CPUC Workshop - 2021-01-29
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California Public Utilities Commission
Follow its sittingsSpeaker 2
We consider energy burden and particular customer needs and be thoughtful in how we define and draw the line for low income and underserved communities. We are out of time. Many
Speaker 2
our panelists and the commenters said we are out of time, and we do not have another ten years to figure out what works and does not work. We need to move forward with a sense of urgency and incorporate what has already been proven and tested from successful programs from around the nation and utilize available data to address barriers and implement financing options that meet the needs of the community. We need to aim high. We need to determine what success looks like and the scale needed and design programs that not only attract public and private capital and other partners, but also protect vulnerable customers. We need to be flexible, avoid complexity, and incorporate simplicity as we expand the availability and accessibility of financing options to all.
We need to identify and listen to the expertise in disadvantaged communities and communities of color to create innovative solutions and build resilient communities for now and into the future. The presentations and discussions from day one of the workshop successfully set the stage for us, and today we will look at how to prioritize unmet needs for clean energy investments. Again, thank you. And at this point, do we have Senator Skinner on the line?
Speaker 1
We do not yet, and I've emailed her to representatives just confirming that she will join us.
Speaker 2
Okay. So I understand that she might be calling in, and so Joe and Robert, once we do have Senator Skinner on
Speaker 2
pause and hear her remarks, you know, wherever we are in the panel presentation. Okay? All right.
Speaker 1
Great. Bear with us a minute. We're getting the I've notified the moderator for our first panel that they quite likely have a few extra minutes and start early, so he's joining right now.
Speaker 2
Okay. And I understand that senator Skinner is calling into the Verizon line right now. So hopefully we will be able to tap her in very soon. And again, thank you to all of our panel members for your time yesterday and today and sharing your knowledge, your wisdom, and the conversation. And Peter, if you want to just repeat some of the instructions to folks, that would be okay as well as we stand by to hear from Senator Skinner.
Speaker 1
Yep. Just a reminder for folks if you're joining late, we've got two panels this morning, the remainder of our two day clean energy financing workshop. Each of the panels is an hour and fifteen minutes long. We'll have an opportunity for public comment at the end of the day, which is an hour long, including a fifteen minute moderator lightning round in which our moderators from the day will summarize their key takeaways, followed by a forty five minute public comment period. The workshop is being recorded.
And like I said earlier, the workshop recording from yesterday is up and posted already, and it's actually quite a good recording quality wise. There is a delay between the telephone audio and the webinar broadcast, so we recommend that you not watch the slides on the screen and listen on the phone line because of that delay. And for any technical issues, please call our CPUC technical support staff at (415) 703-5263. Senator Skinner, are you on the line?
Speaker 1
will let you Welcome to our workshop. Thank you for coming. I know you have a lot of priorities that you're juggling, and I'll pass it to you now.
Speaker 6
Thanks so much, and I want to express my appreciation to Commissioner Saroma and the other staff staff at the PUC for inviting me and really glad you're having this workshop. I think most of the participants know that the the state through the PUC and other, through legislative actions or others, we have a variety of, existing clean energy financing mechanisms including the PACE program which allows people to pay for energy upgrades through their, in effect, property tax bills. We have the net metering program. We have SCHIP, the self generation incentive. We have the utility energy efficiency rebates and a whole variety of things.
And while I think, you know, many many of those have great merit and we have seen great results. It's also kind of a it's not that we need just a single mechanism, but one could say that with so many, it may be hard for the consumer to really figure out what to access, how to access. So again, not advocating that we per se eliminate any but the ability to think about, all right, what are some very effective mechanisms or mechanisms that would be easily promotable and simple for the consumer to understand, to be able to access so that we continue to advance meeting the clean energy goals we have. And of course and I include very strongly within our clean energy goals the zero net energy meaning reduce the use because that's actually the most efficient and most carbon free is that energy we don't use. And so while, the legislature has adopted, I think, very wisely now the 100% renewable, and we look forward to having a 100% electricity from renewable sources.
We know that there is still lots of fossil fuel within our energy system and even within our renewable generation. If we can reduce the amount of generation necessary, all the better. So I really appreciate attention to achieving that reduction in use as well as the more traditional what we consider clean energy. And with that, I really wish you great success in this workshop and thank you very much for holding it.
Speaker 2
Thank you, Senator Skinner, and for those laser words of wisdom. We will keep that all in mind as we proceed in this rulemaking, and thank you for all of your hard work at the legislature on behalf of all of us and Californians. Definitely the energy we don't use is the best and the first thing that we should consider. Thank you.
Speaker 6
You're welcome and thank you. I should have cited my great mentor Art Rosenfeld because he was the one who would, as I and other colleagues would introduce different bills that were good on clean energy, he would always remind me that that energy we don't use is the most effective. And of course, I think we all know the flashy, we're all attracted to the new technology, to the new thing that isn't necessarily the thing that helps us reduce our use most. So glad you agree and have a great day.
Speaker 2
Thank you. Likewise. Thank you. Bye. Bye bye.
Okay, Peter. Great. Thank you very much, Senator.
Speaker 1
Are about to move on to our first panel of the day, the fifth panel in our series of six across the two days. We're just waiting for Dan Adler to get in as moderator. This panel will be focusing on the title is Profiles of Financing Mechanisms and Characteristics of financing needed. How to serve key market segments having the greatest need for policy and investment focus. Dan Adler IC is on.
I see every looks like he's ready to go. So, I'll hand it over to you.
Speaker 7
Thank you very much, Peter. Thank you, Commissioner Schiromo. Good morning, everybody. It's great to be with you here for day two. The theme of this panel, as distinct from some of the discussions yesterday, which were focused on financing design, how to move money in general terms into demand side or customer sided markets.
What we're going to do on this in this conversation is take the perspective of specific sectors, specific technologies, and think from a base of what has worked experience on the ground, how we might integrate the experience of these market leading actors in their technology categories into a unified framework for finance on the customer side of the meter. So this builds on portions of the rule making's interest in, yes, but there are a host of other things that we need to be doing for and with customers on their side of the meter. And if we can design integrated programs, if we're in there doing one measure like efficiency, can we also do something for the transportation agenda? Can we do something on the water side, etcetera? So financing is attracted to those sort of multi thesis opportunities.
Arguably, it's more efficient if you do it once and get the measures implemented and financed as a package rather than having to return to a customer over time with more and different measures. We heard a lot yesterday about what customers actually feel about finance. We heard one metaphor of hide the spinach in the smoothie. So the fewer times you have to hide the spinach to get what you need to get done, better. So that's the thesis here.
We've got a great panel of experts. Miriam Jafiklak will come first from Katefa describing the experience with their programs in energy efficiency. Meredith Alexander from Calstart will give some perspective on the transportation agenda and investments on the customer side there. Pietro Combiaso from the Inland Empire Utilities Agency will join us,
Speaker 7
will be taking the liberties to cover them with questions over the course of the discussion over the next hour. So with that, thank you all very
Speaker 9
Thank you so much, Dan. Is everybody able to hear me okay? Okay, excellent. All right, so and thank you again to Commissioner Schiroma and all of the staff at the CPUC for organizing this workshop and inviting people to share our perspective. So next slide, please.
Again, like yesterday, the perspective that I'm going to share on mobilizing capital comes from the experience of administering the California Hub for energy efficiency financing on behalf of the Public Utility Commission. So a couple of key features here about the hub, just to think about as I go into the conversation, is that these programs were set up
Speaker 9
pilots designed to leverage private capital by providing a credit enhancement. So these are unsecured loan products, not real estate secured, and these were designed to be debt products. And the chief is not a party to nor involved with the financial transaction. And so we are running a program in the affordable multifamily small business and residential sector. Next slide, please.
So I spoke briefly yesterday about our residential program and the success in using a credit enhancement to leverage private capital. We've been able to leverage about $6.6 of private capital for every dollar in loan loss reserve contributions. And this has led to benefits like an average interest rate for customers, the real program that's comparably much lower than what credit unions are offering without a credit enhancement. And that's resulting in an average savings of about $2,000 for customers taking out five year loans. I'm going to focus today on the policy considerations for finance programs based on our experience.
So our programs have design elements to reach underserved borrowers. Renters and tenants are eligible to participate. However, most tenant occupants, as we know, aren't going to make investments in a rental property beyond maybe a simple appliance purchase. We are about to launch a point of sale financing offering with a lender that would allow customers to purchase energy efficiency appliances online, we think that's an option that tenants will avail themselves of. Financing is also available to residents of manufactured and mobile homes.
And as I mentioned yesterday, the program provides a larger credit enhancement contribution if the borrower is an LMI borrower or has a lower credit score, in addition to very small loans for small businesses our small business program, because those are so much more challenging to underwrite. However, as I'm going to talk about in a few minutes, a credit enhancement doesn't typically help a lender with an operational burden, and I think that's something we need to keep in mind. Next slide, please. So the first policy consideration I want to talk about is that we think it's quite important for the commission to draw a distinction between a financing program versus a rebate or incentive program, particularly if it's a financing program leveraging third party capital, and that we think there should be a difference in the requirements that are placed around their use. That main difference being in that when we use a credit enhancement, we're using it to leverage private capital, and that credit enhancement can be redeployed again and again for the benefit of future customers.
A rebate or a traditional utility incentive is paid out to the customer or the contractor, expensed, and then it's gone. So it's understandable that there need to be really robust rules around the use of rebates or incentives, particularly, for example, of wanting to see guaranteed savings, or wanting to meet a strict threshold of cost effectiveness. But when we come to a financing program, we see that customers have a lot of different motivations for making energy upgrades, and in fact, energy efficiency is usually not one of the motivations at all. So if we take windows, for example, 28% of loans coming through our residential program, the REAL program, have included a windows project. Customers want to keep dust out of their homes.
They want the quiet that windows bring, and the health and the comfort, and even sometimes the aesthetics. And they're willing to take on this investment, even though the energy savings from the windows won't cover the repayment cost on a ten or fifteen year loan. Now, are energy savings there from those double pane windows. There just aren't going to be enough bill savings to repay the cost of the loan during the term, as this project may not contribute to a total resource cost value that has been set as the ideal or the goal. So we need to be careful not to set policy guidance that prevents these types of projects.
Most of our loans involve HVAC projects. And my catch in yesterday showed us that for some commercial buildings, it's going to take fifty years to repay an HVAC upgrade through bill savings alone. But we all agree that HVACs need to be upgraded because we need the carbon reduction. And one of our projects, our largest project financed through a private lease company through our small business program, was an $800,000 HVAC project that won't pay back during its useful life, but the owners wanted and needed to make that capital investment. So some people would say that customers of the REAL program or our small business finance program are getting a subsidy, but I want to question that.
I want to question if they're really getting a subsidy, or if what they're getting instead is access to better financing at better terms than they otherwise would have gotten. And these terms allow them to make energy upgrades for which they themselves are going to repay 100% of the cost of the measure and the cost of the installation. So it's very important from a deal flow perspective, from a scalability and ease perspective, that we not put restrictions like bill neutrality on a loan program. And additionally, the TRC, the total resource cost, and its current incarnation, even with the adaptation done by Dundske to evaluate financing programs, does not take into account customer motivations for investment that are not energy saving related. We also talk to property owners that have motivations to offset their carbon use or reduce greenhouse gas reduction, even if it's not completely cost effective.
And I've already mentioned the other motivations around health. Next slide, please. So at the time that the Chief was conceived, the thought then was to encourage a, quote, open market, and the idea was that multiple finance companies and contractors would find each other in this market, agree on deals and projects, and loans would follow, and the role of chief would be to supply the credit enhancement and support these front end transactions. Next slide, please. But the reality is that we did, as the chief, attract the capital with the credit enhancement, because that's the easy part.
The hard part is getting that uptake of projects. And the success of a financing offering requires customer motivation, a delivery mechanism, and operations. And Matthew Brown echoed this yesterday, that uptake doesn't just happen automatically. And several people on this conference have made the point that finance alone doesn't create a demand. It's removing a barrier.
And so that motivation for the customer needs to be generated, either from code requirements about upgrading or broken equipment or a contractor sales force. We heard about the effectiveness of the PACE contractor sales force, albeit with all of the problems with PACE, the contractor sales force was very effective, or could be utilities as trusted messengers. And so I made this point yesterday, but it bears a little repeating that policy decisions slow down and get shaped into a set of program requirements related to contractor rules or customer eligibility or project details. And some intermediary, whatever design we do, needs to be able to handle that eligibility screen so that lenders or investors can focus on underwriting risk and deploying capital. This could be a single originator or a program staff or a program implementer, but it can't be lenders.
And Cisco spoke yesterday about kind of burying the finance in the smoothie, and I think for the point of view of the investors and the lenders and the source of private capital, we need to bury the program in the smoothie so they're just able to focus on the piece that they do well. And also, a good user experience for everyone, the customer, the contractor, the capital provider, is going to require good IT and a serious IT budget. Next slide, please. So our experience in implementing the Chief has been challenging because the original well intended guidance decision was very specific and was very prescriptive, and it did not leave room for CAPA as an administrator to make decisions based on emerging market realities. So for example, we were restricted to measures being eligible for the program only if they were part of an IOU rebate program, which meant there were four different lists of eligible measures in each IOU jurisdiction, and the list of eligible measures changed frequently.
Some could be installed as standalone, others required bundling, and it was really tough for contractors. And then in 2017, the Commission granted CAEPPA the authority to take control of the list of measures, and we created a single streamlined statewide list designed to allow single measure projects, and we saw a lot more uptake in
Speaker 9
Another example after the decision came out, the original guidance decision that's been mentioned from 2013, is we saw the proliferation of energy service agreements in the market as a really good option for customers, but we couldn't allow these in the program without a new formal decision from the commission. And while we really appreciate that the commission gave us the authority to allow service decisions, those types of procedural backs and forths take a lot of time, and we've talked about the fact that time is very valuable right now. Many panelists have spoken to the fact that the financing programs need to be simple and easy to use, And I'll also add that finance companies like CertainT. Pilots make them nervous. We have not been able to attract some larger finance companies to the chief programs because they don't want to invest in their system, in our systems and integration, for something that may not be around.
And our biggest source of complexity right now, which will be an issue for any financing program moving forward, is the geographic complexity of the IOUPOU territories. And it's true that some of this could be absorbed by an intermediary screening the projects, but the truth is that contractors don't want to have to remember in which jurisdictions they can sell a heat pump, and in which they can't, in terms of steering customers to the financing program. There are more than 40 POUs in the state, and contractors work across these jurisdictions every day. Most IOU customers are also POU customers, And customers don't say, oh, I'm going to upgrade my equipment, but I think I'm only going to upgrade my gas equipment. You know, nobody thinks about that.
They think about energy projects. So to make programs seamless and easy, we're going to have to solve the problem of the rules changing whenever somebody crosses a bridge or a street, or literally when one's clothes washer uses water heated from a heat pump versus a gas water heater. And that's a literal challenge my team is trying to figure out how to deal with right now that makes scaling an online point of sale financing program for efficient appliances really difficult. So we are looking for commission guidance on how we can bring non ratepayer funding into the CHIEF and other future programs, so that we can say that programs are truly available statewide. We think the net effect of that will yield many more projects in IOU territories because so much complexity will disappear from the program.
Next slide, please. So I'm going to skip most of this, because I talked about it yesterday, and just in the interest of time, but I think we've talked about how debt and non debt solutions are complementary pieces of reaching borrowers and reaching customers across the credit and income spectrum. One point I will note is that about half of loans applications to real lenders are approved. That allows us to serve a good portion of underserved customers, but that means that half of people who want financing through our program can't get it because they don't have the cash flow means to repay the loan. So that means that some other non debt solution is to reach those customers.
Next slide, please. And that's kind of related to this concept of the credit enhancement. So the credit enhancement has been very useful for the chief as a tool to leverage attractive financing, but it's only one tool, and it has several limitations. One of them is that lenders who are working with underserved borrowers often need operational support because they are coupling whatever loan program they have in place with things like financial literacy or business plans, if it's small business owners, or even just to support the high transaction cost of issuing very small amounts of financing. So Kerry O'Neill talked yesterday about how important it is to have a toolbox of financial tools like subordinate debt, co investments, on bill finance, tariff on bill financing, and we find importantly in our affordable multifamily program that the credit enhancement is not sufficient.
