WEBVTT

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<v ->Okay, good morning, everyone.</v>

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My name is Peter Franzese.

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I'm an analyst in the
energy efficiency branch

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at the California Public
Utilities Commission

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and I wanna welcome you to the CPUC's

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Clean Energy Financing Workshop.

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We have a one and a half day agenda,

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comprised of six distinct panels,

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each of which we hope help
the CPUC and stakeholders

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identify lessons learned

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from the existing clean
energy finance efforts

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in California and nationally.

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Identify priorities and objectives

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for the CPUC's new financing OIR,

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and begin to shape future decisions

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on energy financing in California.

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Each panel today and tomorrow

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will consist of approximately one hour

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of panelists' presentations
and discussions,

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followed by 15 minutes of the Q&amp;A

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among panelists and
their respective moderator.

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The public opportunity to comment

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will come at the end of each
day as noted in the agenda,

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and we'll have a 15-minute
moderator lightning round,

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in which our moderators
from each panel for that day

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will convene and
summarize their takeaways

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from the panelists,

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followed by 45 minutes
of public comment.

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In the public comment session

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individuals who wish to ask a question

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will use the calling line
provided to the service list

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on January 25th, 2021 via email

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and if you don't have that number handy

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in all of your email,

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don't worry, we will have
that number up on the screen

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prior to each public comment session

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both today and tomorrow.

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Both days of our
workshop will be recorded

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and our entire discussion
today and tomorrow

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will be made part of
this proceedings record.

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A link to the recording
will be available

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at the admin monitor webpage link

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that you're using right now
to access this workshop,

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and I wanted to note that we
have the admin monitor link

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for viewing the workshop.

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There also was a call-in number provided

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in the event that you need
to for some reason just listen.

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Just note if you're trying
to follow along online

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to watch the presentation,
but also on the phone,

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there is a delay between the two.

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The internet broadcast is a
bit behind the phone audio.

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If you have any technical
difficulties during the day,

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please contact our CPUC IT
department at 415-703-5263.

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and we are scheduled now

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to hear from our assigned
Commissioner, Genevieve Shiroma,

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and I'll pass it over to you,
Commissioner Shiroma.

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<v ->Great, good morning,
and thank you, Peter,</v>

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and thank you to all of our
moderators and panelists

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for your time today and for
everyone who is tuning in.

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Yes, my name is Genevieve Shiroma

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and I am the assigned Commissioner

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at the California Public
Utilities Commission

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for this Clean Energy
Financing Rulemaking, welcome.

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In August of last year,
the CPUC voted to open

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this order instituting rulemaking or OIR

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to investigate financing options

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to support customer
investment in micro grids,

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energy efficiency, demand response,

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building decarbonisation,
distributing solar,

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and other self-generation
technologies, energy storage,

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alternative fuel, both
electric and gas vehicles,

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reliving infrastructure and more,

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all located on customer sites.

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There's no question

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financing will become
increasingly important

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as California pursues
its ambitious goals

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in the energy sector.

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We can't just rely on
the utilities or grants

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to make investments,

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and of course, the utilities

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are supported by customer dollars.

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We must leverage public
and private dollars as well.

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Achieving these goals will require

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involvement of Californians
at unprecedented levels

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in all market sectors,

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residential, commercial,
industrial, agricultural,

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including those living
in urban, rural, tribal,

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and disadvantaged communities,

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as well as low moderate
income customers and renters.

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Our two-day workshop
features, as Peter said,

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six dynamic and diverse
panels of financing experts

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from California and
across the United States.

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Day one today of the workshop

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is intended to lay the foundation

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for California's financing initiatives,

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and day two, tomorrow,

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we'll look at how to
prioritize unmet needs

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for clean energy investments.

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Each day we'll provide an opportunity

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for public common questions.

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We encourage your input.

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Thank you again for
attending today's workshop.

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I look forward within these two days

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for engaging in insightful discussions

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to learn a lot on how
California can provide

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clean energy financing options.

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It empowers all Californians.

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I also want to thank our team

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from the energy division staff,

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our Administrative Law Judges,

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and legal who have put a lot of thought

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into this groundbreaking workshop

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to be both innovative and inclusive,

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and again, thank you
to all of our moderators

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and our panelists.

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Thanks, back to you, Peter, thank you.

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<v Peter>Okay, thank you,
Commissioner Shiroma.</v>

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We do have a panel
slated to begin at 9:15.

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We have one individual joining

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and still waiting for one
other panelist to join,

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but Holmes Hummel,

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most if not all of you
on the WebEx and phone

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are aware of Holmes
Hummel and the work they do.

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I'll pass it over to you
Holmes for panel one.

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We might be a little early starting off.

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You don't have to fill
in the next 10 minutes

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with song and dance,
but I'll pass it to you.

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<v Holmes>Well, thank you for that,</v>

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and to Commissioner
Shiroma for leading this effort.

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I also recognize

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that we're joined by the
Administrative Law Judge

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who authored the order and
that the Commission signed

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on the eve of Labor Day

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at the end of what I believe

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is a decade's worth of pursuit

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of answers to urgently raised questions

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about inclusion and a transition,

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that means clean energy for all.

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I want to ask Peter,

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if we may use the time
that were advantaged with

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by the introductions to proceed,

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and I believe that the
panelist that we were seeking

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has joined us.

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Is that true?

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<v Peter>Yes, we are still
waiting for Jeff Schub.</v>

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<v Holmes>I believe
he is an attendee</v>

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and may need your assistance

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to change his status.
<v ->Okay.</v>

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<v Woman>Yeah, holds with
the technology of WebEx</v>

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and the virtual environment

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was nice as we can have
a lot more people join in,

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but then we also at times
have to take a few extra minutes

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to figure out the technical logistics.

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<v Holmes>I can
completely understand,</v>

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and as I was prepared to
acknowledge in any case,

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I experienced this type of technology

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actually is an investment in inclusion

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for the number of people
who are able to participate

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without the added
expense of time of travel,

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not to mention the carbon footprint,

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and also I'm well aware

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that the Commission
has already established

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a social and environmental
justice action plan

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that includes a goal of
expanding participation

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and making its proceedings
more accessible,

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and while technologies like
these may give us some wrinkles,

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overall, I think they expand opportunity

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and I'm appreciative for the opportunity

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to join this morning.

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<v Genevieve>We're here, thank you.</v>

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<v Holmes>Peter, I'll wait
your queue on the--</v>

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<v ->Yeah, I'm just making sure
everyone can see the deck.</v>

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Hold on, one second.

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<v Man>It appears Wesley,
nothing, we can't see.</v>

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<v ->Can you see the
panel one, 9:15 to 10:30?</v>

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<v Man>We can, yes.</v>

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<v ->You can, okay.</v>

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Rory, if you could get
that into presentation mode.

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Everyone can still see that now?

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<v Man>We can't still see it,</v>

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but as in presentation mode

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we're seeing the presenter
version of the slide.

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So we're seeing the
slide, the next slide,

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and the notes section.

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I don't know if that's
your intent or not.

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<v ->Okay, hold on.</v>

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<v ->We're clearing this up, folks.</v>

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Hold on one second.

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It's good we have some time.

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<v Joe>Hey, Rory, this is
Joe Hager from CPUC IT.</v>

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Go back on screen and
uncheck use presenters view.

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<v Miriam>Good morning,
Holmes and everyone.</v>

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While they're casting that out

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I just wanna see if you can hear me.

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<v Joe>Go to slideshow.</v>

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<v ->I can hear you, Miriam.</v>

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<v Miriam>Wonderful.</v>

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<v Joe>Uncheck use presenters
view over there to the right.</v>

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<v ->I believe we have achieved.</v>

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<v Peter>I think we're
successful, yes,</v>

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and I just confirmed that for all of you

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I did have a colleague check
the admin monitor broadcast

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and we appear to be good.

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So with that, Holmes, I will
officially pass it over to you

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and your esteemed
panel, and away we go.

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<v ->Well, terrific, good
morning to you all.</v>

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Certainly I want to acknowledge

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the leadership of the entire Commission

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in voting to open this proceeding

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and order a new rulemaking,

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and specifically, the leadership
of Commissioner Shiroma,

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whose vision for equity and inclusion

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as a matter of policy frame,

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has made its mark in
California electricity policy,

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and through this proceeding,

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I think we'll actually help
shape the coming transition.

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It's an honor to be with you

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as a moderator for the
opening panel of this workshop

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in a proceeding that in its order

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lists a dozen other proceedings

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that could be affected by
the decisions made here.

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That adds to the
significance and the gravity

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that I believe all of the
presenters have ascribed

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to their contributions
to this proceeding,

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and while the workshop is
unusual in my experience

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by it lasting not just all today,

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but tomorrow as well,

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is covering a territory that
is investing in the success

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of a rich and robust
public common period

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as the process moves
forward past the scoping memo.

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My task as moderator this morning

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is to host for you three experts
that you see on the agenda.

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Wesley Holmes, Jeffrey
Schub and Miriam Joffe-Block.

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I'm also invited to
take moderators license

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with a few opening remarks

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that are drawn from my own
experience and background

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over the last decade.

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In fact, 10 years ago,

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I served as the senior policy advisor,

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the Department of
Energy's Office of Policy,

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and in that capacity

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I founded the finance
working group for the agency,

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in what many of you will remember

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was the heart of the
Recovery Act period,

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where we had a national policy

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of investing in clean energy

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as a major strategy for
reigniting economic growth

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in the wake of the
mortgage market meltdown.

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If you proceed with the slides,

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which I believe you have control over,

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I would like to quickly move through

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some of the milestones and
highlights of the last 10 years

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that provide additional context

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to the significance of
our discussion today.

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Peter, is it you who is
able to advance the slides?

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There you go.

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Move, right.
<v ->Rory, yep, there we go.</v>

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<v ->Rory, please, thank you.</v>

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Let's go to the next slide.

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This slide covers more
writing than I will say out loud.

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All of you are eligible to read it,

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but I want to point out
that we are arriving in 2021.

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I'm not asking some of the
Commission's important questions

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for the first time.

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Very smart people and
dedicated professionals

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have been endeavoring
to seek financing solutions

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for distributed energy,

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technologies in particular,
for quite some time

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dating back at least a decade.

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It's important for me also to trace

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as is already acknowledged in the order.

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Where we are now, back
to an important decision

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made by the Commission
in the advice of its staff

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on the basis of a consulting product

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that identify the ideal finance
product as a consumer loan.

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That's an important decision,

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and it's a point that I know
will come up in the workshop

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over the next few panels,

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but whether tracing all
the way back to that point

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gives us a fork in the road.

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What happened from that point forward

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was trying to figure out how
to make consumer loans work,

00:14:40.350 --> 00:14:42.810
and one of the first things that
the Commission did discover

00:14:42.810 --> 00:14:45.230
is that the utilities
would lack clear authority

00:14:45.230 --> 00:14:50.230
to become non-bank lenders
and authorize loans to consumers,

00:14:50.460 --> 00:14:53.050
and that allowed the Commission
then to make a decision

00:14:53.050 --> 00:14:54.770
to separate the portfolio

00:14:54.770 --> 00:14:57.410
of the ratepayer-funded pilot programs

00:14:57.410 --> 00:14:58.880
into those that would be administered

00:14:58.880 --> 00:15:00.380
with the benefit of oversight

00:15:00.380 --> 00:15:01.930
from the State Treasurer's Office

00:15:01.930 --> 00:15:05.200
for the residential sector,
small business and multifamily,

00:15:05.200 --> 00:15:07.750
and the others that
would be administered

00:15:07.750 --> 00:15:09.390
under the auspices of the utilities

00:15:09.390 --> 00:15:12.140
that are regulated by
the Utility Commission.

00:15:12.140 --> 00:15:14.640
We will hear from Miriam Joffe-Block,

00:15:14.640 --> 00:15:18.480
who at the California Hub
for Energy Efficiency Financing

00:15:18.480 --> 00:15:20.590
has been stewarding
that residential program,

00:15:20.590 --> 00:15:21.800
but I wanna tell some of the story

00:15:21.800 --> 00:15:23.170
that leads us up to that point.

00:15:23.170 --> 00:15:24.873
Rory, please, let's move forward.

00:15:28.730 --> 00:15:29.780
About one year

00:15:29.780 --> 00:15:32.840
after California made
its significant commitment

00:15:32.840 --> 00:15:36.070
of $70 million to the
financing pilot programs,

00:15:36.070 --> 00:15:39.080
the Department of
Energy published a tome,

00:15:39.080 --> 00:15:42.620
literally 30 case studies
researched by the National Labs

00:15:42.620 --> 00:15:45.450
under the title financing
energy improvements

00:15:45.450 --> 00:15:46.980
on utility bills.

00:15:46.980 --> 00:15:49.760
It could be read by some
as an open letter to California,

00:15:49.760 --> 00:15:51.700
but it was for all 50 states,

00:15:51.700 --> 00:15:55.820
and it searched far
and wide for examples.

00:15:55.820 --> 00:15:58.680
All but one, used consumer loans

00:15:58.680 --> 00:16:01.640
as the mechanism for
capitalizing the upgrades.

00:16:01.640 --> 00:16:03.630
It involves using utility bills

00:16:03.630 --> 00:16:06.530
as a mechanism for
performing debt service,

00:16:06.530 --> 00:16:08.170
but there was one outlier

00:16:08.170 --> 00:16:11.720
and it was in a very
unusual place, Kansas,

00:16:11.720 --> 00:16:14.370
and in Kansas there was a utility

00:16:14.370 --> 00:16:17.470
offering a more inclusive solution

00:16:17.470 --> 00:16:19.680
that used tariffed terms

00:16:19.680 --> 00:16:21.980
to make the site specific investments

00:16:21.980 --> 00:16:24.120
with site specific cost recovery

00:16:24.120 --> 00:16:27.010
on terms that were deemed
as just reasonable and fair

00:16:27.010 --> 00:16:31.070
by the Utility Commission
of the state of Kansas.

00:16:31.070 --> 00:16:32.490
Please proceed forward once more

00:16:32.490 --> 00:16:34.290
and we'll see where the story leads.

00:16:36.060 --> 00:16:37.050
The following year,

00:16:37.050 --> 00:16:39.690
after the Department
of Energy's National Lab

00:16:39.690 --> 00:16:40.863
sponsored report,

00:16:41.900 --> 00:16:44.440
we saw adoption in other states.

00:16:44.440 --> 00:16:48.490
Following Kansas, Kentucky,
New Hampshire and Hawaii

00:16:48.490 --> 00:16:50.480
had already introduced

00:16:50.480 --> 00:16:53.710
tariffs for site specific
investment and cost recovery,

00:16:53.710 --> 00:16:56.763
and they're after in 2015,

00:16:57.730 --> 00:16:59.370
utility in North Carolina

00:16:59.370 --> 00:17:01.250
and the unanimous decision

00:17:01.250 --> 00:17:03.040
of the Utility Commission in Arkansas

00:17:03.040 --> 00:17:05.650
swept through another utility.

00:17:05.650 --> 00:17:08.760
At that point we started to
see not just points on the map,

00:17:08.760 --> 00:17:09.960
but a trend,

00:17:09.960 --> 00:17:12.840
that Utility Commissions
and their legal advisors

00:17:12.840 --> 00:17:15.680
in multiple states as
diverse as ones you see here,

00:17:15.680 --> 00:17:17.260
we're finding that it
was just reasonable,

00:17:17.260 --> 00:17:18.570
cost-based and fair

00:17:18.570 --> 00:17:21.820
to allow utilities to make
site specific investments

00:17:21.820 --> 00:17:24.253
on terms of cost recovery
that would make sure

00:17:24.253 --> 00:17:28.050
there was consumer protections included.

00:17:28.050 --> 00:17:31.830
The data of the market
response to those programs

00:17:31.830 --> 00:17:34.010
was truly arresting.

00:17:34.010 --> 00:17:37.600
It showed that the
addressable market doubled

00:17:37.600 --> 00:17:39.380
when renters and low income customers

00:17:39.380 --> 00:17:42.280
no longer face barriers to eligibility.

00:17:42.280 --> 00:17:44.360
It showed that a
majority of the customers

00:17:44.360 --> 00:17:47.610
who are made an offer for
investment were opting in,

00:17:47.610 --> 00:17:50.760
and that the level of
capitalization almost doubled,

00:17:50.760 --> 00:17:53.360
compared to what was possible
with the federal programs

00:17:53.360 --> 00:17:54.867
for weatherization at the time

00:17:54.867 --> 00:17:57.220
was being reported by the
consumer loan programs

00:17:57.220 --> 00:17:59.940
that have been funded
through the Recovery Act.

00:17:59.940 --> 00:18:02.050
That data was then published

00:18:02.050 --> 00:18:04.590
through the American Council
for an Energy Efficient Economy

00:18:04.590 --> 00:18:08.580
and a couple of different
points in 2015 and 2018 events,

00:18:08.580 --> 00:18:10.830
both of which were hosted in California.

00:18:10.830 --> 00:18:12.080
Rory, let's move forward.

00:18:15.680 --> 00:18:19.440
The following year after
those unusual decisions

00:18:19.440 --> 00:18:20.890
that started to show us the trend

00:18:20.890 --> 00:18:23.260
rather than outlier dots on the map,

00:18:23.260 --> 00:18:25.840
we did see a big
breakthrough in California

00:18:25.840 --> 00:18:29.100
from that original
tranche of $25 million

00:18:29.100 --> 00:18:31.630
that had been allocated
for residential financing

00:18:31.630 --> 00:18:34.770
in the pilot programs by the CPUC.

00:18:34.770 --> 00:18:37.270
The money had made
its way from the CPUC,

00:18:37.270 --> 00:18:38.760
made it to the utilities

00:18:38.760 --> 00:18:40.900
and a form that can be
available to the treasurer's office,

00:18:40.900 --> 00:18:43.810
all the agreements there
being duly negotiated,

00:18:43.810 --> 00:18:45.340
and the team that set up

00:18:45.340 --> 00:18:47.890
the California Hub for
Energy Efficiency Finance

00:18:47.890 --> 00:18:50.370
was able to recruit and enroll lenders,

00:18:50.370 --> 00:18:52.840
recruit and enroll contractors

00:18:52.840 --> 00:18:56.320
and execute the
transaction of its first loan.

00:18:56.320 --> 00:18:59.420
That was in mid-May of 2016

00:18:59.420 --> 00:19:00.700
and an important milestone

00:19:00.700 --> 00:19:03.420
because it shaped the timeline to come,

00:19:03.420 --> 00:19:06.000
which is to say it wasn't actually easy

00:19:06.000 --> 00:19:08.980
to start new conversations
about financing in California

00:19:08.980 --> 00:19:11.240
while the pilot projects
was still underway.

00:19:11.240 --> 00:19:14.270
It was an experiment for
which there wasn't any data yet

00:19:14.270 --> 00:19:16.950
and the experiment needed to run on.

00:19:16.950 --> 00:19:18.850
The actual arrangements were made

00:19:18.850 --> 00:19:21.520
that those pilot would
proceed for two years

00:19:21.520 --> 00:19:22.930
before it was evaluated.

00:19:22.930 --> 00:19:25.610
At that point, the evaluation
would take one more year

00:19:25.610 --> 00:19:26.443
and at that point

00:19:26.443 --> 00:19:29.420
the Commission will be
able to review the evaluation.

00:19:29.420 --> 00:19:30.370
Let's move forward.

00:19:35.320 --> 00:19:39.060
In the meanwhile, the state
legislature did not slow down.

