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4.23.21 - CA Clean Energy Finance Process

Updated: May 17, 2021

During our hiatus, a number of important developments occurred that we don’t want you to have missed. This newsletter covers one of those: The CPUC ASSIGNED COMMISSIONER’S SCOPING MEMO AND RULING for Rulemaking 20-08-022 (i.e. the Order Instituting Rulemaking to Investigate and Design Clean Energy Financing Options for Electricity and Natural Gas Customers).

The bottom lines are:

  1. The CA proceeding will not begin delving into new financing structures, such as inclusive utility investment, until Q3 2021 and will issue a final ruling by Q3 2022

  2. The order has been converted to a ratemaking rulemaking so that rate related decisions can be issued directly from it and not require a follow-on proceeding

A more detailed summary of the commissioner’s scoping memo and ruling follow.

On March 5, the Assigned Commissioner Genevieve Shiroma released a scoping memo and ruling for the CA Order Instituting Rulemaking to Investigate and Design Clean Energy

Financing Options for Electricity and Natural Gas Customers (Rulemaking 20-08-022) integrating and responding to stakeholder input. The full order is attached. The order has been converted to a ratemaking rulemaking which requires disclosure of ex-parte communication with the Commision. The highlights relevant for PAYS Pals are as follows (the schedule is preliminary and may be modified):

The commissioner has decided to pursue the proceeding initially in three tracks, designed to address shorter- and longer-term questions associated with financing policy.

  1. Track 1 (Comments in March ‘21, Decision July/Aug ‘21): Will address near-term issues related to California Alternative Energy and Advanced Transportation Financing Authority” (CAEATFA) budgets for its California Hub for Energy Efficiency Financing (CHEEF) and their ongoing operational costs.

  2. Track 2 (Comments in March ‘21, Existing Financing Options 6/21, Ruling on Metrics and Evaluation Q3 ‘21): Will examine existing financing structures that the Commission should explore expanding or modifying to facilitate a more significant scale of clean energy investments.

  3. Track 3 (Ruling Seeking new Financing Proposals Q3/Q4 ‘21, Workshops on Proposals Q1 ‘22, Final Decision Q3 ‘22): will consider proposals for clean energy financing programs from utilities and other parties to this proceeding and evaluate the most effective clean energy financing mechanisms. Additional guidance for program proposals from IOUs and other parties to the proceeding under Track 3 will be provided through an Assigned Commissioner’s Ruling in mid-2021.

  4. The Commissioner did provide high level interim guidance which is encouraging:

    1. New financing opportunities are necessary to expand the current IOU ratepayer-funded programs’ focus beyond energy efficiency and more broadly address California’s economy-wide decarbonization goals.

      1. New program proposals must provide a financing option for customers to install multiple types of clean energy upgrades with a single repayment option.

      2. Eligible technologies should be commercially available. Upfront cost and financing should be the main identified barriers to the target technologies’ scaled adoption.

      3. Funding resources beyond the IOUs’ current energy efficiency Public Purpose Program charge are likely necessary to implement broader financing options.

    2. New financing opportunities should attract third-party investment by offering risk-reduction strategies such as subordinate debt or co-lending options. Third-party lenders may initially be required to register with a program administrator that is implementing a Commission-approved program to safeguard against any predatory lending.

    3. Customers enrolling in new financing programs must not risk losing their utility service(s), residence, or place of business if they were to default on a loan. Some programs will need to be tailored to address different customer needs and repayment capabilities.

    4. New financing programs may not result in lower utility bills for participants but must achieve at least one of the state’s clean energy goals by resulting in lower emissions, increasing the adoption of clean energy technologies, and/or reducing the use of fossil fueled energy.

      1. Customer outreach should provide information about the potential bill impacts of different clean energy technologies and details about other options that may be more appropriate for their project, based in part on the summary of existing programs that will be filed in this proceeding.

      2. The cost-benefit analysis and evaluation of new financing options should look beyond participating customers’ bill impacts to track and measure each program’s impact on achieving broader state clean energy policy goals.

5. The Preliminary schedule is adopted here and may be modified:

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