It has allowed us to enroll a lender who otherwise would not be able to lend to multifamily properties from a risk perspective, but it doesn't quite bring down the interest rate enough to make some projects pencil out. And the affordable multifamily sector is one place where the bill savings really do need to support repayment of investment costs, because there is no margin for other costs. And so in this case, something like subordinate debt or co investments or interest rate buy downs would allow for a lower blended interest rate that would help these properties. We think these are useful mechanisms to think about for other sectors as well to unlock different sources of capital. Next slide, please.
So I really appreciate the conversation over the past few days. I really appreciate the commission taking up the issue of financing so comprehensively. So we at CAPA and the State Treasurer's Office are very eager to improve upon the pilots that were authorized to innovate, to move quickly, to scale, to reach as many customers as possible, and to leverage what has been built with the chief to support other types of technologies, other financial mechanisms, to expand statewide or support other programs. So please feel free to be in touch with us. We have two regulatory modifications coming up for our small business and our residential program this spring in the next couple of months, and we invite you to be part of that.
Thank you.
Speaker 7
Thanks so much, Miriam. That was really interesting, comprehensive and a lot to dig in on. But let me ask one question at this point before we transition to Meredith. You mentioned that you, the program is looking for commission guidance, but essentially on how to better incorporate third party capital in terms of capital. I I understand that sort of the direction of travel as as far as the policy making is concerned, but it's proceeding in receiving guidance from experts such as yourself so that can
Speaker 7
feel comfortable doing it or by paying a bad new guidance? What do you think the commission should consider specifically in order to unlock?
Speaker 9
So I think we would love to see the commission set budgets in terms of ratepayer dollars that could be used, and then goals and targets in order to meet kind of at a broad level, and then allow program administrators, such as CAFO or others, to use a portion of ratepayer dollars that were budgeted to seek other forms of capital and then be able to deploy instruments like co lending or like the interest rate buy downs that I spoke about. So I think we're looking for budget and authority, and then kind of broad guidance in terms of energy saving goals, and we're specifically looking beyond energy saving goals. We really want the goals for these programs to reflect where the state is moving in terms of greenhouse gas reduction, as opposed to just, you know, kilowatts reduced and therms reduced.
Speaker 7
Thank you for that. And reflecting on your observation that customers are interested in this report and just energy savings is there something that we need to consider in the standard setting metrics evaluation process that lots of more flexibility that on every state dollar has to result in more kilowatt hour save, the project's total value.
Speaker 9
Absolutely. I think that the, we think that the evaluation metrics right now, like the total resource cost, as I mentioned, does not take into account customer motivations. There are sometimes attempts to take into account non energy benefits, but the customer's willingness to make an investment for non energy reasons is not taken into account in that evaluation. And so we think that the methodology needs to be revised to reflect that when it comes to a program where customers are financing the cost of the measure themselves and paying for that. You know, I think that's the specific situation in which I'm speaking of.
Speaker 7
Got it. That's great. Thank you. I'm getting a fair amount of feedback on my line when I talk. Apologies if that's happening for others.
I guess I'll just keep my comments to a minimum. Over to Meredith Alexander, Policy Director for CalSTAR.
Speaker 10
I'm unmuted. You hear me okay? Great. Okay, hopefully not too much feedback and good morning everyone. Fair warning, there are
Speaker 10
So I'm hoping that they stay away from my house, but I apologize if I have to change locations. Well, as they say now for something completely different, I'm going to talk about funding and financing zero emission transportation with a particular focus on commercial vehicle fleets. So perhaps a little less tangible in terms of, you know, the CPUC, as far as I know, hasn't been engaged directly in issues around financing vehicles, specifically commercial EVs, but there's a lot going on in this space and HealthHard has a lot of ideas for potential public interventions that may not be something directly that the CPUC could undertake, but that we would encourage other state agencies to look towards. And I'm going to talk specifically about one example towards the end. So just for a little bit of orientation, CalSTART is a member based 501c3.
We're headquartered in Southern California, but we have offices all over the country. And actually we have a global program called the Global Drive to Zero that encourages states and nations to commit to zero emission vehicles. And there are eight countries that have actually signed the Global Drive to Zero Pledge. So I'm coming at this with that perspective and bringing in some information, not just from here in California, but from some studies that CalcERT has done in The U. S.
And also around the world. Next slide. So just for those of you who don't work on transportation and aren't focused on transportation emissions all day long like I am, I just wanted to frame up some of the challenges we're trying to solve. So we know that to reduce California's transportation emissions significantly, we have to have a rapid increase in zero emission vehicle purchases. We also simultaneously need to improve transportation equity.
We need to reduce vehicle miles traveled to meet not only climate goals, but our air quality goals. We're still out of compliance in the state's two major air basins, and heavy duty vehicles in particular are really the top culprit and the top opportunity. At the same time, just to orient ourselves, market transformation, we are really at the beginning on commercial vehicles. We have less than 2,000 commercial EVs on the road today, and these vehicles still cost 30 to 200, that's actually maybe say 300% more today. So for example, you could buy a diesel, a class eight semi truck for something in the range of a $100,000 or a used one for less than that.
We are seeing the Class eight electric trucks come to market from manufacturers like Volvo and Daimler and Freightliner, and those are probably going to be more in the range of $300,000 So this is a very large delta to consider how to either fund or finance. At the same time, CARB, as you probably heard, adopted something called the advanced clean truck rule. This will require, we estimate 10,000 emission trucks on the road by 2024 model year. But this is, I think one of the fastest market transformations we've ever attempted, which is why we think this financing piece is so critical. At the same time, funding for incentives has consistently diminished because those incentives have only been funded by the Greenhouse Gas Reduction Fund, which has a lot of pressure on it.
Sort of somewhat related, I'm going to talk a little less about this, but it doesn't mean it's less important, is that communities need new transit solutions. And I think looking at how we fund communities to design new transportation systems is something that's really important and something that CalSTART works on. So finally, our research has shown that the initial purchase price for ZEV infrastructure is the number one barrier to fleet adoption. Yes, there are other things, there's the logistics, there's figuring out how it works for their business, but it's really the upfront cost. So I guess that's the good news.
That's what we need to solve for. But the bad news is it's a significant challenge. And the smaller the fleet, the bigger a challenge that will be. So we have something in California called the HVIP program, which is a voucher incentive that has aimed to cover the incremental cost from a diesel truck to a zero emission. But generally it's been two to three times lower.
The budget has been two to three times lower than demand, and we expect demand will just exponentially increase. We're not seeing state funding exponentially increase. Next slide. So to give you a sense for how big this problem is, not according to me, but according to CARB, this is their mobile source strategy, which is actually something that Senator Skinner authored a bill a couple of years ago to require CARB to update this strategy to really show us how are we gonna get to our clean air and climate targets. So just I highlight the number mostly at the bottom.
To transform the goods movement and the transportation sector, along with agriculture, smaller percentage, off road equipment, which is part of goods movement, we're looking at 15 to $30,000,000,000 over the next ten years. So what I would say is that is generally the scope of what needs to be funded or financed by the fleets that are adopting these technologies. Or in the case of on road light duty vehicles, those are just consumers. You know, we need consumers to buy electric vehicles and the upfront sticker cost is still a significant barrier there as well. Next.
Drilling down into that number, CARB produces this investment plan every year for medium and heavy duty vehicles, off road and freight, and kind of the rest of this off road good movement sector. And they're saying they need 2,000,000,000 to $3,500,000,000 in public investments over the next three years. The current GGRF budget proposed by Governor Newsom, which we're happy about, is $315,000,000 over two years. So as you can see, we have an order of magnitude between the amount of money the state looks like they're willing to put into incentives and what the actual incremental cost is of all these technologies. Next.
So what is it actually looking like if you are a commercial EV, someone who wants to purchase a commercial EV today or someone who's interested in financing them? We are, as I said, close to publishing a white paper on commercial EV financing, so I'm drawing from that for this. So there's really high interest from banks in this segment, but also really high perceived risk because this is a new industry. You know, the types of banks that are interested are traditional banks, green banks, those that issue green bonds, micro lenders, equity investors. They all see, you know, every day we're seeing a new announcement of a zero emission vehicle company or technology company going public.
So there's a lot of interest in investing in the sector, but, you know, they just say that the perceived risk about the vehicles themselves is a huge barrier. And therefore, we're seeing very, very few examples of lending to commercial fleets for zero emission vehicles today. Some fleets have very established credit, like, you know, large transit districts are buying a lot of zero emission buses, maybe easier for them to finance those vehicles through, you know, their big lenders that are used to doing municipal financing. Obviously big fleets can find someone to lend them money, but as you'll see in my next few slides, even large fleets are having challenges.
Speaker 10
So there are diverse set of products that people have been looking at and thinking about, and some of them are working more quickly and rolling out more rapidly. And I would say charging as a service or infrastructure as a service is the one type of financing that really seems to be taking off in this space. So that's where you want to buy an electric vehicle or an electric bus. You are going to partner with a service provider who will actually put in the charging infrastructure for you. You will pay them over time.
And in many cases also you'll consign your LCFS credits to them because those are a significant value stream, as I'll talk about in just a minute. So we're also seeing municipal utilities play in this space. SMUD is actually launching or has launched a program for charging as a service for commercial fleets, where they will build the infrastructure. The fleet will turn over their LCFS credits to SMUD, and then they will basically pay them back over time. My understanding is that the IOUs haven't been permitted to do this, or perhaps there was a decision that actually precludes it.
But again, we're seeing a lot of private factors in this space and new models emerging. And then the last two are more relevant for like launching companies, which we're seeing a lot right now. And there are some manufacturers that are starting to offer capital leases for commercial vehicles. Next. So really where we think policy intervention is needed is to reduce the concerns from the commercial banking industry about commercial EVs.
And really the top concern is this issue of residual value. So what that means is how much would you be able to sell this electric delivery van for on the used market after five years? There is no used EV market for commercial vehicles yet or very few. And so lenders are very concerned about what they're actually worth. Therefore, what is the value of the asset that could be potentially repossessed or sold if the borrower defaults on the loan?
So we really think that is an area that requires public intervention today because otherwise even large established fleets are going to continue having problems getting financing for these vehicles. So again, the top barriers being high upfront costs, fear of obsolescence related to lack of residual value. This is more, I would say, outside of California, the lack of cooperation from local utilities. Again, this is a national survey. There are very few utilities that have authorized make ready programs or specific commercial fleet programs like California's IOUs do now.
So again, a vehicle is an asset that can be repossessed if a creditor defaults, but infrastructure, the charging infrastructure for these vehicles, not so much. So just sort of distinguishing between the two. So again, CalSTART thinks that incentives are absolutely critical for the next five to six years, both California and around the country. We have to still help, mostly it's bring down the upfront cost because there is significant cost differential. And then we need, we think, some public backing of private loans, especially to small and medium sized fleets.
And I'll talk a bit more about one idea next. That could also look like a public guarantee of residual value. Have a question mark here because this isn't something that we've really, we don't have a policy proposal here or concept, but we really think this is one place where the state, certain state agencies could step in. I don't know if there's a role specifically for utilities on that one, but I think there are roles for utilities in some other ways. And then this is obviously super relevant for the commission as a guarantee of charging costs through very clear rate structures.
And I think we're definitely moving towards that in recent commercial EV rate cases. And we are personally working across the country to get more rate reform that works for commercial electric fleets. Next. I think this is my last slide. Great.
So this is something Dan and I have been talking about a lot. So commercial fleets in California earn LCFS credits for charging their vehicles that they can sell in the LCFS market. But for a lot of them, that is significantly challenging. They don't know how to sell credits in the market. And they also can't currently leverage those credits in any way.
So a large commercial EV could earn over a $100,000 in credits over the lifetime of the vehicle. That's a big chunk of change. We would love for them to be able to use that money to bring it forward, to buy down either the incremental cost of the vehicle or some of their charging equipment. So we've been working on this proposal with NRDC to address this upfront capital challenge by providing a loan or some sort of public financing backing of a loan that would allow Fleet to leverage their LCFS credits. So currently we are considering, could this program be run through CalCap, which is in the treasurer's office, and that is an existing loan program that generally helps really small truck fleets buy a used truck that helps them reach compliance with their air quality regulations.
So it seems like it could be a good fit because they already work with a lot of lenders make these kinds of loans, that make loans to small commercial vehicle fleets. And so the idea would be that a borrower would consign their credits to a lender and then the state would basically provide a loan loss reserve guarantee so that we hope lenders would actually be willing to make these kinds of loans backed by the LCFS. And we would really love to see a pilot program get launched this year to make at least 300 loans to commercial fleets, which is a very small portion of the number of commercial fleets we need to buy an EV this year. But we think that this could really help the small and medium sized fleets, which, just so you know, are a lot of the ones that operate trucks that go in and out of the ports, which we call drayage vehicles, that are significantly contributing to air quality concerns. So we're hopeful for this program and I'm happy to answer any questions or talk more about it either after the other presenters or one on one.
Thanks so much.
Speaker 7
Thank you, Meredith. Thanks for concluding on this interesting innovative approach here on the LCFS. And, you know, I tend to think you're right that a limited intervention that helps private investors get more comfortable with the value of the low carbon fuel standard will unlock significant multiples of private capital on top of this modest state contribution. Is value there, it's no one has really engineered their way into it from the private sector in a kind of a scalable fashion. So this is a really interesting way to potentially get there.
I wanted to pose one question to you on your pointed reference to residual value. One thing that is conceptually within the purview of the commission as it relates to that is this notion hypothetical, but potentially quite valuable of a second life for vehicle batteries as grid assets. In some structured way, obviously, it would need to over time become effectively a procurement for those assets so that whoever is financing the vehicle now can clearly understand how when it's no longer useful as a vehicle or if the value of this thing as a vehicle is overcome superseded by the value of it as a grid asset, they know where to sell that resource to. Do you have any comments about that concept? How the sort of the rolling stock meets the fixed grid and what we might think about by way of kind of unlocking that value?
Speaker 10
Well, I think if there were the second life market for batteries and that value was understandable and easily kind of attainable in some way that that could definitely help with the residual value. I know on a light duty EV, basically the entire incremental cost is battery cost. Someone told me it's 50% or more of the vehicle is the battery. For these commercial vehicles, it'll range, but especially the heavier duty vehicles, I mean, these are massive, massive batteries. So I think their potential as a second life grid asset is great.
And if someone were to publish that value, that could certainly help with the residual value. And then what you'd have is the remaining, you know, the shell of the vehicle that could potentially have a new battery put into it. So I think that is a place where the commission could play. Also we're going to see more data emerging about how these batteries hold up. So I would hope that in the next few years, we'd have more confidence about what capacity of the battery would be left after a fleet drives it for eight, ten or fifteen years.
Speaker 10
think that could, yeah, having a market somewhere for this marketable product that's part of the residual vehicle, think could be really impactful.
Speaker 7
Thank you. One other question and kind of in the transit sector or more specifically with the school bus fleet, which has a lot of virtues, even in the residual value context, but in the sort of co value of an asset that we understand the use case for it, obviously very sizable returns to a standardized place, you know, doesn't run that often. Have you recall at all on the question of the school bus fleet, how it's financed and what the grid asset value of that vehicle amounts to in terms of our ability to get these vehicles on the road?
Speaker 10
So that is a question, the value of the school bus to the grid is a question that we were grappling with in the VGA working group, which is a different CPC proceeding that I did participate in. We were trying to capture some very basic information about different vehicle types and how much on an annual basis, what their value could be as a great asset to their customers if they can resell the electricity. We think the potential for school buses per vehicle is definitely high because the ratio of battery size to how much they're driven is really high. They're parked a lot, but it's not the only but I don't have a dollar amount. We think our recommendation was that was something that the CBC should consider continue pursuing is a real dollar amount per commercial vehicle for California.
