March 30, 2006

To: Power Committee

From: Charlie Grist and Tom Eckman

Subject: Strategic Plan for Conservation

Staff is proposing a modification in the process used to achieve the goal of action item CNSV-3. This memo is intended to explain the proposed change in approach.

Action item CNSV-3 calls for the Council to develop a strategic plan for conservation acquisition. The original action item called for the Council to hold a forum at which a formal agreement would be reached among key regional players on the following:

• Funding and implementation of a conservation tracking and reporting mechanism,
• An adaptive management process; and,
• A governance structure to help guide the region through coordination, implementation, evaluation and funding issues. 

Staff believes that convening a regional forum for the purpose of adopting of a formalized plan and governance structure would be counterproductive at this time. There are three primary reasons. First, the development of conservation implementation strategies already is proceeding successfully on informal basis. Shortly after the adoption of the Plan, staff convened a small regional coordinating group. This group includes senior staff from Bonneville, the Northwest Energy Efficiency Alliance (Alliance), the Energy Trust of Oregon and utilities. It meets quarterly to address three major issues:

• The scope and goals of current and planned regional conservation implementation activities
• Identification of shortfalls in the achievements of current programs and gaps in the coverage of future program plans 
• Development of solutions and initiatives to address the shortfalls and fill the gaps

Actionable items are identified at each meeting. Those actions with sponsors, lead agencies and available funding proceed. Where there are gaps, orphaned activities, lack of funding or other barriers, the group prioritizes next steps and works to develop solutions. So far this informal process is working. As reported at the March Council meeting, the region is on the path to achieving the 5^th Plan's conservation goals. Although staff is concerned that increased investments may be needed to achieve the 5th Plan's medium and long-term conservation goals, making the case for increased funding (and higher near term rates) may be difficult until a significant shortfall appears imminent.

Second, developing new formal agreements on a governance structure to help guide the region through implementation, evaluation and funding issues may prove cumbersome and actually hinder progress. It may prove cumbersome because there are so many venues where questions affecting how the region will fund and acquire conservation are decided. These venues include utility integrated resource planning processes and their acknowledgement by state regulatory commissions, processes to adopt improved state building codes, and legislative or administrative processes leading to the development or revision of state and federal appliance standards. Although the Council and its staff participate in many of these venues, it has no direct authority over any of these processes. Moreover, representatives that might participate in a Council-organized regional forum could not reasonably be expected to commit their organizations to a formal strategic plan for conservation, including a funding and governance structure, without at least significant time for discussion -- if at all. For example, Bonneville conservation budgets for 2007-2009 were adopted through a process that was completed soon after the 5^th Plan was adopted. While the Council participated in Bonneville's process asserting that funding was not adequate, the Administrator made the final budget decision. It is unlikely that other parties with similar independent budgeting or ratemaking authority would (or could) cede such authority under a regional strategic plan for conservation.

Currently there are only two region-wide conservation decision-making bodies, the Alliance and the Regional Technical Forum (RTF). The 5^th Plan recommended that the missions and budgets of the Alliance and RTF needed to be assessed and possibly revised. Rather than convene a regional forum to address the mission and budgets of these entities, the key parties are successfully approaching these issues on an ad hoc basis.

For example, utilities and Bonneville have been voluntarily funding the RTF year-by-year based on the business plan and the forecast needs of the RTF. If this mechanism continues to work as it has so far there is no pressing need for establishing a more formal agreement.

With respect to the Alliance, staff continues to believe there are outstanding issues that need resolution, in particular expanding its budget and program scope. Ultimately, the Council may wish to formally engage the Alliance on whether it has adequate funding to achieve the Plan's goals. However, in the near term a strategy to achieve increased funding is still under development. Moving the discussions to a more formal process at this time might actually hinder progress.

The third reason is for modifying how the Council achieves the goal of action item CNSV-3 is pragmatic. Using the Council's limited staff resources to organize, host and facilitate a forum to develop and secure regional agreement on a strategic plan will divert staff away from actually working on these very issues. As noted above, there are many decision makers involved in implementation. Many of the critical decisions are made in forums conducted by these other decision makers on schedules they dictate. Taking limited staff time to develop regional agreement on a strategic plan in a formalized process will restrict the amount of time staff can devote to working in these other forums. For example, staff would be able to devote less time to working with utilities to assist them in the development of their conservation resource assessments and integrated resource plans. Staff participation in federal standards rulemakings and state energy code processes would be more limited as would the amount of staff time available to support the work of the Regional Technical Forum.

For these reasons staff feels that the revised approach to action item CNSV-3 will be more efficient and effective and thus is more likely to achieve the conservation goals of the Plan.