will be retrofitted during the 2009-2011 program cycle of the partnership. Many of these facilities and their respective energy savings have been identified and quantified. Other buildings have been audited by the California Energy Commission (CEC) and the partnership is awaiting the CEC's reports. Municipal facilities' energy efficiency is a key component of Huntington Beach's local government participation plans. It will consist of numerous projects in two phases: Phase I consists of monitoring-based commissioning of the two largest municipal facilities in Huntington Beach and IT energy saving retrofits such as server virtualization,network energy management software and HVAC retrofits of server rooms; Phase 2 will consist of lighting system redesign &retrofits,HVAC retrofits, pumping retrofits and building envelope improvements. A.2)Retro-commissioning (of buildings and clusters of buildings) The partnering cities are including this means of achieving significant energy savings in their plans. See A.1 above. A.3)Integrating Demand Response into the audits The ELPP model for all SCE partnerships includes a requirement for participation in demand response programs. Each partner city plans to increase its participation in demand response accordingly. Integrated EE/DR audits will be conducted in eligible facilities. Southern California Edison 2009-2011 Energy Efficiency Plans 233 March 2009 m96e Y 1✓ Orann2e County Cities Energy Leader PartnnershiR A.4)'Technical Assistance for project management,training,audits, etc. - Each partner city has a specific budget for each of these activities. A.5) On-Bill Financing On-bill financing will not be available at the beginning of the 2009-2011 program cycle; however, it may be added in the future, as each partner city has indicated an interest in using on-bill financing. Core Program Element B-Strategic Plan Support B.l) Code Compliance Support The Partnership will support the individual partner cities as they examine ways of increasing compliance with existing codes. Increased enforcement can result in substantial energy savings and greenhouse gas (GHG) emissions. The Partnership will provide training,technical assistance,and additional support from SCE's Codes and Standards Program to build local government capacity to address code compliance issues. B.2) Reach Code The partnership will seek to establish meaningful CEC-approved Reach codes as part of its effort to add value to energy efficiency in alignment with the strategies stated in the Master PIP. This activity will follow the proposed path described in the Codes& Standards PIP. B.3) Guiding Document(s) Support At least one of the partner cities offers information at its building permit office on best practices and energy efficiency opportunities through SCE's programs. SCE plans significant enhancements to this practice for the 2009-2011 program cycle. The partnership intends to make training, documents, and templates available to help cities develop their own climate and energy action plans, especially relating to utility energy elements. BA)Financing for the community The partners are aware of the opportunities for financing provided by AB 811 and will be examining its possibilities. The partnership will arrange for an AB 811 presentation for the cities,and technical assistance through the Peer-to-Peer support network. B.5) Peer-to-Peer Support The partnership plans to develop an effective approach for sharing information among SCE and partner cities. The program will conduct conference calls among all partners on a routine basis. Southern California Edison 2009—2011 Energy Efficiency Plans 234 March 2009 -97- Orange County Cities Enemy Leader Partnership Core Program Element C-Core Program Coordination C.1) Outreach and Education The partnership has budgeted outreach and education efforts to demonstrate local government leadership and to provide the community with opportunities to provide energy actions and reduce the community's environmental footprint. Marketing, education,and outreach (ME&O)activities will consist of: • Staff training; • Huntington Beach Green Corp Citizen and Environmental Board training; • SCE's Mobile Energy Unit at the Annual Green Expo; • Stipends for HB Green Corp home and business energy, green audits, and onsite retrofits; • Support for Huntington Beach's annual environmental awards; • Publishing of Huntington Beach's case studies, strategic sustainability, and energy plans; and • Exploring an AB 811 financing mechanism for the Partnership cities' citizens. See the ELPP Master PIP for a further description of these activities. C.2)Residential and Small Business Direct Install Currently, there are no plans for promoting direct installations in homes and business; however, market outreach will create awareness of energy services and programs. C.3)Third-party program coordination The Partnership will conduct community events appropriate for execution by a third- party contractor(for example, light exchange events). CA) Retrofits for just-above LIEF qualified customers The Partnership will conduct coordination activities as identified in the ELPP Master PIP. C.5)Technical Assistance for program management,training,audits,etc. The Partnership has budgeted for technical assistance. See Table 6 for more details. b) Overview The Orange County Cities Energy Leader Partnership consists of four central Orange County cities: Huntington Beach, Costa Mesa,Fountain Valley, and Westminster. They began working together in early 2008 to form this partnership. c) Non-incentive services • Train the Huntington Beach Green Corps of citizen volunteers to provide energy efficiency audits for residential, small commercial, and low-income citizens. The program will pay stipends to offset background checks and expenses; • Study and consider voluntary "reach"green codes, similar to the pilot project HB Goes Green Residential Scorecard; Southern California Edison 2009-2011 Energy Efficiency Plans 235 March 2009 _98- Orange County Cities Energy Leader Partnership • SCE's Mobile Energy Unit attendance at the annual HB Green Expo conference; • Support for the annual Environmental Award; • Publishing case studies, sustainability, and energy/climate plans with support from available programs and funding sources; and • Strategic plan support to the city of Costa Mesa for extending its existing green building permit waiver program. d) Target audience • All Municipal Facilities: City Halls, Civic Center,Police Departments,Libraries, Social Services, Community Centers, Sports Fields, Parks, and water infrastructure; and • Citizens, businesses, and city staff are the target audience for partner cities. See ELPP Master PIP for more information. e) Implementation The partnership's cost-effective implementation will include customized incentives to retrofit and retro-commission municipal facilities. The partnership bases its incentives on SCE's tiered incentive structure. See the ELPP Master PIP for each core element of the program for further information on the program implementation process. 5. Program Element Rationale and Expected Outcome a) Quantitative Baseline and Market Transformation Information By its nature, market transformation occurs as a result of numerous factors and programs, not single sub-programs. Therefore, all metrics are proposed at the highest program level. Please refer to the quantitative baseline and market transformation discussion,presented in the overall program PIP. Table 3—Refer to the overarching program for quantitative baseline metrics b) Market Transformation Information By its nature,market transformation occurs as a result of numerous factors and programs,not single sub-programs. Therefore, all metrics and goals are proposed at the highest program level. Please refer to the quantitative baseline and market transformation discussion, presented in the overall program PIP. Table 4—Refer to the overarching program for market transformation metrics c) Prop-ram Resign to Overcome Barriers Program barriers,and the strategies to overcome them,are the traditional resource barriers of expertise and funding,as outlined in the ELPP Master PIP. c) Quantitative Program Targets: Southern Cal ifornia Edison 2009—2011 Energy Efficiency Plans 236 March 2009 m99_ Orange County Cities Energy Leader Partnership Table 5 Program Program Program Targ Target Target Target et Program Element by 2009 by 2010 by 2011 1 kWh TBD TBD TBD 2 Number of Workshops 2 6 10 3 Number of Ordinances,Codes,Etc. 0 0 0 #of MEO Events conducted that 4 target Residential customers 2 4 6 6. Other Program Element Attributes a) Best Practices See the ELPP Master PIP for the Energy Leader Model. b) Innovation The partnership demonstrates environmental stewardship and community leadership supporting the California Long-Term Energy Efficiency Strategic PIan (Strategic Plan). It will develop a municipal sustainability template to simplify sustainability reporting for energy efficiency and renewable energy. This template, alternately called a dashboard, will be displayed. c) Interagency coordination Huntington Beach, a PIER program partner,plans to install Bi-level area lights and Enforma diagnostic software. The city has a materials recovery facility in its jurisdiction, and plans to write a Renewable-based Energy Secure Community (RESCO) grant proposal for the CEC. The proposal envisions utilizing indigenous renewable energy resources in Huntington Beach. The partnership will provide technical assistance and other support though the Codes and Standards Program, its relationship with PIER,and support from other programs and organizations through its network of consultants. d) Integrated/coordinated Demand Side Management The IOUs have identified integrated Demand Side Management(IDSM)as an important priority. As a result they have proposed the establishment of a Statewide Integration Task Force(Task Force). SCE's local government partnerships will monitor the progress of the statewide IDSM efforts and work closely with the Task Force to identify comprehensive integration approaches and to implement best practices. The Orange County partner cities will pursue necessary and cost-effective DSM as identified in the ELPP Master PIP. The Partnership has identified accounts eligible for participation in Demand Response programs. It will facilitate technical support for planned renewable energy-related activities by the City of Huntington Beach and other partner cities wishing to pursue similar opportunities. Southern California Edison 2009—2011 Energy Efficiency Plans 237 March 2009 m10®- r - ®_ range County Cities Energy Leader PartnershiR Huntington Beach will apply for a RESCO grant from the CEC and federal government to utilize indigenous renewable energies. e) Integration across resource tvnes(energy,water,air quality,etc) Phase Two energy projects identified above include smart irrigation controllers for use by irrigation accounts that use significant amounts of water. f) Pilots • PIER program Bi-level LED area lighting and Enforma diagnostic software in the City of Huntington Beach,as described above. • New city buildings in Costa Mesa will be Leadership in Energy and Environmental Design (LEED)certified, including the Chamber of Commerce and police buildings. g) EM&V Not applicable. Southern California Edison 2009—2011 Energy Efficiency Plans 238 March 2009 -101- Orange County Cities Energy Leader Partnershi2 7. Partnership Program Advancement of Strategic Plan Goals and Objectives Table 6 California Long Term Energy Efficiency Program Approach to Achieving Strategic Plan (Strategic Plan) Strategy Strategic Plan Goal 1-1: Develop, adopt and implement model The partnership will evaluate adopting building energy codes(and/or other green more stringent model codes on a voluntary codes)more stringent than Title 24's but rewarded basis, including excess Title requirements, on both a mandatory and 24 performance in the fee-waiver voluntary basis; adopt one or two additional program, or adopting the new California tiers of increasing stringency. "Green Building Code"on a voluntary basis through 2010,making it mandatory in 2011, if a sustained funding level is provided by the CPUC to support these activities. Costa Mesa is in the process of adopting new codes. -2: Establish expedited permitting and Through the partnership, Costa Mesa will entitlement approval processes, fee consider expedited permitting based upon structures and other incentives for green reduced valuation in 2009. buildings and other above-code developments. 1-3: Develop, adopt and implement model point-of-sale and other point-of transactions relying on building ratings. 1-4: Create assessment districts or other Through the partnership,Huntington mechanisms so property owners can fund Beach will investigate the adoption of an EE through city bonds and pay off on AB 811 financing mechanism for its property taxes; develop other EE financing jurisdiction. tools. 1-5: Develop broad education program and peer-to-peer support to local governments to adopt and implement model reach codes. 1-6: Link emission reductions from "reach" codes and programs to CARB's AB 32 program. 2-2: Dramatically improve compliance with and enforcement of Title 24 building code, and of HVAC permitting and inspection requirements (including focus on peak load reductions in inland areas). Southern California Edison 2009—2011 Energy Efficiency Plans 239 March 2009 -102- Orange County Cities Energy Leader Partnership California Long Term Energy Efficiency Program Approach to Achieving Strategic Plan (Strategic Plan)Strategy Strategic Plan Goal 2-3: Local inspectors and contractors hired Through the partnership,Huntington by local governments shall meet the Beach already has two energy service requirements of the energy component of companies pre-qualified and they are their professional licensing(as such energy energy literate and conscious firms. Costa components are adopted). Mesa has a service agreement with a certified energy company that is also energy literate. 3-1: Adopt specific goals for efficiency of Due to the efforts of the partnership, local government buildings, including: Huntington Beach will be publishing an environmentally preferred purchasing policy and publishing energy/climate plans as part of the 2009-2011 Partnership with SCE. Costa Mesa is also interested in publishing an energy action plan in partnership. 3-2: Require commissioning for new The partnership's Phase One energy buildings, and re-commissioning and retro- projects include retro-commissioning the commissioning of existing buildings. two largest municipal facilities with significant near term energy savings. The City of Costa Mesa has a high interest in retro-commissioning its municipal facilities to maximize both energy savings and performance. 3-4: Explore creation of line item in local Due to the partnership, Huntington Beach government budgets or other options that has devoted a portion of its annual capital allow EE cost savings to be returned to the improvement plan to energy efficiency department and/or projects that provided the and the savings accrue to the general fund. savings to fund additional efficiency. However, part of the energy/climate action plan will track the fiscal impacts(savings) created by the plan. 3-5: Develop innovation Incubator that competitively selects initiatives for inclusion in local government pilot projects. 4-1: Local governments commit to clean Both the City of Costa Mesa and energy/climate change leadership. Huntington Beach have located appropriate sites for large-scale solar installations and both cities are exploring current funding mechanisms. Huntington Beach is also applying for grants to study ocean and urban wind power to meet 2020 AB 32 goals before 2015. HB has signed the US Mayors Climate Protection Agreement. For further information, see http://www.usmayors.org/climateprotectio n/ Southern California Edison 2009—2011 Energy Efficiency Plans 240 March 2009 -1®3- Orange County Cities Energy Leader Partnership California Long Term Energy Efficiency Program Approach to Achieving Strategic Plan (Strategic Plan) Strategy Strategic Plan Goal 4-2: Use local governments' general plan Huntington Beach has deferred investment energy and other elements to promote in general plan updates to include energy efficiency, sustainability and climate energy/climate concerns. change. 4-4: Develop local projects that integrate The partnership's Phase-Two energy EE/DSM/water/wastewater end use. projects will include water efficiency projects, including aerators and ET irrigation controllers. Wastewater, storm water runoff, and potable water capital projects are also being pursued. SCE will ensure that they are as energy efficient as possible. 4-5: Develop EE-related"carrots" and Huntington Beach is studying zoning and "sticks" using local zoning and development authority changes to comply development authority. with AB 32 and SB 375. Specifically,the Beach/Edinger Corridor plans and the Downtown Specific plan will be updated to create accessible and walkable neighborhoods that enhance Huntington Beach. Southern California Edison 2009—2011 Energy Efficiency Plans 241 March 2009 -104- EXHIBIT D EM&V PLAN [TO BE ATTACHED WHEN ISSUED BY THE COMMISSION] ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 32 �1®5- y j A.08-07-021 et al. ALJ/DMG/ays ATTACHMENT 1 2010 ® 2012 Joint Energy Division and IOU Evaluation Measurement and Verification Plan 1. Introduction and Scope of Joint EAR&V Plan Energy Division (ED) and the Investor-Owned Utilities (IOUs) submit this Joint Evaluation, Measurement and Verification (EM&V) / Policy and Planning (PP), Plan ("EM&V Plan") pursuant to Commission Decision 09-09-047, "Decision Approving 2010-2012 Energy Efficiency Portfolios and Budgets," issued on October 1, 2009. The EM&V Plan represents a cooperative effort by ED, Southern California Edison (SCE), Southern California Gas (SCG), San Diego Gas and Electric (SDG&E), and Pacific Gas and Electric (PG&E) staff to present a joint EM&V planning proposal and budget for the 2010- 2012 energy efficiency portfolios authorized in Decision 09-09-047. In Decision 09-09-047, the California Public Utilities Commission ("CPUC" or "Commission") addressed certain EM&V issues and policies and deferred resolution of others to a subsequent EM&V Decision. In anticipation of the subsequent EM&V decision, the Commission ordered ED and the IOUs to prepare an EM&V plan to be jointly submitted to the assigned ALJ and issued for comment via ruling. The plan presented herein is responsive to the Commission's stated desire "...to make near-term improvements in order to streamline EM&V processes, and enhance timeliness, transparency and consistency across EM&V work products" (D. 09-09-047 at p. 301) and "to take a fresh look at several aspects of our EM&V activity in California for the upcoming program cycle, to reduce unnecessary burden on staff and other resources, and streamline our EM&V processes." (D.09-09-047 at p. 294). 1 Throughout this document"EM&V," if not otherwise indicated,is understood to refer to both traditional Evaluation, Measurement and Verification work as well as the Energy Division's policy and planning activities. (See Decision 09-09-047 pages 295-298 and 387 for more on policy and Planning as included in the EM&V budget and activities). - 1 - -106- - i A.08-07-021 et al. ALJ/DMG/ays- In D.09-09-047, the Commission adopted "1) a budget for 2010-2012 EM&V, 2) Commission goals for EM&V, and 3) a process for adopting detailed EM&V projects, refined EM&V budgets, and remaining EM&V policy issues in a subsequent EM&V Decision expected in the final quarter of 2009." The Commission clarified that the subsequent EM&V decision would include, but would not be limited to the following issues: o Approval of the joint Energy Division and utility EM&V plans and Budgets o Clarification of the respective scope of responsibilities for IOU and ED staff o Recommendation on improved stakeholder input process for EM&V projects o Improvements to the cost-effectiveness calculation tool and tracking and reporting requirements for EM&V related data o Frequency and Scope of DEER Updates o Consideration of methodologies to verify savings driven by behavior - based energy efficiency programs (D.09-09-047 at pp.301-04) This EM&V Plan presents the ED and IOU joint proposals with respect to EM&V planning and budgeting. 2. Guiding Principles The EM&V plan is guided by the Commission's Goals for EM&V, as articulated in Decision 09-09-047: "EM&V activities shall be planned and implemented to achieve the following core objectives in order to support the Commission's oversight function of ensuring the efficient and effective expenditure of ratepayer funds within the energy efficiency portfolios. All activities should be undertaken to meet the overarching goals of clarity, consistency, cost-efficiency, and timeliness. The core objectives are: 1 . Savings Measurement and Verification - Measurement and verification of savings resulting from energy efficiency measures, programs, and portfolios serve the fundamental purpose of developing estimates of reliable load impacts delivered through ratepayer-funded efficiency efforts. Measurement and -2- -107- A.08-07-021 et al. ALJ/DMG/ays verification work should reflect a reasonable balance of accuracy and precision, cost, and certainty, and be designed for incorporation into in procurement planning activities. 2. Program Evaluation - Evaluation of program-specific qualitative and quantitative measures, such as the program performance metrics discussed earlier in this decision and process evaluations, serves a key role in providing feedback for the purposes of improving performance and supporting forward-looking corrections to utility programs and portfolios. In order to maximize return on ratepayer dollars, program evaluations must be completed on a timeline which informs mid-course corrections and/or program planning for the following cycle. 3. Market Assessment- In a constantly evolving environment market assessments are an essential EM&V product needed to set the baseline for strategic design and improvement of- programs and portfolios. Saturation studies, surveys of emerging technologies and other such analyses which inform estimates of remaining program potential and forward-looking goal-setting are key aspects of market assessment. 4. Policy and Planning Support- Consistent with prior program cycles, it is essential to reserve funding to support overarching studies and advisory roles which support Commission policy goals. Over the last program cycle this has been inclusive of potential and goals studies, maintenance of DEER database, developing databases of best practices for program design and delivery, program design mix, and other means which support the Commission's oversight role, but do not fall under the core EM&V categories described above. 5. Financial and Management Audit- Supporting the Commission's oversight function of ensuring the efficient and effective expenditures of ratepayer funds within the utilities' energy efficiency portfolios is another objective of EM&V activities. Rigorous financial and management audits overseen by Commission staff will be critical in ensuring that the utilities' general and administrative costs, and other program expenditures are prudent and reasonable. -3 - _108- A.08-07-021 et al. ALJ/DMG/ays 3. Informal Goals and Guiding Principles for Increased ED/IOU Collaboration Staff from ED and all four IOUs met for fours days of working meetings to develop EM&V budgets and a joint EM&V plan. During these meetings we agreed that we needed to develop a more collaborative and transparent working relationship as an important step towards improving the EM&V process. "Collaboration" in this document is defined as IOU and ED staff working together on shared EM&V projects, as well as working on separate EM&V projects following mutually agreed upon standards for transparency, respect, and communication. We believe that this more collaborative process will result in greater cost-efficiencies, more reliable results, broader stakeholder buy-in, and fewer disputed issues. The following are informal goals for the purpose of fostering a working relationship built upon mutual respect and transparency. They represent an informal Energy Division and IOU staff-level agreement on general principles to guide staff-level collaboration and interaction on EM&V projects. These are not intended to impose formal or specific obligations on the ED or the IOUs and do not define the formal division of EM&V roles and responsibilities. a. Transparency ED and IOU EM&V staff will conduct EM&V projects in a transparent manner wherever possible. i. Open Communication - In order to cultivate better collaboration and make more productive use of EM&V results, ED and the IOU staff will engage in open and truthful communication regarding EM&V projects. ii. Regular Communication - ED and IOU staff will hold regular meetings to provide each other updates on their respectively managed EM&V projects. Upon issuance of the decision, ED and IOU staff will collaborate to determine an appropriate schedule for these meetings. iii. Joint Participation - An effort will be made to include both ED and IOU EM&V staff in all stages of all EM&V projects. iv. Sharing of EM&V Data and Information -All data and work products resulting from all EM&V projects should be made -4- _109- A.08-07-021 et al. ALJ/DMG/ays available to both ED and IOU EM&V staff when the data becomes available. Tracking of EM&V Projects -All EM&V projects will be disclosed and tracked in an easily accessible tracking system. v. Timeliness - Communication regarding EM&V plans and results, and actions based on those results, will be conducted in a timely manner. b. Consensus Although ideal, it may not always be possible or productive to reach consensus between ED and IOU staff during the planning and implementation of EM&V projects or interpretation and use of EM&V results. ED and the IOUs will seek to achieve consensus through informal processes. If consensus cannot be reached informally, ED and the IOUs will follow the applicable dispute resolution processes in effect wherever a formal resolution is necessary. c. Cost-efficiency ED and the IOUs will plan and implement EM&V projects with the goal of achieving the highest benefit for the EM&V expenditure, while minimizing interference with the programs and utility customers. To that end, EM&V projects will be designed to avoid duplication of effort, consolidated across all activities in a streamlined manner, and planned to comply with the Commission's schedule requirements. This document and the proposed budget allocations represent ED and the IOUs' current best judgment on the appropriate allocation of the authorized EM&V budget to EM&V projects needed to accomplish technically credible, quality work products that will comply with the Commission's requirements and goals stated in Decision 09-09-047. d. Time for collaboration EM&V projects will be scheduled in a manner that allows sufficient time for input and participation between ED and IOU staff, as well as other stakeholders as required by the Commission. ED and the IOUs recognize that the time needed to implement and complete EM&V projects may generally be longer as a result of this effort. ED and the IOUs also recognize the possibility that the desired time allotment for collaboration on some EM&V projects may not be possible due to superseding requirements, such as adherence to Commission - 5 - -11®- A.08-07-021 et al. ALj/DMG/ays mandated schedules or the need to take advantage of a time sensitive field situation. e. Ethical standards and technical best practices EM&V projects will always be conducted in accordance with the laws of the State of California, Commission established policies, and Commission adopted technical standards (such as the California Evaluation Protocols). Additionally, ED and the IOUs intend to manage EM&V projects following guidance from the relevant professional societies' standards for ethics and technical best practices. Such standards include the International Performance Measurement and Verification Protocols (IPMVP); the American Evaluation Association's Guiding Principles for Evaluators;2 the National Society of-Professional Engineers Code of Ethics for Engineers;3 and the American Society of Heating, Refrigerating, and Air-Conditioning Engineers Code of Ethics.4 4. EnM&V Planning Framework At the time of this EM&V Plan, the 2010- 2012 IOU portfolios are just recently adopted by the Commission, and program plans are expected to undergo additional refinement over the next four to six months through the final stages of the program planning process and compliance filings ordered by Decision 09-09-047. Additionally, as the adopted EE portfolio is implemented, program plans will necessarily evolve to adapt to changing circumstances, program funding may be shifted around, new programs may be designed and fielded, and some programs may be terminated. For these reasons, ED and IOU staff have agreed that the optimal EM&V plan for the Commission to adopt at this time is an EM&V Punning Framework guided by existing Commission policy and ED & IOU staff experience and expertise that gives EM&V the needed flexibility, rather than a detailed plan that makes assumptions about the full scope of EM&V needs over a three year period. This document outlines the basic 2 hM2://www.eval.org/publications/guidingl2rinciples.asl2 3 http://www.nspe.org/Ethics/CodeofEthics/index.html 4 http://www.ashrae.org/publications/detail/16451 - 6- 111 A.08-07-021 et al. ALJ/DMG/ays elements of this proposed EM&V Planning Framework, and ED/IOUs jointly request party input primarily on this proposed Framework and proposed areas of work, not on specific draft EM&V/PP project budgets. Given the many Commission required EM&V projects, multiple possible EM&V needs, and constraints on EM&V staff and consulting resources, there is a need to prioritize and optimize across EM&V research areas and individual projects, as well as a need to plan and implement EM&V project in phases. To accomplish the next three years worth of EM&V as effectively and efficiently as possible, ED and IOU EM&V staff propose the following EM&V Planning Framework: a. Phased and ongoing project planning and transparent project implementation ED and IOU EM&V staff believe it is necessary to commit funding, staff, and consulting resources to fully planning and implementing EM&V projects in phases and as priorities change, rather than to develop plans for all EM&V projects first and then subsequently implement all EM&V projects, as was the practice for impact evaluations during the 2006 -2008 cycle. ED and the IOUs therefore recommend that the Commission adopt a process that provides the EM&V staff with the flexibility to plan and implement EM&V in phases and on an ongoing basis, rather than committing to a three year plan for all EM&V projects at this time. In lieu of a full three year EM&V plan, ED and the IOUs recommend that the Commission clearly articulate standards for transparency and stakeholder participation which ED and the IOUs will follow during the course of the 2010-2012 EM&V projects. b. Continuous optimization and prioritization of E► &V work One of the first projects that ED and the IOUs will initiate is a review of previous EM&V work, particularly EM&V projects conducted during 2006-2008, and a gap analysis to optimize EM&V activities and determine priorities across all EM&V research areas. The gap analysis will first create an inventory of recent and ongoing EM&V projects and compare this information with EM&V needs moving forward. Continuous optimization will be done via an ongoing status review and prioritization exercise facilitated by the phased implementation of EM&V projects, as well as flexibility in EM&V planning and implementation that allows EM&V to be responsive to contextual - 7- -112- A.08-07-021 et al. ALJ/DMG/ays changes over time. EM&V projects will emphasize the flow of EM&V findings to program managers for the purpose of program improvement. c. Integration of EM&V projects across functions One of the goals of the proposed EM&V planning framework is to look for opportunities to create synergy and integration across different EM&V research objectives and needs, rather than viewing individual needs as disparate elements competing for limited resources. This includes avoiding the creation of unnecessary silos of EM&V activities, avoiding unnecessarily duplicative data collection and analysis, and identifying ways in which EM&V can be organized and implemented to meet multiple needs in a cost-effective manner. 5. Initial EM&V Plan As discussed above, ED and the IOUs plan to design and implement EM&V in phases by order of project priority. The First Phase of EM&V projects is work that needs to be immediately initiated in order to set up a more efficient EM&V "infrastructure" that makes cost-effective improvements on the use of all EM&V resources, data, and processes. The First Phase will also include some research projects that are immediately needed by the IOUs in order to make rapid adjustments to the new program portfolio. ED and the IOUs intend to begin work on projects in this First Phase using previously approved 2009 bridge-funding for EM&V. The First Phase projects will need to begin prior to a final Commission Decision approving EM&V plans and budgets, hoped for in late 2009. Several of the First Phase projects will be ongoing and may-continue through 2012. The Second Phase and Third Phase projects are briefly describe at the end of section 5. ED and the IOUs expect the First Phase to consist of the following projects: a. ERA&V inventory, priority analysis, and gap analysis Upon completion of this draft EM&V plan, ED and the IOUs will immediately begin a review of EM&V work conducted since 2004 for the purpose of creating an inventory of recent EM&V work. This analysis will include an assessment of the quality and usefulness of the research products. - 8- -113- A.08-07-021 et al. ALJ/DMG/ays A simultaneous effort will be undertaken to create a similar inventory of research required by the Commission in D. 09-09-047 and anticipated as needed by ED and the IOUs. The IOU EM&V staff will discuss potential immediate research needs with the IOU program staff and will develop research proposals for statewide and utility specific EM&V projects. ED staff will develop proposals for research projects that are considered necessary in order to accomplish the Commission's EM&V goals stated in D. 09-09-047 (pgs. 299-301), as well as other specific research goals mandated by the Commission in that Decision. ED and the IOUs will compare potential projects to identify areas where efficiencies can be gained by consolidating projects. The proposed projects will then be placed in an order of priority according to criteria such as uncertainty of program impacts, relative magnitude of impacts, future program and market potential, and implicit or explicit importance attributed to the project by the Commission. The prioritized list of projects will then be compared to the inventory of previous EM&V research to determine where the previous research can be used in lieu of conducting new analysis, or where the previously completed research can be leveraged to make any new analysis more robust and reduce costs. Once this gap analysis step is completed, the prioritized list of projects will be updated and the projects will be implemented in order of priority. Expected Timeline 2009 December-2010 January Review and inventory of recent EM&V work 2010 January-February.............Inventory of proposed research 2010 February-March..................Project consolidation and prioritization 2010 March-April.........................Gap analysis and revised priorities b. Reporting standards and reporting tools improvements. In D.09-09-047 the Commission requested that Energy Division "...review further all existing and new energy efficiency reporting requirements and report on possible ways to streamline these requirements." Additionally, the IOUs were specifically instructed to report gross savings relative to goals, progress towards accomplishing performance metrics goals, and additional information related to the -9- -114- A.08-07-021 et al. ALJ/DMG/ays administration of local government partnership programs. Energy Division has also begun the development of a new cost effectiveness tool (CE Tool) for the purpose of enforcing data quality controls, streamlining the review of cost effectiveness inputs, and making the IOUs' savings reports directly traceable to the program tracking systems. To accomplish these objectives, ED will conduct a review of all energy efficiency reporting requirements, existing and planned reporting tools related to EM&V and will prepare and implement a comprehensive plan to create a reporting system that is more streamlined, cost-effective, and useful. Expected Timeline 2010 January-2010 March.......Review of existing reporting requirements 2010 March..................................ED report on reporting requirements 2010 April......................................Commission action on ED report 2010 May Onward......................Implementation of new reporting requirements c. Program evaluability assessment and data collection enhancements. This project will take initial steps towards addressing the issues specifically raised in Attachment C of the July 7t" ALJ Ruling issued in A. 08-07-021 . While this project will focus specifically on improvements to the data systems needed for conducting the detailed EM&V work, it is related to, and will be done in conjunction with the reporting standards and reporting tools improvements project described above. The project will consist of a review the data availability problems encountered in the 2006-2008 program evaluations and the program designs and tracking systems in place for the 2010-2012 program portfolios. The project will aim to develop data collection and data transfer protocols as well as tracking system enhancement procedures. The goal is to assure that the data needed for EM&V will be efficiently available to the ED and IOU EM&V staff and their contractors. Expected Timeline 2010 January-2010 March.......Review of existing data systems 2010 April......................................Comprehensive long-range data management plan 2010 May......................................Data collection and data transfer protocols 2010 May Onward......................Implementation of data system improvements - 10- -115- A.08-07-021 et al. ALJ/DMG/ays d. Development of a process for integrating project inspection, M&V, and process evaluation for larger program participants. IOUs require the largest customized nonresidential projects to submit to pre-project and post-project implementation inspections. While there are comparatively few of these larger projects, the expected savings from these projects are quite significant, which means they are more likely to be sampled for both M&V and process evaluations. Furthermore, the larger projects are typically quite complex, requiring more time for the utility inspectors and ED evaluators to be on the participant's site. From the participant's perspective, the impact of multiple seemingly redundant inspections can be an unanticipated burden; and from the CPUC's perspective, this redundancy can be a potentially inefficient use of ratepayer expenditures. ED and the IOUs will work cooperatively to make the evaluation of large energy efficiency projects more cost-effective and less disruptive to the customer by jointly developing procedures to identify large projects early and include the ED evaluators in the pre- and post- project inspection process. ED and the IOUs will make efforts to consolidate evaluation surveys so as to minimize customer inconvenience. Expected Timeline 2010 January-February............Review of IOU project inspection procedures 2010 March..................................Review of expected evaluation needs 2010 May......................................Integration plan e. Development of plans to gather necessary market baseline data. This project will identify key market indicators that have been or can be influenced by a program intervention. The primary purpose of this early market baseline project is to develop and implement a work plan that provides a basis for later comparisons of the status of the key markets after program intervention, in order to help assess the impact of the program or programs. More than one program can impact a market, and a program can impact more than one market. ED and the IOUs will therefore carefully identify the "markets" that need to be researched early in the cycle, with timely collection of appropriate market data that will serve as the baseline. The evaluation needs to address the period over which the market effect will remain, the level of effect experienced in the market over - 11 - -11 f 'j s - _ A.08-07-021 et al. ALJ/DMG/ays time, the degree to which the program's efforts caused the market effect, and the amount of energy savings provided by the effect. All this presumes the appropriate market data collected before the program effects occur. In general, any key market indicator that the program theory predicts will be changed by the program should be considered for inclusion in either a market characterization or a baseline study. However, markets are constantly in a state of change, so we will seek to identify not only those market indicators that are important under the initial program theory, but also those that could become important later. Steps in this Activity 1. For each program, identify key market indicators that the program theory predicts will be changed by the program. a. Clearly define the targeted market(s); b. Develop a detailed description of market operations and factors that contribute to their status; c. Describe the market hypothesis on which the various program activities and the expected effects rely; d. Describe the baseline condition that is expected to occur without program intervention including impacts from other external factors that affect the market; and e. Describe the causal linkages that lead from program activities to the accomplishment of the program's goals in isolation from other external market effects. 2. Develop sets of indicators for each market that will provide efficient but effective measurements of the identified market effects. Include a plan to isolate external market effects in order to gain a true perspective of identified program related market indicators. 3. Collect baseline values for these indicators, before the program effects begin to take place. Expected Timeline 2010 Jon udry...............................Develop scopes of work for RFPs 2010 February..............................issue RFPs and select contractors 2010 March-February..................Analyze statewide programs 2010 M ay......................................Develop indicator systems 2010 June onward......................Collect data for indicator systems f. Procurement of management and technical consulting services for ED. - 12- -117- A.08-07-021 et al. ALJ/DMG/ays Given the complexity and workload involved in managing EM&V projects, ED staff expect to rely on a team of expert consultants to assist with oversight, management, and advisory functions. ED will conduct competitive solicitations for this work towards the end of 2009 and expects to have a new team of consultants available to assist ED in early 2010. Expected Timeline 2010 January...............................Develop scopes of work for RFPs 2010 February..............................Issue RFPs 2010 March..................................Select consultants g. Development of a detailed plan for ED and IOU coordination. Once the upcoming EM&V Decision is finalized, ED and the IOUs will develop a coordination plan that incorporates and implements the policies, rules, and any specific projects required therein. The coordination plan will be a guidance document for ED and IOU staff and can be made publicly available if the Commission desires. We expect the coordination plan to be completed within 30 days of the final EM&V Decision. In the meantime, ED and the IOUs will prepare an interim coordination plan which sets out our mutually agreed process for collaborating on First Phase projects. Expected Timeline 2009 January-February..............Interim ED/IOU coordination plan 2010 April-May..........................Final ED/IOU coordination plan h. Behavioral Energy Savings estimation methods In D.09-09-047 the Commission indicated its intent to "...consider expedited approval of new EM&V methodologies to verify savings driven by behavior-based Efficiency programs (currently considered non-resource programs)." And that the EM&V work "...should ensure synergies and leveraging of any new behavior-based approaches with the residential programs approved herein..." On October 11, 2009, the Governor signed SB 488 into law, which requires the CPUC to evaluate certain residential benchmarking programs using an experimental design approach. Energy savings from behavior programs have traditionally been measured with a billing or consumption analysis. ED and the IOUs will review best practices in billing analyses as well as the data requirements that would be needed to support robust billing analyses. ED and IOU EM&V staff will coordinate with program managers for IOU residential benchmarking programs to ensure that participants are randomly assigned to treatment and control groups (or - 13 - _11 8- F� _ E A.08-07-021 et al. ALj/DMG/ays comparison groups) to ensure that an experimental design billing analysis can be completed, at least on a pilot basis. ED has been conducting a review of different types of behavior intervention programs as well as some pilot EM&V projects and will extend this effort into full program evaluations wherever it makes sense to do so. ED and the IOUs will also work on ways to tightly coordinate the delivery and evaluation of behavior based energy efficiency programs with the ongoing advanced meter infrastructure roll-out and eliminate any redundant and overlapping efforts. Expected Timeline 2009 February.................Review of billing analysis methods and data requirements 2010 March-April..........EM&V protocols and methods for behavior programs I. IOU market assessments, early EM&V, and process work The first phase projects include IOU projects that need to start immediately due to the time-sensitive nature of data collection as well as the criticality of information needs for program implementation in 2010. All the IOU Phase i projects will be conducted in collaboration with the Energy Division. Early M&V: ® Assessment of savings from server virtualization and data centers. • Window film lifetime and replacement practices. © Lighting baseline usage for selected applications lacking this data (preschool, pool lighting etc). ® Pool pump usage. ® Remaining Useful Life assessment for selected.technologies. ® Heating/Ventilating/Air conditioning maintenance savings - Phase 1 (secondary research) and Phase 2 (control led/quasi- experimental research). ® Retrocommissioning measure energy savings/prediction tools research for most common measures. ® Single family residential new construction energy savings and incremental measure cost update. -14- -119- Y A.08-07-021 et al. ALJ/DMG/ays Market Assessment: • Advanced Lighting Market Assessment - to help guide the Advanced Lighting program and provide information on the current state of the market for technologies such as LED as well as the ways in which the market is changing both from the supply side and the demand side. • Market Study of Deep Energy Reduction for the Whole House Market - to assess the availability of infrastructure and technologies to help in planning, market awareness, knowledge and acceptance of deep energy reduction strategies, and how to overcome these barriers for homes. • Market Study of Water Energy Savings -to assess the current penetration/potential for water energy savings technologies within the residential and commercial segments. • Plug Load Market Potential Study - to assess the size of the market opportunities (will be coordinated with any Energy Efficiency Potential Study update plans). • Industrial EE Program Market Assessment Study for customers with either high gas and/or electric loads- to determine customer sectors most sensitive to the current challenges and opportunities. • Residential New Construction Customer Decision Study -to assess the "decision triggers" and current levels of awareness of the various existing carbon/low energy labels and associated lower energy home opportunities. • Market Assessment on Code Compliance - to identify areas of weak code compliance and highlight market barriers that can be addressed through the Compliance Enhancement Sub- Program. • Baseline Studies for Partnership Programs - to document existing practices and characterize the needs of the customers and their likelihood of program participation. • Strategic Industrial Research - to look at market segmentation/dynamics and decision making processes for energy efficiency projects. • The "Invisible" (Hard-to-Reach) Data Centers - to assess where opportunities exist and develop program strategies to reach these opportunities. • Pool Vendor Market Assessment-to inform training strategies. • Agricultural Market Assessment and Energy Efficiency Potential. - 15 - -12®- A.08-07-021 et al. ALJ/DMG/ays Process Evaluation: • Evaluability Assessments for selected smaller programs not covered by Energy Division's Program Evaluability Assessment Project, to determine if the program outcomes are sufficiently well defined and measurable via data tracking processes, as well as identify any early M&V needs. • Detailed Program Theory and Logic Model - development where needed for the programs. • Enhanced Inspection Plan - development for selected programs, including baseline documentation requirements. • Rapid Feedback Evaluations - for selected programs and specific marketing activities to help provide early feedback and recommendation on program design changes (initial list includes: new construction programs, WE&T, and ME&O targeted marketing campaigns). • Effectiveness impact of behavioral energy use "peer comparisons" tools (i.e. Home Energy Reports) for residential customers. • Impact of In-Home Displays: to drive customer participation in EE, effectiveness of marketing and outreach activities associated with real-time usage data. • Cost effectiveness of solar water heating technologies in utility programs. Timeline Varies by Specific Project j. Portfolio Cost Effectiveness methodology This category of analysis will include a review of existing cost- effectiveness methodologies and development of new methodologies that seek to measure cost effectiveness at the program and portfolio level. This methodology should reflect the California Long-Term Energy Efficiency Strategic Plan goal for market transformation by not only considering program costs in relation to savings realized, but also include an analysis of program costs in relation to market transformation objectives and goals. Timeline TBD k. Goals/Potential analysis Analytic consistency is an essential starting point in setting aggressive yet realistic goals for. EE programs while also developing "stretch" goals for energy efficiency savings. Setting stretch goals require a consideration of additional technologies, measures, and savings - 16- -121- A.08-07-021 et al. ALJ/DMG/ays potential available to the utilities but not reflected in the current potential study informing current goals. This category of analysis will reexamine goals and potential to inform the development of stretch goals while at the same time not reducing the rigor by which current goals exist. This analysis will inform forward-looking goals on the basis of updates to measure savings parameters. Timeline TBD A Second Phase of projects will be planned and implemented as soon as assignments are made and work is underway on the First Phase projects, but no later than the first quarter of 2010. The Second Phase projects will include the formative M&V, process evaluation, and market research that is needed to provide early assessments of the programs and make decisions about program modifications, but which were not launched as part of the First Phase. We anticipate that the Second Phase projects will be initiated during the first and second quarters of 2010. Finally, a Third Phase of EM&V projects will be planned and implemented when ED and IOU staff are convinced that Second Phase projects are successfully underway and likely to achieve project goals. The Third Phase projects will primarily be the summative, or ex-post, evaluations that have been employed by the Commission to establish retrospective statements of portfolio accomplishments. Additional formative work may also be implemented during the Third Phase of EM&V projects, if needed. We anticipate that the Third Phase projects will be initiated between the second and fourth quarters of 2010, after the Commission rules on the incentive mechanism for 2010-2012 in Rulemaking 09-01-019. 6. Proposed EM&V Budget Below we present the proposed allocation of authorized budget for all ED and IOU EM&V projects, as well as ED staff Policy and Planning projects. In D.09-09-047, the Commission indicated a desire to keep the EM&V budget at 4% (approximately $125 million) with the expectation that the ED and IOU EM&V staff can produce cost efficiencies and streamline the scope and reporting of EM&V projects. While the Commission also indicated a possibility that it would consider changes to the initial EM&V funding based on proposals for additional funding brought forth in the EM&V plan, ED and the IOU EM&V staff have taken the Commission's desire to manage costs seriously and will strive to complete a robust research portfolio for under $125 million. - 17- _122- A.08-07-021 et al. ALj/DMG/ays While we are confident that the authorized budget will be sufficient to complete a reasonably comprehensive set of EM&V projects, the range of studies needed for 2010-2012 is substantially greater than the range of studies completed for 2006-2008. We are therefore compelled to emphasize that some potentially important research projects may not be implemented if we are to prioritize effectively. Thus, we ask that the EM&V decision keep open the option offered in D.09-09-047 to request more funding if we determine that sufficiently important projects cannot be funded. 