00:19:39.060 --> 00:19:43.200
It issued a mandate to the
California Energy Commission

00:19:43.200 --> 00:19:44.280
to study the question

00:19:44.280 --> 00:19:47.390
of why low income communities
were underrepresented

00:19:47.390 --> 00:19:50.180
in some of the most
robustly growing markets

00:19:50.180 --> 00:19:51.660
in the California economy.

00:19:51.660 --> 00:19:54.520
Rooftop solar, for
example, or energy efficiency

00:19:54.520 --> 00:19:55.960
and the emerging opportunities

00:19:55.960 --> 00:19:57.793
in transportation electrification.

00:19:58.710 --> 00:20:02.180
The low income barriers study
was a landmark achievement

00:20:02.180 --> 00:20:05.610
at the end of 16 months
of robust stakeholder,

00:20:05.610 --> 00:20:09.740
consultation, comments,
hearings, workshops, drafts,

00:20:09.740 --> 00:20:13.620
and all of the diligence
that I think reflects well

00:20:13.620 --> 00:20:17.190
on California's commitment
to inclusion and public policy.

00:20:17.190 --> 00:20:19.380
It was no surprise that
the Commission found

00:20:19.380 --> 00:20:21.430
that access to financing was a barrier.

00:20:21.430 --> 00:20:22.580
I think it's important to note

00:20:22.580 --> 00:20:24.020
that the first of the remedies

00:20:24.020 --> 00:20:25.680
that it listed in its recommendations

00:20:25.680 --> 00:20:27.300
was directly to the attention

00:20:27.300 --> 00:20:28.990
of the Public Utilities Commission.

00:20:28.990 --> 00:20:32.460
In fact, it indicated that the
Commission's considered view

00:20:32.460 --> 00:20:34.850
was that the California
Public Utilities Commission

00:20:34.850 --> 00:20:38.303
should consider developing
a tariffed on-bill pilot.

00:20:39.140 --> 00:20:41.090
It actually even went on to say

00:20:41.090 --> 00:20:43.520
that it would suggest that that pilot

00:20:43.520 --> 00:20:45.550
be developed specifically

00:20:45.550 --> 00:20:48.500
to not pass a debt
obligation onto a customer

00:20:48.500 --> 00:20:50.610
and to include consumer protections

00:20:50.610 --> 00:20:52.530
that would assure that
the cost recovery charge

00:20:52.530 --> 00:20:54.500
would be less than
the estimated savings.

00:20:54.500 --> 00:20:56.410
So the customers would be better off

00:20:56.410 --> 00:20:58.400
for opting to participate.

00:20:58.400 --> 00:20:59.350
Let's move forward.

00:21:02.500 --> 00:21:06.010
Meanwhile, at the
very same time in 2016,

00:21:06.010 --> 00:21:10.110
when the landmark barriers
report was being published

00:21:10.110 --> 00:21:13.170
you will see that the Property
Assessed Clean Energy program

00:21:13.170 --> 00:21:18.140
met its height of loan throughput.

00:21:18.140 --> 00:21:20.580
The loan volumes were skyrocketing.

00:21:20.580 --> 00:21:22.460
It was attracting attention nationwide

00:21:22.460 --> 00:21:25.100
and certainly at the
Department of Energy.

00:21:25.100 --> 00:21:26.820
What we saw there after however,

00:21:26.820 --> 00:21:29.540
was just as steep a decline.

00:21:29.540 --> 00:21:33.560
The lien backed loans
were tied to homeownership

00:21:33.560 --> 00:21:36.480
and had implications for
both the sale of the property

00:21:36.480 --> 00:21:39.260
and the terms of the mortgages.

00:21:39.260 --> 00:21:41.770
I think many people
attending today's workshop

00:21:41.770 --> 00:21:44.090
will know some of the
epilogue on the story

00:21:44.090 --> 00:21:47.060
that is implied by the graph
published by American Banker,

00:21:47.060 --> 00:21:48.330
but in recent months

00:21:48.330 --> 00:21:50.420
two of the largest
vendors for the PACE loans

00:21:50.420 --> 00:21:52.080
have filed bankruptcy.

00:21:52.080 --> 00:21:55.060
Well, today's workshop
doesn't delve into that story,

00:21:55.060 --> 00:21:57.650
at least in this panel as
part of the 10 year history.

00:21:57.650 --> 00:21:59.210
I think it's an important mark

00:21:59.210 --> 00:22:00.210
because at some points

00:22:00.210 --> 00:22:03.500
it seemed as if PACE
loans would be the answer

00:22:03.500 --> 00:22:05.040
and the pressure to search

00:22:05.040 --> 00:22:06.730
for new solutions to the Commission

00:22:06.730 --> 00:22:08.180
might be somewhat lightened.

00:22:08.180 --> 00:22:09.460
That wasn't true.

00:22:09.460 --> 00:22:10.860
It's not true, now.

00:22:10.860 --> 00:22:11.810
Let's move forward.

00:22:16.680 --> 00:22:20.410
In 2018, the state
legislature kept up its march

00:22:20.410 --> 00:22:25.410
by passing both SB100
and SB1477 code language

00:22:25.460 --> 00:22:27.130
for folks outside of California

00:22:27.130 --> 00:22:30.660
for no more fossil fuels
in the electric power sector

00:22:30.660 --> 00:22:33.763
and no more fossil
fuels in buildings either.

00:22:34.740 --> 00:22:36.490
As a result and in response

00:22:36.490 --> 00:22:39.480
to that very dynamic public
policy dialogue at the time,

00:22:39.480 --> 00:22:42.770
Greenlining Institute and
Energy Efficiency for All,

00:22:42.770 --> 00:22:44.200
a coalition in California

00:22:44.200 --> 00:22:47.040
that actually has relations nationwide,

00:22:47.040 --> 00:22:49.110
teamed up to bring
together environmental

00:22:49.110 --> 00:22:51.850
and social justice
advocates and they produced

00:22:51.850 --> 00:22:55.040
an equitable building
electrification framework

00:22:55.040 --> 00:22:56.930
that itself dedicates a chapter

00:22:56.930 --> 00:22:59.350
to funding and financing solutions,

00:22:59.350 --> 00:23:02.270
and in particular, it
urges decision makers

00:23:02.270 --> 00:23:05.990
to support environmental
and social justice communities

00:23:05.990 --> 00:23:07.960
by considering alternative financing

00:23:07.960 --> 00:23:10.260
such as tariffed on-bill investment.

00:23:10.260 --> 00:23:11.420
The following year,

00:23:11.420 --> 00:23:14.030
almost as if to respond to the champions

00:23:14.030 --> 00:23:16.760
for environmental and
social justice in California,

00:23:16.760 --> 00:23:19.020
the Building Decarbonisation Coalition

00:23:19.020 --> 00:23:21.250
pursued its own landmark report

00:23:21.250 --> 00:23:23.640
on a roadmap for
decarbonisation and buildings

00:23:23.640 --> 00:23:27.680
to search for financing
solutions that would be open to all.

00:23:27.680 --> 00:23:29.130
The publication called towards

00:23:29.130 --> 00:23:31.110
an accessible financing solution

00:23:31.110 --> 00:23:34.970
with very rigorously developed
in a stakeholder process.

00:23:34.970 --> 00:23:38.340
Some of you on the workshop
were active in its engagement,

00:23:38.340 --> 00:23:39.450
and during that process

00:23:39.450 --> 00:23:41.890
we heard of other proceedings underway,

00:23:41.890 --> 00:23:44.400
including the San
Joaquin Valley proceeding

00:23:44.400 --> 00:23:45.410
that was brought to us

00:23:45.410 --> 00:23:47.850
and the attention of all stakeholders

00:23:47.850 --> 00:23:50.560
at the opening remarks
of the opening workshop

00:23:50.560 --> 00:23:52.323
by Commissioner Guzman Aceves.

00:23:53.350 --> 00:23:56.270
Both the San Joaquin Valley proceeding

00:23:56.270 --> 00:23:58.740
and the SB1477 proceeding

00:23:58.740 --> 00:24:02.250
that has presented us with
tech and build pilot projects,

00:24:02.250 --> 00:24:03.780
those of you who are working so closely

00:24:03.780 --> 00:24:05.450
with the Commission will recognize,

00:24:05.450 --> 00:24:07.920
have funding for pilot projects

00:24:07.920 --> 00:24:10.430
and each of those
proceedings have pilot projects

00:24:10.430 --> 00:24:13.200
where financing is part of the scope.

00:24:13.200 --> 00:24:14.610
I think that's important to flag here

00:24:14.610 --> 00:24:17.920
because it may raise the
opportunity of a fast track

00:24:17.920 --> 00:24:19.160
to being little test ideas

00:24:19.160 --> 00:24:22.160
that come through this rulemaking
for Clean Energy Finance.

00:24:22.160 --> 00:24:23.110
Let's move forward.

00:24:27.150 --> 00:24:29.760
Bringing us very close to the current.

00:24:29.760 --> 00:24:31.760
In April of this past year,

00:24:31.760 --> 00:24:35.350
the Residential Energy Efficiency
Loan program's evaluation

00:24:35.350 --> 00:24:37.223
formally reached the Commission.

00:24:38.090 --> 00:24:39.337
Opinion Dynamics and Dunsky,

00:24:39.337 --> 00:24:41.880
and the other contractors
that worked for a year

00:24:41.880 --> 00:24:44.260
to develop this 200 page report

00:24:44.260 --> 00:24:45.800
were able to convey to the Commission

00:24:45.800 --> 00:24:49.110
that as a result of the
$25 million allocated

00:24:49.110 --> 00:24:50.770
nearly seven years earlier,

00:24:50.770 --> 00:24:53.830
it was now known that
in a space of 24 months,

00:24:53.830 --> 00:24:57.740
212 homeowners had been
able to benefit from the program.

00:24:57.740 --> 00:24:59.460
A third were underserved

00:24:59.460 --> 00:25:03.450
by the definitions of the
CalEnviro screen framework,

00:25:03.450 --> 00:25:06.023
and 8% were credit challenged.

00:25:06.910 --> 00:25:09.470
The loan volumes are not very high

00:25:09.470 --> 00:25:13.490
for the service area of all of
the investor-owned utilities,

00:25:13.490 --> 00:25:16.910
which is in the order of 8
million households I understand,

00:25:16.910 --> 00:25:19.400
but the loan volumes were growing

00:25:19.400 --> 00:25:22.130
and that was a promising indicator.

00:25:22.130 --> 00:25:23.790
So the evaluation team

00:25:23.790 --> 00:25:26.000
recognizing that the
sample size was small,

00:25:26.000 --> 00:25:30.320
did entertain further evaluation
of the growth scenarios.

00:25:30.320 --> 00:25:31.610
In the evaluation report,

00:25:31.610 --> 00:25:35.740
the high growth scenario
would reach about 0.01%

00:25:37.350 --> 00:25:41.530
of the investor-owned
utilities served customers,

00:25:41.530 --> 00:25:44.230
and that was I think a
very important signal

00:25:44.230 --> 00:25:47.580
about the potential for
scalability using consumer loans

00:25:47.580 --> 00:25:50.060
if that was going to
be the main response

00:25:50.060 --> 00:25:51.510
to the clean energy divide

00:25:51.510 --> 00:25:55.090
that was causing chronic pain
in underserved communities.

00:25:55.090 --> 00:25:58.040
The CPUC resolved nevertheless,

00:25:58.040 --> 00:26:00.970
to make this program as it stands,

00:26:00.970 --> 00:26:02.640
one of the permanent features

00:26:02.640 --> 00:26:05.300
of programs that are
eligible for continued funding

00:26:05.300 --> 00:26:06.930
without declaring some of the details

00:26:06.930 --> 00:26:08.470
that may in fact be taken up

00:26:08.470 --> 00:26:11.920
in decisions such as the
ones this rulemaking may tend.

00:26:11.920 --> 00:26:14.733
Let's go to the very last slide.

00:26:16.980 --> 00:26:18.120
So here we are.

00:26:18.120 --> 00:26:22.470
We find ourselves
today at the first workshop

00:26:22.470 --> 00:26:23.780
invited by the Commission

00:26:23.780 --> 00:26:26.020
after ordering a rulemaking

00:26:26.020 --> 00:26:27.900
that in its opening paragraphs

00:26:27.900 --> 00:26:29.750
declares that it will look to ensure

00:26:29.750 --> 00:26:32.200
that new options will be
accessible to populations

00:26:32.200 --> 00:26:34.200
that face issues with credit worthiness

00:26:34.200 --> 00:26:37.610
and barriers to accessing
affordable capital.

00:26:37.610 --> 00:26:39.330
It says almost immediately thereafter

00:26:39.330 --> 00:26:41.510
that these strategies will be informed

00:26:41.510 --> 00:26:43.120
by the existing efforts

00:26:43.120 --> 00:26:45.300
to ensure equitable
access to clean energy,

00:26:45.300 --> 00:26:47.940
and an example of that is
the low income barrier study

00:26:47.940 --> 00:26:49.450
in a nod to the public process

00:26:49.450 --> 00:26:50.860
undertaken by the Energy Commission

00:26:50.860 --> 00:26:53.880
in response to the mandate
from the state legislature.

00:26:53.880 --> 00:26:56.913
So here we are, a decade in the making.

00:26:57.780 --> 00:27:00.560
There's one last slide
that actually acknowledges

00:27:00.560 --> 00:27:03.490
that we are all gathering
as part of a proceeding

00:27:03.490 --> 00:27:04.860
that's subject to the environmental

00:27:04.860 --> 00:27:07.770
and social justice action
plan of the Commission

00:27:07.770 --> 00:27:11.330
and it covers only the
title page of the plan,

00:27:11.330 --> 00:27:14.220
but I raised it as the opening moderator

00:27:14.220 --> 00:27:15.680
to reflect my commitment

00:27:15.680 --> 00:27:17.540
and commitment of our fellow panelists

00:27:17.540 --> 00:27:19.360
to uphold and advance the action plan

00:27:19.360 --> 00:27:20.750
that Commission has set forward

00:27:20.750 --> 00:27:23.540
for inclusion and
participation in process.

00:27:23.540 --> 00:27:25.590
Rory, go ahead and
tap to the next slide,

00:27:27.230 --> 00:27:30.330
where you can see goals one and two

00:27:30.330 --> 00:27:33.290
are specifically about
integrating equity and access

00:27:33.290 --> 00:27:36.560
in all CPUC proceedings
and other efforts.

00:27:36.560 --> 00:27:37.393
Goal number two,

00:27:37.393 --> 00:27:39.400
to increase investment
in clean energy resources

00:27:39.400 --> 00:27:41.660
to benefit environmental
and social justice communities

00:27:41.660 --> 00:27:43.850
that have been underserved for so long,

00:27:43.850 --> 00:27:45.060
and goal number five,

00:27:45.060 --> 00:27:48.030
to enhance outreach and
public participation opportunities

00:27:48.030 --> 00:27:49.680
in environmental and
social justice communities

00:27:49.680 --> 00:27:52.890
to meaningfully participate in
the decision making process

00:27:52.890 --> 00:27:55.320
and to benefit from the CPUC programs,

00:27:55.320 --> 00:27:58.853
frankly, those that can benefit
all residents of California.

00:27:59.700 --> 00:28:02.010
I hope that this has
been a useful introduction

00:28:02.010 --> 00:28:03.190
to the first panel,

00:28:03.190 --> 00:28:05.110
and a welcome to all who are here

00:28:05.110 --> 00:28:06.760
to participate in the rulemaking.

00:28:06.760 --> 00:28:09.760
My true and sincere thanks to the staff

00:28:09.760 --> 00:28:11.310
who've invited me to participate.

00:28:11.310 --> 00:28:14.070
Clean Energy Works
stands to be at your service

00:28:14.070 --> 00:28:16.130
and to the Commission and
an Administrative Law Judge

00:28:16.130 --> 00:28:17.290
that have created the contract

00:28:17.290 --> 00:28:19.710
for such a constructive
conversation to unfold

00:28:19.710 --> 00:28:20.710
in today's workshop.

00:28:21.810 --> 00:28:22.643
With the next slide,

00:28:22.643 --> 00:28:26.130
it is my privilege to introduce
to you Wesley Holmes,

00:28:26.130 --> 00:28:28.230
the director of strategy and development

00:28:28.230 --> 00:28:30.700
at the Southeast Energy
Efficiency Alliance,

00:28:30.700 --> 00:28:33.100
which is based in Atlanta, Georgia.

00:28:33.100 --> 00:28:34.520
In Wesley's career,

00:28:34.520 --> 00:28:37.620
he has worked with
numerous decision makers

00:28:37.620 --> 00:28:41.580
at the Utility Commission,
utility executive suites,

00:28:41.580 --> 00:28:43.390
and community advocate organizations

00:28:43.390 --> 00:28:46.520
seeking to advance
upgrades to buildings,

00:28:46.520 --> 00:28:49.050
in particular, with energy
efficiency improvements

00:28:49.050 --> 00:28:50.240
that are cost effective,

00:28:50.240 --> 00:28:52.030
especially where they
can be most lucrative

00:28:52.030 --> 00:28:54.040
in underserved communities.

00:28:54.040 --> 00:28:55.470
Wesley, thank you for being with us

00:28:55.470 --> 00:28:57.970
and sharing the insights
of your experience today.

00:29:02.150 --> 00:29:03.280
<v Wesley>Thanks for the
introduction, Holmes,</v>

00:29:03.280 --> 00:29:04.730
and thanks to everybody

00:29:04.730 --> 00:29:06.800
at the California Public
Utilities Commission

00:29:06.800 --> 00:29:08.260
for inviting me here today

00:29:08.260 --> 00:29:10.770
to share our story and our experience.

00:29:10.770 --> 00:29:11.900
As Holmes mentioned,

00:29:11.900 --> 00:29:14.460
I'm the director of
strategy and development

00:29:14.460 --> 00:29:16.710
for a regional energy
efficiency organization

00:29:16.710 --> 00:29:19.480
called the Southeast
Energy Efficiency Alliance.

00:29:19.480 --> 00:29:20.430
Next slide, please.

00:29:22.980 --> 00:29:25.040
A little context on that.

00:29:25.040 --> 00:29:27.500
So being a regional
organization, we work multistate.

00:29:27.500 --> 00:29:30.270
We cover 11 states across the southeast,

00:29:30.270 --> 00:29:32.130
ranging from Florida to Virginia

00:29:32.130 --> 00:29:34.713
and then westward including
Arkansas and Louisiana.

00:29:35.690 --> 00:29:36.640
Next slide, please.

00:29:39.888 --> 00:29:41.180
The central theme of our ideas

00:29:41.180 --> 00:29:44.740
that we try to find ideas
that work across states.

00:29:44.740 --> 00:29:48.350
A lot of our states there
share similar geographies,

00:29:48.350 --> 00:29:51.330
similar housing stock, similar
demographic characteristics,

00:29:51.330 --> 00:29:54.090
similar policymaking characteristics,

00:29:54.090 --> 00:29:55.380
and so we try to find ideas

00:29:55.380 --> 00:29:58.213
that work in different
communities, different places,

00:29:59.423 --> 00:30:00.830
try to share those across the region

00:30:00.830 --> 00:30:01.940
where they can be replicated

00:30:01.940 --> 00:30:05.600
and promote best practices
across a range of areas.

00:30:05.600 --> 00:30:08.500
Areas, we tend to touch on
our energy efficiency policy,

00:30:08.500 --> 00:30:11.010
where we're working
with utility companies,

00:30:11.010 --> 00:30:14.370
regulators, State Energy Offices,

00:30:14.370 --> 00:30:17.760
on how to set a reasonable,
achievable progression

00:30:17.760 --> 00:30:19.450
on energy performance standards

00:30:19.450 --> 00:30:22.490
and what kind of regulatory
frameworks can support utilities

00:30:22.490 --> 00:30:25.430
as all this new technology
and all these new challenges

00:30:26.540 --> 00:30:28.260
come into the space.