And there are quite a few other vehicle classes that we identified, like delivery trucks that are typically done with their route, certain kinds, not Amazon, but a lot of other fleets, they're done by mid afternoon. If there's additional capacity, they could charge while we're still producing solar and discharge during the evening peak and have a really high value to the grid and help a lot with balancing. So definitely something we would love the commission to continue pursuing. And once we have real numbers, also those will help fleets say, I'm going to make money on BGI. So that also helps me with the math of this vehicle purchase that's incrementally more expensive.
Speaker 10
don't have those numbers to show them and say, this is what we really think you could earn in addition from this vehicle.
Speaker 7
Right. Right. Which is obviously key information for the investor as well. So maybe this is this proceeding could be the vehicle for the pun intended getting that information to the investor class in addition to the fleet operator.
Speaker 4
Good morning, Daniel. Hope you can hear me. Great. Thank you for having the opportunity to be part of the panel discussion. Again, my name is Pietro Cambiaso, and I'm the deputy manager of strategic planning and resources at Inland Empire Utilities Agency.
I'm here today to talk about our experience with implementing and financing different types of clean energy project, such as energy efficiency, on-site generation, and energy storage. Next slide, please. So just a brief introduction about IUA. So for those who are not familiar with the Eden Empire Utilities Agency, we are a regional wastewater treatment agency and wholesale distributor of imported water. We are responsible for serving about 875,000 people over two forty two square miles in the Southwestern area of San Bernardino County.
Next slide. So in addition to wastewater treatment and imported water distribution, the agency is also focused on recycled water distribution, developing local water resources, and conservation programs to reduce the region's dependence on imported water supply. We also convert biosolids and waste into high quality compost and generating electricity from renewable resources. Next slide. But why energy management is so important to IUA and why is it a major program?
You can skip one more slide. Thanks. So the answer is the fiscal responsibility. Just to keep in perspective, the energy is the largest non labor operational cost. And therefore, responsibility is the main driver.
When we talk about being fiscal responsible, we don't only need to reduce the energy use and cost, but also we want to be resilient in times of energy market volatility. And this can be achieved by diversifying our energy portfolio through a combination of on-site generation and also electricity purchased from the market, both from the IOUs and also from energy service provider. Also minimizing our dependency from the utility is critical to achieve operational flexibility and reliability. And finally, IUA is very proud to protect the environment, to promote sustainable use of renewable resources, enhance air quality, reduce greenhouse gas emissions, and also to support the state goals by becoming part of the solution. So the AIS approach in order to address this issue is based on three major elements.
So the first one is about electricity consumption reduction. The second one is on-site generation. And the third one is about load demand management. Next slide. So just to kind of echo what the central skin mentioned earlier today, clean energy is the use, the one that we don't use.
Energy efficiency has been one of the major element that I really focus. So in 2015, we enrolled in two programs, the Water Infrastructure System Efficiency Program, also known as WISE, and the Southern California Regional Energy Network, also known as SOCA brand. These programs, they provide technical assistance through their specialized energy consultant at no additional cost to IUA. And some of the services they provide is project management support, energy efficiency assessment, savings verification, and also incentives processing. State of California Edison, which is our provider, is also an active partner and provides financial support by offering incentives, 0% interest loan through the on bill financing program.
Next slide. So since 2015, IUA has implemented several energy efficiency projects, and we were able to save more than 5,000 megawatt hour per year, and a saving of about $600,000 per year. So if you put in perspective, this is about 9% of the agency energy budget. And also, we received a one time incentive of about half $1,000,000 from California Edison. So this we thought it was very good approach in terms of reducing costs and also reducing gas emissions.
Next slide. One more, sorry. So the second element is the outside generation. IUS portfolio includes overall 3.5 megawatt of solar, one megawatt of wind turbine, and three megawatt of internal combustion engines on biogas. Both solar and wind turbines are twenty year power purchase agreements.
The developers are responsible for financing the project and also for the design, installation, operation and maintenance of the system. The IUA as the customer is responsible for purchasing all the electricity generator at a pre established rate over the life of the agreement. The SOAR project received the California Solar Initiative incentives, while the Winterbine received incentive from the LG, the South Generation Incentive Programs. Both savings were passed to IUA when we were negotiating the lower PPA rates. Another project is the Renewable Energy Efficiency Project, also known as the REAP, which consists of two one point five megawatt engines.
This project, just to give you perspective, was established in 2003 after securing an agreement with the Department of Energy. The REIT was conceived as a full scale energy demonstration system that was going use methane gas from local processing of food waste, dairy manure, and other organic materials. So the goal of this project was to develop a research and development project that has not been done before to determine if it was feasible. Also to design a system that is cost effective and transferable to other public agency and also to private industry. And the main goal is also to have a project that would not have any impact to the environment and produce immediate clean air and water quality benefits.
Next slide. So the latest clean energy project that was implemented, commissioned at IUA, in 2018 are the installation of a 1.5 megawatt rooftop solar and a 1.5 megawatt energy storage at one facility, and the installation of an overall 2.5 megawatt energy storage at three other sites. Both projects were developed through a partnership with a private provider. This provider was responsible for, again, financing, designing, operating, maintaining the system. This is a little different from the typical PPA that we have for the solar and the winter buying.
IE is responsible for the payment of a monthly energy management service, which are lower than the electricity bill savings achieved through the energy storage demand management operation. The energy provider received SGFP incentives for the combination of the solar and storage. They also received the federal investment tax credit, which again, were passed to IUA when we were negotiating the monthly energy management service payments. Next slide. So to recap IVA's financial strategy, as you can see, the public private partnership has been a common thread.
This is especially true for large projects that require significant investment, for example, solar projects. But also for those specific projects where staff doesn't have a really expertise, and may require third party to operate and maintain the system. This is true for the energy storage project. So what if private partner bridge the gap between by financing this project and also providing the skilled acquired expertise. The private partnership has allowed actually the agency to shift the risk to the private sector.
Being a public agency, we are looking for long term benefits. So financial responsibility and stability is a key element. And also the ability to have low rates for our customers. For smaller projects, like we saw for the energy efficiency project, incentives and on bill financing help staff to prioritize this project and also to implement them quickly. I also wanted to highlight that all this project I mentioned early receive incentives or grants, and it's very likely that this project will not be implemented without this type of financial support.
Grants typically can cover up to 50% of the project costs. However, most of the time, grants requirements exclude established technology. They tend to focus on research project at the risk element that public agencies may not want to take. So definitely, SGIP, it's a good avenue as well in terms of reducing the investment cost. Next
Speaker 4
So in addition to financial support, again, that's definitely one of the major hurdles. If you can address that, it's a great step forward to the implementation of clean energy project. But this is not the only issue. Special customers like highway and public agency face also other obstacles that could prevent implementation of this type of project.
Speaker 4
You see that? A long permitted process, stringent inquiry regulation, adding many regulatory agency involved during the process, the project implementation and permitting. Another issue could be the both our energy market, it doesn't allow agency like us to quantify the savings over time. And an important element, for on-site generation project via the meter, it's a long and costly interconnection and permitting process that also may restrict the exporting excess power to the grid. So in addition to provide financial support, I believe the energy project will benefit from streamlining the overall process, reducing cost for time and administrative effort during the permitting process as well, and also rely on proven technology and practices, so reducing the risk for public agency when implementing this new type of project.
And I believe this is my last slide. I have one more to show my contact information. If you're interested, you can always reach out to IUA if you have an additional question.
Speaker 7
Thank you, Pietro. If I could, comment you made on your prior slide regarding the shape of the energy market and lack of an opportunity to export any excess power. That obviously has resonance and sort of parallels with other issues that the commission has to wrestle within the DER space for all customer classes. Can you say a little bit more about what that has specifically meant for you? The disincentives component has that, is it sort of a, I mean, obviously it's not optimal, but has it directly impacted your ability to say raise money for projects or just operate those projects in the kind of the most rational fashion?
Speaker 4
Yeah, actually, this is one of the critical issue when the project actually is sized. So when we selected equipment, it could be a solar project, could be an engine on wind turbines, on a fuel cell, we tried the key priority is to actually use the power on That's the goal that the agency is planning to implement to reduce, of course, of the energy costs. However, sometimes because of the size of the project, there could be some instances where excess power may be exported to the grid because the low at work capacity is not constant. So the two avenues, either to export to the grid, which will not provide a, I would say, a valuable benefit because most of the time the value of the energy exported to the grid could be 50% of the actual market value. Or we are forced to reduce the size of the project.
So this has happened in the past. Also, there's a much more complicated interconnection agreement process with the option to export. There's additional modeling, additional equipment that is required at the grade for safety reasons, of course. But this definitely is an important element that has influenced the size of the project and the type of a project. Especially at the beginning, when we started back in 2008, where energy storage was not an option.
We believe now energy storage definitely can help to address this issue. But again, also when you add an additional equipment like energy storage to an existing on-site generation, it's a new avenue also for the IOUs to go through the interconnection agreement process. And that, of course, has delayed some of our project as required additional review. As required also the installation of additional expensive monitoring system, engine meters are pretty expensive. I understand the purpose for that, as other cost that sometimes it really made a longer payback to the project for the investor as well.
Speaker 7
Hopefully the more as we deploy more storage those soft costs come down a bit, but you have nonetheless succeeded in deploying a significant amount of storage. And that is a technology category of interest to this proceeding. Can you say anything that would be helpful for the discussion here about the financing challenges associated with your storage agenda? And it's an integrated approach with efficiency and supply side solutions. But as you approach the capital markets, has it been I imagine it's been challenging on some level to raise the money for this aspect of the work.
What should we learn from your experience there?
Speaker 4
So we always thought that energy storage was a critical element again to help maximize the on-site generation. And we approached this project different way. And the only time that we thought it was the most cost effective is through a public private partnership. So IUA did not have any upfront capital cost on the energy storage project. We are not, again, installation energy part is not our key main focus.
So we relied on third party and we understood it was very expensive as an installation project. We didn't have the expertise to actually manage the chargingdischarge of the storage. So relying on third party, having a known upfront cost over time that we can keep under control, that we can also use for a stable rate setting can help us to move forward with this project. But as I mentioned earlier, the provider of the investor, they were able to leverage the SGIP incentive programs, which definitely made this project feasible. There's also a way to recover some of the costs.
Like we know, being part of the demand manager response program to Kai, so that provide additional revenue that are shared between us as a customer and the provider. We hope that this will help as well to provide more cost benefits.
Speaker 7
And so the provider is effectively operating the storage system on your behalf?
Speaker 4
That is correct. So definitely with our load, our price structure, again, it's kind of complicated because we have a few sites on direct access, they receive power from Edison, and so they need to be familiar with all the different, you know, details and load and specific on-site generation in order to appropriately meet those cost savings.
Speaker 7
Right. Interesting. And so you've got the potential sort of like the OMConnect example yesterday of aggregating these storage assets facing the energy market and extracting economic value based on grid conditions, which if that can be done efficiently that enables capital to form for the storage asset in the first place.
Speaker 7
Very good. Okay, thank you so much Pietro. Let's turn it over to Chris Cone from Bayren for our final presentation.
Speaker 5
Thank you, Dan, and good morning everyone on the panel today and in the audience. It's a pleasure to be here and share our Water Upgrade SAVE program with you. My name is Chris Cohn. I am the program manager for Water Upgrade SAVE, which is a tariff on bill water efficiency program from the Bay Area Regional Energy Network. Next slide.
BayREN is a collaboration of the nine Bay Area counties and is led by the Association of Bay Area Governments. It is underwritten by CPUC ratepayer funds and uses the expertise of local governments to deliver efficiency services. Next slide, please. Bay RAN empowers communities to bridge the gap between resource constrained local governments and state and local policy. In 2013, Bay RAN has provided six efficiency programs that serve single family, multifamily, commercial, green labeling, and codes and standards participants.
Next slide. Water Upgrade SAVE is a tariff on bill program that allows water customers to install upgrades with no upfront cost using an on bill charge that is significantly lower than the estimated savings. This is possible because of the 80% rule. The monthly on bill charge is no greater than 80% of the estimated savings, and the repayment period no longer than 80% of the useful life of the upgrade. This means participants pay as they save using a portion of their savings to pay for the project cost over time with the tariff on bill charge.
Water Upgrade Saves makes the following participant assurances to utility customers who voluntarily install eligible program upgrades. No upfront payment, new debt obligation, credit check or lien, estimated savings that exceed by at least 20%, a utility approved monthly on bill charge. Repayment is required only while they are a water utility customer at the project location, and a guarantee that any failed upgrade is repaired or the on bill charge is terminated. The program also helps local governments, residents, and businesses pursue property improvements that are required by building code changes, time of sale requirements, and water use regulations. Next slide.
The regional program provides utility investment funds from ABAC and installs projects through a turnkey service designed to support water utility conservation goals, facilitate low cost capital, streamline customer services, and serve property owners as well as renters. Next slide. The program serves single family and multifamily customers with indoor and outdoor upgrades. Commercial services are in development now. The cost repayment period is ten years, and the estimated savings on which the on bill charge is based include water, sewer, and water heating savings.
Next slide. The Tariff on Bill model has been tested in the California market for over a decade. In 2010, the Sonoma County Regional Climate Protection Authority, my agency, received a Better Buildings Program grant to pilot the Tariffon Bill model with the town of Windsor. In 2013, BayRen assumed the initiative and supported pilots in the city of Hayward and East Bay Municipal Utilities District. In 2017, Senate Bill five sixty four, the Water Bill Savings Act, established a joint powers authority funding mechanism to support development of a regional tariff on bill program based on the three pilots.
Water Upgrade Safe, I'm proud to announce, has enrolled its first partner utility this month. Next slide. In 2019, a process evaluation of the three pilots showed high levels of participant satisfaction, an average of 30% bill savings for multifamily and 20% bill savings for single family projects, and accrued savings that would not otherwise have occurred. It also identified lessons learned that have been incorporated into the regional program design. Next slide.
Water Upgrade SAVE removes the household income and upfront cost barriers. It serves property owners and renters, enables water utilities to invest in behind the meter infrastructure, and provides a pathway to deeper efficiency projects. Next slide. As a CPUC Water Energy Nexus program, Water Upgrade SAVE provides a new solution for local governments, water utilities, and water customers. It enables customers to reduce their water and sewer costs.
It enables utilities to secure demand reductions that protect against increasing water supply costs, increasing demand from population growth and new housing, increasing state conservation targets, the need to invest in behind the meter efficiency, and persistent drought. And finally, it helps local governments to ensure that all citizens have access to a no upfront cost efficiency service. Next slide. Tariff on bill is often assumed to be a consumer loan program, but it is not. Rather, Tariff on Bill finance mechanism uses capital to facilitate utility investment for the public benefit.
It does this by using utility rate selling authorities to recover the investment. The capital provider pays for services rendered to participating customers who then join the utility's portfolio of installed projects. The utility collects the on bill charge at participating meters or from all ratepayers to make full repayment of the invested capital. The Tariff On Bill Rate Schedule offers the capital provider the following protections. The utility repays the capital regardless of customer collections.
The utility retains ownership of the project assets until the on bill charge is repaid in full. The on bill fee schedule is approved through a utility regulatory process and continues even if the utility undergoes reorganization or transition. The on bill charge is calculated to deliver the participant at least 20% net savings during the cost recovery term. The customers sign a participation agreement delineating consent, indemnification, and program obligations. And finally, the repayment obligation is attached to the meter.
So ongoing savings and any remaining on bill charge are assumed by a successor customer at that meter location. The ability of utilities to serve customers regardless of credit history and deliver immediate savings that support repayment creates an attractive offer that encourages participation. The on bill service enables participants to easily install efficiency upgrades at no upfront cost, realize immediate bill savings, capture savings from multiple project savings streams, and experience efficiency benefits that can lead to deeper projects. One challenge is navigating prevailing wage exceptions to avoid a contractor administrative burden while still enabling a living wage. Next slide.
In this era of COVID-nineteen, more people are struggling to make ends meet until the economy can recover. Income is increasingly used to meet basic needs, bumping an out of pocket efficiency investment to the back burner. For some, this is a new experience. For others, a limited budget is the norm. Either way, more people than ever need a way to reduce expenses without an out of pocket cost.