2006-2008 were start-up years for both the ED and the IOU EM&V groups, with many start-up difficulties and new systems that did not function optimally. As a result, a number of the important planned studies could not be completed. The experiences of 2006-2008 uncovered some weaknesses in current utility and CPUC tools that need to be strengthened. These include the EM&V structure itself, utility tracking and reporting systems and their ability to meet EM&V data needs, as well as multiple concerns surrounding ex-ante savings parameter updating and documentation, and cost-effectiveness issues. Finally, the adoption of the California Long Term Energy Efficiency Strategic Plan pushes programs, planning, and coordination in far-reaching new directions. This necessitates a major investment in coordinating with market actors and state agencies, policy analysis, and planning for the 2013-2015 cycle and beyond, in each of the strategic areas of focus, and it creates a host of new information needs. a. Overview and rationale of budgeting process The IOU EM&V team solicited input from program staff regarding the programs that will be offered during the 2010-2012 cycle. The EM&V team also reviewed the process evaluations, market assessments, and early M&V projects performed during the 2006-2008 cycle to identify additional research requirements. In collaboration with the program staff, the EM&V team compiled a list of market assessment and early M&V needs and process evaluations related to the programs that are being offered in 2010-2012. Based on previous experience, the EM&V team then estimated the cost of performing these studies, including the costs related to the EM&V staff. ED staff developed budgets for impact evaluations, performance metric -18- -123- A.08-07-021 et al. ALJ/DMG/ays evaluations, and overarching and support projects using expert judgment and experience managing similar projects during the 2006-2008 timeframe. These estimates take into consideration expected efficiencies to be gained from the proposed prioritization and optimization process, as well as the fact that the projects will be managed by staff (both IOU and ED) that have gained considerable additional experience managing the 2006-2008 EM&V projects. b. Request for full fund shifting flexibility The specific studies and their associated budgets listed in the Table in Section 6c below are ED and the IOU's current estimate of the optimal allocation of the authorized EM&V budget. Section 5 of this plan describes the multi-stage process that ED and the IOUs will go through for determining and prioritizing what studies will be done, when, and with what level of project budget. The process will include making decisions about which organization will contract for each project, who will take primary project management responsibility for it, and the level of involvement of the Commission staff in overseeing each project. In order to allow ED and the IOUs to respond to changes in the market and to new insights in evaluation, fund-shifting flexibility is needed within the EM&V budget. This includes not only shifting funds between projects, but also, to some extent, between funds managed by the IOUs and those managed by ED, as they mutually agree. ED and the IOUs agree that a minimum allocation of 15% of the EM&V budget to the IOUs is appropriate to support necessary EM&V activities until such time as the Commission issues a final EM&V decision and budget. These costs are currently included as part of the process evaluation, market assessment and early M&V study costs in the budget estimates in Table C. ED and the IOUs were not able to reach consensus as to any further pre-allocation of the remaining 85% of the EM&V budget. ED and the IOUs agree that it is appropriate for the IOUs to include any specific proposals for allocation of the remaining 85% of the EM&V budget in their comments to this EM&V Plan. As during the 2006-2008 cycle, the utilities will be responsible to pay the Energy Division-approved costs for all projects contracted and/or managed by Energy Division. Each utility's EM&V budget will be its proportional share of the total EM&V budget approved by the Commission, with the proportion equal to its - 19- -124- A.08-07-021 et al. ALJ/DMG/ays proportion of total program budgets: 43% for PG&E; 39% for SCE; and 9% each for SDG&E and SoCalGas. This requires correcting Ordering Paragraph 42 of D.09-09-047, which inadvertently used the program funding proportions from the 2006-2008 cycle. Each utility will pay for its studies that are determined to be acceptable utility-specific studies, out of its overall EM&V budget. This EM&V fund-shifting flexibility request is consistent with Commission practice for at least the last two decades, and probably for the entire history of EM&V funding for EE programs. The Commission has always recognized the benefits of setting an overall budget but allowing EM&V decision-makers to determine EM&V priorities and budget allocations-for the costs to meet them in an ongoing process, rather than assuming that needs and priorities are all known in advance and will be unchanged over a program funding cycle. - 20- -125- f. Y � 3 A.08-07-021 et al. ALJ/DMG/ays c. Budget Table d. Description of budget categories The general EM&V project area descriptions below provide summaries of the categories of work used to set the EM&V budget proposed herein. While these project areas are considered necessary preliminarily, they are provided for illustrative purposes and are subject to change as ED and the IOUs continue with the prioritization process. Final research project goals, scope, timing, and deliverables will be determined during development of detailed statements of work included in the contracting process. EM&V Project Number 1. M&V and Impact Evaluation M&V is the process of gathering data on energy efficiency technologies and practices from the building and facility where the technology or practice is implemented or typically in use. M&V - 21 - -126- A.08-07-021 et al. ALJ/DMG/ays activities will consist of on-site review and measurement of program activities and energy consumption behavior that can be physically inspected and measured at a customer site or project, as well as the analysis of site level and measure level data through engineering and building simulation models. Site visits will be performed on a probability sample of IOU customers, buildings, or facilities drawn from IOU program tracking databases, IOU billing systems, or the general population. Some M&V data may be collected through remote surveys or by using pre-existing data, if circumstances warrant. Given the enormous scale of energy efficiency program activities, the M&V work will focus on program components selected on the basis of the overall uncertainty of that component's contribution to the total portfolio savings, including potential future savings. These component level evaluations will be conducted at the technology measure level (referred to as high-impact measures, or HIMs). A subsidiary of M&V activity is the physical inspection of installations to estimate measure installation rates. Impact evaluation consists of evaluation activities designed to measure savings at the program level, such as analyses using utility bill data to produce gross realization rates and net-to-gross studies. Net= to-gross values will be developed for major measure/program strategy combinations and will incorporate reliable attribution for spillover and market effects where data are available and where consistent with Commission policy. Impact evaluations may also include some indirect impact evaluation activity that addresses those programs or program components primarily designed to obtain behavior changes that eventually lead to energy and demand savings, but not as a direct result of the program intervention. Indirect impact evaluations are used for situations where the primary uncertainty lies in the program's ability to obtain the behavior change targeted by the program. Indirect impact evaluations will therefore be linked to energy or demand savings estimates measured through the HIM M&V, program specific impact evaluations, and/or approved ex-ante estimates. - 22- -127- A.08-07-021 et al. ALJ/DMG/ays EM&V Project Number 2. Performance Metrics Program performance metrics are indicators of the progress of a program toward the short and long-term market transformation goals and objectives in the Strategic Plan. Energy Division developed a process for developing program performance metrics that the utilities shall use when developing these metrics. According to D.09-09-047, the utilities will request approval for their proposed logic models and metrics via an advice letter filing within 120 days of the effective date of that decision. Additionally the utilities will track their program performance metrics using the EEGA or a similar database and will need to develop the tools to submit and track these parameters. The analysis under this category will help complete these tasks. Market transformation metrics require-the identification of indicators to track, the identification of data sources, and agreement on the frequency of data collection, analysis and use. In order to develop these metric recommendations there will need to be analysis on specific market transformation ultimate and proximate indicators, as well as data collection and tracking processes, for a subset of portfolio programs or measures that have the most impact in terms of their importance, such as the Big Bold Programmatic Initiatives, their savings potential or dollars spent. This analysis may consider qualitative factors as necessary and appropriate. It is both necessary and possible to begin the work of gathering baseline data immediately. The IOUs will need to include key data sources and indicators for which to begin collecting market transformation baseline data in their Advice Letters on Utility Program Performance Metrics (see description of performance metric analysis). A process for tracking external market conditions that affect program performance metrics and baseline information will be further developed in the umbrella energy efficiency rulemaking proceeding, or its successor. In that proceeding, we will also consider the appropriate timing for the commencement of the system of market transformation metrics. Market transformation data analysis will inform this effort. Program Performance Metrics and market conditions data serve the following purposes: To track California's progress towards achievement of the Strategic Plan objectives, specifically the Big Bold Programmatic Initiatives and other key Plan goals and objectives; - 23- -12� A.08-07-021 et al. ALJ/DMGJays ® To inform portfolio development and necessary modifications in future portfolio decisions, including improving program design or eliminating non-performing programs; and ® To target the next generation of improvements and thus continue the cycle of market transformation. These metrics will be used to track the progress of the programs towards the California Energy Efficiency Strategic Planning market transformation goals. EIbM&V Project Number 3. Process Evaluation The California Evaluation Framework states "a process evaluation is a systematic assessment of an energy efficiency program for the purposes of (1) documenting program operations at the time of the examination, and (2) identifying and recommending improvements that can be made to the program to increase the program's efficiency or_effectiveness for acquiring energy resources while maintaining high levels of participant satisfaction." While impact or "summative" evaluations provide an accounting of a program's effectiveness, process evaluations provide insight into program operations that can guide mid-course corrections and future program design. Process evaluations look at both the program's design and its implementation. This allows program managers to pinpoint where and how whether future effectiveness can be increased by improving program design, program implementation, or both. Process evaluations also provide the valuable function of capturing the story of the program, to share and compare lessons learned with other implementers. Process evaluations can articulate how proximal indicators based on the program's theory (e.g., changes in attitudes) can show whether progress is being made toward long-term goals such as acceptance of emerging technologies. Process evaluations will typically document a program's theory in both detailed narrative form and through a schematic (e.g., "program logic model") that graphically links program resources and inputs to program activities to program outputs to short-, mid-, and long-term outcomes. Process flow narratives and diagrams may also be used to capture program operations, and to identify gaps in program implementation. The logic model and program theory help program evaluators identify gaps in - 24- -129- A.08-07-021 et al. ALJ/DMG/ays the program's theoretical underpinning, and study these further, to develop recommendations that will likely enhance future success. Process evaluations use a variety of social science research methods including telephone surveys, in-person interviews, social network analysis, review of program activities and participation data, review of program marketing plans and materials, and field observations. New programs generally undergo an early and more comprehensive process evaluation designed to provide timely feedback on how well the program is being managed and implemented, how well project partners are communicating, and whether initial participants are satisfied with the program's ease-of-use and understandability. Later process evaluations are used to confirm that program design and implementation are still effective. EM&V Project Number 4. Early M&V Evaluation Early M&V, managed by IOUs or ED, seeks to validate key savings assumptions and to better understand how savings are achieved for the purpose of improving programs. Early M&V research occurs at the measure-level or parameter-level to: o Provide in-cycle feedback to programs on savings assumptions o Correct mutually agreed upon errors in savings estimates o Improve accuracy of savings estimates for custom calculated projects o Contribute to future cycle ex ante revisions o Gather data for developing savings estimates for new measures o Guide future research to reduce savings uncertainty Early M&V will be carried out as necessary and results incorporated in program design and planning as soon as feasible. EM&V Project Number 5. Market Assessment The Market Assessment studies that will be conducted by ED and the IOUs will include two different study types: market characterization and market baseline measurement. Market Characterization is a quantitative and qualitative assessment of the structure and functioning of a market, the primary purpose of - 25 - -13®- y A.08-07-021 et al. ALJ/DMG/ays which is to understand key components and magnitudes of a market, and how the market operates. The study also provides information on how to effectively change the way in which the market functions. Market Baseline Measurement is the quantification of key market indicators that have been or can be influenced by a program intervention. The primary purpose of the baseline measurement is to provide a basis for later comparisons of the status of the market after program intervention, in order to help assess the impact of the program. This study can also include quantification of size of a particular market so we can monitor the share of market as a _ result of program intervention. EM&V Project Number 6. Strategic Plan This budget category is created to track spending with regard to regulatory support for Energy Division and utility strategic planning efforts. It would include staff time and additional help from consultants. External consultants will provide logistical support with regard to task force / workshop / stakeholder meeting planning, coordination, and staffing. These consultants will work with ED / IOU staff to develop agendas, take meeting minutes, maintain contact information for interested stakeholders, arrange meeting venues and times, communicate with the public, production of task force / workshop / stakeholder meeting material for public dissemination, and all aspects of providing support for task force / workshop / stakeholder meeting planning. EM&V Project Number 7. Strategic Plan Update Studies This category of analysis will inform ongoing strategic planning goals and objectives by providing funding for evaluation efforts that are not currently anticipated but will be critical to maintaining continuous forward progress toward meeting these stated goals and objectives. Examples of this kind of analysis are evaluations of portfolio wide leveraging efforts with ARRA investment opportunities that have the potential to allow for the most efficient usage of ratepayer funds while propelling progress towards strategic planning goals and objectives. Other areas that will benefit from evaluation projects not yet fully identified are strategic planning efforts in the area of emerging lighting strategies. -26 - -131 1 A.08-07-021 et al. ALJ/DMG/ays EM&V Project Number 8. Energy Efficiency Potential A bottom-up assessment of measure/end use savings and program participation levels is needed to inform a new EE potential study for the years 2013-2015 and beyond. This study will build as feasible on existing data and models utilized in the 2008 California Potential Study. New data collection/modeling will be gathered and utilized to ensure the accuracy of the inputs and projections. New methodologies will include a review of best practices and examination of potential as proposed through various existing building strategies in the California Strategic Plan. With an updated EE Potential Study in hand, a new Goals Study as required in D. 08-07-047 will be undertaken. New methodologies will be examined, to allow the identification of goals based on assumptions of achievements of existing building and other targets as contained in the California Strategic Plan. Review will examine costs associated with these new strategies, and possible offsets to program costs with societal benefits, such as job creation. EM&V Project Number 9. Ex-Ante Estimates Development All ex ante measure parameters used to determine savings accomplishments and for future energy efficiency portfolio planning will come directly from the DEER database , which will include both DEER measures and "non-DEER" measure work papers. All ex-ante estimates are proposed to be updated by the end of 2010 for use in planning the portfolios that will be implemented in 2013. The ex-ante estimates will be developed using the best available data and methodologies. The budget for this category includes (1) ex ante parameters updates, (2) statistical analysis for developing ex ante updates, (3) deemed measures cost studies, (4) customized project cost analysis, and (5) useful lives and technical degradation analysis. EM&V Project Number 10. Data Management The Energy Division proposes to continue its management and quality control of data, evaluation activities, and parameters used to calculate energy savings and cost-effectiveness. The budget for this category includes (1) a Data Quality and Data Management consultant contract, (2) updates and maintenance of energy - 27- -132- A.08-07-021 et al. ALJ/DMG/ays efficiency websites (DEER, EEGA, CMS, CALMAC, etc.), (3) cost- effectiveness tool development, (4) avoided costs and GHG emissions updates, (5) data tracking and reporting system enhancements, and (6) Energy Division reporting. EIS&V Project Number 11. Best Practices and Methodology Improvements Four studies are planned in this area, two being mandated by D.09-09- 047. • EM&V Technical and Institutional Framework. Ordering Paragraph 59 states that "Energy Division may hire a contractor to initiate in 2010 a comprehensive review of current Evaluation, Measurement & Verification technical and institutional frameworks." This is further described on pages 9 and 305 of the Decision: "The main purpose of this review will be to set a course to develop effective EM&V going forward, post-2012. However, to the extent this review will allow us to improve the 2010-2012 program cycle, we will do so." ® Behavioral Energy Savings Estimation Methods. Ordering Paragraph 60 requires 2010-2012 EM&V to undertake "consideration of methodologies to verify savings driven by behavior-based energy efficiency programs." This study will search for, review, identify, and develop as necessary solid methods for estimating the energy savings created by programs focused on changing energy user behavior. ® Methodology Development for Attribution Analysis. Closely related to behavioral energy savings measurement, improved methods for determining the attribution of energy savings are needed. The concepts of energy efficiency programs competing in forward capacity markets, of additionality in greenhouse gas emissions markets, and of free ridership and spillover in the energy efficiency programs arena need comparison, further analysis, and further development to meet the increasing needs for identifying causality in all these areas, and to identify what roles (if any) energy efficiency programs can play in the new markets. Improved Statistical Analysis Processes for Energy Efficiency Savings Estimation. By the end of this cycle, the utilities will have interval energy usage data for virtually all of their customers. With this vastly increased information about energy usage, statistical analysis of energy usage and other data becomes an increasingly powerful method of developing not only program energy savings estimates, -28 - -133- A.08-07-021 et al. ALJ/DMG/ays but also ex ante estimates of measure savings. Savings estimates based on actual energy usage data have the advantage of incorporating effects of customer behavior in relation to installed measures. It is critical to prepare for the maximum effective use of this new data. EM&V Project Number 12. Energy Consumption Surveys The California Commercial End-Use Survey (CEUS) is a comprehensive study of commercial building sector end-use energy use. The survey captures detailed building systems data, building geometry, electricity and gas usage, thermal shell characteristics, equipment inventories, operating schedules, and other commercial building characteristics. Commercial premises are weighted and aggregated to building segment results. Available study results include floor stocks, fuel shares, - electric and natural gas consumption, energy-use indices, energy intensities, and 16-day hourly end-use load profiles estimated for twelve common commercial building type categories. The California Industrial End-Use Survey (IEUS) is a comprehensive study of industrial sector energy end-use energy. The mail, internet and on- site surveys and metering of some large process loads are expected to produce: Equipment saturations (including EE levels, vintages, and cogeneration), End use characteristics, Building characteristics, Space heating/cooling, Lighting, General production equipment, Industry specific process equipment, Energy Use (electric and gas) by INFORM (industrial forecasting model) end-use categories and industry groups and Load Profiles by utility area and industry group. The California Lighting and Appliance Saturation Study (CLASS) database provides baseline information on residential appliance, equipment and lighting saturations and efficiencies. The overarching goal for the studies is to provide an accurate baseline in order to understand future energy savings potential and past accomplishments in the residential sector. The original study was completed in 2000 and repeated in 2005 to see what changes had taken place over the 5 year period. Repeating this study for a third time in 2010 will show the continuing effects of residential energy efficiency in California. - 29 - -134- A.08-07-021 et al. ALj/DMG/ays The Residential Market Share Tracking (RMST) study has monitored the market penetration of energy efficient appliances and lighting measures in California since 1999. RMST measures statewide and utility milestones for promoting short-term adoption of measures and long- term market acceptance of energy efficient technologies. In addition to the program implementers, beneficiaries of this research include federal and state agencies, regional and state energy efficiency organizations, trade organizations, equipment manufacturers, distributors, and retailers. A total energy consumption evaluation pilot study will be conducted to assess the reduction in energy consumption resulting from the various energy efficiency programs and efforts in California. The value of individual energy efficiency efforts is uncertain without the measurement of performance of the whole system to link the efforts to actual reduction in energy consumption. Issues that arise from field measurements are that the actual energy performance of an energy efficiency measure does not align with the initial specification of the design intent. Some of the factors that contribute to these inconsistencies are the lack of system integration in design and operation, and the lack of training and work force necessary for the appropriate installation and maintenance of equipment. Energy efficiency should be used in conjunction with performance metrics such as energy intensity in describing the mathematical relationship between energy use and service output. The intensity component, the energy use rate, is the ratio of the total consumption to a unit of measurement (e.g. Btu/square-foot-hour, million Btu/household, energy/gross output, energy/industrial production etc.). - A decrease in energy intensity over time may correspond to an increase in energy efficiency depending on the level other structural and behavioral effects. A good measure of energy intensity should identify (or remove from a measure) as many of the behavioral and structural changes that affect the energy intensity (but are generally agreed upon to be unrelated to energy efficiency) as is computationally feasible within budget limitations and data availability. -30 - -135- A.08-07-021 et al. ALJ/DMG/ays The study will design and implement an EM&V approach for the assessment of energy consumption for the different end-use sectors in California including: a. Defining energy intensity indicators for the different end-use sectors; b. Identifying behavioral and structural factors that can affect energy intensity but not related to energy efficiency improvements. c. Identifying the effects of the IOUs programs in the reduction of energy consumption for a given end-use sector; EM&V Project Number 73. Portfolio Financial and Management Audits The CPUC Utility Audit, Finance, and Compliance Branch (UAFCB) staff and ED staff will perform an evaluation of the IOU energy efficiency portfolio financial administration and management systems. A financial audit will consist of a review of the financial statements of each utility's energy efficiency operations to determine if the statements are accurate, complete, and consistent with Commission policy and standard accounting practices. The management audit will be a systematic assessment of each utility's management procedures and the effective use of resources in implementing the energy efficiency portfolios. EM&V Project Number 14.ED Master Evaluation Contractor Team Please refer to section 5f "Procurement of management and technical consulting services for ED." EM&V Project Number 75.CPUC staffing funded by EM&V Consistent with current practice, a small portion of the EM&V funding will be set aside to fund a portion of the Energy Division's energy efficiency staff positions. (END OF ATTACHMENT 1) -31 - -136- _ 3 R 06-04-010 DGX/ays ENERGY EFFICIENCY POLICY MANUAL, VERSION 4® (July 2008) Applicable to post-2005 Energy Efficiency Pr®rams -1 37- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 VI Competitive Bidding and Partnership Programs 14 VII Advisory Groups 16 VIII Performance-Based Risk and Reward Incentive Mechanism 17 I Balancing Accounts 2 Mechanism Structure 3 Earnings or Penalties,Payments 4 Ex Ante Assumptions,1st and 2nd Claims 5 Direction for 1st and 2nd Claims for PY2009-2011 6 Procedures for Review and Approval of Earnings/Penalties 6a Interim Claims 6b Final Claim IX Affiliate and Disclosure Rules 26 X Reporting Requirements 26 XI Process and Procedural Issues 27 APPENDIX A Reference Documents and E-Links 1 Energy Action Plan 1a Energy Action Plan Update 2 EE Administrative Structure,D 05-01-055 3 Energy Savings Goals,D 04-09-060 4 Standard Practice Manual 5 Database for Energy Efficient Resources (DEER) 6 LT Avoided Cost Methodology and E3 Calculators 7 EE Program Reporting Requirements Manual 8 EM&V Protocols Tables - Approved Savings Goals (2004-2013) Table- Fund Shifting Rules Graphic- Shareholder Incentive Mechanism Graphic Illustration iz -138- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 ENERGY EFFICIENCY POLICY MANUAL FOR POST-2005 PROGRAMS I Introduction -11 This document presents the California Public Utilities Commission s (Commission) policy rules and related reference documents for the development and evaluation of energy efficiency programs funded by ratepayers in California Referred to as the Energy Efficiency Policy Manual,Version 4 0,this document shall apply to all energy efficiency activities commencing in program year(PY) 2005 and beyond The policy rules,terms and definitions.contamed herein apply to energy efficiency activities funded through the following mechanisms ® The electric public goods charge (PGC), as authorized by Public Utilities (PU)Code Sections 381 and 399 ® The gas surcharge, as authorized by PU Code Sections 890-900 ® Procurement rates,as authorized by the Commission The rules in this manual do not currently apply to e Low-income energy efficiency programs (LIFE)funded by the electric PGC or gas surcharges e California Alternative Rates for Energy(CARE)for low-income customers funded out of electric or gas PGC1 Interruptible rate or load management programs2 ® Self-generation and demand-responsiveness programs developed in response to AB970 (PU Code Section 39915(b))3 1 A separate low-income rulemaking was initiated on January 25 2007(R 07-01-042) 2 Interruptible and load management programs are addressed under Decision 05-11-009 (R 02-06-001) 3 These programs were adopted in D 01-03-073,in R 98-07-037 1 -139- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 in the 2005 Database for Energy Efficient Resources (DEER) shall be used for the purpose of verifying energy efficiency program and portfolio performance4 Program Administrators should develop their energy efficiency program portfolios so that they will meet or exceed these annual and cumulative savings goals,both over the short- and long-term 5 As clarified in D 07-10-032, cumulative savings represent the savings in that year from all previous measure installations (and reflecting any persistence decay that has occurred since the measures were installed)plus the first-year savings of the measures installed in that program year 3 In order to promote the resource procurement policies articulated in the Energy Action Plan and by this Commission,energy efficiency activities funded by ratepayers should focus on programs that serve as alternatives to more costly supply-side resource options ('resource programs") Focusing -- energy efficiency efforts in this way is the most equitable way to distribute program benefits By keeping energy resource procurement costs as low as possible through the deployment of cost-effective portfolio of resource programs, over time all customers will share in the resource savings from energy efficiency 4 Lost opportunities" are those energy efficiency options which offer long-lived,cost-effective savings and which,if not exploited promptly or simultaneously with other low cost energy efficiency measures or in tandem with other load-reduction technologies or distributed generation technologies being installed at the site (e g,solar heating or photovoltaics),are lost irretrievably or rendered much more costly to achieve "Cream skimming" results in the pursuit of only the lowest cost energy efficiency measures,leaving behind other cost-effective opportunities Cream skimming becomes a problem when lost opportunities are created in the process 5 Program Administrators should manage their portfolio of programs to meet or exceed the short-and long-term savings goals established by the 4 D 06-06-063 As discussed in this decision DEER defines peak demand as the average grid level impact for a measure between 2 p in and 5 p m during the three consecutive weekday periods containing the weekday temperature with the hottest temperature of the year 5 While the energy savings achieved by LIEE programs will count towards the Commission s savings goals,per D 04-09-050 the Commission considers factors other than cost-effectiveness in determining LIEE program design and funding levels 3 -1 40- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 8 The deployment of new and improved energy efficiency products and applications can help sustain or increase current savings yields from program dollars, and serves to create a new generation of technologies available to tap the cost-effective potential of energy efficiency in ways we cannot predict today In order to provide higher levels of bridging between available upstream innovations and the marketplace,annual funding for emerging technologies programs should increase Program Administrators should work with the California Energy Commission(CEC) and other appropriate stakeholders to include appropriate levels of funding to demonstrate and commercialize emerging technologies funded through the California Public Interest Energy Research(PIER) program and other sources that otherwise would not receive funding for pre-commercialization demonstration In their program planning applications, the Program Administrators shall jointly propose emerging _ technologies programs and increases to current funding levels for these programs The main purpose of these programs should be to increase the probability that promising technologies will be commercialized within 6 years of program funding and thereby increase the chance of obtaining additional energy savings from these technologies in the long run Program strategies should focus on reducing both the performance uncertainties associated with new products and applications and the institutional barriers to introducing them into the market 9 Per D 05-01-055,Program Administrators with input from the public and advisory groups will develop for Commission consideration their portfolios of energy efficiency programs utilizing selection criteria that are consistent with these Rules Program Administrators will manage a portfolio of programs implemented by IOUs and non-IOUs that are selected and evaluated based on their ability to best meet the policy objectives articulated in these Rules 10 Pursuant to PU Code sections 381,38116,399 and 890-900, PGC and gas surcharge funds must be spent to deliver energy efficiency benefits to ratepayers in the service territory from which the funds were collected 6 Consistent with the provisions of AB117(Chapter 838,Chaptered September 24 2002) Section 3811 was added to Public Utilities Code pernutting community choice aggregators(CCAs) to apply to administer cost-effective energy efficiency and conservation programs The Commission adopted certain procedures in Decision(D) 03-07-034 (dated July 10 2003)to implement portions of AB 117 affecting the allocation of energy efficiency program funds [MOVED FROM FOOTNOTE l] 5 - r R 06-04-010 DGX/ays EE Policy Manual Version 4 0 ® Long-term obligations must be reported and tracked separately and include information regarding funds encumbered and estimated date of project completion,and • Energy savings for projects with long lead tunes will be calculated by defining the baseline as the applicable codes and standards at the time of the issuance of the building permit 14 For calculating the Performance Earnings Basis (PEB),funds encumbered for continuing programs or for programs with long lead tunes shall be counted when those funds are spent 15 Mid-Cycle Funding Augmentations See Rule IV 12 below III Common Terms and Definitions 1 Common terms and definitions will facilitate the review,selection and evaluation of energy efficiency activities In particular,program definitions should be designed to facilitate to the extent possible (1) the identification of energy efficiency activities by end-use savings potential, (2) the evaluation, measurement and verification (EM&V) of those activities based on Commission- adopted EM&V protocols,and (3) the coordination of program development and evaluation with resource planning and procurement needs To this end, Program Administrators and program implementers should use the definitions included in Appendix B to these Rules when characterizing any proposed program activity The burden is on them to justify any departure from those terms and definitions IV Cost-Effectiveness 1 The cost-effectiveness indicators referred to in these rules are described in the California Standard Practices Manual Economic Analysis of Demand-Side Management Programs (SPM) Economic Analysis of Demand-Side Management Programs Program Administrators and Implementers should perform cost- 7 -142- a a R 06-04-010 DGX/ays EE Policy Manual Version 4 0 3 The Program Administrator Cost(PAC)test of cost-effectiveness should also be considered in evaluating program and portfolio cost-effectiveness Under the PAC test,the program benefits are the same as the TRC test,but costs are defined differently to include the net present value of costs incurred by the program administrator(including financial incentives and rebates paid to anyone),but not the costs incurred by the participating customer Like the TRC test,the PAC test is calculated utilizing a discount rate that reflects each utility s weighted cost of capital,as adopted by the Commission 4 Applying both the TRC and PAC cost-effectiveness test is called the "Dual-Test" In almost all instances, an energy efficiency program that passes the TRC test will also pass the PAC test However,if deployment of the program requires rebates or financial incentives to participants that-exceed the measure cost,then the program may pass the TRC test,but fail the PAC test Considering the results of both tests when evaluating program proposals ensures that program administrators and implementers do not spend more on financial incentives or rebates to participating customers than is necessary to achieve TRC net benefits 5 TRC and PAC benefits should be computed utilizing the avoided cost methodologies and input assumptions,including non-price factors(e g,for avoiding greenhouse gas and non-greenhouse gas pollutants)that have been developed for the evaluation of energy efficiency programs in our avoided cost rulemaking,R 04-04-02511 The performance earnings basis(PEB) of energy efficiency resource programs shall be calculated from TRC and PAC benefits (being equal) minus TRC and PAC costs weighted two-thirds and one-third respectively (D 05-04-051) 6 A prospective showing of cost-effectiveness using the Dual-Test for the entire portfolio of ratepayer-funded energy efficiency activities and programs (i e,individual programs,plus all costs not assignable to individual programs, such as overhead, planning,evaluation,measurement verification and administrator compensation and performance, if applicable)is a threshold condition for eligibility for ratepayer funds This prospective showing of cost- effectiveness shall include the costs for shareholder incentives that are projected 11 See D 05-04-024 and D 06-06-063 9 -143- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Division 15 However,evaluation, measurement and verification costs should not be allocated to individual programs in the calculation of TRC and PAC net benefits Rather,all costs associated with evaluation,measurement and verification should be allocated at the total portfolio level,rather than program by program & To support comparisons of all resources in the utilities' procurement portfolio,the program administrators are required to also provide levelized unit cost estimates at the portfolio, end-use and measure level consistent with the methods described in the SPM This information should be submitted with the program admnistrators' compliance filings on the competitive bid results, during each program cycle 9 The usefulness of the TRC test as a primary indicator of cost- effectiveness is limited for certain programs which do not necessarily focus on the timing or type of resource needs of the utility, such as programs designed to demonstrate or commercialize promising emerging energy efficiency technologies or structurally change the marketplace For statewide marketing and outreach programs and information-only programs,the link between programs and savings is also difficult to discern Therefore,the Commission and program administrators will need to consider factors and performance metrics other than the TRC and PAC Tests of cost-effectiveness when evaluating such program proposals for funding and when evaluating their results 10 Fuel substitution programs may offer resource value and environmental benefits Fuel-substitution programs should reduce the need for supply without degrading environmental quality Fuel-substitution programs, whether applied to retrofit or new construction applications,must pass the following three-prong test to be considered further for funding 1 The program must not increase source-BTU consumption Proponents of fuel substitution programs should calculate the source-BTU impacts using the current CEC-established heat rate 2 The program must have TRC and PAC benefit-cost ratio of 10 or greater The TRC and PAC tests used for this purpose is See for example Ordering Paragraph 4 D 04-09-060 11 -144- i R 06-04-010 DGX/ays EE Policy Manual Version 4 0 12 Costs and energy savings from mid-budget cycle funding additions for programs other than low income energy efficiency (LIEF)programs shall be counted when calculating portfolio cost-effectiveness and the performance earnings basis in applying the energy efficiency risk/return incentive mechanism Energy savings from mid-budget cycle funding additions shall count towards the utilities' energy efficiency goals for resource planning purposes only Such savings shall not be counted towards the energy efficiency goals for the purpose of 1) satisfying the minimum performance standard(MPS) associated with the energy efficiency risk/reward incentive mechanism, or 2) determining which"performance band" (e g, deadband or applicable earnings tier level)should be used in calculating incentive payments or penalties Each proposal to augment energy efficiency program funding must be carefully reviewed to ensure that such funding is not misclassified as LIEF, given the implications associated with LIFE classification that carry over to the adopted incentive mechanism Savings associated with any mid-cycle funding augmentation to the LIEE program will not count towards the MPS (OP 7, D 07- 10-032) V Evaluation, Measurement and Verification(EM&V) 1 The development of energy efficiency programs that deliver reliable energy savings for California s ratepayers depends on well-designed methods of portfolio performance evaluation,measurement and verification(EM&V) Rigorous and strategically focused EM&V practices are required to gauge the performance of Program Administrators and Implementers,verify energy savings, improve the design and success of future energy efficiency programs and enhance the reliability of forecasted savings for resource planning purposes 2 The performance basis and related EM&&V protocols for energy efficiency portfolios and programs for post-2005 energy efficiency activities were developed in the EM&&V phase of Rulemaking 01-08-028,and updated in Rulemaking 06-10-040,consistent with these Rules The California Energy Efficiency Evaluation Protocols were initially adopted by ALJ Ruling dated April 25,2006 (later updated in June 2006) to specify the current minimum acceptable approaches and procedures for the evaluation of utilities energy efficiency portfolios Per D 05-01-055,Energy Division will have the lead role in the further development of EM&V protocols and procedures and the assigned ALJ may provide additional clarification and direction on EM&V administrative issues as needed 13 -1 45- 3 - R 06-04-010 DGX/ays EE Policy Manual Version 4 0 interest if the IOU Program Administrators or program implementers managed and directly contracted for them V1 Competitive Bidding and Partnership Programs 1 Competitive solicitations can help to identify innovative approaches or technologies for meeting savings goals with improved performance that aught not otherwise be identified during the program planning process However,not all program activities lend themselves to a competitive solicitation It would be counterproductive to require open bids in instances where,for example, partnerships between IOUs and local governments ("local government partnership programs") can take advantage of the unique strengths that both partners bring to the table,or a combination of partnerships and bilateral contracting arrangements with private or public entities can deliver effective statewide initiatives, such as a statewide public awareness campaign or an upstream lighting program 2 Competition in energy efficiency procurement should focus on soliciting good,new program ideas to achieve or exceed the Commission`s savings goals, rather than allocating a specific percentage of program funding to particular implementers Decisions on whether non-IOUs should be program implementers responsible for designing and delivering the program(rather than working to implement IOU-designed programs) should be made based on an evaluation of whether the program designs and delivery mechanisms proposed by non-IOUs are superior to those currently being implemented or planned for the future in achieving overall portfolio savings goals 3 As directed in D 05-01-055,for each program planning cycle,the Program Administrators shall propose a portfolio of programs(with input from the Program Advisory Groups as described in that decision)that reflects the continuation of successful IOU and non-IOU implemented programs and new program initiatives designed to meet or exceed the Commission's savings goals with cost-effective energy efficiency As part of that process, the Program Administrators will identify a minimum of 20% of funding for the entire portfolio of programs that will be put out to competitive bid to third-parties for the purpose of soliciting innovative ideas and proposals for improved portfolio performance Per D 07-10-032,successful third-party programs from the 2006- 2008 program cycle retained by the IOUs for successive budget cycles will count 15 -146- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 to the Program Administrator and performing a supporting role for the program However,this should not be the only option available for partnership programs Other partnership arrangements,e g,where the local government partner is fully involved in program planning and implementation,may take better advantage of the relative strengths of each partner These arrangements must,in any event,be considered to light of other applicable Commission decisions, including the implementation of community choice aggregation,and should in no way diminish or dilute the responsibility and accountability of Program Administrators to meet the Commission-adopted savings goals 6 Standard contract language should improve the effectiveness of future partnership programs The standard language should establish the rights and responsibilities of the partners with sufficient flexibility to enable each partner to make improvements to program performance,as circumstances warrant The standard language should also address information sharing,intellectual property ownership,reimbursement turn-around, dispute resolution,and other issues Energy Division and Legal Division should work with the Program Administrators,interested local governments and other parties to develop a standard contract for future partnership programs,and submit that language with the program plans VII Advisory Groups Decision 07-10-032 eliminated the Public Advisory Groups(PAGs)for the purposes of planning for the 2009-11 program cycle and beyond The following rules combine the functional descriptions of the PAGs with the Peer Review Groups (PRGs)for the 2006-2008 program cycle and the 2009-11 program cycle and beyond, and should be applied to the appropriate program cycle 1 The Program Administrators should put together the advisory groups and implement the program design and selection process consistent with D 05- 01-055 and D 07-10-032 and in the spirt of the collaborative approach they discuss in their filings For 2009 and beyond,the Public Advisory Group (PAG) is eliminated while the Peer Review Group (PRG) is retained Per Decision 07-10- 032,the advisory function formerly performed by the PAG will be subsumed in the statewide strategic planning activity These advisory groups should serve to (1) promote transparency in the Program Administrator's decision-making process, (2) provide a forum to obtain valuable technical expertise from stakeholders and non-market participants, (3)encourage collaboration among stakeholders and (4)create an additional venue for public participation The advisory groups will provide advice and feedback to the IOUs and provide 17 -147- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 peer reviewers for the energy efficiency program evaluation and selection process,referred to as "Peer Review Groups' (PRGs) 5 As described in D 05-01-055 and D 07-10-032, members of each PRG will be expected to (1) oversee the development of criteria and selection of government partnership programs, (2)review the IOUs' submittals to the Commission and assess the IOUs overall portfolio plans,their plans for bidding out pieces of the portfolio per the minimum bidding requirement and(3)review the bid evaluation utilized by the IOUs and their application of that criteria in selecting third-party programs In addition, the three PRGs are expected to meet and assess the statewide portfolio in terms of its ability to meet or exceed short and long-term savings goals in compliance with these Rules 6 The PAG meetings should be open to the public, and the IOUs should establish a clearinghouse website for noticing these meetings and posting documents to be discussed by the PAG at the meetings In addition,the IOUs are expected to conduct public workshops, at least twice a year that are designed to solicit broad public input from non-PAG members concerning program design and implementation For 2009 and beyond, the Public Advisory Group (PAG) is eliminated while the Peer Review Group (PRG)is retained Per Decision 07-10- 032,the advisory function formerly performed by the PAG will be subsumed in the statewide strategic planning activity VIII Performance-Based Risk and Reward Incentive Mechanism 1 In accordance with Public Utilities Code Section 73910,the Commission has established balancing accounts for each utility that remove significant regulatory disincentives for utility investments in energy efficiency and other demand-side management programs With these balancing accounts, a large majority of the utilities'fixed-cost revenue requirements are no longer tied to the forecasted level of commodity electric and natural gas sales 2 Per D 07-09-043 OP 2,as modified by D 08-01-042 OP 2,the risk/reward shareholder incentive mechanism applies to the energy efficiency programs funded for the 2006-2008 program cycle and for subsequent program cycles until further Commission notice The risk/reward shareholder incentive mechanism is structured as follows a) To be eligible for earnings,SDG&E,PG&E and SCE shall meet the following minimum performance standard(MPS) 19 -148- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 (3) Verified savings from Codes and Standards Advocacy Programs17 shall count as described in (a)and (b)below Codes and Standards savings are to be verified(as opposed to ex ante estimates used for planning purposes) (a) Fifty(50) percent of verified savings from pre- 2006 Codes and Standards Advocacy Programs shall count towards the energy savings goals and minimum performance standards for the 2006-2008 (per D 07-09-043) and 2009-2011 (per D 07-10-032)program cycles (b One hundred (100)percent of verified savings from post-2005 Codes and Standards Advocacy Programs shall count towards the energy savings goals,minimum performance standards and performance earnings basis for the 2006- 2008 and 2009-2011 program cycles Codes and Standards Advocacy costs are included as they are incurred in calculating the performance earnings basis and savings are included as they are realized e) If the utility has met the MPS, a first tier sharing rate of 9% shall apply If the utility has met 100% 17 D 05-09-043 and Attachment 10 Note-The 50% verified savings calculation for Codes and Standards Advocacy