Details for: 4051-E (Part 1 of 1).pdf

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Gary A. Stern, Ph. D.
Managing Director, State Regulatory Operations

August 6, 2019
(U 338-E)
Request for Approval to Increase Loan Caps for Southern
California Edison Company’s On Bill Financing Program


Southern California Edison Company (SCE) hereby submits for approval this advice
letter to increase the loan caps for SCE’s On Bill Financing (OBF) Program pursuant to
Decision (D.) 19-03-001, Ordering Paragraph (OP) 2, which grants flexibility for SCE,
San Diego Gas and Electric (SDG&E), and Southern California Gas (SCG) to request a
similar increase to the loan caps as Pacific Gas and Electric (PG&E) for their respective
OBF programs via a Tier 2 Advice Letter.
SCE’s OBF program was adopted in D.09-09-047; Decision Approving 2010 to 2012
Energy Efficiency Portfolios and Budgets (OBF Decision). The program provides zeropercent interest loans, paid back through a customer’s utility bill, towards the purchase
and installation of new energy efficient measures or equipment at the customer’s
premises. Qualified customers are those who meet specified credit criteria and comply
with OBF program requirements. Since implementing the program in 2010, SCE has
successfully financed over $82.5 million of energy efficiency (EE) projects and
experienced lower than a one percent default rate on those loans.
OP 40 of D.09-09-047 aligned loan terms and caps for each relevant market segment
eligible to participate in the OBF program across all of the California investor-owned
utilities (IOUs).1 The loan amounts in SCE’s program are currently capped at $100,000
for its business segment and up to $250,000 for government and institutional (G&I) and
multifamily segments.

SCE, Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company, and
Southern California Gas Company.

