PG&E

K. PG&E’s Application Proposes a Reasonable Schedule for Implementation of

On Bill Financing (OBF) During the 2009-2011 Cycle Given the Technical

and Operational Activities that Must Be Completed Prior To Launch.

1. Institutional OBF

PG&E appreciates SB-Cal’s comments and its willingness to work collaboratively with

PG&E to ensure development of successful OBF programs. However, contrary to the assertions of SB-Cal, PG&E’s proposed schedule for implementing an on-bill financing (OBF) program for institutional customers in 2009 is in compliance with D. 07-10-032. D.07-10-032 directs the utilities to propose OBF programs for institutional customers for the 2009-2011 cycle. In compliance with this direction, PG&E has established an aggressive schedule to modify its billing system and perform extensive customer research, in order to fully develop and implement an OBF program that is cost effective and meets the needs of customers. PG&E anticipates that it will launch the OBF program for institutional customers in 2009.  Prior to program launch, PG&E must complete many tasks, each of which requires time and financial resources. For example, PG&E must modify its billing system to allow the capability of displaying finance payments on customer bills. Beyond the technical issues, there are many contractual, financial and tax issues that must be resolved before the program can launch. Given the complexity associated with establishing a completely new OBF offering,

PG&E’s timeframe is reasonable and compliant with the CPUC directive.

Beyond the issues PG&E must resolve internally to implement OBF, the timing of the

launch of PG&E’s OBF program is also impacted by the delay in the issuance of a final Decision on the utilities’ 2009-2011 applications. PG&E agrees with SB-Cal that the current schedule for the Commission ruling on the 2009-2011 application may create a delay in implementing the initial program. Moreover, utilities have not yet received a Decision on bridge funding which includes a funding request to commence planning activities for 2009-2011 programs like OBF.

2. Small Commercial OBF Pilot

PG&E is conducting research to inform the development of pilot OBF programs for small

24 commercial customer as required by the Commission. D.07-10-032 directs utilities to create OBF pilot programs for small commercial customers. (See p. 89). Consistent with this directive, PG&E plans to study its OBF research results and design pilot programs based on models that have demonstrated success and meet customer needs. PG&E appreciates SB-Cal’s recommendations to work with a specific LGP and third-party. The two organizations suggested by SB-Cal are being considered as potential partners in an OBF pilot for small businesses, as are other organizations. SCE

N. On-Bill Financing Program Design Complies With Commission Directive

Small Business California commented that SCE’s size limitation for on-bill financing of

customers with a monthly usage of 100 kW or less may limit program success.51 Pursuant to D.07-10-032,52 which directs IOUs to start or continue offering on-bill financing to small businesses and institutional customers, SCE intends to provide on-bill financing service to the customer segments specified. In the 2009-2011 cycle, SCE is expanding the on-bill financing program to include all eligible small businesses and start offering the service to all eligible institutional customers. It should be noted that the 100 kW requirement will not apply to institutional customers. Although SCE is open to the possibility of offering on-bill financing to all business customers in the future, SCE intends to focus its efforts in 2009-2011 to provide on bill financing to the customer segments cited above. Furthermore, through the proposed Financial Solutions Element, SCE intends to explore the possibility of developing other financing tools outside of on-bill financing to large business customers.  Small Business California also recommended an approach using on-bill financing contractor contact opportunities to incorporate a small business workforce development strategy to help improve on-bill financing installations.53 SCE agrees this is a useful approach, and plans to actively outreach to eligible customers and contractors to provide guidance and assistance on

integrating OBF into customer's energy efficiency projects. This active outreach will include SCE's participation in events and forums where eligible customers are likely to confer, as well as special sessions and events directed exclusively toward familiarizing customers and contractors with the OBF application process and integration of OBF into their planned energy efficiency projects.  LGSEC also asserts that the funding for on-bill financing is insufficient for the many local government needs that could be served through this incentive option.54 The amount of on bill financing funding proposed is based on SCE's projection of demand coming from small businesses and institutional customers. This projection takes into account existing participation

rates in various on-bill financing programs being administered by California IOUs. The

objective of offering on-bill financing is to facilitate energy efficiency projects that will not otherwise be feasible without the availability of on-bill financing, and this objective is also taken into consideration in arriving at the proposed funding amount. SCE believes the proposed budget for on-bill financing is adequate to meet the needs of customers in 2009-2011.