work applies gWy to savings leading to the adoption of the 2005 standards developed by the CEC At the time,installed savings and committed savings had been counted during the same budget cycle D 05-04-051 had adopted a policy to count only verified savings To avoid double counting of committed savings with verified savings,a methodology was developed and adopted to derive the amount of savings attributable to reducing energy over the future years concerned (post 2005) using a calculation considering economic potential,market potential and naturally-occurring savings associated with the codes adopted The result was 50% 21 -149- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 mechanism shall be paid as follows a) There shall be two"progress payment" interim earnings claims and one final true-up claim for each three-year program cycle They shall be linked to Energy Divisions Verification and Performance Basis Reports as described in D 07-09-043 and in its Attachment 6 b) Interim claims shall be evaluated on a"Cumulative-to-Date" basis,which counts the verified achievements from program year(s) in determining whether the MPS is met in each subsequent interim claim c) Thirty-five (35)percent of the earnings calculated for each interim claim shall be'held back" until the final true-up claim.,in order to minimize the risk of overpaying earnings before the ex post true-up of load impacts in the final claim (D 08-01-042) d) The costs of shareholder incentives shall be included in calculations when(1) evaluating the cost-effectiveness of program plans submitted during the program planning cycle (on a projected basis), or (2) conducting a cost- effectiveness review of portfolio performance in hindsight These costs shall not be included in the calculation of PEB See Appendix A for a graphic illustrating this mechanism 4 Per D 08-01-042,for the 2006-2008 program cycle,the following ex ante assumptions of energy savings and demand reductions shall be used in conjunction with verified installations and verified costs to calculate the 1st and 2nd Claims (a) Except as otherwise provided for below,the ex ante measure savings parameters that are contained in the utilities'E3 calculators, as of the 4th quarter 2007 report for the 1st Claim and as of the 4th quarter 2008 report for the 2nd Claim 23 -ISO- 7 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 (2) California Public Utility Commission(CPUC) audit team develops financial audit reports that verify portfolio costs for each utility (3)Energy Division aggregates evaluation contractor reports and ex ante measure parameters (updated as directed in VIII 4 and VIII 5 above)for each utility to quantify the portfolio resource benefits and uses that quantity in connection with the audit team reports to develop the draft Verification Report,which is posted on a publicly accessible website Energy Division notifies the CPUC Energy Efficiency service lists and lists of other interested stakeholders 2°maintained by Energy Division of the availability of the draft Verification Report and the website posting location Energy Division also notifies all of those stakeholders of the conference described in the next Step (4) Energy Division holds a conference by telephone or in person At this meeting, all stakeholders have an opportunity to discuss the draft Verification Report with those who prepared it (and supporting consultants) Stakeholders may raise questions about the draft report, receive responses from those who prepared it, and point out any errors they believe are contained in the report The goal is to have a give and take between the stakeholders,report authors, and the supporting technical experts (5)Stakeholders have an opportunity to provide written comments to Energy Division identifying any errors in the draft Verification Report Stakeholders will be required to include in the written comments at least a brief description of every point in the draft report which they believe needs correction, even if discussed at the conference Law Judge s Ruling Adopting Protocols for Process and Review of Post-2005 Evaluation, Measurement and Verification Activities, dated January 11, 2006 21 "Stakeholders" refers to those lasted on one of the CPUC s Energy Efficiency service list or who have notified Energy Division of their interest 25 -151- � - l R 06-04-010 DGX/ays EE Policy Manual Version 4 0 (2) Evaluation contractors hold a conference,under Energy Division sponsorship, with stakeholders,by telephone or in-person, to discuss draft final evaluation reports (3) Stakeholders have an opportunity to provide written comments identifying any errors in the draft final evaluation reports Stakeholders will be required to include in the written comments at least a brief description of every point in the draft report which they believe needs correction, even if discussed at the conference (4) Energy Division directs evaluation contractors to make any necessary changes to final evaluation reports stimulated by the comments All written comments, and Energy Division s treatment of them,will be reflected in appendices to the final evaluation reports The final evaluation reports are posted on a publicly accessible website (5)Within 60 days of public release, program administrators will respond in writing to the final report findings and recommendations indicating what action,if any,will be taken as a result of study findings as they relate to potential changes to the programs Energy Division can choose to extend the 60 day limit if the administrator presents a compelling case that more time is needed and the delay will not cause any problems in the implementation schedule, and may shorten the time on a case-by-case basis if necessary to avoid delays in the schedule (6)Energy Division aggregates evaluation contractor reports for each utility to quantify the portfolio resource benefits and uses that quantity in connection with the audit team reports to develop the draft Final Performance Basis Report Energy Division will notify the CPUC Energy Efficiency service lists and lists of other interested stakeholders maintained by Energy Division of the availability of the draft Final Performance Basis Report and the website posting location Energy Division also notifies all of those stakeholders of the conference described in the next Step (7)Energy Division,with the assistance of relevant contractors holds a conference with stakeholders,by telephone or m-person At this meeting, 27 -152- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 IX Affiliate and Disclosure Rules 1 To avoid anti-competitive behavior and cross-subsidies between IOUs and their affiliates, all transactions between the IOU administrator and any implementer that is an affiliate of PG&E,SCE,SDG&E or SoCalGas are banned, per D 05-01-055 2 The Program Administrators will not provide preferential treatment to any provider of an energy efficiency service that uses energy efficiency program funds 3 Bidders for EM&V contracts,including program design evaluation and market assessment studies,shall provide full disclosure of any potential conflicts of interest,including all current non-energy efficiency related contracts with Program Administrators and program implementers X Reporting Requirements 1 The Program Administrators shall present information in their program planning applications in compliance with Ordering Paragraph 13 of D 04-12-048,and in compliance with any further direction by this Commission, the Assigned Commissioner or Administrative Law judge regarding the content or format of these filings Energy Division may develop reporting requirements through workshops or other means to ensure that the types of data and the format of the information presented in the Program Administrator filings and reports is as consistent as possible 2 The Program Administrators shall file reports on portfolio and program activities on a regular basis during the program cycle using the standardized reporting formats, definitions,timelines and narratives established by the Energy Division, as updated from time to time The design and oversight of program-specific,portfolio-level and financial reporting requirements for energy efficiency activities will remain the responsibility of the Energy Division, as discussed in D 05-01-055 Energy Division shall design the reporting requirements in consultation with the Assigned Commissioner and Administrative Law Judge 3 In addition to other reports that may be required,the Program Administrators shall publish a summary of the achievements of the energy efficiency programs on an annual basis This report will be available to the public on the web and will contain at least the following information for the entire portfolio as well as 29 -153- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 3 Any program proposal for energy efficiency funding must describe a dispute resolution process to be used in dealing with complaints from end-use gas or electric consumers participating or attempting to participate in the program In programs where the Program Administrators hold contracts with third parties, those contracts will also be required to include dispute resolution provisions 31 -154- - V R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices 5 Database for Energy Efficient Resources (DEER)http //eeg_a cpuc ca gov/deer/ 6 Methodology and Forecast of Long Term Avoided Costs for the Evaluation of California Energy Efficiency Programs http //www ethree com/CPUC/E3 Avoided Costs Final pdf ® E3 Calculators (Updated to comply with D 07-09-043,10-7-07) http//www ethree com/cRuc cee tools html 7 CPUC Energy Efficiency Pro am Reporting Requirements Manual under the heading "Reporting_Rules" ftp///ftp cpuc ca gov/PUC/energy/electric/energy+efficiency/programs/rrm4 pdf 8 CPUC Energy Efficiency Program EM&V Protocols ftp //ftp cl2uc ca gov/PUC/energy/electric/energy+efficiency/em+and+v/evaluatorspro Cols_final_adoptedvlaruhng 06-19-2006 doc 33 -155- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Energy Efficiency Programs Approved Savings Goals 2004 through 2013 (D 04-09-060) SoCalGas Gas Savings Cumulative Gas Annual Goal Savings Year MMThNr MMTh " 2004 96 96 2005 96 193 2006 147 340 2007 193 533 2008 233 765 2009 272 1037 2010 283 1320 2011 299 1619 2012 323 1942 2013 358 2301 Total Savings=all savings from energy efficiency programs funded by public goods charges and procurement funding This total includes natural gas savings from energy efficiency programs already included in the CEC forecast SDG&E Gas Energy Savings Savings Cumulative Cumulative Annual Cumulative Annual Energy Demand Demand Goal Gas Savings Goal Savings Reductions Reductions Year MMThNr MMTh - GWHNr GWH)- MWNr (MW)7 2004 18 18 2684 2684 504 2005 18 36 2684 5368 1007 2006 27 63 2805 8173 546 1553 2007 31 95 2851 11024 542 2095 2008 37 131 2844 13868 54 2635 2009 41 173 2823 16691 536 3171 2010 45 21 8 2736 19427 52 3691 2011 49 267 2625 22052 499 419 2012 53 320 2217 2426 9 421 4611 2013 57 376 2149 26418 408 5019 Total Savings=all savings from EE programs funded by public goods charge and procurement funding This total includes savings from EE programs already in the CEC forecast For incremental savings above the levels included the CEC forecast see D 04 09 060 Attachment 9) MW Savings derived by multiplying GWh Savings by 0 19 average value SDG&E GWh to peak savings for 2004/5 applications This is an estimate of average peak savings during all the peak hours =GWh savings in peak period/560 hours in period 35 -1 S6- �_. R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices D 05-09-043 TABLE 8 ADOPTED FUND SHIFTING RULES,as modified by D 06-12-013 and D 07-10-032 Category Shifts Among Budget Categories Within Shifts Among Programs Within Shifts Among Categories Program Ca!%ory Resource! Yes no formal Commission Yes no formal Commission Yes up to 25 A on an annual basis or Nonresource review/approval triggered review/approval triggered 50%on a cumulative basis Advice Programs However 15 day PRG notification letter required for larger shifts (includes and comment required if shifts Adding a new program outside the multiple program exceed 25°/on an annual basis or competitive bid process triggers categories—see 50 A on a cumulative basis Advice letter process definitions Adding a new program outside the Advice letter required if allocation to below) competitive bid process triggers third parry implementers is.expected Advice letter process to fail below 20% Advice letter required if allocation to third party implementers is expected to fall below 20% C&S!ET! Yes same as above Advice letter required for shifts that Advice letter required to shift funds Statewide M&O would reduce any of these programs OUT of any program more than 1°/of by more than I°/of budgeted levels budgeted levels EM&V Yes within utility portion Not Applicable—Single Program Assigned ALJ or Commissioner ruling Fund shifting between the required to shift funds OUT of EM&V utility and ED portions only by any amount with Assigned Commissioner orALJapproval in consultation with Joint Staff For purpose of these fund shifting rules the Resource/Non Resource program categories are as follows • Resource/Non Resource Program categories for SCE SDG&E and SoCalGas are (1)Residential (2)Nonresidential (3)Crosscutting (except C&S ET SW Marketing and Outreach EM&V) • Resource/Non Resource Program categories for PG&E are (1)Mass Market(residential/small commercial cross cutting) (2)Residential targeted market sectors within Targeted Markets and(3)Non Residential targeted market sectors within Targeted Markets Utility program administrators may carryover/carryback funding during the 2006 2008 program cycle without triggering a review/approval process Authorization for utilizing 2006 funding in 2005 for specific purposes is described in D 05 09 043 Per D 06 12 013 (OP 2) utility program administrators may file an advice letter to seek authorization to shift existing unspent uncommitted energy efficiency funds from previous program cycles to the 2006 2008 portfolio budgets to fund new energy efficiency programs or incremental energy efficiency activities as part of existing authorized programs Utilities should consult with the PRG prior to submitting this type of advice letter Per D 07 10 032 carryover/carryback funding is permitted during the 2006 2008 budget cycle so long as the 2009 2011 portfolio has been approved CPUC approval is not necessary for up to 15°/of the current program cycle See Rules 1112 and 1113 Changes to incentive levels or modifications to program design(such as changes to customer eligibility requirements)will not trigger Energy Division or formal Commission review except as indicated below We expect that the results of EM&V studies statewide coordination efforts and ongoing consultation with advisory groups will enable utility program administrators to identify the best practices and program designs for portfolio implementation If the proposed incentive level change impacts as statewide offering e g is included in the deemed and calculated measure list presented in the statewide PAG meeting on August 2 3 2005 and is less than 50 A of the original incentive level on a cumulative basis over the three year program cycle the utility administrator will need to inform and solicit comment from the Joint PRGs prior to the change taking place • If the proposed incentive level change impacts a statewide program offering and is more than 50°/of the original incentive level on a cumulative basis the utility administrator will follow the advice letter process described in these rules The program administrator will notify the PRG of all incentive level changes that take place For all significant shifts in funding or modifications to program design the utilities should seek informal review with their PRG members as part of the ongoing exchange of information during program implementation Where an advice letter is required under these rules absent a protest or written data request by Energy Division for additional information by the end of the 20 day protest.period the request will become effective on the twentieth day after filing If Energy Division staff issues a data request before the end of the protest period the response time requirements and other procedures applicable to our normal advice letter procedures as updated by D 05 01 032 will take effect All advice letters required for fund shifting shall be served on the service list in A 05 06 004 and R 01 08 028 or its successor rulemakmg unless otherwise specified by the assigned ALJ The assigned ALJ in consultation with the Assigned Commissioner may provide further clarification on implementing these fundshifting rules or consider modifications to these rules during the 2006 2008 program cycle as appropriate 37 -157- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices 39 -158- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Coincident Peak Demand The metered or estimated demand of a device,circuit, or building that occurs at exactly the same time as the system peak fora given year and weather condition Community Choice Aggregators Organizations created by local governments pursuant to Assembly Bill 117 for the purpose of procuring12ower and administering energy efficiency programs on behalf of local citizens Competitive solicitation The process whereby parties are requested to submit bids offering mnovative approaches to energy savings or improved program performance Conservation Reduction of a customer's energy use achieved by relying on changes to the customer's behavior which may result in a lower level of end use service Conservation Measures Activities and/or behaviors aimed at reducing energy consumption Conservation Programs Programs which are intended to influence customer behavior as a means to reduce energy use Cost Effectiveness An indicator of the relative^performance or economic attractiveness of any energy efficiency investment or practice when compared to the costs of enerrgX produced and delivered m the absence of such an investment Cream Skimming Cream skimming results in the pursuit of a limited set of the most cost-effective measures,leaving behind other cost-effective opportunities Cream skimming becomes a problem when lost opportunities are created m the process Cross Subsidization Benefits ejoyed by one group such as a customer class,which are funded by another group 2 -159- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices annual electric and natural gas emissions reductions,which are the units implemented in the year times the annual emission reduction for a 1articular measure The E3 calculator calculates values of CO2 in tons per kWh or therms,NOx and PM10 are in pounds per kWh or therms The following eg.uations are from the `E3 Calculator Tech Memo' found at the following web luck http //www ethree cam/CPUC/E3%20Calculator%20TechMemo%203c doc Emissions Reductions Electric Reductions CO2 tons per year (Emission/ElfQ027) Emzsszon[E][CO2]Y Y 4(INM o *kWh_A *NTG, *ER[CO2],,,, Q=I+(y-1) 4 Where y — year of consideration 2006= 1 Total Annual used for years 2008 through the end of the Implementation period Q = Quarter of the year Jan Mar 2006=I INS _ #of incremental of measures Implemented m Quarter Q NTGM = Net to Gross ratio for measure M Eli CO2 M = Emission rate of CO2 in tons per kWh of measure M (The emissions rate for each measure is calculated using the product of the hourly measure savings load shape and the hourly heat rate for the IOU.)- kWh AM = Annual kWh reduction for measure M NOX and PM 10 equations are the same Just replace W021 with the appropriate indicator Note that CO2 emission rate is in tons per kWh NOX and PM 10 are in pounds per kWh Gas Reductions CO2 tons per year ffmisston[Gl(CO27) Emzsszon[G][CO2]Y = 4(INM o *Th_Am *NTGM *ER[CO2](c i 1 Where Y = year of consideration 2006= 1 Total Annual used for ears 2008 through the end of the implementation period 4 = Quarter of the year Jan Mar 2006= I INS _ #of Incremental of measures Implemented in quarter Q NTGu = Net—to Gross ratio for measure M E- RfCO2] = Emission rate of CO2 In tons per therm based on thP �s combustion tune GCT� specified on the input sheet for the measure 4 -1 C0- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices volume of a refrigerator,temperature levels,.production output of a manufacturing facility,or lighting_level ter square foot Evaluation,Measurement and Verification(EM&V) Activities which evaluate,morutor,measure and verify performance or other aspects of energy efficiency programs or their market environment Evaluation Project Budget The protect level evaluation budget as it is defined by the proaam administrators or Toint Staff for internal program budgeting and management purposes Inclusive of direct and allocated overhead and costs (+/-)recovered from other sources Financial Incentive Financial support(e g,rebates,low interest loans,free technical advice)provided to customers as an attempt to motivate the customers to install energy efficient measures or undertake energy efficiency Rrolects (See Rebate,) Free Drivers A free driver is a non-particigant who adopted a particular efficiency measure or ,practice as a result of a utili , yroogram (From Apri12006 EM&V Protocols) Free riders (Free Ridership) Program participants who would have installed the program measure or equipment in the absence of the program Fuel Substitution Programs which are intended to substitute energy using equipment of one energy source with a coml2etine energy source(e g switch from electric resistance heating_to gasfurnaces) Funding Cycle Period of time for which funding of energy efficiency programs have been approved by the Commission Gas Savings Reduced natural gas usage(or savings) produced by either energy efficiency investments which maintain the same level of end use service or conservation actions which can reduce energy use by_reducing the quantity or-quality of the baseline services provided 6 ®'961m J R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices specific) conservation and energy efficiency_opportunities For these programs,the information may be unsolicited by the customer Innovation Incubator A low-cost,stand-alone program designed to grow innovative energy savin programs and processes for the larger portfolio over the long term The incubator funds new 1rogram ideas that meet reasonable scientific scrutiny for potentially cost-effective energy savings avings and-peak reduction Institutional Barriers A type of market barrier In this case,the internal organizational hurdles that inlubit the evaluation and or choice to take energy efficiency actions Least Cost/Best Fit The procurement of cost-effective supply and demand-side resources that,regardless of ownership,meet capacity and energy deliverabilgy requirements Energy efficiency resources are constructed from the bottoms up approach that aggregates the demand and energy savings from various energy-saving measures and activities into a licable end-use categories such as space cooling, pace heating,lighting,and refrigeration, m order to provide near-and Iong-term peaking, intermediate,and baseload requirements Levelized Cost An estimate of the annualized cost of installmg an energy efficiency measures divided by_the annual energy savings Typically calculated by multiplying the incremental cost of the measure by capital recovery factor(function of discount rate and expected useful life of the measure) and then dividing by annual energy savings Load Management Programs which reduce or shift electric peak demand away from periods of high cost electricity to non-peak or lower cost time periods,with a neutral effect on or negligible increase m electric use Load Serving Entities Entities that provide electric and/or gas commodity to customers Lost Opportunities Energy efficiency measures that offer long-lived,cost-effective savings that are fleeting in nature A lost op ortunity occurs when a customer does not install an ener 8 -1 f 2- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Non-price Factors Those factors included in cost effectiveness tests,other than commodity graces and transportation and distribution costs, e g,environmental factors Operating Program Budget The program budget as it is defined by the program administrators for internal program budgeting and management purposes Inclusive of costs (±/-)recovered from other sources Participant Test The Participant Test is the measure of the Quantifiable benefits and costs to the customer due to participation in a program Since many customers do not base their decision to participate m a program entirely quantifiable variables,this test cannot be a complete measure of the benefits and costs of a program to a customer (See SPM hnk under Attachment Al Partnership Coordinated efforts of a utility and a local government or other entity to use the strgn the of both parties to achieve energy savings goals Peak Demand(per OP 1 of D 06-06-063) The average gnd level impact for a measure between 212 m and 512 m during the three consecutive weekday period containing the weekday temperature with the hottest temperature of the ytar Peak Demand-General(k6V) 1) The maximum level of metered demand during a specified genod,such as a billing month,or during a specified peak demand period 2 Extremely high energy use,usually with reference to a particular time period Peak Savings- Coincident (k) The estimated peak(e g highest) demand savings (MW or M from a program for a specific time,date,and location coincident with the forecasted system peak for a given area and a given set of weather conditions This estimate must also include consideration of the likelihood that the equipment is actually on at the time of coincident peak Usage of this definition Resource planning-for making adjustments to forecasts of peak usage for understanding reserve margins and rehabihttpurposes Peak Savings-Daily Average (kW) The average peak demand savmgs (kWh impacts/ # of hours in the peak rate period) for a given utill durmg their eak season Example for SCE-Peak period is for summer 10 -163- R 06-04-010 DGX/ays. EE Policy Manual Version 4 0 Appendices Portfolio Reporting Regglarly scheduled reporting by-the portfolio administrators directly to the CPUC Metrics reported are portfolio budgets and expenditures,measures installed,services rendered,and other program activity deemed relevant to Energy Division's responsibility to suI212ort the Conumssion's responsibilities of duality assurance policy oversight,and EM&V Pre-commercialization A 1hase in the life of a product before it is readily available on the market Program A collection of defined activities and measures that • are carried out by the admuustrator and/or their subcontractors and implementers, © target a specific market segment, customer class, a defined end use, or a defined set of market actors a g designers, architects,homeowners), ® are designed to achieve specific efficiency related changes in behavior, investment practices or maintenance practice m the energy market, ® and are guided by a specific budget and implementation plan Program Activities Any action taken by the program administrator or program implementer in the course of implementing the program Program Administrator An entity tasked with the functions of portfolio management of energy efficiency programs and program choice Program Administrator Cost(PAC) Test Under portfolio evaluation of cost effectiveness, the PAC test contains the program benefits of the TRC test,but costs are defined differently to include the costs incurred by the program administrator but not the costs incurred by the participating customer (See the SPM link under Attachment A Program Advisory Group (PAG) Advisory groups for each utility service area composed of energy efficiencyexperts representing customer groups,academic organizations,environmental organizations, agency staff and trade allies in the energy market For 2007 and beyond, the Public Advisory Group (PAG) is eliminated while the Peer Review Group (ERG)is retained Per Decision 07-10-032, the advisory function formerly performed by the PAG will be subsumed in the statewide strategic planning activity 12 -164- R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices net present value of all of the costs associated with a program and all of the estimated benefits(both energy and capacity) The calculation of resource value and associated benefits should be consistent with the avoided costs adopted in the most recent Commission proceeding or otherwise provided for by the Commission Service Area The eographucal area served by a utulrty Short TernVLong Term Planning terms referring to the tuning or expected tuning of program activities, program impacts, or program funding Short term indicates program activities, program impacts, or program funding that occurs during the current program cycle Long term indicates Rrogram activities,pro gam m impacts, or program funding that occurs beyond the current program cycle Source-BTU Consumption Conversion of retail energy forms OiWh,therms)into the BTU required to generate and deliver the energy to the site Tlus conversion is used to compare the relative impacts of switching_between fuel sources at the source or BTU level for the three-prong test required for fuel-substitution programs Spillover Reductions m energy consumption and/or demand in a utihtv's service area caused by the presence of the DSM pro am,beyond program related gross or net savings of participants These effects could result from (a)additional energy efficiency actions that prop am participants take outside the program as a result of havung_participated, (b) changes in the array of energy-using equipment that manufacturers,dealers and contractors offer all customers as a result of program availabuhty,and(c)changes un the energy use of non-participants as a result of uhlrty_programs,whether direct(e g, utuhty program advertising) or indirect(e g, stocking practices such as (b) above or char eg s un consumer buyin hg abits) " ParticIpant spillover is described by (a),and non- participant spillover,by(b}and (c) Some parties refer to non-participant spillover as "free-drivers" (From EM&V Protocols, April 20U Standard Practice Manual (SPM) The California Standard Practice Manual Economuc Analysis of Demand-side Programs and Projects is jointly issued by the California Public Utilities Commission and the California Energy Commission It defines the standard cost effectiveness tests and their components used for energy efficiency programs 14 -165- EXHIBIT E [REPORTING REQUIREMENTS] ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT -166- Exhibit E Reporting Requirements 1. Program Reporting: Consultant will provide SCE with the requisite information for purposes of preparing any reports required of SCE by the CPUC including current Quarterly and Annual Reports.Requirements for these reports may change per the direction of the CPUC or the CPUC's Energy Division. The current reporting requirements are as follows: 2. Quarterly Narrative: For the Program,a description of the Program activities occurring during the quarter. 2.1. Administrative activities; 2.2. Marketing activities; 2.3. Direct Implementation activities; 2.4. Consultant's assessment of Program performance and Program status (is the Program on target, exceeding expectations,or falling short of expectations, etc.); 2.5. Discussion of changes in Program emphasis(new Program elements, less or more emphasis on a particular delivery strategy, Program elements discontinued,Measure discontinued,etc.); 2.6. Discussion of near term plans for Program over the coming months(i.e., marketing and outreach efforts that are expected to significantly increase Program participation,etc.); 2.7. Changes to staffing and staff responsibilities, if any; 2.8. Changes to contacts,if any; 2.9. Changes to Subcontractors and Subcontractor responsibilities, if any; 2.10.Number of Customer complaints received; and 2.11.Program Theory and Logic Model if not already provided in the PIP,or if revisions have been made. Consultant will provide additional data or information as required by the CPUC. 3. Annual Reports: The Consultant will provide the required information and data to be aggregated to the portfolio and reported per the Annual Reporting Requirements Manual Version 4 (RRM4) (Attachment C to Administrative Law Judge Ruling of August 8, 2007) and subsequent revisions for 2010-2012. -167- �r Consultant will be required to fulfill these reporting obligations for their Program. Consultant will provide additional data or information as required by the CPUC. 4. Reporting Terminology Definitions 4.1. Adopted Program Budget—The Program budget as it is adopted by the CPUC, inclusive of costs (+/-)recovered from other sources. 4.2. Operating Program Budget—The Program budget as it is defined by the Program administrators for internal Program budgeting and management purposes, inclusive of costs(+/-) recovered from other sources. 4.3. Direct Implementation Expenditures—Costs associated with activities that are a direct interface with the Customer or Program participant or recipient(i.e., Consultant receiving training). (Note: This is still an open issue, the items included in this definition may be changed by the CPUC pending discussion on the application of the State's Standard Practice Manual) 4.4. Report Month—The month for which a particular Monthly Report is providing data and information. For example, a report covering the month of July 2010, but prepared and delivered later than July 2010,would still be titled July 2010. 4.5. Program Strategy—The method deployed by a program in order to obtain program participation. 4.6. Program Element—A subsection of a program, or body of program activities within which a single program strategy is employed. (Example:A body of program activities employing both an upstream Rebate approach and a direct install approach represents two discrete program elements.) 5. Measure Classification 5.1. Measure End-Use Classification Each energy efficiency Measure reported should be classified into one of the following end-use categories: Residential End Uses Detailed End Use Aggregated End Use Clothes Dryer Appliances Clothes Washer Appliances Consumer Electronics Consumer Electronics Cooking Cooking Appliances Dishwasher Appliances Other Appliance Appliances Building Shell HVAC -168- Space Cooling HVAC Space Heating HVAC Interior Lighting Lighting Exterior Lighting Lighting Pool Pump Pool Pump Freezers Refrigeration Refrigeration Refrigeration Water Heating Water Heating Other (User Entered Text String Other Description) Nonresidential End Uses Detailed End Use Aggregated End Use Building Shell HVAC Space Cooling HVAC .-Space Heating HVAC Ventilation HVAC Daylighting Lighting Interior Lighting Lighting Exterior Lighting Lighting Office Equipment Office Compressed Air Process Cooking Process Food Processing Process Motors Process Process Cooling Process Process Heat Process Process Steam Process Pumps Process Refrigeration Refrigeration Other(User Entered Text String Other Description) 5.2. Measure Market Sector/Market Segment Classification: Where reports require market sector or market segment classification,the following classification scheme should be used: Market Sector Market Segment Residential NA Single Family NA Multi Family NA Mobile Homes NA Nonresidential NAICS CODE(greater than 2 digit not required) Commercial NAICS CODE(greater than 2 digit not required) Industrial NAICS CODE(greater than 2 digit not required) Agricultural NAICS CODE(greater than 2 digit not required) Unknown NA -169- 6. Allowable Costs Allowable Costs Table The cost items listed on the Allowable Costs sheet are the only costs that can be claimed for ratepayer-funded energy efficiency work.The costs reported should be only for costs actually expended.Any financial commitments are to be categorized as commitments.If the reporting entity does not have a cost as listed on the cost reporting sheet,then no cost is to be reported for that item.These Allowable Cost elements are to be used whenever costs are invoiced or reported to SCE's Program administrator. If there is a desire to include additional Allowable Cost elements,the Program administrator should be contacted in order for the Program administrator to seek approval from the CPUC. 3/30/2006 Cost Categories Allowable Costs Administrative Cost Category Managerial and Clerical Labor Consultant Labor-Clerical Consultant Labor-Program Design Consultant Labor-Program Develo ment Consultant Labor-Program Planning Consultant Labor-Program/Project Management Consultant Labor-Staff Management Consultant Labor-Staff Supervision Human Resource Support and Development Consultant Labor-Human Resources Consultant Labor-Staff Development and Training Consultant Benefits-Administrative Labor Consultant Benefits-Direct Implementation Labor Consultant Benefits-Marketing/Advertising/Outreach Labor Consultant Payroll Tax-Administrative Labor Consultant Payroll Tax-Direct Implementation Labor Consultant Payroll Tax- Marketing/Advertising/Outreach Labor Consultant Pension-Administrative Labor Consultant Pension-Direct Implementation Labor Consultant Pension-Marketing/Advertising/Outreach Labor Travel and Conference Fees Consultant-Conference Fees Consultant Labor-Conference Attendance Consultant-Travel-Airfare Consultant-Travel-Lodging Consultant-Travel-Meals Consultant-Travel-Mileage Consultant-Travel-Parkin Consultant-Travel-Per Diem for Misc.Expenses Overhead (General and Administrative)-Labor and Materials Consultant Equipment Communications Consultant Equipment Computing -170- Allowable Costs Table The cost items listed on the Allowable Costs sheet are the only costs that can be claimed for ratepayer-funded energy efficiency work.The costs reported should be only for costs actually expended.Any financial commitments are to be categorized as commitments.If the reporting entity does not have a cost as listed on the cost reporting sheet,then no cost is to be reported for that item.These Allowable Cost elements are to be used whenever costs are invoiced or reported to SCE's Program administrator.If there is a desire to include additional Allowable Cost elements,the Program administrator should be contacted in order for the Program administrator to seek approval from the CPUC. 3/30/2006 Cost Cate ories Allowable Costs Consultant Equipment Document Reproduction Consultant Equipment General Office Consultant Equipment Transportation Consultant Food Service Consultant Office Supplies Consultant Postage Consultant Labor-Accounting Support Consultant Labor-Accounts Payable Consultant Labor-Accounts Receivable Consultant Labor-Facilities Maintenance Consultant Labor-Materials Management Consultant Labor-Procurement Consultant Labor-Shop Services Consultant Labor-Administrative Consultant Labor-Transportation Services Consultant Labor-Automated Systems Consultant Labor-Communications Consultant Labor-Information Technology Consultant Labor-Telecommunications Marketing/Advertising/Outreach Cost Category Consultant-Bill Inserts Consultant-Brochures Consultant-Door Hangers Consultant-Print Advertisements Consultant-Radio Spots Consultant-Television Spots Consultant- Website Development Consultant Labor-Marketing Consultant Labor-Media Production Consultant Labor-Business Outreach Consultant Labor-Customer Outreach Consultant Labor- Customer Relations Direct Implementation Cost Cate ory Financial Incentives to Customers Activity-Direct Labor Consultant Labor-Facilities Audits Consultant Labor- Curriculum Development Consultant Labor- Customer Education and Training Consultant Labor-Customer Equipment Testing and -171- J 3 -.. Allowable Costs Table The cost items listed on the Allowable Costs sheet are the only costs that can be claimed for ratepayer-funded energy efficiency work.The costs reported should be only for costs actually expended.Any financial commitments are to be categorized as commitments.If the reporting entity does not have a cost as listed on the cost reporting sheet,then no cost is to be reported for that item.These Allowable Cost elements are to be used whenever costs are invoiced or reported to SCE's Program administrator. If there is a desire to include additional Allowable Cost elements,the Program administrator should be contacted in order for the Program administrator to seek approval from the CPUC. 3/30/2006 Cost Categories Allowable Costs Diagnostics Installation and Service-Labor Consultant Labor-Customer Equipment Repair and Servicing Consultant Labor-Customer Equipment Repair and Servicing Direct Implementation Hardware and Materials Consultant-Direct Implementation Literature Consultant-Education Materials Consultant-Energy Measurement Tools Consultant-Installation Hardware Consultant-Audit Applications and Forms Rebate Processing and Inspection-Labor and Materials Consultant Labor-Field Verification Consultant Labor-Rebate Processing Consultant-Rebate A lications -1 7Z- ATTACHMENT #2 EXHIBIT A(revised January 2,2010) ENERGY LEADER PARTNERSHIP-PROGRAM LEVEL CURRENT LEVEL: Silver 2004 Baseline 2004-2009 Energy Participation/Savings Savings Required for Consumption*(kWh). Savings(kWh) Percentage next Level(kWh) Municipal Facilities 19,428,827 2,512,674 12.93% 1,373,091 Community, 1,137,432,308 104,872,074 9.22% 8,871,157 *Baseline numbers are mutually agreed upon for purposes of this Agreement only. Energy Leader Partnership levels are: Valued Partner Level—This level is the entry level for the partner to develop knowledge and establish goals towards the Silver Level.A budget is available for energy savings projects,for marketing,education,and outreach to the community,as well as for technical assistance toward upgrading or retrofitting partners'facilities. SCE's core program incentives will be offered directly to the partner. The partner will be expected to use the marketing and outreach funds to generate verifiable energy savings in their own facilities and in the community and will participate in demand response at a basic level. Valued Level provides the Partner with 3 cents per kWh paid in addition to what is paid to the Partner under SCE's core program.Partner will need to meet the following DR requirement:Enroll in California's Statewide Flex Alert and implement an internal educational campaign. Silver Level—To qualify for this level,the partner demonstrates past participation in SCE energy efficiency programs,develops an energy action plan,sets community and city energy reduction goals,targets 25 percent of its facilities to complete energy efficiency upgrades,and participates in demand response.An enhanced incentive is paid at the Silver Level.Silver Level provides the Partner with 6 cents per kWh paid in addition to what is paid to the Partner under SCE's core program.Partner will need to meet the following DR requirements: 1-At least one(1)eligible facility to participate in one(1)SCE Demand Response program 2-At least one(1)eligible facility to develop a Demand Reduction Action Plan to be followed during a Flex Alert event 3-Distribute Energy Solutions brochure to partner employees 4-Complete an integrated Demand Side Management(iDSM) audit at all eligible facilities. Gold Level—To.qualify for this level,the partner demonstrates higher past participation in SCE energy efficiency programs, establishes higher city and community program participation and energy savings goals and makes a higher commitment to participate in demand response.Incentive factors are higher for partner facilities'energy efficiency projects.Gold Level provides the Partner with 9 cents per kWh paid in addition to what is paid to the Partner under SCE's core program.Partner will need to meet the following DR requirements: 1-Have at least 25%of eligible facilities participate in an SCE Demand Response program 2-Conduct co-branded marketing and outreach to residential customers on SCE's Demand Response programs 3-At least one(1)eligible facility implement a DR measure recommended from the iDSM audit. .. Platinum Level—To qualify for this level,the partner demonstrates even higher past participation in energy efficiency programs,is innovative and integrates Energy Action Plan policies,ordinances and procedures.All facilities are targeted for energy efficiency upgrades and the partner makes a higher commitment to participate in Demand Response.Incentive factors are highest for Partner facilities'energy efficiency projects and additional incentives are made available for customized community energy efficiency projects.Platinum Level provides the Partner with 12 cents per kWh paid in addition to what is paid to the Partner under SCE's core program.Partner will need to meet the following DR requirements- 1-At least one(1) eligible facility must participate in SCE's Auto Demand Response program 2-Have at least 50%of eligible facilities participate in an SCE Demand Response program and develop a Demand Reduction Action Plan for the participating facilities 3-Organize a local outreach event during the Spring/Summer season to promote Demand Response/iDSM. Agreed and accepted: The City: THE CITY OF HUNTINGTON BEACH illk By: re Wilson Title. City Administrator Date: Nq-/o SCE: SOUTHERN CALIFORNIA EIDISON COMPANY a APPROVED AS TO FORM JENNIFER McGRATH,City Attorney B)L) Lyndaa Zieger Title: Se or V" a President, Customer Service By at Deputy City A#tarney�Z"1 l APPROVE � Attachment STEPHEN E.PN:K sr.Vice P �- SOUTHERN CALIFORNIA � SON r FOISf3Nt:Nr(_•R.VAT1O.V,V:Q C:Frtap3r,y City of Huntington Beach Aaron Klemm 2000 Main Street Huntington Beach,CA 92648 Re: Revised Exhibit A to Partnership Agreement Dear Mr. Klemm: This letter agreement shall serve.as an amendment to that certain Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program,by and among The City of Huntington Beach and Southern California Edison, dated as of January 1,2010 (the"Agreement"). All terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement. The Parties agree to the following revision effective as of January 2, 2010: 1. Exhibit A to the Agreement shall be deleted and replaced with revised. Exhibit A as attached to this letter agreement; All other provisions of the Agreement shall remain unchanged and in full force and effect. September 28, 2010 Southern California Edison Company Attn: Jim Hodge 6042-A N. Irwindale Avenue Irwindale, CA 91702 Dear Mr. Hodge: Enclosed for your records is a fully executed original of the Revised Exhibit A to the "Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program" between the City of Huntington Beach and Southern California Edison. Sincerely, Joan L. Flynn, CIVIC City Clerk JF:pe Enclosure G:followup:agrmtltr Council/Agency Meeting Held: —42 - Deferred/Continued to: �l pr ved ❑ Co d tionall A proved ❑ D pied City rk' S nature ounocil Meeting Date: 1/19/2010 Department ID Number: AD 10-002 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY CO IL MEMBERS SUBMITTED BY: FRED A. WILSON, CITY ADMINSTR PREPARED BY: BOB HALL, DEPUTY CITY ADMINIST ATO SUBJECT: AGREEMENT TO JOINTLY DELIVER ORANGE COUNTY CITIES ENERGY EFFICIENCY PARTNERSHIP PROGRAM Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: The city of Huntington Beach and Southern California Edison Company (SCE) approved resolution 2009-09 and entered into a Local Government Energy Action Resources partnership in January 2009. SCE recently received Pubic Utilities Commission (PUC) approval for programs from 2010-2012. This agreement replaces the expiring prior agreement approved by council in January 2009. The council is asked to approve updated energy efficiency partnership agreements with SCE and Southern California Gas Company (SCG). Funding Source: N/A Recommended Action: Motion to: 1. Approve and authorize Mayor and City Administrator to execute Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership program between the City of Huntington Beach, California and Southern California Edison Company and the Orange County Cities Energy Efficiency Partnership Program by and among The City of Costa Mesa, The City of Huntington Beach, The City of Westminster and Southern California Gas Company Alternative Action(s): Do not approve the agreement and advise staff on how to proceed. REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 1/19/2010 DEPARTMENT ID NUMBER: AD 10-002 Analysis: SCE and SCG have chosen to partner with Huntington Beach and other adjacent Orange County cities to implement an Orange County local government energy efficiency partnership. The partnership framework provides enhanced incentives for energy saving projects in city facilities, technical assistance and marketing, education and outreach funding to support Huntington Beach's energy and sustainability efforts in the community. The funds are Public Goods charge funds that SCE and SCG are required by the Public Utilities Commission (PUC) to collect. SCE administers these funds with PUC oversight to increase energy efficiency, eliminating the need to build new power plants. This contract will provide additional funds to the city when the city invests in energy savings projects in our facilities and infrastructure. This contract will extend the effectiveness of existing and planned Capital Improvement Project (CIP) funding that increases energy efficiency. Huntington Beach has received an award from the Federal government for $1.78M in energy efficiency projects. Strategic Plan Goal: Maintain, Improve, and Obtain Funding for Public Improvements Environmental Status: Not applicable for this action, but the agreement positively impacts the City of Huntington Beach's ability to reduce environmental impacts from energy use. Attachment(s): City Clerk's P. • - Number, NoiDes,oriptiorf 1. Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program between the City of Huntington Beach, California and Southern California Edison Company. �" ��':, i 6; 2. Agreement to Jointly Deliver the 2010-2012 Orange County Cities f -,3DD$ Energy Efficiency Partnership Program By and Among The City of Costa Mesa, The City of Huntington Beach, The City of Westminster and Southern California Gas Company. 3. Insurance and Indemnification Waiver Modification Request -2- 1/5/2010 9:57 AM ATTACHMENT # 1 AGREEMENT TO JOINTLY DELIVER THE 2010-2012 ORANGE COUNTY ENERGY LEADER PARTNERSHIP PROGRAM BETWEEN THE CITY OF HUNTINGTON BEACH and SOUTHERN CALIFORNIA EDISON COMPANY Dated: January 19 , 200_2010 This program is funded by California utility ratepayers and administered by Southern California Edison under the auspices of the California Public Utilities Commission. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT THIS AGREEMENT TO JOINTLY DELIVER THE 2010-2012 ORANGE COUNTY ENERGY LEADER PARTNERSHIP PROGRAM (the "Agreement") by and between SOUTHERN CALIFORNIA EDISION COMPANY ("SCE") and the City of Huntington Beach (the "City"), which Agreement shall be effective as of 01/01/2010 ("Effective Date"). SCE and the City may be referred to herein individually as a "Party" and collectively as the "Parties." The Orange County Energy Leader Partnership may be referred to herein as the "Partnership." WHEREAS, on July 21, 2008 (and as amended on March 2, 2009), SCE submitted its 2009-2011 Application for Approval of its Proposed Energy Efficiency Program Plans and Public Goods Charge and Procurement Funding Requests to the California Public Utilities Commission (the "Commission"), which application included the Energy Leader Partnership Program in which SCE will partner with cities, counties, and other local government organizations that have a vision for energy efficiency sustainability and a desire to provide energy efficiency leadership to their communities; WHEREAS, on July 2, 2009, SCE amended its aforementioned application to the Commission, requesting approval of an extended 2010-2012 Program cycle for its proposed plans and funding requests, including the Energy Leader Partnership Program; WHEREAS, on September 24, 2009, the Commission authorized certain energy efficiency programs, including the Partnership's Energy Leader Partnership Program for the 2010-12 program cycle (the "Program"); WHEREAS the City has expressed a commitment, and has qualified, to participate in the Program through the Partnership, allowing the City to demonstrate energy efficiency leadership in its community while helping residents and businesses achieve sustainable reductions in energy use within SCE's service territory; WHEREAS, the Partnership's Program is designed to encompass several local government jurisdictions in Orange County, including Westminster, Fountain Valley, Costa Mesa, and Huntington Beach ("Program Participants"),provided however that each Program Participant shall execute individual agreements for the performance of their respective obligations in connection with the Program; WHEREAS, the City, on February 2 , 2009, passed, ,approved and adopted a Resolution supporting and endorsing the Program, approving the City as a Program Participant, and authorizing execution of a Partnership Agreement, in substantially similar form as this Agreement; and WHEREAS, the Parties desire to enter into an agreement that supersedes any and all previous agreements, and sets forth the terms and conditions under which the Program shall be implemented with respect to the Parties. NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 2 7 r 1. DEFINITIONS All terms used in the singular will be deemed to include the plural, and vice versa. The words "herein," "hereto," and "hereunder" and words of similar import refer to this Agreement as a whole, including all exhibits or other attachments to this Agreement, as the same may from time to time be amended or supplemented, and not to any particular subdivision contained in this Agreement, except as the context clearly requires otherwise. "Includes" or "including" when used herein is not intended to be exclusive, or to limit the generality of the preceding words, and means "including without limitation." The word "or" is not exclusive. 