PacifiCorp has agreed to terminate all of its ratepayer-funded energy efficiency programs in California, citing that they currently lack cost-effectiveness. According to documents filed with the California Public Utilities Commission (CPUC) on Friday, this move will result in a 0.7% rate reduction for customers.

PacifiCorp serves approximately 46,000 customers in northern California through its subsidiary Pacific Power. The company had attempted to retain and redesign these programs, but ultimately reached a proposed settlement with the Public Advocates Office (Cal Advocates) under the CPUC, agreeing to phase out the programs by January 1, 2026.

"PacifiCorp's energy efficiency programs have historically failed to deliver cost-effective benefits to ratepayers, and performance has been declining in recent years," Cal Advocates stated in a November filing. "Furthermore, cost-effectiveness projections for PacifiCorp's proposed redesigned portfolio show only marginal improvements and fail to provide ratepayer benefits exceeding program costs."

Cal Advocates noted in the filing that PacifiCorp has acknowledged "its failure to meet overall portfolio targets or cost-effectiveness standards, and difficulties in maintaining energy savings from existing programs. For example, savings from the Wattsmart Business program declined by approximately 75% between 2022 and 2024, while total portfolio savings fell by 40% for the full year 2024."

Pacific Power spokesperson Simon Gutierrez said that "delivering these programs in the California service territory presents unique challenges" because the area is largely rural, "with an average of only 4 customers per square mile and a higher proportion of low-income customers."

"Additionally, there are few large commercial projects that can offset the costs of smaller projects, and program delivery costs continue to rise," Gutierrez said. "Based on these factors, Pacific Power's energy efficiency programs in California are no longer cost-effective."

The agreement is subject to CPUC approval before it can take effect. In the joint filing, Cal Advocates and PacifiCorp requested that the Commission waive the comment and reply comment periods to resolve the case before the end of the year.

Under the agreement, PacifiCorp will continue to honor existing and pending customer incentive commitments and will reduce its California Schedule 191 surcharge—which funds public purpose and energy efficiency programs—to reflect the termination of these programs.

PacifiCorp may continue to collect a smaller amount for marketing, education, and outreach efforts in its California service territory through 2027 to inform customers about "available state, federal, and other non-investor-owned utility (non-IOU) funded energy efficiency, weatherization, and electrification programs and services."

The Schedule 191 surcharge is currently set at $1.37 per month for residential customers and 0.101–0.315 cents/kWh for non-residential customers by class.

Two of the energy efficiency programs—Wattsmart Homes and Wattsmart Business—have separate rate schedules and are now suspended, but the settlement preserves PacifiCorp's "ability to reactivate such programs in the future if it determines they are cost-effective," the filing states.

The settlement also states that PacifiCorp's exit from managing these programs does not "constitute a permanent waiver of its authority or ability to administer Commission-authorized energy efficiency programs."

The agreement stipulates that if PacifiCorp identifies "cost-effective program opportunities" in the future, it has an obligation to notify Cal Advocates "as soon as practicable." In such cases, "if the settling parties agree that a program is projected to be cost-effective, the parties agree to seek Commission approval of such programs through an application in good faith."

If the CPUC later changes its methodology for determining cost-effectiveness, or makes adjustments to its "Avoided Cost Calculator" that would bring these programs into compliance with its cost-effectiveness standards, the settlement provides that PacifiCorp and the CPUC will meet to discuss whether the programs should be reinstated.

The agreement also requires that, over the next year, PacifiCorp must "make all reasonable efforts to provide customers with information about all known applicable energy efficiency programs, including non-ratepayer-funded state or federal programs, that are available in PacifiCorp's California service territory."