00:30:28.260 --> 00:30:29.880
We also work on built
environment issues.

00:30:29.880 --> 00:30:30.820
So supporting states

00:30:30.820 --> 00:30:33.640
with building energy code
development and adoption,

00:30:33.640 --> 00:30:35.530
also working with regional workforces

00:30:35.530 --> 00:30:37.160
on what are the best practices?

00:30:37.160 --> 00:30:39.630
How do you build to this new standard?

00:30:39.630 --> 00:30:41.160
And giving resources to them

00:30:41.160 --> 00:30:42.923
so that their work isn't disrupted.

00:30:43.870 --> 00:30:45.770
We also work on energy
efficient transportation.

00:30:45.770 --> 00:30:46.920
So looking at opportunities

00:30:46.920 --> 00:30:49.000
to expand electric vehicle adoption

00:30:49.000 --> 00:30:50.170
and support states

00:30:50.170 --> 00:30:52.810
and utilities and local
governments on their plans

00:30:52.810 --> 00:30:55.160
for electric charging
infrastructure build out.

00:30:56.130 --> 00:30:56.963
In addition to that,

00:30:56.963 --> 00:30:58.450
we also try to just in general,

00:30:58.450 --> 00:31:00.080
raise a flag for the southeast

00:31:00.080 --> 00:31:02.100
as an opportunity of investment,

00:31:02.100 --> 00:31:05.030
drawing federal investment,
philanthropic investment,

00:31:05.030 --> 00:31:07.500
and private sector
capital into the region,

00:31:07.500 --> 00:31:09.130
where we see lots of opportunity

00:31:09.130 --> 00:31:11.840
for growth, business development,

00:31:11.840 --> 00:31:13.400
economic development through investments

00:31:13.400 --> 00:31:15.150
in energy efficiency.

00:31:15.150 --> 00:31:17.320
One of the core things
we did in that regard

00:31:17.320 --> 00:31:20.440
was back in 2009, SEEA
served as an administrator

00:31:20.440 --> 00:31:23.810
for the American
Reinvestment Recovery Act.

00:31:23.810 --> 00:31:26.640
The energy efficiency and conservation

00:31:26.640 --> 00:31:29.050
block grant funds
that came to the region

00:31:29.050 --> 00:31:32.000
was about a $20 million
kind of Omnibus grant

00:31:32.000 --> 00:31:32.970
that went to support

00:31:32.970 --> 00:31:35.210
state and local energy
efficiency programs

00:31:35.210 --> 00:31:37.030
during that recovery effort,

00:31:37.030 --> 00:31:40.860
and we supported a
variety of financing projects,

00:31:40.860 --> 00:31:44.510
investment portfolios across
states and local governments.

00:31:44.510 --> 00:31:47.130
Many of those actually,
unfortunately, went away.

00:31:47.130 --> 00:31:48.970
After the initial investment

00:31:48.970 --> 00:31:50.250
when the grants went
away, the funding went away.

00:31:50.250 --> 00:31:53.630
A lot of states did not reallocate
funding to keep it going.

00:31:53.630 --> 00:31:56.680
A lot of cities couldn't
figure out revenue models

00:31:56.680 --> 00:31:58.040
to keep it going.

00:31:58.040 --> 00:32:00.480
So unfortunately, many
of the programs went away.

00:32:00.480 --> 00:32:01.313
Next slide.

00:32:04.823 --> 00:32:05.780
So I just wanna tell you a little bit

00:32:05.780 --> 00:32:07.480
about the ones that did continue,

00:32:07.480 --> 00:32:09.057
and where we were able
to make new investments

00:32:09.057 --> 00:32:13.230
and what we learned in terms
of energy efficiency financing.

00:32:13.230 --> 00:32:14.690
So our core goal in financing

00:32:14.690 --> 00:32:17.970
is to make the availability
and accessibility of capital

00:32:17.970 --> 00:32:19.683
for energy efficiency investments.

00:32:20.620 --> 00:32:23.460
There's too many people who
just aren't able to get capital,

00:32:23.460 --> 00:32:25.650
or don't even know that they
need to make the investment.

00:32:25.650 --> 00:32:30.650
So we wanted to stimulate
the traditional market investors,

00:32:31.130 --> 00:32:34.210
traditional banks credit
unions, traditional lenders.

00:32:34.210 --> 00:32:36.140
We wanted to incentivize that market

00:32:36.140 --> 00:32:38.420
to be innovative in the space

00:32:38.420 --> 00:32:39.980
and find new opportunities

00:32:39.980 --> 00:32:43.320
and create some targeted
products for energy efficiency.

00:32:43.320 --> 00:32:46.570
So what we did was actually
used some legacy ARRA funds

00:32:46.570 --> 00:32:47.660
and we created what was called

00:32:47.660 --> 00:32:49.980
the Southeast Energy Efficiency Fund,

00:32:49.980 --> 00:32:52.170
and the projects
listed there on the left

00:32:52.170 --> 00:32:56.000
are a sample of some of
the ones we put money into.

00:32:56.000 --> 00:32:57.780
So they were commercial loan programs,

00:32:57.780 --> 00:32:59.683
residential loan programs,

00:33:00.630 --> 00:33:03.183
state-sponsored loan
programs, utility loans.

00:33:04.030 --> 00:33:05.590
We set up a variety of maximums,

00:33:05.590 --> 00:33:07.330
mostly risk reduction pools.

00:33:07.330 --> 00:33:09.550
So we did things like
loan loss reserves,

00:33:09.550 --> 00:33:10.700
interest rate buydowns,

00:33:11.850 --> 00:33:13.750
and other incentivizing mechanisms.

00:33:13.750 --> 00:33:17.270
Our central goal was
your finance experts,

00:33:17.270 --> 00:33:18.920
you know your space,
you know your market,

00:33:18.920 --> 00:33:22.100
you know how to design
and move financial products.

00:33:22.100 --> 00:33:23.250
So we wanna encourage you

00:33:23.250 --> 00:33:25.480
to apply your expertise
to energy efficiency

00:33:25.480 --> 00:33:28.320
and create some
targeted products for that.

00:33:28.320 --> 00:33:29.370
So what we would do is essentially,

00:33:29.370 --> 00:33:31.390
if they were willing
to go down that path,

00:33:31.390 --> 00:33:34.460
we would put up something like $100,000

00:33:34.460 --> 00:33:36.150
as a loan loss reserve option

00:33:36.150 --> 00:33:38.580
if a bank or credit
union was willing to do

00:33:38.580 --> 00:33:40.920
a million dollars in capital

00:33:40.920 --> 00:33:43.600
available for energy efficiency loans.

00:33:43.600 --> 00:33:45.850
We took a lot of learnings
from that process,

00:33:46.770 --> 00:33:48.040
CHEEF among them.

00:33:48.040 --> 00:33:49.270
Traditional banks and credit unions

00:33:49.270 --> 00:33:51.670
just are not very good at that.

00:33:51.670 --> 00:33:55.050
The scale of the lessons is
not terribly attractive to them.

00:33:55.050 --> 00:33:57.000
Most energy efficiency investments

00:33:57.000 --> 00:34:00.460
are in the range of
about 7,500 up to $10,000

00:34:00.460 --> 00:34:02.550
depending on the property.

00:34:02.550 --> 00:34:03.610
It's not a very big loan,

00:34:03.610 --> 00:34:04.710
and it's a lot of paperwork

00:34:04.710 --> 00:34:07.540
the same amount of investment
for a bank or credit union

00:34:07.540 --> 00:34:09.430
to get that loan processed

00:34:09.430 --> 00:34:12.350
for not as much payoff as
a car note, or a house note,

00:34:12.350 --> 00:34:15.220
or some other more
lucrative investment vehicle,

00:34:15.220 --> 00:34:17.780
and so they're just one of
a terrible lot of motivation

00:34:17.780 --> 00:34:19.440
to move these products.

00:34:19.440 --> 00:34:21.160
They're thinking for
the ones who did pursue

00:34:21.160 --> 00:34:24.080
it was that it could be a
hook to reach a new customer

00:34:24.080 --> 00:34:26.640
by offering something
unique in the marketplace,

00:34:26.640 --> 00:34:28.050
and that can be a pathway for them

00:34:28.050 --> 00:34:30.290
to then get their car
note and their house note

00:34:30.290 --> 00:34:31.333
and other things.

00:34:32.520 --> 00:34:35.150
Unfortunately, most of
them did not do terribly well.

00:34:35.150 --> 00:34:38.400
Just to give you an example
of some performance here.

00:34:38.400 --> 00:34:40.190
So we had the benefit
of working with folks

00:34:40.190 --> 00:34:41.540
like Renew Financial,

00:34:41.540 --> 00:34:43.913
veterans of California's PACE projects,

00:34:44.790 --> 00:34:46.810
and they found that

00:34:46.810 --> 00:34:51.180
without the, kind of broad
marketing and cultural push

00:34:51.180 --> 00:34:52.750
for investments in energy efficiency,

00:34:52.750 --> 00:34:55.340
it was really hard to get
individual consumers engaged

00:34:55.340 --> 00:34:59.510
and interested in
taking on these products.

00:34:59.510 --> 00:35:01.610
So despite all their experience,

00:35:01.610 --> 00:35:03.180
the Renew Financial product in Florida

00:35:03.180 --> 00:35:06.550
was only able to get
about 12 loans processed

00:35:06.550 --> 00:35:07.790
over the two years they're operating

00:35:07.790 --> 00:35:09.040
and then they had to close down.

00:35:09.040 --> 00:35:10.080
Their main issue

00:35:10.080 --> 00:35:13.060
was that they didn't have
a robust contractor network

00:35:13.060 --> 00:35:14.500
that felt motivated enough

00:35:14.500 --> 00:35:16.610
to be their ambassadors and promoters

00:35:16.610 --> 00:35:18.443
and sellers of those products.

00:35:19.296 --> 00:35:20.530
'Cause there's a similar experience

00:35:20.530 --> 00:35:22.503
by Sunstate Federal Credit Union.

00:35:23.420 --> 00:35:24.630
They developed a loan product,

00:35:24.630 --> 00:35:27.650
ended up only doing about 10 loans

00:35:27.650 --> 00:35:29.030
over the course of their offering

00:35:29.030 --> 00:35:31.130
and then decided to
discontinue that offering

00:35:31.130 --> 00:35:33.730
'cause they just weren't
seeing the volume.

00:35:33.730 --> 00:35:35.390
Folks over Kentucky Housing Corporation,

00:35:35.390 --> 00:35:37.520
unfortunately, does
another state led initiative

00:35:37.520 --> 00:35:39.450
that unfortunately wasn't
able to get off the ground

00:35:39.450 --> 00:35:42.900
because during a Kentucky
State budgeting process,

00:35:42.900 --> 00:35:44.940
unrelated to this, their
funding got pulled away

00:35:44.940 --> 00:35:46.720
and so they weren't
able to offer that program

00:35:46.720 --> 00:35:48.070
even to get off the ground.

00:35:49.100 --> 00:35:50.940
The most successful
programs we did see though,

00:35:50.940 --> 00:35:52.530
had a common characteristic.

00:35:52.530 --> 00:35:54.700
So the program with MACED.

00:35:54.700 --> 00:35:58.950
MACED is a Mountain Association

00:35:58.950 --> 00:36:00.680
for Community Economic Development.

00:36:00.680 --> 00:36:02.390
It's an economic development group

00:36:02.390 --> 00:36:04.490
serving the Appalachian
region themselves.

00:36:05.960 --> 00:36:06.910
We made an investment with them

00:36:06.910 --> 00:36:09.010
to support their on-bill
financing products

00:36:09.010 --> 00:36:10.750
throughout Kentucky.

00:36:10.750 --> 00:36:14.250
They were one of the most
successful projects in the space.

00:36:14.250 --> 00:36:16.200
They did several 100 loans

00:36:16.200 --> 00:36:19.473
across a team of utilities
operating that program.

00:36:20.640 --> 00:36:23.130
Most successful traditional
loan program though,

00:36:23.130 --> 00:36:25.150
was actually through
Jax Metro Credit Union,

00:36:25.150 --> 00:36:29.960
which is a credit union
attached to the JA electric utility,

00:36:29.960 --> 00:36:33.920
the municipal utility
service in Florida.

00:36:33.920 --> 00:36:35.470
So the key takeaways for us

00:36:35.470 --> 00:36:37.160
from this whole
experience with these folks

00:36:37.160 --> 00:36:40.720
was that one, that
traditional lenders and banks

00:36:40.720 --> 00:36:42.910
really not well suited in this.

00:36:42.910 --> 00:36:45.390
The role of utility is really critical

00:36:45.390 --> 00:36:48.560
as a marketing and
promotional partner on one end

00:36:48.560 --> 00:36:50.720
to mobilize our contractor networks,

00:36:50.720 --> 00:36:52.960
to send out billers and emails

00:36:52.960 --> 00:36:56.300
and things to get the
customer market aware of this.

00:36:56.300 --> 00:36:59.130
While there's certainly
trust issues between utilities

00:36:59.130 --> 00:37:01.090
and certainly low income consumers,

00:37:01.090 --> 00:37:04.540
they do tend to trust
utilities about energy issues.

00:37:04.540 --> 00:37:06.720
If the utility is saying if you
make these investments,

00:37:06.720 --> 00:37:08.560
you'll realize this level of savings,

00:37:08.560 --> 00:37:10.210
they typically believe that,

00:37:10.210 --> 00:37:11.750
and so we found that the utilities

00:37:11.750 --> 00:37:14.210
are quite a critical partner,

00:37:14.210 --> 00:37:16.560
but even in the case of
Jax Metro Credit Union,

00:37:16.560 --> 00:37:19.400
most successful loan program
that was going at the time,

00:37:19.400 --> 00:37:24.400
they peaked at about
312 loans in their program

00:37:24.520 --> 00:37:26.080
and then it just sort of cratered off,

00:37:26.080 --> 00:37:28.980
and they started only
doing one to two a month.

00:37:28.980 --> 00:37:30.590
So as you can see on
the column on the right,

00:37:30.590 --> 00:37:34.840
that's when we started to
look at other mechanisms.

00:37:34.840 --> 00:37:35.720
How do you get around this?

00:37:35.720 --> 00:37:36.790
How do you address

00:37:37.890 --> 00:37:39.920
the limitations of
traditional credit lenders?

00:37:39.920 --> 00:37:41.750
And what are some of the driving causes

00:37:41.750 --> 00:37:44.883
of some of these barriers
traditional credit and financing?

00:37:45.940 --> 00:37:47.080
Next slide, please.

00:37:51.881 --> 00:37:52.830
So the main takeaway we have from this

00:37:52.830 --> 00:37:54.920
is that solutions that work for anyone,

00:37:54.920 --> 00:37:56.520
that have to overcome income levels,

00:37:56.520 --> 00:37:57.860
credit scores, renter status,

00:37:57.860 --> 00:38:00.810
those are the solutions
that work best for everybody,

00:38:00.810 --> 00:38:02.413
and the reason that is,

00:38:03.650 --> 00:38:05.260
one, a manifestation of the limitations

00:38:05.260 --> 00:38:07.300
of the markets themselves,

00:38:07.300 --> 00:38:10.250
but also the conditions of the consumers

00:38:10.250 --> 00:38:11.990
and we have to take
more of a closer look

00:38:11.990 --> 00:38:12.823
at what are the conditions

00:38:12.823 --> 00:38:14.200
of the consumers in the marketplace

00:38:14.200 --> 00:38:16.940
to understand what's the
barriers they're experiencing

00:38:16.940 --> 00:38:18.850
of accessing capital.

00:38:18.850 --> 00:38:20.810
So I wanna talk about
that in a couple of slides.

00:38:20.810 --> 00:38:21.760
Next slide, please.

00:38:26.710 --> 00:38:29.080
So, key characteristic
about the Southeast,

00:38:29.080 --> 00:38:29.913
we often like them both.

00:38:29.913 --> 00:38:31.307
We have the lowest energy rates,

00:38:31.307 --> 00:38:34.870
but we also have the
highest residential utility bills.

00:38:34.870 --> 00:38:37.870
So energy is actually incredibly
expensive in the Southeast.

00:38:38.810 --> 00:38:39.643
Next slide.

00:38:44.790 --> 00:38:48.500
Now, add to the fact that
on top of high energy bills,

00:38:48.500 --> 00:38:49.780
the Southeast is also where you find

00:38:49.780 --> 00:38:52.250
the most pervasive rates
of poverty in the country.

00:38:52.250 --> 00:38:55.050
So you add that high
rate of energy expense

00:38:55.050 --> 00:39:00.050
to an already impoverished
communities set

00:39:00.480 --> 00:39:03.550
and that high utility bill
just becomes another barrier

00:39:03.550 --> 00:39:05.914
and another stressor on the household.

00:39:05.914 --> 00:39:07.550
I've got some stats there on the right

00:39:07.550 --> 00:39:09.130
talking about how many households

00:39:09.130 --> 00:39:11.130
actually report feeling
energy insecurity,

00:39:11.130 --> 00:39:12.090
meaning that they're not sure

00:39:12.090 --> 00:39:14.320
if they're gonna be able to
make that bill month to month

00:39:14.320 --> 00:39:16.410
and how often that actually happens.

00:39:16.410 --> 00:39:19.600
About 7.5 million households have said

00:39:19.600 --> 00:39:22.040
that they've gotten
disconnection notices

00:39:22.040 --> 00:39:24.190
at some point there over
the course of the year,

00:39:24.190 --> 00:39:26.860
and keep in mind, this is
pre-pandemic numbers.

00:39:26.860 --> 00:39:28.963
This is probably much, much higher now.

00:39:29.970 --> 00:39:32.010
We've also noted that households
have to leave their homes

00:39:32.010 --> 00:39:33.650
at unhealthy temperatures,

00:39:33.650 --> 00:39:37.520
they have to leave their
AC units at low temperatures,

00:39:37.520 --> 00:39:39.550
they have to leave their
heaters at low temperatures,

00:39:39.550 --> 00:39:43.180
and ultimately, this
has a negative effect

00:39:43.180 --> 00:39:44.670
on the population themselves

00:39:44.670 --> 00:39:47.170
and this just becomes
a financial stressor

00:39:47.170 --> 00:39:50.070
that adds to their unwillingness

00:39:50.070 --> 00:39:51.960
to take on additional debt, I'll say.

00:39:51.960 --> 00:39:52.910
Next slide, please.

00:39:56.380 --> 00:39:57.630
Now it's also important to note

00:39:57.630 --> 00:40:00.290
that like so many of the
other consequences of poverty,

00:40:00.290 --> 00:40:02.650
this isn't a burden
that's shared equally.

00:40:02.650 --> 00:40:04.370
This map you're seeing here

00:40:04.370 --> 00:40:08.510
is actually an overlay of
energy burden populations

00:40:08.510 --> 00:40:13.510
with the concentrations of
minority community populations.

00:40:14.340 --> 00:40:16.210
So where you have high concentrations

00:40:16.210 --> 00:40:20.060
of Black communities,
Hispanic communities,

00:40:20.060 --> 00:40:22.190
assuming there's non-white
communities across the South,

00:40:22.190 --> 00:40:24.470
when you overlay that
with energy burden data

00:40:24.470 --> 00:40:26.790
what you find is that
communities of color

00:40:26.790 --> 00:40:29.670
are consistently pushed
into the worst housing

00:40:29.670 --> 00:40:31.550
that their communities have to offer.