1.1. Agreement: This document and all exhibits attached hereto, and as amended from time to time. 1.2. Authorized Partnership Budget: The Commission approved maximum budget for funding the Partnership and performance by all of the Program Participants' performance of the Authorized Work, which total amount shall be apportioned among the Program Participants, including the City,by SCE in its sole and absolute discretion(see "Partner Budget"). 1.3. Authorized Work: The work authorized by the Commission for the Program as set forth in this Agreement and as more fully described in the Program Implementation Plans attached hereto as Exhibit C, and as agreed to be performed by the Parties. 1.4. Business Day: The period from one midnight to the following midnight, excluding Saturdays, Sundays, and holidays. 1.5. Calendar Day: The period from one midnight to the following midnight, including Saturdays, Sundays, and holidays. Unless otherwise specified, all days in this Agreement are Calendar Days. 1.6. Contractor: An entity contracting directly or indirectly with a Party, or any subcontractor thereof subcontracting with such Contractor, to furnish services or materials as part of or directly related to such Party's Authorized Work obligations. 1.7. Customers or Eligible Customers: Those customers eligible for Program services, which are SCE customers located in the City. 1.8. Energy Efficiency Measure (or Measure): As used in the Commission's Energy Efficiency Policy Manual, Version 4, August 2008 . 1.9. EM&V: Evaluation, Measurement and Verification of the Program pursuant to Commission requirements. 1.10. Incentive: As used in the Commission's Energy Efficiency Policy Manual, Version 4, August 2008. 1.11. Partner Budget: That portion of the Authorized Partnership Budget, which represents the maximum budget and maximum allocation by period, for funding the ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 3 r performance of the Program by the City and as set forth in Exhibit B, subject to amendment by SCE consistent with the terms of this Agreement. 1.12. Program Expenditures: Actual (i.e., no mark-up for profit, administrative or other indirect costs), reasonable expenditures of the City that are pre-approved, directly identifiable to and required for the Authorized Work in accordance with Section 10.3. 1.13. PIP or Program Implementation Plan: The implementation plan specific to this Partnership, together with the Energy Leader Partnership Master PIP, which include the anticipated scope of the Program in SCE's service territory, approved by the Commission and attached hereto as Exhibit C. 1.14. Public Goods Charge (PGC): The funds which make up the Partner Budget and which are collected from electric utility ratepayers pursuant to Section 381 of the California Public Utilities Code for public purposes programs, including energy efficiency programs approved by the Commission. 2. PURPOSE The Program is funded by California utility ratepayers and is administered by SCE under the auspices of the Commission. The purpose of this Agreement is to set forth the terms and conditions under which the Parties will jointly implement the Program. The work authorized pursuant to this Agreement is not to be performed for profit. This Agreement is not intended to and does not form any "partnership" within the meaning of the California Uniform Partnership Act of 1994 or otherwise. 3. PROGRAM DESCRIPTION 3.1. Overview. The Energy Leader Partnership Program is designed to provide integrated technical and financial assistance to help local governments effectively lead their communities to increase energy efficiency, reduce greenhouse gas emissions, protect air quality and ensure that their communities are more livable and sustainable. The Program provides a performance-based opportunity for the City to demonstrate energy efficiency leadership in its community through energy saving actions, including retrofitting its municipal facilities as well as providing opportunities for constituents to take action in their homes and businesses. By implementing measures in its own facilities, the City will lead by example as the City and SCE work together to increase community awareness of energy efficiency and position the City as a leader in energy management practices. The Program will provide marketing, outreach, education, training and community sweeps to connect the community with opportunities to save energy, money and help the environment. The Program Participants will leverage the strengths of each other to efficiently deliver energy and demand savings. Delivering sustainable energy savings, promoting energy efficiency lifestyles, and achieving an enduring leadership role for the City through this Program design is rooted in an effective relationship between the City, other Program Participants, their constituents, and SCE. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 4 J I 3.2. Energy Leader Partnership Level. The Program offers a tiered Incentive structure through achievement of four separate levels of participation: "Valued Partner," "Silver," "Gold" and "Platinum." The City will enter the Program at the level indicated on Exhibit A hereto, which has been determined by the City's past participation in SCE energy efficiency and demand response programs both at the city level and at the community level. Exhibit A further explains each level and the energy savings requirements for moving to the next Energy Leader Partnership level. SCE will track the City's performance under this Agreement against the goals and objectives set forth herein, and will notify the City when it has achieved the next incentive level. 4. AUTHORIZED WORK 4.1. Scope. The work authorized by the Commission is set forth broadly in the PIP (Exhibit C) and shall be performed pursuant to the terms of this Agreement. The Parties shall collaborate and mutually agree upon specific Program implementation consistent with the PIP, and the Parties shall document such details in a "Planning Document" which is intended to evolve throughout the term of the Program. 4.2. Obiectives. The Program is designed to meet the specific goals and milestones set forth in Exhibit B of this Agreement, while implementing the Program strategies and meeting the general objectives and goals set forth in the PIP, attached hereto as Exhibit C. 5. LIMITATION ON SERVICE TERRITORY — The Parties agree that Authorized Work shall only be performed in SCE's service territory, with energy savings and demand reduction claims applicable solely to SCE's utility system. No Authorized Work shall be performed for any customers that receive electricity from a municipal utility corporation or other electricity service provider or that do not directly receive electricity service from SCE. 6. OBLIGATIONS OF THE PARTIES 6.1. Obligations of SCE and the City 6.1.1. Each Party will be responsible for the overall progress of its Authorized Work, to ensure that the Program remains on target (including but not limited to achieving the Program's specific energy savings and demand reduction goals as set forth in Exhibit B). 6.1.2. The Parties shall jointly coordinate and prepare all Program-related documents, including all required reporting pursuant to Section 9, and any such other reporting as may be reasonably requested by SCE. 6.1.3. To the extent practicable and with coordination by SCE, the Parties shall use the Program as a portal for other existing or selected programs that SCE offers, including programs targeting low-income ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 5 i customers, demand response, self-generation, solar, and other programs as described in the PIP, with a goal to enhance consistency in rebates and other Program details, minimize duplicative administrative costs, and enhance the possibility that programs can be marketed together to avoid duplicative marketing expenditures. 6.1.4. Consistent with those contained in the PIP, SCE and the City will work together to develop and accomplish additional mutually agreeable goals. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 6 6.2. Obligations of the City. 6.2.1. The City will appoint an "Energy Champion" who will be the primary contact between the City, other Program Participants, and the SCE Energy Efficiency Representative (defined in Section 6.3.1), and who will be authorized to act on behalf of the City in carrying out the City's obligations under this Agreement. Such appointment shall be communicated in writing to SCE within 10 Business Days following execution of this Agreement. The City shall communicate regularly with the SCE Energy Efficiency Representative in accordance with Section 7.2 and 7.3 hereof, and shall advise SCE immediately of any problems or delays associated with its Authorized Work obligations. 6.2.2. The City shall perform its Authorized Work obligations within the Partner Budget and in conformance with the schedule and goals associated with such Authorized Work as set forth in this Agreement, and shall furnish the required labor, equipment and material with the degree of skill, care and professionalism that is required by current professional standards. 6.2.3. The City will be actively involved in all aspects of the Program. The City will use its best efforts to (a) dedicate human resources necessary to implement the Program successfully, (b) providing support for the Program's marketing and outreach activities, and (c) working to enhance communications with SCE to address consumer needs. 6.2.4. The City shall obtain the approval of SCE when developing Program marketing materials and prior to their distribution, publication, circulation, or dissemination in any way to the public. In addition, all advertising, marketing or otherwise printed or reproduced material used to implement, refer to, or that is in any way related to the Program must contain the respective name and logo of SCE and, at a minimum, the following language: "This Program is funded by California utility ratepayers and administered by Southern California Edison under the auspices of the California Public Utilities Commission." 6.2.5. The City shall obtain the approval of SCE prior to conducting any Program public outreach activities (exhibits, displays, public presentations, canvassing, etc.) and any marketing materials used in connection with such outreach activity shall comply with the requirements of Section 6.2.4. 6.2.6. The City shall submit to SCE, upon its request, all contracts, agreements or other requested documents with the City's Contractors (including subcontractors) performing Authorized Work in connection with the Program. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 7 6.2.7. The City acknowledges and agrees that the Program has other Program Participants, and that no one Program Participant is entitled to the entire Authorized Partnership Budget, and that the City shall work with SCE and each other Program Participants to achieve the goals and accomplish the Authorized Work of the Program. 6.3. Obligations of SCE. 6.3.1. SCE will appoint a Partnership representative ("SCE Energy Efficiency Representative") who will be the primary contact between SCE, other Program Participants, and the City, and who will be authorized to act on behalf of SCE in carrying out SCE's obligations under this Agreement. Such appointment shall be communicated in writing to the City within 10 Business Days following execution of this Agreement. 6.3.2. SCE will oversee the activities and implementation of the Program, in accordance with this Agreement. 6.3.3. SCE will be actively involved in all aspects of the Program. SCE will use its best efforts to add value to the Program by (a) dedicating human resources necessary to assist the City in implementing the Program successfully and providing and maintaining an SCE presence in the City, (b) providing support for the Program's marketing and outreach activities, and (c) working to enhance communications with the City to address consumer needs and provide SCE information and services. 6.3.4. SCE shall provide, at no cost to the City, informational and educational materials on SCE's statewide and local energy efficiency core programs. 6.3.5. SCE shall work with the City as requested to help identify cost- effective energy efficient projects in the City's qualifying municipal facilities within SCE's service territory. 6.3.6. SCE shall administer the PGC funds authorized by the Commission for the Program in accordance with this Agreement, and SCE shall reimburse the City for Program Expenditures in accordance with Section 10 below. 6.3.7. SCE shall be responsible for coordinating and ensuring compliance with all reporting and other filing requirements. 6.3.8. SCE shall be responsible for tracking performance of the City in accordance with Section 10.1.2, and for verifying all energy savings and demand reduction claims of the City, and for monitoring and ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 8 verifying achievement of the Partner Levels as described in Exhibit A. 6.4. EM&V. Once the Commission has approved and issued an evaluation, measurement and verification ("EM&V") plan for the Program, such EM&V plan shall be attached to this Agreement as Exhibit D and shall be incorporated herein by this reference. Any subsequent changes or modifications to such EM&V plan by the Commission shall be automatically incorporated into Exhibit D. The City shall provide and comply with all Commission/SCE requests regarding activities related to EM&V. The City and its Contractors shall cooperate fully with the SCE Energy Efficiency Representative and will provide all requested information, if any, to assure the timely completion of all EM&V Plan tasks requiring the City's involvement or cooperation. 7. ADMINISTRATION OF PROGRAM 7.1. Decision-making and Approval. 7.1.1. Except as specifically provided in this Agreement, the following actions and tasks require consent of both Parties: a. Any material modification to the Authorized Work in connection with the Program. b. Any action that materially impacts the agreed-upon schedule for implementing the Program. C. Selection of any Contractor not previously approved by SCE. 7.1.2. Unless otherwise specified in this Agreement, the Parties shall document all material Program decisions, including, without limitation, all actions specified in Section 7.1.1 above, in meeting minutes or if taken outside a meeting, through written communication, which shall be maintained in hard copy form on file by the Parties for a period of no less than five (5) years after the expiration or termination of this Agreement. 7.2. Regular Meetings. During the term of this Agreement, the Program Participant representatives of the Partnership identified in writing pursuant to Section 6.2.1 and 6.3.1 respectively, along with such members of the Partnership team as the Parties deem necessary or appropriate, shall meet monthly at a location reasonably agreed upon by the Parties. In addition to any other agenda items requested by either Party, the agenda shall include a review the status of the City's performance against Partner Budget, toward achievement of the goals set forth in Exhibit B, and the Partnership's progress towards meeting overall Partnership goals set forth in Exhibit C. Any decision-making shall be reached and documented in accordance with the requirements of Section 7.1 above. 7.3. Regular Communication. Regular communication among Partnership representatives is critical for the long-term success of the Partnership and achievement of Partnership goals and objectives. Notwithstanding Section 7.2, ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 9 above, the Partnership representatives identified in writing by each Partner pursuant to Sections 6.2.1 and 6.3.1, respectively, including other Program Participants, shall communicate regularly with each other to review the status of the Program's goals, deliverables, schedules and budgets, and plan for upcoming Program implementation activities, and to advise the other Party of any problems associated with successful implementation of the Program. Any decision-making during this communication process shall be reached and documented in accordance with the requirements of Section 7.1 above. 7.4. Non-Responsibility for Other Party. Notwithstanding anything contained in this Agreement in the contrary, a Party shall not be responsible for the performance or non-performance hereunder of the other Party, nor be obligated to remedy any other Party's defaults or defective performance. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 10 8. DOUBLE DIPPING PROHIBITED In performing its respective Authorized Work obligations, the City shall implement the following mechanism and shall take other practicable steps to minimize double-dipping: 8.1. Prior to providing incentives or services to an Eligible Customer, the City and its Contractors shall obtain a signed form from such Eligible Customer stating that: 8.1.1. Such Eligible Customer has not received incentives or services for the same measure from any other SCE program or from another utility, state, or local program; and 8.1.2. Such Eligible Customer agrees not to apply for or receive Incentives or services for the same measure from any other SCE program or from another utility, state, or local program. Each Party shall keep its Customer-signed forms for at least five (5) years after the expiration or termination of this Agreement. 8.2. No Party shall knowingly provide an incentive to an Eligible Customer, or make payment to a Contractor, who is receiving compensation for the same product or service either through another ratepayer funded program, or through any other funding source. 8.3. The City represents and warrants that it or its Contractors has not received, and will not apply for or accept Incentives or services for any measure provided for herein or offered pursuant to this Agreement or the Program from any other SCE program or from any other utility, state or local program. 8.4. The Parties shall take reasonable steps to minimize or avoid the provision of incentives or services for the same measures provided under the Program from another program or other funding source ("double-dipping"). 9. REPORTING 9.1. Reporting Requirements. The Parties shall implement those reporting requirements set forth in Exhibit E attached hereto, as the same may be amended from time to time, or until the Commission otherwise requires or issues different or updated reporting requirements for the Program, in which case and at which time such Commission-approved reporting requirements shall replace the requirements set forth in Exhibit E in their entirety. 10. PAYMENTS 10.1. Partner Budget ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 11 10.1.1. Maximum Budget: The Partner Budget is set forth in Exhibit B to this Agreement and represents the City's maximum share of the Program's three-year Authorized Partnership Budget. Additionally, Exhibit B sets forth the maximum non-Incentive budget on a periodic basis during the Program. The City shall not be entitled to compensation in excess of the Partner Budget (either on a periodic basis or in total), without written authorization by SCE and receipt of a revised Exhibit B. Consistent with Commission directives to maximize cost-effectiveness and energy savings, the Partner Budget set forth in Exhibit B may be reallocated or adjusted at any time by SCE in its sole discretion, based upon SCE's evaluation of the City's commitment to, and progress toward the City's energy savings goals set forth herein. 10.1.2. Tracking: SCE will track the City's performance against the objectives set forth in Section 4.2 hereof, including tracking (or estimating) achievement towards the specific energy savings and demand reduction goals set forth in Exhibit B, and will provide such tracking information to the City on a regular basis, but in no event less than quarterly. The tracking will enable SCE, to (i) properly allocate the Authorized Partnership Budget among all the Energy Leader Partnerships according to their individual performance and achievement of respective goals and objectives, (ii) confirm or amend the Partner Budget, set forth in Exhibit B hereto, based on the City's performance of the goals and objectives set forth in this Agreement; and (iii) determine/verify the City's eligibility to move to a new Energy Leader Level as described in Section 3.2 hereof. 10.1.3. Partner Budget Adjustment: The Parties acknowledge that this Program is offered in furtherance of the Commission's strategic energy efficiency goals for California and is based on the City's commitment to attain such goals and its desire to provide leadership to its community. To this end, in the event that SCE determines, in its sole discretion and through the tracking mechanism set forth in 10.1.2 above, that the City is not performing in accordance with the goals and objectives set forth in Section 4.2 hereof, then SCE shall have the unilateral right to reduce, eliminate, or otherwise adjust the Partner Budget for the remaining Program year or years (other than for Program Expenditures previously approved by SCE) by amending Exhibit B and providing the amended Exhibit to the City. Pursuant to this Section, any such amended Exhibit B shall automatically be incorporated into this Agreement and take effect immediately upon delivery from SCE to the City. 10.1.4. Partner Budget Catefyories a. Non-Incentive Budget: The Partner Budget is comprised of a non-incentive portion which includes separate categories for Marketing, Education & Outreach, Technical Assistance [and ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 12 Direct Implementation), all of which are more fully described in the Program Implementation Plan (Exhibit Q. b. Incentive Budget: As part of the Partner Budget, the City shall be eligible to receive certain enhanced Incentives through partnership participation in SCE core programs, as well as additional incentives consistent with the City's tier level of program participation, including completion of municipal retrofit projects further described in this Agreement and in the Program Implementation Plan. The additional Incentives will be made available as the City reaches higher Energy Leadership Partnership Levels in accordance with Exhibit A. 10.2. Program Expenditures of City. The City, with SCE's prior approval, shall be entitled to spend PGC funds, within the limits of the Partner Budget, on Program Expenditures. The City shall not be entitled to reimbursement of Program Expenditures for any item (1) not specifically identifiable to the Program, (ii) not previously approved by SCE, (iii) not expended within the term of this Agreement, or (iv) not otherwise reimbursable under this Agreement. 10.3. Payment to the City. In order for the City to be entitled to PGC funds for Program Expenditures: 10.3.1.The City shall submit monthly activity reports to SCE in a format acceptable to SCE and containing such information as may be required for the reporting requirements set forth in Section 9 above ("Monthly City Reports"), by the tenth (loth) Calendar Day of the calendar month following performance, setting forth all Program Expenditures. 10.3.2.The City shall submit to SCE, together with any Monthly City Report (if required), a monthly invoice for reimbursement of reported Program Expenditures, in a format acceptable to SCE, attaching all documentation reasonably necessary to substantiate the Program Expenditures, including, without limitation, the following: a. Contractor Costs: Copies of all Contractor invoices. If only a portion of Contractor costs applies to the Program, the City shall clearly indicate the line items or percentage of the invoice amount that should be applied to the Program as provided in Exhibit E. b. Marketing, Education & Outreach: A copy of each distinct marketing material produced, with quantity of a given marketing material produced and the method of distribution. C. Other expenditures: As pre-approved by SCE, with sufficient documentation to support the expenditure. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 13 e d. Allowable Costs: Only those costs as listed in the Allowable Cost Table contained in the Reporting Requirements attached as Exhibit E can be submitted for payment. All invoices submitted to SCE must report all costs using the allowable cost elements shown on.the Allowable Cost Table. The City understands and acknowledges that all of the City's invoices for the Program and the Monthly City Report shall be submitted to SCE. 10.3.3. SCE reserves the right to reject any City invoiced amount for any of the following reasons: a. The invoiced amount, when aggregated with previous Program Expenditures, exceeds the amount budgeted therefore in the Partner Budget for such Authorized Work (as set forth in Exhibit B). b. There is a reasonable basis for concluding that such invoiced amount is unreasonable or is not directly identifiable to or required for the Authorized Work, and/or the Program. C. The invoiced amount, in SCE's sole discretion, contains charges for any item not authorized under this Agreement or by the Commission, or is deemed untimely, unsubstantiated or lacking proper documentation. 10.3.4.The City shall maintain for a period of not less than five (5) years all documentation reasonably necessary to substantiate the Program Expenditures, including, without limitation, the documentation set forth in Section 10.3.2 above. The City shall promptly provide, upon the reasonable request by SCE, any documentation, records or information in connection with the Program or its Authorized Work. SCE shall review and either approve, dispute or reject for payment reported Program Expenditures within twenty (20) Calendar Days of receipt of the Monthly City Report and corresponding invoice. SCE shall pay all undisputed amounts after the ten (10) Calendar Day period described in Section 10.3.1, but within thirty (30) Calendar Days of receiving the Monthly City Report and corresponding invoice. 10.3 Payment of Incentives. Payment of Incentives to the City shall be made in accordance with the applicable SCE program requirements, including terms and conditions, and only after appropriate program documents have been submitted and approved, and the appropriate inspections of each Project have been completed to SCE's satisfaction. 10.4. Shifting Funds. SCE may shift funds within the Authorized Partnership Budget among Program Participants, and/or may shift funds within the Partner ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 14 Budget among budget categories (Marketing, Education & Outreach, Technical Assistance, [Direct Implementation] and Incentives), which categories and budget amounts are set forth in Exhibit B. Such shifting may be made by SCE to the maximum extent permitted under, and in accordance with, Commission decisions and rulings to which the Program relates. 10.5. Reasonableness of Expenditures. The City shall bear the burden of ensuring that its Program Expenditures are objectively reasonable. The Commission has the authority to review all Program Expenditures for reasonableness. Should the Commission, at any time, issue a finding of unreasonableness as to any Program Expenditure and require a refund or return of the PGC funds paid in the reimbursement of such Program Expenditure, the City shall be solely liable for such refund or return. 11. END DATE FOR PROGRAM AND ADMINISTRATIVE ACTIVITIES Unless this Agreement is terminated pursuant to Section 25 below, or unless otherwise agreed to by the Parties or so ordered by the Commission, the Parties shall complete all Program Administrative activities (as defined in the PIP) and all reporting requirements by no later than March 31, 2013, and all Direct Implementation and Marketing & Outreach activities by no later than December 31, 2012. 12. FINAL INVOICES The City must submit final invoices to SCE no later than March 31, 2013. 13. INDEMNITY 13.1. Indemnity by the City. The City shall indemnify, defend and hold harmless SCE, and its respective successors, assigns, affiliates, subsidiaries, current and future parent companies, officers, directors, agents, and employees, from and against any and all expenses, claims, losses, damages, liabilities or actions in respect thereof (including reasonable attorneys' fees) to the extent arising from (a) the City's negligence or willful misconduct in the City's activities under the Program or performance of its obligations hereunder, or (b) the City's breach of this Agreement or of any representation or warranty of the City contained in this Agreement. 13.2. Indemnity by SCE. SCE shall indemnify, defend and hold harmless the City, and its respective successors, assigns, affiliates, subsidiaries, current and future parent companies, officers, directors, agents, and employees, from and against any and all expenses, claims, losses, damages, liabilities or actions in respect thereof (including reasonable attorneys' fees) to the extent arising from (a) SCE's negligence or willful misconduct in SCE's activities under the Program or performance of its obligations hereunder or (b) SCE's breach of this Agreement or any representation or warranty of SCE contained in this Agreement. 13.3. LIMITATION OF LIABILITY. NO PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 15 DAMAGES WHATSOEVER WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR STRICT LIABILITY INCLUDING, BUT NOT LIMITED TO, LOSS OF USE OF OR UNDER-UTILIZATION OF LABOR OR FACILITIES, LOSS OF REVENUE OR ANTICIPATED PROFITS, COST OF REPLACEMENT POWER OR CLAIMS FROM CUSTOMERS, RESULTING FROM A PARTY'S PERFORMANCE OR NONPERFORMANCE OF THE OBLIGATIONS HEREUNDER, OR IN THE EVENT OF SUSPENSION OF THE AUTHORIZED WORK OR TERMINATION OF THIS AGREEMENT. 14. OWNERSHIP OF DEVELOPMENTS The Parties acknowledge and agree that SCE, on behalf of its Customers, shall own all data, reports, information, manuals, computer programs, works of authorship, designs or improvements of equipment, tools or processes (collectively "Developments") or other written, recorded, photographic or visual materials, or other deliverables produced in the performance of this Agreement; provided, however, that Developments do not include equipment or infrastructure purchased for research, development, education or demonstration related to energy efficiency. Although the City shall retain no ownership, interest, or title in the Developments except as may otherwise be provided in this Agreement, it will have a permanent, royalty free, non-exclusive license to use such Developments. 15. DISPUTE RESOLUTION 15.1. Dispute Resolution. Except as may otherwise be set forth expressly herein, all disputes arising under this Agreement shall be resolved as set forth in this Section 15. 15.2. Negotiation and Mediation. The Parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiations between the Parties' authorized representatives. The disputing Party shall give the other Party written notice of any dispute. Within twenty (20) Calendar Days after delivery of such notice, the authorized representatives shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary to exchange information and to attempt to resolve the dispute. If the matter has not been resolved within thirty (30) Calendar Days of the first meeting, any Party may initiate a mediation of the dispute. The mediation shall be facilitated by a mediator that is acceptable to both Parties and shall conclude within sixty (60) Calendar Days of its commencement, unless the Parties agree to extend the mediation process beyond such deadline. Upon agreeing on a mediator, the Parties shall enter into a written agreement for the mediation services with each Party paying a pro rata share of the mediator's fee, if any. The mediation shall be conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association; provided, however, that no consequential damages shall be awarded in any such proceeding and each Party shall bear its own legal fees and expenses. 15.3. Confidentiality. All negotiations and any mediation conducted pursuant to Section 15.2 shall be confidential and shall be treated as compromise and ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 16 settlement negotiations, to which Section 1152 of the California Evidence Code shall apply, which Section is incorporated in this Agreement by reference. 15.4. Iniunctive Relief. Notwithstanding the foregoing provisions, a Party may seek a preliminary injunction or other provisional judicial remedy if in its judgment such action is necessary to avoid irreparable damage or to preserve the status quo. 15.5. Continuing Obligation. Each Party shall continue to perform its obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement. 15.6. Failure of Mediation. If, after good faith efforts to mediate a dispute under the terms of this Agreement as provided in Section 15.2 above, the Parties cannot agree to a resolution of the dispute, any Party may pursue whatever legal remedies may be available to it at law or in equity, before a court of competent jurisdiction and with venue as provided in Section 15.2. 16. REPRESENTATIONS AND WARRANTIES 16.1. Representation of both Parties. Each Party represents and warrants, as of the Effective Date and thereafter during the term of this Agreement, that: 16.1.1.The Authorized Work performed by a Party and/or its Contractors shall comply with the applicable requirements of all statutes, acts, ordinances, regulations, codes, and standards of federal, state, local and foreign governments, and all agencies thereof. 16.1.2.The Authorized Work performed by a Party and/or its Contractors shall be free of any claim of trade secret, trade mark, trade name, copyright, or patent infringement or other violations of any proprietary rights of any person. 16.1.3.Each Party shall conform to the applicable employment practices requirements of (Presidential) Executive Order 11246 of September 24, 1965, as amended, and applicable regulations promulgated thereunder. 16.1.4. Each Party shall contractually require each Contractor it hires to perform the Authorized Work to indemnify each other Party to the same extent such Party has indemnified each other Party under the terms and conditions of this Agreement. 16.1.5.Each Party shall retain, and shall cause its Contractors to retain, all records and documents pertaining to its Authorized Work obligations for a period of not less than five (5) years beyond the termination or expiration of this Agreement. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 17 16.1.6. Each Party shall contractually require all of its Contractors to provide the other Parties reasonable access to relevant records and staff of Contractors concerning the Authorized Work. 16.1.7. Each Party will maintain, and may require its Contractors to maintain, the following insurance coverage or self insurance coverage, at all times during the term of this Agreement, with companies having an A.M. Best rating of "A-, VII" or better, or equivalent: (i) Workers' Compensation/Employer's Liability or Equivalent: statutory minimum. (ii) Commercial General Liability: $2 million minimum per occurrence/$4 million minimum aggregate. (iii) Commercial or Business Auto (if applicable): $1 million minimum. (iv) Professional Liability (if applicable): $1 million minimum. 1.6.1.8 Each Party shall take all reasonable measures, and shall require its Contractors to.take all reasonable measures, to ensure that the Program funds in its possession are used solely for Authorized Work, which measures shall include the highest degree of care that such Party uses to control its own funds, but in no event less than a reasonable degree of care. 17. PROOF OF INSURANCE 17.1. Evidence of Insurance. Upon request at any time during the term of this Agreement, a Party shall provide evidence that its insurance policies (and the insurance policies of any Contractor, as provided in Section 16.8) are in full force and effect, and provide the coverage and limits of insurance that the Party has represented and warranted herein to maintain at all times during the term of this Agreement. 17.2. Self-Insurance. If a Party is self-insured, such Party shall upon request forward documentation to the other Party that demonstrates to the other Party's satisfaction that such Party self-insures as a matter of normal business practice before commencing the Authorized Work. Each Party will accept reasonable proof of self-insurance comparable to the above requirements. 17.3. Notice of Claims. Each Party shall immediately report to the other Party, and promptly thereafter confirm in writing, the occurrence of any injury, loss or damage incurred by such Party or its Contractors or such Party's receipt of notice or knowledge of any claim by a third party of any occurrence that might give rise to such a claim over $100,000. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 18 18. CUSTOMER CONFIDENTIALITY REQUIREMENTS 18.1. Non-Disclosure. Subject to any disclosures required pursuant to the Public Records Act, the City, its employees, agents and Contractors shall not disclose any Confidential Customer Information (defined below) to any third party during the term of this Agreement or after its completion, without the City having obtained the prior written consent of SCE, except as provided by law, lawful court order or subpoena and provided the City gives SCE advance written notice of such order or subpoena. 18.2. Confidential Customer Information. "Confidential Customer Information" includes, but is not limited to, an SCE customer's name, address, telephone number, account number and all billing and usage information, as well as any SCE customer's information that is marked "confidential". If the City is uncertain whether any information should be considered Confidential Customer Information, the City shall contact SCE prior to disclosing the customer information. 18.3. Non-Disclosure Agreement. Prior to any approved disclosure of Confidential Customer Information, SCE may require the City to enter into a nondisclosure agreement. 18.4. Commission Proceedings. This provision does not prohibit the City from disclosing non-confidential information concerning the Authorized Work to the Commission in any Commission proceeding, or any Commission-sanctioned meeting or proceeding or other public forum. 18.5. Return of Confidential Information. Confidential Customer Information (including all copies, backups and abstracts thereof) provided to the City by SCE, and any and all documents and materials containing such Confidential Customer Information or produced by the City based on such Confidential Customer Information (including all copies, backups and abstracts thereof), during the performance of this Agreement shall be returned upon written request by SCE. 18.6. Remedies. The Parties acknowledge that Confidential Customer Information is valuable and unique, and that damages would be an inadequate remedy for breach of this Section 18 and the obligations of the Parties are specifically enforceable. Accordingly, the Parties agree that in the event of a breach or threatened breach of this Section 18 by the City, SCE shall be entitled to seek and obtain an injunction preventing such breach, without the necessity of proving damages or posting any bond. Any such relief shall be in addition to, and not in lieu of, money damages or any other available legal or equitable remedy. 19. TIME IS OF THE ESSENCE The Parties hereby acknowledge that time is of the essence in performing their obligations under this Agreement. Failure to comply with milestones and goals stated in this Agreement, including but not limited to those set forth in Exhibit B of this Agreement, may ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 19 constitute a material breach of this Agreement, resulting in its termination, payments being withheld, Partner Budgets being reduced or adjusted, funding redirected by SCE to other programs or partners, or other Program modifications as determined by SCE or as directed by the Commission. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 20 20. CUSTOMER COMPLAINT RESOLUTION PROCESS The Parties shall develop and implement a process for the management and resolution of Customer complaints in an expedited manner including, but not limited to: (a) ensuring adequate levels of professional Customer service staff; (b) direct access of Customer complaints to supervisory and/or management personnel; (c) documenting each Customer complaint upon receipt; and (d) directing any Customer complaint that is not resolved within five (5) Calendar Days of receipt by the City to SCE. 21. RESTRICTIONS ON MARKETING 21.1. Use of Commission's Name. No Party may use the name of the Commission on marketing materials for the Program without prior written approval from the Commission staff. In order to obtain this written approval, SCE must send a copy of the planned materials to the Commission requesting approval to use the Commission name and/or logo. Notwithstanding the foregoing, the Parties shall disclose their source of funding for the Program by stating prominently on marketing materials that the Program is "funded by California ratepayers under the auspices of the California Public Utilities Commission." 21.2. Use of SCE Name. The City must receive prior review and written approval from SCE for the use of SCE's name or logo on any marketing or other Program materials. The City shall allow five (5) Business Days for SCE review and approval. If the City has not received a response from SCE within the five (5) Business Day period, then it shall be deemed that SCE has disapproved such use. 21.3. Use of the City's Name. SCE must receive prior review and written approval from the City for the use of the City's name or logo on any marketing or other Program materials. SCE shall allow five (5) Business Days for the City's review and approval. If SCE has not received a response from the City within the five (5) Business Day period, then it shall be deemed that the City has disapproved such use. 22. RIGHT TO AUDIT The Parties agrees that the other Party, and/or the Commission, or their respective designated representatives, shall have the right to review and to copy any records or supporting documentation pertaining to the their performance of this Agreement or the Authorized Work, during normal business hours, and to allow reasonable access in order to interview any staff of the City or SCE who might reasonably have information related to such records. Further, the Parties agrees to include a similar right of the other Party and/or the Commission to audit records and interview staff in any subcontract related to performance of the Authorized Work or this Agreement. 23. STOP WORK PROCEDURES SCE may suspend the Authorized Work being performed in their service territory for good cause, including, without limitation, concerns relating to program funding, ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 21 implementation or management of the Program, safety concerns, fraud or excessive customer complaints, by notifying the City in writing to suspend any Authorized Work being performed in SCE' service territory. Any performance of Authorized Work by the City in SCE's service territory shall stop immediately, and the City may resume its Authorized Work only upon receiving written notice from SCE that it may resume its Authorized Work. 24. MODIFICATIONS Except as otherwise provided in this Agreement, changes to this Agreement shall be only be valid through a written amendment to this Agreement signed by both Parties. 25. TERM AND TERMINATION 25.1. Term. This Agreement shall be effective as of the Effective Date. Subject to Section 37, the Agreement shall continue in effect until June 30, 2013 unless otherwise terminated in accordance with the provisions of Section 25.2 or 30 below. 25.2. Termination for Breach. Any Party may terminate this Agreement in the event of a material breach by the other Party of any of the material terms or conditions of this Agreement, provided such breach is not remedied within sixty (60) days written notice to the breaching Party thereof from the non-breaching Party or otherwise resolved pursuant to the dispute resolution provisions set forth in Section 15 herein. 25.3. Effect of Termination. Any termination by the City or by SCE shall constitute a termination of this Agreement in its entirety (subject, however, to the survival provisions of Section 36). 25.3.1. Subject to the provisions of this Agreement, the City shall be entitled to PGC Funds for all Program Expenditures incurred or accrued pursuant to contractual or other legal obligations for Authorized Work up to the effective date of termination of this Agreement, provided that any Monthly City Reports or other reports, invoices, documents or information required under this Agreement or by the Commission are submitted in accordance with the terms and conditions of this Agreement. The provisions of this Section 25.3.1 shall be the City's sole compensation resulting from any termination of this Agreement. 25.3.2. In the event of termination of this Agreement in its entirety, the City shall stop any Authorized Work in progress and take action as directed by SCE to bring the Authorized Work to an orderly conclusion, and the Parties shall work cooperatively to facilitate the termination of operations and of any applicable contracts for Authorized Work. 26. WRITTEN NOTICES ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 22 Any written notice, demand or request required or authorized in connection with this Agreement, shall be deemed properly given if delivered in person or sent by facsimile, nationally recognized overnight courier, or first class mail, postage prepaid, to the address specified below, or to another address specified in writing by a Party as follows: The City: SCE: City of Huntington Beach Southern California Edison Company Aaron Klemm Jim Hodge 2000 Main Street. 6042-A N. Irwindale Ave. Huntington Beach, CA 92648 Irwindale, CA 91702 Notices shall be deemed received (a) if personally or hand-delivered, upon the date of delivery to the address of the person to receive such notice if delivered before 5:00 p.m., or otherwise on the Business Day following personal delivery; (b) if mailed, three (3) Business Days after the date the notice is postmarked; (c) if by facsimile, upon electronic confirmation of transmission, followed by telephone notification of transmission by the noticing Party; or (d) if by overnight courier, on the Business Day following delivery to the overnight courier within the time limits set by that courier for next-day delivery. 27. CONTRACTS Each Party shall, at all times, be responsible for its Authorized Work obligations, and acts and omissions of Contractors, subcontractors and persons directly or indirectly employed by such Party for services in connection with the Authorized Work. Each Party shall require its Contractors to be bound by terms and conditions which are the same or similar to those contained in this Agreement, as the same may be applicable to Contractors. 28. RELATIONSHIP OF THE PARTIES The Parties shall act in an independent capacity and not as officers or employees or agents of each other. This Agreement is not intended to and does not form any "partnership" within the meaning of the California Uniform Partnership Act of 1994 or otherwise. 29. NON-DISCRIMINATION CLAUSE No Party shall unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of sex, race, color, ancestry, religious creed, national origin, physical disability (including HIV and AIDS), mental disability, medical condition (cancer), age (over 40), marital status, and denial of family care leave. Each Party shall ensure that the evaluation and treatment of its employees and applicants for employment are free from such discrimination and harassment, and shall comply with the provisions of the Fair Employment and Housing Act (Government Code Section 12990 (a)- (f) et seq.) and the applicable regulations promulgated thereunder (California Code of Regulations, Title 2, Section 7285 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code Section 12990 (a)- (f), set forth in Chapter 5 of Division 4 of Title 2 of the California Code of Regulations, are incorporated into this Agreement by reference and made a part hereof as if set forth in full. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 23 Each Party represents and warrants that it shall include the substance of the nondiscrimination and compliance provisions of this clause in all subcontracts for its Authorized Work obligations. 30. COMMISSION/SCE AUTHORITY TO MODIFY OR TERMINATE This Agreement and the Program shall at all times be subject to the discretion of the Commission, including, but not limited to, review and modifications, excusing a Party's performance hereunder, or termination as the Commission may direct from time to time in the reasonable exercise of its jurisdiction. In addition, in the event that any ruling, decision or other action by the Commission adversely impacts the Program, SCE shall have the right to terminate this Agreement in accordance with the provisions of Section 25 above by providing at least ten (10) days' prior written notice to the City setting forth the effective date of such termination. Notwithstanding the right to terminate, as partners in the Program, the Parties agree to share in the responsibility and to abide by Commission energy policy supporting this Program. The Parties agree to use all reasonable efforts to minimize the adverse impact to a Party resulting from such Commission actions, including but not limited to modification of the required energy savings goals set forth in Section 4.2 which are fundamental to this Agreement. 31. NON-WAIVER None of the provisions of this Agreement shall be considered waived by either Party unless such waiver is specifically stated in writing. 32.ASSIGNMENT No Party shall assign this Agreement or any part or interest thereof, without the prior written consent of the other Party, and any assignment without such consent shall be void and of no effect. Notwithstanding the foregoing, if SCE is requested or required by the Commission to assign its rights and/or delegate its duties hereunder, in whole or in part, such assignment or delegation shall not require the City's consent and SCE shall be released from all obligations hereunder arising after the effective date of such assignment, both as principal and as surety. 33. FORCE MAJEURE Failure of a Party to perform its obligations under this Agreement by reason of any of the following shall not constitute an event of default or breach of this Agreement: strikes, picket lines, boycott efforts, earthquakes, fires, floods, war (whether or not declared), revolution, riots, insurrections, acts of God, acts of government (including, without limitation, any agency or department of the United States of America), acts of terrorism, acts of the public enemy, scarcity or rationing of gasoline or other fuel or vital products, inability to obtain materials or labor, or other causes which are reasonably beyond the control of such Party. 34. SEVERABILITY ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 24 In the event that any of the terms, covenants or conditions of this Agreement, or the application of any such term, covenant or condition, shall be held invalid as to any person or circumstance by any court, regulatory agency, or other regulatory body having jurisdiction, all other terms, covenants, or conditions of this Agreement and their application shall not be affected thereby, but shall remain in full force and effect, unless a court, regulatory agency, or other regulatory body holds that the provisions are not separable from all other provisions of this Agreement. 35. GOVERNING LAW; VENUE This Agreement shall be interpreted, governed, and construed under the laws of the State of California as if executed and to be performed wholly within the State of California. Any action brought to enforce or interpret this Agreement shall be filed in Los Angeles County, California. 36. SECTION HEADINGS Section headings appearing in this Agreement are for convenience only and shall not be construed as interpretations of text. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 25 37. SURVIVAL Notwithstanding completion or termination of this Agreement, the Parties shall continue to be bound by the provisions of this Agreement which by their nature survive such completion or termination. Such provisions shall include, but are not limited to, Sections 9, 10, 13, 14, 15, 18, 22, 35 and 38 of this Agreement. 38.ATTORNEYS' FEES Except as otherwise provided herein, in the event of any legal action or other proceeding between the Parties arising out of this Agreement or the transactions contemplated herein, each Party in such legal action or proceeding shall bear its own costs and expenses incurred therein, including reasonable attorneys' fees. 39. COOPERATION Each Party agrees to cooperate with the other Party in whatever manner is reasonably required to facilitate the successful completion of this Agreement. 40. ENTIRE AGREEMENT This Agreement (including all of the Exhibits and Attachments hereto which are incorporated into this Agreement by this reference) contains the entire agreement and understanding between the Parties and merges and supersedes all prior agreements, representations and discussions pertaining to the subject matter of this Agreement. 41. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument. [INTENTIONALLY LEFT BLANK] ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 26 SIGNATURE PAGE IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives. The City: HUNTIAYOT.j BEACH Na e: red A. Wilson APPROVED ASTOFORM jENNIFER McGRA I C Au0°e' Ti e: City Administrator B SCE: Depu ity SOUTHERN CALIFORNIA EDISO COMPANY Lynda Ziegler C4it Senior Vice esident, Customer S rvic &.Vift r adW ed 8MdQWWd ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 27 EXHIBIT A ENERGY LEADER PARTNERSHIP - PROGRAM LEVEL City 2003 City 2003-2008 Participation/ City's Retrofit Community Baseline Energy Savings Savings Energy Energy Energy Consumption* Percentage Savings Saving Leader Savings Required Program Required next for next Level: Level Level Municipal Facilities 19,195,114 310,974 kWh 2 % Valued 648,782 0 kWh kWh net Partner kWh net Community 1,104,674,684 74,260,407 6.7 % N/A N/A 0 kWh kWh kWh net 2010—2012 - - - - - - - - - - - - - - - Valued 648,782 0kWh Partner kWh net *Baseline numbers are mutually agreed upon for purposes of this Agreement only. Energy Leaders Partnership levels are: Valued Partner Level —This level is the entry level for the partner to develop knowledge and establish goals towards the Silver Level. A budget is available for energy savings projects, for marketing, education, and outreach to the community, as well as for technical assistance toward upgrading or retrofitting partners' facilities. SCE's core program incentives will be offered directly to the partner. The partner will be expected to use the marketing and outreach funds to generate verifiable energy savings in their own facilities and in the community and will participate in demand response at a basic level. Valued Level provides the Partner with 3 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. Silver Level—To qualify for this level,the partner demonstrates past participation in SCE energy efficiency programs, develops an energy action plan,sets community and city energy reduction goals,targets 25 percent of its facilities to complete energy efficiency upgrades,and participates in demand response. An enhanced incentive is paid at the Silver Level. Silver Level provides the Partner with 6 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. Gold Level—To qualify for this level,the partner demonstrates higher past participation in SCE energy efficiency programs, establishes higher city and community program participation and energy savings goals and makes a higher commitment to participate in demand response.Incentive factors are higher for partner facilities'energy efficiency projects.Gold Level provides the Partner with 9 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. Platinum Level—To qualify for this level,the partner demonstrates even higher past participation in energy efficiency programs, is innovative and integrates Energy Action Plan policies, ordinances and procedures.All facilities are targeted for energy efficiency upgrades and the partner makes a higher commitment to participate in Demand Response. Incentive factors are highest for Partner facilities'energy efficiency projects and additional incentives are made available for customized community energy efficiency projects. Platinum Level provides the Partner with 12 cents per kWh paid in addition to what is paid to the Partner under SCE's core program. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 28 EXHIBIT "B" ENERGY LEADER PARTNERSHIP PROGRAM 2010-2012 GOALS & PARTNER BUDGET Program Cycle Partner Budget and Goals: Maximum Partner KWh Energy Savings kW Peak Demand Budget Goal Reduction Goal 2010-2012: $400,292 1,118,389 KWh 241 kW Gross Gross Incentive: $190,126 Non-Incentive: $210,166 (Marketing,Education& Outreach,Technical Assistance[and Direct Implementation]) Minimum Performance % vs. Expenditures of Non-Incentive Partner Budget: Performance 12 months 24 Months 30 Months 36 Months Category into Program into Program into Program into Program Non- NTE 40% NTE 65% NTE 90% NTE 100% Incentive Budget Expended (ME&O) Minimum 15% 50% 70% kWh Achieved Minimum 15% 50% 70% kW Achieved *NTE=Not To Exceed Explanation of non-Incentive Partner Budget allocation against goals: Maximum Percent of total non-incentive Partner Budget expended by the end of year 1: 40% Minimum kWh achieved by the end of year 1: 15%of 3-year goal Maximum Percent of total non-incentive Partner Budget expended by end of year 2:65% Minimum kWh achieved by end of year 2:50%of 3-year goal Maximum Percent of total non-incentive Partner Budget expended by end of the 2nd quarter of year 3:90% Minimum kWh achieved by the end of 2nd quarter of year 3:70%of 3-year goal In accordance with Section 10 of this Agreement,SCE reserves the right to assess the progress made by the City at any time with respect to the above goals, and may in its sole discretion elect to shift funds among categories or redistribute all or part of the funding budgeted herein to other energy efficiency programs or partnerships in accordance with the Agreement.. ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 29 ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 30 EXHIBIT C PROGRAM IMPLEMENTATION PLANS COMMUNITY ENERGY PARTNERSHIP PROGRAM AGREEMENT Orange County Cities Enemy Leader Partnership 1. Program Name: Orange County Cities Energy Leader Partnership 2. Projected Program Budget Table Table 1 —Refer to Table l in ELPP Master PIP. 3. Projected Program Gross Impacts Table Table 2—Refer to Table 2 in ELPP Master PIP. 4. Program Element Description and Implementation Plan a) List of program elements: The three core program elements are those identified in the Energy Leader Partnership Program Master PIP: Element A—Government Facilities, Element B— Strategic Plan Activities, and Element C—Core Program Coordination. Core Program Element A- Government Facilities A.1) Retrofit of county and municipal facilities The four cities participating in the Orange County Cities Energy Leader Partnership (Partnership)with Southern California Edison (SCE)are developing detailed lists of facilities that will be retrofitted during the 2009-2011 program cycle of the partnership. Many of these facilities and their respective energy savings have been identified and quantified. Other buildings have been audited by the California Energy Commission (CEC) and the partnership is awaiting the CEC's reports. Municipal facilities' energy efficiency is a key component of Huntington Beach's local government participation plans. It will consist of numerous projects in two phases: Phase 1 consists of monitoring-based commissioning of the two largest municipal facilities in Huntington Beach and IT energy saving retrofits such as server virtualization, network energy management software and HVAC retrofits of server rooms; Phase 2 will consist of lighting system redesign& retrofits, HVAC retrofits, pumping retrofits and building envelope improvements. A.2) Retro-commissioning (of buildings and clusters of buildings) The partnering cities are including this means of achieving significant energy savings in their plans. See A.1 above. A.3) Integrating Demand Response into the audits The ELPP model for all SCE partnerships includes a requirement for participation in demand response programs. Each partner city plans to increase its participation in demand response accordingly. Integrated EE/DR audits will be conducted in eligible facilities. Southern California Edison 2009—2011 Energy Efficiency Plans 233 March 2009 Orange County Cities Energy Leader Partnership A.4) Technical Assistance for project management, training, audits, etc. - Each partner city has a specific budget for each of these activities. A.5) On-Bill Financing On-bill financing will not be available at the beginning of the 2009-2011 program cycle; however, it may be added in the future, as each partner city has indicated an interest in using on-bill financing. Core Program Element B- Strategic Plan Support B.1) Code Compliance Support The Partnership will support the individual partner cities as they examine ways of increasing compliance with existing codes. Increased enforcement can result in substantial energy savings and greenhouse gas (GHG) emissions. The Partnership will provide training,technical assistance, and additional support from SCE's Codes and Standards Program to build local government capacity to address code compliance issues. B.2) Reach Code The partnership will seek to establish meaningful CEC-approved Reach codes as part of its effort to add value to energy efficiency in alignment with the strategies stated in the Master PIP. This activity will follow the proposed path described in the Codes & Standards PIP. B.3) Guiding Document(s) Support At least one of the partner cities offers information at its building permit office on best practices and energy efficiency opportunities through SCE's programs. SCE plans significant enhancements to this practice for the 2009 - 2011 program cycle. The partnership intends to make training, documents, and templates available to help cities develop their own climate and energy action plans, especially relating to utility energy elements. BA)Financing for the community The partners are aware of the opportunities for financing provided by AB 811 and will be examining its possibilities. The partnership will arrange for an AB 811 presentation for the cities, and technical assistance through the Peer-to-Peer support network. B.5) Peer-to-Peer Support The partnership plans to develop an effective approach for sharing information among SCE and partner cities. The program will conduct conference calls among all partners on a routine basis. Southern California Edison 2009—2011 Energy Efficiency Plans 234 March 2009 Orange County Cities Energy Leader Partnership Core Program Element C - Core Program Coordination C.1) Outreach and Education The partnership has budgeted outreach and education efforts to demonstrate local government leadership and to provide the community with opportunities to provide energy actions and reduce the community's environmental footprint. Marketing, education, and outreach (ME&O) activities will consist of: • Staff training; • Huntington Beach Green Corp Citizen and Environmental Board training; • SCE's Mobile Energy Unit at the Annual Green Expo; • Stipends for HB Green Corp home and business energy, green audits, and onsite retrofits; • Support for Huntington Beach's annual environmental awards; • Publishing of Huntington Beach's case studies, strategic sustainability, and energy plans; and • Exploring an AB 811 financing mechanism for the Partnership cities' citizens. See the ELPP Master PIP for a further description of these activities. C.2) Residential and Small Business Direct Install Currently,there are no plans for promoting direct installations in homes and business; however, market outreach will create awareness of energy services and programs. C.3) Third-party program coordination The Partnership will conduct community events appropriate for execution by a third- party contractor(for example, light exchange events). CA) Retrofits for just-above LIEF qualified customers The Partnership will conduct coordination activities as identified in the ELPP Master PIP. C.5)Technical Assistance for program management,training, audits,etc. The Partnership has budgeted for technical assistance. See Table 6 for more details. b) Overview The Orange County Cities Energy Leader Partnership consists of four central Orange County cities: Huntington Beach, Costa Mesa, Fountain Valley, and Westminster. They began working together in early 2008 to form this partnership. c) Non-incentive services • Train the Huntington Beach Green Corps of citizen volunteers to provide energy efficiency audits for residential, small commercial, and low-income citizens. The program will pay stipends to offset background checks and expenses; • Study and consider voluntary "reach" green codes, similar to the pilot project HB Goes Green Residential Scorecard; Southern California Edison 2009—2011 Energy Efficiency Plans 235 March 2009 Orange County Cages Energy header Partnership • SCE's Mobile Energy Unit attendance at the annual HB Green Expo conference; • Support for the annual Environmental Award; • Publishing case studies, sustainability, and energy/climate plans with support from available programs and funding sources; and • Strategic plan support to the city of Costa Mesa for extending its existing green building permit waiver program. d) Target audience • All Municipal Facilities: City Halls, Civic Center, Police Departments, Libraries, Social Services, Community Centers, Sports Fields, Parks, and water infrastructure; and • Citizens, businesses, and city staff are the target audience for partner cities. See ELPP Master PIP for more information. e) Implementation The partnership's cost-effective implementation will include customized incentives to retrofit and retro-commission municipal facilities. The partnership bases its incentives on SCE's tiered incentive structure. See the ELPP Master PIP for each core element of the program for further information on the program implementation process. 5. Program Element Rationale and Expected Outcome a) Quantitative Baseline and Market Transformation Information By its nature, market transformation occurs as a result of numerous factors and programs, not single sub-programs. Therefore, all metrics are proposed at the highest program level. Please refer to the quantitative baseline and market transformation discussion, presented in the overall program PIP. Table 3—Refer to the overarching program for quantitative baseline metrics b) Market Transformation Information By its nature, market transformation occurs as a result of numerous factors and programs, not single sub-programs. Therefore, all metrics and goals are proposed at the highest program level. Please refer to the quantitative baseline and market transformation discussion, presented in the overall program PIP. Table 4—Refer to the overarching program for market transformation metrics c) Program Design to Overcome Barriers Program barriers, and the strategies to overcome them, are the traditional resource barriers of expertise and funding, as outlined in the ELPP Master PIP. c) Quantitative Program Targets: Southern California Edison 2009-2011 Energy Efficiency Plans 236 March 2009 Orange County Cities Energy Leader Partnership Table 5 Program Program Program Targ Target Target Target et Program Element by 2009 by 2010 by 2011 1 kWh TBD TBD TBD 2 Number of Workshops 2 6 10 3 Number of Ordinances, Codes, Etc. 0 0 0 #of MEO Events conducted that 4 tar et Residential customers 2 4 6 6. Other Program Element Attributes a) Best Practices See the ELPP Master PIP for the Energy Leader Model. b) Innovation The partnership demonstrates environmental stewardship and community leadership supporting the California Long-Term Energy Efficiency Strategic Plan (Strategic Plan). It will develop a municipal sustainability template to simplify sustainability reporting for energy efficiency and renewable energy. This template, alternately called a dashboard, will be displayed. c) Interagency coordination Huntington Beach, a PIER program partner, plans to install Bi-level area lights and Enforma diagnostic software. The city has a materials recovery facility in its jurisdiction, and plans to write a Renewable-based Energy Secure Community (RESCO)grant proposal for the CEC. The proposal envisions utilizing indigenous renewable energy resources in Huntington Beach. The partnership will provide technical assistance and other support though the Codes and Standards Program, its relationship with PIER, and support from other programs and organizations through its network of consultants. d) Integrated/coordinated Demand Side Management The IOUs have identified integrated Demand Side Management(IDSM) as an important priority. As a result they have proposed the establishment of a Statewide Integration Task Force (Task Force). SCE's local government partnerships will monitor the progress of the statewide IDSM efforts and work closely with the Task Force to identify comprehensive integration approaches and to implement best practices. The Orange County partner cities will pursue necessary and cost-effective DSM as identified in the ELPP Master PIP. The Partnership has identified accounts eligible for participation in Demand Response programs. It will facilitate technical support for planned renewable energy-related activities by the City of Huntington Beach and other partner cities wishing to pursue similar opportunities. Southern California Edison 2009—2011 Energy Efficiency Plans 237 March 2009 ®range County Cities Energy Leader Partnership Huntington Beach will apply for a RESCO grant from the CEC and federal government to utilize indigenous renewable energies. e) Integration across resource types (energy,water, air quality, etc) Phase Two energy projects identified above include smart irrigation controllers for use by irrigation accounts that use significant amounts of water. f) Pilots • PIER program Bi-level LED area lighting and Enforma diagnostic software in the City of Huntington Beach, as described above. • New city buildings in Costa Mesa will be Leadership in Energy and Environmental Design (LEED) certified, including the Chamber of Commerce and police buildings. g) EM&V Not applicable. Southern California Edison 2009—2011 Energy Efficiency Plans 238 March 2009 OranEe County Cities Energy Leader Partnership 7. Partnership Program Advancement of Strategic Plan Goals and Objectives Table 6 California Long Term Energy Efficiency Program Approach to Achieving Strategic Plan (Strategic Plan) Strategy Strategic Plan Goal 1-1: Develop, adopt and implement model The partnership will evaluate adopting building energy codes (and/or other green more stringent model codes on a voluntary codes) more stringent than Title 24's but rewarded basis, including excess Title requirements, on both a mandatory and 24 performance in the fee-waiver voluntary basis; adopt one or two additional program, or adopting the new California tiers of increasing stringency. "Green Building Code" on a voluntary basis through 2010, making it mandatory in 2011, if a sustained funding level is provided by the CPUC to support these activities. Costa Mesa is in the process of adopting new codes. -2: Establish expedited permitting and Through the partnership, Costa Mesa will entitlement approval processes, fee consider expedited permitting based upon structures and other incentives for green reduced valuation in 2009. buildings and other above-code developments. 1-3: Develop, adopt and implement model point-of-sale and other point-of transactions relying on building ratings. 1-4: Create assessment districts or other Through the partnership, Huntington mechanisms so property owners can fund Beach will investigate the adoption of an EE through city bonds and pay off on AB 811 financing mechanism for its property taxes; develop other EE financing jurisdiction. tools. 1-5: Develop broad education program and peer-to-peer support to local governments to adopt and implement model reach codes. 1-6: Link emission reductions from "reach" codes and programs to CARB's AB 32 program. 2-2: Dramatically improve compliance with and enforcement of Title 24 building code, and of HVAC permitting and inspection requirements (including focus on peak load reductions in inland areas). Southern California Edison 2009—2011 Energy Efficiency Plans 239 March 2009 Orange County Cities Energy Leader Partnership California Long 'germ Energy Efficiency Program Approach to Achieving Strategic Plan (Strategic Plan) Strategy Strategic Plan Goal 2-3: Local inspectors and contractors hired Through the partnership, Huntington by local governments shall meet the Beach already has two energy service requirements of the energy component of companies pre-qualified and they are their professional licensing (as such energy energy literate and conscious firms. Costa components are adopted). Mesa has a service agreement with a certified energy company that is also energy literate. 3-1: Adopt specific goals for efficiency of Due to the efforts of the partnership, local government buildings, including: Huntington Beach will be publishing an environmentally preferred purchasing policy and publishing energy/climate plans as part of the 2009-2011 Partnership with SCE. Costa Mesa is also interested in publishing an energy action plan in partnership. 3-2: Require commissioning for new The partnership's Phase One energy buildings, and re-commissioning and retro- projects include retro-commissioning the commissioning of existing buildings. two largest municipal facilities with significant near term energy savings. The City of Costa Mesa has a high interest in retro-commissioning its municipal facilities to maximize both energy savings and performance. 3-4: Explore creation of line item in local Due to the partnership, Huntington Beach government budgets or other options that has devoted a portion of its annual capital allow EE cost savings to be returned to the improvement plan to energy efficiency department and/or projects that provided the and the savings accrue to the general fund. savings to fund additional efficiency. However, part of the energy/climate action plan will track the fiscal impacts (savings) created by the plan. 3-5: Develop innovation Incubator that competitively selects initiatives for inclusion in local government pilot projects. 4-1: Local governments commit to clean Both the City of Costa Mesa and energy/climate change leadership. Huntington Beach have located appropriate sites for large-scale solar installations and both cities are exploring current funding mechanisms. Huntington Beach is also applying for grants to study ocean and urban wind power to meet 2020 AB 32 goals before 2015. FIB has signed the US Mayors Climate Protection Agreement. For further information, see http://www.usmayors.org/climateprotectio n/ Southern California Edison 2009—2011 Energy Efficiency Plans 240 March 2009 ®range County Cities Energy Leader Partnership California Long Term Energy Efficiency Program Approach to Achieving Strategic Plan (Strategic Plan) Strategy Strategic Plan Goal 4-2: Use local governments' general plan Huntington Beach has deferred investment energy and other elements to promote in general plan updates to include energy efficiency, sustainability and climate energy/climate concerns. change. 4-4: Develop local projects that integrate The partnership's Phase-Two energy EE/DSM/water/wastewater end use. projects will include water efficiency projects, including aerators and ET irrigation controllers. Wastewater, storm water runoff, and potable water capital projects are also being pursued. SCE will ensure that they are as energy efficient as possible. 4-5: Develop EE-related "carrots" and Huntington Beach is studying zoning and "sticks" using local zoning and development authority changes to comply development authority. with AB 32 and SB 375. Specifically, the Beach/Edinger Corridor plans and the Downtown Specific plan will be updated to create accessible and walkable neighborhoods that enhance Huntington Beach. Southern California Edison 2009—2011 Energy Efficiency Plans 241 March 2009 EXHIBIT D EM&V PLAN [TO BE ATTACHED WHEN ISSUED BY THE COMMISSION] ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT 32 A 08-07-021 et al ALJ/DMG/ays ATTACHMENT 1 2010 ® 2012 Joint Energy Division and IOU Evaluation Measurement and Verification Plan 1 Introduction and Scope of Joint EM&V Plan Energy Division (ED) and the Investor-Owned Utilities (IOUs) submit this Joint Evaluation Measurement and Verification (EM&V) / Policy and Planning (PP)I Plan ("EM&V Plan") pursuant to Commission Decision 09-09-047 "Decision Approving 2010-2012 Energy Efficiency Portfolios and Budgets " issued on October 1 2009 The EM&V Plan represents a cooperative effort by ED Southern California Edison (SCE) Southern California Gas (SCG) San Diego Gas and Electric (SDG&E) and Pacific Gas and Electric (PG&E) staff to present a joint EM&V planning proposal and budget for the 2010- 2012 energy efficiency portfolios authorized in Decision 09-09-047 In Decision 09-09-047 the California Public Utilities Commission ("CPUC" or "Commission") addressed certain EM&V issues and policies and deferred resolution of others to a subsequent EM&V Decision In anticipation of the subsequent EM&V decision the Commission ordered ED and the IOUs to prepare an EM&V plan to be jointly submitted to the assigned ALJ and issued for comment via ruling The plan presented herein is responsive to the Commission's stated desire " to make near-term improvements in order to streamline EM&V processes and enhance timeliness transparency and consistency across EM&V work products" (D 09-09-047 at p 301 ) and "to take a fresh look at several aspects of our EM&V activity in California for the upcoming program cycle to reduce unnecessary burden on staff and other resources and streamline our EM&V processes " (D 09-09-047 at p 294) 1 Throughout this document `EM&V," if not otherwise indicated, is understood to refer to both traditional Evaluation, Measurement and Verification work as well as the Energy Divisions policy and planning activities (See Decision 09-09-047 pages 295-298 and 387 for more on policy and Planning as included in the EM&V budget and activities) - 1 - A 08-07-021 et al ALJ/DMG/ays In D 09-09-047 the Commission adopted "1 ) a budget for 2010-2012 EM&V 2) Commission goals for EM&V and 3) a process for adopting detailed EM&V projects refined EM&V budgets and remaining EM&V policy issues in a subsequent EM&V Decision expected in the final quarter of 2009 " The Commission clarified that the subsequent EM&V decision would include but would not be limited to the following issues o Approval of the joint Energy Division and utility EM&V plans and Budgets o Clarification of the respective scope of responsibilities for IOU and ED staff o Recommendation on improved stakeholder input process for EM&V projects o Improvements to the cost-effectiveness calculation tool and tracking and reporting requirements for EM&V related data o Frequency and Scope of DEER Updates o Consideration of methodologies to verify savings driven by behavior based energy efficiency programs (D 09 09 047 of pp 301 04) This EM&V Plan presents the ED and IOU joint proposals with respect to EM&V planning and budgeting 2 Guiding Principles The EM&V plan is guided by the Commission's Goals for EM&V as articulated in Decision 09-09-047 "EM&V activities shall be planned and implemented to achieve the following core objectives in order to support the Commission's oversight function of ensuring the efficient and effective expenditure of ratepayer funds within the energy efficiency portfolios All activities should be undertaken to meet the overarching goals of clarity consistency cost-efficiency and timeliness The core objectives are 1 Savings Measurement and Verification - Measurement and verification of savings resulting from energy efficiency measures programs and portfolios serve the fundamental purpose of developing estimates of reliable load impacts delivered through ratepayer-funded efficiency efforts Measurement and - 2 - A 08-07-021 et al ALJ/DMG/ays verification work should reflect a reasonable balance of accuracy and precision cost and certainty and be designed for incorporation into in procurement planning activities 2 Program Evaluation - Evaluation of program-specific qualitative and quantitative measures such as the program performance metrics discussed earlier in this decision and process evaluations serves a key role in providing feedback for the purposes of improving performance and supporting forward-looking corrections to utility programs and portfolios In order to maximize return on ratepayer dollars program evaluations must be completed on a timeline which informs mid-course corrections and/or program planning for the following cycle 3 Market Assessment - In a constantly evolving environment market assessments are an essential EM&V product needed to set the baseline for strategic design and improvement of programs and portfolios Saturation studies surveys of emerging technologies and other such analyses which inform estimates of remaining program potential and forward-looking goal-setting are key aspects of market assessment 4 Policy and Planning Support- Consistent with prior program cycles it is essential to reserve funding to support overarching studies and advisory roles which support Commission policy goals Over the last program cycle this has been inclusive of potential and goals studies maintenance of DEER database developing databases of best practices for program design and delivery program design mix and other means which support the Commission's oversight role but do not fall under the core EM&V categories described above 5 Financial and Management Audit - Supporting the Commission's oversight function of ensuring the efficient and effective expenditures of ratepayer funds within the utilities' energy efficiency portfolios is another objective of EM&V activities Rigorous financial and management audits overseen by Commission staff will be critical in ensuring that the utilities' general and administrative costs and other program expenditures are prudent and reasonable -3 - A 08-07-021 et al ALJ/DMG/ays 3 Informal Goals and Guiding Principles for Increased ED/IOU Collaboration Staff from ED and all four IOUs met for fours days of working meetings to develop EM&V budgets and a joint EM&V plan During these meetings we agreed that we needed to develop a more collaborative and transparent working relationship as an important step towards improving the EM&V process "Collaboration" in this document is defined as IOU and ED staff working together on shared EM&V projects as well as working on separate EM&V projects following mutually agreed upon standards for transparency respect and communication We believe that this more collaborative process will result in greater cost-efficiencies more reliable results broader stakeholder buy-in and fewer disputed issues The following are informal goals for the purpose of fostering a working relationship built upon mutual respect and transparency They represent an informal Energy Division and IOU staff-level agreement on general principles to guide staff-level collaboration and interaction on EM&V projects These are not intended to impose formal or specific obligations on the ED or the IOUs and do not define the formal division of EM&V roles and responsibilities a Transparency ED and IOU EM&V staff will conduct EM&V projects in a transparent manner wherever possible i Open Communication - In order to cultivate better collaboration and make more productive use of EM&V results ED and the IOU staff will engage in open and truthful communication regarding EM&V projects ii Regular Communication - ED and IOU staff will hold regular meetings to provide each other updates on their respectively managed EM&V projects Upon issuance of the decision ED and IOU staff will collaborate to determine an appropriate schedule for these meetings III Joint Participation - An effort will be made to include both ED and IOU EM&V staff in all stages of all EM&V projects IV Sharing of EM&V Data and Information - All data and work products resulting from all EM&V projects should be made -4 - A 08-07-021 et al ALJ/DMG/ays available to both ED and IOU EM&V staff when the data becomes available Tracking of EM&V Projects - All EM&V projects will be disclosed and tracked in an easily accessible tracking system v Timeliness - Communication regarding EM&V plans and results and actions based on those results will be conducted in a timely manner b Consensus Although ideal it may not always be possible or productive to reach consensus between ED and IOU staff during the planning and implementation of EM&V projects or interpretation and use of EM&V results ED and the IOUs will seek to achieve consensus through informal processes If consensus cannot be reached informally ED and the IOUs will follow the applicable dispute resolution processes in effect wherever a formal resolution is necessary c Cost-efficiency ED and the IOUs will plan and implement EM&V projects with the goal of achieving the highest benefit for the EM&V expenditure while minimizing interference with the programs and utility customers To that end EM&V projects will be designed to avoid duplication of effort consolidated across all activities in a streamlined manner and planned to comply with the Commission's schedule requirements This document and the proposed budget allocations represent ED and the IOUs' current best judgment on the appropriate allocation of the authorized EM&V budget to EM&V projects needed to accomplish technically credible quality work products that will comply with the Commission's requirements and goals stated in Decision 09-09-047 d Time for collaboration EM&V projects will be scheduled in a manner that allows sufficient time for input and participation between ED and IOU staff as well as other stakeholders as required by the Commission ED and the IOUs recognize that the time needed to implement and complete EM&V projects may generally be longer as a result of this effort ED and the IOUs also recognize the possibility that the desired time allotment for collaboration on some EM&V projects may not be possible due to superseding requirements such as adherence to Commission - 5 - A 08-07-021 et al ALJ/DMG/ays mandated schedules or the need to take advantage of a time sensitive field situation e Ethical standards and technical best practices EM&V projects will always be conducted in accordance with the laws of the State of California Commission established policies and Commission adopted technical standards (such as the California Evaluation Protocols) Additionally ED and the IOUs intend to manage EM&V projects following guidance from the relevant professional societies' standards for ethics and technical best practices Such standards include the International Performance Measurement and Verification Protocols (IPMVP) the American Evaluation Association's Guiding Principles for Evaluators 2 the National Society of Professional Engineers Code of Ethics for Engineers 3 and the American Society of Heating Refrigerating and Air-Conditioning Engineers Code of Ethics 4 4 EM&V Planning Framework At the time of this EM&V Plan the 2010 - 2012 IOU portfolios are just recently adopted by the Commission and program plans are expected to undergo additional refinement over the next four to six months through the final stages of the program planning process and compliance filings ordered by Decision 09-09-047 Additionally as the adopted EE portfolio is implemented program plans will necessarily evolve to adapt to changing circumstances program funding may be shifted around new programs may be designed and fielded and some programs may be terminated For these reasons ED and IOU staff have agreed that the optimal EM&V plan for the Commission to adopt at this time is an EM&V Planning Framework guided by existing Commission policy and ED & IOU staff experience and expertise that gives EM&V the needed flexibility rather than a detailed plan that makes assumptions about the full scope of EM&V needs over a three year period This document outlines the basic 2 hhtt //www eval org/publications/guidingprinciples asp 3 http //www nspe org/Ethics/CodeofEthics/index html 4 http //www ashrae org/publications/detail/16451 - 6 - A 08-07-021 et al ALJ/DMG/ays elements of this proposed EM&V Planning Framework and ED/IOUs jointly request party input primarily on this proposed Framework and proposed areas of work not on specific draft EM&V/PP project budgets Given the many Commission required EM&V projects multiple possible EM&V needs and constraints on EM&V staff and consulting resources there is a need to prioritize and optimize across EM&V research areas and individual projects as well as a need to plan and implement EM&V project in phases To accomplish the next three years worth of EM&V as effectively and efficiently as possible ED and IOU EM&V staff propose the following EM&V Planning Framework a Phased and ongoing project planning and transparent project implementation ED and IOU EM&V staff believe it is necessary to commit funding staff and consulting resources to fully planning and implementing EM&V projects in phases and as priorities change rather than to develop plans for all EM&V projects first and then subsequently implement all EM&V projects as was the practice for impact evaluations during the 2006 - 2008 cycle ED and the IOUs therefore recommend that the Commission adopt a process that provides the EM&V staff with the flexibility to plan and implement EM&V in phases and on an ongoing basis rather than committing to a three year plan for all EM&V projects at this time In lieu of a full three year EM&V plan ED and the IOUs recommend that the Commission clearly articulate standards for transparency and stakeholder participation which ED and the IOUs will follow during the course of the 2010-2012 EM&V projects b Continuous optimization and prioritization of EM&V work One of the first projects that ED and the IOUs will initiate is a review of previous EM&V work particularly EM&V projects conducted during 2006-2008 and a gap analysis to optimize EM&V activities and determine priorities across all EM&V research areas The gap analysis will first create an inventory of recent and ongoing EM&V projects and compare this information with EM&V needs moving forward Continuous optimization will be done via an ongoing status review and prioritization exercise facilitated by the phased implementation of EM&V projects as well as flexibility in EM&V planning and implementation that allows EM&V to be responsive to contextual - 7- A 08-07-021 et al ALJ/DMG/ays changes over time EM&V projects will emphasize the flow of EM&V findings to program managers for the purpose of program improvement c Integration of EM&V projects across functions One of the goals of the proposed EM&V planning framework is to look for opportunities to create synergy and integration across different EM&V research objectives and needs rather than viewing individual needs as disparate elements competing for limited resources This includes avoiding the creation of unnecessary silos of EM&V activities avoiding unnecessarily duplicative data collection and analysis and identifying ways in which EM&V can be organized and implemented to meet multiple needs in a cost-effective manner 5 Initial EM&V Plan As discussed above ED and the IOUs plan to design and implement EM&V in phases by order of project priority The First Phase of EM&V projects is work that needs to be immediately initiated in order to set up a more efficient EM&V "infrastructure" that makes cost-effective improvements on the use of all EM&V resources data and processes The First Phase will also include some research projects that are immediately needed by the IOUs in order to make rapid adjustments to the new program portfolio ED and the IOUs intend to begin work on projects in this First Phase using previously approved 2009 bridge-funding for EM&V The First Phase projects will need to begin prior to a final Commission Decision approving EM&V plans and budgets hoped for in late 2009 Several of the First Phase projects will be ongoing and may continue through 2012 The Second Phase and Third Phase projects are briefly describe at the end of section 5 ED and the IOUs expect the First Phase to consist of the following projects a EM&V inventory, priority analysis, and gap analysis Upon completion of this draft EM&V plan ED and the IOUs will immediately begin a review of EM&V work conducted since 2004 for the purpose of creating an inventory of recent EM&V work This analysis will include an assessment of the quality and usefulness of the research products - 8 - A 08-07-021 et al ALJ/DMG/ays A simultaneous effort will be undertaken to create a similar inventory of research required by the Commission in D 09-09-047 and anticipated as needed by ED and the IOUs The IOU EM&V staff will discuss potential immediate research needs with the IOU program staff and will develop research proposals for statewide and utility specific EM&V projects ED staff will develop proposals for research projects that are considered necessary in order to accomplish the Commission's EM&V goals stated in D 09-09-047 (pgs 299-301 ) as well as other specific research goals mandated by the Commission in that Decision ED and the IOUs will compare potential projects to identify areas where efficiencies can be gained by consolidating projects The proposed projects will then be placed in an order of priority according to criteria such as uncertainty of program impacts relative magnitude of impacts future program and market potential and implicit or explicit importance attributed to the project by the Commission The prioritized list of projects will then be compared to the inventory of previous EM&V research to determine where the previous research can be used in lieu of conducting new analysis or where the previously completed research can be leveraged to make any new analysis more robust and reduce costs Once this gap analysis step is completed the prioritized list of projects will be updated and the projects will be implemented in order of priority Expected Timeline 2009 December-2010 JanuaryReview and inventory of recent EM&V work 2010 January February Inventory of proposed research 2070 February March Project consolidation and priontization 2010 March April Gap analysis and revised priorities b Reporting standards and reporting tools improvements In D 09-09-047 the Commission requested that Energy Division " review further all existing and new energy efficiency reporting requirements and report on possible ways to streamline these requirements " Additionally the IOUs were specifically instructed to report gross savings relative to goals progress towards accomplishing performance metrics goals and additional information related to the - 9 - A 08-07-021 et al ALJ/DMG/ays administration of local government partnership programs Energy Division has also begun the development of a new cost effectiveness tool (CE Tool) for the purpose of enforcing data quality controls streamlining the review of cost effectiveness inputs and making the IOUs' savings reports directly traceable to the program tracking systems To accomplish these objectives ED will conduct a review of all energy efficiency reporting requirements existing and planned reporting tools related to EM&V and will prepare and implement a comprehensive plan to create a reporting system that is more streamlined cost-effective and useful Expected Timeline 2010 January-2010 March Review of existing reporting requirements 2010 March ED report on reporting requirements 2010 April Commission action on ED report 2010 May Onward implementation of new reporting requirements c Program evaluability assessment and data collection enhancements This project will take initial steps towards addressing the issues specifically raised in Attachment C of the July Th ALJ Ruling issued in A 08-07-021 While this project will focus specifically on improvements to the data systems needed for conducting the detailed EM&V work it is related to and will be done in conjunction with the reporting standards and reporting tools improvements project described above The project will consist of a review the data availability problems encountered in the 2006-2008 program evaluations and the program designs and tracking systems in place for the 2010-2012 program portfolios The project will aim to develop data collection and data transfer protocols as well as tracking system enhancement procedures The goal is to assure that the data needed for EM&V will be efficiently available to the ED and IOU EM&V staff and their contractors Expected Timeline 2010 January-2010 March Review of existing data systems 2010 April Comprehensive long range data management plan 2010 May Data collection and data transfer protocols 2010 May Onward Implementation of data system improvements - 10 - A 08-07-021 et al ALJ/DMG/ays d Development of a process for integrating project inspection, M&V, and process evaluation for larger program participants IOUs require the largest customized nonresidential projects to submit to pre-project and post-project implementation inspections While there are comparatively few of these larger projects the expected savings from these projects are quite significant which means they are more likely to be sampled for both M&V and process evaluations Furthermore the larger projects are typically quite complex requiring more time for the utility inspectors and ED evaluators to be on the participant's site From the participant's perspective the impact of multiple seemingly redundant inspections can be an unanticipated burden and from the CPUC's perspective this redundancy can be a potentially inefficient use of ratepayer expenditures ED and the IOUs will work cooperatively to make the evaluation of large energy efficiency projects more cost-effective and less disruptive to the customer by jointly developing procedures to identify large projects early and include the ED evaluators in the pre- and post- project inspection process ED and the IOUs will make efforts to consolidate evaluation surveys so as to minimize customer inconvenience Expected Timeline 2010 January-February Review of IOU project inspection procedures 2070 March Review of expected evaluation needs 2010 May Integration plan e Development of plans to gather necessary market baseline data This project will identify key market indicators that have been or can be influenced by a program intervention The primary purpose of this early market baseline project is to develop and implement a work plan that provides a basis for later comparisons of the status of the key markets after program intervention in order to help assess the impact of the program or programs More than one program can impact a market and a program can impact more than one market ED and the IOUs will therefore carefully identify the "markets" that need to be researched early in the cycle with timely collection of appropriate market data that will serve as the baseline The evaluation needs to address the period over which the market effect will remain the level of effect experienced in the market over - 11 - A 08-07-021 et al ALJ/DMG/ays time the degree to which the program's efforts caused the market effect and the amount of energy savings provided by the effect All this presumes the appropriate market data collected before the program effects occur In general any key market indicator that the program theory predicts will be changed by the program should be considered for inclusion in either a market characterization or a baseline study However markets are constantly in a state of change so we will seek to identify not only those market indicators that are important under the initial program theory but also those that could become important later Steps in this Activity 1 For each program identify key market indicators that the program theory predicts will be changed by the program a Clearly define the targeted market(s) b Develop a detailed description of market operations and factors that contribute to their status c Describe the market hypothesis on which the various program activities and the expected effects rely d Describe the baseline condition that is expected to occur without program intervention including impacts from other external factors that affect the market and e Describe the causal linkages that lead from program activities to the accomplishment of the program's goals in isolation from other external market effects 2 Develop sets of indicators for each market that will provide efficient but effective measurements of the identified market effects Include a plan to isolate external market effects in order to gain a true perspective of identified program related market indicators 3 Collect baseline values for these indicators before the program effects begin to take place Expected Timeline 2010 January Develop scopes of work for RFPs 2010 February Issue RFPs and select contractors 2010 March February Analyze statewide programs 2010 May Develop indicator systems 2010 June onward Collect data for indicator systems f Procurement of management and technical consulting services for ED - 12- A 08-07-021 et al ALJ/DMG/ays Given the complexity and workload involved in managing EM&V projects ED staff expect to rely on a team of expert consultants to assist with oversight management and advisory functions ED will conduct competitive solicitations for this work towards the end of 2009 and expects to have a new team of consultants available to assist ED in early 2010 Expected Timeline 20 7 0 January Develop scopes of work for RFPs 2010 February Issue RFPs 2010 March Select consultants g Development of a detailed plan for ED and IOU coordination Once the upcoming EM&V Decision is finalized ED and the IOUs will develop a coordination plan that incorporates and implements the policies rules and any specific projects required therein The coordination plan will be a guidance document for ED and IOU staff and can be made publicly available if the Commission desires We expect the coordination plan to be completed within 30 days of the final EM&V Decision In the meantime ED and the IOUs will prepare an interim coordination plan which sets out our mutually agreed process for collaborating on First Phase projects Expected Timeline 2009 January February Interim ED/IOU coordination plan 2010 April-May Final ED/IOU coordination plan h Behavioral Energy Savings estimation methods In D 09-09-047 the Commission indicated its intent to " consider expedited approval of new EM&V methodologies to verify savings driven by behavior-based Efficiency programs (currently considered non-resource programs) " And that the EM&V work " should ensure synergies and leveraging of any new behavior-based approaches with the residential programs approved herein " On October 11 2009 the Governor signed SB 488 into law which requires the CPUC to evaluate certain residential benchmarking programs using an experimental design approach Energy savings from behavior programs have traditionally been measured with a billing or consumption analysis ED and the IOUs will review best practices in billing analyses as well as the data requirements that would be needed to support robust billing analyses ED and IOU EM&V staff will coordinate with program managers for IOU residential benchmarking programs to ensure that participants are randomly assigned to treatment and control groups (or - 13 - A 08-07-021 et al ALJ/DMG/ays comparison groups) to ensure that an experimental design billing analysis can be completed at least on a pilot basis ED has been conducting a review of different types of behavior intervention programs as well as some pilot EM&V projects and will extend this effort into full program evaluations wherever it makes sense to do so ED and the IOUs will also work on ways to tightly coordinate the delivery and evaluation of behavior based energy efficiency programs with the ongoing advanced meter infrastructure roll-out and eliminate any redundant and overlapping efforts Expected Timeline 2009 February Review of billing analysis methods and data requirements 20 10 March-April EM&V protocols and methods for behavior programs i IOU market assessments, early EM&V, and process work The first phase projects include IOU projects that need to start immediately due to the time-sensitive nature of data collection as well as the criticality of information needs for program implementation in 2010 All the IOU Phase 1 projects will be conducted in collaboration with the Energy Division Early M&V • Assessment of savings from server virtualization and data centers • Window film lifetime and replacement practices • Lighting baseline usage for selected applications lacking this data (preschool pool lighting etc) • Pool pump usage • Remaining Useful Life assessment for selected technologies • Heating/Ventilating/Air conditioning maintenance savings - Phase 1 (secondary research) and Phase 2 (controlled/quasi- experimental research) • Retrocommissioning measure energy savings/prediction tools research for most common measures • Single family residential new construction energy savings and incremental measure cost update - 14 - A 08-07-021 et al ALJ/DMG/ays Market Assessment • Advanced Lighting Market Assessment - to help guide the Advanced Lighting program and provide information on the current state of the market for technologies such as LED as well as the ways in which the market is changing both from the supply side and the demand side • Market Study of Deep Energy Reduction for the Whole House Market - to assess the availability of infrastructure and technologies to help in planning market awareness knowledge and acceptance of deep energy reduction strategies and how to overcome these barriers for homes • Market Study of Water Energy Savings -to assess the current penetration/potential for water energy savings technologies within the residential and commercial segments • Plug Load Market Potential Study - to assess the size of the market opportunities (will be coordinated with any Energy Efficiency Potential Study update plans) • Industrial EE Program Market Assessment Study for customers with either high gas and/or electric loads- to determine customer sectors most sensitive to the current challenges and opportunities • Residential New Construction Customer Decision Study -to assess the "decision triggers" and current levels of awareness of the various existing carbon/low energy labels and associated lower energy home opportunities • Market Assessment on Code Compliance - to identify areas of weak code compliance and highlight market barriers that can be addressed through the Compliance Enhancement Sub- Program • Baseline Studies for Partnership Programs - to document existing practices and characterize the needs of the customers and their likelihood of program participation • Strategic Industrial Research - to look at market segmentation/dynamics and decision making processes for energy efficiency projects • The "Invisible" (Hard-to-Reach) Data Centers - to assess where opportunities exist and develop program strategies to reach these opportunities • Pool Vendor Market Assessment - to inform training strategies • Agricultural Market Assessment and Energy