Drone view of suburbs in South Redondo Beach, CA
April 20, 2022

Californians have the opportunity to shape inclusive utility investment proposals in sweeping rule-making

By: Jenna Barron

On April 15, four utilities and three other entities in California filed proposals in the California Public Utility Commission’s (CPUC) rule-making R.20-08.022 on options for accelerating decarbonization by clearing financial barriers to clean energy upgrades. Rather than seeking financing solutions for renewables, energy efficiency, transportation, building electrification, and storage in various separate dockets, this rule-making is a single proceeding for all distributed resources.

“As we look to expand clean energy financing strategies, the Commission will look to ensure that new options will be accessible to populations that face issues of creditworthiness and barriers to accessing affordable capital.” – CPUC Order Instituting Rule-making 20-08-022 

In advance of filing the proposals and subsequent planned 8 weeks of community workshops and stakeholder input, each of the seven proponents in the proceeding presented their proposed solutions at a workshop on March 25, 2022.

How California got here

This stepping stone toward a more inclusive clean energy economy has been years in the making, starting in 2015 with a massive advocacy campaign with environmental justice leadership to pass the state law SB350. This law mandated the California Energy Commission (CEC) study barriers to low-income communities in accessing energy efficiency and renewable energy.

After 16 months of hearings, workshops, and comments, the CEC finally concluded in the landmark Barriers Study that financing is a barrier. Its first recommendation was for the CPUC to take action by allowing California utilities to offer a tariff for energy upgrades on terms that would be open to all customers regardless of income, credit score, or renter status.

“The CPUC should consider developing a tariffed on-bill pilot for investments in energy efficiency that targets low-income customers regardless of credit score or renter status, and that do not pass on a debt obligation to the customer.” – CEC Barriers Study

CPUC did not immediately act on this recommendation because the Residential Energy Efficiency Loan (REEL) program (which the CPUC had sponsored with ratepayer funds) was just getting started and the CPUC wanted to see results from that pilot first.  

After three years, the evaluation showed results consistent with similar experiments run in half a dozen other states over the prior decade. The data indicated that marketing debt products to lower income households for clean energy solutions resulted in low participation. In five years, special energy efficiency loans for households in California had reached fewer than 0.05% of California residents in the for-profit utility service areas. Like similar loan programs in other states, most of the loans went to households with prime credit scores or better.

A new way forward

In 2020, the CPUC ordered a new rule-making on financing options for every type of upgrade for decarbonization at a customer’s site . Specifically, the Commission is examining options to assist utility customers with investments that are designed to improve energy efficiency, reduce greenhouse gas emissions, and/or support customers’ on-site energy needs.

The rule-making ordered every for-profit utility to propose a clean energy finance solution for every type of clean energy upgrade for virtually every category of utility customer. Both utilities and anyone else with ideas for inclusive and equitable financial solutions were required to file proposals by April 15, 2022. Additionally, the CPUC instructed each proponent to explain how its idea advances every goal in the CPUC’s Environmental & Social Justice Action Plan – or explain on the record why it cannot do so.

With the filing of these proposals, there comes three  months of stakeholder engagement activity to provide input, including a briefing to the Disadvantaged Communities Advisory Group on May 16, 2022. Additional workshops are anticipated for filers to present their proposals in greater detail. Interested parties have until June 29, 2022 to submit comments after which reply comments will be due July 11th.  At that point, the multiple avenues for public participation will be closed.

The CPUC will issue a decision in the fall that will determine whether Californians will have access to an option for inclusive utility investments for all affordable decarbonization solutions. The decisions in this proceeding could expand the options available to stakeholders in a dozen other proceedings so it is crucial that interested parties share their feedback, Starting with a review of the written concept proposals filed on April 15 in order to prepare for the community workshops in the next several weeks.

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