00:40:31.550 --> 00:40:33.130
So even when adjusted for income,

00:40:33.130 --> 00:40:34.970
adjusted for utility territory,

00:40:34.970 --> 00:40:37.910
adjusted for energy bill rates,

00:40:37.910 --> 00:40:41.180
communities of color ultimately
end up spending more money

00:40:41.180 --> 00:40:42.230
and they ultimately end up

00:40:42.230 --> 00:40:45.190
bearing more of the
negative household effects,

00:40:45.190 --> 00:40:49.210
health effects and financial
effects of high energy burden,

00:40:49.210 --> 00:40:51.040
and this is important
for us to recognize.

00:40:51.040 --> 00:40:52.440
If we're trying to
come up with solutions

00:40:52.440 --> 00:40:54.700
to systemic problems in the system,

00:40:54.700 --> 00:40:55.720
we have to be honest with ourselves

00:40:55.720 --> 00:40:57.140
about the systemic solutions

00:40:57.140 --> 00:41:01.300
and we have to recognize
that all of the social issues

00:41:01.300 --> 00:41:05.550
that drove this conditions are
so prevalent in market rates.

00:41:05.550 --> 00:41:07.480
They're prevalent in market interactions

00:41:07.480 --> 00:41:09.430
and they shape how people access capital

00:41:09.430 --> 00:41:11.640
and where they can access capital,

00:41:11.640 --> 00:41:13.300
and feed into people's psychology

00:41:13.300 --> 00:41:15.730
about assessing the creditworthiness

00:41:15.730 --> 00:41:18.730
of people who are seeking
capital to make investments.

00:41:18.730 --> 00:41:21.440
So we have to be thoughtful
about how do you overcome that?

00:41:21.440 --> 00:41:24.230
How you recognize that
that's prevalent in our society,

00:41:24.230 --> 00:41:27.744
and what models serve to overcome that.

00:41:27.744 --> 00:41:30.860
So for SEEA, that was
a big turning point to look

00:41:30.860 --> 00:41:33.290
even closer at the utility lead programs

00:41:34.160 --> 00:41:36.290
that demonstrated some characteristics

00:41:36.290 --> 00:41:39.190
of overcoming those social hurdles

00:41:39.190 --> 00:41:43.253
because they looked more
intently at the housing themselves.

00:41:43.253 --> 00:41:45.807
So that led us down the
path to utility on-bill programs.

00:41:45.807 --> 00:41:47.350
I'm gonna give you a little clarity

00:41:47.350 --> 00:41:49.810
on some distinctions of those.

00:41:49.810 --> 00:41:50.760
Next slide, please,

00:41:54.562 --> 00:41:57.880
and so there's three different
types of on-bill programs

00:41:57.880 --> 00:41:58.713
you'll hear out there.

00:41:58.713 --> 00:42:01.110
You'll hear on-bill financing a lot.

00:42:01.110 --> 00:42:04.070
On-bill financing is a
utility-sponsored loan,

00:42:04.070 --> 00:42:05.860
where the utilities
putting up the capital

00:42:05.860 --> 00:42:08.960
and serving as the
assessor of the occupants

00:42:08.960 --> 00:42:11.720
of that capital, or the
people asking for it.

00:42:11.720 --> 00:42:13.730
On the repayment it's the same model.

00:42:13.730 --> 00:42:14.820
It's run by the utility,

00:42:14.820 --> 00:42:16.530
but they're partnering
with a third party bank

00:42:16.530 --> 00:42:19.310
who provides the capital,
which ultimately means

00:42:19.310 --> 00:42:20.360
that they have to pass through

00:42:20.360 --> 00:42:23.620
that bank's risk management principles,

00:42:23.620 --> 00:42:25.273
FICO score limitations,

00:42:28.460 --> 00:42:30.650
income level limitations,
all those other things.

00:42:30.650 --> 00:42:32.260
So it adds to the cost of capital

00:42:32.260 --> 00:42:35.050
and adds to the friction
in the transaction.

00:42:35.050 --> 00:42:37.740
Utility-sponsored
loans are a little easier,

00:42:37.740 --> 00:42:40.670
they've got a little more
flexibility in who they can reach

00:42:40.670 --> 00:42:42.450
because they can look at
things like Bill Pay history,

00:42:42.450 --> 00:42:43.570
rather than FICO score,

00:42:43.570 --> 00:42:46.150
but it's largely up
to the utility itself,

00:42:46.150 --> 00:42:47.260
and what we found

00:42:47.260 --> 00:42:50.330
is that even when the
utility is driving the process

00:42:50.330 --> 00:42:52.630
and recruiting the
customers on loan programs,

00:42:52.630 --> 00:42:54.100
they experience a similar condition

00:42:54.100 --> 00:42:56.740
where there's this initial
peak in participation

00:42:56.740 --> 00:42:57.830
and then it drops off

00:42:57.830 --> 00:43:01.410
because the number of people
who are highly motivated enough

00:43:01.410 --> 00:43:03.810
to make investments
in energy efficiency,

00:43:03.810 --> 00:43:05.290
motivated enough to take debt on

00:43:05.290 --> 00:43:06.913
to manage energy efficiency.

00:43:07.960 --> 00:43:10.210
With every additional layer you add

00:43:10.210 --> 00:43:14.249
a risk management
collateral requirement,

00:43:14.249 --> 00:43:17.290
or each additional
dollar of profit motive

00:43:17.290 --> 00:43:18.680
for the capital investor,

00:43:18.680 --> 00:43:20.520
that window gets smaller and smaller

00:43:20.520 --> 00:43:22.300
of who was actually able to access that.

00:43:22.300 --> 00:43:24.010
You end up leaving
a whole lot of people,

00:43:24.010 --> 00:43:26.907
thousands of people who are
motivated enough to do this,

00:43:26.907 --> 00:43:29.093
but get screened out of these processes,

00:43:30.130 --> 00:43:30.980
and that's what pointed us

00:43:30.980 --> 00:43:33.730
towards the tariffed
on-bill investment model.

00:43:33.730 --> 00:43:35.340
Tariffs are not loans.

00:43:35.340 --> 00:43:37.320
It provides a lot of
functional similarity

00:43:37.320 --> 00:43:40.690
to paste mechanisms by
attaching investments to property.

00:43:40.690 --> 00:43:42.270
So rather than being

00:43:42.270 --> 00:43:44.960
based on an assessment of
the person who lives in the house,

00:43:44.960 --> 00:43:45.850
the investment is determined

00:43:45.850 --> 00:43:48.470
based on the performance of the house.

00:43:48.470 --> 00:43:51.900
So if the utility or contractor
can go and assess,

00:43:51.900 --> 00:43:53.786
if we make those kinds of investments

00:43:53.786 --> 00:43:57.750
in insulation, duct sealing,
swapping out a heat pump,

00:43:57.750 --> 00:43:59.470
or swapping out of
water with a heat pump,

00:43:59.470 --> 00:44:01.900
we can relatively engineeringly say

00:44:01.900 --> 00:44:03.710
that it's gonna save this much money,

00:44:03.710 --> 00:44:06.990
and if it pencils out to
where it's a low to no cost

00:44:06.990 --> 00:44:09.890
or a debt neutral investment
opportunity for the occupant,

00:44:09.890 --> 00:44:11.580
then they can move
forward with the process,

00:44:11.580 --> 00:44:14.090
and that has been pretty game changing

00:44:14.090 --> 00:44:17.740
in terms of who can
access and how they access.

00:44:17.740 --> 00:44:20.710
It also reflects the important
kind of shift in the thinking

00:44:20.710 --> 00:44:23.660
about how we think about
investments in energy efficiency

00:44:23.660 --> 00:44:25.710
and who really benefits.

00:44:25.710 --> 00:44:26.660
Next slide, please.

00:44:28.750 --> 00:44:29.940
Historically, we have this habit

00:44:29.940 --> 00:44:31.690
of thinking about investments in housing

00:44:31.690 --> 00:44:32.690
and energy efficiency

00:44:32.690 --> 00:44:36.200
as really only of a benefit
to the person who lives there,

00:44:36.200 --> 00:44:37.810
but increasingly, it's
starting to be understood

00:44:37.810 --> 00:44:40.730
that an investment in residential energy

00:44:40.730 --> 00:44:44.170
is actually an investment in
the energy system as a whole.

00:44:44.170 --> 00:44:46.430
As low switching technology,

00:44:46.430 --> 00:44:48.830
the ability to shape low demand

00:44:48.830 --> 00:44:50.830
by manipulating water heater levels,

00:44:50.830 --> 00:44:52.670
or change AC unit levels,

00:44:52.670 --> 00:44:55.230
or set the charging
time for electric vehicles.

00:44:55.230 --> 00:44:57.880
As all that technology
becomes more ubiquitous

00:44:57.880 --> 00:44:59.037
and the pricing for it goes down

00:44:59.037 --> 00:45:00.950
and more consumers adopt it,

00:45:00.950 --> 00:45:01.940
it's increasingly the case

00:45:01.940 --> 00:45:05.100
that houses are not just the
end of the line for electrons,

00:45:05.100 --> 00:45:06.310
but they're a two-way street,

00:45:06.310 --> 00:45:08.367
and increasingly buildings

00:45:08.367 --> 00:45:11.000
are a functional transactional part

00:45:11.000 --> 00:45:12.960
of our electrical grid system

00:45:12.960 --> 00:45:16.850
and test ongoing investments
recognize that role of housing

00:45:16.850 --> 00:45:18.370
and maintaining the grid,

00:45:18.370 --> 00:45:20.160
and so we think they appropriately

00:45:20.160 --> 00:45:21.520
apply the tariff mechanism,

00:45:21.520 --> 00:45:23.890
which is broadly defined by the utility.

00:45:23.890 --> 00:45:26.310
If it serves the greater
interest of the utility system,

00:45:26.310 --> 00:45:27.500
it can be incorporated

00:45:27.500 --> 00:45:29.500
into the tariff charges that they apply.

00:45:30.360 --> 00:45:33.370
This recognizing that
housing has a really key role

00:45:33.370 --> 00:45:34.600
in the energy system

00:45:34.600 --> 00:45:36.960
and that investments
there definitely pay off,

00:45:36.960 --> 00:45:37.920
not just for the occupant,

00:45:37.920 --> 00:45:40.390
but for this whole system itself.

00:45:40.390 --> 00:45:41.223
Next slide.

00:45:44.430 --> 00:45:46.460
So this is just a sample

00:45:46.460 --> 00:45:48.650
of some of the numbers
of the utility parameters.

00:45:48.650 --> 00:45:50.920
This give me an example
of kind of the scale

00:45:50.920 --> 00:45:54.080
and the distinctions
and participation rates.

00:45:54.080 --> 00:45:55.830
So I'll go through all of
these numbers specifically.

00:45:55.830 --> 00:45:58.550
Holmes alluded to this in her intro,

00:45:58.550 --> 00:46:00.200
but the main takeaway

00:46:00.200 --> 00:46:03.600
is that utilities who
have done loans before

00:46:03.600 --> 00:46:06.110
and then have moved
into doing tariff models,

00:46:06.110 --> 00:46:08.940
they're seeing volume way beyond,

00:46:08.940 --> 00:46:10.320
like multitudes of the volume

00:46:10.320 --> 00:46:11.650
that we saw in traditional loans,

00:46:11.650 --> 00:46:13.790
where experienced loan providers

00:46:13.790 --> 00:46:16.580
in the traditional
credit union bank sector

00:46:16.580 --> 00:46:18.200
put everything they had towards it,

00:46:18.200 --> 00:46:22.190
they would get dozen
loans, 15 loans, 20 loans,

00:46:22.190 --> 00:46:23.023
and the same amount of time

00:46:23.023 --> 00:46:25.090
the utilities-sponsored tariff program

00:46:25.090 --> 00:46:29.683
is doing 200 loans,
300 loans, 500 loans.

00:46:31.600 --> 00:46:34.980
The force factor of participation
is just truly remarkable,

00:46:34.980 --> 00:46:37.130
and so you can see this
is kind of a breakdown

00:46:37.130 --> 00:46:38.700
of the different tariffs
on both programs

00:46:38.700 --> 00:46:40.660
that are available across the Southeast,

00:46:40.660 --> 00:46:42.470
as well as in Kansas.

00:46:42.470 --> 00:46:43.660
Most of these are being led

00:46:43.660 --> 00:46:45.620
by cooperative utilities
around the region

00:46:45.620 --> 00:46:48.520
who have been the first
to really embrace this idea,

00:46:48.520 --> 00:46:50.480
but there are investor-owned
utilities in the country

00:46:50.480 --> 00:46:51.650
who are taking it on now.

00:46:51.650 --> 00:46:55.300
Georgia Power was scheduled
to develop their first pilot

00:46:55.300 --> 00:46:58.890
of a tariff on-bill model
here in Atlanta in 2020,

00:46:58.890 --> 00:47:00.197
but then 2020 happened

00:47:00.197 --> 00:47:03.020
and so now they're looking
at doing it this year as well.

00:47:03.020 --> 00:47:06.160
So we're really optimistic
about that investment

00:47:06.160 --> 00:47:08.980
and there are other IOUs
we're looking really closely

00:47:08.980 --> 00:47:10.280
at how those are gonna perform

00:47:10.280 --> 00:47:11.890
and see how they can adapt that model,

00:47:11.890 --> 00:47:14.830
serve the investor-owned utility model.

00:47:14.830 --> 00:47:15.663
Next slide.

00:47:24.690 --> 00:47:28.210
So this is just a quick kind of
apples to apples comparison

00:47:28.210 --> 00:47:29.740
in these slides.

00:47:29.740 --> 00:47:30.770
I won't go too deep into them,

00:47:30.770 --> 00:47:33.560
but this is just an example
of electric cooperatives

00:47:33.560 --> 00:47:35.110
who started with a loan program

00:47:35.110 --> 00:47:37.430
and then moved to a tariffed program.

00:47:37.430 --> 00:47:38.820
There's something really important,

00:47:38.820 --> 00:47:40.580
not just about the
functionality of the tariff,

00:47:40.580 --> 00:47:43.310
but something in the
psychology as well, I think.

00:47:43.310 --> 00:47:47.730
So this is Ouachita Cooperative
in southwest Arkansas.

00:47:47.730 --> 00:47:49.350
So a small utility

00:47:49.350 --> 00:47:51.910
serving one of the more impoverished

00:47:51.910 --> 00:47:55.160
lower income communities
in southwest Arkansas.

00:47:55.160 --> 00:47:57.750
It's not a low income
minority community,

00:47:57.750 --> 00:47:59.540
but it is a low income community

00:47:59.540 --> 00:48:02.060
and they have all the same
kind of barriers and stressors.

00:48:02.060 --> 00:48:05.080
They did a loan-based program

00:48:05.080 --> 00:48:08.247
from April to December of 2015.

00:48:08.247 --> 00:48:09.670
There were about 70 single family homes

00:48:09.670 --> 00:48:12.310
who were willing to
participate in that loan model.

00:48:12.310 --> 00:48:13.790
They weren't getting the
traction they wanted to see,

00:48:13.790 --> 00:48:16.990
so they went to the back
of the house, restructured it,

00:48:16.990 --> 00:48:19.100
set it up as a tariffed
model the next year,

00:48:19.100 --> 00:48:20.960
and then the next year

00:48:20.960 --> 00:48:24.005
they more than doubled
their participation rates.

00:48:24.005 --> 00:48:25.730
118 single family homes,

00:48:25.730 --> 00:48:28.560
82 multifamily units,
two commercial units.

00:48:28.560 --> 00:48:30.180
Like Holmes said initially,

00:48:30.180 --> 00:48:33.140
the tariff got people
to sign a lot faster,

00:48:33.140 --> 00:48:35.763
got a lot more people
to sign and they found

00:48:35.763 --> 00:48:37.460
and applied to a whole
lot more customer types,

00:48:37.460 --> 00:48:42.450
commercial, industrial,
renter, homeowner.

00:48:42.450 --> 00:48:44.150
All kinds of customers
were willing to do tariffs

00:48:44.150 --> 00:48:45.800
who were not willing to do loans.

00:48:47.570 --> 00:48:48.403
Next slide.

00:48:52.630 --> 00:48:53.463
So this is another one.

00:48:53.463 --> 00:48:55.630
This is Roanoke Electric Cooperative,

00:48:55.630 --> 00:48:57.750
which is in eastern North Carolina.

00:48:57.750 --> 00:49:01.310
This is serving a predominantly
African American community.

00:49:01.310 --> 00:49:02.640
Lots of high rates of poverty,

00:49:02.640 --> 00:49:05.040
lots of high rates of energy burden.

00:49:05.040 --> 00:49:07.660
They similarly tried
to create a loan model

00:49:07.660 --> 00:49:10.870
to make available to
their consumers in 2015.

00:49:10.870 --> 00:49:12.550
They were able to get one person

00:49:12.550 --> 00:49:14.530
who was actually interested enough

00:49:14.530 --> 00:49:15.810
and met all the qualifications

00:49:15.810 --> 00:49:17.980
to be able to access this loan.

00:49:17.980 --> 00:49:20.010
So they realized that wasn't gonna work.

00:49:20.010 --> 00:49:20.843
So the next year

00:49:20.843 --> 00:49:23.120
they switched it over
to a tariff-based model

00:49:23.120 --> 00:49:24.470
and they actually got,

00:49:24.470 --> 00:49:28.420
it was 250 signed on
to do it in the first year.

00:49:28.420 --> 00:49:29.560
So it's just night and day

00:49:29.560 --> 00:49:33.640
in terms of the consumer
perception of attaching more debt

00:49:33.640 --> 00:49:36.000
to their already
financially burden life,

00:49:36.000 --> 00:49:38.780
or signing onto a tariff
which is transferable,

00:49:38.780 --> 00:49:40.060
which stays with the property,

00:49:40.060 --> 00:49:41.610
which benefits them immediately,

00:49:41.610 --> 00:49:43.590
but if their life circumstances change

00:49:43.590 --> 00:49:45.240
and they move to a new property

00:49:45.240 --> 00:49:47.580
without carrying that
debt burden with them.

00:49:47.580 --> 00:49:51.270
That seems to be a huge
security factor for the consumers

00:49:51.270 --> 00:49:52.550
that makes them willing to say yes

00:49:52.550 --> 00:49:55.483
in a way that loans have not
proven to make them say yes.

00:49:56.750 --> 00:49:57.700
Next slide, please.

00:50:00.030 --> 00:50:03.620
So, final parting thought
for the folks in California.

00:50:03.620 --> 00:50:06.313
If you're pursuing
scale, the pursuit of scale

00:50:06.313 --> 00:50:08.370
is really about the
pursuit of equitable access.

00:50:08.370 --> 00:50:10.100
As much as you can design programs

00:50:10.100 --> 00:50:13.240
that do not pass through the
risk management mechanisms

00:50:13.240 --> 00:50:15.640
or the profit motives
of private sector capital,

00:50:16.570 --> 00:50:19.570
that increases equity,
that increases access,

00:50:19.570 --> 00:50:21.590
and it's not that the
loan programs don't work.

00:50:21.590 --> 00:50:24.190
They do functionally work,

00:50:24.190 --> 00:50:26.010
but they leave out so many people

00:50:26.010 --> 00:50:27.690
and they leave out the places

00:50:27.690 --> 00:50:30.280
where the greatest
potential for energy savings,

00:50:30.280 --> 00:50:33.140
the greatest potential
for financial savings.