Tariff on bill meets that need. Utilities need a way to increase their investment in behind the meter efficiency to meet state goals. Tariff on bill meets that need. Utilities also need a way to provide equitable services throughout their territories. Tariff on bill meets that need too.
Using bill savings to pay for project costs means anyone can participate and benefit. Next slide. I want to thank you for the opportunity to tell you about our program, and I'm happy to take questions now or after the workshop. Thank you.
Speaker 7
Thank you so much, Chris. If you wouldn't mind, I think maybe we're getting some feedback on your mic. Mute yourself just briefly while I ask you a question and then come back on. You mentioned the role of utility capital. I want to make sure that we have a clear picture of where the money is actually coming from for this program.
Is it solely utility money that's being put to work or can you also envision or is it actually happening third party money coming into tariff on bill structure to maybe lower the total cost of capital and just increase the pool of available funds?
Speaker 5
Sure. So our program is the capital we are using to finance the installation of the projects is coming from the Association of Bay Area Governments. And it is Senate Bill five sixty four that made it possible for Joint Powers Authority to be the capital provider for our program.
Speaker 7
I see. So, ABAG goes to the capital markets to source the money, perhaps a green bond of some sort?
Speaker 5
Currently, we have a million dollar line of credit with a bag. The legislation provides for a scaling up funding through a bond acquisition process, and we are looking at some other alternatives as well. We're currently planning how to scale up the financing side.
Speaker 7
Got it. It strikes me as eminently scalable, given the tight control and measures, the effective driving savings and just the clarity of the thesis. Seems like it's a great pilot. Thank you for sharing that.
Speaker 5
Well, I do want to make one correction there. This program is no longer a pilot. We have three pilots, and our current endeavor is a full fledged program that is available throughout the nine Bay Area counties.
Speaker 7
Got it. Thank you for correcting me on that. That's a key point. Let me ask in our final few minutes here for all the panelists, one question that you won't be able to do justice to in the time that we have, but just quickly, given the importance of inclusivity and attention to disadvantaged communities, what would be a lesson you'd offer from your program, your community that the commission should take to heart when it comes to financing some of solutions that you focus on, but making sure they're broadly distributed across the California landscape? Chris, do you want to go first?
Speaker 5
in our program model, inclusivity and equity are really at the heart of this. We're trying to make it the model is designed to make it possible for anyone in the community to participate and lower their costs without that out of pocket burden or a credit check or consumer loan burden. And in that way, it has been very carefully designed to make this easy and accessible to the customer and to take the challenges of a program implementation onto the program partners that are bringing the offer to the customer.
Speaker 7
That's great. Thank you so much, Chris. Pietro, do you have a quick thought on this one?
Speaker 7
problem. Just asking for any concluding thoughts on the challenge of inclusivity at perhaps not a perfect fit for the nature of your work, but any lessons you have in the implementation of your program for economic inclusivity disadvantaged communities?
Speaker 4
Yeah, we basically indirectly we benefit the disadvantaged community by keeping our rates low. So any project is cost effective to the agency. It provides savings to our ratepayer, our customers. So, you know, that's fine. So anything that have allowed the agency to be more cost effective and this funding that will, you know, we pass those savings to our customers.
Speaker 10
Well, two thoughts. One is that, you know, we're really focused on giving everyone access to zero emission transportation. I think that takes different forms. So, you know, we don't think everyone in California needs to own a car, which means they don't need to all own an EV, but hopefully they can all have access to convenient zero emission transportation, which can look like, you know, riding a zero emission bus, taking public transit, having great clean mobility options. So I think to the degree that we can enable transit agencies and other public agencies to provide these services and, you know, finance zero emission electric buses, that will really help communities.
And also, it's disadvantaged communities that are most impacted right now by NOx and PM 2.5 emissions. So while it may not look like an equity program necessarily to transition our state's truck fleet, it really will have great impacts on disadvantaged communities.
Speaker 7
Great, thank you, Meredith. And Miriam, final thoughts on this point if you're still with us?
Speaker 9
Yeah, thanks. I think for us it's two things. One is, as we've mentioned, we think a loan program is an important tool for people who have the cash flow to repay loans. So we need other solutions for those that don't. And then to make our loan program more useful to everyone, including members of the underserved community, we need to streamline operations, remove complexity and make sure that we are able to allow lenders to do to reach people and to focus on the underwriting and the credit approvals and take care of the other complexities for them so that we can reach more and more people.
Speaker 7
Excellent focus on the service ethos. Thank you all so much. It was a great discussion, wide ranging, and I hope contributory to the Commission's agenda. Back over to you, Peter.
Speaker 1
Thank you, Dan, Chris, Pietro, Miriam, and Meredith. Thanks for a great panel. And we are now going to take a break and reconvene in thirteen minutes at 10:45 for our sixth and final workshop panel. See you in a few minutes. Peter Franzise, I'm an energy efficiency analyst at the CPUC and your host for the remainder of the day.
For our last panel, the format is the same as our first five. This panel will be seventy five minutes long, a one hour presentation by our panelists, followed by a fifteen minute panel Q and A among panelists and their moderator. We will have a public comment session at the end of today that will run from noon to one It'll begin with a fifteen minute moderator lightning round in which our moderators for today and perhaps one additional guest that is pending response from an invitation will join for sharing with us their key takeaways, followed by a forty five minute public comment session. As noted earlier, the workshop is being recorded and will be included on the record for our clean energy financing rulemaking twenty-eight-twenty two, and that link will be available at the Admin Monitor website that you are using to see our broadcast today. Just to note, there is a delay between the telephone audio and the webinar broadcast, so unless you absolutely have to watch the broadcast and get your audio from the phone line, we recommend that you do not and that you get both audio and video from the webinar broadcast so they are synced up.
And for any technical issues you have, please contact our IT technical support team. They've been doing a great job. They are available at (415) 703-5263. With that housekeeping done, I will now pass it over to our moderator for Panel six, Nancy Robles. Take it away,
Speaker 14
Great, thank you, and thank you so much for having us here today. I'm Nancy Robles. I'm the Executive Director of the California Pollution Control Financing Authority. And this agency is within the State Treasurer's Office. And, what this agency does is issues low cost tax exempt green bonds for water and waste.
We also have a capital access program that incentivizes lenders to make loans for small businesses and most notably for a program for heavy duty trucks for small fleets. And we heard earlier from Meredith at CalSTART about the challenges of financing for these small fleets and for zero emission vehicles. And we have continued to work with the Air Resources Board on a very successful program that helps lenders with that perceived risk that she spoke about. And so far, we've been able to assist financing of about 31,000 trucks on the road. So that's good news there and I hope that we can partner with them and assist with that zero emission vehicles.
So, enough about me. We have a great panel here today who are going to talk about their clean energy finance efforts and ways to shape future decisions of energy financing. So what I'd like to do is have them each give their own short introduction, and then we'll go into our presentations. And for the panel, if you're not speaking, if you could just keep yourself on mute, but remember to unmute yourself when it's time to speak. That will help with the feedback issues that we were having earlier today.
Sounds pretty good right now. So Ravi Patel from SMUD, could you introduce yourself, please?
Speaker 15
Sure. Thanks for having me. I'm filling in last minute for my director, Eric Krause here. I manage the market development and support team. We do strategic planning for our low income programs and support our commercial account representatives.
And, you know, SMUD has provided electric service here in the Sacramento area for a long time. We've offered a loan program for over ten, fifteen years now. As of today, we have about 3,100 loans valued at around $24,000,000. And I guess I'll wait to get into some of the details of kind of what we've done and where we're going.
Speaker 14
All right, great. Thank you. We also have Gwen Yamamoto Lau, and Gwen is with the Hawaiian Green Infrastructure Authority. Gwen, can you introduce yourself?
Speaker 16
Sure, good morning. The Hawaii Green Infrastructure Authority or HGIA was a result of Act two eleven, which created the framework for establishing a state administered clean energy financing authority. The loan fund was capitalized by a $150,000,000 green energy market securitization bond. Hence the program is often referred to as GEMS. The bond issuance was an innovative method of leveraging a tried and true rate reduction bond financing mechanism capital to facilitate clean energy infrastructure.
And HCA's objective is to make clean energy investments accessible and affordable to Hawaii's underserved rate payers defined as low and moderate income homeowners, renters, nonprofits, small businesses and multifamily rental projects. Thanks.
Speaker 14
All right, great. Thanks Gwen. Next up is Diana Adame from Mission Asset Fund. Diana?
Speaker 17
Hi everyone. Thank you so much for having me here. Yes, my name is Diana. I'm here with my colleague, Elena Farley. We are from Mission Asset Fund, also known as MAP.
We're a nonprofit organization located in the Mission District in San Francisco. I'll be sharing information about our recent program called Bay RAN Business Micro Loan Program. The program is pretty much designed to help small business owners save on their energy bill while also building credit. So I'll go more into detail about the program.
Speaker 14
All right, great. Thank you. And, last but not least, we have Bruce Mast from Ardena Energy. Bruce?
Speaker 18
Thank you, Nancy. Yes, my name is Bruce Mast. My I'm an independent consultant. My company is Ardena Energy. Some of you know me as coming to this conversation as a former program implementer with a long focus on scaling up whole house retrofit programs.
Since I've gone out on
Speaker 18
on residential electrification. And in that capacity, I've had the pleasure of working with the Building Decarbonization Coalition. And my esteemed colleagues, Holmes Hummel and Jean Clinton, and we wrote we co wrote an accessible finance white paper that laid out a policy roadmap for adopting terrestrial investments in California. For today's conversation, probably the important thing is that I'm part of the energy solutions team that has been selected to implement the tech program, the technologies and equipment for clean heat, which we'll talk about. And I'm going talk about the financing elements that we've planned for that program.
Speaker 14
All right, fantastic. Thank you, Bruce. So, thanks everyone for being here. And let's go ahead and get started with our program presentations. And we will start with Ravi.
Ravi, take it away.
Speaker 15
Yeah, sure. So luckily I just have one slide that kind of summarizes, you know, what we've been offering and kind of what we'd like to see going forward, but, you know, Smutt historically focused on energy efficiency for quite some time, we funded the loans ourselves, the intent of those loans was to, you know, get funds to people who wouldn't, or couldn't otherwise qualify and may not have gone forward with the energy efficiency upgrade. We had a lot of EE rebate programs, and so when we looked at our portfolio over the last year or two, and started analyzing kind of what's happening, we realized that, you know, this had become more of a program focused on people with very good credit and relatively high income. So it was really wasn't helping people to afford upgrades at the low income level and the vast segment that we wanted to serve. So we started looking into partnerships and kind of focusing on our core efforts while maybe partnering with financial institutes that could provide a more attractive offering.
And so as you can see from the current state, commercial sector very limited in what we had offered up to $10,000 in lending. Residential is by far our most active segment predominantly made up of HVAC replacement work valued at around $9.10000 per project. And again, those were really tied to our rebate programs, right? So it was contractor dependent, it was contractor driven, if they're gonna pick it at the time of retrofit, time of emergencies, then we have a shot of giving our loan a chance, but even during those times, right, there's a long paper trail, a long paper process that goes through the approval process, etcetera. Even the interest rates, maybe not the most attractive at starting at 6.99 for the secured loans and then going higher for unsecured.
And then there's of course, a little application fees and stuff that would be taken back if things go through, but very, it hasn't really evolved quite a bit over time. And so as we started looking for partners and we're kind of in the middle of it right now, which makes it a little challenging to kind of speak to all the details of it, but you know, the future state we want to work with an entity that could support our carbon reduction goals and electrification efforts, not just around, you know, energy efficiency necessarily, or even energy efficiency above title 24, right? That was the other kind of rule that we kind of had for ourselves that we would only provide loans for SEER ratings much above the code levels for HVAC, for example. And so, in the future we hope we could be a little more aggressive on the commercial side, if we have a partner that could bring in the technology, quick application feedback and approval process. Residential, we'd like to continue being aggressive there.
It's a huge touch point for SMUD. And actually that's why our current program has succeeded with very little marketing and such. We recognize that SMUD from a brand perspective is a very trusted name in our community. And so just based on that customers are willing to work with us on the energy efficiency upgrades and get the financing through us. But as we think about the future and our needs for meeting our integrated resource plan goals, we have to get better scale and we have to work with those that do this for a living.
So that's kind of where our mind is going here to see what options there are. And when we talk about the measures, right, it's not just about HVAC anymore, it's maybe heat pump space heating as a little bit more of a focus, heat pump water heating, electrification measures in general, analog grades, we need to get into the EV world as well, whether it's residential or commercial on the charging infrastructure side. And as far as the interest rates go, we wanna be current with the market, make sure if the market rates are low, then customers are able to get attractive financing there. And so when we think about our current low income programs and all the funding we have that we provide for replacing air conditioning or refrigerators or any of these typical measures, should we create a loan loss reserve of some sort to help our partners feel better about lending to customers that wouldn't have otherwise qualified through our normal historic kind of program. And finally, the customer experience side, which is extremely important across the board, especially for our programs and a point of emphasis, especially over the last five years or so, we have to get that right in terms of just the ease, the understanding of what's being offered to them, and even for the ease and the sake for the contractors, right, for them to be able to pitch it and get that approval or denial, but it's happening quickly and it's not wasting anyone's time.
There's minimal application fees. If there are fees, it's built into the payment plan, if you will. And even thinking about working with partners in the future, we hope that they could provide the portals necessary to allow the customer to auto pay and see their payment history and some of those basics that you expect from many institutions outside of the utility world. So that's kind of a, I guess, overview of what we'd like to see happen going forward. And we're literally in the middle of this transition here.
Yeah, good timing.
Speaker 14
Well, great. Thank you. You know, we heard earlier from Miriam Joffe Brock from Capefa, and it sounds like these are pretty similar challenges that you've had in processing your programs. And one of the similar challenges that you mentioned was that this wasn't necessarily utilized by lower income folks in the beginning. So how now, how will you serve that so far underserved market segment?
Speaker 15
Yeah, good question. I mean, it's going to be a work in progress for sure, but just looking at our current portfolio, those customers that currently receive a low income subsidy on their bills today, they only make up 3% of our loans. And so, you know, how do we get them more solutions and options to take on financing? I think it kind of goes back to a combination of things from partnering with third parties that again, could do some, you know, bring something to the table that maybe a utility can't. We want to make sure the timing of the offer is, you know, attractive as well.
When we talk about air conditioning, water heating, those are things that no one plans, it's gonna happen at any point and it's always a panic and people will have reactions instead of being proactive leading up to those moments. So how do we set up our contractors to have things shovel ready to offer something that's attractive and a no brainer when those moments happen for these customers. Know, Splunk has a great team of interview advisors that go out in the field or used to, and we do virtual audits and things like that. So we're trying to use technology to kind of prep for those moments and have better, I guess, predictions of when things may happen for certain neighborhoods or whatnot. And if we're properly working with third parties to anticipate those moments, maybe we could work out a loan loss reserve or allocate some funding to make sure that whatever is offered, you know, whether it's interest rate buy down or leveraging in the case of electric vehicles, low carbon fuel standard credit funding, you know, how could that be leveraged for financing EV projects perhaps?
So there's a lot to think about, but you're right on. I mean, we need to solve this challenge. And I think we just have to think outside the box more than we've done before. And again, utilizing third parties and folks that do this for a living, I think we'll get there slowly but surely.
Speaker 14
All right, great. Yeah, it's interesting you say that about, you know, utilizing third parties. That's something that, you know, I actually do at the treasurer's office where, you know, the air resources board and their truck program, they provide the funding, we provide the administration for that and connect with lenders and the loan loss reserves. We do the same for EV charging stations as well. Now you said that you were, you fund, you're funding your own program, is that correct?
Speaker 15
Correct. I mean, we're going through a transition right now where the portfolio will be taken on by a local bank, but as we move forward, we don't necessarily want to do the administration or the underwriting of these loans going forward. We rather make sure that the local partners are shaping their programs to compliment our rebate programs and our efforts, and we could help with the contractor training outreach, perhaps some co branding and really drive the initiatives that way.