P.O. Box 800

8631 Rush Street

Rosemead, California 91770

(626) 302-9645

Fax (626) 302-6396


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ADVICE 4051-E (U 338-E) -2- August 6, 2019 On September 7, 2018, PG&E submitted a Petition for Modification (PFM) of D.09--09--047 to enable PG&E to raise its OBF loan caps consistent with D.18-05-041 and PG&E’s approved EE Business Plan.2 As a means to reach the state’s increased energy efficiency goals to double EE savings by 2030, PG&E proposed in its Business Plan to “raise caps and other parameters for OBF loans” to increase the supply of, and access to, affordable capital for EE investments.3 By increasing the maximum loan amounts and extending loan terms, PG&E asserted that program administrators would have greater flexibility to design programs around OBF in place of rebates and incentives.4 The Commission approved PG&E’s EE Business Plan in D.18-05-041 on May 31, 2018.5 On March 14, 2019, the Commission issued D.19-03-001 which modified its previous decision (D.09-09-047) to allow PG&E to increase its OBF loan caps to $250,000 per loan for all market segments and to expand the maximum OBF Program loan terms from five years to 10 years. Additionally, the decision increased PG&E’s loan cap from $2 million to $4 million for unique opportunities to capture large savings. In support of granting PG&E’s request to increase the loan caps, the Commission stated, “Increased loan limits for OBF will enable the utilities, their customers and thirdparty implementers to exercise greater flexibility in implementing and designing energy efficiency projects, thereby helping meet the state’s ambitious energy goals.”6 In that decision, the Commission also granted flexibility for the other IOUs to request a similar increase to the loan caps for their respective OBF programs via a Tier 2 Advice Letter.7 PROPOSAL Consistent with the Commission’s direction in D.19-03-001, SCE is submitting this Tier 2 Advice Letter to request to increase its OBF Program loan caps to enable customers and third-party EE implementers to exercise greater flexibility in designing and implementing EE projects, meet the needs of larger customers, and increase energy savings. Similar to PG&E, SCE requests approval to increase OBF loan caps up to $250,000 for business segments and up to $1 million for G&I customers. SCE also proposes to increase the OBF loan exception caps for energy efficiency projects across all market segments, including multifamily, where SCE identifies unique energy savings opportunities, as set forth in the chart below. 2 3 4 5 6 7 PG&E’s PFM, p. 1. See PG&E’s EE Business Plan, Finance Chapter, p. 2. Id. D.18-05-041, OP 12 approves the energy efficiency business plans of eight Program Administrators, including PG&E. D.09-03-001, p. 2. Id., OP 2.
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ADVICE 4051-E (U 338-E) -3- August 6, 2019 Table 1 below summarizes the existing and proposed loan cap increases. SCE is not recommending any changes to the loan repayment period at this time. Table 1: Existing and Proposed OBF Loan Caps Market segment Commercial/Industrial /Agricultural G&I Multifamily Existing Caps $100,000 Proposed Caps $250,000 Existing Exception Caps N/A Proposed Exception Caps $4,000,000 $250,000 $1,000,000 $1,000,000 $4,000,000 $250,000 $250,000 N/A $4,000,000 SCE’s request to increase loan caps for our business customers to $250,000 along with the exception cap increase to $4 million is aligned with PG&E’s approved request. While SCE’s loan cap increase request for our G&I customers is larger than that of PG&E’s approved request, SCE has a compelling reason for increasing the G&I loan caps to $1 million. Under SCE’s current loan cap of $250,000, 51 percent of G&I customer OBF loans exceeded the current maximum loan amount, and thus SCE made many of these loans pursuant to the “exception cap” scenario. The fact that over 50 percent of the G&I loans exceeded the cap demonstrates that the current loan cap is insufficient to meet the needs of this segment.8 Increasing the cap to $1 million is not only prudent for these customers but will also significantly reduce the number of exceptions with minimal increased risk based on historic performance of SCE’s loans in this market segment.9 Additionally, G&I customers have historically had less access to outside capital for deeper energy efficiency retrofits. Therefore, if approved, this change could provide more adequate OBF funding to pursue larger projects with deeper energy savings. SCE believes that these increases across all customer segments would allow more comprehensive retrofit projects, allowing SCE to pursue projects which would not otherwise be implemented under the current loan limits. SCE has discussed these proposed changes with its trade professional partners, as well as few of SCE’s larger G&I customers, who are supportive of SCE’s proposed request and have provided statements of support included in Attachment A. 8 9 For the period of 2016 – 2019, SCE funded 42 OBF loans over the $250,000 cap with a total loan amount of $22,831,948. SCE’s default rate for G&I customers is less than 1 percent.
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ADVICE 4051-E (U 338-E) -4- August 6, 2019 THIRD PARTY EE PROVIDERS Through the third party solicitation process, SCE is making bidders aware of the OBF program as part of the Request for Proposals (RFP) in the relevant sectors. A thirdparty EE provider wishing to offer customers OBF loans could propose to market OBF as a financing option accompanying its program. For third-party programs that market OBF as a financing option, SCE’s OBF program will provide the capital and collect loan repayments through the customer’s bill consistent with the current program. Alternately, a third party EE implementer could also opt to provide separate financing alternatives as part of its EE proposal. SAFEGUARDS AND CONTROLS As required by OP 2 of D.19-03-001, an IOU requesting loan caps or term increases via a Tier 2 advice letter must demonstrate that it has appropriate safeguards and controls in place to manage any requested increase in the terms or caps on OBF loans. As such, SCE proposes to implement the following safeguards and controls to manage the program with the increased loan caps: • • • • 10 11 SCE will continue to limit the availability of loans made to any one customer to a maximum of 10 percent of the total OBF budget, so that OBF can serve a large range of