Encourage utilities to engage in pilots that utilize emerging normalized metering technologies.

The Commission may want to encourage a range of projects that use both individual buildings and portfolio-based (multiple buildings) statistical approach to measurement and verification, in order to give utilities greater energy efficiency opportunities, provided they maintain transparency.

Build on existing work to improve the accuracy and cost effectiveness of normalized metered efficiency.

California could bolster the state’s development of calibration protocols to ensure accuracy, reliability, and cost effectiveness for normalized metered efficiency by relying on the research already conducted by various research entities (e.g. National Renewable Energy Laboratory, Northwest Energy Efficiency Alliance, Cadmus, Idaho Design Labs, Seattle City Light, and Portland State University.)

Accelerate deployment of normalized metering technologies.

Technology purveyors of normalized metering technologies would benefit from additional support to verify existing technologies, improve and tailor them to California’s specific requirements, and encourage the development of additional purveyors.

Convene experts for follow-up discussions and working groups to assess the progress of various pilot projects and regulator efforts.

As the pilot projects deploy, industry leaders and other stakeholders may want to formalize expert working groups to track the progress, identify ongoing challenges, and recommend next steps and solutions for policy makers and the industry to implement.

Develop and expedite clear and definitive rules to support standardized measurement and verification technologies, particularly for normalized metered efficiency.

Without regulatory approval of these technologies, industry actors may be reluctant to invest in pay-for-performance programs and projects.

Consider standardizing the reporting of energy conservation measure performance by parties seeking pay-for-performance incentives.

The commission could use methodologies related to pay-for-performance with incentives paid quarterly within a specified number of days of receipt of reports demonstrating performance. Performance reports could provide normalized meter data from the participating site. Third-party servicers could potentially provide these reports or metering service instead of the utilities.

Consider unifying measurement and verification rules and technologies with other states to facilitate a multistate energy efficiency market.

A coalition of states could collectively address advanced metering solutions with the aim of creating a standardized market. Ultimately, a multi-state market for energy efficiency, using standardized measurement and verification technologies, could encourage more investment and innovation by the energy efficiency industry and its financial backers.

Consider legislation to expedite standardized rules for measurement and verification technologies.

Pursuant to SB 350, the California Public Utilities Commission will assess and adopt policies that promote pay-for-performance efficiency programs. Given the urgency of meeting the 2030 goals, state legislation could allow the commission to expedite the process for adopting measurement and verification rules in its upcoming proceeding pursuant to SB 350.

Encourage energy efficiency retrofit pilot projects that utilize pay-for-performance.

These pilot projects could inform new regulations to launch more pay-for-performance mechanism or energy efficiency. The commission could introduce a functioning path for rapid approval of innovative pilot projects supported by a specific sponsor and host utility.

Encourage utility-focused energy efficiency pilot projects via rate designs or tariffs that spur improved financing mechanisms for retrofits.

Commission leaders could develop two types of pilots that could inform the development of new utility standard offers or tariffs. First, the agency could encourage more sustained utility commitment to soliciting projects that combine both energy efficiency and demand response into a single transaction and to pay a front-end price for expected performance.  Second, utilities could use “preferred resource” combinations of demand-side programs.

Incorporate lessons from the pilot projects into rate design and tariffs to encourage pay-for-performance energy efficiency programs.

Regulators should consider adopting rates and tariffs that promote energy efficiency bids bundled with other services such as demand response.

Ensure completion of rules that would allow cheaper financing of energy efficiency retrofits by third parties through state-backed credit guarantees.

For example, state credit enhancement benefits can be provided for third parties that finance and execute energy efficiency improvements, either through loans to customers, energy service agreements, or energy efficiency leases. These credit enhancements could also cover on-bill repayment and a loss reserve pool. Ultimately, they could allow customers who participate in energy efficiency financing programs to receive reduced borrowing costs.

Ensure that commercial meter data is streamlined and made available by utilities to designated energy efficiency providers, as required by AB 802.

The data are critical to assisting building owners with energy efficiency improvements, and they should be made available within a specified number of days after submission of the request for access. Designated third parties, with customer approval, should be able to secure the data via a fee payment, which utilities could increase in exchange for faster processing.

Consider requiring a certain percentage of energy efficiency programs to be based on pay-for-performance by a certain date.

Policymakers approved the current commercial customer rebate program for contracting based on discrete efficiency measures and ex ante estimates, with payments based in part on ex post performance. Perhaps as a result, California’s commercial customer rebate program has had low realization rates of about 50 percent. The commission should therefore transition energy conservation programs to pay-for-performance.

Develop a roadmap on ways to improve the energy efficiency industry workforce based on a charge to pay-for-performance contracting.

Such a roadmap, based on research and consultation with industry experts, could lay out the projected workforce needs and the specific training that contractors may require based on new requirements. State agencies or other research entities could convene stakeholders to develop the workforce training programs and priorities.

Coordinate and support contractor training efforts through existing networks and programs.

These leaders could develop the training programs using organizations such as the Western HVAC Performance Alliance (WHPA), in order to educate them on new pay-for-performance programs and rollout timing. The California Public Utilities Commission could use its existing Workforce, Education, and Training Program to assist, along with pay-for-performance demonstration projects. State leaders could also provide more marketing and training funds for the contractor networks.