Speaker 14
right, excellent. So what do you think your maximum transaction volume could be?
Speaker 15
Yeah, that's a tough one. You know, I think it really depends on the lens you look at it with. When you look at our internal goals for our carbon reduction needs and all that, you know, we have some projections of how many electric water heaters and HVAC and all these things we may need over the next ten, twenty years. And when you look at it strictly based on that, and you assume like a 25% conversion rate for those that need financing and loans for those types of projects, going from like 5,000,000 a year, which we're currently trending right now, it needs to get up to like $2,730,000,000 just from a per year kind of perspective. And again, it's very ambitious.
It's kind of far exceed the numbers that we're currently used to, but we could only do it with the support of our community and businesses that are also driven by this mission here.
Speaker 14
great. Well, thank you. It's fantastic. It sounds like you have a plan to get there and to, you know, increase that volume.
Speaker 15
Yeah, yep, and the one last thing I'll add there is, we can't really do this without the contractors, right? I mean, at the end of the day, a lot of these measures, all these technologies that we're talking about, it's not just plugging in new air conditioning or a new water heater. I keep coming back to those two references, but it's the technology shift too, Going from a gas water heater to electric or fuel switching or whatever those needs are, there's a big leap there alone. And so the contractors have to be on board, they need to know what their options are. We have to make it easy for them to offer it up.
And so, it's going to be a huge stakeholder that we need to be mindful of.
Speaker 14
Great, all right. Well, you, Ravi. Appreciate your presentation. And next, let's go to Gwen.
Speaker 16
Great, okay, good. So, you know, has one of the highest energy costs currently ranging from you can actually go to the next slide, ranging from 25¢ to 31.3¢ per kilowatt hour for residential ratepayers depending on which island they live on. This coupled with our high cost of living has made it a priority for our policymakers to make green energy inclusive and available to our most vulnerable ratepayers while stimulating private investments, leveraging tools to mitigate risk and reach new markets. Next slide please. In order to level the playing field and provide flexible financing to low and moderate income households and renters previously locked out of solar, HGIA launched its green energy money saver on bill program, which is available to 95% of the rate payers in the state located on five islands.
The unique features of this program include non traditional underwriting, which means no credit reports, no debt to income ratios, and loan qualification is via a simple two step process. First, we look at utility bill payment history and second, the energy installation requested must have an estimated 10% minimum bill savings, including the repayment of the loan after its installation. Additionally, with approximately 43% of our households renting due to the high cost of housing in Hawaii, it was important to design a program that also included renters. We did this by tying the obligation to the utility meter, which allows for transfer from tenant to tenant, split incentives and creative terms to eliminate obstacles for landlords. Some wonder about the capital stack.
So as mentioned earlier, our loan fund was capitalized with the issuance of a green bond. The bond is not an obligation of the state of Hawaii. It is an obligation of the ratepayers of the Hawaiian electric companies through a non bypassable green infrastructure fee on their utility bills. In order to not negatively impact ratepayers, the PC carved out a portion of the unused public benefit fund surcharge for energy efficiency programs and redirected it for the green infrastructure fee making it budget neutral for the ratepayers. Additionally, the capital stack for projects financed often include private capital from either the ratepayer or the bank.
Next slide please. The journey of On Bill in Hawaii began in 2011 when the governor signed Act two zero four into law which directed the Public Utilities Commission to investigate the viability of an on bill financing program for Hawaii. The PUC initiated this investigation on August 1531. On 02/01/2013, an on bill financing program was deemed viable. The PUC then commenced the implementation phase for our public benefits fund administrator, Hawaii Energy.
On 01/09/2015, the Hawaii Energy Bill Saver Program Manual was published by the PC. However, in October year, its finance program administrator informed the PC that it will not meet with contracts set to expire on December 31. Following an unsuccessful search for a replacement financing program administrator, the PC suspended the Hawaii Energy Bill Saver Program on May 2036 and directed the utility to work with HGIA to design and implement an ongoing payment mechanism for its exclusive use. So just to note, HGIA did not exist when On Bill was first being investigated. HGIA began our On Bill journey in April 2017 with weekly project meetings consisting of members from the authority, the electric utility and Concord, our loan servicer.
One year later, the PUC conditionally approved our green energy money saver on bill program and in December 2018, we received final approval. IT systems programming between the utility and our loan servicer was the most time and resource consuming. Additionally, to ensure utility bill integrity, the testing phase was complex and comprehensive. Because of the time lag between loan application and loan funding, as funding is typically done after the system is installed, the PUC allowed us to start accepting applications on 06/01/2018 and the on bill repayment mechanism went live on 04/08/2019. This actually worked out perfectly as we were able to immediately board loans into the on bill system once the mechanism was up and running.
Next slide, please. I wanted to provide some insight on a couple of projects in this PV plus storage example for a home in Maui. The post retrofit bill of $552 a month, which includes the LOMI payment is 10% lower than the pre solar bill of $6.14 a month. Adding the solar tax credits, the estimated benefits to over the life of the system aggregates over 52,000 for this low and moderate income household. The estimated savings, while not guaranteed, is very important as our goal is to help our ratepayers be in a better place financially after the installation of the energy improvement than they were before.
The estimated savings are not guaranteed because it's dependent upon a number of factors beyond our control such as weather, the cost of oil, and of course, human behavior. Next slide please. The next example is a non profit on Oahu with a post retrofit bill of $3,400 a month, which includes the power purchase agreement payment for the investor who owns the solar system and is 38 percent lower than the pre solar bill of $5,500 a month. As a nonprofit does not own the system, it is not entitled to tax credits. However, it is projected to enjoy significant savings of over $1,200,000 over the twenty year term of the power purchase agreement.
Thank you.
Speaker 14
All right, great. Thank you, Gwen. So, I noticed something there that's pretty interesting. It looks like you started your on bill in April 2019. So you basically have about a year's worth of data before the pandemic hit.
And then, you know, we really can't rely on data at this point for repayment after pandemic. But do you know, can you tell us how successful it was, the on bill repayment prior, pre pandemic anyway?
Speaker 16
Yeah, so actually there was pent up demand, Hawaii has been waiting for this for a while. So we did get a lot of application pre pandemic and we have been getting, construction is considered an essential business and have always has during this whole pandemic period. So we have been like supporting our contractors and processing loans during the pandemic. I will say though, due to the pandemic, like many States, when our governor issued the stay at home order in March 2020, it immediately resulted in our unemployment rates skyrocketing from 2.7% in January to 23.8% in April. And as a result of that, we began offering our borrowers deferrals for up to six months of which 63% of our residential and 89% of our commercial borrowers opted in.
Honestly, in spite of the rigorous testing that we did prior to launch of the ongoing repayment mechanism, we never tested for a mass loan deferral. So, we actually weren't sure exactly how the system would react, but I would say thanks to our loan servicer and the utility, we were able to work through some of the unexpected kinks that we encountered.
Speaker 14
Oh, that's fantastic. So, you tell us just a little bit more about your on bill payment process? Like how difficult was it to establish? And do you have like nonpayment trigger disconnects or we already know how the pandemic affected it. Right.
Speaker 16
Hawaii's journey was a little longer than I think necessary only because it went through two different iterations, First through the Hawaii Energy and then through HGIA. As I indicated on the earlier slide, having the program charge as part of the electric utility bill is critical because it enables non payment to be included in the utility standard collection process up to and including disconnection of services. And while we'll definitely do not want any ratepayer to be disconnected, this is a strong incentive for them to make payment. And this was the game changer that allowed us to change our underwriting criteria.
Speaker 14
Yeah, all right, fantastic. And even though this is a California forum, I mean, the reason that Gwen is here is because Hawaii has this successful program and we can certainly learn from you. So, what advice would you give California based on your experience and the lessons you've learned?
Speaker 16
Yeah, so many great lessons learned along the way, but I think there are three that I want to highlight. The most important is collaborating and leveraging the strengths of critical partners and instead of maybe forcing a utility to become a lender, reach out to your local green bank, a lender who's already proficient in understanding the nuances of clean energy financing such as your California Alternative Energy and Advanced Transportation Financing Authority. Second, prioritize utilities based on the number of ratepayers. As an example, the utility with the most ratepayer first and or group utilities that utilize the same billing system provider to collectively work on programming because by far that was the longest amount of time and resources that we needed for our program is that IT programming for the servicers system and the utilities billing system to electronically talk to each other. And third, broaden the application of this tool as a repayment mechanism.
It's not limited to being a financing program to install rooftop solar or energy efficiency measures. It can also be leveraged to lower risks and costs for community solar and multifamily projects, enabling developers to reach more LMI households and other served ratepayers.
Speaker 14
Excellent. All right. Well, Gwen, thank you so much for that presentation. Thank you. Great.
And, so, next we have, Diana.
Speaker 17
Hi, thank you so much. So I'll be introducing our, like I'd mentioned, our recently launched program called, Bayram Business Micro Loan Program. And we can continue with the next slide. So Bayram Business Micro Loan Program was mainly created to, intended to help small business owners save on their energy bill by helping them switch over to energy savings products. So, from fluorescent lights to LED lights, new refrigerators, TV monitors, any product that pretty much would be energy efficient.
And I do apologize if my dog begins to bark. He's running around here. The other thing is that we also wanted to make this program accessible and relevant. And our webpage clients are then able to complete their application and go through the entire process. They can even schedule a one on one directly with me just in case they can, you know, before they even begin the application, they can kind of inquire a little bit more about how the program can help them.
Also even about, you know, consulting products, know, this is what's going on with my business. This is where I would like to save money. They can go directly and schedule that appointment with me. Once they enroll in the program, we also facilitate the payment process by auto debiting their account on a monthly payment, that way they can make their payments on time, and they can save themselves that time just, you know, wherever they might be going to a place and making a payment, they don't have to worry about that. We just auto debit their account.
So pretty much we just try to tailor and really help out the client. And if we could go to our next slide. So for an example, Bayron Business Market Loan, again, like I'd mentioned, is still in the pilot phase. We're learning and adapting our program to so we could better reach clients within our community. And we've established partnership with Bayron, who is fully funding our loans through Bayron Business Micro Loan.
Mike, you would say, is our client that signed up for the energy savings program. He's the proud owner of C. In Little Italy in San Francisco. Mike heard of MAF through, we first reached out to him via call just to see if, you know, we reviewed the program with me, with him, and, he was a bit hesitant. Know, his first thought was, I get a lot of these calls, someone trying to save money or help me save money or just to kind of get more information.
And he said, So I'm always very cautious. So I'm like, Yeah, yeah, math, okay. And the other thing is that he, you know, heard about the program, was a little bit hesitant, but it wasn't until actually one of the contractors went into his business and has said, you know, Mike, I see that your lighting is a little bit off. You know, they're not all bright. You know, are you going out of business?
And he said, No, you know, this is, this is a business that I have for some time. So, you know, the contractor just kind of said, you know, I'm working with Mission Asset Fund. They're offering this great program, which can help you switch over your lighting. They offer this 0% interest loan. It's very simple.
They'll walk you through it. So Mike felt a little bit more comfortable. So then he reached out to us and he said, Okay, I'm ready. You know, here are my questions. We answered all of them.
He felt a little bit more confident in applying for the program. Again, I do apologize for my dog barking in the background. So the other thing too is that after he joined the program, he was able to switch out his fluorescent lights to the LED lights. He, the value of the loan was up to $3,000, but luckily through rebates and incentives, he lowered the total cost to about $1,700. Mike now has the brighter shop, and he saves on average from switching to LED lights to about $1,200 So the bigger picture of this program again, it helped him to save money out in his pocket.
It helped to improve his credit because this is a loan that we report out to all three major credit bureaus. And he opted into you know to save energy savings products by and he's also helping the environment right when he switched over to the LED lights. The other part too that I wanted to share as one of the things that Mike shared when I was doing an interview about a year ago, he said, You know, Diana, you know how long it takes me to actually make a profit of $1,200 So even though this program is saving me $100 a month, this is a huge thing for me because I'm a small business owner. So every dollar that I'm saving really does count. That's how the BayRam Business Micro Loan program helps our community.
Speaker 14
That's fantastic. Thank you. Yeah. Mike's story is, it's really exciting. It's exciting to see any small business owner right now, be successful.
So, Diana, where, where again, did you say your
Speaker 17
funding came from for your program? Yes, the funding comes from Bayron. So they're the ones to fully, we have the system set up already because of our programs that we have through lending circles or social loans and everything. So we have that system implemented. So what they provide us is with the funding so we can help the clients with these loans.
Speaker 14
Right. So, I know micro lending is a really a difficult arena for sure. So tell me how do you reach your underserved communities? What type of like marketing strategies do you have? So how do you do it?
I mean, I heard you say that you called the mic and in my world, that's called a cold call where you just pick the phone up and start calling businesses. How do
Speaker 17
you reach your communities? So we have a very, client focused based approach everything, even the way that MAP started back more than a decade ago, we surveyed the community, we found out that, you know, what their needs are. We really implement our three main core values. And so I'll just kind of share some information with you about that, which is that we respect the diversity of our communities and the challenges in their lives and the strengths that they also bring. We also meet them where they're at, not where we think they should be.
And this is even the way that we do our approach in reaching them. When we want to promote about our programs, when we want to let them know about changes in the community, We are doing Facebook live sessions. We go directly where they're at, so it's accessible for them, both in English and in Spanish. We help out, no matter what their immigration status is, Even if clients have a social security or not, if they have an ITIN, more than welcome to also participate. And not only during our presentations do we do bilingual presentations, but also our website, which is also easier to navigate.
They are in diverse languages. So, always try to keep that in mind. We also build on what is good in the lives of our clients. No matter the shape and the size, we build on programs that are accessible, culturally relevant. We also have different, we've even created an application, MyMouth.
So it's a tool that they can use. They have it at the tip of their hand. And also we focused, right now with the Rapid Response Fund. We have a, you know, the need within our community that it's not enough to cover their rent, their bills. And so we launched that where we're helping $500 in funds and grants for those that were not eligible to receive the stimulus check by the federal government.
So we really, really focus on implementing those ideas and to see where the community sat so that way we could meet those needs.
Speaker 14
fantastic. So I know that your program is limited right now to the Bay Area. But, how do you, you know, tell others, how do you think they could, duplicate your programs, to be statewide?
Speaker 17
One of the things is that we really focus on partnerships with partnerships to spread the word. But, know, if there, we do see that there is a need, with the application being online, I've gotten applications from Texas, from Florida, from New York, but unfortunately, because we don't cover those areas, then, you know, we're not able to assist those clients. So there is a need. And, you know, the way that they can just replicate it would also be through what we already do is with partnerships. You know, we do the kind of the back end and they're the ones to assist the clients directly.
They have that direct, you know, if there's someone in New York and they already go to a specific site that they trust in their community, then, you know, that would be the ideal to create partnerships, something that we've already established through our different program called Landing Circles.
Speaker 14
right, great. Well, thank you. Thank you, Diana so much. And thanks for the great work that you're doing in the Bay Area.
Speaker 14
right. And now we have Bruce. Bruce, would you like to introduce yourself and your program? Thank you.
Speaker 18
Thank you, Nancy, and thank you, Commissioner Schiromo and PUC staff for the opportunity to talk with you today and hopefully add something to the conversation. We can advance the slide. I've already introduced myself. This morning, I want to talk a little bit about our plans. We can advance the slide.
We'll talk a little bit about our plans for including financing options in as part of the technology and equipment program tech. For those of you who haven't been following this process as closely as a four year statewide pilot program that was authorized by Senate Bill fourteen seventy seven. It's regulated through a separate PUC proceeding R1901.01. And it is a market transformation program intended to spur added accelerated retrofits and existing homes for space heating and water heating. I want to really call out some remarks that were made yesterday in sessions that several panelists talked about the fact that financing doesn't generate demand, just enables it.
And that's an important point. I really want to stress here that financing is one element in a broader program that's comprehensive and includes supply chain development and upstream and midstream incentives and contractor education and consumer inspiration. And so I want to really stress that that it's embedded in a bigger effort. Next slide, please. We had a whole session yesterday talking about the capital requirements to get to our statewide climate action goals.
