FAIRFAX TOWN COUNCIL MEETING
STAFF REPORT
AGENDA ITEM #5.i
MEETING DATE April 2, 2025
PREPARED FOR Mayor and Town Council
PREPARED BY Heather Abrams, Town Manager
SUBJECT Authorize the Mayor to Sign Energy Efficiency Coalition Letter
RECOMMENDATION
Staff recommends authorizing the Mayor Blash to sign the Energy Efficiency Coalition letter in support of ratepayer-funded energy efficiency programs.
BACKGROUND
The California Legislature and regulatory agencies are increasingly scrutinizing customer-funded energy efficiency programs as part of ongoing discussions about utility affordability. Recent legislative and regulatory actions, including Assembly Bill 3264 (Petrie-Norris, 2024) and Executive Order N-5-24, have focused on the potential repeal or restructuring of certain customer programs funded through utility rates.
DISCUSSION
The coalition letter, addressed to the Chair of the Senate Committee on Energy, Utilities, and Communications, responds to a February 19 oversight hearing on affordability. The letter advocates for the continuation of ratepayer-funded energy efficiency programs, emphasizing their benefits for residents, businesses, and marginalized communities. It highlights the need to counter growing efforts to phase out these programs, particularly those deemed "non-cost-effective" by the California Public Utilities Commission (CPUC) and other stakeholders.
Energy efficiency programs have long provided economic and environmental benefits, reducing energy consumption and lowering costs for residents and businesses. Signing onto this coalition letter aligns with the Town’s commitment to the environment and affordability for its residents.
FISCAL IMPACT
None.
ATTACHMENTS
Energy Efficiency Coalition Letter
March xx, 2025
The Honorable Josh Becker
Chair, Senate Committee on Energy, Utilities and Communications 1021 O Street, Suite 3350
Sacramento, CA 95814
Subject: Joint Comments on Oversight Hearing to Address Electricity Utility Bill Affordability While Advancing the State’s Clean Energy Goals: Energy Efficiency Programs are Vital to an Equitable Clean Energy Transition and Maintaining Grid Reliability Dear Senator Becker,
We, the undersigned organizations, write to thank you for focusing on ratepayer affordability during your first hearing of 2025. Our organizations represent a broad cross section of local governments, community choice aggregators, regional energy networks, businesses, and non-profit organizations that are committed to the state’s clean energy transition and who share the concern that unaffordable electric bills could undermine our important efforts to stem the impacts of climate change through clean electricity. We believe the state can and must advance both climate progress and electric affordability for all Californians, and energy efficiency programs are a vital tool for gaining ground in both areas.
Throughout the course of your recent oversight hearing, several stakeholders suggested that bill savings could be achieved by repealing, or otherwise altering, ratepayer-funded energy efficiency programs. To the contrary, we respectfully urge you to consider the vital role that energy efficiency plays in California’s clean energy future and in supporting the most marginalized members of our communities, including low- and middle-income households.
This letter provides information that we hope you will find valuable in informing your deliberations on legislative solutions to the ratepayer affordability crisis. We stand ready to work with you to find the appropriate balance of program offerings, as well as opportunities to improve existing programs to better meet today’s energy needs.
Energy Efficiency Delivers Important Benefits Including Affordability The Governor’s Executive Order N-5-24 tasked the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) with, among other things, examining the benefits and costs to ratepayers of programs they oversee that may be unduly adding to rates or whose funding should more appropriately come from a non-ratepayer source. While the CPUC’s report states that shifting programs could reduce rates minimally, it also cautions that repealing the programs would eliminate the benefits they provide. The data, as outlined below, actually show that energy efficiency programs provide myriad benefits and that repealing them would undermine affordability and the state’s clean energy transition. <<<LOGOS>>>
• Energy efficiency programs are a small and declining component of customer bills and are not driving up bills or exacerbating the affordability crisis. The CPUC’s report in response to Executive Order N-5-24 shows that energy efficiency was 1.5% of revenue collected from ratepayers in 2024.1 This is down from 2.2% of revenue collected from ratepayers in 2023.
2 This is because energy efficiency
revenues declined slightly while the revenue requirement of the investor-owned utilities (IOUs)3increased significantly from $39.6 billion to $54 billion. According to an independent analysis, energy efficiency program costs to ratepayers decreased by 32% on an inflation adjusted basis over the past 10 years. 4 California’s programs are
more cost-effective on a per customer basis than the programs in 39 other states. 5 • Energy efficiency is criticalfor California’s world-leading clean energy transition.
In 2023 alone, energy efficiency programs helped Californians:
o Avoid using 11,276 gigawatt-hours (GWh) of electricity, o Avoid using 153,559,891 therms of gas,
o Shave 1.9 gigawatts (GW of demand, and
o Avoid 11,353,046 tons of GHG emissions.