00:50:33.140 --> 00:50:35.930
Those are the problems
that it gets swept out.

00:50:35.930 --> 00:50:37.590
So not only are those
people being left out,

00:50:37.590 --> 00:50:40.110
but the benefits to
California, to the utility,

00:50:40.110 --> 00:50:44.360
to the reducing waste energy
and reducing lost capital,

00:50:44.360 --> 00:50:46.990
those tend to get narrowed
down more and more

00:50:46.990 --> 00:50:50.180
that you add risk
reduction and profit motive

00:50:50.180 --> 00:50:52.173
into the investment mechanism.

00:50:53.810 --> 00:50:54.930
So with that, I'll stop.

00:50:54.930 --> 00:50:57.960
I probably went long,
I apologize for that,

00:50:57.960 --> 00:50:59.070
but if you have any
additional questions,

00:50:59.070 --> 00:51:02.020
I'm happy to answer and look
forward to the Q&amp;A afterwards,

00:51:08.500 --> 00:51:10.390
or you can go to my slide, thank you.

00:51:12.920 --> 00:51:14.670
<v Holmes>Wesley,
thank you very much</v>

00:51:14.670 --> 00:51:18.910
for that extensive and
expansive tour of the experience

00:51:18.910 --> 00:51:21.260
that the Southeast Energy
Efficiency Alliance has had

00:51:21.260 --> 00:51:24.760
over almost a decade as you pointed out.

00:51:24.760 --> 00:51:26.850
To capitalize on the time that we have,

00:51:26.850 --> 00:51:27.907
which is we have enough time

00:51:27.907 --> 00:51:31.640
for the two full
presentations of our panelists,

00:51:31.640 --> 00:51:33.850
Jeff Schubb and Miriam Joffe- Block.

00:51:33.850 --> 00:51:35.800
Jeffrey Schubb is the executive director

00:51:35.800 --> 00:51:37.830
of the Coalition for Green Capital,

00:51:37.830 --> 00:51:41.930
and he is a leading expert on
Green Bay finance institutions

00:51:41.930 --> 00:51:43.870
that accelerate investment

00:51:43.870 --> 00:51:47.553
to cause equitable, clean
energy transition, Jeffrey.

00:51:49.600 --> 00:51:51.370
<v ->Thanks so much, Holmes.</v>

00:51:51.370 --> 00:51:54.448
It's wonderful to be
here with all of you.

00:51:54.448 --> 00:51:55.880
Really excited to be able to join

00:51:55.880 --> 00:51:58.670
this really critical discussion

00:51:58.670 --> 00:52:01.980
with the California
Public Utility Commission.

00:52:01.980 --> 00:52:04.640
California, obviously, is a
leader in so many respects here,

00:52:04.640 --> 00:52:05.930
but I hope I can bring

00:52:05.930 --> 00:52:09.250
a little bit of information in context

00:52:09.250 --> 00:52:11.570
and lessons learned from organizations

00:52:11.570 --> 00:52:12.420
from around the country

00:52:12.420 --> 00:52:14.700
that have been trying to crack this knot

00:52:14.700 --> 00:52:17.540
in all sorts of ways to
accelerate investment

00:52:17.540 --> 00:52:19.410
in clean energy solutions

00:52:19.410 --> 00:52:20.980
across different technologies,

00:52:20.980 --> 00:52:22.240
different kinds of market segments

00:52:22.240 --> 00:52:24.127
definitely focused on low

00:52:24.127 --> 00:52:26.630
and moderate income households as well.

00:52:26.630 --> 00:52:27.940
Just for a little bit of background,

00:52:27.940 --> 00:52:29.920
the Coalition for Green Capital

00:52:29.920 --> 00:52:31.830
we're a nonprofit organization

00:52:31.830 --> 00:52:34.030
that's been working for over a decade

00:52:34.030 --> 00:52:38.410
to try to expand and stand
up the Green Bank model

00:52:38.410 --> 00:52:40.960
at the national level and
at the state local level.

00:52:42.090 --> 00:52:45.230
We've been lucky enough to
work with many state green banks,

00:52:45.230 --> 00:52:47.070
helping to stand up.

00:52:47.070 --> 00:52:49.530
The first state Green
Bank in Connecticut,

00:52:49.530 --> 00:52:52.260
the largest state Green
Bank in New York,

00:52:52.260 --> 00:52:54.770
working across the country
and many other venues,

00:52:54.770 --> 00:52:56.113
Colorado and Nevada,

00:52:57.010 --> 00:53:00.470
supporting efforts in Florida,
Wisconsin, Minnesota,

00:53:00.470 --> 00:53:03.100
legislation in Maine, Alaska,

00:53:03.100 --> 00:53:04.750
supporting the efforts in Hawaii.

00:53:06.040 --> 00:53:08.670
We operate the American
Green Bank Consortium,

00:53:08.670 --> 00:53:10.290
which is an industry association

00:53:10.290 --> 00:53:12.920
pulling all these good actors together.

00:53:12.920 --> 00:53:14.530
CGC does not claim

00:53:14.530 --> 00:53:16.370
the credit for creating
or operating all of them,

00:53:16.370 --> 00:53:18.640
but we try to do what we can

00:53:18.640 --> 00:53:22.200
to help get those organizations
and new ones up and running

00:53:22.200 --> 00:53:24.590
with best practices and
technical assistance,

00:53:24.590 --> 00:53:26.960
as well as advocating for
the creation of new ones.

00:53:26.960 --> 00:53:28.563
So this is an idea that now has,

00:53:29.853 --> 00:53:33.420
I think been firmly
established as a proven model

00:53:33.420 --> 00:53:36.780
across the country and
increasingly around the world,

00:53:36.780 --> 00:53:39.510
but we can dive into that
in a little bit more detail.

00:53:39.510 --> 00:53:41.850
So if can go to the next slide.

00:53:41.850 --> 00:53:46.070
I'm gonna zoom way, way, way
out, much, much bigger context

00:53:46.070 --> 00:53:48.650
than the incredible expertise

00:53:48.650 --> 00:53:53.650
that Wesley and Holmes sort
of displayed in their remarks.

00:53:55.700 --> 00:53:56.760
Just a really big question.

00:53:56.760 --> 00:53:59.300
I think one of the problems here was

00:53:59.300 --> 00:54:01.200
how far have we come
and how far do we have to go

00:54:01.200 --> 00:54:02.440
when it comes to climate change

00:54:02.440 --> 00:54:04.890
and the amount of investment necessary?

00:54:04.890 --> 00:54:08.420
The really simple answer here
is we have a long way to go.

00:54:08.420 --> 00:54:11.450
Estimates on the amount
of investment necessary

00:54:11.450 --> 00:54:12.520
are all over the place,

00:54:12.520 --> 00:54:15.910
but some round numbers are
about $200 billion of investment

00:54:15.910 --> 00:54:19.253
into climate solutions per
year for the next 20 years.

00:54:20.500 --> 00:54:22.700
That means basically quadrupling

00:54:22.700 --> 00:54:24.200
the amount of investment annually

00:54:24.200 --> 00:54:25.683
compared to the baseline.

00:54:27.060 --> 00:54:30.750
Globally the estimates
around 1.7 to $2 trillion

00:54:30.750 --> 00:54:34.160
of marginal additive investment per year

00:54:34.160 --> 00:54:35.700
for the next several decades

00:54:35.700 --> 00:54:39.061
to the next standard
two degree scenario.

00:54:39.061 --> 00:54:42.230
This is all just to say,
we've got a long way to go.

00:54:42.230 --> 00:54:44.410
Breaking it down into specific markets,

00:54:44.410 --> 00:54:47.270
just looking first nationally.

00:54:47.270 --> 00:54:49.110
Let's look at the power sector.

00:54:49.110 --> 00:54:51.470
President Biden has laid out a target

00:54:51.470 --> 00:54:55.210
of 100% clean electricity by 2035.

00:54:55.210 --> 00:54:58.390
Following that I put a lot of
really important announcements

00:54:58.390 --> 00:55:00.973
and executive orders
yesterday, but where are we?

00:55:01.945 --> 00:55:06.160
If we look just at non-hydro
renewable power market share

00:55:06.160 --> 00:55:10.330
grew from 2% to 12%,
nationally over the last 15 years,

00:55:10.330 --> 00:55:12.150
which means over the next 15 years

00:55:12.150 --> 00:55:16.880
we have to grow from 12% to
roughly about 75% market share,

00:55:16.880 --> 00:55:20.933
where the remaining is some
combination of nuclear, hydro,

00:55:22.200 --> 00:55:24.193
and other resources of that nature.

00:55:25.600 --> 00:55:27.720
So that's a six fold increase

00:55:29.604 --> 00:55:31.630
in the speed of sort of market adoption

00:55:31.630 --> 00:55:33.040
compared to the last 15 years.

00:55:33.040 --> 00:55:36.950
So we have to start
dramatically increase,

00:55:36.950 --> 00:55:39.740
go straight up the
vertical part of the S curve,

00:55:39.740 --> 00:55:40.573
so to speak,

00:55:41.770 --> 00:55:44.230
and just looking, zeroing in California,

00:55:44.230 --> 00:55:45.463
looking at the transportation sector,

00:55:45.463 --> 00:55:48.300
this is data that's easily available.

00:55:48.300 --> 00:55:50.597
California has about 15
million registered vehicles

00:55:50.597 --> 00:55:53.240
and 250,000 of them
are electric vehicles.

00:55:53.240 --> 00:55:56.020
So if the goal is 100%
market penetration,

00:55:56.020 --> 00:55:59.687
we've got about 2% down and 98% to go,

00:55:59.687 --> 00:56:02.047
and California obviously,
is the leader in the country

00:56:02.047 --> 00:56:05.324
and so you're ahead of the rest of us.

00:56:05.324 --> 00:56:07.917
I'm sad to say I'm not in California.

00:56:07.917 --> 00:56:09.000
I'm in New Jersey

00:56:09.000 --> 00:56:11.970
and I really wish I was
in California right now,

00:56:11.970 --> 00:56:15.780
but you all are leading
the game here on EVs,

00:56:15.780 --> 00:56:17.960
but there's a long way to go,

00:56:17.960 --> 00:56:19.690
and so I think sometimes it's useful

00:56:19.690 --> 00:56:21.460
just to look at that big context

00:56:21.460 --> 00:56:24.090
of the numbers we're talking about here

00:56:24.090 --> 00:56:25.900
are staggering and scaling,

00:56:25.900 --> 00:56:28.920
and the amount of investment
necessary to hit those targets

00:56:28.920 --> 00:56:31.083
is equally staggering.

00:56:32.040 --> 00:56:32.990
Next slide, please.

00:56:38.047 --> 00:56:42.510
So, there are so, so, so many
reasons why this is difficult

00:56:42.510 --> 00:56:43.343
and why it's challenging,

00:56:43.343 --> 00:56:47.263
but if we sort of zero in
on the core question of,

00:56:48.961 --> 00:56:50.340
let's put it this way.

00:56:50.340 --> 00:56:52.510
In a classroom setting,

00:56:52.510 --> 00:56:54.710
this looks like this
shouldn't be a problem.

00:56:55.570 --> 00:56:58.400
Solar technology is cost effective,

00:56:58.400 --> 00:57:01.860
is at or below grid parity
in many parts of the country

00:57:01.860 --> 00:57:03.260
and certainly in California.

00:57:04.920 --> 00:57:07.280
Energy Efficiency is
cost effective everywhere,

00:57:07.280 --> 00:57:09.320
EVs are increasingly
cost effective everywhere,

00:57:09.320 --> 00:57:12.160
storage is increasingly cost
effective in more markets.

00:57:12.160 --> 00:57:15.450
So on a purely economic
rational decision making basis,

00:57:15.450 --> 00:57:18.270
there should be endless demand

00:57:18.270 --> 00:57:20.690
and abundant and cheap capital

00:57:20.690 --> 00:57:24.827
to finance what is largely
proven technologies,

00:57:24.827 --> 00:57:27.373
and so why is this not happening?

00:57:31.071 --> 00:57:34.030
I think it took our
organization a while to learn

00:57:34.030 --> 00:57:39.030
that this really is not
purely a financing challenge.

00:57:39.690 --> 00:57:43.153
For one, as everybody
who's attending this

00:57:43.153 --> 00:57:46.443
has certainly heard it
100 times in their life.

00:57:47.390 --> 00:57:48.840
Every capital provider says

00:57:48.840 --> 00:57:50.990
that they have a
limitless supply of capital,

00:57:50.990 --> 00:57:53.240
they can't find projects,
and every developer says

00:57:53.240 --> 00:57:56.110
they have limitless supply
of projects, can't find capital.

00:57:56.110 --> 00:57:57.150
So obviously, that tells you

00:57:57.150 --> 00:58:02.050
that this is a market efficiency
problem to some extent,

00:58:02.050 --> 00:58:04.293
but the barriers don't
just sit on the capital side,

00:58:04.293 --> 00:58:06.910
they definitely sit on the
customer side and on demand side.

00:58:06.910 --> 00:58:08.900
There are collective action problems.

00:58:08.900 --> 00:58:11.030
There's information asymmetries

00:58:11.030 --> 00:58:13.253
or information sort of misperceptions.

00:58:14.220 --> 00:58:16.180
Low consumer awareness.

00:58:16.180 --> 00:58:18.240
There's a mismatch between the form

00:58:18.240 --> 00:58:20.980
and structure of capital
and the project needs,

00:58:20.980 --> 00:58:23.210
which I think Wesley and
Holmes did a really good job

00:58:23.210 --> 00:58:25.867
of explaining the
kind of form of capital

00:58:25.867 --> 00:58:28.070
and the way it reaches a customer

00:58:28.070 --> 00:58:29.523
makes a huge difference here,

00:58:30.730 --> 00:58:32.420
but I think also the
point that wasn't made

00:58:32.420 --> 00:58:33.910
about the sort of low penetration

00:58:33.910 --> 00:58:37.280
of some of the loan
products that they experienced

00:58:37.280 --> 00:58:40.420
being attributed to sort
of a dedicated sales force.

00:58:40.420 --> 00:58:42.040
That's essential.

00:58:42.040 --> 00:58:44.010
If we think about the number of homes

00:58:44.010 --> 00:58:46.247
that need to be retrofitted

00:58:46.247 --> 00:58:48.810
for electrification or efficiency,

00:58:48.810 --> 00:58:51.120
it's an astronomical task

00:58:51.120 --> 00:58:54.660
from just a business
execution standpoint.

00:58:54.660 --> 00:58:57.550
I mean, to bring it into context today,

00:58:57.550 --> 00:58:59.430
I think we see perfectly
well in our country

00:58:59.430 --> 00:59:02.990
how unbelievably hard
it is to deliver vaccines

00:59:02.990 --> 00:59:07.364
into the arms of the 325 million
Americans who need shots,

00:59:07.364 --> 00:59:10.670
and that's when the entire
government apparatus,

00:59:10.670 --> 00:59:11.503
top to bottom,

00:59:11.503 --> 00:59:14.563
is at least now trying to
actually solve that problem.

00:59:15.410 --> 00:59:18.110
It's really, really hard to do
this stuff at scale on email

00:59:18.110 --> 00:59:19.530
to human beings and businesses

00:59:19.530 --> 00:59:21.970
that need to be working
towards it is enormous

00:59:21.970 --> 00:59:26.170
and we just, frankly,
the capacity doesn't exist

00:59:26.170 --> 00:59:29.480
to do it from a human
workforce standpoint,

00:59:29.480 --> 00:59:31.790
and so all of these problems
sort of add up together.

00:59:31.790 --> 00:59:32.850
Some of them are technical,

00:59:32.850 --> 00:59:35.080
some of them are sort
of obvious on their phase,

00:59:35.080 --> 00:59:36.140
some of them sit deep

00:59:36.140 --> 00:59:37.730
in the sort of capital
market structures,

00:59:37.730 --> 00:59:40.810
but some of them sit
at the customer's level.

00:59:40.810 --> 00:59:43.070
These are the barriers
that need to be addressed

00:59:43.070 --> 00:59:45.070
and thinking about them holistically,

00:59:45.070 --> 00:59:48.770
I think, is what green banks
have learned over the years.

00:59:48.770 --> 00:59:51.510
It's not about just
sort of plugging money

00:59:51.510 --> 00:59:52.920
into a part of this problem.

00:59:52.920 --> 00:59:55.530
It's about delivering that
capital in a very specific form

00:59:55.530 --> 00:59:57.210
and a well-designed construct

00:59:57.210 --> 00:59:59.100
alongside private sector partners

00:59:59.100 --> 01:00:00.840
to actually reach customers

01:00:00.840 --> 01:00:04.020
and try to achieve
some market penetration.

01:00:04.020 --> 01:00:04.970
Next slide, please.

01:00:07.890 --> 01:00:09.270
So just in summary.

01:00:09.270 --> 01:00:12.976
I'm not here to sell green
banks to you all in California.

01:00:12.976 --> 01:00:14.913
I'm just giving the label in.

01:00:15.910 --> 01:00:20.410
So there's over a dozen
green banks now in the US.

01:00:20.410 --> 01:00:22.527
Collectively, they've driven
over $5 billion of investment.

01:00:22.527 --> 01:00:25.240
This data is now officially a year old.

01:00:25.240 --> 01:00:27.960
So the number is actually
higher than this now.

01:00:27.960 --> 01:00:29.470
In the leveraging of private sector

01:00:29.470 --> 01:00:32.143
capital was worth many
designs and it's about $3,

01:00:33.980 --> 01:00:36.393
nearly $3 of private
capital for public capital

01:00:36.393 --> 01:00:37.913
a green bank dollar deployed.

01:00:39.440 --> 01:00:41.870
This is not just about energy,

01:00:41.870 --> 01:00:42.703
it's also about jobs

01:00:42.703 --> 01:00:44.850
and economic development in Connecticut.

01:00:44.850 --> 01:00:46.570
In the case of the
Connecticut Green Bank,

01:00:46.570 --> 01:00:49.310
they've created over 23,000 new jobs

01:00:49.310 --> 01:00:51.820
through their investment activity.

01:00:51.820 --> 01:00:54.700
These green banks
also have a huge project

01:00:54.700 --> 01:00:56.660
of opportunity pipeline identified

01:00:56.660 --> 01:00:59.900
and so like all of you in California,

01:00:59.900 --> 01:01:01.030
you've identified the need,

01:01:01.030 --> 01:01:02.680
you've identified the scale

01:01:02.680 --> 01:01:06.070
and green banks are showing
how their institutional model

01:01:06.070 --> 01:01:07.870
is trying to address this need,

01:01:07.870 --> 01:01:11.460
and it demonstrates that it works.

01:01:11.460 --> 01:01:14.249
This is also not a
uniquely US phenomenon.

01:01:14.249 --> 01:01:15.870
The national green bank in Australia

01:01:15.870 --> 01:01:18.764
a multibillion dollar institution,

01:01:18.764 --> 01:01:21.420
that new national green
bank in New Zealand,

01:01:21.420 --> 01:01:24.197
a new climate bank created in Scotland.

01:01:24.197 --> 01:01:26.910
The UK, it had a national
Green Investment Bank.

01:01:26.910 --> 01:01:28.809
They privatized because they decided

01:01:28.809 --> 01:01:30.703
they didn't wanna be in
that business anymore

01:01:30.703 --> 01:01:32.470
and for now they're working

01:01:32.470 --> 01:01:34.453
to try to recreate it and relaunch it.

