Memorandum
To:
EEU E-mail Service List
From:
Robert Ide, Director for Energy Efficiency
Riley Allen, Director for Regulated Planning
Subject:
EEU Structure Working Group – EEU Structure Recommendation for
Consideration
Date:
September 13, 2007
In its September 5, 2007 memo, the Public Service Board (“PSB”) requested
participants circulate comments describing a recommended or proposed EEU structure
for Working Group consideration. This memo proposes an alternative structure that
attempts to fix the weaknesses in the existing structure while retaining many aspects of
the existing structure identified as strengths in the Department’s August 28, 2007 memo
in this proceeding as well as in other participants’ comments.
Key Characteristics of a Franchise
The existing institutional structure for the EEU is set forth in the September 30,
1999 Board order in Docket 5980 and was summarized in the Department’s August 28,
2007 memo in this working group process. The Docket 5980 order delineates the roles of
the various entities, including the PSB, EEU, Contract Administrator, Fiscal Agent,
Advisory Committee, DPS, and the distribution utilities. 1 Central to the Department’s
consideration of an alternative “performance franchise-like” structure is the retention of
many of the existing mechanisms that focus the EEU activities on acquiring costeffective energy efficiency resources and continuing to provide for independent oversight
of the EEU activities and independent management of the EEC funds collected to fund
the EEU activities.
Table 1 lists the major EEU functions, the primary responsible entity under the
existing contract structure, and proposed under a “performance franchise-like” structure.
1
Docket No. 5980 order, 9/30/99; Section E., pp. 29-41
Table 1
Function
Program Planning &
Implementation
Evaluation
Contract Administration
Budget setting
Determination of
Performance goals and
objectives
Determination of Minimum
performance standards
Setting Annual EEC
Collecting EEC revenues
EEC fund accounting
Annual EEU/EEC fund audit
Tri-annual Independent Audit
of Energy & Capacity
Savings
Resource Planning
Existing Contract Structure
EEU
‘Franchise-like Structure”
EEU
DPS
CA contract with PSB
PSB
PSB with DPS input
DPS
EEU w/DPS powers of
investigation under Title 30
and PSB oversight
PSB approved
PSB approved
PSB with DPS input
PSB approved
PSB
Utilities
FA contract with PSB
PSB contract
PSB contract
PSB
Utilities
FA contract w/PSB
PSB
PSB
Utilities/VELCO/DPS
EEU/Utilities/VELCO/DPS
The creation of, and powers granted to, a “performance-based -franchise” would
have at least the following characteristics:
1.
The Board would issue a certificate of public good (“CPG”) to an
independent entity for an indefinite period of time, contingent on
satisfactory performance, and with provisions for franchise
revocation in the event of unsatisfactory performance and/or
contingent on the continued need for the acquisition of cost
effective energy efficiency resources.
2.
Notice of revocation or franchise would trigger a formal
competitive solicitation and award of the franchise to a new
franchisee.
3.
The Board would set total EEU annual budgets for an initial threeyear period, with an annual process to maintain a three-year
forward budget that included the EEU, the DPS, the electric
utilities, and other stakeholders.
4.
Exemplary performance targets and incentives, satisfactory
performance definitions, and other measurable performance
benchmarks would be defined and detailed in the Board Orders
pertaining to the CPG or elements of the regulatory regime not
fully address in the CPF. The CPG or Board ordered terms of
performance may look like the existing contract between VEIC
and the Board, but without provision for direct Board oversight.
5.
The CPG would include authorization for specified activities not
directly related to the acquisition of cost-effective resources to the
extent they further state energy policy goals. Examples include
long-term planning, participation in the Vermont System Planning
Committee (“VSPC”), and other appropriate activities.
6.
Periodic reports on activities and progress towards performance
goals would be required.
7.
The Board would continue to set the EEC charge, direct the
collection of funds through the electric utility franchises, and
manage the funds through the fiscal agent mechanism.
8.
Energy Efficiency Utility savings verification, and other
independent EEU program evaluation activities would continue to
be provided by the DPS.
9.
The Board would continue jurisdiction on the use of forward
capacity market (“FCM”) revenues received by the franchise
holder.
10.
The franchise holder would be responsible for short- and long-term
planning and implementation of services and initiatives.
11.
The franchise holder would be responsible for the prudence, used
and usefulness of its expenditures directed toward activities
undertaken under the auspices of its CPG. Its records would be
subject to regulatory inspection under 30 V.S.A. 2006, as is now
the case with Vermont regulated utilities.
12.
The franchise holder would be considered a utility subject to the
jurisdiction of the Board and the Department under Title 30 of the
Vermont Statutes Annotated.
13.
The franchise holder would be subject to the same rules that
govern Vermont regulated utility legislative and lobbying efforts.