o Combined, energy efficiency provided enough energy savings and environmental benefits to avoid over 11.3 million tons of GHG emissions, which is equivalent to the annual energy use of over 1.5 million homes.6 • These results are achievable because California law has long recognized energy efficiency as a key strategy for enacting the state’s clean energy goals in an affordable manner. For example, California’s loading order calls for energy efficiency as a priority resource to address electric demand, and the Clean Energy and Pollution Reduction Act of 2015 established the goal of doubling energy efficiency savings by 2030.7 Beyond energy savings, EE programs also provide the training, support and education needed for workers and contractors to advance California’s clean energy transition. • Statewide, energy efficiency is overwhelmingly cost-effective. California’s full ecosystem of EE programs is designed to meet both statewide goals and the needs of all customers. The CPUC evaluates EE spending and performance at the individual program, portfolio and collective statewide level. In 2023, each dollar invested in EE 1 CPUC Response to Executive Order N-5-24, Table A-2, p. 31. 2 Table 1.1 (revenue requirement) and Table 5.1 (energy efficiency costs) from the 2023 California Electric and Gas Utility Costs Report, https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/office-of-governmentalaffairs-division/reports/2024/2023-ab-67-report.pdf . 3 The revenue requirement is the amount of money an IOU must collect from customers to pay for its costs. 4 What is Driving Up Electric Rates in California?, Edward Randolph and Michel Florio. 5 2022 State Energy Efficiency Scorecard, ACEEE, available at https://www.aceee.org/sites/default/files/pdfs/u2206.pdf, pp. 26 (CA highest for public benefits nationwide), 37-40 (ranked 40th and 24th for highest electric EE and gas EE spending nationwide). 6 California Energy and Data Reporting System (CEDARS), 2023 Confirmed Claim Summary. 7 Public Utilities Code Section 454.5 and Public Resources Code Section 25310. <<<LOGOS>>>
avoided over $3 dollars of otherwise necessary electric and gas costs, making the statewide suite of EE programs highly cost-effective.8
• Energy efficiency is critical for maintaining a stable grid in an era of rapidly increasing demand for electricity. The CEC estimates that total electricity consumption will increase by as much as 74%, and peak demand will increase by as much as 45%, by 2040.
9 Many ratepayer-supported energy efficiency programs help shave peak load through measures that enable demand response and load flexibility measures, making them vital tools for managing this substantial load growth.
Importantly, the CEC’s load forecasts, which are the basis for electricity procurement, assume at least 1.9 GWs in achievable energy efficiency savings.
Without these programs, load serving entities (LSEs) will need to buy an additional
1.9 GW statewide to cover the shortfall, and those costs will be passed on to customers.
• Many energy efficiency programs are designed to provide energy and bill savings to disadvantaged customers and communities. Energy efficiency is one of the only tools customers can use to protect themselves against high rates, and energy efficiency helps to reduce power procurement costs and GHG emissions at the same time. If customers cannot reduce their usage through energy efficiency, they are more at risk of falling behind on their bills and even being disconnected. For example, the Energy Savings Assistance Program (ESA) serves exclusively low-income customers, but a significant portion of the non-income qualified energy efficiency portfolio also serves customers earning less than the area or statewide median income, rural customers, affordable multi-family housing, and small businesses. • Successful energy efficiency programs depend on reliable, predictable multiyear funding. Funding certainty allows administrators to plan ahead with confidence, which helps ensure that all customers can participate. It also improves costeffectiveness by allowing for bulk purchasing, efficient use of administrative resources, and other economies of scale. Sustainable and reliable funding is also essential to support nearly 300,000 energy efficiency jobs and 53,000 EE businesses across California.10 Neither the State General Fund nor the Greenhouse Gas Reduction Fund (GGRF) are able to provide the necessary funding certainty to sustain these valuable programs and ensure they remain cost effective.
Revisiting Energy Efficiency Metrics
While we firmly believe in the value of energy efficiency programs, we also recognize that any program can be improved and welcome the opportunity to do so through a fair and deliberative process. As part of its response to Executive Order N-5-24, the CPUC evaluated 8 This ratio is derived from the CPUC’s Total Resource Cost test: https://www.cpuc.ca.gov/-/media/cpucwebsite/files/legacyfiles/e/6442465683-eepolicymanualrevised-march-20-2020-b.pdf 9 Peak demand refers to the time when statewide energy usage is highest, typically 4-9pm on summer days, and power is most expensive to supply during this time. 10 https://e4thefuture.org/wp-content/uploads/2023/10/Energy-Efficiency-Jobs-in-America-2023.pdf <<<LOGOS>>>
ratepayer costs and benefits of energy efficiency programs and concluded that opening a new energy efficiency proceeding that focuses on cost-effectiveness in 2025 is the optimal pathway and venue to further reduce ratepayer costs.11 We agree with the CPUC that opening a new energy efficiency proceeding is the best course of action to affirm that energy efficiency programs are meeting their intended goals. The CPUC has already committed to opening a new proceeding later this year that will utilize a more modern lens to examine energy efficiency programs.12 The CPUC is also creating a dashboard that will facilitate greater public and legislative oversight by visualizing program impacts. We are confident that the new energy efficiency proceeding is well suited to refine energy efficiency programs consistent with the legislature’s commitment to energy affordability.
We look forward to working with you on solutions to the affordability crisis that preserve the state’s energy efficiency programs to ensure they can be administered to reduce customer bills, benefit the neediest communities, play a role in supporting the clean energy transition, and help manage the state’s growing load.
Sincerely,
Patrick Welch
Senior Legislative Manager
San Diego Community Power
Stephanie Chen
Director of Legislative Affairs
MCE
Cc: Members, Senate Committee on Energy, Utilities and Communications The Honorable Mike McGuire, Senate President pro Tem
11 CPUC Response to Executive Order N-5-24, p. 18.
12 CPUC, Decision (D.) 25-01-006, p, 5.- The Commission recognized that “energy efficiency programs have evolved significantly since we opened R.13-11-005 in 2013” and that the new proceeding would have a modern focus that ensures “effective oversight of these energy efficiency programs moving forward.”.