01:01:36.220 --> 01:01:37.260
They wouldn't be doing my job

01:01:37.260 --> 01:01:40.727
if I didn't name that the
National Green Bank in the US,

01:01:40.727 --> 01:01:42.560
called the Clean Energy Accelerator

01:01:42.560 --> 01:01:45.470
is quickly moving towards
implementation and passage

01:01:45.470 --> 01:01:50.157
as part of climate infrastructure
package later this year.

01:01:51.469 --> 01:01:52.302
That's a separate conversation,

01:01:52.302 --> 01:01:54.000
but I need to put a plug in for that

01:01:54.000 --> 01:01:56.000
'cause that's what I gotta do every day.

01:01:56.970 --> 01:01:58.023
Next slide, please.

01:02:01.540 --> 01:02:03.820
So this is hyper detailed.

01:02:03.820 --> 01:02:06.200
I've got a couple slides in here.

01:02:06.200 --> 01:02:08.310
Organization, we're
working with a lot of partners.

01:02:08.310 --> 01:02:12.370
We've got 25 detailed
technical use cases

01:02:12.370 --> 01:02:13.660
of the kinds of investments

01:02:13.660 --> 01:02:16.910
that the Clean Energy
accelerator could or would make

01:02:16.910 --> 01:02:19.700
in partnership with the
state green banks for utilities,

01:02:19.700 --> 01:02:21.270
local partners in general.

01:02:21.270 --> 01:02:22.810
Most of this activity, as you all know,

01:02:22.810 --> 01:02:24.600
is state locally based.

01:02:24.600 --> 01:02:26.150
This is a schematic

01:02:26.150 --> 01:02:30.760
for a utility driven
tariff-based financing structure

01:02:30.760 --> 01:02:34.653
to do exactly what Holmes
and Wesley were describing.

01:02:37.780 --> 01:02:40.243
The role for risk mitigation is clear.

01:02:41.470 --> 01:02:42.950
This money has to come from somewhere,

01:02:42.950 --> 01:02:45.170
either public money or utility money,

01:02:45.170 --> 01:02:48.380
considering reserved
support utility investments

01:02:48.380 --> 01:02:49.550
in the kinds of upgrades

01:02:49.550 --> 01:02:52.143
that Wesley and Holmes
were talking about.

01:02:53.360 --> 01:02:54.370
I put this up here,

01:02:54.370 --> 01:02:57.910
one, to just demonstrate
that this stuff is technical

01:02:57.910 --> 01:02:59.860
and being thoughtful
about how money moves

01:02:59.860 --> 01:03:03.670
and the participants,
who the participants are,

01:03:03.670 --> 01:03:04.527
you gotta be careful about it,

01:03:04.527 --> 01:03:06.357
but also being like holistic about it

01:03:06.357 --> 01:03:10.240
and thinking it's not just a
single box in the bottom left,

01:03:10.240 --> 01:03:13.760
but there's a reserve fund
and that money needs to exist.

01:03:13.760 --> 01:03:17.240
The existence of that money
in that fund is necessary,

01:03:17.240 --> 01:03:18.700
but not sufficient for success.

01:03:18.700 --> 01:03:20.070
You have to be thinking holistically

01:03:20.070 --> 01:03:22.580
about the entire structure of the market

01:03:22.580 --> 01:03:24.880
and the technologies
you're trying to address.

01:03:25.730 --> 01:03:26.680
Next slide, please.

01:03:29.500 --> 01:03:31.507
And this is another one again.

01:03:31.507 --> 01:03:33.750
It looks just like an
explosion of lines and graphs,

01:03:33.750 --> 01:03:34.590
and again, the objective

01:03:34.590 --> 01:03:37.240
is not necessarily to be able to read it

01:03:37.240 --> 01:03:39.290
in this brief moment on the slide deck,

01:03:39.290 --> 01:03:42.120
but this is an example of how to deploy

01:03:42.120 --> 01:03:45.690
a solar plus storage
project, specifically targeting

01:03:45.690 --> 01:03:48.310
low to moderate income
community facilities,

01:03:48.310 --> 01:03:50.850
be it a shelter, or a health clinic,

01:03:50.850 --> 01:03:54.087
or a multifamily affordable
housing community.

01:03:56.440 --> 01:03:58.670
The barriers here are complex.

01:03:58.670 --> 01:04:00.790
It's a combination of
technical know how,

01:04:00.790 --> 01:04:02.280
local capacity to that.

01:04:02.280 --> 01:04:06.010
To deploy this, commercial
lender don't have experience

01:04:06.010 --> 01:04:07.907
with this kind of lending

01:04:07.907 --> 01:04:10.760
and so if the objective is
to engage private capital

01:04:12.660 --> 01:04:15.720
making sure that there's
somebody whose job it is

01:04:15.720 --> 01:04:17.430
to actually work with
that commercial lender,

01:04:17.430 --> 01:04:19.340
to train them on how to make these loans

01:04:19.340 --> 01:04:21.520
and get comfortable with it,

01:04:21.520 --> 01:04:22.450
and then being thoughtful

01:04:22.450 --> 01:04:25.130
about how to bring in the other
components of the ecosystem.

01:04:25.130 --> 01:04:27.010
How do you take advantage

01:04:27.010 --> 01:04:28.530
of federal tax credits from grants?

01:04:28.530 --> 01:04:29.870
How do you work with utility

01:04:29.870 --> 01:04:33.430
to bring in the different
kinds of financial flows

01:04:33.430 --> 01:04:36.440
that can come from utility
for these kinds of projects?

01:04:36.440 --> 01:04:37.790
But solutions, as I said, are not,

01:04:37.790 --> 01:04:39.150
I mean, as you can see here

01:04:39.150 --> 01:04:41.400
the schematic here is wildly different

01:04:41.400 --> 01:04:46.050
than for a residential LMI upgrade,

01:04:46.050 --> 01:04:48.440
and so those structures,

01:04:48.440 --> 01:04:51.040
they all require money and
they all require public money

01:04:51.040 --> 01:04:53.000
or concessional capital of some kind

01:04:53.000 --> 01:04:54.460
to play a key role here,

01:04:54.460 --> 01:04:57.000
but the way it actually
gets deployed matters a lot

01:04:57.000 --> 01:04:59.530
and it's project specific,
it's technology specific.

01:04:59.530 --> 01:05:01.930
There is no silver bullet solution

01:05:01.930 --> 01:05:03.130
It really, really depends

01:05:03.130 --> 01:05:06.170
on the application that
you're trying to get here.

01:05:06.170 --> 01:05:07.003
Next slide.

01:05:12.240 --> 01:05:14.770
And then this is my last slide.

01:05:14.770 --> 01:05:17.303
Just drafts for summing
up some lessons learned.

01:05:19.172 --> 01:05:22.550
I think maybe the simple summary here

01:05:22.550 --> 01:05:24.010
is this is not Field of Dreams,

01:05:24.010 --> 01:05:26.280
meaning this is not a market

01:05:26.280 --> 01:05:27.920
where if you build it they will come,

01:05:27.920 --> 01:05:30.483
in they is both customers and capital.

01:05:31.820 --> 01:05:34.500
There is an enormous
amount of work to be done

01:05:34.500 --> 01:05:35.990
to do the hard work here.

01:05:35.990 --> 01:05:38.340
It has to be somebody's job to do it.

01:05:38.340 --> 01:05:40.760
It has to be someone's job to figure out

01:05:40.760 --> 01:05:42.850
these kinds of structure,
financing structures.

01:05:42.850 --> 01:05:45.930
It has to be somebody's job
to find private capital partner,

01:05:45.930 --> 01:05:49.380
who wants to come to the
table and do this collectively.

01:05:49.380 --> 01:05:50.450
It has to be someone's job

01:05:50.450 --> 01:05:52.750
to figure out how to generate funds.

01:05:52.750 --> 01:05:56.893
This is a pitch, but the
construct of institutions overall.

01:05:57.760 --> 01:05:58.860
If we're actually talking

01:05:58.860 --> 01:06:02.010
about the task of
dramatically and rapidly

01:06:02.010 --> 01:06:03.880
changing our entire built environment,

01:06:03.880 --> 01:06:05.250
it probably makes sense

01:06:05.250 --> 01:06:08.170
to have an institution
whose job it is to do that.

01:06:08.170 --> 01:06:09.437
Again, this isn't me
pitching a green bank.

01:06:09.437 --> 01:06:10.490
It's just thinking

01:06:10.490 --> 01:06:13.290
about how to solve
these problems holistically,

01:06:13.290 --> 01:06:14.220
and not just think about this

01:06:14.220 --> 01:06:16.483
as a capital problem or risk problem.

01:06:17.980 --> 01:06:20.833
The go to market barriers here are real.

01:06:22.150 --> 01:06:24.000
I think it was what we said before,

01:06:24.000 --> 01:06:29.000
like, signing up a contractor
to try to serve LMI households

01:06:29.500 --> 01:06:30.930
is really, really different

01:06:30.930 --> 01:06:32.380
than signing up the contractor

01:06:32.380 --> 01:06:36.380
who only exists to serve LMI households.

01:06:36.380 --> 01:06:38.210
Those businesses need to exist,

01:06:38.210 --> 01:06:39.120
because if they don't

01:06:39.120 --> 01:06:41.503
those customers aren't gonna be served.

01:06:42.550 --> 01:06:46.700
As I said, different markets
require different solutions.

01:06:46.700 --> 01:06:48.810
So LMI residential electrification

01:06:48.810 --> 01:06:51.720
likely need some sort of
ongoing repayment structure.

01:06:51.720 --> 01:06:54.790
If we're talking about
converting commercial heavy duty

01:06:54.790 --> 01:06:56.920
trucking fleets to electric vehicles,

01:06:56.920 --> 01:06:58.530
that's almost certainly
a different structure,

01:06:58.530 --> 01:07:02.070
that's probably an
ESA-based restructure.

01:07:02.070 --> 01:07:03.660
Every market, every technology

01:07:03.660 --> 01:07:05.980
might need a completely
different construct.

01:07:05.980 --> 01:07:09.123
That's okay, but you're onto
something and how we design it,

01:07:10.090 --> 01:07:12.183
and then specifically in the LMI space,

01:07:13.540 --> 01:07:16.900
the risk perception versus
reality is a genuine barrier,

01:07:16.900 --> 01:07:18.960
and when it comes to lending,

01:07:18.960 --> 01:07:21.870
Wesley and Holmes
spoke about this at length.

01:07:21.870 --> 01:07:25.370
Being thoughtful of having
the right tool for the job,

01:07:25.370 --> 01:07:28.820
but again, I think just
creating a reserve fund

01:07:28.820 --> 01:07:31.390
and expecting people
to show up and use it.

01:07:31.390 --> 01:07:32.730
We have to be more programmatic

01:07:32.730 --> 01:07:35.290
about pulling people to the table,

01:07:35.290 --> 01:07:36.490
and then last but not least,

01:07:36.490 --> 01:07:37.870
I think this is an important comment

01:07:37.870 --> 01:07:40.430
across creating financing really large.

01:07:40.430 --> 01:07:44.200
Making something available
for a customer is not success.

01:07:44.200 --> 01:07:45.810
It's only uptake that actually matters.

01:07:45.810 --> 01:07:47.380
Yes, we should celebrate

01:07:47.380 --> 01:07:50.010
that there is availability to customers

01:07:50.010 --> 01:07:51.150
who want to do something,

01:07:51.150 --> 01:07:54.763
and in a world in which
we're talking about financing,

01:07:56.790 --> 01:07:59.070
the purchase of a
television availability

01:07:59.070 --> 01:08:00.440
is probably all we would need to do

01:08:00.440 --> 01:08:01.390
because there's no,

01:08:02.800 --> 01:08:04.710
the government and
society are not compelled

01:08:04.710 --> 01:08:07.490
to want every household
to own a television.

01:08:07.490 --> 01:08:08.687
The customer can
choose either they will do,

01:08:08.687 --> 01:08:10.337
if they want it or they don't

01:08:10.337 --> 01:08:12.630
and they should have
financing if they want it.

01:08:12.630 --> 01:08:14.390
We actually do need everybody

01:08:14.390 --> 01:08:16.250
to make these kinds of
changes and conversions.

01:08:16.250 --> 01:08:18.490
We actually do need every household

01:08:18.490 --> 01:08:21.670
to make different decisions
about how they use energy,

01:08:21.670 --> 01:08:24.050
and so making something available,

01:08:24.050 --> 01:08:25.420
and again, it's just the first step

01:08:25.420 --> 01:08:26.950
to actually achieving a goal,

01:08:26.950 --> 01:08:29.400
but we really can only measure success

01:08:29.400 --> 01:08:30.710
through uptake and adoption,

01:08:30.710 --> 01:08:34.290
not to making financing
solutions available,

01:08:34.290 --> 01:08:35.640
and I just think it's important

01:08:35.640 --> 01:08:39.490
for us to think about
designing financing solutions,

01:08:39.490 --> 01:08:40.790
no matter the market,

01:08:40.790 --> 01:08:44.890
in terms of measuring success
based on uptake and adoption

01:08:44.890 --> 01:08:46.610
and not just declaring victory

01:08:46.610 --> 01:08:49.203
when something has made
available to a customer.

01:08:50.920 --> 01:08:52.280
So I'm obviously happy

01:08:52.280 --> 01:08:55.376
to have more discussion with the panel.

01:08:55.376 --> 01:08:56.410
If we get some time for Q&amp;A,

01:08:56.410 --> 01:08:58.703
we'll dive into this more deeply.

01:08:58.703 --> 01:09:00.890
This is my very brief attempt

01:09:00.890 --> 01:09:04.396
to capture lessons across
the board into one slide,

01:09:04.396 --> 01:09:07.393
but talk and back to Holmes.

01:09:13.670 --> 01:09:17.120
<v ->Terrific, there we go.</v>

01:09:17.120 --> 01:09:21.100
Jeff, thank you for
that tour you did for us.

01:09:21.100 --> 01:09:23.320
Rory, thank you for
advancing the slides.

01:09:23.320 --> 01:09:25.840
We're still on track for the remarks

01:09:25.840 --> 01:09:28.280
that have been prepared
by Miriam Joffe-Block,

01:09:28.280 --> 01:09:29.280
the senior manager

01:09:29.280 --> 01:09:33.220
for the California Hub for
Energy Efficiency Finance,

01:09:33.220 --> 01:09:35.480
known to many of us as CHEEF.

01:09:35.480 --> 01:09:36.380
It's important for me

01:09:36.380 --> 01:09:38.810
to acknowledge Miriam's leadership role

01:09:38.810 --> 01:09:41.190
in launching and
approving the real program,

01:09:41.190 --> 01:09:43.450
while developing
commercial financing pilots

01:09:43.450 --> 01:09:47.270
that are also attended
through that same infrastructure,

01:09:47.270 --> 01:09:49.340
and to acknowledge
the history and expertise

01:09:49.340 --> 01:09:52.020
that Marian brings to
that post for the state,

01:09:52.020 --> 01:09:52.860
having previously worked

01:09:52.860 --> 01:09:55.530
at Beneficial State Bank and foundation

01:09:55.530 --> 01:09:57.450
on an expedited underwriting process

01:09:57.450 --> 01:09:58.790
for small business lending.

01:09:58.790 --> 01:10:01.200
Securing over $3.8 million

01:10:01.200 --> 01:10:04.280
in CDFI Fund grant awards to the bank.

01:10:04.280 --> 01:10:06.840
So with the kind of market experience

01:10:06.840 --> 01:10:09.490
that Marian brings to the
public policy implementation

01:10:09.490 --> 01:10:12.903
of the CPUC's financing pilots,

01:10:14.746 --> 01:10:17.670
we're here to hear the lessons learned

01:10:17.670 --> 01:10:20.070
from administering the CHEEF.

01:10:20.070 --> 01:10:23.194
Miriam, please, thank you so much.

01:10:23.194 --> 01:10:24.027
<v ->Thank you, Holmes,</v>

01:10:24.027 --> 01:10:25.850
and thank you to all the Commissioners,

01:10:25.850 --> 01:10:27.740
and for the CPUC staff

01:10:27.740 --> 01:10:30.173
for organizing this really
important workshop.

01:10:31.070 --> 01:10:32.810
So we'll go to the first slide,

01:10:32.810 --> 01:10:35.460
and like Holmes said,

01:10:35.460 --> 01:10:37.810
the perspective that
I'm gonna share today

01:10:37.810 --> 01:10:39.700
results from papers administration

01:10:39.700 --> 01:10:43.120
of the California Hub for
Energy Efficiency Financing,

01:10:43.120 --> 01:10:48.120
and there's a few key
elements of the CPUC's decision

01:10:49.000 --> 01:10:52.010
to set up, achieve and
establish pilot programs

01:10:52.010 --> 01:10:53.510
that I wanna highlight.

01:10:53.510 --> 01:10:54.343
So the first

01:10:54.343 --> 01:10:59.040
is the use of a ratepayer-funded
credit enhancement

01:10:59.040 --> 01:11:01.170
to leverage private capital

01:11:01.170 --> 01:11:03.090
that would be made
available to customers

01:11:03.090 --> 01:11:05.390
in the form of unsecured

01:11:05.390 --> 01:11:08.230
or equipment secured loans or leases.

01:11:08.230 --> 01:11:09.960
So as Holmes mentioned earlier,

01:11:09.960 --> 01:11:12.050
the choice was to set up a loan program,

01:11:12.050 --> 01:11:13.537
to set up a debt program,

01:11:13.537 --> 01:11:16.780
but these are non real
estate secured loans.

01:11:16.780 --> 01:11:19.640
Another kind of key decision at the time

01:11:19.640 --> 01:11:23.420
was to set up an open
market transaction design,

01:11:23.420 --> 01:11:25.440
meaning that a wide range of lenders

01:11:25.440 --> 01:11:27.700
could connect with
contractors and customers

01:11:27.700 --> 01:11:29.150
and agree on deals,

01:11:29.150 --> 01:11:33.240
and so the CHEEF is not part
of the financial transactions,

01:11:33.240 --> 01:11:37.000
and if you're familiar with the
GoGreen Financing website,

01:11:37.000 --> 01:11:40.600
that's the public facing
platform for these programs.

01:11:40.600 --> 01:11:43.143
Okay, so next slide, please.

01:11:44.300 --> 01:11:47.300
First, I'm gonna talk
about what has worked

01:11:47.300 --> 01:11:48.690
or what is working.

01:11:48.690 --> 01:11:51.550
So we've seen that a credit enhancement

01:11:51.550 --> 01:11:54.930
can very successfully
leverage private capital.

01:11:54.930 --> 01:11:59.090
So the end of 2020, our
residential program called REEL,

01:11:59.090 --> 01:12:02.980
had done just over 1,000 loans

01:12:02.980 --> 01:12:06.810
and we deployed credit
enhancement funds of 2.6 million

01:12:06.810 --> 01:12:10.170
to leverage about 17.5
million in private capital

01:12:10.170 --> 01:12:12.080
from seven enrolled lenders.

01:12:12.080 --> 01:12:13.900
So a dollar in credit enhancement

01:12:13.900 --> 01:12:17.120
was leveraging about
660 in private capital,

01:12:17.120 --> 01:12:19.530
and as these loans are repaid,

01:12:19.530 --> 01:12:21.430
we recapture the credit enhancement,

01:12:21.430 --> 01:12:24.870
which can be revolved
again to support new loans

01:12:24.870 --> 01:12:27.520
provided the customer doesn't default,

01:12:27.520 --> 01:12:30.120
and the credit enhancement
contribution rate

01:12:30.120 --> 01:12:31.620
that you can see there

01:12:31.620 --> 01:12:35.040
is higher for loans made
to underserved customers,

01:12:35.040 --> 01:12:40.040
who are either LMI based on a
household income calculation,

01:12:40.180 --> 01:12:42.670
or a property census track lookup,

01:12:42.670 --> 01:12:44.440
or borrowers who are credit-challenged

01:12:44.440 --> 01:12:47.193
with a credit score of less than 640.