Efficiency Potential - 15 - A 08-07-021 et al ALJ/DMG/ays Process Evaluation • Evaluability Assessments for selected smaller programs not covered by Energy Division's Program Evaluability Assessment Project to determine if the program outcomes are sufficiently well defined and measurable via data tracking processes as well as identify any early M&V needs • Detailed Program Theory and Logic Model - development where needed for the programs • Enhanced Inspection Plan - development for selected programs including baseline documentation requirements • Rapid Feedback Evaluations - for selected programs and specific marketing activities to help provide early feedback and recommendation on program design changes (initial list includes new construction programs WE&T and ME&O targeted marketing campaigns) • Effectiveness impact of behavioral energy use "peer comparisons" tools (i e Home Energy Reports) for residential customers • Impact of In-Home Displays to drive customer participation in EE effectiveness of marketing and outreach activities associated with real-time usage data • Cost effectiveness of solar water heating technologies in utility programs Timeline Varies by Specific Project J Porffolio Cost Effectiveness Methodology This category of analysis will include a review of existing cost- effectiveness methodologies and development of new methodologies that seek to measure cost effectiveness at the program and portfolio level This methodology should reflect the California Long-Term Energy Efficiency Strategic Plan goal for market transformation by not only considering program costs in relation to savings realized but also include an analysis of program costs in relation to market transformation objectives and goals Timeline TBD k Goals/Potential analysis Analytic consistency is an essential starting point in setting aggressive yet realistic goals for EE programs while also developing "stretch" goals for energy efficiency savings Setting stretch goals require a consideration of additional technologies measures and savings - 16 - A 08-07-021 et al ALJ/DMG/ays potential available to the utilities but not reflected in the current potential study informing current goals This category of analysis will reexamine goals and potential to inform the development of stretch goals while at the same time not reducing the rigor by which current goals exist This analysis will inform forward-looking goals on the basis of updates to measure savings parameters Timeline TBD A Second Phase of projects will be planned and implemented as soon as assignments are made and work is underway on the First Phase projects but no later than the first quarter of 2010 The Second Phase projects will include the formative M&V process evaluation and market research that is needed to provide early assessments of the programs and make decisions about program modifications but which were not launched as part of the First Phase We anticipate that the Second Phase projects will be initiated during the first and second quarters of 2010 Finally a Third Phase of EM&V projects will be planned and implemented when ED and IOU staff are convinced that Second Phase projects are successfully underway and likely to achieve project goals The Third Phase projects will primarily be the summative or ex-post evaluations that have been employed by the Commission to establish retrospective statements of portfolio accomplishments Additional formative work may also be implemented during the Third Phase of EM&V projects if needed We anticipate that the Third Phase projects will be initiated between the second and fourth quarters of 2010 after the Commission rules on the incentive mechanism for 2010-2012 in Rulemaking 09-01-019 6 Proposed EM&V Budget Below we present the proposed allocation of authorized budget for all ED and IOU EM&V projects as well as ED staff Policy and Planning projects In D 09-09-047 the Commission indicated a desire to keep the EM&V budget at 4% (approximately $125 million) with the expectation that the ED and IOU EM&V staff can produce cost efficiencies and streamline the scope and reporting of EM&V projects While the Commission also indicated a possibility that it would consider changes to the initial EM&V funding based on proposals for additional funding brought forth in the EM&V plan ED and the IOU EM&V staff have taken the Commission's desire to manage costs seriously and will strive to complete a robust research portfolio for under $125 million - 17- A 08-07-021 et al ALJ/DMG/ays While we are confident that the authorized budget will be sufficient to complete a reasonably comprehensive set of EM&V projects the range of studies needed for 2010-2012 is substantially greater than the range of studies completed for 2006-2008 We are therefore compelled to emphasize that some potentially important research projects may not be implemented if we are to prioritize effectively Thus we ask that the EM&V decision keep open the option offered in D 09-09-047 to request more funding if we determine that sufficiently important projects cannot be funded 2006-2008 were start-up years for both the ED and the IOU EM&V groups with many start-up difficulties and new systems that did not function optimally As a result a number of the important planned studies could not be completed The experiences of 2006-2008 uncovered some weaknesses in current utility and CPUC tools that need to be strengthened These include the EM&V structure itself utility tracking and reporting systems and their ability to meet EM&V data needs as well as multiple concerns surrounding ex-ante savings parameter updating and documentation and cost-effectiveness issues Finally the adoption of the California Long Term Energy Efficiency Strategic Plan pushes programs planning and coordination in far-reaching new directions This necessitates a major investment in coordinating with market actors and state agencies policy analysis and planning for the 2013-2015 cycle and beyond in each of the strategic areas of focus and it creates a host of new information needs a Overview and rationale of budgeting process The IOU EM&V team solicited input from program staff regarding the programs that will be offered during the 2010-2012 cycle The EM&V team also reviewed the process evaluations market assessments and early M&V projects performed during the 2006-2008 cycle to identify additional research requirements in collaboration with the program staff the EM&V team compiled a list of market assessment and early M&V needs and process evaluations related to the programs that are being offered in 2010-2012 Based on previous experience the EM&V team then estimated the cost of performing these studies including the costs related to the EM&V staff ED staff developed budgets for impact evaluations performance metric - 18 - A 08-07-021 et al ALJ/DMG/ays evaluations and overarching and support projects using expert judgment and experience managing similar projects during the 2006-2008 timeframe These estimates take into consideration expected efficiencies to be gained from the proposed prioritization and optimization process as well as the fact that the projects will be managed by staff (both IOU and ED) that have gained considerable additional experience managing the 2006-2008 EM&V projects b Request for full fund shifting flexibility The specific studies and their associated budgets listed in the Table in Section 6c below are ED and the IOU's current estimate of the optimal allocation of the authorized EM&V budget Section 5 of this plan describes the multi-stage process that ED and the IOUs will go through for determining and prioritizing what studies will be done when and with what level of project budget The process will include making decisions about which organization will contract for each project who will take primary project management responsibility for it and the level of involvement of the Commission staff in overseeing each project In order to allow ED and the IOUs to respond to changes in the market and to new insights in evaluation fund-shifting flexibility is needed within the EM&V budget This includes not only shifting funds between projects but also to some extent between funds managed by the IOUs and those managed by ED as they mutually agree ED and the IOUs agree that a minimum allocation of 15% of the EM&V budget to the IOUs is appropriate to support necessary EM&V activities until such time as the Commission issues a final EM&V decision and budget These costs are currently included as part of the process evaluation market assessment and early M&V study costs in the budget estimates in Table C ED and the IOUs were not able to reach consensus as to any further pre-allocation of the remaining 85% of the EM&V budget ED and the IOUs agree that it is appropriate for the IOUs to include any specific proposals for allocation of the remaining 85% of the EM&V budget in their comments to this EM&V Plan As during the 2006-2008 cycle the utilities will be responsible to pay the Energy Division-approved costs for all projects contracted and/or managed by Energy Division Each utility's EM&V budget will be its proportional share of the total EM&V budget approved by the Commission with the proportion equal to its - 19 - A 08-07-021 et al ALJ/DMG/ays proportion of total program budgets 43% for PG&E 39% for SCE and 9% each for SDG&E and SoCalGas This requires correcting Ordering Paragraph 42 of D 09-09-047 which inadvertently used the program funding proportions from the 2006-2008 cycle Each utility will pay for its studies that are determined to be acceptable utility-specific studies out of its overall EM&V budget This EM&V fund-shifting flexibility request is consistent with Commission practice for at least the last two decades and probably for the entire history of EM&V funding for EE programs The Commission has always recognized the benefits of setting an overall budget but allowing EM&V decision-makers to determine EM&V priorities and budget allocations for the costs to meet them in an ongoing process rather than assuming that needs and priorities are all known in advance and will be unchanged over a program funding cycle -20 - A 08-07-021 et al ALJ/DMG/ays c Budget Table d Description of budget categories The general EM&V project area descriptions below provide summaries of the categories of work used to set the EM&V budget proposed herein While these project areas are considered necessary preliminarily they are provided for illustrative purposes and are subject to change as ED and the IOUs continue with the prioritization process Final research project goals scope timing and deliverables will be determined during development of detailed statements of work included in the contracting process EM&V Project Number I M&V and Impact Evaluation M&V is the process of gathering data on energy efficiency technologies and practices from the building and facility where the technology or practice is implemented or typically in use M&V - 21 - A 08-07-021 et al ALJ/DMG/ays activities will consist of on-site review and measurement of program activities and energy consumption behavior that can be physically inspected and measured at a customer site or project as well as the analysis of site level and measure level data through engineering and building simulation models Site visits will be performed on a probability sample of IOU customers buildings or facilities drawn from IOU program tracking databases IOU billing systems or the general population Some M&V data may be collected through remote surveys or by using pre-existing data if circumstances warrant Given the enormous scale of energy efficiency program activities the M&V work will focus on program components selected on the basis of the overall uncertainty of that component's contribution to the total portfolio savings including potential future savings These component level evaluations will be conducted at the technology measure level (referred to as high-impact measures or HIMs) A subsidiary of M&V activity is the physical inspection of installations to estimate measure installation rates Impact evaluation consists of evaluation activities designed to measure savings at the program level such as analyses using utility bill data to produce gross realization rates and net-to-gross studies Net- to-gross values will be developed for major measure/program strategy combinations and will incorporate reliable attribution for spillover and market effects where data are available and where consistent with Commission policy Impact evaluations may also include some indirect impact evaluation activity that addresses those programs or program components primarily designed to obtain behavior changes that eventually lead to energy and demand savings but not as a direct result of the program intervention Indirect impact evaluations are used for situations where the primary uncertainty lies in the program's ability to obtain the behavior change targeted by the program Indirect impact evaluations will therefore be linked to energy or demand savings estimates measured through the HIM M&V program specific impact evaluations and/or approved ex-ante estimates - 22- A 08-07-021 et al ALJ/DMG/ays EM&V Project Number 2 Performance Metrics Program performance metrics are indicators of the progress of a program toward the short and long-term market transformation goals and objectives in the Strategic Plan Energy Division developed a process for developing program performance metrics that the utilities shall use when developing these metrics According to D 09-09-047 the utilities will request approval for their proposed logic models and metrics via an advice letter filing within 120 days of the effective date of that decision Additionally the utilities will track their program performance metrics using the EEGA or a similar database and will need to develop the tools to submit and track these parameters The analysis under this category will help complete these tasks Market transformation metrics require the identification of indicators to track the identification of data sources and agreement on the frequency of data collection analysis and use In order to develop these metric recommendations there will need to be analysis on specific market transformation ultimate and proximate indicators as well as data collection and tracking processes for a subset of portfolio programs or measures that have the most impact in terms of their importance such as the Big Bold Programmatic Initiatives their savings potential or dollars spent This analysis may consider qualitative factors as necessary and appropriate It is both necessary and possible to begin the work of gathering baseline data immediately The IOUs will need to include key data sources and indicators for which to begin collecting market transformation baseline data in their Advice Letters on Utility Program Performance Metrics (see description of performance metric analysis) A process for tracking external market conditions that affect program performance metrics and baseline information will be further developed in the umbrella energy efficiency rulemaking proceeding or its successor In that proceeding we will also consider the appropriate timing for the commencement of the system of market transformation metrics Market transformation data analysis will inform this effort Program Performance Metrics and market conditions data serve the following purposes • To track California's progress towards achievement of the Strategic Plan objectives specifically the Big Bold Programmatic Initiatives and other key Plan goals and objectives - 23 - A 08-07-021 et al ALJ/DMG/ays • To inform portfolio development and necessary modifications in future portfolio decisions including improving program design or eliminating non-performing programs and • To target the next generation of improvements and thus continue the cycle of market transformation These metrics will be used to track the progress of the programs towards the California Energy Efficiency Strategic Planning market transformation goals EM&V Project Number 3 Process Evaluahon The California Evaluation Framework states "a process evaluation is a systematic assessment of an energy efficiency program for the purposes of (1 ) documenting program operations at the time of the examination and (2) identifying and recommending improvements that can be made to the program to increase the program's efficiency or effectiveness for acquiring energy resources while maintaining high levels of participant satisfaction " While impact or "summative" evaluations provide an accounting of a program's effectiveness process evaluations provide insight into program operations that can guide mid-course corrections and future program design Process evaluations look at both the program's design and its implementation This allows program managers to pinpoint where and how whether future effectiveness can be increased by improving program design program implementation or both Process evaluations also provide the valuable function of capturing the story of the program to share and compare lessons learned with other implementers Process evaluations can articulate how proximal indicators based on the program's theory (e g changes in attitudes) can show whether progress is being made toward long-term goals such as acceptance of emerging technologies Process evaluations will typically document a program's theory in both detailed narrative form and through a schematic (e g "program logic model") that graphically links program resources and inputs to program activities to program outputs to short- mid- and long-term outcomes Process flow narratives and diagrams may also be used to capture program operations and to identify gaps in program implementation The logic model and program theory help program evaluators identify gaps in - 24 - A 08-07-021 et al ALJ/DMG/ays the program's theoretical underpinning and study these further to develop recommendations that will likely enhance future success Process evaluations use a variety of social science research methods including telephone surveys in-person interviews social network analysis review of program activities and participation data review of program marketing plans and materials and field observations New programs generally undergo an early and more comprehensive process evaluation designed to provide timely feedback on how well the program is being managed and implemented how well project partners are communicating and whether initial participants are satisfied with the program's ease-of-use and understandability Later process evaluations are used to confirm that program design and implementation are still effective EM&V Project Number 4 Early M&V Evaluation Early M&V managed by IOUs or ED seeks to validate key savings assumptions and to better understand how savings are achieved for the purpose of improving programs Early M&V research occurs at the measure-level or parameter-level to o Provide in-cycle feedback to programs on savings assumptions o Correct mutually agreed upon errors in savings estimates o Improve accuracy of savings estimates for custom calculated projects o Contribute to future cycle ex ante revisions o Gather data for developing savings estimates for new measures o Guide future research to reduce savings uncertainty Early M&V will be carried out as necessary and results incorporated in program design and planning as soon as feasible EM&V Project Number 5 Market Assessment The Market Assessment studies that will be conducted by ED and the IOUs will include two different study types market characterization and market baseline measurement Market Characterization is a quantitative and qualitative assessment of the structure and functioning of a market the primary purpose of - 25 - A 08-07-021 et al ALJ/DMG/ays which is to understand key components and magnitudes of a market and how the market operates The study also provides information on how to effectively change the way in which the market functions Market Baseline Measurement is the quantification of key market indicators that have been or can be influenced by a program intervention The primary purpose of the baseline measurement is to provide a basis for later comparisons of the status of the market after program intervention in order to help assess the impact of the program This study can also include quantification of size of a particular market so we can monitor the share of market as a result of program intervention EM&V Project Number 6 Strategic Plan This budget category is created to track spending with regard to regulatory support for Energy Division and utility strategic planning efforts It would include staff time and additional help from consultants External consultants will provide logistical support with regard to task force / workshop / stakeholder meeting planning coordination and staffing These consultants will work with ED / IOU staff to develop agendas take meeting minutes maintain contact information for interested stakeholders arrange meeting venues and times communicate with the public production of task force / workshop / stakeholder meeting material for public dissemination and all aspects of providing support for task force / workshop / stakeholder meeting planning EM&V Project Number 7 Strategic Plan Update Studies This category of analysis will inform ongoing strategic planning goals and objectives by providing funding for evaluation efforts that are not currently anticipated but will be critical to maintaining continuous forward progress toward meeting these stated goals and objectives Examples of this kind of analysis are evaluations of portfolio wide leveraging efforts with ARRA investment opportunities that have the potential to allow for the most efficient usage of ratepayer funds while propelling progress towards strategic planning goals and objectives Other areas that will benefit from evaluation projects not yet fully identified are strategic planning efforts in the area of emerging lighting strategies - 26 - A 08-07-021 et al ALJ/DMG/ays EMBV Project Number 8 Energy Effic►ency Potential A bottom-up assessment of measure/end use savings and program participation levels is needed to inform a new EE potential study for the years 2013-2015 and beyond This study will build as feasible on existing data and models utilized in the 2008 California Potential Study New data collection/modeling will be gathered and utilized to ensure the accuracy of the inputs and projections New methodologies will include a review of best practices and examination of potential as proposed through various existing building strategies in the California Strategic Plan With an updated EE Potential Study in hand a new Goals Study as required in D 08-07-047 will be undertaken New methodologies will be examined to allow the identification of goals based on assumptions of achievements of existing building and other targets as contained in the California Strategic Plan Review will examine costs associated with these new strategies and possible offsets to program costs with societal benefits such as job creation EM&V Project Number 9 Ex-Ante Estimates Development All ex ante measure parameters used to determine savings accomplishments and for future energy efficiency portfolio planning will come directly from the DEER database which will include both DEER measures and "non-DEER" measure work papers All ex-ante estimates are proposed to be updated by the end of 2010 for use in planning the portfolios that will be implemented in 2013 The ex-ante estimates will be developed using the best available data and methodologies The budget for this category includes (1 ) ex ante parameters updates (2) statistical analysis for developing ex ante updates (3) deemed measures cost studies (4) customized project cost analysis and (5) useful lives and technical degradation analysis EM&V Project Number 10 Data Management The Energy Division proposes to continue its management and quality control of data evaluation activities and parameters used to calculate energy savings and cost-effectiveness The budget for this category includes (1 ) a Data Quality and Data Management consultant contract (2) updates and maintenance of energy - 27- A 08-07-021 et al ALJ/DMG/ays efficiency websites (DEER EEGA CMS CALMAC etc ) (3) cost- effectiveness tool development (4) avoided costs and GHG emissions updates (5) data tracking and reporting system enhancements and (6) Energy Division reporting EM&V Project Number 11 Best Practices and Methodology Improvements Four studies are planned in this area two being mandated by D 09-09- 047 • EM&V Technical and Institutional Framework Ordering Paragraph 59 states that "Energy Division may hire a contractor to initiate in 2010 a comprehensive review of current Evaluation Measurement & Verification technical and institutional frameworks " This is further described on pages 9 and 305 of the Decision "The main purpose of this review will be to set a course to develop effective EM&V going forward post-2012 However to the extent this review will allow us to improve the 2010-2012 program cycle we will do so " • Behavioral Energy Savings Estimation Methods Ordering Paragraph 60 requires 2010-2012 EM&V to undertake "consideration of methodologies to verify savings driven by behavior-based energy efficiency programs " This study will search for review identify and develop as necessary solid methods for estimating the energy savings created by programs focused on changing energy user behavior • Methodology Development for Attribution Analysis Closely related to behavioral energy savings measurement improved methods for determining the attribution of energy savings are needed The concepts of energy efficiency programs competing in forward capacity markets of additionality in greenhouse gas emissions markets and of free ridership and spillover in the energy efficiency programs arena need comparison further analysis and further development to meet the increasing needs for identifying causality in all these areas and to identify what roles (if any) energy efficiency programs can play in the new markets • Improved Statistical Analysis Processes for Energy Efficiency Savings Estimation By the end of this cycle the utilities will have interval energy usage data for virtually all of their customers With this vastly increased information about energy usage statistical analysis of energy usage and other data becomes an increasingly powerful method of developing not only program energy savings estimates - 28 - A 08-07-021 et al ALJ/DMG/ays but also ex ante estimates of measure savings Savings estimates based on actual energy usage data have the advantage of incorporating effects of customer behavior in relation to installed measures It is critical to prepare for the maximum effective use of this new data EAR&V Project Number 12 Energy Consumption Surveys The California Commercial End-Use Survey (CEUS) is a comprehensive study of commercial building sector end-use energy use The survey captures detailed building systems data building geometry electricity and gas usage thermal shell characteristics equipment inventories operating schedules and other commercial building characteristics Commercial premises are weighted and aggregated to building segment results Available study results include floor stocks fuel shares electric and natural gas consumption energy-use indices energy intensities and 16-day hourly end-use load profiles estimated for twelve common commercial building type categories The California Industrial End-Use Survey (IEUS) is a comprehensive study of industrial sector energy end-use energy The mail internet and on- site surveys and metering of some large process loads are expected to produce Equipment saturations (including EE levels vintages and cogeneration) End use characteristics Building characteristics Space heating/cooling Lighting General production equipment Industry specific process equipment Energy Use (electric and gas) by INFORM (industrial forecasting model) end-use categories and industry groups and Load Profiles by utility area and industry group The California Lighting and Appliance Saturation Study (CLASS) database provides baseline information on residential appliance equipment and lighting saturations and efficiencies The overarching goal for the studies is to provide an accurate baseline in order to understand future energy savings potential and past accomplishments in the residential sector The original study was completed in 2000 and repeated in 2005 to see what changes had taken place over the 5 year period Repeating this study for a third time in 2010 will show the continuing effects of residential energy efficiency in California - 29 - A 08-07-021 et al ALJ/DMG/ays The Residential Market Share Tracking (RMST) study has monitored the market penetration of energy efficient appliances and lighting measures in California since 1999 RMST measures statewide and utility milestones for promoting short-term adoption of measures and long- term market acceptance of energy efficient technologies In addition to the program implementers beneficiaries of this research include federal and state agencies regional and state energy efficiency organizations trade organizations equipment manufacturers distributors and retailers A total energy consumption evaluation pilot study will be conducted to assess the reduction in energy consumption resulting from the various energy efficiency programs and efforts in California The value of individual energy efficiency efforts is uncertain without the measurement of performance of the whole system to link the efforts to actual reduction in energy consumption Issues that arise from field measurements are that the actual energy performance of an energy efficiency measure does not align with the initial specification of the design intent Some of the factors that contribute to these inconsistencies are the lack of system integration in design and operation and the lack of training and work force necessary for the appropriate installation and maintenance of equipment Energy efficiency should be used in conjunction with performance metrics such as energy intensity in describing the mathematical relationship between energy use and service output The intensity component the energy use rate is the ratio of the total consumption to a unit of measurement (e g Btu/square-foot-hour million Btu/household energy/gross output energy/industrial production etc ) A decrease in energy intensity over time may correspond to an increase in energy efficiency depending on the level other structural and behavioral effects A good measure of energy intensity should identify (or remove from a measure) as many of the behavioral and structural changes that affect the energy intensity (but are generally agreed upon to be unrelated to energy efficiency) as is computationally feasible within budget limitations and data availability - 30 - A 08-07-021 et al ALJ/DMG/ays The study will design and implement an EM&V approach for the assessment of energy consumption for the different end-use sectors in California including a Defining energy intensity indicators for the different end-use sectors b Identifying behavioral and structural factors that can affect energy intensity but not related to energy efficiency improvements c Identifying the effects of the IOUs programs in the reduction of energy consumption for a given end-use sector EM&V Project Number 13 Portfolio F►nancial and Management Audits The CPUC Utility Audit Finance and Compliance Branch (UAFCB) staff and ED staff will perform an evaluation of the IOU energy efficiency portfolio financial administration and management systems A financial audit will consist of a review of the financial statements of each utility's energy efficiency operations to determine if the statements are accurate complete and consistent with Commission policy and standard accounting practices The management audit will be a systematic assessment of each utility's management procedures and the effective use of resources in implementing the energy efficiency portfolios EM&V Project Number 14 ED Master Evaluation Contractor Team Please refer to section 5f "Procurement of management and technical consulting services for ED " EM&V Project Number 15 CPUC staffing funded by EM&V Consistent with current practice a small portion of the EM&V funding will be set aside to fund a portion of the Energy Division's energy efficiency staff positions (END OF ATTACHMENT 1) - 31 - R 06-04-010 DGX/ays ENERGY EFFICIENCY POLICY MANUAL, VERSION 4.0 (July 2008) Applicable to post-2005 Energy Efficiency Programs R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Table of Contents I Introduction 1 II Policy Objectives and Program Funding Guidelines 2 1 Energy Efficiency as a Procurement Resource 1 a Strategic Plan for PY2009 and Beyond 2 Energy Savings Goals 3 Energy Efficiency Programs 4 Lost Opportunities and Cream Skimming 5 Program Portfolio Management and Strategies 6 Program Portfolio Balance 7 Emissions, Co-Branding 8 Emerging Technologies 9 Program Selection Criteria 10 Public Goods Charge Funding and Gas Surcharge Funding 11 Fund Shifting Rules (see Appendix A Table) 12 Bridge Funding 13 Funds for Long Lead Times 14 Funds,Performance Earnings Basis 15 Mid-Cycle Funding Augmentations (see Rule IV 12) III Common Terms and Definitions (see Appendix B) 7 IV Cost Effectiveness 7 1 Standard Practice Manual (SPM) 2 Total Resource Cost Test(TRC) 3 Program Administrator Cost Test (PAC) 4 Application of the TRC and the PAC,the Dual-Test 5 Avoided Costs and Other Inputs 6 Portfolio Filing of Prospective Cost Effectiveness 7 Fuel Substitution, Solar Water Heating 8 Levelized Unit Cost Estimates 9 Performance Metrics for Non-Resource Programs 10 Fuel Substitution Programs,the Three-Pronged Test 11 Load Impacts for Cost Effectiveness, DEER 12 Mid-Cycle Funding Augmentations V Evaluation,Measurement and Verification (EM&V) 12 1 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 VI Competitive Bidding and Partnership Programs 14 VII Advisory Groups 16 VIII Performance-Based Risk and Reward Incentive Mechanism 17 1 Balancing Accounts 2 Mechanism Structure 3 Earnings or Penalties,Payments 4 Ex Ante Assumptions,1st and 2nd Claims 5 Direction for 1st and 2nd Claims for PY2009-2011 6 Procedures for Review and Approval of Earnings/Penalties 6a Interim Claims 6b Final Claim IX Affiliate and Disclosure Rules 26 X Reporting Requirements 26 XI Process and Procedural Issues 27 APPENDIX A Reference Documents and E-Links 1 Energy Action Plan 1a Energy Action Plan Update 2 EE Administrative Structure,D 05-01-055 3 Energy Savings Goals,D 04-09-060 4 Standard Practice Manual 5 Database for Energy Efficient Resources (DEER) 6 LT Avoided Cost Methodology and E3 Calculators 7 EE Program Reporting_Requirements Manual 8 EM&V Protocols Tables - Approved Savings Goals (2004-2013) Table- Fund Shifting Rules Graphic- Shareholder Incentive Mechanism Graphic Illustration 11 R 06-04-010 DGX/ays EE Polic Manual Version 4 0 APPENDIX B-GLOSSARY Common EE Terms and Definitions Adopted Program Budget Free Riders(ndershWI Peer Review Group(PRG) Advanced Technologies Fuel Substitution Performance Basis Affiliate Fundm C cle Performance Earnings Basis(PEB) Avoided Costs Gas Savings Baseline Data Hard To Reach,Non Performance Uncertainties Residential Coincident Peak Demand Hard To Reach,Residential Portfolio Community Choice Portfolio Reporting Aggregators Competitive Solicitation Incremental Measure Cost Pre commercialization Conservation Information and Education Program Programs Conservation Measures Innovation Incubator Program Activities Conservation Programs Institutional Bamers Program Administrator Cost Effectiveness Least Cost/Best Fit Program Administrator Cost Test jrAgji Cream Skimming Levelized Cost Program Advisory Group PAG) Cross Subsidization Load Management Program Cycle Customer Load Serving Entities Program Implementers Dual Test Lost Opportunities Program Strategy E3 Calculator Market Effect Program Years) Effective Useful Life Marketing and Outreach Ratepaver Electricity Savings Measures Rebate Emerging Technologies Minimum Performance Report Month Standard(MPS) Emissions Reductions Net to Gross Ratio Resource Value Energy Efficiency Groupware Non pnce Factors Service Area Application 2006(EEGA) End Use Operating Program Budget Short Term/Long Term Energy Efficiency Partici ant Test Source BTU Consumption Energy Efficiency Measure Partnership Rover Energy Efficiency Program Peak Demand Standard Practice Manual Energy Efficiency Savings Peak Demand,Coincident Statewide Evaluation,Measurement and Peak Demand(General) Third Party/Non IOU Venfication(EM&V) Evaluation Project Budget Peak Savings,Coincident Total Resource Cost Test(TRC) (kW-j Financial Incentive Peak Savings-Daily Average (kW) Free Dnvers Peak Savings,Non Coincident Zero Net Energy 111 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 ENERGY EFFICIENCY POLICY MANUAL FOR POST-2005 PROGRAMS I Introduction This document presents the California Public Utilities Commission s (Commission) policy rules and related reference documents for the development and evaluation of energy efficiency programs funded by ratepayers in California Referred to as the Energy Efficiency Policy Manual,Version 4 0, this document shall apply to all energy efficiency activities commencing in program year (PY) 2005 and beyond The policy rules,terms and definitions contained herein apply to energy efficiency activities funded through the following mechanisms ® The electric public goods charge (PGC), as authorized by Public Utilities (PU) Code Sections 381 and 399 ® The gas surcharge, as authorized by PU Code Sections 890-900 ® Procurement rates, as authorized by the Commission The rules in this manual do not currently apply to ® Low-income energy efficiency programs (LIEE) funded by the electric PGC or gas surcharges o California Alternative Rates for Energy (CARE) for low-income customers funded out of electric or gas PGC1 ® Interruptible rate or load management programs2 ® Self-generation and demand-responsiveness programs developed 1n response to AB970 (PU Code Section 39915(b)) 3 1 A separate low-income rulemaknlg was initiated on January 25 2007(R 07-01-042) 2 Interruptible and load management programs are addressed under Decision 05-11-009 (R 02-06-001) 3 These programs were adopted in D 01-03-073,in R 98-07-037 1 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 This document supersedes all previous versions of the Energy Efficiency Policy Manual Sections II-XI below articulate the Commissions policy rules ("Rules') governing energy efficiency activities, commencing in 2006 The term"Program Administrators" refers to the following investor-owned utilities (IOUs) Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), San Diego Gas &Electric Company (SDG&E) and Southern California Gas Company (SoCalGas) II Energy Efficiency Policy Objectives and Program Funding Guidelines 1 Commission and state energy policy, as expressed in the Energy Action Plan and reaffirmed in Decision (D ) 04-12-048, make energy efficiency the utilities' highest priority procurement resource In other words,cost-effective energy efficiency should be first in the"loading order" of resources used by the utilities to meet their customers energy service needs The Governor's and the state s policies also seek to reduce the environmental impact(including the greenhouse gas emissions) associated with the state s energy consumption to protect the public s health and safety Energy efficiency is a critical part of the state's strategy to achieve these goals 1 a For PY2009 and through 2020 and beyond, the utilities shall develop a single, comprehensive Strategic Plan updated annually for energy efficiency programs and program cycles The plan shall incorporate collaboration with a wider range of stakeholders, integration with other demand-side management programs,and innovation of energy efficiency programs, as outlined under D 07- 10-032 The utilities shall aggressively pursue energy efficiency as part of the Western Regional Climate Action Initiative, February 26,2007 and the National Action Plan for Energy Efficiency (See http //www epa gov/solar/energy- 1programs/napee/index html) 2 The Commissions overriding goal guiding its energy efficiency efforts is to pursue all cost-effective energy efficiency opportunities over both the short- and long-term By D 04-09-060,the Commission translated this policy into specific annual and cumulative numerical goals for electricity and natural gas savings by utility service territory These goals shall be updated periodically by the Commission as provided for in that decision The Commission-adopted energy savings goals are expressed in terms of annual and cumulative gigawatt hours, million-therms and peak megawatt load reductions By D 06-06-063, Ordering Paragraph 1,the definition of peak megawatt load reduction contained 2 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 in the 2005 Database for Energy Efficient Resources (DEER) shall be used for the purpose of verifying energy efficiency program and portfolio performance4 Program Administrators should develop their energy efficiency program portfolios so that they will meet or exceed these annual and cumulative savings goals,both over the short-and long-term 5 As clarified in D 07-10-032, cumulative savings represent the savings in that year from all previous measure installations (and reflecting any persistence decay that has occurred since the measures were installed) plus the first-year savings of the measures installed in that program year 3 In order to promote the resource procurement policies articulated in the Energy Action Plan and by this Commission, energy efficiency activities funded by ratepayers should focus on programs that serve as alternatives to more costly supply-side resource options ('resource programs") Focusing energy efficiency efforts in this way is the most equitable way to distribute program benefits By keeping energy resource procurement costs as low as possible through the deployment of cost-effective portfolio of resource programs, over time all customers will share in the resource savings from energy efficiency 4 Lost opportunities' are those energy efficiency options which offer long-lived,cost-effective savings and which, if not exploited promptly or simultaneously with other low cost energy efficiencv measures or in tandem with other load-reduction technologies or distributed generation technologies being installed at the site (e g, solar heating or photovoltaics), are lost irretrievably or rendered much more costly to achieve "Cream skimming" results in the pursuit of only the lowest cost energy efficiency measures,leaving behind other cost-effective opportunities Cream skimming becomes a problem when lost opportunities are created in the process 5 Program Administrators should manage their portfolio of programs to meet or exceed the short-and long-term savings goals established by the 4 D 06-06-063 As discussed in this decision DEER defines peak demand as the average grid level impact for a measure between 2 p m and 5 p in during the three consecutive weekday periods containing the weekday temperature with the hottest temperature of the year 5 While the energy savings achieved by LIEE programs will count towards the Commission s savings goals,per D 04-09-050 the Commission considers factors other than cost-effectiveness in determining LIEE program design and funding levels 3 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Commission by pursuing the most cost-effective energy efficiency resource programs first,while minimizing lost opportunities In addition,the Program Administrators should demonstrate in their program planning applications how their proposed portfolio will aggressively increase overall capacity utilization and lower peak loads through the deployment of low load factor/high critical peak saving measures The aggressive annual and cumulative savings goals established by the Commission will serve to discourage cream- skimming program designs or implementation approaches that create lost opportunities Nonetheless,Program Administrators should actively develop strategies to minimize lost opportunities,and should describe those strategies in the applications they submit for each program cycle 6 Compliance with Rule I15 will generally dictate the appropriate balance for portfolio funding of resource programs across market sectors (e g, residential, industrial, commercial) and geography,as well as the most appropriate program designs Program Administrators should also include a selection of statewide marketing and outreach programs, upstream market transformation programs information and education programs, support for codes and standards and other activities in their proposed portfolios that support the Commission's short-term and long-term energy savings goals Program administrators shall allocate a sufficient portion of portfolio funding to statewide marketing and outreach to continue and build upon the success of the existing program Statewide marketing and outreach programs should convey a consistent statewide message to energy consumers in all sectors 7 To further support the Governor's and State's goals to reduce greenhouse gas emissions, Program Administrators should explore with their advisory groups ways in which to co-brand with the California Climate Action Registry that will encourage the accurate reporting of emissions in California This might include,for example,marketing and outreach efforts that provide information about the Registry to IOU customers and encourage larger commercial and industrial customers to participate in the Registry reporting protocols In their program plan applications Program Administrators shall describe the ways in which such co-branding will be supported through their proposed programs Similarly, energy efficiency marketing efforts should strive to co-brand with water conservation messaging,recycling, toxic reductions (particularly mercury from fluorescent lamps), solar, distributed generation, green buildings,low income, and other related programs (D07-10-043, mimeo p 59) 4 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 8 The deployment of new and improved energy efficiency products and applications can help sustain or increase current savings yields from program dollars, and serves to create a new generation of technologies available to tap the cost-effective potential of energy efficiency in ways we cannot predict today In order to provide higher levels of bridging between available upstream innovations and the marketplace, annual funding for emerging technologies programs should increase Program Administrators should work with the California Energy Commission (CEC) and other appropriate stakeholders to include appropriate levels of funding to demonstrate and commercialize emerging technologies funded through the California Public Interest Energy Research(PIER) program and other sources that otherwise would not receive funding for pre-commercialization demonstration In their program planning applications, the Program Administrators shall jointly propose emerging technologies programs and increases to current funding levels for these programs The main purpose of these programs should be to increase the probability that promising technologies will be commercialized within 6 years of program funding and thereby increase the chance of obtaining additional energy savings from these technologies in the long run Program strategies should focus on reducing both the performance uncertainties associated with new products and applications and the institutional barriers to introducing them into the market 9 Per D 05-01-055,Program Administrators with input from the public and advisory groups will develop for Commission consideration their portfolios of energy efficiency programs utilizing selection criteria that are consistent with these Rules Program Administrators will manage a portfolio of programs implemented by IOUs and non-IOUs that are selected and evaluated based on their ability to best meet the policy objectives articulated in these Rules 10 Pursuant to PU Code sections 381,38116,399 and 890-900, PGC and gas surcharge funds must be spent to deliver energy efficiency benefits to ratepayers in the service territory from which the funds were collected 6 Consistent with the provisions of AB117 (Chapter 838,Chaptered September 24 2002) Section 3811 was added to Public Utilities Code permitting community choice aggregators (CCAs)to apply to administer cost-effective energy efficiency and conservation programs The Commission adopted certain procedures in Decision(D) 03-07-034 (dated July 10 2003) to implement portions of AB 117 affecting the allocaton of energy efficiency program funds [MOVED FROM FOOTNOTE 11 5 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Additionally,gas PGC collections must fund natural gas energy efficiency programs and electric PGC collections must fund electric energy efficiency programs However,nothing in these Rules is intended to prohibit or limit the ability of the Commission to direct the IOUs to jointly fund with PGC�gas surcharges, or other collections (e g,via procurement rates) selected measurement studies, statewide marketing and outreach programs, or other energy-efficiency activities that reach across service territory boundaries 11 Fund Shifting Rules (D 05-09-043, Table 8) applicable to the 2006-2008 program cycle are added to these Policy Rules as an attachment to Appendix A Appendix A is modified per D 07-10-032 for carry-back/carry-over funding to apply to the 2009-2011 funding cycle, and is repeated below 12 Bridge Funding Programs continuing from the 2006-2008 program cycle into the 2009-2011 cycle may use 2009-2011 funding, once the 2009-2011 portfolio has been approved and start-up costs for 2009-2011 programs may use 2009-2011 funding once the 2009-2011 portfolio has been approved (D 07-10- 032) Unspent or uncommitted funds from previous program years, or 2006-2008 funds that will not be needed should be used prior to using 2009-2011 funds Both continuing program funding and start-up cost funding are limited to 15% of the current budget cycle without Commission approval An Advice Letter is required for funding in excess of this percentage 13 Funds may be committed for projects with lead times beyond three years under the following conditions • Long-term projects that require funding beyond the three-year program cycle shall be specifically identified in the utility portfolio plans and shall include an estimate of the total costs broken down by year and associated energy savings, • Funds for long-term projects must be actually encumbered in the current program cycle, Contracts with all types of implementing agencies and businesses must explicitly allow completion of work beyond the end of a program cycle, • Encumbered funds may not exceed 20% of the value of the current program cycle budget to come from the subsequent program cycle, except by approval in an advice letter process, 6 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 • Long-term obligations must be reported and tracked separately and include information regarding funds encumbered and estimated date of project completion,and • Energy savings for projects with long lead times will be calculated by defining the baseline as the applicable codes and standards at the time of the issuance of the building permit 14 For calculating the Performance Earnings Basis (PEB),funds encumbered for continuing programs or for programs with long lead times shall be counted when those funds are spent 15 Mid-Cycle Funding Augmentations See Rule IV 12 below III Common Terms and Definitions 1 Common terms and definitions will facilitate the review, selection and evaluation of energy efficiency activities In particular, program definitions should be designed to facilitate to the extent possible (1) the identification of energy efficiency activities by end-use savings potential, (2) the evaluation, measurement and verification(EM&V) of those activities based on Commission- adopted EM&V protocols, and (3) the coordination of program development and evaluation with resource planning and procurement needs To this end, Program Administrators and program implementers should use the definitions included in Appendix B to these Rules when characterizing any proposed program activity The burden is on them to justify any departure from those terms and definitions IV Cost-Effectiveness 1 The cost-effectiveness indicators referred to in these rules are described in the California Standard Practices Manual Economic Analysis of Demand-Side Management Programs (SPM) Economic Analysis of Demand-Side Management Programs Program Administrators and Implementers should perform cost- 7 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 effectiveness analyses consistent with the indicators and methodologies included in the SPM, unless otherwise indicated 7 2 This Commission relies on the Total Resource Cost Test(TRC) as the primary indicator of energy efficiency program cost effectiveness,consistent with our view that ratepayer-funded energy efficiency should focus on programs that serve as resource alternatives to supply-side options The TRC measures the net resource benefits from the perspective of all ratepayers by combining the net benefits of the program to all ratepayers,both participants and non-participants The benefits are the net present value of avoided costs of the supply-side resources avoided or deferred The TRC costs encompass the net present value of the costs participants incur for the measures/equipment installed over the measure life and all non-rebate$costs incurred by the program administrator 9 The TRC is calculated utilizing a discount rate that reflects each utility's weighted average cost of capital,as adopted by the Commission10 7 See Appendix A of this manual for information on how to obtain a copy of the SPM and its clarifications S The