A recent report by the California State Auditor’s office says that the California Public Utilities Commission needs to do a better job making sure that the state’s utility companies are spending money on energy efficiency programs that are cost-effective and also do the best job of helping the state meet its energy-reduction goals.

Energy efficiency programs such as light bulb and thermostat replacements are paid for by utility customers in rates separate from their electric and natural gas usage, and total billions of dollars.

The state audit, which was requested by the Joint Legislative Audit Committee, reviewed the portfolios of energy efficiency programs for Pacific Gas & Electric, San Diego Gas & Electric, Southern California Edison, and Southern California Gas Company from 2012 through 2022 and targeted 20 efficiency programs.

The audit’s main takeaways: The portfolios did not achieve their goals and were “rarely” cost-effective, and the 20 programs reviewed did not achieve energy savings and also were not cost-effective for the most part.

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Programs not Cost Effective

Over the decade studied, state auditors found that utility company spending on efficiency programs continued to decrease. When there is less spending on energy efficiency programs, the CPUC reduces the amount that the utility companies collect from customers.

But even though the CPUC spends millions in ratepayer dollars on independent evaluations of efficiency programs, the agency does not follow up to make sure the utilities follow resulting recommendations for improving the programs’ performance, the audit found.

A key finding of the state audit is that the CPUC has allowed the utilities to operate energy efficiency programs for years that are not meeting energy-savings goals and are not cost effective according to its formula of costs and benefits.

That formula, however, does not fully capture non-energy benefits to participants, such as cleaner air or increased property values, state auditors said.

The CPUC’s response to the audit was to agree with all but one of the auditor’s recommendations and pledge to engage regularly with the utility companies to review and discuss the performance of efficiency programs and also consider how to add non-energy benefits into calculations.

Audit Report