01:12:48.859 --> 01:12:50.359
All right, next slide, please.

01:12:52.110 --> 01:12:54.513
So looking at our residential program,

01:12:55.350 --> 01:12:58.113
we see four concrete ways.

01:13:00.290 --> 01:13:02.290
Rory, are you able to advance the slide?

01:13:05.480 --> 01:13:08.370
Thank you, so we see four concrete ways

01:13:08.370 --> 01:13:11.170
in which that credit
enhancement contribution

01:13:11.170 --> 01:13:13.810
allows the lender to
offer concrete benefits

01:13:13.810 --> 01:13:16.940
to the customer that they
wouldn't otherwise be able to,

01:13:16.940 --> 01:13:17.870
and so right now,

01:13:17.870 --> 01:13:20.160
all of the participating lenders
in the residential program

01:13:20.160 --> 01:13:22.360
are nonprofit credit unions.

01:13:22.360 --> 01:13:23.700
They're really
participating in the program

01:13:23.700 --> 01:13:25.630
as a service to the community.

01:13:25.630 --> 01:13:27.550
They don't have the same profit motive

01:13:27.550 --> 01:13:28.680
as for profit lender,

01:13:28.680 --> 01:13:31.670
and we can talk about
that a little bit more later on.

01:13:31.670 --> 01:13:33.240
So the first benefit we see

01:13:33.240 --> 01:13:36.510
is that the lenders are
granting access to more capital.

01:13:36.510 --> 01:13:39.920
So customers are able
to access up to $50,000,

01:13:39.920 --> 01:13:43.270
as opposed to the
more typical $20,000 cap

01:13:43.270 --> 01:13:47.730
that one finds on
personal unsecured loans.

01:13:47.730 --> 01:13:52.090
Importantly, also lenders
extend terms up to 15 years

01:13:52.090 --> 01:13:55.300
compared to the typical five
year term on an unsecured loan,

01:13:55.300 --> 01:13:58.260
and this allows customers
to keep monthly payments

01:13:58.260 --> 01:14:03.260
pretty affordable for large
purchases like Ajax or Windows.

01:14:03.300 --> 01:14:05.730
We also see big
reductions in interest rates,

01:14:05.730 --> 01:14:08.530
especially at the lower
end of the credit score band.

01:14:08.530 --> 01:14:10.030
So including in some places,

01:14:10.030 --> 01:14:12.540
we see interest rates
lowered 1,000 basis points.

01:14:12.540 --> 01:14:16.550
So from a non-real rate of 18%,

01:14:16.550 --> 01:14:21.940
down to a rate under
8%, and then we also see

01:14:23.690 --> 01:14:25.520
lenders are able to
make loans to customers

01:14:25.520 --> 01:14:29.670
with credit scores down
to 600 FICO scores or 580,

01:14:29.670 --> 01:14:31.880
whereas normally without
the credit enhancement

01:14:31.880 --> 01:14:35.133
they would have a minimum of 660 or 640.

01:14:36.150 --> 01:14:37.790
So right now in our program,

01:14:37.790 --> 01:14:41.270
a customer with a credit score of 580

01:14:41.270 --> 01:14:44.060
can walk, will walk metaphorically,

01:14:44.060 --> 01:14:45.717
into the REEL program

01:14:45.717 --> 01:14:49.870
and get access to a 15 year
unsecured loan at 5.99%,

01:14:49.870 --> 01:14:52.980
which is just not available
anywhere else on the market

01:14:52.980 --> 01:14:54.043
without this program.

01:14:55.340 --> 01:14:56.523
Next slide, please.

01:14:58.720 --> 01:15:01.830
So zooming in a bit on
the interest rate benefit.

01:15:01.830 --> 01:15:05.390
Credit unions in November
were charging 10.4% on average

01:15:05.390 --> 01:15:07.670
for a 60-month term
loan, and that's, as I said,

01:15:07.670 --> 01:15:10.450
the longest that they'll tend to go out,

01:15:10.450 --> 01:15:12.010
but with a credit enhancement

01:15:12.010 --> 01:15:13.880
REEL lenders charge through our program

01:15:13.880 --> 01:15:18.880
an average of 5.02% across
all terms even up to 15 years.

01:15:19.000 --> 01:15:20.400
So when we compare the rates

01:15:20.400 --> 01:15:23.320
that a customer gets with a REEL loan

01:15:23.320 --> 01:15:26.380
compared to if they got
that same five-year loan

01:15:27.750 --> 01:15:29.680
without the program
from the same credit union,

01:15:29.680 --> 01:15:30.880
we see the customer saving

01:15:30.880 --> 01:15:33.360
almost $2,000 on average in interest,

01:15:33.360 --> 01:15:34.850
and we see similar types of benefits

01:15:34.850 --> 01:15:36.400
in our small business program

01:15:36.400 --> 01:15:38.500
with lenders being able
to approve industries

01:15:38.500 --> 01:15:39.520
they otherwise wouldn't,

01:15:39.520 --> 01:15:44.520
like restaurants, or customers
with less time in business

01:15:44.560 --> 01:15:48.380
and also able to lower
rates and extend terms.

01:15:48.380 --> 01:15:49.330
Next slide, please.

01:15:52.700 --> 01:15:55.300
So more on what has worked.

01:15:55.300 --> 01:16:00.300
We see that customers
will make energy upgrades

01:16:00.570 --> 01:16:04.790
with financing without
any rebate or incentive,

01:16:04.790 --> 01:16:07.290
and we also see customers
willing to make upgrades

01:16:07.290 --> 01:16:09.450
for things windows and H-backs

01:16:09.450 --> 01:16:11.360
that won't necessarily have payback

01:16:11.360 --> 01:16:13.020
through energy efficiency savings

01:16:13.020 --> 01:16:14.880
because customers
have a lot of motivations

01:16:14.880 --> 01:16:18.613
beyond energy efficiency,
like health and comfort.

01:16:19.520 --> 01:16:21.380
We also see that a loan program

01:16:21.380 --> 01:16:25.150
can reach underserved
customers to a degree.

01:16:25.150 --> 01:16:29.780
So 57% of loans, the
first kind of 1,059 loans

01:16:29.780 --> 01:16:32.690
were made to upgrade
properties in LMI census tracts,

01:16:32.690 --> 01:16:36.600
of which 23% went to tracts
that are considered low,

01:16:36.600 --> 01:16:41.600
meaning income of less than
80% of area median income.

01:16:44.420 --> 01:16:47.190
As we mentioned,
we incentivize lenders

01:16:47.190 --> 01:16:49.380
with a higher credit enhancement amount

01:16:49.380 --> 01:16:52.203
for loans to LMI
customers, but I wanna note

01:16:52.203 --> 01:16:54.640
that that doesn't actually
dramatically change

01:16:54.640 --> 01:16:56.040
lender approval rates

01:16:56.040 --> 01:16:59.300
because lenders are really
sensitive to credit score,

01:16:59.300 --> 01:17:01.860
and they're looking at
debt to income ratios,

01:17:01.860 --> 01:17:05.790
or the ability for a
customer to repay a loan.

01:17:05.790 --> 01:17:06.623
So that's important

01:17:06.623 --> 01:17:09.200
because we only want lenders
to make loans to customers

01:17:09.200 --> 01:17:11.520
that have the cash flow to repay them.

01:17:11.520 --> 01:17:13.100
So a credit enhancement

01:17:13.100 --> 01:17:16.230
is really important for
broadening approvals,

01:17:16.230 --> 01:17:18.250
especially to borrowers
with lower credit scores,

01:17:18.250 --> 01:17:20.710
and making those
repayments more affordable

01:17:20.710 --> 01:17:23.300
through extended terms
and lowered interest rates,

01:17:23.300 --> 01:17:25.760
but as a debt product,

01:17:25.760 --> 01:17:29.240
REEL is never gonna be
a truly low income program.

01:17:29.240 --> 01:17:31.820
So we think that REEL is a good option

01:17:31.820 --> 01:17:34.223
for customers sort of in that median,

01:17:35.070 --> 01:17:38.680
or 80% of AMI income range,

01:17:38.680 --> 01:17:43.063
as opposed to down to the
30, 50% very low and low.

01:17:45.140 --> 01:17:46.263
Next slide, please.

01:17:48.090 --> 01:17:50.383
Okay, so moving on
to what hasn't worked.

01:17:52.190 --> 01:17:54.150
Private lenders are really good

01:17:54.150 --> 01:17:58.690
at evaluating risk, pricing
for it, funding and servicing,

01:17:58.690 --> 01:18:00.050
and any program

01:18:00.050 --> 01:18:04.610
that has a public or ratepayer
source of funding behind it

01:18:04.610 --> 01:18:07.310
is gonna incorporate a
set of policy decisions

01:18:07.310 --> 01:18:10.820
that are gonna filter down
into program eligibility rules,

01:18:10.820 --> 01:18:14.080
and in our sort of front end model,

01:18:14.080 --> 01:18:17.340
where lenders originate
directly with customers,

01:18:17.340 --> 01:18:20.070
too much of that eligibility screening,

01:18:20.070 --> 01:18:24.160
data collection burden
falls on the lenders,

01:18:24.160 --> 01:18:27.240
and also in some cases
falls on the contractors.

01:18:27.240 --> 01:18:28.990
That's been a real challenge.

01:18:28.990 --> 01:18:30.063
Next slide, please.

01:18:34.390 --> 01:18:37.520
So continuing with what hasn't worked,

01:18:37.520 --> 01:18:40.050
and related to the complexity

01:18:40.050 --> 01:18:42.700
is the geographic
complexity of our state.

01:18:42.700 --> 01:18:44.940
So lenders, customers and contractors

01:18:44.940 --> 01:18:46.950
really do not view the world

01:18:46.950 --> 01:18:51.540
through the lens of IOU
and POU jurisdictions.

01:18:51.540 --> 01:18:52.990
So the fact that a heat pump

01:18:52.990 --> 01:18:55.870
is an eligible measure
in West Sacramento,

01:18:55.870 --> 01:18:57.730
but across the bridge in Sacramento

01:18:57.730 --> 01:18:59.840
it's not an eligible measure

01:18:59.840 --> 01:19:01.280
because there's a public utility there,

01:19:01.280 --> 01:19:03.940
that just makes the programs complex

01:19:03.940 --> 01:19:07.040
and less desirable for key
partners to participate in,

01:19:07.040 --> 01:19:09.180
and that complexity
sort of trickles down

01:19:09.180 --> 01:19:11.840
through all of our program operations.

01:19:11.840 --> 01:19:15.950
So similarly, restrictions
in which we allow

01:19:15.950 --> 01:19:18.300
energy efficiency to be financed,

01:19:18.300 --> 01:19:20.180
but not storage or solar,

01:19:20.180 --> 01:19:22.500
that doesn't make sense
to program participants.

01:19:22.500 --> 01:19:25.750
So there's a high learning
curve to use the programs,

01:19:25.750 --> 01:19:28.500
and high learning curves
are really not good for scale.

01:19:29.650 --> 01:19:32.460
So a debt program, as I mentioned,

01:19:32.460 --> 01:19:34.160
is not gonna reach all borrowers,

01:19:34.160 --> 01:19:36.930
but I do wanna respond to
Holmes' opening comments

01:19:36.930 --> 01:19:39.870
about the limitations of debt

01:19:39.870 --> 01:19:42.380
and kind of REEL's trajectory for growth

01:19:42.380 --> 01:19:45.960
is that let's not conclude
that a debt program can't scale

01:19:45.960 --> 01:19:48.230
just because it's a loan program.

01:19:48.230 --> 01:19:50.630
The operational hurdle
that I've described,

01:19:50.630 --> 01:19:53.370
the complexity, the delivery mechanism,

01:19:53.370 --> 01:19:55.910
the kind of lack of demand generation

01:19:55.910 --> 01:19:57.640
that Jeffrey touched on,

01:19:57.640 --> 01:19:59.480
the burden on lenders and contractors

01:19:59.480 --> 01:20:01.930
to understand new ones
program requirements.

01:20:01.930 --> 01:20:04.590
Some of these stem
from very well-intentioned

01:20:04.590 --> 01:20:06.600
privacy policy guidance at the time.

01:20:06.600 --> 01:20:11.600
Those are some real hurdles
and obstacles to REEL scaling,

01:20:11.960 --> 01:20:14.133
and so moving on to the next slide,

01:20:15.680 --> 01:20:20.163
in terms of how we might
address these barriers.

01:20:21.060 --> 01:20:23.160
So financing a loan

01:20:23.160 --> 01:20:26.380
doesn't create a demand
for energy efficiency.

01:20:26.380 --> 01:20:27.893
I think Jeffrey said it well,

01:20:27.893 --> 01:20:29.510
that just because something is available

01:20:29.510 --> 01:20:31.070
it doesn't mean people are gonna do it.

01:20:31.070 --> 01:20:34.130
Financing really
removes an upfront barrier,

01:20:34.130 --> 01:20:37.460
and the demand has to
be generated elsewhere,

01:20:37.460 --> 01:20:38.600
and there's a lot of discussion

01:20:38.600 --> 01:20:40.360
around how to deal with credit risk

01:20:40.360 --> 01:20:42.010
when thinking about
clean energy financing

01:20:42.010 --> 01:20:45.380
and making it broadly accessible,

01:20:45.380 --> 01:20:46.820
but in our experience,

01:20:46.820 --> 01:20:49.010
the generation of that demand

01:20:49.010 --> 01:20:53.760
and the operational details
and the delivery of the program

01:20:53.760 --> 01:20:57.430
can be as big or bigger
challenges to tackle.

01:20:57.430 --> 01:20:59.403
So related to
that, we really see

01:20:59.403 --> 01:21:01.270
that there needs to be
an effective intermediary

01:21:01.270 --> 01:21:03.230
between the customer and the lender

01:21:03.230 --> 01:21:05.490
for that eligibility screen.

01:21:05.490 --> 01:21:09.510
Some state programs use
a single originator model,

01:21:09.510 --> 01:21:11.690
some use dedicated program staff,

01:21:11.690 --> 01:21:15.030
there are also some
specialty financing companies

01:21:15.030 --> 01:21:17.520
that can act as screeners or brokers.

01:21:17.520 --> 01:21:19.723
We see the need for
that to be incorporated.

01:21:21.100 --> 01:21:22.560
At the time the pilots were set up,

01:21:22.560 --> 01:21:23.630
there was a lot of interest,

01:21:23.630 --> 01:21:25.860
like I said, in the open market

01:21:25.860 --> 01:21:28.200
for all lenders to kind of
participate on the front end,

01:21:28.200 --> 01:21:29.033
but we think having

01:21:29.033 --> 01:21:30.970
some being able to
participate on the front end

01:21:30.970 --> 01:21:33.090
and other lenders just
being able to purchase loans

01:21:33.090 --> 01:21:35.170
after they've been originated

01:21:35.170 --> 01:21:37.360
would be something
that would be really helpful

01:21:37.360 --> 01:21:39.693
and attract more
forms of private capital.

01:21:40.630 --> 01:21:43.030
Kind of most importantly,

01:21:43.030 --> 01:21:47.440
making financing
offerings available statewide

01:21:47.440 --> 01:21:50.640
will reduce complexity significantly

01:21:50.640 --> 01:21:52.840
and we believe lead to greater uptake

01:21:52.840 --> 01:21:56.170
and much greater uptake
in IOU territory as well

01:21:56.170 --> 01:21:58.280
because program partners

01:21:58.280 --> 01:22:01.060
will be attracted to the simplicity
and ease of the program.

01:22:01.060 --> 01:22:03.700
So that means we need to figure out

01:22:03.700 --> 01:22:06.820
how to incorporate
non-ratepayer sources of funding

01:22:06.820 --> 01:22:10.360
and combine them with
ratepayer program funding sources

01:22:10.360 --> 01:22:14.830
in order to have truly
statewide measure eligibility

01:22:14.830 --> 01:22:17.080
and just truly statewide
offerings available.

01:22:18.380 --> 01:22:19.630
Rory, next slide, please.

01:22:21.530 --> 01:22:22.567
So I'll conclude by saying

01:22:22.567 --> 01:22:24.840
the CHEEF was authorized to run pilots

01:22:24.840 --> 01:22:25.990
and you've learned a lot

01:22:25.990 --> 01:22:27.860
from the challenges of running them,

01:22:27.860 --> 01:22:30.200
and to get where California needs to be,

01:22:30.200 --> 01:22:32.110
we're gonna need many good options

01:22:32.110 --> 01:22:34.430
to help customers make
energy investments.

01:22:34.430 --> 01:22:37.830
So we're gonna need
debt and non-debt solutions.

01:22:37.830 --> 01:22:40.400
We have some exciting
developments in the works.

01:22:40.400 --> 01:22:43.240
We're working to set
up a point of sale offering

01:22:43.240 --> 01:22:44.540
for residential customers

01:22:44.540 --> 01:22:47.220
to purchase energy
efficient appliances online

01:22:47.220 --> 01:22:48.950
with real financing,

01:22:48.950 --> 01:22:50.970
which would help reach tenant occupants,

01:22:50.970 --> 01:22:53.520
help with distressed
purchases and bring the cost

01:22:53.520 --> 01:22:56.910
of kind of that emergency
financing much down.

01:22:56.910 --> 01:22:59.030
We're also setting up
a microloan pathway

01:22:59.030 --> 01:23:01.350
in our small business program

01:23:01.350 --> 01:23:02.760
to help facilitate lenders

01:23:02.760 --> 01:23:06.210
to get very, very small
loans of under $5,000,

01:23:06.210 --> 01:23:09.840
to mom-and-pop type
small business customers,

01:23:09.840 --> 01:23:13.280
where the utilities
on-bill financing programs

01:23:13.280 --> 01:23:16.090
kind of leave off at that $5,000 mark,

01:23:16.090 --> 01:23:17.510
and we are working very hard

01:23:17.510 --> 01:23:19.380
to try and reduce the operational burden

01:23:19.380 --> 01:23:20.980
for lenders in our programs

01:23:20.980 --> 01:23:23.663
using a variety of
things, including some IT.

01:23:24.590 --> 01:23:26.100
So we invite you to reach out to us.

01:23:26.100 --> 01:23:27.500
Stay in touch with the announcements

01:23:27.500 --> 01:23:31.490
and be part of our public
rulemaking development process

01:23:31.490 --> 01:23:33.700
this spring for both the residential

01:23:33.700 --> 01:23:35.120
and small business program

01:23:35.120 --> 01:23:37.470
as we make some of these modifications.

01:23:37.470 --> 01:23:39.130
I look forward to the
rest of the conference

01:23:39.130 --> 01:23:41.463
and the rest of the
discussion, thank you.

01:23:45.490 --> 01:23:49.370
<v ->Terrific, Miriam,
thank you so much.</v>

01:23:49.370 --> 01:23:52.570
You have brought to this workshop,

01:23:52.570 --> 01:23:55.700
the title of this panel's lessons,

01:23:55.700 --> 01:23:58.010
10 years, what have
we learned in 10 years?

01:23:58.010 --> 01:24:01.700
And you've given it to us
so directly and succinctly.