customers, including smaller projects, and to mitigate the risk from any one customer defaulting on an OBF loan. In order to minimize the risk of free ridership, SCE will modify its existing OBF application to require customers to sign a declaration confirming that the financed project would not have been undertaken in the same capacity if it was not for the availability of the OBF loan.10 SCE will modify existing OBF application to add a checkbox requiring customers to acknowledge their awareness that loans of more than $250,000 may not be combined with rebates or other incentives. This will minimize the risk of free ridership, while giving customers the choice between financing and incentives.11 Customers will still be required to participate in one of SCE’s core EE programs to be eligible for an OBF loan. SCE will also communicate to market participants (e.g., distributors and trade professionals) that customers with loans exceeding $250,000 will not be eligible for rebates in order to mitigate free ridership. PG&E’s Advice 4085-G_5517-E, Pg. 3. Loans up to $250,000 will still be eligible to receive both incentives and financing.
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ADVICE 4051-E (U 338-E) • • -5- August 6, 2019 SCE will modify existing loan reservation letter to explicitly state that loans of more than $250,000 may not be combined with rebates or other incentives.12 SCE will educate and conduct phone interviews to ensure those who have applied for an OBF loan are aware that only projects that require financing are allowed to use the OBF program, and communicate to customers that loans over $250,000 will be funded without rebates or incentives. Both of these safeguards will help deter free ridership. Within its EE Annual Report, SCE will include the default rates, energy savings, status of efforts to replace incentives with loans, and the degree of free ridership, if any, associated with projects financed through the OBF program as required by D.19--03--001, OP 4. In addition to this new reporting requirement, SCE will continue to assess and monitor free ridership utilizing existing evaluation methods and internal project quality control processes to maintain the OBF program’s cost-effectiveness. D.19-03-001, OP 2 requires that SCE demonstrate that it will prioritize OBF loan funds to cover projects with the largest savings. Currently, OBF loan funds are offered on a first-come, first-served basis. However, when the requested increase in loan caps is approved, SCE intends to monitor the OBF budget to prioritize and approve projects that reflect higher energy savings opportunities. PROPOSED TARIFF CHANGES No cost information is required for this advice letter. This advice letter will not increase any rate or charge, cause the withdrawal of service, or conflict with any other schedule or rule. TIER DESIGNATION Pursuant to General Order (GO) 96-B, Energy Industry Rule 5.2, this advice letter is submitted with a Tier 2 designation. EFFECTIVE DATE This advice letter will become effective on September 5, 2019, the 30th calendar day after the date submitted.
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ADVICE 4051-E (U 338-E) -6- August 6, 2019 NOTICE Anyone wishing to protest this advice letter may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received no later than 20 days after the date of this advice letter. Protests should be submitted to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California 94102 E-mail: Copies should also be mailed to the attention of the Director, Energy Division, Room 4004 (same address above). In addition, protests and all other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile or electronically to the attention of: Gary A. Stern, Ph.D. Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California 91770 Telephone: (626) 302-9645 Facsimile: (626) 302-6396 E-mail: Laura Genao Managing Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California 94102 Facsimile: (415) 929-5544 E-mail: There are no restrictions on who may submit a protest, but the protest shall set forth specifically the grounds upon which it is based and must be received by the deadline shown above. In accordance with General Rule 4 of GO 96-B, SCE is serving copies of this advice letter to the interested parties shown on the attached A.17-01-013 et al, R.13-11-005, and GO 96-B service lists. Address change requests to the GO 96-B service list should be directed by electronic mail to or at (626) 302-3719. For changes to all other service lists, please contact the Commission’s Process Office at (415) 703-2021 or by electronic mail at
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ADVICE 4051-E (U 338-E) -7- August 6, 2019 Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by submitting and keeping the advice letter at SCE’s corporate headquarters. To view other SCE advice letters submitted with the Commission, log on to SCE’s web site at For questions, please contact Joni Key at (626) 302-5394 or by electronic mail at Southern California Edison Company /s/ Gary A. Stern Gary A. Stern, Ph.D. GAS:jk:cm Enclosures
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ADVICE LETTER SUMMARY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/CPUC Utility No.: Southern California Edison Company (U 338-E) Utility type: ELC GAS PLC HEAT ELC = Electric PLC = Pipeline WATER Contact Person: Darrah Morgan Phone #: (626) 302-2086 E-mail: E-mail Disposition Notice to: EXPLANATION OF UTILITY TYPE GAS = Gas WATER = Water HEAT = Heat (Date Submitted / Received Stamp by CPUC) Tier Designation: 2 Advice Letter (AL) #: 4051-E Subject of AL: Request for Approval to Increase Loan Caps for Southern California Edison Company’s On Bill Financing Program Keywords (choose from CPUC listing): Compliance AL Type: Monthly Quarterly Annual One-Time Other: If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #: Decision 19-03-001 Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: Summarize differences between the AL and the prior withdrawn or rejected AL: Confidential treatment requested? Yes No If yes, specification of confidential information: Confidential information will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact information to request nondisclosure agreement/ access to confidential information: Resolution required? Yes No Requested effective date: 9/5/19 No. of tariff sheets: -0- Estimated system annual revenue effect (%): Estimated system average rate effect (%): When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting). Tariff schedules affected: None Service affected and changes proposed1: Pending advice letters that revise the same tariff sheets: None 1 Discuss in AL if more space is needed. Clear Form
