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CPUC- New Programs and TRC
As I have mentioned in previous posts, the energy efficiency incentive landscape in California is changing. Moving forward the California Public Utilities Commission (CPUC) will be shifting program design away from the utilities and will rely more heavily on “third parties”.
Currently, most third parties respond to RFPs (Request For Proposals) from the utilities. Starting in 2018, third parties will now be responsible for program design and implementation. This is a fundamental shift and is intended to encourage new ideas and innovative approaches.
The first step will be RFAs, or request for approach submissions. This is a simple, 3-4 page document, that outlines the high-level concepts. If the program is selected from the RFA batch the third parties will then have to create an RFP. The RFP will include the specifics on how they intend to set up and run the program (implementation) and of course, how much it will cost.
One of the things the third parties will have to contend with is how much the program costs vs. the amount of energy saved. The CPUC uses a metric for this known as total resource cost, which is more commonly referred to as TRC.
TRC of 1.0
In the most basic terms, a TRC of 1.0 means the program saves one dollar of energy for every program dollar spent. Higher TRC means the program saves more than it costs. Lower TRC means it saves less than it costs. The TRC is applied across the entire portfolio of energy efficiency programs at the utility. This is a good thing, as more expensive programs like whole house retrofits, can be offset by low-cost programs such as light bulb replacements.
Much of the conversation this month has centered around TRC. The CPUC is considering raising the current TRC from 1.0 to 1.25. This would mean more complicated programs would lose ground or be cut out, and simple cost effective programs would remain. To further complicate things, if the CPUC raises the TRC to 1.25 the new programs will have to save more than 1.0 to cover the existing less effective programs that are already in place.
What is important here is the CPUC is looking for new and innovative approaches, as long as they meet the cost effectiveness litmus tests. This can be a challenge, as new and innovative approaches often require some lead time to “work out the bugs”. Hopefully the TRC will stay at 1.0 and not force the new programs to carry the less efficient existing programs. Meeting a TRC of 1.0 is challenging, raising the TRC to 1.25 would have significant consequences and many programs would simply be eliminated in order to meet the 1.25 performance goal.
It’s a bit of a mixed message from the CPUC. We want innovative and creative new solutions, as long as they don’t cost more than what we already have. That is the challenge the new program designs will have to face moving forward.