So I don't need to say a lot about this, other than just to acknowledge that the gap between what's needed and our current levels of public funding right now, that gap is enormous. So we can move on. Thank you. Let's talk more specifically about what we have in mind for tech. I have to stress that this is all in the planning phase.
In fact, we haven't even finalized our contract yet. So this is all but I think the details are coming into focus. So we're contemplating a two pronged approach. And I think this also echoes some of the remarks that were made yesterday about the need for multiple solutions for different customer segments that are facing different problems. And so, we really zeroed in on two, two solutions in particular.
One is a debt financing approach. And in this case, we want to piggyback on cases, real residential energy efficiency and loan assistance program. And the second option is tariffs tariff on bill investment pilot. We see debt financing is really important because it's well suited for customers who maybe have decent credit, but they don't necessarily require a positive payback on their on the big investments. They've got the cash flow and they want to make investments for reasons that may not be about those savings.
And Mary and Joffe Block talked about that. So Defiance is really great for that and it addresses that issue. Tariffed on bill investments we see as a very complementary tool, very well suited for customers who lack that access to conventional credit sources. And so in this case, we want to leverage the bill savings as the value stream to underwrite those investments. And so in this context, it becomes important that investment is constrained by the expected bill savings.
And that's an important consideration. We'll talk a fair amount about that. So we've got these two options with different constraints and different opportunities and complementary.
Speaker 18
more about REAL and then I'm going to talk at length about Tariff Don't Bill. So with REAL, Miriam talked already about some of the opportunities there. We want to build on the existing capacity investments that CASE has made and the PUC has made. And by doing so, we can offer customers higher borrowing limits and extended repayment periods, lower interest rate or credit requirements. So the value that we're adding here is tech.
Miriam talked both yesterday and again this morning about the challenges of geographical complexity of their offering. We think we can help solve or at least mitigate that issue and to give a little context, REAL is able to offer credit enhancements for a project that's served by both gas and electric IOU. REAL can offer credit enhancements that comes to the whole project. For a customer that is a gas IOU and a muni electric IOU, muni electric service, REAL can only offer credit enhancements for the gas portion of that investment. So you get this multiple flavors of offerings depending on the utility service in the area and that creates this geographical complexity.
So because of the source of funding for tech, we think that we can solve this. And so our plan is to offer basically GAAP funding. We've earmarked about just shy of $1,500,000 for supplementary credit enhancements to basically bridge that gap for customers that have a gas IOU service, but muni electric service and able to basically underwrite the electric measures under the same terms now as the gas measures. Now that means that we will be able to offer a kind of uniform offering to customers pretty much statewide. And we think that will go a long way towards simplifying that offer, making it easier for contractors and supplying the underlying administration.
And then when you combine that with the other aspects of tech around and contractor engagement, consumer inspiration, we think that we can really help spur further uptake in real. So that's kind of the intent there. On the tariff side, our goal is to do a pilot. We've heard from Chris Cohn earlier that this idea has been deployed successfully already with water districts in California and we heard yesterday from homes about how it's been you know rolled out for more than ten years in states, Kansas, North Carolina, Arkansas, Georgia, Kentucky, Hawaii. So there's lots of experience with this.
We don't have direct experience in California with an electrification program, so there's some things that we need to learn here. So we're looking for a utility partner that will work with us to do this because we need a utility that will that's part of the of the mix here. And we've earmarked about $3,000,000 for a mix of really kind of relieved utilities upfront risk. Covering some soft costs and some setup costs, doing some risk mitigation for the utility and for the customer, some credit enhancements as needed. So we've got about $3,000,000 earmarked for that to really make that pilot low risk from our partners perspective.
Let's go to the next slide. Just real quickly, when we talk about tariff on bill investments, we're leveraging a mechanism that is kind of well established on the utility side of the meter. So, this utilities already have a mechanism for making infrastructure investments and capitalizing them and finance them over long terms. And then recovering those costs and tariffs that customers basically pay for their share of the benefits and the customers don't have to show credit scores and they don't have to pay off debts when they move and things like that. It's all just based on the tariff.
And so the idea here and the innovation is to extend that to investments on the customer side of meter. As I said, there's a well established examples of that elsewhere. Chris talked a little bit more about the specific mechanisms for that. So we can click through to the next slide. We got one more.
Thank you. So with our pilot here, one of the things we really want to look at is the consumer protection aspect of this. Certainly based on my professional experience, this is going to be an important aspect for us. You know, a central premise of this approach is that we are able to offer participating customers a cash positive assurance that their cost of energy is going to go down, their energy burdens are going to go down, their risk of non payment, their risk of disconnects are going to go down. So it's really important that we can actually deliver on that promise.
So for starters, you know, I expect that we will adopt kind of what is the standard practice when in tariff on bill programs, which is this 80% rule that Chris alluded to. So basically capping the cost recovery charge at 80% of the expected savings that the customer is going to enjoy. Now, the challenge here, from my perspective is, is that, you know, customers don't pay their bills based on predicted engineering predictions, they pay pay based on meter readings. And, you know, from my somewhat painful experience, work with the home upgrade program, I can tell you that savings predictions don't always equal metered savings. In fact, in that program, we had a realization rate, which is the ratio of metered savings to predict the savings, our realization rate for the program was, I think, like in the 30% range is very low.
And so you can imagine and if you look through the evaluation literature you see multiple examples of programs that are you know come in with realization rates that are substantially lower than 100%. And so you can imagine that if we were to offer a teratom bill program that produced a realization rate that was lower than 80%, then a bunch of customers are going to be underwater. So that is an important concern. And the challenge here is really about how to partition risk between the customer and utility or the program operator. The utility shouldn't take on the full risk because you know on an individual basis customer energy consumption varies wildly and that's because life happens.
People have kids, kids grow up, they leave home, they buy gadgets, grandparents move in, they add on to their housing, all kinds of things happen that impact energy use that are perfectly legitimate and frankly none of none of our business. Fine, but we still have I believe a fiduciary duty to ensure that the upgrades that we invest in perform and perform up to the standards that we expected and that they're just not a quality installation but they're actually quality performance And we also have an obligation that the predictions that we made themselves are sound and predictions is an exact science. And so if you click forward, this is going to be something that you know we're going to be grappling with in the program design phase. We've earmarked money for this purpose to backstop this and one idea that we're kicking around is you start with this is from the kind of upfront ex ante view. This is basically a recap of what's in the box on the left.
So we've got our annual savings there, which I've conveniently benchmarked at 100. And so we would set our cost recovery at 80. And that's all on a predicted basis. If you click once more, we would look at how these projects perform and actually look at how the overall portfolio performs on an average basis across all of the projects in the portfolio. And the idea is that if our predictions are good and if our installation quality is good, that when we average over hundreds and thousands, hopefully millions of customers, that our predictions should converge towards 100% of the metered savings.
And so we should be getting a realization rate that's close to 100%. And if our portfolio level realization rate is significantly below that, then maybe we need to go back and adjust the cost recovery charge that customers are paying. So in this example here, let's
Speaker 18
that we get a realization rate of 90%, then we would go back and adjust the cost recovery by discount that by 10%, which means that we're writing off like 10% of the cost recovery revenue that we're expecting. And so that's where this risk mitigation fund that we've earmarked comes in. So one of the questions in the pilot is just kind of what is the nature of this risk? How big is it? Can we with confidence, know, basically you bring that risk down to zero?
Can we reduce the size of that risk mitigation? So I think it's going be an important area of investigation for our pilot. Next slide, and this is I think my last meaty slide. I want to a lot of things going on in this slide. There are really three important points that I want to drive home here.
One is this idea that financing specifically tariff investments that are tied to the energy savings, that that financing itself is going to be insufficient and we still need a robust incentive and mechanisms to go with it. It's going to be the combination. Oh, I'm still on the previous slide. I want to stress that we need policy drivers to incorporate the full cost of all of the positive externalities, able to internalize those into transaction. Either talk about that.
And then the final thing is that because these investments are tied to energy savings, energy prices are really important drivers and these are going to be determined by policies that are outside of this proceeding, But I want to just make sure that they are kind of high on the commission's radar. So just to explain to you kind of what you're looking at here. This is a hypothetical retrofit for a home in West Sacramento, looking at converting the space heating, conditioning and the water heating from gas to electric, and converting that with kind of typical assumed efficiencies for the gas and the heat pump technologies, and looking at the impacts on the energy bills and then how that if we apply that 8% rule, how much investment that could support through the tariff. And in the first scenario, there this that first column, the assumption is that the electric price is 24¢ a kilowatt hour. So that might be in line with what a IOU customer might pay under under tiered rates.
And you also see that the yellow that's, I'm assuming a climate incentive tied to the value of the GHGs at let's say $50 a ton. And what you see there is that the utility bill savings are pretty modest. The tariff contribution to the capital stack is very small. The orange there is what's left for the customer copay and I've kept that at the like for like replacement cost. So equipment's about to fail, they would spend so much on a furnace or hot water heater instead of spending that on the electric technology.
And you see if I impose that cap, and there's still this gap, that's the red that's like, it's not accounted for in that capital stack. So that's
Speaker 18
The second scenario now I'm assuming an electric rate of 12¢ a kilowatt hour. So that's more in line with what a muni customer might pay or you might start to get to that price point if an IOU customers on a TOU rate and we're able to run their equipment at off peak hours. And there you can see that the utility bill savings are more substantial. We've got cost recovery that is more substantial. And now the customers out of pocket cost is significantly reduced.
Now it's actually less than the like for like replacement. So now we're starting to get to maybe an attractive offer to a customer that has to replace their equipment. The third scenario, there is going back to the 24¢ price, but I'm looking at now another value stream that was left out of scenario one. So with electrification, that customer investment is actually creating like this positive benefit stream to utility ratepayers, and that's because we're adding electric load, the customer is paying for that at retail rates, but the utility is serving that added load at an incremental cost that's substantially less than the retail rate. And so in this case based on published literature, I estimated that delta to be about 17¢ a kilowatt hour.
So I calculated an upfront incentive that was worth the present value of that utility contribution to gross margin over twelve years and that's the green and you can see that now we've better improved the value stack and the tariff is still about the same as it was in scenario one, but the overall value stack is better because now we're looking at all the value stream or more value streams and internalizing those to the transaction so making the entire deal better. You would get basically the same thing if you could charge the customer a rate that is more mine with the marginal cost and then that whole green plus blue would just be blue. So different ways of getting to the same solution, but the more that we can internalize these external positive values into the deal, the more successful we're going to be in the more leverage we're going to get these transactions. So I will stop there and take questions.
Speaker 14
right, great Bruce. Thank you. Yeah, I do have a couple of questions. So how would you present like a compelling customer value proposition for attracting large scale private capital investment?
Speaker 18
Well, attack, to get the capital providers to the table, that's all about deal flow. So we need to show customers are attracted to the deal that they're actually participating. So I think by showing, starting with the pilot and showing that there's a really good uptake on the customer side, having a really compelling value proposition for them. So right now, you know, electric technologies is basically offering them, you know, new high performing equipment that's healthier and delivers better comfort and it's clean. And if we bring attractive financing solutions to the table, the goal is to get them to a place where it's little or no out of pocket costs upfront, little or no performance risk to the customer.
They're not getting disqualified for credit or other personal finance reasons. They're able to do more comprehensive upgrades in the future, they may need to comply with new codes. And so we can solve those problems and offer this streamlined easy painless investment opportunity to customers. Then the prospect is that we will get much more uptake than we have seen with prior programs and that in turn will bring the private capital to the table.
Speaker 14
Okay, great. So how much public or ratepayer funding support are you going
Speaker 18
So for this pilot, you know, I mentioned for the real pilot, we've earmarked about 1,000,001 half for
Speaker 18
of gap filling credit enhancements for the tariff on bill pilot. We've earmarked about 3,000,000,000 for various risk mitigation. We're looking kind of more broadly from a policy perspective. I think there's really two answers to
Speaker 18
One is looking really carefully at the leverage that we're able to get public dollar to private dollar and Miriam you know you mentioned for real right now that they're able to leverage about 6.6 for every public dollar they're putting in. So that's that's a reasonable kind of benchmark to aim for we can go better than that. Then the other lens that I would look at here is looking at the full suite of positive externalities and you know the benefits to society, benefits to ratepayers and looking at what you know what investments need to be made to internalize those into the transaction. That's an incentive upfront or smarter rate design or maybe a performance incentive over the life of the investment. Different ways we can do that with these investment mechanisms but that's another lens for us to really evaluate how much public funds should be going into these.
Speaker 14
All right, great. Well, Bruce, thank you so much. And I want to open it up to the panel now to see if there's anything that they'd like to add. I'm sure Gwen wants to tell
Speaker 9
you how jealous she is that you were talking about rates of $0.24 and $0.12 a kilowatt hour. Not her experience, I'm sure.
Speaker 14
You. All right, great. Thank you. Any other panel members have anything to add? Hearing none, I want to thank you all.
You gave fantastic presentations. It was really great to have you here, and I'm sure our audience will be reaching out to you. You all had contact information that was on your presentations that will be sent out later. And with that, Peter, I'll go ahead and turn it back over to you. Thank you.
Speaker 1
Thank you very much, Nancy, and to your panelists. We are about ready for our public comment period, but that will not start for a few minutes because we are twelve minutes ahead of time, so I need to get the folks who need to be on the line on the line. So I we will be back in a few minutes.
Speaker 1
As a participant moderator yesterday, and we also have a coming out of retirement quote unquote appearance by, I believe, someone that most, if not all of you on the call know, Jean Clinton. She shared with us during the public comment period yesterday some interesting and insightful comments, and we invited her back here to augment our moderator lightning round. So Holmes, Nancy, and keep an eye out for Jean. But Holmes and Nancy, you're on if you want to start, and we'll get Jean in as soon as we can. Can you hear me?
Speaker 11
terrific. Hello everyone. Commissioner Schiromo, thank you for holding this space once again for so many of the people who are following this rulemaking with care and for good reason for its potential for contribution. I'm a very poor stand in for the governor's advisor, Dan Adler who capably moderated both yesterday and today. And in service of this lightning round, I wanted to acknowledge that we also had a chance to hear for a second time from Miriam Joffe Block, the senior manager for CATFE, who I think in the spirit of a lightning round made very clear a request to the commission to authorize new funding for loans without regard to their cash flow potential for the borrower.
And recognizing that among those people who are eligible with credit score and income to access those instruments, about half of them are approved and that the overall performance of that program, should be considered, in its evaluation to include, and perhaps depend critically on its greenhouse gas contributions to the greenhouse gas policies of California rather than other potential metrics, including the cost effectiveness metrics of other ratepayer funded programs. Miriam was also very clear that there are unmet needs and under served market segments beyond those that could be reached by even the growing real program and left open the possibility that different instruments could address that market space. I think we also heard other speakers yesterday and today note that CATEFA's existence as an asset to the state of California means that it couldn't have a role in what those instruments could be. Meredith Alexander brought us really the only robust conversations of the whole workshop on transportation electrification, which is in the scope of the preliminary scoping memo for this rulemaking and underscored that the number one cost, the number one barrier to deployment is the upfront cost. And then went on to connect that to a charging as a service model being demonstrated at SMUD that is very similar to site specific utility investment with site specific cost recovery.
And I think that lit up the switchboard among folks that I know that interested in seeing the potential of what we've already observed for several years in the building sector, being brought to fixed assets in the transportation sector and potentially the onboard batteries that are associated with those deployments. I'm not going to summarize all of the contributions that were made, but I do want to feature the two water utility conversations that Dan hosted because they show us the multi resource potential for financing mechanisms to help with all of the resource efficiency interests and upgrades that are required for modernizing the grid and infrastructure in California. And we also saw that Chris Cohn was able to publish some very valuable data from three pilot programs that have now concluded and announced with some pride, think that's worthy of anyone who's worked on something for ten years that they have a full scale program now open to all of the nine counties in the Bay Area. And I'm looking forward to what that will mean to accelerate the state's interest with the CPUC rulemaking underway. With that, I think I hope I have done justice to Dan Adler and his coverage moderator of that first panel.