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Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this submittal, unless otherwise authorized by the Commission, and shall be sent to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, CA 94102 Email: Name: Gary A. Stern, Ph.D. Title: Managing Director, State Regulatory Operations Utility Name: Southern California Edison Company Address: 8631 Rush Street City: Rosemead Zip: 91770 State: California Telephone (xxx) xxx-xxxx: (626) 302-9645 Facsimile (xxx) xxx-xxxx: (626) 302-6396 Email: Name: Laura Genao c/o Karyn Gansecki Title: Managing Director, State Regulatory Affairs Utility Name: Southern California Edison Company Address: 601 Van Ness Avenue, Suite 2030 City: San Francisco State: California Zip: 94102 Telephone (xxx) xxx-xxxx: Facsimile (xxx) xxx-xxxx: (415) 929-5544 Email: Clear Form
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ENERGY Advice Letter Keywords Affiliate Direct Access Preliminary Statement Agreements Disconnect Service Procurement Agriculture ECAC / Energy Cost Adjustment Qualifying Facility Avoided Cost EOR / Enhanced Oil Recovery Rebates Balancing Account Energy Charge Refunds Baseline Energy Efficiency Reliability Bilingual Establish Service Re-MAT/Bio-MAT Billings Expand Service Area Revenue Allocation Bioenergy Forms Rule 21 Brokerage Fees Franchise Fee / User Tax Rules CARE G.O. 131-D Section 851 CPUC Reimbursement Fee GRC / General Rate Case Self Generation Capacity Hazardous Waste Service Area Map Cogeneration Increase Rates Service Outage Compliance Interruptible Service Solar Conditions of Service Interutility Transportation Standby Service Connection LIEE / Low-Income Energy Efficiency Storage Conservation LIRA / Low-Income Ratepayer Assistance Street Lights Consolidate Tariffs Late Payment Charge Surcharges Contracts Line Extensions Tariffs Core Memorandum Account Taxes Credit Metered Energy Efficiency Text Changes Curtailable Service Metering Transformer Customer Charge Customer Owned Generation Mobile Home Parks Name Change Transition Cost Transmission Lines Decrease Rates Non-Core Transportation Electrification Demand Charge Non-firm Service Contracts Transportation Rates Demand Side Fund Nuclear Undergrounding Demand Side Management Oil Pipelines Voltage Discount Demand Side Response PBR / Performance Based Ratemaking Wind Power Deposits Portfolio Withdrawal of Service Depreciation Power Lines Clear Form
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Attachment A
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Going Green NRG Donnie Martin 7—l0—2019 pea. lam writing today to ask SCE to consider increasing the OBF funding limits. The current commercial limit of $100,000.00 leaves many customers without an option for an energy retrofit. A large shopping center or medical facllityjust can’! fit into the current loam terms. For example, we currently have a medical group that supports the local children’s hospital that needs more than the $100,000.00 to complete their project. With the current limit they can only complete about 80% of the project. believe a cap for commercial projects at $250,000.00 would allow many more consumers to take advantage of energy efficiency projects, Multifamily residences could also benefit form the same increase. Many of these facilities are quite large, and an energy efficiency projectjust can't be completed with the current cap of$l0D,000.00. Due to the housing crisis in Southern California, I believe that this is a strong target base as many of the facilities are impacted with residents and they facilities are consuming large quantities of energy. Most likely more than they ever have. I also feel that a of $1,000,000.00 Is completely realistic for government facilities. I have audited a few institutions in the past and they are very large. Several of them were unable to fit a retrofit into the current budget, and the OBF program fell short of funding them. A larger cap would have eliminated this issue and allowed the project to move forward without any budget concerns. I am a string supporter of SCE and the OBF program. If you have any concerns or questions, feel free to reach out to me. I look fonrvard to working with SCE for many more years. Sincerely, vi,’ Donnie Martin President TGac3ir1c_:jGr-een
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From: To: Subject: Date: Hi Fwd: (External):CDCR Thursday, July 25, 2019 8:12:46 AM , please see attached.  Sent from my iPhone Begin forwarded message: From: "Elliott, Mark@CDCR" <> Date: July 25, 2019 at 7:31:53 AM PDT To: Cc: "Beland, Deanna@CDCR" <>, Subject: (External):CDCR Good morning ,   Please find below a statement from CDCR regarding increasing OBF funding levels:   Since 2008, CDCR has engaged in a collaborative effort through the California InvestorOwned Utilities (IOU)/CDCR Energy Efficiency Partnership Program to improve energy efficiency at its existing facilities. CDCR has completed 108 energy efficiency projects that have yielded a combined GHGe reduction of 70,000 metric tons per year and an annual cost savings of $8.6 million. CDCR has identified 70 additional energy efficiency projects.  Some of the potential measures that align with CDCR’s energy efficiency goals no longer qualify for incentives, or are not sufficiently funded to complete a comprehensive project, which often discounts measures that have large energy reduction potential. An increase in utility On Bill Financing (OBF) from Southern California Edison’s $1 million cap to $4 million, in alignment with recent PG&E OBF program increase, would enable CDCR to develop more comprehensive energy efficiency projects such as;  LED (light emitting diode) exterior lighting, HVAC and mechanical projects, LED interior lighting, and building energy management systems. Energy measures that do not qualify for incentives/rebates or inadequate funding, limits CDCR on developing statewide energy efficiency projects.   Sincerely, Mark Elliott, Associate Construction Analyst Energy and Sustainability Section Facilities Asset Management Branch Facility Planning, Construction and Management
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Office:      Cell: 
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