SPM restricts rebates to include only dollar benefits such as rebates or rate incentives (monthly bill credits) paid from the Program Administrator to participating ratepayers 9 The TRC test uses the incremental" measure cost(not the full cost) and incremental energy savings benefit (not the full energy savings benefit) when an energy-efficient appliance or measure promoted through the program is installed in lieu of the standard (less efficient) appliance/measure that would have been installed, without the utility EE activity The TRC test uses the full measure cost (at the time of installation) and the full energy savings benefit(of the new measure) for the remaining useful life of the pre-existing equipment(e g,3 or more years), where the utility EE activity causes measure/equipment to be replaced much earlier The TRC test then uses the incremental savings for the balance of the effective useful life of the newly installed measure/equipment and deducts the full cost of that equipment discounted back to the date of the measure/equipment installation io For the 2006-8 program cycle an average IOU weighted cost of capital may have been used for cost effectiveness calculations The value used for ex ante calculations should also be used for ex post calculations 8 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 3 The Program Administrator Cost(PAC) test of cost-effectiveness should also be considered in evaluating program and portfolio cost-effectiveness Under the PAC test,the program benefits are the same as the TRC test,but costs are defined differently to include the net present value of costs incurred by the program administrator(including financial incentives and rebates paid to anyone),but not the costs incurred by the participating customer Like the TRC test, the PAC test is calculated utilizing a discount rate that reflects each utility s weighted cost of capital, as adopted by the Commission 4 Applying both the TRC and PAC cost-effectiveness test is called the "Dual-Test" In almost all instances, an energy efficiency program that passes the TRC test will also pass the PAC test However,if deployment of the program requires rebates or financial incentives to participants that exceed the measure cost,then the program may pass the TRC test,but fail the PAC test Considering the results of both tests when evaluating program proposals ensures that program administrators and implementers do not spend more on financial incentives or rebates to participating customers than is necessary to achieve TRC net benefits 5 TRC and PAC benefits should be computed utilizing the avoided cost methodologies and input assumptions, including non-price factors (e g,for avoiding greenhouse gas and non-greenhouse gas pollutants) that have been developed for the evaluation of energy efficiency programs in our avoided cost rulemaking, R 04-04-02511 The performance earnings basis (PEB) of energy efficiency resource programs shall be calculated from TRC and PAC benefits (being equal) minus TRC and PAC costs weighted two-thirds and one-third respectively (D 05-04-051) 6 A prospective showing of cost-effectiveness using the Dual-Test for the entire portfolio of ratepayer-funded energy efficiency activities and programs (i e,individual programs, plus all costs not assignable to individual programs, such as overhead, planning, evaluation,measurement verification and administrator compensation and performance, if applicable) is a threshold condition for eligibility for ratepayer funds This prospective showing of cost- effectiveness shall include the costs for shareholder incentives that are projected 11 See D 05-04-024 and D 06-06-063 9 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 to be paid for portfolio performance under the energy efficiency risk/reward incentive mechanism in effect at that time 12 This threshold requirement applies to each of the following (1) the entire statewide portfolio of programs and (2) the service-territory wide program portfolios offered by each Program Administrator, excluding emerging technologies programs Program adrrunistrators must demonstrate that this threshold requirement is met on a prospective basis in their program funding applications to the Comrrussion If a prospective showing of cost-effectiveness for the entire statewide portfolio including emerging technologies programs does not also pass the Dual-Test, Program Administrators shall describe the benefits associated with these programs that are not reflected in the TRC or PAC tests,and describe how these programs are expected to produce benefits in excess of costs for California ratepayers over the long-term Program Administrators must also demonstrate that the proposed level of electric and natural gas energy efficiency program activities are expected to meet or exceed the Commission-adopted electric and natural gas savings goals, by service territory 13 7 As described in these Rules, fuel-substitution programs must also pass the Dual-Test to be considered for inclusion in the portfolio and eligible for funding In addition, as a condition for the inclusion of solar water heating within the definition of energy efficiency measures solar water heating installations must be cost-effective on a stand-alone basis, 1 e , pass the Dual-Test of cost-effectiveness to be eligible for funding Similarly, solar-powered water circulators must be cost-effective on a stand-alone basis (i e, pass the Dual-Test) to be eligible for funding 14 Other programs are not strictly required to pass the Dual test on a program level basis to be considered for funding,but their cost- effectiveness must be carefully considered In order to design an overall portfolio that passes the Dual-Test, per Rule IV 6 Accordingly, except where otherwise indicated in these Rules, Program Administrators must present estimates of TRC and PAC net benefits for each program on a prospective basis in their program funding applications, along with any other information that may be requested by the Commission, Assigned Commissioner, Administrative Law Judge or Energy 12 D 07-09-043, Mimeo page 220 13 Per D 04-09-060 savings from LIEE programs will also count towards these goals 14 Per D 07-11-004, eligible for 2006-2008 funding and cumulative savings goals 10 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Division 15 However, evaluation, measurement and verification costs should not be allocated to individual programs in the calculation of TRC and PAC net benefits Rather,all costs associated with evaluation,measurement and verification should be allocated at the total portfolio level, rather than program by program 8 To support comparisons of all resources in the utilities' procurement portfolio,the program administrators are required to also provide levelized unit cost estimates at the portfolio, end-use and measure level consistent with the methods described in the SPM This information should be submitted with the program administrators' compliance filings on the competitive bid results, during each program cycle 9 The usefulness of the TRC test as a primary indicator of cost- effectiveness is limited for certain programs which do not necessarily focus on the timing or type of resource needs of the utility, such as programs designed to demonstrate or commercialize promising emerging energy efficiency technologies or structurally change the marketplace For statewide marketing and outreach programs and information-only programs,the link between programs and savings is also difficult to discern Therefore, the Commission and program administrators will need to consider factors and performance metrics other than the TRC and PAC Tests of cost-effectiveness when evaluating such program proposals for funding and when evaluating their results 10 Fuel substitution programs may offer resource value and environmental benefits Fuel-substitution programs should reduce the need for supply without degrading environmental quality Fuel-substitution programs, whether applied to retrofit or new construction applications, must pass the following three-prong test to be considered further for funding 1 The program must not increase source-BTU consumption Proponents of fuel substitution programs should calculate the source-BTU impacts using the current CEC-established heat rate 2 The program must have TRC and PAC benefit-cost ratio of 10 or greater The TRC and PAC tests used for this purpose is See for example Ordering Paragraph 4 D 04-09-060 11 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 should be developed in a manner consistent with these Rules 3 The program must not adversely impact the environment To quantify this impact, respondents should compare the environmental costs with and without the program using the most recently adopted values for residual emissions in the avoided cost rulemaking, R 04-04-025 The burden of proof lies with the sponsoring party to show that the material environmental impacts have been adequately considered in the analysis For purposes of applying these tests, fuel substitution proponents must compare the technologies offered by their program with the most efficient same- fuel substitute technologies available to prospective participants that would have TRC and PAC benefit-cost ratio of 10 or greater The burden of proof falls on the party sponsoring the analysis to show that the baseline comparison adheres to this requirement Fuel substitution programs with a predominantly load building or load retention character are not eligible for funding,and the proponent of a fuel-substitution program carries the burden of proof to demonstrate that the program focuses on energy efficiency and creates net resource value 11 To the extent possible, the assumptions that are used to estimate load impacts (e g, kWh,kW and therm savings per unit, program net-to-gross ratios, incremental measure costs and useful lives) in the calculation of the TRC and PAC tests shall be taken from the most up-to-date version of the Database for Energy Efficiency Resources (DEER) 16 If the required cost-effectiveness test inputs for a measure to be included into a portfolio are not available in DEER, documentation supporting the inclusion of new information from alternate sources must be provided to Energy Division for review and approval prior to the inclusion of that measure's use in a savings claim or to a portfolio filing's approval Cost-effectiveness parameters for non-DEER measures should be developed using methods and data from DEER to the extent possible The evaluation,measurement and verification protocols for post-2005 programs will include a schedule and process for updating DEER on a regular basis (See Rule V 2 below) (D 08-01-042) 16 See Appendix A of this manual for information on how to access DEER 12 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 12 Costs and energy savings from mid-budget cycle funding additions for programs other than low income energy efficiency (LIEE) programs shall be counted when calculating portfolio cost-effectiveness and the performance earnings basis in applying the energy efficiency risk/return incentive mechanism Energy savings from mid-budget cycle funding additions shall count towards the utilities' energy efficiency goals for resource planning purposes only Such savings shall not be counted towards the energy efficiency goals for the purpose of 1) satisfying the minimum performance standard(MPS) associated with the energy efficiency risk/reward incentive mechanism, or 2) determining which"performance band" (e g, deadband or applicable earnings tier level) should be used in calculating incentive payments or penalties Each proposal to augment energy efficiency program funding must be carefully reviewed to ensure that such funding is not misclassified as LIEE, given the implications associated with LIEE classification that carry over to the adopted incentive mechanism Savings associated with any mid-cycle funding augmentation to the LIEE program will not count towards the MPS (OP 7, D 07- 10-032) V Evaluation, Measurement and Verification (EM&V) 1 The development of energy efficiency programs that deliver reliable energy savings for California s ratepayers depends on well-designed methods of portfolio performance evaluation,measurement and verification (EM&V) Rigorous and strategically focused EM&V practices are required to gauge the performance of Program Administrators and Implementers, verify energy savings, improve the design and success of future energy efficiency programs and enhance the reliability of forecasted savings for resource planning purposes 2 The performance basis and related EM&&V protocols for energy efficiency portfolios and programs for post-2005 energy efficiency activities were developed in the EM&&V phase of Rulemaking 01-08-028, and updated in Rulemakmg 06-10-040, consistent with these Rules The California Energy Efficiency Evaluation Protocols were initially adopted by ALJ Ruling dated April 25,2006 (later updated in June 2006) to specify the current minimum acceptable approaches and procedures for the evaluation of utilities energy efficiency portfolios Per D 05-01-055, Energy Division will have the lead role in the further development of EM&V protocols and procedures and the assigned ALJ may provide additional clarification and direction on EM&V administrative issues as needed 13 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 3 In D 05-04-051 the Commission defined the current performance earnings basis, or PEB, as the net dollar benefits to ratepayers of the utilities portfolios calculated as specified in IV 5 above In D 07-09-043 the Commission defined the Minimum Performance Standard threshold, or MPS,for evaluation of the utility portfolios Together the MPS and PEB form the "performance basis" focus for energy efficiency portfolio performance evaluation Additionally, portfolio evaluation efforts are to be structured such that they can 1) inform the program selection process, 2) provide early feedback to program implementers, 3) produce calculations of performance basis at the end of the funding period, and 4) feed back into the planning process for the next program cycle 4 D 05-01-055 adopts an approach to EM&V administration whereby Energy Division has management and contracting responsibilities for all EM&V impact-related studies that will be used to 1) measure and verify energy and peak load savings,2) generate data for savings estimates,cost-effectiveness inputs, and the Commission s adopted performance basis, and 3) evaluate whether portfolio goals are met 5 As also directed in D 05-01-055, public participation in the development of impact-related evaluation studies will be provided in several stages including 1) development of the EM&V protocols,2) the overall EM&V plans,budget and the allocation of funding levels to studies will be addressed during each program planning cycle, 3) study results will be made available for public review and comment while in draft form, and 4) finalized studies will be made available for public review in an appropriate forum established by Assigned Commissioner's ruling 6 D 05-01-055 adopts an approach to EM&V administration whereby Program Administrators and program implementers may directly contract for (and serve as technical lead in managing) program design evaluation and market assessment studies to assist them in selecting and managing a portfolio of programs to meet the Commissions objectives as well as provide them with access to information on a real-time basis to improve program delivery While soliciting input from Energy Division, the Program Administrators should also take the lead in allocating Commission-authorized funding for this category of EM&V across individual studies, develop the scope of work for each study and prepare the RFPs In their program plan applications, the Program Administrators should also describe each type of study (including general scope of work) they or their program implementers plan to manage and/or directly contract for in this category All interested parties should have an opportunity to consider whether any of those proposed studies would create a conflict of 14 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 interest if the IOU Program Administrators or program implementers managed and directly contracted for them VI Competitive Bidding and Partnership Programs 1 Competitive solicitations can help to identify innovative approaches or technologies for meeting savings goals with improved performance that might not otherwise be identified during the program planning process However,not all program activities lend themselves to a competitive solicitation It would be counterproductive to require open bids in instances where,for example, partnerships between IOUs and local governments("local government partnership programs ) can take advantage of the unique strengths that both partners bring to the table, or a combination of partnerships and bilateral contracting arrangements with private or public entities can deliver effective statewide initiatives, such as a statewide public awareness campaign or an upstream lighting program 2 Competition in energy efficiency procurement should focus on soliciting good, new program ideas to achieve or exceed the Commission's savings goals, rather than allocating a specific percentage of program funding to particular implementers Decisions on whether non-IOUs should be program implementers responsible for designing and delivering the program(rather than working to implement IOU-designed programs) should be made based on an evaluation of whether the program designs and delivery mechanisms proposed by non-IOUs are superior to those currently being implemented or planned for the future in achieving overall portfolio savings goals 3 As directed in D 05-01-055,for each program planning cycle, the Program Administrators shall propose a portfolio of programs(with input from the Program Advisory Groups as described in that decision) that reflects the continuation of successful IOU and non-IOU implemented programs and new program initiatives designed to meet or exceed the Commissions savings goals with cost-effective energy efficiency As part of that process, the Program Administrators will identify a minimum of 20% of funding for the entire portfolio of programs that will be put out to competitive bid to third-parties for the purpose of soliciting innovative ideas and proposals for improved portfolio performance Per D 07-10-032,successful third-party programs from the 2006- 2008 program cycle retained by the IOUs for successive budget cycles will count 15 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 towards the 20% and the extensions should be able to be structured as bilateral contracts (D 07-10-032,OP 19) The portions to put out to bid could encompass programs currently designed and delivered by a combination of IOU and non- IOU program implementers Any current program or group of programs (IOU or non-IOU designed and implemented)that can be improved upon in this way may be subject to open bids to replace, augment or otherwise enhance current efforts However, open bids should not be required in instances where current or potential future partnerships between the Program Administrators and local governments can take advantage of the unique strengths that both partners bring to the table to deliver cost-effective energy efficiency services, or where combination of partnerships and bilateral contracting arrangements with private or public entities can deliver effective statewide initiatives that enhance portfolio performance Such activities should be funded out of the 80% (maximum) core portfolio that is not put out to competitive bid 4 As directed in D 05-01-055, the proposed portfolio of programs, portions to put out to bid and the bid evaluation criteria will be filed by the Program Admnistrators in their program plan applications for each funding cycle, and subject to Commission approval Upon receiving Commission approval of the applications, the Program Administrators will complete the process of selecting programs and program implementers to design and deliver the programs in the next program cycle During this process, the Program Administrators will develop and issue RFPs using criteria approved by the Commission and select a set of bids For the 2007-2011 program cycle, third- party proposals will be included in the utility's portfolio application and the competitively bid RFP process and the PRG s review to ensure that the criteria are applied properly will occur prior to the utility's submittal of the application, as directed in D 07-10-032 The Peer Review Groups (including Energy Division s independent consultant(s)) will observe the Program Administrators' bid selection process to ensure that the criteria are applied properly Before finalizing their selections,the Program Administrators will discuss the proposed results of their bid review process with the Peer Review Groups (and Energy Division's independent consultants) After incorporating feedback, the Program Administrators will make public all winning bids and submit compliance filings, as directed in D 05-01-055 5 Future partnership programs need to be developed in a manner that places the Program Administrator and local government(or private) partner on more equal footing, in terms of involvement in program design and planning, information sharing and program implementation We recognize that some program partners may prefer or be best suited to functioning as a subcontractor 16 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 to the Program Adnimistrator and performing a supporting role for the program However,this should not be the only option available for partnership programs Other partnership arrangements, e g,where the local government partner is fully involved in program planning and implementation, may take better advantage of the relative strengths of each partner These arrangements must, in any event, be considered in light of other applicable Commission decisions, including the implementation of community choice aggregation, and should in no way diminish or dilute the responsibility and accountability of Program Administrators to meet the Commission-adopted savings goals 6 Standard contract language should improve the effectiveness of future partnership programs The standard language should establish the rights and responsibilities of the partners with sufficient flexibility to enable each partner to make improvements to program performance,as circumstances warrant The standard language should also address information sharing, intellectual property ownership, reimbursement turn-around, dispute resolution, and other issues Energy Division and Legal Division should work with the Program Administrators, interested local governments and other parties to develop a standard contract for future partnership programs, and submit that language with the program plans VII Advisory Groups Decision 07-10-032 eliminated the Public Advisory Groups (PAGs) for the purposes of planning for the 2009-11 program cycle and beyond The following rules combine the functional descriptions of the PAGs with the Peer Review Groups (PRGs) for the 2006-2008 program cycle and the 2009-11 program cycle and beyond, and should be applied to the appropriate program cycle 1 The Program Administrators should put together the advisory groups and implement the program design and selection process consistent with D 05- 01-055 and D 0740-032 and in the spirit of the collaborative approach they discuss in their filings For 2009 and beyond, the Public Advisory Group (PAG) is eliminated while the Peer Review Group (PRG) is retained Per Decision 07-10- 032, the advisory function formerly performed by the PAG will be subsumed in the statewide strategic planning activity These advisory groups should serve to (1) promote transparency in the Program Administrator's decision-making process, (2) provide a forum to obtain valuable technical expertise from stakeholders and non-market participants, (3) encourage collaboration among stakeholders and (4)create an additional venue for public participation The advisory groups will provide advice and feedback to the IOUs and provide 17 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 information to the Commission,but will not have any independent decision- making or contracting authority 2 As discussed in D 05-01-055, members of the PAGs should be drawn from the energy efficiency expertise of both market and non-market participants across the full spectrum of program areas and strategies One purpose of the PAGs is to provide guidance to the IOUs regarding region-specific customer and program needs, and provide a forum for input and collaboration with the local interests and stakeholders served by the programs However, the PAGs must not focus exclusively on region-specific needs The IOUs and their PAGs should also address statewide programs and consistency issues,bringing in national expertise as appropriate to consider these issues For the purpose, the IOUs should form a subgroup of their PAG members who will closely collaborate and coordinate on statewide marketing and outreach, support for building codes and standards, education and training and other activities that secure both short-and long-term energy savings and peak demand reductions by providing a consistent and recognizable program presence throughout the state In addition, the PAGs and IOUs should collaborate on statewide program designs and implementation strategies that increasingly integrate energy efficiency with demand response and distributed generation offerings to end-users For 2009 and beyond, the Public Advisory Group (PAG) is eliminated while the Peer Review Group (PRG) is retained Per Decision 07-10-032, the advisory function formerly performed by the PAG will be subsumed in the statewide strategic planning activity 3 The IOUs and PAGs should ensure that statewide residential and nonresidential offerings take advantage of"best available practices' and avoid customer confusion by being as uniform and consistent as possible While we recognize that differences in climate zones and other parameters may warrant some variations in program offerings to customers, these variations should be the exception and not the rule If the need emerges to focus on a particular market segment, the IOUs and PAGs may also establish a separate working group of industry experts and stakeholders to address that need 4 Energy Division and DRA staff will be ex offino members of each PAG and peer review subgroup described below and CEC staff is invited to participate as ex officzo members as well The IOUs will select additional PAG members,but participation will be voluntary and there will be no formal voting rules or designation of voting or non-voting members Within each PAG,the IOU will also identify and select a subgroup of non-financially interested members with extensive energy efficiency expertise that are willing to serve as 18 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 peer reviewers for the energy efficiency program evaluation and selection process,referred to as "Peer Review Groups' (PRGs ) 5 As described in D 05-01-055 and D 07-10-032, members of each PRG will be expected to (1) oversee the development of criteria and selection of government partnership programs, (2) review the IOUs' submittals to the Commission and assess the IOUs overall portfolio plans,their plans for bidding out pieces of the portfolio per the minimum bidding requirement and (3) review the bid evaluation utilized by the IOUs and their application of that criteria in selecting third-party programs In addition, the three PRGs are expected to meet and assess the statewide portfolio in terms of its ability to meet or exceed short and long-term savings goals in compliance with these Rules 6 The PAG meetings should be open to the public, and the IOUs should establish a clearinghouse website for noticing these meetings and posting documents to be discussed by the PAG at the meetings In addition,the IOUs are expected to conduct public workshops, at least twice a year that are designed to solicit broad public input from non-PAG members concerning program design and implementation For 2009 and beyond, the Public Advisory Group (PAG) is eliminated while the Peer Review Group (PRG) is retained Per Decision 07-10- 032, the advisory function formerly performed by the PAG will be subsumed in the statewide strategic planning activity VIII Performance-Based Risk and Reward Incentive Mechanism 1 In accordance with Public Utilities Code Section 73910, the Commission has established balancing accounts for each utility that remove significant regulatory disincentives for utility investments in energy efficiency and other demand-side management programs With these balancing accounts, a large majority of the utilities' fixed-cost revenue requirements are no longer tied to the forecasted level of commodity electric and natural gas sales 2 Per D 07-09-043 OP 2, as modified by D 08-01-042 OP 2,the risk/reward shareholder incentive mechanism applies to the energy efficiency programs funded for the 2006-2008 program cycle and for subsequent program cycles until further Commission notice The risk/reward shareholder incentive mechanism is structured as follows a) To be eligible for earnings,SDG&E, PG&E and SCE shall meet the following minimum performance standard (MPS) 19 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 for the energy efficiency portfolio as a whole, on an ex ante basis for load impacts,with verified installations and costs (1) Achieve a minimum of 85% of the Commission- adopted savings goals, based on a simple average of the percentage of each individual gigawatt-hour (GWh),megawatt(MW) and, as applicable, million therm (MTherm) goal they achieve,and also (2) Meet a minimum of 80% of the goal for each individual savings metric b) SoCalGas shall meet the MPS and be eligible for earnings if it achieves a minimum of 80% of the MTherm savings goal on an ex ante basis for load impacts, with verified installations and costs c) Once the utility meets the MPS, earnings shall be calculated as a percentage (sharing rate) of the "performance earnings basis (PEB) metric defined in Decision(D ) 94-10-059, as follows (1) Portfolio net benefits calculated using the Total Resource Cost test of cost-effectiveness are weighted by two-thirds and (2) Portfolio net benefits calculated using the Program Administrator Cost test of cost-effectiveness are weighted by one-third d) Program savings and costs shall be counted in determining whether the MPS is met and in calculating the PEB,as follows (1) Savings from low-income energy efficiency (LIEF) programs shall count towards determining whether the utilities have met their MPS, but neither LIEE program costs nor savings shall be included in the calculation of the PEB under the risk/reward shareholder incentive mechanism (2) With the exception of the Emerging Technologies Program and LIEE, all energy efficiency portfolio costs including associated evaluation, measurement and verification (EM&V) shall be included in the calculation of PEB 20 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 (3) Verified savings from Codes and Standards Advocacy Programs17 shall count as described in (a) and (b)below Codes and Standards savings are to be verified (as opposed to ex ante estimates used for planning purposes) (a) Fifty (50) percent of verified savings from pre- 2006 Codes and Standards Advocacy Programs shall count towards the energy savings goals and minimum performance standards for the 2006-2008 (per D 07-09-043) and 2009-2011 (per D 07-10-032) program cycles (b One hundred (100) percent of verified savings from post-2005 Codes and Standards Advocacy Programs shall count towards the energy savings goals,minimum performance standards and performance earnings basis for the 2006- 2008 and 2009-2011 program cycles Codes and Standards Advocacy costs are included as they are incurred in calculating the performance earnings basis and savings are included as they are realized e) If the utility has met the MPS, a first tier sharing rate of 9% shall apply If the utility has met 100% 17 D 05-09-043 and Attachment 10 Note- The 50% verified savings calculation for Codes and Standards Advocacy work applies qnj�to savings leading to the adoption of the 2005 standards developed by the CEC At the time, installed savings and committed savings had been counted during the same budget cycle D 05-04-051 had adopted a policy to count only verified savings To avoid double counting of committed savings with verified savings,a methodology was developed and adopted to derive the amount of savings attributable to reducing energy over the future years concerned (post 2005)using a calculation considering economic potential,market potential and naturally-occurring savings associated with the codes adopted The result was 50% 21 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 of the savings goals, a second tier sharing rate of 12% shall apply, up to the earnings cap adopted for each utility (1) If the MPS is met, each individual savings metric must be no less than 5% below the second tier threshold to be considered within that tier based on the three-metric average (2) If the MPS is met utilizing ex ante assumptions for load impacts, with verified installations and costs, but the ex post EM&V results take an individual metric below the 80% threshold or take the overall portfolio results to between 65% and 85% of the Commission-adopted savings goals, the utility shall continue to earn at the first tier sharing rate of 9%, applied to the ex post PEB, and shall not return any interim claims payments If, however,ex post results take a utility below 65% of Commission goals for any individual metric, the utility shall pay back any interim payments, in addition to any applicable penalty f) Penalties shall begin to accrue if portfolio performance for any single savings metric (GWh,MW or MTherm) falls to or below 65% of the savings goal for that metric If this occurs, the larger of the following penalty provisions apply up to the penalty cap adopted for each utility (1) 5c/kWh,45Q/therm and$25/kW per unit penalties applied to each unit below the savings goal, or(if larger) (2) Dollar-for-dollar payback of negative net benefits ( cost-effectiveness guarantee'),where negative net benefits are calculated based on the PEB formula adopted in D 04-10-059 g) Total earnings and penalties are capped for the four utilities combined at$450 million over each three-year program cycle, beginning with the 2006-2008 program cycle The $450 million combined cap is allocated to each utility as follows PG&E--$180 million,SCE--$200 million, SDG&E-$50 million and SoCalGas--$20 million 3 Earnings (or penalties) under the risk/reward shareholder incentive 22 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 mechanism shall be paid as follows a) There shall be two"progress payment" interim earnings claims and one final true-up claim for each three-year program cycle They shall be linked to Energy Division's Verification and Performance Basis Reports as described in D 07-09-043 and in its Attachment 6 b) Interim claims shall be evaluated on a "Cumulative-to-Date" basis, which counts the verified achievements from program year(s) in determining whether the MPS is met in each subsequent interim claim c) Thirty-five (35) percent of the earnings calculated for each interim claim shall be ' held back" until the final true-up claim,in order to minimize the risk of overpaying earnings before the ex post true-up of load impacts in the final claim (D 08-01-042) d) The costs of shareholder incentives shall be included in calculations when (1) evaluating the cost-effectiveness of program plans submitted during the program planning cycle (on a projected basis), or (2) conducting a cost- effectiveness review of portfolio performance in hindsight These costs shall not be included in the calculation of PEB See Appendix A for a graphic illustrating this mechanism 4 Per D 08-01-042,for the 2006-2008 program cycle, the following ex ante assumptions of energy savings and demand reductions shall be used in conjunction with verified installations and verified costs to calculate the 1st and 2nd Claims (a) Except as otherwise provided for below, the ex ante measure savings parameters that are contained in the utilities E3 calculators, as of the 4th quarter 2007 report for the 1st Claim and as of the 4th quarter 2008 report for the 2nd Claim 23 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 (b) For measures contained in the Database for Energy Efficient Resources (DEER), the 2008 and 2009 DEER updates of ex ante measure savings parameters, including net-to-gross ratios and expected useful lives The 2008 DEER update shall apply to the 1st Claim and the 2009 DEER update shall apply to the 2nd Claim (c) For customized measures or customized projects that represent aggregated measures in the E3 calculator,Energy Division shall identify the appropriate installed measure(s) based on its measure verification results and develop the associated ex ante load impact values For this purpose, Energy Division may use the utilities tracking system information,engineering workpapers, DEER values and methods, or other current measurement and verification results that are available 5 Per D 08-01-042,direction on the ex ante assumptions used to calculate interim claims during the 2009-2011 program cycle shall be provided in the decision authorizing the 2009- 2011 program plans 6 Procedures for Review and Approval of Earnings/Penalties under the Energy Efficiency Risk/Reward Incentive Mechanism" (D 07-09-043, OP 5, Attachment 7) 6a Interim Claims-Payments under the interim claim(s) represent a "progress payment" towards total expected earnings (1 ) Evaluation contractors use data requested from investor-owned utility (IOU) program tracking databases and reports to develop Contract Group19 level reports that verify unit installations 18 These procedures augment and substitute for Attachment 4 to Administrative Law Judge s Ruling Adopting Protocols for Process and Review of Post-2005 Evaluation, Measurement and Verification Activities, dated January 11, 2006 19 These procedures augment and substitute for Attachment 4 to Administrative Footnote continued on next page 24 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 (2) California Public Utility Commission(CPUC) audit team develops financial audit reports that verify portfolio costs for each utility (3) Energy Division aggregates evaluation contractor reports and ex ante measure parameters (updated as directed in VIII 4 and VIII 5 above) for each utility to quantify the portfolio resource benefits and uses that quantity in connection with the audit team reports to develop the draft Verification Report, which is posted on a publicly accessible website Energy Division notifies the CPUC Energy Efficiency service lists and lists of other interested stakeholders 2°maintained by Energy Division of the availability of the draft Verification Report and the website posting location Energy Division also notifies all of those stakeholders of the conference described in the next Step (4) Energy Division holds a conference by telephone or in person At this meeting, all stakeholders have an opportunity to discuss the draft Verification Report with those who prepared it (and supporting consultants) Stakeholders may raise questions about the draft report, receive responses from those who prepared it, and point out any errors they believe are contained in the report The goal is to have a give and take between the stakeholders, report authors, and the supporting technical experts (5 ) Stakeholders have an opportunity to provide written comments to Energy Division identifying any errors in the draft Verification Report Stakeholders will be required to include in the written comments at least a brief description of every point in the draft report which they believe needs correction, even if discussed at the conference Law judge s Ruling Adopting Protocols for Process and Review of Post-2005 Evaluation, Measurement and Verification Activities, dated January 11, 2006 20 "Stakeholders" refers to those listed on one of the CPUC s Energy Efficiency service list or who have notified Energy Division of their interest 25 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 (6 ) Energy Division makes any necessary changes to the Verification Report stimulated by the oral conference and written comments All written comments, and Energy Division's treatment of them, will be reflected in an appendix to the Final Verification Report, which is posted on a publicly accessible website (7) Final Verification Report is made publicly available (8 ) Within 45 days of issuance of the Final Verification Report, the utility will file an advice letter for Energy Division disposition pursuant to section 7 61 of General Order 96-B, citing the Verification Report The advice letter will address whether based on that report there are any earnings or penalties, and if so at what level, for the interim claim (9 ) Energy Division will approve the advice letter as soon as practicable thereafter so long as it correctly incorporates the results of the Verification Report, if it does not, Energy Division will take other appropriate action under General Order 96-B 6b Final Claim -The final claim and true-up of savings and performance basis estimates will be based on the Final Performance Basis Report (1 )Evaluation contractors complete draft final evaluation reports21 and post them on a publicly accessible website The evaluation contractors will notify the CPUC Energy Efficiency service lists and lists of other interested stakeholders maintained by Energy Division of the availability of the draft final evaluation reports and their website posting location(s) Energy Division will notify all of those stakeholders of the conference described in the next Step 21 Evaluation reports refer to either interim or final reports submitted to Energy Division by program evaluation contractors describing results of evaluations (e g, impact evaluation studies) of the Contract Groups 26 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 (2) Evaluation contractors hold a conference, under Energy Division sponsorship, with stakeholders,by telephone or in-person, to discuss draft final evaluation reports (3 ) Stakeholders have an opportunity to provide written comments identifying any errors in the draft final evaluation reports Stakeholders will be required to include in the written comments at least a brief description of every point in the draft report which they believe needs correction, even if discussed at the conference (4) Energy Division directs evaluation contractors to make any necessary changes to final evaluation reports stimulated by the comments All written comments, and Energy Division s treatment of them, will be reflected in appendices to the final evaluation reports The final evaluation reports are posted on a publicly accessible website (5 ) Within 60 days of public release, program administrators will respond in writing to the final report findings and recommendations indicating what action, if any, will be taken as a result of study findings as they relate to potential changes to the programs Energy Division can choose to extend the 60 day limit if the administrator presents a compelling case that more time is needed and the delay will not cause any problems in the implementation schedule, and may shorten the time on a case-by-case basis if necessary to avoid delays in the schedule (6 ) Energy Division aggregates evaluation contractor reports for each utility to quantify the portfolio resource benefits and uses that quantity in connection with the audit team reports to develop the draft Final Performance Basis Report Energy Division will notify the CPUC Energy Efficiency service lists and lists of other interested stakeholders maintained by Energy Division of the availability of the draft Final Performance Basis Report and the website posting location Energy Division also notifies all of those stakeholders of the conference described in the next Step (7) Energy Division, with the assistance of relevant contractors holds a conference with stakeholders, by telephone or in-person At this meeting, 27 R 06-04-010 DGX J ays EE Policy Manual Version 4 0 all stakeholders have an opportunity to discuss the draft Final Performance Basis Report with those who prepared it (and supporting consultants) Stakeholders may raise questions about the draft report, receive responses from those who prepared it, and point out any errors they believe are contained in the report The goal is to have a give and take between the stakeholders, report authors, and the supporting technical experts (8 ) Stakeholders have an opportunity to provide written comments identifying any errors in the draft Final Performance Basis Report Stakeholders will be required to include in the written comments at least a brief description of every point in the draft report or which they believe needs correction, even if discussed at the conference (9 ) Energy Division makes any necessary changes to the Final Performance Basis Report stimulated by the oral conference and written comments All written comments, and Energy Division's treatment of them, will be reflected in an appendix to the Final Performance Basis Report (10 ) Final Performance Basis Report is made publicly available by posting on a publicly accessible website and sending it to the Energy Efficiency proceeding service list(s) (11 )Within 60 days of issuance of the Final Performance Basis Report, the utility will file an advice letter for Energy Division disposition pursuant to section 7 6 1 of General Order 96b, citing the Final Performance Basis Report The advice letter will address whether based on that report there are any earnings or penalties, and if so at what level, for the final claim (12 ) Energy Division will approve the advice letter as practicable as possible thereafter so long as it correctly incorporates the results of the Final Performance Basis Report, if it does not Energy Division will take other appropriate action under General Order 96-B 28 R 06-04-010 DGXJ ays EE Policy Manual Version 4 0 IX Affiliate and Disclosure Mules 1 To avoid anti-competitive behavior and cross-subsidies between IOUs and their affiliates, all transactions between the IOU administrator and any implementer that is an affiliate of PG&E, SCE, SDG&E or SoCalGas are banned, per D 05-01-055 2 The Program Administrators will not provide preferential treatment to any provider of an energy efficiency service that uses energy efficiency program funds 3 Bidders for EM&V contracts, including program design evaluation and market assessment studies, shall provide full disclosure of any potential conflicts of interest, including all current non-energy efficiency related contracts with Program Administrators and program implementers X Reporting Requirements 1 The Program Administrators shall present information in their program planning applications in compliance with Ordering Paragraph 13 of D 04-12-048,and in compliance with any further direction by this Commission, the Assigned Commissioner or Administrative Law Judge regarding the content or format of these filings Energy Division may develop reporting requirements through workshops or other means to ensure that the types of data and the format of the information presented in the Program Administrator filings and reports is as consistent as possible 2 The Program Administrators shall file reports on portfolio and program activities on a regular basis during the program cycle using the standardized reporting formats, definitions, timelines and narratives established by the Energy Division, as updated from time to time The design and oversight of program-specific,portfolio-level and financial reporting requirements for energy efficiency activities will remain the responsibility of the Energy Division, as discussed in D 05-01-055 Energy Division shall design the reporting requirements in consultation with the Assigned Commissioner and Administrative Law Judge 3 In addition to other reports that may be required, the Program Administrators shall publish a summary of the achievements of the energy efficiency programs on an annual basis This report will be available to the public on the web and will contain at least the following information for the entire portfolio as well as 29 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 each utility's portfolio (1) energy savings (annual, cumulative, and lifecycle kWh and therms), peak demand savings22, levelized costs,cost per kW saved,total cost to billpayers, total savings to billpayers, net benefits to billpayers and environmental benefits (tons of CO2 and other pollutants avoided) Following each program cycle,a summary of the ex post measured achievements from the entire portfolio will also be published 4 The utilities shall incorporate the correction in the E3 calculator to the erroneous demand reduction estimated for lighting currently contained in DEER that is discussed in Section 8 3 of D 05-09-043 (D 05-09-043,OP 11 ) 5 As discussed in D 05-09-043, the utilities are required to use the August 2005 updates to ex ante expected useful life (EUL) assumptions posted to DEER when reporting actual installations during program implementation, and when submitting calculations of savings, portfolio cost-effectiveness and performance basis during the 2006-2008 program cycle Staff shall ensure that inputs to the E3 calculator are appropriately adjusted,so that these calculations will reflect the ex ante EUL values referenced above (D 05-09-043, OP 12) XI Process and Procedural Issues 1 The Commission, the assigned Commissioner, the assigned Administrative Law Judge, or the Energy Division may utilize both formal and informal procedural vehicles as needed to (1) revise the Rules and /or any of its referenced documents, in whole or in part, at any time, upon request by interested parties or on its own initiative, and (2) resolve disputes among or complaints from various market participants,as circumstances warrant In addition, nothing in these Rules preclude the Commnssion from planning and developing future energy efficiency programs, or delegating that responsibility to the assigned Commissioner, the assigned Administrative Law Judge or to Energy Division in the future 2 The Assigned Administrative Law judge or Commission staff may hold workshops or other forums, as needed,for interested parties, customers and market actors to provide input and feedback on energy efficiency-related issues 22 By D 06-06-063, the definition of peak megawatt load reduction contained in the 2005 Database for Energy Efficient Resources (DEER) shall be used for the purpose of verifying energy efficiency program and portfolio performance 30 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 3 Any program proposal for energy efficiency funding must describe a dispute resolution process to be used in dealing with complaints from end-use gas or electric consumers participating or attempting to participate in the program In programs where the Program Administrators hold contracts with third parties, those contracts will also be required to include dispute resolution provisions 31 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices APPENDIX A Reference Documents 1 Energy Action Plan http //www cpuc ca gov/PUBLISHED/REPORT/51604 htm 1 a Energy Action Plan Update,February 2008 h9L//www cpuc ca gov/NR/rdonlyres/58ADCD6A-7FE64B32-8C70- 7C85CB31EBE7/0/2008 EAP UPDATE PDF 2 CPUC Decision 05-01-055 "Interim Opinion on the Administrative Structure for Enery Efficiency Threshold Issues" http //www cpuc ca gov/PUBLISHED/FINAL DECISION/43628 htm 3 CPUC Decision 04-09-060 "Interim Opinion Energy Savings Goals for Program Year 2006 and Beyond" See attached tables for the savings goals adopted in that decision,by IOU service territory http //www cpuc ca gov/PUBLISHED/FINAL DECISION/40212 htm 4 Standard Practice Manual Economic Analysis of Demand-Side Management Programs October 2001 ftp //ftp cpuc ca gov/12uc/energy/electric/energy+efficiency/em+and+v/std+practice+ manual doc SPM 2001 Correction Memo From D 07-09-043, Attachment 9, page 7 of 7 linked below for the "SPM Correction Memo of October 7, 1988 http,//www cpuc ca gov/NR/rdonLUes/3D41FF54-9809-4651-8898- 78F93F84999B/0/CorrectionMemoSPM1071988 pdf SPM 2007 Clarification Memo From D 07-09-043, attached to this reference list http//www cpuc ca goIR/rdonl, ryes/A7C97EB0-48FA-4F05-9F3D- 4934512FEDEA/0/2007SPMClarificationMemo doc ® NTG Numerical Examples from D 07-09-043 http//www cpuc ca gov/NR/rdonlyres/101F0713-7277-43A8-883D- 8EF2712EFA8A/0/NumericalExamplesNTGAdjtoTRCD0709043 pdf 32 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices 5 Database for Energy Efficient Resources (DEER) http //eega cpuc ca g_ov/deer/ 6 Methodology and Forecast of Long Term Avoided Costs for the Evaluation of California Energy Efficiency Programs httI//www ethree com/CPUC/E3-Avoided Costs Final pdf • E3 Calculators (Updated to comply with D 07-09-043,10-7-07) http //www ethree com/cpuc cee tools html 7 CPUC Energy Efficiency Program Reporting Requirements Manual under the heading "Reporting Rules" ftp //ftp cpuc ca Soy/PUC/energy/electric/energyy+efficiency/programs/rrm4 pdf 8 CPUC Energy Efficiency Program EM&V Protocols //ftp cl2uc ca gov/PUC/energy/electric/energy+efficiency /em+and+v/evaluatorspro tocols_final_adoptedvlarulmg_06-19-2006 doc 33 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Energy Efficiency Programs Approved Savings Goals 2006 through 2013 (D 04-09-060) SCE Energy Savings Cumulative Cumulative Annual Energy Demand Demand Goal Savings Reductions Reductions Year GWHNr GWH ** MW/Yr (MW** 2006 922 25749 207 541 2007 1046 3621 3 219 760 2008 1167 47885 246 1006 2009 1189 59772 249 1255 2010 1176 71534 247 1502 2011 1164 83171 