And I will pass it to, well, I would pass it to Nancy who just texted us that she may be having technical difficulties. Peter, I maybe leave it to you whether we should go to Jean next.
Speaker 1
Yes, Jean Clinton is in. I see her name. I think Jean, all you have to do is unmute yourself to join us and share your takeaways from today as well. For folks who weren't on yesterday, you can perhaps share your thoughts from yesterday with the folks on today as well.
Speaker 13
Sure, thank you. This is a sudden jumping into participating in the panel. So I tried to pull some nuts together from, some big picture themes, that I think have transpired over the two days. So I've boiled it down to four and I organize this in a way that I hope is useful for the deliberations and thinking at the PUC proceeding and and with all the myriad of stakeholders that we've been hearing from as well as experts today. So four four major takeaways that that I've heard going back to something that I said at the end of the day yesterday, I think what we heard from yesterday's panel on sort of what are the opportunities for investment in technology and end uses.
We're looking at a wartime equivalent for a decarbonization deployment that's needed and not only in California, obviously, but but more broadly. And the the takeaway that I heard from some of the panels was that there are multiple pathways to do this. There are a variety of, investment and financing and tariff products that could be called upon. And that what we really need to do is to focus on solving the needs and wants of the consumers and the customers and the market segments and make sure that the products that we collectively put on the table are going to meet those needs and wants to drive the deployment because just bringing the financing tools is is not sufficient. As many people have said, they get around barriers, they're enablers, but they don't drive the deployment.
So we need to make sure that we focus on that. Along the lines of the war time equivalent for deployment is that we are past the time of being able to do pilots. We need to mobilize full scale programs. And I would offer that the perhaps the smart way to do that is to come up with smart programs and designs with on ramps that can get up to speed, but are destined to go to full scale as long as they meet targets and metrics, but don't have to pause after two or three years and come back for approval and funding. Related to large scale deployment is looking at what is the scale of the supporting financing products and programs.
And I think one of the things that we've heard both from the East Coast and and from Hawaii and from CATFA is that we really need, if possible in California, statewide programs that somehow can draw upon state across the state funding sources. They may not it may not be a uniform set of funding sources. It may be a combination. And in doing that scale, at preferably statewide, we, tick three boxes. One, it's easier to communicate with contractors and consumers, about what's available.
Secondly, we have to have, more uniform and broad sets of investment measures that are eligible to participate in these programs, not just efficiency, not just solar, not just storage, not just EV charging, but to be able to have a uniform platform that can allow whatever the customer or property owner is ready for. And by doing so, California will be able to attract more capital sources at scale, hopefully with lower cost of capital by being able to to drive this scale. And sort of a footnote that I heard that I really wanna emphasize both from KITFA and from the Hawaii GEMS program was that this scale, it's helped support the IT systems that are necessary to allow the operations to go quickly, efficiency efficiently, and at reasonable cost for transactions. So that was all point two. Point three that I heard from Connecticut yesterday, Carrie O'Neil and from Hawaii, today with Gwen was the need for partnering and collaboration in what I would call the program design.
And that is that there are many partners and players who need to bring their knowledge and expertise together to sort of lay out the entire deployment channel or pathway. And to be clear that the benefits that everyone is anticipating can be realized. And just to be more specific on that, what I heard in Connecticut was that there were four or five different state agencies that came together covering finance, energy and utilities, consumer protection, housing, and probably also health. And in Hawaii, we had a number of entities coming together. And as I was thinking about this earlier this morning, I thought about the New York experience where you have NYSERDA as a market innovation and deployment driving sort of program visionary.
You have a green bank handling finance. You have a public service commission that's looking at programs and incentives and rates and funding. And then you have to have an infrastructure for what I would call pipeline development and delivery, which gets not only at measures and contractors and technologies, but also at consumer protection and consumer assurance. And those are important functions that I think the partners collectively need to be able to bring to the table. And then that leads me to my fourth sort of big picture takeaway coming from the remarks that I listened to this morning from both Miriam at CAPEVA and Meredith at Kailstart.
In terms of figuring out whose dollars are needed and for what purposes. And two different kinds of thoughts on that. There were three kinds of categories of dollars that I heard are necessary funding. One is support dollars. And I would call that for supporting transaction operations, marketing, maybe explaining of financial options, education, if you will.
Then there are leveraging dollars, the kinds of dollars that are used to go into loan loss reserves, interest write downs, maybe a performance, assurance reserve. And then there's the leveraged outside capital that also could include the capital not only for the changes in utility bills that are experienced or the energy resource benefits that are experienced, but also other value streams that may exist regarding grid system, and perhaps down the road, other value streams that could be related to resiliency and then property insurance and health and other kinds of value streams that, that could exist down the road. And I think the takeaway question, for for me as I was listening to, a lot of possible ways that, let me say, public purpose, dollars could be deployed was what is the process for choosing how to deploy these dollars, whether they're ratepayer dollars, utility dollars, greenhouse gas funds. And I suggest that it's a good start for to with collaboration to figure out, well, what are the possibilities to establish some principles for who principles that would guide deploying different sources for what purposes, then to establish some very clear goals that the different funding sources want to achieve.
And finally, some metrics establishing a framework of metrics that could be used for setting priorities for how to deploy those funds. So I hope that's not too high level, but I was trying to pull together some themes that I was listening to over the past two days, including adding in what we heard this morning. So thank you.
Speaker 1
No, thank you, Jean. And hope you stick around for the public comment question period that's coming up. And Nancy, did you are you sorted on your end? And are you able to join in?
Speaker 14
Okay, fantastic. Sorry about that. You know, I was having some technical difficulty, but I was able to hear some of our speakers. And I don't know that I have anything additional to add. It was pretty clear that we just need a variety of different programs and funding.
You know, loan programs aren't always the answer, but we do have, you know, great loan programs out there that are always in need of funding. And, you know, whether it's a pilot program or a program that has been established and running for a while, you know, they certainly are one of the tools in the toolbox. What I did hear and especially stuck out to me was the technical support as I'm having technical problems. Yeah, tech support is it seems to be a barrier to quick deployment when we do have good programs and the ability to, you know, present something to the public. There always seems to be this stall just getting, you know, whether it's the funding or the expertise for the technical piece of it to be put together.
Other than that, you know, Gene had stole my thunder, as it were, and fantastic, and it's good to see you again.
Speaker 1
Okay, thank you, Nancy, that, and Jean and Holmes. We are a few minutes ahead of schedule, but my sense is that we probably don't have anyone coming in right at 12:15. The folks who are on are the ones interested in providing public comment. So I will propose that to the Verizon operator. Thank you in advance for your work, and you may feed the call into the WebEx.
Speaker 20
The first speaker is Zaina Badde from GRID Alternatives. Your line is now open.
Speaker 12
Thank you. Yes, my name is Zaina Badde. I'm with GRID Alternatives and thanks again to the Commission and all the speakers in this workshop over the past two days. As the Commission looks to scale up clean energy adoption through financing, I wanted to ask if there will be a plan to meet the workforce needs for achieving the market penetration goals over the next couple of decades. Many of the speakers over the past two days talked about the ambitious targets and some even mentioned job creation potential of scaling up decarbonization technologies and it seems likely that it's going to require a lot of training and hiring of new people in the industry.
So I know it falls somewhat outside the scope of this particular proceeding, but wondering if the commission is considering the workforce implications of this and how to ensure that we have the adequate workforce in California to achieve the desired scale of deployment. Thank you.
Speaker 19
Is Hal Kane with the CPUC. If no one else wants to jump in, I'll just mention we have the CPUC has signed a memorandum of understanding with the California Workforce Development Board through which we're working on this. We're very aware of the governor's office. It has the high road plan, it's called, which you could look up if you're not familiar with it. Energy efficiency has taken the lead on this.
We have a 2018 decision which gave workforce requirements for certified work or people who have five years or more of experience for certain projects like lighting and HVAC above a certain size. So that's what we've done so far.
Speaker 20
The next speaker is Alfred Gisparis from Pacific Gas and Electric. Your line is now open.
Speaker 21
Hey, everybody. It's really great to hear some familiar voices and some new voices. It's been a very interesting two days, 1.5 So thank you very much. I'm on the customer resiliency team now at PG and E, but I've been working on our financing programs since 2012, along with the team, including Peter Thompson and others. Embraced PG and E has embraced financing programs to meet our customer goals, and we've been able to expand the programs within our existing authorization.
I think one of the things that's really important is that as an entrepreneur or any source, you have to be familiar with the funding source that you have. And we talked a lot about some of the requirements that come down. So it's important that we look at how we can expand the roles to do that. So some of the things we've done is pushed on the OBS program to offer the non incentive pass. We've increased loan terms to support comprehensive measures.
We've only given about $260,000,000 in loans. We've been constrained in the energy efficiency by the cost effectiveness requirements that Marion brought up. So that is a great call out, and we want to get that set up. In the S SHIP program, we've been looking at how to address that barrier for both customers and developers of the cash flow timing. S SHIP is a statewide program, somewhat complicated, and it can take some time for the projects to be funded.
So we introduced the financial incentive, upfront financial incentive for developers, for residential customers. Last year, where we provided 50% of the SGIP funding at the time of RRF for upfront for the developers and to help low income. We also proposed and we have outstanding a proposal for an OBF offering for the SGIP program, where we would support schools that are looking at investing in storage. That's the first offering we've been able to put forth since we got we worked with the Department of Financial Protection and Innovation to expand our OBF offering beyond just energy efficiency. So as an investor owned utility, we got an interpretive opinion that specified that we don't have
Speaker 21
In terms of questions, I think one thing it's a questioncomments, I have three of them. The first is on innovation. We heard a lot about it's past the time for pilots and it's time for big action. And we agree. We look at we have ten years for carbon goals.
PG and E is fully supportive of meeting the state's carbon goals and wants to lean in. But we don't want to lose the sight of the importance of failing fast and failing early. And I think this is what Jean Clinton was highlighting around the idea of having off ramps and making sure that we can do that. We're really excited about looking at options from otherware. So some of the things we're looking at is that it's great to hear what Connecticut has done to drive adoption in low income communities.
We're also looking at Green Mountain Power in Vermont, where they have gotten the cost of batteries down to almost $10,000 less than we're paying for S chip incentives here in California. And they're able to offer a lease option for customers, which is very exciting for battery option. So that question is, on innovation, how do we bounce that of going big but not falling into the trap of trying to either boil the ocean or getting into something that we find out in a year isn't going to work and we've wasted a year. The second question is around other market trends. So we talked a lot about pace.
And for those of you, you recall that one of the things that came out of PACE was the FHFA did some work on the secured lending market, so for mortgages. And now Fannie Mae is one of the biggest issuers of green bonds for their green mortgages. So I want to make sure that we're thinking about how to integrate those markets. We also should be thinking about property tax the property insurance market. So as your resiliency becomes more of an issue, we could potentially look at working in those markets because all of those sources of capital are things that can be leveraged for clean energy programs.
So I'm wondering if anyone has comments on that. Thank you.
Speaker 11
don't hear anyone making a comment in response to Mr. Gaspari, who helped co author the business plan for PG and E's energy efficiency programs for the year 2018 to 2021. And that business plan does include a substantial segment with attention to financing, including a commitment to examine tariff on bill terms without mention of many of the things that I think have developed in the portfolio that we've just heard described since that time. And perhaps that business plan is due to be updated this year. I'm not up on the schedules for deadlines and deliveries, but it sounds like there's new thinking at the utility that might be able to further elaborate on the intentions in 2021 to seek commission support for the new ideas.
Speaker 2
Yes, and Holmes, it's Genevieve. And thank you to PG and E and to Gottsparri for weighing in. PG and E and the other utilities are parties in this proceeding and many others, and we will definitely be welcoming all ideas into the proceeding. Thank you.
Speaker 13
So, in addition to what goes on in the proceeding, this is Jean, I would just offer the dilemma, an observation of the dilemma that we have where we need a lot of voices in minds to contribute to what I would call program design and sort of market deployment channels. And some of that probably needs to occur outside of a strict regulatory proceeding where other players who have lots of views in the market and contractors and manufacturers and the capital industry need to come together and then sort of bring a solution back or forward for approval. So I think one of the interesting challenges is, to what extent does a regulatory entity sort of set the parameters what success might look like? And then how are the market players sort of free to go figure out the products and make sure that they're nimble, not only with Al Gasparri's comments about what's going on with federal sort of home equity products and mortgages, but in resilience, but also what's going on in changes with technology and cost. And so I think one of the challenges will be to think for the Commission to think through how to set those parameters and then how to let the program design and innovation occur in a somewhat more inclusive market setting.
Speaker 18
If I could chime in, this is Bruce, if I can chime in on Al's remarks. The theme that I took away from that is, and Jeannie, you've touched on this, you know, this tension between kind of allowing key market actors, space to innovate and to experiment a little bit, while you know, from a regulatory perspective, still maintaining accountability and oversight.
Speaker 18
we also heard from Miriam Joffe Block and is when she was relaying some of the challenges that KFA has experienced that they are trying to adapt to market conditions. And what it calls to mind for me is just, you know, the, the value, you know, to the maximum extent that we can to really regulate by looking at performance and outcomes rather than trying to micromanage processes. And the more that we can shift to that performance lens, I think the more, more we'll be able to balance flexibility and innovation and accountability.
Speaker 12
Hello. This is Jennifer Dowdell. I just wanted to first thank Commissioner Schiroma and the panelists for an excellent workshop. We have been listening with eagerness. I just have a couple of comments and a request for some feedback from the panelists.
The first being that not surprisingly TURN wishes the consideration that the utility share of consumer wallet is not infinite. And we're to get to 2045 in California, we are talking about huge amount of investment that has implications for ratepayer costs that are significant regardless of how we structure that. It's an important end goal and we support it, but the costs are likely to be significant. I was excited about what I heard in this workshop about the use of private investment. I think that's a huge opportunity.
I also think it's very important that in this proceeding there's an opportunity for the Commission to look at what consumer protections are necessary to provide guardrails and traffic signals that would allow the financial market to help bring solutions that might be affected. I think people have shared some tales where programs didn't work so well. And I think consumer protection is going to be crucial here. And with that, I'm wondering what kind of structures other panelists are thinking about could be effective that would allow full market kind of engagement in providing dollars that could be leveraged with say public purpose funds or credit enhancement or structures like that. I hope that was coherent and clear.
Speaker 11
Jennifer, this is Holmes, and I was tracking everything to the last sentence where you posed a question, but I didn't quite catch the question part of it.
Speaker 12
Oh, okay. My question is, we can say consumer protection, but if you're too prescriptive with what a program should look like, then you can't let the market assess and do what the financial markets do, which is to provide capital fairly efficiently in most cases. So my question is, if we're thinking about structures, kind of what sort of guardrails are folks on the panel and participants thinking would be good. What kind of frameworks for those sorts of protections might be affected? Is that clearer?
Speaker 11
Much, and I appreciate your indulgence. One thing that I can contribute to the conversation you started on that topic is that at the federal level for ten years, there has been a well known dilemma about consumer protections that are patrolled in the financial services sector under the auspices of the Consumer Financial Protection Bureau and consumer protections that are patrolled by economic regulators of the utility industry, which are of course prevailed upon by groups such as TERN and all of the members of the National Association of State Utility Consumer Advocates. It does turn out that the consumer protection rules that apply to the financial services sector's products, systematically disqualify large segments of the population that then present themselves in the halls of utility commissions as underserved constituents. And California is not unique in this regard. It's exactly for that point that I think yesterday's first panel had a first speaker who was describing what's happening in several states where persistent poverty is even more intensely felt than it is in a state the size of California, even with the conditions that we have and the tension with the ambition for climate policy that's here.
And the practical response to those two different sets of consumer protection between the financial services sector and the economic regulators of the utility industry, is that between the two, the second, the utility regulators were actually able to authorize a solution that was reaching a far larger percentage, in every single place where both types of instruments were available. And at the end of that panel, every member of the panel agreed, that both types of instruments can and do exist, in all of the places where more inclusive site specific investment and cost recovery options are available from the utility. And all three of those panelists rewind the tape on that, I'll have to go check, but I think I asked them each directly, could you do it without the site specific investment from the utility? And at least two of them emphatically said they didn't know another way. The reason why I'm harping on this rewind to the tape piece is that there is from the Southern Environmental Law Center, a 10 or 12 page memo on consumer protections, specifically for utility regulators that have had the opportunity to approve these types of programs.