245 1747 2012 1151 94685 241 1988 2013 1139 106076 240 2228 (1)Total Savings =all savings from energy efficiency programs funded by public goods charge and procures funding This total includes savings from EE programs already in the CEC forecast For incremental saving the levels included in the CEC forecast see D 04 09 060 Attachment 9 (2) GWh savings converted to MW by multiplying by 21 average of utility GWh to peak savings for 2004/5 applications This is an estimate of average peak savings not coincident peak=GWH savings in peak peric hours in period PG&E Gas Energy Savings Savings Cumulative Cumulative Annual Cumulative Annual Energy Demand Demand Goal Gas Savings Goal Savings Reductions Reductions Year MMThNr MMTh ** GWHNr GWH ** MW/Yr) (MW)-- 2006 126 321 829 23165 180 503 2007 149 470 944 32605 205 708 2008 174 644 1053 43135 228 936 2009 203 848 1067 53808 232 1168 2010 211 1059 1015 63963 220 1388 2011 22 1278 1086 74828 236 1624 2012 23 1509 1173 86562 254 1878 2013 251 1760 1277 99332 278 2166 (1)Total Annual Energy Savings=all savings from energy efficiency programs funded by public goods charge and procurement funding This total includes savings from baseline EE program funding of$100 MM/yr accounted for in the CEC sales forecast For incremental savings above the levels included in the CEC forecast see D 04 09 060 Attachment 9 (2) GWh savings converted to MW by multiplying by 217 which is ratio of GWh to peak savings for 2004/5 applications This is an estimate of average peak savings not coincident peak=GWh savings in peak period /560 hours in period 34 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Energy Efficiency Programs Approved Savings Goals 2004 through 2013 (D 04-09-060) SoCalGas Gas Savings Cumulative Gas Annual Goal Savings Year MMThNr) MMTh "* 2004 96 96 2005 96 193 2006 147 340 2007 193 533 2008 233 765 2009 272 1037 2010 283 1320 2011 299 1619 2012 323 1942 2013 358 2301 Total Savings=all savings from energy efficiency programs funded by public goods charges and procurement funding This total includes natural gas savings from energy efficiency programs already included in the CEC forecast SDG&E Gas Energy Savings Savings Cumulative Cumulative Annual Cumulative Annual Energy Demand Demand Goal Gas Savings Goal Savings Reductions Reductions Year MMTh/Yr) (MMTh)- GWHNr GWH)- MWNr (MW)- 2004 18 18 2684 2684 504 2005 18 36 2684 5368 1007 2006 27 63 2805 8173 546 1553 2007 31 95 2851 11024 542 2095 2008 37 131 2844 13868 54 2635 2009 41 173 2823 16691 536 3171 2010 45 218 2736 19427 52 369 1 2011 49 267 2625 22052 499 419 2012 53 320 1 221 7 1 24269 421 461 1 2013 57 1 376 1 2149 1 2641 8 408 5019 Total Savings= all savings from EE programs funded by public goods charge and procurement funding This total includes savings from EE programs already in the CEC forecast For incremental savings above the levels included the CEC forecast see D 04 09 060 Attachment 9) MW Savings derived by multiplying GWh Savings by 0 19 average value SDG&E GWh to peak savings for 2004/5 applications This is an estimate of average peak savings during all the peak hours =GWh savings in peak penod/560 hours in period 35 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Total Electricity and Natural Gas Program Savings Goals (all IOUs) 2006-2013 D 04-09-060 Total Total Annual Total Annual Total Total Natural Cumulative Electricity Cumulative Peak Gas Natural Gas Savings Savings Savings Savings Savings (GWh! r GWh/ r) (MW) (MMTh/ r MMTh/ r 2004 1 838 1 838 379 21 21 2005 1 838 3 677 757 21 42 2006 2032 5 709 1 1 199 30 72 2007 2 275 7 984 1 677 37 110 2008 2 505 10 489 2205 44 154 2009 2 538 13 027 2 740 52 206 2010 2 465 15 492 3 259 54 260 2011 2 513 18 005 3 789 57 316 2012 2 547 20 552 4 328 61 377 2013 2 631 23 183 4 885 67 444 Total annual energy savings = all savings from EE programs funded by public goods charges and Procurement funding This total includes savings from baseline EE program funding of$100 MM/yr accounted for in the CEC sales forecast For incremental program savings above the levels included in the CEC forecast, see Attachment 9 of D 04-09-060 Average peak MW estimated by multiplying GWh from utility by the ratio they used in 2004/5 filings ranging from 019 to 0 21 This is an estimate of average peak savings, not coincident peak savings = GWh savings in peak period/560 hours in period 36 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices D 05-09-043 TABLE 8 ADOPTED FUND SHIFTING RULES,as modified by D 06-12-013 and D 07 10-032 Category Shifts Among Budget Categories Within Shifts Among Programs Within Shifts Among Categories Program Category Resource/ Yes no formal Commission Yes no formal Commission Yes up to 25 A on an annual basis or Nonresource review/approval triggered review/approval triggered 50 A on a cumulative basis Advice Programs However 15 day PRG notification letter required for larger shifts (includes and comment required if shifts Adding a new program outside the multiple program exceed 25°/on an annual basis or competitive bid process triggers categories—see 50%on a cumulative basis Advice letter process definitions Adding a new program outside the Advice letter required if allocation to below) competitive bid process triggers third party implementers is expected Advice letter process to fall below 20% Advice letter required if allocation to third party implementers is expected to fall below 20 A C&S J ET J Yes same as above Ad-,ice letter required for shifts that Advice letter required to shift funds Statewide M&O would reduce any of these programs OUT of any program more than 10/of by more than I/of budgeted levels budgeted levels EM&V Yes within utility portion Not Applicable—Single Program Assigned ALJ or Commissioner ruling Fund shifting between the required to shift funds OUT of EM&V utility and ED portions only by any amount with Assigned Commissioner or ALJ approval in consultation with Joint Staff For purpose of these fund shifting rules the Resource/Non Resource program categories are as follows • Resource/Non Resource Program categories for SCE SDC&E and SoCalGas are (1)Residential (2)Nonresidential (3)Crosscutting (except C&S ET SW Marketing and Outreach EM&V) ® Resource/Non Resource Program categories for PG&E are (1)Mass Market(residential/small commercial cross cutting) (2)Residential targeted market sectors within Targeted Markets and(3)Non Residential targeted market sectors within Targeted Markets Utility program administrators may carryover/carryback funding during the 2006 2008 program cycle without triggering a review/approvai process Authorization for utilizing 2006 funding in 2005 for specific purposes is described in D 05 09 043 Per D 06 12 013 (OP 2) utility program administrators may file an advice letter to seek authorization to shift existing unspent uncommitted energy efficiency funds from previous program cycles to the 2006 2008 portfolio budgets to fund new energy efficiency programs or incremental energy efficiency activities as part of existing authorized programs Utilities should consult with the PRG prior to submitting this type of advice letter Per D 07 10 032 carryover/carryback funding is permitted during the 2006 2008 budget cycle so long as the 2009 2011 portfolio has been approved CPUC approval is not necessary for up to ISO/of the current program cycle See Rules Ii 12 and It 13 Changes to incentive levels or modifications to program design(such as changes to customer eligibility requirements)will not trigger Energy Division or formal Commission review except as indicated below We expect that the results of EM&V studies statewide coordination efforts and ongoing consultation with advisory groups will enable utility program administrators to identity the best practices and program designs for portfolio implementation if the proposed incentive level change impacts as statewide offering e g is included in the deemed and calculated measure list presented in the statewide PAG meeting on August 2 3 2005 and is less than 50 A of the original incentive level on a cumulative basis over the three year program cycle the utility administrator will need to inform and solicit comment from the Joint PRGs prior to the change taking place If the proposed incentive level change impacts a statewide program offering and is more than 50°/ of the original incentive level on a cumulative basis the utility administrator will follow the advice letter process described in these rules The program administrator will notify the PRG of all incentive level changes that take place For ail significant shifts in funding or modifications to program design the utilities should seek informal review with their PRG members as part of the ongoing exchange of information during program implementation Where an advice letter is required under these rules absent a protest or written data request by Energy Division for additional information by the end of the 20 day protest period the request will become effective on the twentieth day after filing If Energy Division staff issues a data request before the end of the protest period the response time requirements and other procedures applicable to our normal advice letter procedures as updated by D 05 01 032 will take effect All advice letters required for fund shifting shall be served on the service list in A 05 06 004 and R of 08 028 or its successor rulemak rig unless otherwise specified by the assigned ALJ The assigned ALJ in consultation with the Assigned Commissioner may provide further clarification on implementing these fundshifting rules or consider modifications to these rules during the 2006 2008 program cycle as appropriate 37 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Figure 1 Amsted Incentive Mechanism Earnings/Penalty Curve Earnings capped at$450 million Reward (% of ER=12% PEB) ER=9% , 0% 65% 85% 100% % of CPUC goals (Per unit below CPUC 5c/kWh,$25/kW 45 C/therm - - below goals,or payback of Penalty capped goal}Penalty negative net benefits (cost- at$450 m211ton- -- effectiveness guarantee) ------------------------------------------ Earnings = ER x PEB PEB= Performance Earnings Basis ER= Earnings Rate (or Shared-Savings Rate) 38 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices 39 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices APPENDIX B GLOSSARY COMMON ENERGY EFFICIENCY TERMS AND DEFINITIONS Adopted Program Budget The program budget as it is ado tp ed by the Commission Inclusive of costs recovered from other sources Advanced Technologies Measures or processes which exceed the efficiency or thermodynamic performance of standard energy using equipment or processes Affiliate Any person, corporation, utility,partnership, or other entity 5% or more of whose outstanding securities are owned,controlled or held with power to vote, directs or indirectly either by an administrator or any of its subsidiaries, or by that administrator's controlling corporation and/or any of its subsidiaries as well as any company in which the administrator, its controlling corporation, or any of the administrator's affiliates exert substantial control over the operation of the company and/or indirectly have substantial financial interests in the company exercised through means other than ownership For purposes of these Rules, "substantial control" includes but is not linuted to,the possession, directly and indirectly and whether acting alone or in conjunction with others, of the authority to direct or cause the direction of the management of policies of a company A direct or indirect voting interest of five percent(5%) or more by the administrator, its subsidiaries, or its affiliates in an entity's company creates a presumption of control Avoided Costs Avoided costs refers to the incremental costs avoided by the investor-owned utility when it purchases power from qualifying facilities implements demand-side management, such as energy efficiency or demand-response programs, or other wise defers or avoids generation from existing/new utility supply-side investments or energy purchases in the market Avoided costs also encompass the deferral or avoidance of transmission and distribution-related costs (D 08-01-006, Footnote 2� Baseline Data The initial base metric for comparing the net result of programmatic changes versus what would have happened in the absence of the program or activity_ 1 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Coincident Peak Demand The metered or estimated demand of a device, circuit, or building that occurs at exactly the same time as the system for a given year and weather condition Community Choice Aggregators Organizations created b, local governments pursuant to Assembly Bill 117 for the purpose of procuring_power and administering energy efficiency programs on behalf of local citizens Competitive solicitation The process whereby parties are requested to submit bids offering innovative approaches to energy savings or improved program performance Conservation Reduction of a customer's energy use achieved by relying on changes to the customer's behavior which may result in a lower level of end use service Conservation Measures Activities and,/or behaviors aimed at reducing energy consumption Conservation Programs Programs which are intended to influence customer behavior as a means to reduce energy use Cost Effectiveness An indicator of the relative performance or econonuc attractiveness of any enemy efficiency investment or practice when compared to the costs of energy produced and delivered in the absence of such an investment Cream Skimming Cream skimming results in the pursuit of a linuted set of the most cost-effective measures leaving behind other cost-effective opportunities Cream skimming becomes a problem when lost opportunities are created in the process Cross Subsidization Benefits enjoyed by_one group,such as a customer class,which are funded by another grout 2 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Customer Any_person or entity that pays an electric and/or gas bill to an IOU and that is the ultimate consumer of goods and services including energy efficiency products, services, or practices Cumulative Savings As clarified in D 07-10-032,cumulative savings represent the savings in that year from all previous measure installations (and reflecting any persistence decay that has occurred since the measures were installed)plus the first-year savings of the measures installed in that program year Dual Test The requirement that an energy efficiency activity pass both the TRC and the PAC cost- effectiveness test E3 Calculator The E3 calculator is a model developed by Energy Environmental Economics (or"EY for use by the utilities to map Commission-adopted avoided costs to energy efficiency programs for cost-effectiveness calculations Effective Useful Life (EUL) An estimate of the median number of years that the measures installed under the program are still in place and operable Electricity Savings Reduced electricity use or savings)produced by either energy efficiency investments which maintain the same level of end use service or conservation actions which usually reduce energy use by reducing the quantity or quality of the baseline energy services demanded Emerging Technologies New energy efficiencyt echnologies, systems, or practices that have significant energy savings potential but have not vet achieved sufficient market share (for a variety of reasons) to be considered self sustaining or commercially viable Emerging technologies include early prototypes of hardware, software, design tools or energy services that if implemented will result in enemy savings Emissions Reductions The Commission requires annual reporting of reduced errussions of carbon dioxide (CO2), sulfur oxides (SOx), nitrous oxides (NOx), and particulate matter (PM10) as a result of energy efficiency savings The utilities use the E3 calculator to compute the 3 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices annual electric and natural gas emissions reductions,which are the units implemented in the year times the annual emission reduction for a particular measure The E3 calculator calculates values of CO2 in tons per kWh or therms,NOx and PM10 are in pounds per kWh or therms The following equations are from the 'E3 Calculator Tech Memo' found at the following web link http //www ethree com/CPUC/E3%20Calculator%20TechMemo%203c doc Emissions Reductions Electric Reductions CO2 tons per year (EmissionEE)(CO21) Emission[E][CO2]y = I(INm o *kWh_AM *NTGw *ER[CO2]n, 0=1+(y-1) 4 Where y = year of consideration 2006= 1 Total Annual used for years 2008 through the end of the implementation period O = Quarter of the year Jan Mar 2006= 1 INS = #of incremental of measures implemented in quarter 0 NTGM = Net--to Gross ratio for measure M ER CO2 M = Emission rate of CO2 in tons per kWh of measure M (The emissions rate for each measure is calculated using,the product of the hourly measure savings load shape and the hourly heat rate for the IOU) kWh AM = Annual kWh reduction for measure M NOX and PM 10 equations are the same Just replace FCO21 with the appropriate indicator Note that CO2 emission rate is in tons per kWh NOX and PM 10 are in pounds per kWh Gas Reductions CO2 tons per year (Emiss►onEG7ECO21) Emtsston[G][CO2]y = E(INM o *Th_Aw *NTGM *ER[CO2]<<, 0=1+(y-1)4 Where y = year of consideration 2006= 1 Total Annual used for years 2008 through the end of the implementation period Q = Quarter of the year Jan Mar 2006= 1 iN q = #of incremental of measures implemented in quarter 0 NTGu = Net—to Gross ratio for measure M ER CO2 GCT = Emission rate of CO2 in tons per therm based on the gas combustion type(GCT) specified on the input sheet for the measure 4 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Th Af = Annual gas reduction(m therms)for measure M NOX and PM 10 equations are the same Just replace[CO21 with the appropriate indicator Note that CO2 emission rate is in tons per Therm NOX and PM 10 are in pounds per Therm Energy Efficiency Groupware Application 2006 (EEGA2006) The utilities post monthly and quarterly status reports to the EEGA2006 webpage, which is accessible to the public http flee a2006 cpuc ca gov End Use 1) The purpose for which energy is used (e g heating,cooling:lighting) 2) A class of energy use that an energy efficiency program is concentrating_efforts upon Typically categorized by equipment purpose, equipment energy use intensity, and/or building type Energy Efficiency Activities or programs that stimulate customers to reduce customer energy use by making investments in more efficient equipment or controls that reduce energy use while maintaining a comparable level of service as perceived by the customer Energy Efficiency Measure An energy using a2phance, equipment control system, or practice whose installation or implementation results in reduced energy use(purchased from the distribution utility) while maintaining a comparable or higher level of energy service as perceived by the customer In all cases energy efficiency measures decrease the amount of energy used to provide a specific service or to accomplish a specific amount of work (e g,kWh per cubic foot of a refrigerator held at a specific temperature, therms per gallon of hot water at a specific temperature,etc) For the purpose of these Rules,solar water heating and stand-alone solar-powered water circulators are eligible energy efficiency measures (Per D 07-11-004,OP 1 Energy Efficiency Programs Programs that reduce customer energy use by promoting energy efficiency investments or the adoption of conservation practices or changes in operation which maintain or increase the level of energy services provided to the customer Energy Efficiency Savings The level of reduced energy use (or savings)resulting from the installation of an energy efficiency measure or the adoption of an energy efficiency practice, subject to the condition that the level of service after the investment is made is comparable to the baseline level of service The level of service may be expressed in such ways as the 5 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices volume of a refrigerator, temperature levels, production output of a manufacturing facility, or lighting level per square foot Evaluation,Measurement and Verification (EM&V) Activities which evaluate,monitor, measure and verify performance or other aspects of energy efficiency progrrams or their market environment Evaluation Project Budget The project level evaluation budget as it is defined by the program administrators or Toint Staff for internal program budgeting and management purposes Inclusive of direct and allocated overhead and costs (+/-)recovered from other sources Financial Incentive Financial support (e g ,rebates, low interest loans, free technical advice)provided to customers as an attempt to motivate the customers to install energy efficient measures or undertake energy efficiency projects (See Rebate) Free Drivers A free driver is a non-participant who adopted a particular efficiency measure or practice as a result of a utility program (From April 2006 EM&V Protocols) Free riders (Free Ridership) Program participants who would have installed the RrogKam measure or equipment in the absence of the program Fuel Substitution Programs which are intended to substitute energy using equipment of one energy source with a competing energy source e g switch from electric resistance heating to gas furnaces) Funding Cycle Period of time for which funding of energy efficiency programs have been approved by the Commission Gas Savings Reduced natural gas usage (or savings) produced by_either energy efficiency investments which maintain the same level of end use service or conservation actions which can reduce energy use by reducing the quantity or quality of the baseline services provided 6 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Hard to Reach,Non Residential Those customers who do not have easy access to program information or generally do not participate in energy efficiency programs due to a language,business size, geographic, or lease (split incentive) barrier These barriers are defined as Language -Primary language spoken is other than English,and/or Business Size -Less than ten employees and/or classified as Very Small, and/or Geographic - Businesses in areas other than the San Francisco Bay Area,San Diego area, Los Angeles Basin or Sacramento,and/or Lease-Investments in improvements to the building benefit the business only during the lease period, landlords benefit longer Hard to Reach, Residential Those customers who do not have easy access to program information or generally do not participate in energy efficiency programs due to a language, income, housing type, geographic, or home ownership (split incentives) barrier These barriers are defined as Language-Primary language spoken is other than English,and/or Income-Those customers who fall into the moderate income level (income levels less than 400% of the federal poverty guidelines), and/or Housing Type- Multi-family and Mobile Home Tenants, and/or Geographic -Businesses in areas other than the San Francisco Bay Area,San Diego area, Los Angeles Basin or Sacramento, and/or Home Ownership - Renters Incremental Measure Cost The additional cost of purchasing and installing a more efficient measure Calculated from the price differential between energy-efficient equipment and standard or baseline measures The inclusion of the word ' gross' in the definition reflects incremental measure costs, which have not been adjusted for free riders Net incremental measure costs means that the term has been adjusted for free riders, i e, the net-to-gross ratio has been applied Information & Education Information and education programs can provide a wide range of activities designed to inform or educate a customer or customer group Generally these range from in-depth, one-on-one, on-site or centrally located classroom style instruction in topics related to energy efficiency, to programs that target information to specific types of customers,to general information provided to a wide range of customers, to short inexpensive public service announcements on FCC approved communication frequencies Programs intended to provide customers with information regarding generic (not customer- 7 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices sRecific) conservation and energy efficiency opportunities For these programs, the information may be unsolicited by the customer Innovation Incubator A low-cost,stand-alone program designed to grow innovative energy saving proms and processes for the larger portfolio over the long term The incubator funds new program ideas that meet reasonable scientific scrutiny for potentially cost-effective energy savings and peak reduction Institutional Barriers A type of market barrier In this case, the mternal organizational hurdles that inhibit the evaluation and or choice to take energy efficiency actions Least Cost/Best Fit The procurement of cost-effective supply and demand-side resources that,regardless of ownership,meet capacrt7 and energy deliverabili!y requirements Energy efficiency resources are constructed from the bottoms up approach that aggregates the demand and energy smogs from various energy-saving measures and activities into applicable end-use categories such as space cooling,space heating,lighting, and refrigeration, in order to provide near-and long-term peaking, intermediate, and baseload requirements Levelized Cost An estimate of the annualized cost of installing an energy efficiency measures divided by the annual energy savings Typically calculated by multiplying the incremental cost of the measure by capital recovery factor (function of discount rate and expected useful life of the measure) and then dividing by annual energy savings Load Management Programs which reduce or shift electric12eak demand awayfrom periods of high cost electricity to non-peak or lower cost time periods,with a neutral effect on or negligible increase in electric use Load Serving Entities Entities that provide electric and/or gas commodity to customers Lost Opportunities Energy efficiency measures that offer long-lived,cost-effective savings that are fleeting in nature A lost opportunity occurs when a customer does not install an enemy 8 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices efficiency measure that is cost-effective at the time, but whose installation is unlikely to be cost-effective if the customer attempts to install the same measure later Market Effect A market effect is a change in the structure or functioning of a market or the behavior of participants in a market that result from one or more program efforts 'Typically these efforts are designed to increase in the adoption of energy-efficient products, services or practices and are causally related to market interventions (From EM&V Protocols,April 2006) Market Transformation Decision (D) 98-04-063, Appendix A, defines market transformation as "fllong- lasting,sustainable changes in the structure or functioning of a market achieved by reducing barriers to the adoption of energy efficiency measures to the point where further publicly-funded intervention is no longer appropriate in that specific market" Marketing and Outreach Communications activities designed to identify,reach and motivate potential customers to take actions to either learn more about or invest in energy efficiency opportunities Measures 1)S12ecific customer actions which reduce or otherwise modify energy end use atterns 2) A product whose installation and operation at a customer's prenuses results in a reduction in the customer s on-site energy use, compared to what would have happened otherwise Minimum Performance Standard (MPS) As part of the Shareholder Incentive Mechanism, the minimum performance standard is the minimum level of savings that utilities must achieve relative to their savings goal before accruing earnings and is expressed as a percentage of the Commission-adopted savings goals per utility The utility MPS is based on the whole energy efficiency portfolio and the minimum goal of each individual savings metric (See Rule VIII ) Net to Gross Ratio A ratio or percentage of net program impacts divided by gross or total impacts Net to gross ratios are used to estimate and describe the free-ridership that may be occurring within energy efficiency_programs 9 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Non-price Factors Those factors included in cost effectiveness tests, other than commodity prices and transportation and distribution costs, e g, environmental factors Operating Program Budget The program budget as it is defined by the program admuustrators for internal program budgeting and management purposes Inclusive of costs (+/-)recovered from other sources Participant Test The Participant Test is the measure of the Quantifiable benefits and costs to the customer due to participation in a program Since many customers do not base their decision to participate in a program entirely on quantifiable variables,this test cannot be a complete measure of the benefits and costs of aerogram to a customer (See SPM link under Attachment A) Partnership Coordinated efforts of a utility and a local government or other entijy to use the strengths of both parties to achieve energy savings goals Peak Demand (per OP 1 of D 06-06-063) The average grid level impact for a measure between 2 p m and 5 p m during the three consecutive weekday period containing the weekday temperature with the hottest temperature of the , Peak Demand-General(kW) 1) The maximum level of metered demand during a specified 1eriod,such as a billing month, or during a specified peak demand period 2 Extremely high energy use, usually with reference to a particular time period Peak Savings-Coincident (kW) The estimated peak e g highest) demand savings (MW or kW)from a program for a specific time, date, and location coincident with the forecasted system peak for a given area and a given set of weather conditions This estimate must also include consideration of the likelihood that the equipment is actually on at the time of coincident peak Usage of this definition Resource planning- for making adjustments to forecasts of peak usage for understandmg reserve margins and reliability purposes Peak Savings-Daily Average (kW) The average peak demand savings (kWh impacts/ # of hours in the peak rate period) for a given utili duringtheir heir peak season Example for SCE-Peak period is for summer 10 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices weekdays from 12-6 PM So-daily average savings would be the number of kWh saved/ # of kWhs saved for all weekday,1eakperiods (= kWh/5 days/week* 12 weeks/ summer*6 hours/day = kW average Usage Cost effectiveness analysis, primarily for valuing energy savings that occur during the peak period using 'peak" average avoided costs Peak Savings-Non coincident (kW) Estimated highest level of leak savings(kW or MW) fora given program during the peak time period for a given utility on the hottest day of a"normal" weather year Thus if a Sjou12of measures saved 1MW at 2Pm, 17 MW at 3PM, 16 MW at 4PM, 10 MW at 5Pm and 12 MW at 6 pm,the peak non coincident savings would be 17 MW This savings estimate does not take into account how many of the affected devices or equipment will be operating during the peak time 2eriod Usage Cost effectiveness analysis and procurement Peer Review Group (PRG) A subset of the Program Advisory Group consisting of non-financially interested members who will review utility_submittals to the Commission, assess overall portfolio plans,plans for bidding out pieces of the portfolio, and the bid evaluation criteria for selecting third-party rograms Performance Basis The metrics by which a program or a group of programs is measured and evaluated for the purpose of assessing the programs) success at displacing or deferring more costly supply-side resources and or increasing more energy efficient design and practices Performance Earnings Basis (PEB) A metric used in the shareholder incentive mechanism consisting of total portfolio net benefits(TRC) weighted 2/3rd and total Program Administrator Cost(PAC) portfolio net benefits weighted 1/3rd (See Rule VIII ) Performance Uncertainties A market barrier refers to new technologies or systems whose efficiency or system performance levels are uncertain due to lack of experience Portfolio All IOU and non-IOU energy efficiency-programs funded by ratepayers that are implemented durmg a program year or cycle May also refer to a gloup of pro rg ams sponsored,managed,and contracted for by a particular IOU 11 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Portfolio Reporting Regularly scheduled reporting y the portfolio administrators directly to the CPUC Metrics reported are portfolio budgets and expenditures, measures installed, services rendered, and other program activity deemed relevant to Energy Divisions responsibility to support the Commission s responsibilities of duality assurance, policy oversight, and EM&V Pre-commercialization A phase in the life of a product before it is readily available on the market Program A collection of defined activities and measures that ® are carried out by the administrator and/or their subcontractors and implementers, © target a specific market segment,customer class, a defined end use, or a defined set of market actors (e g designers, architects, homeowners), ® are designed to achieve specific efficiency related changes in behavior, investment]ractices or maintenance Rractice in the enema market, ® and are guided by a specific budget and implementation plan Program Activities Any action taken by the program administrator or program implementer in the course of implementing the program Program Administrator An entity tasked with the functions of portfolio management of energy efficiency programs and program choice Program Administrator Cost (PAC) Test Under-portfolio evaluation of cost effectiveness, the PAC test contams the program benefits of the TRC test,but costs are defined differently to include the costs incurred by the program administrator but not the costs mcurred by the participating customer (See the SPM link under Attachment A Program Advisory Group (PAG) Advisory groups for each utility service area composed of energy efficiency experts representing customer groups,academic organizations,environmental organizations, agency staff and trade allies in the energy market For 2007 and beyond, the Public Advisory Group (PAG) is eliminated while the Peer Review Group (PRG)is retained_ Per Decision 07-10-032, the advisory function formerly performed by the PAG will be subsumed in the statewide strategic planning activity 12 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Program Cycle The period of time over which a program is funded and implemented Program Implementation Plan A detailed description of a program that includes program theory, planned program processes, expected program activities, program budget, projected energy savings and demand reduction and other pro am plan details as required by the Commission, assigned ALI, or Energy Division Program Implementers An entity or person that up is a program or part of a program into practice based on contacts or agreements with the portfolio manager Program Strategy The set of activities deployed by the program in order to achieve the progrram's objectives Program Year(s) The calendar years during which the program operates Ratepayer Those customers who pay for gas or electric service under regulated rates and conditions of service Rebate A financial incentive paid to the customer in order to obtain a specific act,typically the installation of energy efficiency etc ui ment Report Month The month for which a particular monthly report is providing data and information For example,the report month for a report covering the month of July 2006,but prepared and delivered later than July 2006,would be July 2006 Resource Value An estimate of the net value of reliable energy (e S, kWh, therms) and cal2acity(e g(e , kW, Mcfd) reductions resulting from an energy efficiency program Tlus includes the 13 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices net present value of all of the costs associated with a program and all of the estimated benefits (both energy and capacity) The calculation of resource value and associated benefits should be consistent with the avoided costs adopted in the most recent Commssion proceeding or otherwise provided for by the Commission Service Area The geographical area served by a utility Short Term/Long Term Planning terms referring to the tmung-or erected tuning of program activities, program impacts, or program funding Short term indicates program activities, program impacts, or program funding that occurs during the current program cycle_ Long term indicates program activities,program impacts, or program funding that occurs beyond the current program cycle Source-BTU Consumption Conversion of retail energy forms (kWh,therms) into the BTU required to generate and deliver the energy to the site Tfus conversion is used to compare the relative impacts of switching between fuel sources at the source or BTU level for the three-prong test required for fuel-substitution programs Spillover Reductions in energy consumption and/or demand in a utilrtX's service area caused by the presence of the DSM pro agr m,beyond program related gross or net savings of participants These effects could result from (a) additional energy efficiency actions that profram participants take outside the program as a result of having- ap rticipated, (b) changes in the array of energy using equiRment that manufacturers, dealers and contractors offer all customers as a result of program availability,and (c) changes in the energy use of non-para ticlpants as a result of utilrty_programs,whether direct (e g, utility program advertising) or indirect(e g, stocking practices such as (b) above or changes m consumer buyinghabits)abits) " Participant spillover is described by (a),and non- participant spillover,by (b) and (c) Some parties refer to non-participant spillover as "free-drivers" (From EM&V Protocols, April 2006) Standard Practice Manual (SPM) The California Standard Practice Manual Economic Analysis of Demand-side Programs and Projects is jointly issued by the California Public Utilities Commission and the California Energy Conumpion It defines the standard cost effectiveness tests and their components used for energy efficiency programs 14 R 06-04-010 DGX/ays EE Policy Manual Version 4 0 Appendices Statewide Energy efficiency programs or activities that are essentially similar in desigLi and available in all Commission regulated utility service areas in California Third Party/Non-IOU Non-regulated implementers of ratepayer funded energy efficiency activates Total Resource Cost Test (TRC) The TRC test measures the net resource benefits from the perspective of all ratepayers by combining the net benefits of the program to participants and non-participants The benefits are the avoided costs of the supply-side resources avoided or deferred The TRC costs encompass the cost of the measures/equipment installed and the costs incurred by the program administrator (See SPM link under Attachment A) Zero Net Energy Zero Net Energy is defined as the implementation of a combination of building_energy efficiency design features and on-site clean distributed generation that result in no net purchases from the electricity or gas grid, at the level of a single "project" seeking development entitlements and building code permits Definition of zero net energy at this scale enables a wider range of technologies to be considered and deployed, including district heating and cooling systems and/or small-scale renewable energy projects that serve more than one home or business (D 07-10-032,Footnote 42) (END OF APPENDIX B) 15 EXHIBIT E [REPORTING REQUIREMENTS] ENERGY LEADER PARTNERSHIP PROGRAM AGREEMENT Exhibit E Reporting Requirements 1. Program Reporting: Consultant will provide SCE with the requisite information for purposes of preparing any reports required of SCE by the CPUC including current Quarterly and Annual Reports.Requirements for these reports may change per the direction of the CPUC or the CPUC's Energy Division. The current reporting requirements are as follows: 2. Quarterly Narrative: For the Program, a description of the Program activities occurring during the quarter. 2.1. Administrative activities; 2.2. Marketing activities; 2.3. Direct Implementation activities; 2.4. Consultant's assessment of Program performance and Program status (is the Program on target, exceeding expectations, or falling short of expectations, etc.); 2.5. Discussion of changes in Program emphasis (new Program elements, less or more emphasis on a particular delivery strategy, Program elements discontinued, Measure discontinued, etc.); 2.6. Discussion of near term plans for Program over the coming months (i.e., marketing and outreach efforts that are expected to significantly increase Program participation, etc.); 2.7. Changes to staffing and staff responsibilities, if any; 2.8. Changes to contacts, if any; 2.9. Changes to Subcontractors and Subcontractor responsibilities, if any; 2.10.Number of Customer complaints received; and 2.11 Program Theory and Logic Model if not already provided in the PIP, or if revisions have been made. Consultant will provide additional data or information as required by the CPUC. 3. Annual Reports: The Consultant will provide the required information and data to be aggregated to the portfolio and reported per the Annual Reporting Requirements Manual Version 4 (RRM4) (Attachment C to Administrative Law Judge Ruling of August 8, 2007) and subsequent revisions for 2010-2012. Consultant will be required to fulfill these reporting obligations for their Program. Consultant will provide additional data or information as required by the CPUC 4. Reporting Terminology Definitions 4.1. Adopted Program Budget—The Program budget as it is adopted by the CPUC, inclusive of costs (+/-) recovered from other sources. 4.2. Operating Program Budget—The Program budget as it is defined by the Program administrators for internal Program budgeting and management purposes, inclusive of costs (+/-)recovered from other sources. 4.3. Direct Implementation Expenditures—Costs associated with activities that are a direct interface with the Customer or Program participant or recipient(i.e., Consultant receiving training). (Note: This is still an open issue, the items included in this definition may be changed by the CPUC pending discussion on the application of the State's Standard Practice Manual.) 4.4. Report Month—The month for which a particular Monthly Report is providing data and information. For example, a report covering the month of July 2010, but prepared and delivered later than July 2010, would still be titled July 2010. 4.5. Program Strategy—The method deployed by a program in order to obtain program participation. 4.6. Program Element—A subsection of a program, or body of program activities within which a single program strategy is employed. (Example: A body of program activities employing both an upstream Rebate approach and a direct install approach represents two discrete program elements.) 5. Measure Classification 5.1. Measure End-Use Classification Each energy efficiency Measure reported should be classified into one of the following end-use categories: Residential End Uses Detailed End Use Aggregated End Use Clothes Dryer Appliances Clothes Washer Appliances Consumer Electronics Consumer Electronics Cooking Cooking Appliances Dishwasher Appliances Other Appliance Appliances Building Shell HVAC Space Cooling HVAC Space Heating HVAC Interior Lighting Lighting Exterior Lighting Lighting Pool Pump Pool Pump Freezers Refrigeration Refrigeration Refrigeration Water Heating Water Heating Other (User Entered Text String Other Description) Nonresidential End Uses Detailed End Use Aggregated End Use Building Shell HVAC Space Cooling HVAC Space Heating HVAC Ventilation HVAC Daylighting Lighting Interior Lighting Lighting Exterior Lighting Lighting Office Equipment Office Compressed Air Process Cooking Process Food Processing Process Motors Process Process Cooling Process Process Heat Process Process Steam Process Pumps Process Refrigeration Refrigeration Other(User Entered.Text String Other Description) 5.2. Measure Market Sector/Market Segment Classification: Where reports require market sector or market segment classification, the following classification scheme should be used: Market Sector Market Segment Residential NA Single Family NA Multi Family NA Mobile Homes NA Nonresidential NAICS CODE(greater than 2 digit not required) Commercial NAICS CODE(greater than 2 digit not required) Industrial NAICS CODE(greater than 2 digit not required) Agricultural NAICS CODE(greater than 2 digit not required) Unknown NA 6. Allowable Costs Allowable Costs Table The cost items listed on the Allowable Costs sheet are the only costs that can be claimed for ratepayer-funded energy efficiency work. The costs reported should be only for costs actually expended.Any financial commitments are to be categorized as commitments. If the reporting entity does not have a cost as listed on the cost reporting sheet,then no cost is to be reported for that item. These Allowable Cost elements are to be used whenever costs are invoiced or reported to SCE's Program administrator. If there is a desire to include additional Allowable Cost elements,the Program administrator should be contacted in order for the Program administrator to seek approval from the CPUC. 3/30/2006 Cost Categories Allowable Costs Administrative Cost Category Managerial and Clerical Labor Consultant Labor- Clerical Consultant Labor-Program Design Consultant Labor- Program Development Consultant Labor-Program Planning Consultant Labor-Program/Project Management Consultant Labor- Staff Management Consultant Labor- Staff Supervision Human Resource Support and Development Consultant Labor-Human Resources Consultant Labor- Staff Development and Training Consultant Benefits-Administrative Labor Consultant Benefits-Direct Implementation Labor Consultant Benefits-Marketing/Advertising/Outreach Labor Consultant Payroll Tax-Administrative Labor Consultant Payroll Tax-Direct Implementation Labor Consultant Payroll Tax- Marketin Advertisin /Outreach Labor Consultant Pension-Administrative Labor Consultant Pension-Direct Implementation Labor Consultant Pension-Marketing/Advertising/Outreach Labor Travel and Conference Fees Consultant- Conference Fees Consultant Labor-Conference Attendance Consultant-Travel -Airfare Consultant- Travel-Lodging Consultant-Travel -Meals Consultant-Travel -Mileage Consultant- Travel-Parkin Consultant-Travel -Per Diem for Misc. Expenses Overhead(General and Administrative)-Labor and Materials Consultant Equipment Communications Consultant Equipment Computing Allowable Costs'fable The cost items listed on the Allowable Costs sheet are the only costs that can be claimed for ratepayer-funded energy efficiency work. The costs reported should be only for costs actually expended.Any financial commitments are to be categorized as commitments. If the reporting entity does not have a cost as listed on the cost reporting sheet,then no cost is to be reported for that item. These Allowable Cost elements are to be used whenever costs are invoiced or reported to SCE's Program administrator. If there is a desire to include additional Allowable Cost elements,the Program administrator should be contacted in order for the Program administrator to seek approval from the CPUC. 3/30/2006 Cost Categories Allowable Costs Consultant Equipment Document Reproduction Consultant Equipment General Office Consultant Equipment Transportation Consultant Food Service Consultant Office Su lies Consultant Postage Consultant Labor-Accounting Support Consultant Labor-Accounts Payable Consultant Labor-Accounts Receivable Consultant Labor-Facilities Maintenance Consultant Labor-Materials Mana ement Consultant Labor-Procurement Consultant Labor- Shop Services Consultant Labor-Administrative Consultant Labor- Transportation Services Consultant Labor-Automated Systems Consultant Labor-Communications Consultant Labor-Information Technology Consultant Labor- Telecommunications MMarketin /Advertisin /Outreach Cost Category Consultant-Bill Inserts Consultant-Brochures Consultant-Door Hangers Consultant-Print Advertisements Consultant-Radio Spots Consultant-Television Spots Consultant- Website Development Consultant Labor-Marketing Consultant Labor- Media Production Consultant Labor-Business Outreach Consultant Labor-Customer Outreach Consultant Labor- Customer Relations Direct Implementation Cost Cate or Financial Incentives to Customers Activity-Direct Labor Consultant Labor-Facilities Audits Consultant Labor- Curriculum Development Consultant Labor- Customer Education and Training Consultant Labor- Customer Equipment Testing and Allowable Costs Table The cost items listed on the Allowable Costs sheet are the only costs that can be claimed for ratepayer-funded energy efficiency work. The costs reported should be only for costs actually expended. Any financial commitments are to be categorized as commitments. If the reporting entity does not have a cost as listed on the cost reporting sheet,then no cost is to be reported for that item. These Allowable Cost elements are to be used whenever costs are invoiced or reported to SCE's Program administrator. If there is a desire to include additional Allowable Cost elements,the Program administrator should be contacted in order for the Program administrator to seek approval from the CPUC. 3/30/2006 Cost Categories Allowable Costs Diagnostics Installation and Service-Labor Consultant Labor- Customer Equipment Repair and Servicing Consultant Labor-Customer Equipment Repair and Servicing Direct Implementation hardware and Materials Consultant-Direct Implementation Literature Consultant-Education Materials Consultant-Energy Measurement Tools Consultant- Installation Hardware Consultant-Audit Applications and Forms Rebate Processing and Inspection-Labor and Materials Consultant Labor- Field Verification Consultant Labor-Rebate Processing Consultant-Rebate Applications AT TACHMENT #3 suo(it INSURANCE AND INDEMNIFICATION WAIVER HUM n. 114sach MODIFICATION REQUESTR E C E V F n DEC 2 2 2009 1. Requested by: Aaron Klemm City of Huntington 33eac'h 2. Date: December 18, 2009 City Attorney's office 3. Name of contractor/permittee: Southern California Edison & Southern California Gas Compan 4. Description of work to be performed: No work will be performed by SCE or SCG, contract provides incentive funding mechanism for HB. 5. Value and length of contract: TBD by subsequent work authorizations, 36 months 6. Waiver/modification request: Contract proposes full cross indeminification and hold harmles 7. Reason for request and why it should be granted: Indemnification between HB and SCE is already captured in PUC administrative law and the associated approved service tariffs 8. Identify the risks to the City in approving this waiver/modification: There are no known risks to the indeminification clauses in the partnership agreements. A, D6-paftment Head Signature Date: APPROVALS Approvals must be obtained"in the order listed on this form. Two,approvals are required fora request to be granted. Approval from the City Administrator's Office is only required if -Risk Management and th ;City Attorneys office disagree. 1. Ri"k Management TkApproved ❑ Denied L " Signatur D to 1� 2. City Attorney's Office A proved El Denied �a`' a-3 ' dC) Signature Date 3. City Administrator's Office ❑ Approved ❑ Denied Signature Date If approved', the completed waiver/modification request is to be submitted to the City Attorney's Office along with the contract for approval. Once the contract1has been approved, this form is'to be filed with the Risk Management Division;of'Human Resources Insurance Waiver Form 12/18/2009 2:57:00 PM RCA ROUTING SHEET INITIATING DEPARTMENT: Administration SUBJECT: SCE & SCG Partnership contracts COUNCIL MEETING DATE: January 19, 2010 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable ❑ Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable ❑ Tract Map, Location Map and/or other Exhibits Attached ❑ Not Applicable ❑ Contract/Agreement (w/exhibits if applicable) Attached (Signed in full by the City Attorne ) Not Applicable ❑ Subleases, Third Party Agreements, etc. Attached ❑ (Approved as to form by City Attorney) Not Applicable ❑ Certificates of Insurance (Approved by the City Attorney) Attached ❑ Not A licable ❑ Fiscal Impact Statement (Unbudgeted, over $5,000) Attached ❑ Not Applicable ❑ Bonds (If applicable) Attached ❑ Not 'cable ❑ Staff Report (If applicable) ttted El Ap ucable ❑ Commission, Board or Committee Report (If applicable) Attached ❑ Not Applicable ❑ Findings/Conditions for Approval and/or Denial Attached ❑ Not Applicable ❑ EXPLANATIOH FOR MWHO ATTACHNEWS REVIEWED RETURNED FOR` ARDED Administrative Staff Deputy City Administrator Initial City Administrator Initial City Clerk EXPLANATION FOR RETURN OF ITEM: (Be1ow ',Spa66 For • RCA Author: Aaron Klemm City ®f Huntington Beach 1 ; 2000 Main Street • Huntington Beach, CA 92648 OFFICE OF THE CITY CLERIC JOAN L. FLYNN CITY CLERK January 27, 2010 Southern California Edison Company Attn: Jim Hodge 6042-A N. Irwindale Avenue Irwindale, CA 91702', Dear Mr. Hodge: Enclosed please find two originals of the Agreement to Jointly Deliver the 2010-2012 Orange County Energy Leader Partnership Program Between the City of Huntington Beach and Southern California Edison Company. Upon execution, please return all one original to: Joan Flynn City Clerk 2000 Main Street— 2"d Floor Huntington Beach CA 92648 Your attention to this matter is greatly appreciated. Sincerely, an L. Flynn, CIVIC ity Clerk JF:pe Enclosure: Agreements G:followup:agnntltr Sister Cities: Anjo, Japan ® Waitakere, New Zealand (Telephone.714-536-5227)