It's a resource that we can certainly try to make available through the record that's being developed for this docket. And I can provide it to TURN directly.
Speaker 9
I'd like to chime in. This is Miriam from CATEF. I'd like to chime in with a little bit of a more narrow answer. And Holmes, that was I really appreciate. From a very practical implementation standpoint,
Speaker 9
experience, setting up consumer protection around the financial instrument itself, and again, we're talking about a debt product here, is pretty straightforward because we're engaging with a few capital providers, or if there was a single originator model, a product is devised. And so there's a pretty kind of straightforward path to regulate some boundaries around things like interest rates, things like consumer credit requirements, that as Holmes mentioned, can be exclusionary, but are sometimes appropriately exclusionary to prevent people from going further into debt or bankruptcy. And then we know other mechanisms are needed. I feel like that path is pretty straightforward for what we're doing. And then there can be debates about what that box and those different protections should be.
What we have found more challenging has been the consumer protection around the energy installation and the performance of that equipment itself. And that's for the reason that when we're trying to do a wide range, wide scale program, there are hundreds of different contractors involved who have many, many different levels of expertise and performance and internal ethics, and for all the reasons Bruce mentioned, with behavior change and energy savings being notoriously hard to predict, and then also the challenge of not wanting to hold up the financial transaction with things like mandatory audits on every project or robust M and V for very small transactions, that part has been more challenging to figure out. So we kind of think of the consumer protection in a couple of different buckets, the financial protection around the financing product, and then the actual satisfaction with the home improvement project that's been done.
Speaker 20
The next speaker is Ron George from Zero Admission Vehicle Nonprofit. Your line is now open.
Speaker 22
Alright. Thank you. My name is Ranji George. I am leading a non new nonprofit called Coalition for Advanced Zero Emissions Vehicles. I am a I was a scientist with the South Coast A AQMD.
I was in their technology advancement office, and we introduced the concept of battery vehicles and later on hydrogen fuel cell vehicles as the zero emission technologies to meet our air quality and climate goals. And I want to thank the CPC for focusing on climate change and the investments they have made, particularly in solar and wind and now in batteries. I have one chief concern, though, that the focus has been almost exclusively on battery and battery technologies as far as vehicles, infrastructure and storage is concerned. This dominance of batteries is a little unfortunate because hydrogen fuel cells can offer as much, if not more, benefits than batteries because there's no cleanup afterwards. There is an issue of battery disposal and custody at the very tail end of these batteries.
And then the low the disadvantaged communities that have to face the brunt of these storage facilities or recycling facilities. Urge you to put more focus on hydrogen fuel sets as far vehicles, as far as infrastructure and storage concern. All three categories is coming at big time in Europe and Japan. In Korea, they are spending billions. And even though California was the first in the country to lead in these technologies, Unfortunately, other countries have taken over us.
So I urge CPUC to come back strongly in these technologies. Thank you for letting me share these opinions. Thank you.
Speaker 1
Okay, thanks. We might wait a few minutes. Our moderators may want to weigh in. Yesterday, we did have one extra call after a couple of minutes, so we'll give the line a few more minutes before moving on to Commissioner Schiroma.
Speaker 13
This is Jean Clinton. Maybe I'll take a minute to add one additional comment or perspective. Something that Miriam Joffe Block commented on that was, I think, similar to one of the commenters yesterday was that perhaps there hasn't been enough attention to what I call the project development pipeline to specify projects, figure out the right project, and then get it installed with quality and attention to performance. And I just make the observation that California, obviously over years, had in the residential sectors, you know, experience with programs like Energy Upgrade California, some programs that were funded, during the 'eight, 'nine economic stimulus period. And, quite frankly, going back to the '70s, I hate to date myself, but there were some statewide residential retrofit and financing programs.
And I think the challenge that we're hearing in places like Hawaii and Connecticut, maybe Arkansas or Kansas, people have been able to collaborate and work on a small scale and so to do a soup to nuts program design that figures out how to figure out the right project and the quality on the installation and then bring financing. And I think in a state as big as California with 40,000,000 people, it's been a challenge now for over forty years on how to sort of marry the policy objectives, the delivery challenges of getting good quality work with thousands and thousands of contractors, and then bringing in some financial dimension, whether it's incentives or financing, and while making sure that the consumer gets a good experience. So, I think we've got forty or more years to learn from. And I think the challenge is how to bring all of those lessons learned together in a way where we can mobilize smart investments. And I don't profess to have the solution, but I think that's the challenge that we're looking at.
Speaker 23
This is Meredith Alexander. Can you guys hear me? I just wanted to address the last public commenter. Sorry, trying to turn my video back on And just say that CalSTART is, we are technology neutral. So I intended my comments this morning to apply to both types of zero emission vehicles, whether they be battery electric or fuel cell electric vehicles.
But, we think that obviously the connections with the electric utilities are more important. And so probably issues around battery electric vehicles being top of mind for the Public Utilities Commission. I did wanna highlight though that, not quite in the scope of this proceeding, but in the in the transportation electrification framework proceeding, we do have scoped into that potentially development of hydrogen production rates, and that is something that CalSTART would like to see. At one point I wanted to raise is that I think both types of vehicles have the same issues around incremental cost of the vehicles. One important difference that we've seen is the potential for hydrogen for large fleets.
With a large fleet, the infrastructure cost per vehicle for hydrogen, we think, can come down and there can be scale achieved. And we know there are some fleets like AC Transit that are, you know, have adopted hydrogen a long time ago and maybe are even, producing their own hydrogen. I think there's a few transit fleets in California doing that. So we see that being, you know, one area where we could actually see positive infrastructure costs coming down with scale, and we definitely see hydrogen, as a good solution for not only transit fleets with longer routes, but also as as a critical technology for long haul trucking to replace diesel. So just wanted to raise that.
Thanks.
Speaker 2
This is Jennifer, I'll just tag on that. I'm also the assigned Commissioner on our Resiliency and Microgrid proceeding, and we are hearing extensively from fuel cell manufacturers, I don't if you call them developers, but as folks are saying, their technology is very well developed and continues to be fine tuned, and so there's extensive discussion through that proceeding as well. Are there any more commenters on the public line?
Speaker 20
The next public comment is from Brett Anderson. Please state your organization, if applicable. Your line is now open.
Speaker 3
Yeah. Hello. Thank you for the opportunity to speak. Brett Anderson is here. I'm a member of Carbon Free Palo Alto and also have been active in the Fossil Free Business Campaign in Silicon Valley and Fossil Free Silicon Valley.
We advocate for decarbonization policies in local jurisdictions, mostly cities, but we're also very concerned about what goes on in the county and state level. There was a large movement last year toward reach codes, all electric reach codes for new construction. And we've also had a very good progress in California of course on decarbonization, the electricity supply. The focus is now on exist on existing buildings, and communities are really looking for ways to adopt mandates that would require people to use electric solutions with their gas when they're replacing things that are getting to the end of life. The realization here is that it's an infrastructure problem and the utilities hold the key to the economics and feasibility for consumers to adopt dual switching solutions like electric heat pumps.
So the communities are really looking for a way to pass mandates that will address needs of the community because there are barriers to adoption. And a lot of those are mediated by the utility. So I'm hoping that the CPUC and down the line utilities could take the perspective that they are going to see mandates or part of the mission is to facilitate mandates because normal market development and incentives are not going to get us to the goals for 2030. We need ordinances mandates that make it a requirement to go all electric and switch away from fossil fuels. So in light of that I think thinking about the role of the CPUC and the financing end of it, basically along the lines of what has been addressed in some of the panels to make it simple, to get to reach scale and to make it flexible.
And the fact that we do have a proven solution in tariff on bill financing that does address these barriers I think should hopefully allow us to cut to the chase here and really provide something that is a solution for the decarbonization challenge just as it was a solution for the efficiency challenge. I think Bruce Maff laid out a nice way to look at the value stack and how we can bring the additional capital needed into the mix using something like tariff on bill financing that is kind of a universal easy to to do thing and you know captures that whole opportunity of upgrading our infrastructure based on you know a utility model which is you know basically the end to end owner of success here. It's a trusted source for the consumer and the suppliers to get the job done on a systematic massive scale to just roll these things out. When I look at that large chunk of investment that has to go into electrification, the prices are pretty high today. They're going to come down.
But we've already got people putting in 30% of that amount in gas devices every year. I mean we're still doing that. It's creating a lot of cognitive dissonance for communities to see themselves doing this and having no means to kind of stop that investment in these stranded assets. So I offer that as just a perspective to help maybe increase the urgency and focus on getting something that is a behind the meter infrastructure investment that is basically owned and simplified and made accessible by the utilities as soon as possible.
Speaker 1
Thank you. Does anyone in the group of panelists and moderators care to respond? Give the Verizon line another minute to see if we get any additional callers. In the meantime, ALJ Sisto, did you want to ask your question?
Speaker 24
Great. Yeah, I was hoping to ask the panelists whether they can give us some information about how and if renters or businesses that are moving into properties that have existing on bill financing obligations are being made aware of that extra funding requirement added to their utility bills before they sign their rental agreement.
Speaker 16
Yeah. So we actually make it the responsibility of the property owner to inform their renters, new tenants of the under obligation.
Speaker 11
Similar to Gwen's reply, though perhaps legally different in its originating authority. The programs that have been discussed by now multiple presenters, regarding utility site specific investment and cost recovery, involves a notice process that's posted freely online. And that URL can also be provided in comments on this workshop and the scoping memo for the record, but for all in attendance, the well tested now practice of all those utilities that have experienced and are reporting it, is that there is an owner's agreement, so that the building cannot be upgraded without the owner agreeing. And that agreement, it obligates them, as Gwen has just described, to notify the prospective renter of that location, that the building has been upgraded with the benefits of the energy upgrades the utility is capitalizing. And the result of that is net savings estimated for, you know, X, Y dollars for these particular upgrades.
And the renter has the right to decline the lease if they do not want to have an upgraded unit with lower energy bills. We haven't actually seen any program operators reporting that renters are rejecting that. In fact, the most interesting data set that we know about is from a multifamily housing unit in Arkansas that had a 100% subscription in the first year, but 25% transients, which means that 25% of the people moved out and the notice process worked for them well, even in the first year without the hitches that we had actually heard about years ago coming from early adopters in Kansas. Nowadays, all of that documentation is on the web, whereas before it was disclosed only in commissioner proceedings. So I think it's easy for consumer protection advocates and housing advocates to scrutinize in advance.
Speaker 1
Thank you, Homs. Anyone else care to weigh in? Otherwise, we'll go back to the phone line one last time. To the Verizon operator, do we have any other individuals waiting in the queue?
Speaker 20
The next commenter is Ron George. Your line is now open. Mr. George, please check your mute button.
Speaker 22
Thank you. I just want to add to Meredith's comment from CalSTART on hydrogen vehicles. Yes, there are three major transit agencies into it. The Sunline, South Coast where I used to work, was responsible helping Sunline to get into hydrogen and heavy duty buses running on hydrogen. The question I have, and thank you for the commissioner or the panelists who mentioned about fuel cells and distributed generation.
But I like the commissioners to consider this, please, in as much as you may give a rate break to IUs to people who use EV charging during peak hours, I would appreciate if you can give a break to those who will use electrolyzers to split hydrogen water into hydrogen. Some of that may coincide with peak hours. So and incidentally, electrolyzers have become very efficient. Right now, I'm hearing 82% efficiency in Germany, a company called Thijsen. TIGHTSEN, they are building electrolyzer large scale into that.
Some of those may be attracted to California if PUC would consider giving a break for electricity in use of electrolyzers. Thank you.
Speaker 20
The next commenter is Ann Arquit. Please state your organization. Your line is now open.
Speaker 25
Yeah. Hi, Peter and everyone involved in the workshop. This is Ann Arquit, Leader Bearer from EnerVee. I've really been enjoying this. I've tuned in to almost the whole two days and, you know, it's just been really rich set of information.
I just wanted to raise one issue that I don't think was actually raised explicitly. I think there's a big opportunity as well to take something like the unsecured loan program that's offered through the Treasury, the REAL program, and actually use money that's dedicated for low income programs and blend those two sources of funding together. So, you know, ESA funds to actually maybe buy down the interest rates that can be achieved through private lenders through REAL to the point where you're maybe offering zero interest financing on consumer products for example. So I think that's a big opportunity there being able to work across different silos which was in fact mentioned a number of times. A lot of these regulatory silos seem to get in the way of what we're actually trying to do to deliver, consumer friendly solutions.
So yes, that's one opportunity. We do have the new ESA cycle coming up and, we need to be scaling these types of solutions as everybody has said. So thank you.
Speaker 1
Okay. I think with that, Commissioner Charoma, we can move to your closing remarks.
Speaker 2
Okay. Thank you, Peter. Listen, this has been really, really insightful. Thank you all for your participation today. Our discussants, our panel members, our moderators, this second day of the workshop has been very insightful, as yesterday was, and it was very nice that we started the day with Senator Skinner, and the theme of the energy we don't use is the best of all, and how do we get there?
We heard from a diversity of financing about a diversity of financing programs being implemented, whether by our state treasurer's office, public utilities, including water, local governments, our sister state Hawaii today, and entrepreneurial energy companies and thought leaders. I've heard recurring themes of, again, simplicity, flexibility, including how customers pay, you know, on bill tariffs or what have you, and the urgency, the continued urgency to get beyond pilots and go to implementation, and to allow options that may not be cost effective to the customers but address their needs and wants, and consideration of metrics that take into account those needs and wants. I also heard about the importance of utility, public and private partnerships, information technology platforms that are easy for customers to navigate, for contractors to navigate, need to improve the interconnection permitting process. I mean, in all of this, there are also the engineering and the mechanics of making these kinds of programs work and that contractors are key partners. And how do we provide for innovation in our CPUC proceeding, which by its nature can be very lumbering?
Okay. There's a whole panoply of things for us to consider. And speaking of our proceeding, next Friday, on February 5, we will hold our pre hearing conference for this clean energy financing proceeding. As those of you who are familiar with the CPUC proceedings and rulemakings, it is focused on the formal parties, though anyone can attend, and our docket now has a feature for the public to offer comments, written comments. It's very important that the parties be prepared to provide data on any outcomes of programs implemented and ideas for the next steps so that we can get that information into the docket.
I want to thank the moderators, panelists, and all those who participated in yesterday's and today's workshop. Your input will help us identify the priorities and objectives as we take next steps on the clean energy financing in California. And last but certainly not least, I want to thank the CPUC staff that worked for a number of months on the planning and organizing the workshop, starting with the Energy Division. Thank you, Peter, who was our host today, Peter Frances, Kevin Fawesi, Rory Cox, who is operating all of the slides, Yug Patel, Hal Kane and Jen Khalifoot, Joe Haga in our Information Technology and Audio Visual Unit, and our judges, Julie Fitch and Carolyn Sisto. And from my office, my energy advisor, Cheryl Winn, and my Chief of Staff, Luong Tessvai.
So again, thank you everybody. Your input and contribution will be invaluable as we move forward on this proceeding. This is recorded. We've taken notes and
Speaker 2
be reviewing the commentary as we go forward through the formal process. So I know there were over 500 people who at various points in time checked into the workshop. Today I think we didn't have quite as many, but we still had almost 200. So I think that really shows the interest and the urgency for this effort, and we do take it seriously. So thank you, everyone, and have a good rest of the day.
Have a good weekend. Be safe, and please continue to weigh in on this proceeding. Thank you. Back to
Speaker 1
I will be sending out a slide deck. Actually, I'll be creating a page on our CPUC website. I'll be sending out a link to that next week that will include the slide deck from yesterday and today, as well as directions on how to find the recording. If you don't find it on the admin monitor website. Other than that, thank you all for participating and have a good afternoon.
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