01:24:01.700 --> 01:24:05.350
It's my understanding that
the contents from this workshop

01:24:05.350 --> 01:24:07.720
will be available as
part of the proceedings

01:24:07.720 --> 01:24:11.400
to all who are taking
service of the list

01:24:11.400 --> 01:24:13.060
for people who are
interested in this docket,

01:24:13.060 --> 01:24:14.510
and that the scoping memo

01:24:14.510 --> 01:24:16.800
for the rulemaking that's forthcoming

01:24:16.800 --> 01:24:18.700
will present a comment opportunity

01:24:18.700 --> 01:24:22.150
that could include comments on
the proposed recommendations

01:24:22.150 --> 01:24:24.530
for reforms that would be
seen at the treasurer's office

01:24:24.530 --> 01:24:26.470
on rulemaking later this year,

01:24:26.470 --> 01:24:29.830
and I think that is
really exciting also.

01:24:29.830 --> 01:24:34.790
The time on the clock
gives us just a slice of time

01:24:34.790 --> 01:24:37.030
for one round amongst us all

01:24:37.030 --> 01:24:37.960
and I want to acknowledge

01:24:37.960 --> 01:24:41.210
that I've understood
from our workshop host

01:24:41.210 --> 01:24:44.220
that there is a Q&amp;A session
for members of the public

01:24:44.220 --> 01:24:45.620
who are joining us for today

01:24:46.560 --> 01:24:49.980
that is designated at the
end of the program today.

01:24:49.980 --> 01:24:51.900
So it's my understanding as moderator,

01:24:51.900 --> 01:24:54.030
we're not going to public Q&amp;A right now,

01:24:54.030 --> 01:24:56.490
but that one question

01:24:56.490 --> 01:24:58.810
definitely posed a hook to our panelists

01:24:58.810 --> 01:25:01.810
allow us to close it out on
time for a 15 minute break,

01:25:01.810 --> 01:25:04.280
and I have to say I was arrested

01:25:04.280 --> 01:25:08.090
by the comparison that Jeffrey brought

01:25:08.090 --> 01:25:10.070
to the historic challenge

01:25:10.070 --> 01:25:11.800
that our country is facing right now

01:25:11.800 --> 01:25:16.800
to try to vaccinate people
with not even 100% target.

01:25:17.110 --> 01:25:19.710
A target that's less than reaching 100%,

01:25:19.710 --> 01:25:23.360
but we have a climate
change and public health policy

01:25:23.360 --> 01:25:25.730
that is reaching 100% clean energy

01:25:25.730 --> 01:25:28.870
over obviously a much
larger amount of time,

01:25:28.870 --> 01:25:30.430
but still with the degree of urgency

01:25:30.430 --> 01:25:33.040
that's challenging now
every federal agency

01:25:33.040 --> 01:25:35.530
with orders from the
President in the last week.

01:25:35.530 --> 01:25:39.670
So I think that it is a moment
where all tools are welcome.

01:25:39.670 --> 01:25:44.650
All ideas, all instruments
have applications and uses.

01:25:46.640 --> 01:25:48.740
We do know from Miriam's remarks

01:25:48.740 --> 01:25:51.970
that the REEL program
can grow much faster

01:25:51.970 --> 01:25:53.310
than the high growth scenario

01:25:53.310 --> 01:25:54.910
that was reported to the Commission.

01:25:54.910 --> 01:25:57.870
I think that's an important
update on the evaluation

01:25:57.870 --> 01:26:00.100
that was submitted to
the Commissioners in April,

01:26:00.100 --> 01:26:01.860
but it brings me to an open question

01:26:01.860 --> 01:26:05.810
if Miriam's remarks is
also that that program alone

01:26:05.810 --> 01:26:07.130
will not be able to reach

01:26:07.130 --> 01:26:10.660
all the underserved market
segments in California?

01:26:10.660 --> 01:26:12.730
Can we see them coexisting

01:26:12.730 --> 01:26:15.360
in ways that they would
nevertheless be compatible

01:26:15.360 --> 01:26:20.360
in a portfolio of utility
regulator-sponsored programs?

01:26:20.540 --> 01:26:22.980
Or if not directly
sponsored, let's call it inable

01:26:22.980 --> 01:26:24.550
because some of the
instruments we've talked about,

01:26:24.550 --> 01:26:26.400
including the ones that CHEEF is using

01:26:26.400 --> 01:26:29.540
are directly dependent and
enabled by the ratepayer funding

01:26:29.540 --> 01:26:31.110
allocated by the Commission.

01:26:31.110 --> 01:26:32.830
So I'm gonna solicit comments

01:26:32.830 --> 01:26:33.960
from each one of the three of you

01:26:33.960 --> 01:26:35.910
on the compatibility
of multiple solutions

01:26:35.910 --> 01:26:38.150
in the marketplace, in
case any of you hold a view

01:26:38.150 --> 01:26:39.890
that there's a mutual exclusion

01:26:39.890 --> 01:26:42.830
that we need to examine
before we move on

01:26:42.830 --> 01:26:46.010
from today's dialogue
in this panel to the next.

01:26:46.010 --> 01:26:47.610
Wesley, would you like to start?

01:26:54.630 --> 01:26:55.463
<v ->Yeah, happy to second.</v>

01:26:55.463 --> 01:26:56.643
Can you tee up your question?

01:26:57.910 --> 01:27:00.050
<v ->The question is do
you see any reason</v>

01:27:00.050 --> 01:27:05.050
that loan programs and
tariffed on-bill programs

01:27:05.060 --> 01:27:07.520
could not coexist in a marketplace

01:27:07.520 --> 01:27:09.450
where customers have choices and options

01:27:09.450 --> 01:27:10.650
between the two of them?

01:27:12.320 --> 01:27:15.680
<v ->Yes, I can answer
that question.</v>

01:27:15.680 --> 01:27:17.400
They absolutely can coexist.

01:27:17.400 --> 01:27:20.430
There is a market for both products.

01:27:20.430 --> 01:27:22.540
There is a market for
debt-based financing

01:27:22.540 --> 01:27:23.930
and it makes financial sense

01:27:23.930 --> 01:27:28.000
for a lot of residential consumers
and commercial consumers,

01:27:28.000 --> 01:27:29.220
but if we're really approaching scale,

01:27:29.220 --> 01:27:30.840
you've got to have tariffed on-bill

01:27:30.840 --> 01:27:31.883
to reach all of those communities

01:27:31.883 --> 01:27:34.450
that are otherwise squeezed
out of those opportunities.

01:27:34.450 --> 01:27:35.480
They can coexist.

01:27:35.480 --> 01:27:37.090
There's a market and a customer

01:27:37.090 --> 01:27:39.490
for all of these great products,

01:27:39.490 --> 01:27:40.500
but if we really wanna reach scale

01:27:40.500 --> 01:27:42.430
we've got to reach the folks
who are currently excluded

01:27:42.430 --> 01:27:44.603
from the market-based debt-based ones.

01:27:48.640 --> 01:27:49.473
<v ->Jeffrey.</v>

01:27:49.473 --> 01:27:50.660
<v ->Yeah, I totally agree.</v>

01:27:50.660 --> 01:27:53.120
I mean, I just look at
the easiest comparison

01:27:53.120 --> 01:27:54.030
is mortgage market,

01:27:54.030 --> 01:27:55.510
and I think about how
many different structures

01:27:55.510 --> 01:27:57.230
of kinds of mortgages exists,

01:27:57.230 --> 01:28:00.653
different terms, different
ways of financing them.

01:28:01.710 --> 01:28:03.670
Yeah, we need tailored solutions

01:28:03.670 --> 01:28:05.970
for different markets
and different customers.

01:28:08.099 --> 01:28:11.060
I think the burden has
to fall on somebody

01:28:11.060 --> 01:28:14.210
other than the customer for
the customer to understand that,

01:28:14.210 --> 01:28:16.350
meaning somebody needs
to be bringing to the customer

01:28:16.350 --> 01:28:19.320
the right solution
that meets their needs.

01:28:19.320 --> 01:28:21.827
I think asking the
customers to sort through that

01:28:22.993 --> 01:28:24.473
is a pretty high barrier,

01:28:25.370 --> 01:28:27.567
but multiple solutions have
to have some improvements

01:28:27.567 --> 01:28:29.047
to exist when they can.

01:28:30.900 --> 01:28:32.090
<v ->Thank you for that.</v>

01:28:32.090 --> 01:28:34.630
Miriam, I'm gonna amend.

01:28:34.630 --> 01:28:38.160
My question to you is please
join us in engaging that point

01:28:38.160 --> 01:28:38.993
and I've seen

01:28:38.993 --> 01:28:40.870
that you've made a
contribution to the chat box

01:28:40.870 --> 01:28:43.060
for everyone who's with us today

01:28:43.060 --> 01:28:44.160
and I want to give you a chance

01:28:44.160 --> 01:28:46.330
to vocalize that and explain.

01:28:46.330 --> 01:28:48.416
So please just take a moment to say

01:28:48.416 --> 01:28:51.160
what you want to say
to both of those points.

01:28:51.160 --> 01:28:52.160
<v ->Thank you, Holmes.</v>

01:28:52.160 --> 01:28:55.730
So the answer to is there
any mutual exclusivity?

01:28:55.730 --> 01:28:58.320
No, and I think we need all solutions

01:28:58.320 --> 01:28:59.930
to get where California needs to go

01:28:59.930 --> 01:29:03.900
in terms of climate adaptation

01:29:03.900 --> 01:29:06.300
and our greenhouse gas emissions.

01:29:06.300 --> 01:29:08.560
We need all options on the table.

01:29:08.560 --> 01:29:11.030
I think there's a few important points.

01:29:11.030 --> 01:29:14.950
I think my comment about how
solutions need to be statewide,

01:29:14.950 --> 01:29:17.987
and we need to combine
non-ratepayer sources of funding

01:29:17.987 --> 01:29:19.700
and with a ratepayer sources of funding

01:29:19.700 --> 01:29:22.480
would still hold for a
tariffed on-bill solution

01:29:22.480 --> 01:29:26.100
so that we avoid all of that
complexity about eligibility

01:29:26.100 --> 01:29:28.190
and we figure out a way to support

01:29:28.190 --> 01:29:33.070
decarbonisation measures
across jurisdictions,

01:29:33.070 --> 01:29:34.840
and I think there's also,

01:29:34.840 --> 01:29:36.460
it would have to be done very carefully

01:29:36.460 --> 01:29:38.970
to make sure that
the simplicity and ease

01:29:38.970 --> 01:29:41.720
is still preserved, but I
think there's a scenario

01:29:41.720 --> 01:29:44.170
in which a tariffed on-bill type program

01:29:44.170 --> 01:29:48.160
allows customers to
install certain measures

01:29:48.160 --> 01:29:49.410
and then there's other measures

01:29:49.410 --> 01:29:51.910
that require that customer
to pay out of pocket

01:29:51.910 --> 01:29:54.270
and the finance be layered on top,

01:29:54.270 --> 01:29:56.940
and we see that right now
with rebates for customers

01:29:56.940 --> 01:30:00.240
will pay for the portion
that's not covered

01:30:00.240 --> 01:30:01.590
by a rebate or incentive,

01:30:01.590 --> 01:30:02.960
and so I think there's also

01:30:02.960 --> 01:30:07.650
some potential linking
and connecting of the two

01:30:07.650 --> 01:30:08.673
for some customers.

01:30:09.990 --> 01:30:13.950
In terms of the comment that
I wrote to Holmes in the chat,

01:30:13.950 --> 01:30:15.750
I just wanted to be clear that CHEEF

01:30:17.010 --> 01:30:18.800
is going to be engaged

01:30:18.800 --> 01:30:22.570
in two public rulemakings this spring.

01:30:22.570 --> 01:30:26.230
The first is to add the
on-bill repayment element

01:30:26.230 --> 01:30:27.740
to our small business program,

01:30:27.740 --> 01:30:29.477
and the microloan
pathway that I mentioned,

01:30:29.477 --> 01:30:30.310
and the second

01:30:30.310 --> 01:30:33.040
is to make some operational
improvements to REEL,

01:30:33.040 --> 01:30:34.670
reduce some complexity for lenders

01:30:34.670 --> 01:30:37.170
and also add that
microloan pathway for REEL

01:30:37.170 --> 01:30:38.690
for point of sale financing.

01:30:38.690 --> 01:30:43.390
So this is happening
prior to the Commission

01:30:43.390 --> 01:30:46.190
issuing a decision
on long-term direction

01:30:46.190 --> 01:30:48.490
for the statewide pilot program.

01:30:48.490 --> 01:30:50.090
So everybody is invited

01:30:50.090 --> 01:30:53.630
to be part of both public
engagement processes,

01:30:53.630 --> 01:30:55.410
and we'll have more information

01:30:56.630 --> 01:30:58.763
through our Listserv and on our website,

01:30:59.850 --> 01:31:02.463
or feel free to contact
me after this panel.

01:31:07.320 --> 01:31:09.630
<v ->Thank you so much
for adding that information</v>

01:31:09.630 --> 01:31:10.670
to the records here today.

01:31:10.670 --> 01:31:13.110
We're exactly at time.

01:31:13.110 --> 01:31:14.700
I apologize to those

01:31:14.700 --> 01:31:16.890
who may have heard the
audio quality deteriorate

01:31:16.890 --> 01:31:19.540
while I had my microphone
on while Miriam was speaking,

01:31:19.540 --> 01:31:21.830
but I trust that you could
hear what Marian had to say

01:31:21.830 --> 01:31:23.700
that it will also be
part of the transcription

01:31:23.700 --> 01:31:26.320
and available to anyone
to continue to engage in

01:31:26.320 --> 01:31:28.110
and the fact that the
State Treasurer's Office

01:31:28.110 --> 01:31:30.320
has its own rulemaking process

01:31:30.320 --> 01:31:32.823
assures that we have
access and visibility.

01:31:33.780 --> 01:31:35.500
Thank you so much

01:31:35.500 --> 01:31:37.390
for all of your
participation this morning.

01:31:37.390 --> 01:31:40.240
I believe that our schedule
is to turn to a break,

01:31:40.240 --> 01:31:42.190
but I'm gonna return it
to the Commission staff

01:31:42.190 --> 01:31:43.310
to guide us forward.

01:31:43.310 --> 01:31:45.860
Thank you again Commissioner
Shiroma for convening.

01:31:47.050 --> 01:31:50.500
<v ->Thank you, Holmes,
Wesley, Jeff and Miriam</v>

01:31:50.500 --> 01:31:51.333
for kicking off.

01:31:51.333 --> 01:31:52.910
Thanks, audience for your patience,

01:31:52.910 --> 01:31:56.030
and thanks to our CPUC IT support staff

01:31:56.030 --> 01:31:57.713
for getting us up and running.

01:31:58.990 --> 01:32:00.100
We are going to take a break

01:32:00.100 --> 01:32:03.410
and we'll resume again
at 10:45 with panel two,

01:32:03.410 --> 01:32:04.583
what success might look like.

01:32:04.583 --> 01:32:07.570
That will run from 10:45 until noon.

01:32:07.570 --> 01:32:10.433
So we'll see you in about 13 minutes.

01:32:19.230 --> 01:32:20.063
Good morning, everyone

01:32:20.063 --> 01:32:23.510
and welcome back to those of
you who've been on since 9 a.m.

01:32:23.510 --> 01:32:24.343
For those of you

01:32:24.343 --> 01:32:28.740
who are just joining our CPUC
Clean Energy Finance Workshop,

01:32:28.740 --> 01:32:29.950
welcome to you.

01:32:29.950 --> 01:32:31.430
Some quick housekeeping items.

01:32:31.430 --> 01:32:34.320
Bear with me folks
who've been on since nine.

01:32:34.320 --> 01:32:35.390
For the new folks,

01:32:35.390 --> 01:32:39.240
each of our panels
today is 75 minutes long,

01:32:39.240 --> 01:32:40.930
consisting of a one hour presentation

01:32:40.930 --> 01:32:43.830
followed by a 15-minute panel Q&amp;A

01:32:43.830 --> 01:32:46.940
that's between the
moderator and panelists.

01:32:46.940 --> 01:32:49.900
The public comment section
will come at the end of the day,

01:32:49.900 --> 01:32:51.973
that's going to be a one hour session.

01:32:52.908 --> 01:32:53.920
The first 15 minutes

01:32:53.920 --> 01:32:55.600
of which will be a
moderator lightning round,

01:32:55.600 --> 01:32:57.260
in which our day's moderators

01:32:57.260 --> 01:32:58.750
will summarize their key takeaways

01:32:58.750 --> 01:33:02.880
followed by the 45 minute
public comment period.

01:33:02.880 --> 01:33:04.800
Today's workshop is being recorded

01:33:04.800 --> 01:33:09.000
and will be included in the
record for the rulemaking,

01:33:09.000 --> 01:33:11.660
the Clean Energy Financing rulemaking.

01:33:11.660 --> 01:33:12.830
There is a delay.

01:33:12.830 --> 01:33:16.330
If folks are for some
reason watching the webinar,

01:33:16.330 --> 01:33:18.310
but dialed into the telephone audio,

01:33:18.310 --> 01:33:20.170
which we recommend not doing

01:33:20.170 --> 01:33:24.563
because there is a delay on
part of the webinar broadcast,

01:33:26.630 --> 01:33:30.310
and lastly, if you have
any technical issues

01:33:30.310 --> 01:33:35.200
you may call our CPUC IT
department technical support group

01:33:35.200 --> 01:33:38.840
at 415-703-5263.

01:33:38.840 --> 01:33:42.150
So panel two we have
what success might look like

01:33:42.150 --> 01:33:45.283
and I will hand it over now
to our moderator, Dan Adler.

01:33:47.480 --> 01:33:48.313
<v ->Thank you, Peter.</v>

01:33:48.313 --> 01:33:50.600
Thank you to Commissioner
Shiroma and Commission and staff

01:33:50.600 --> 01:33:52.200
for putting this conversation together.

01:33:52.200 --> 01:33:54.660
It's great to join you all this morning.

01:33:54.660 --> 01:33:57.090
I should say that I
started my professional life

01:33:57.090 --> 01:33:58.430
as an analyst at the Commission

01:33:58.430 --> 01:34:02.050
and left to try and work on
creative financing solutions

01:34:02.050 --> 01:34:04.967
that helped advance the state's
clean energy policy agenda

01:34:04.967 --> 01:34:07.930
and in the very long time since then

01:34:07.930 --> 01:34:09.690
we've made a fair amount of progress

01:34:09.690 --> 01:34:10.830
certainly in certain categories,

01:34:10.830 --> 01:34:12.740
but there's still a great
deal of work to be done.

01:34:12.740 --> 01:34:16.510
So this remains a timely
and fascinating subject for me.

01:34:16.510 --> 01:34:18.150
Now, let me introduce our panelists

01:34:18.150 --> 01:34:19.710
and then I'll give a few brief comments

01:34:19.710 --> 01:34:22.140
before turning to the presentations.

01:34:22.140 --> 01:34:24.170
Some of you are looking at
an older version of the agenda.

01:34:24.170 --> 01:34:27.614
We do not have Jigar
Shah generate capital

01:34:27.614 --> 01:34:29.050
and formerly of SunEdison.

01:34:29.050 --> 01:34:32.083
We have instead an upgrade
in my judgment, sorry, Jigar.

01:34:32.083 --> 01:34:35.230
We have Cisco DeVries,
CEO of Ohm Connect,

01:34:35.230 --> 01:34:36.090
known to many of you

01:34:36.090 --> 01:34:39.240
as the originator of the
PACE financing mechanism.

01:34:39.240 --> 01:34:41.350
So great content and experience,

01:34:41.350 --> 01:34:45.600
as well as a very enjoyable
presentation to come from Cisco.

01:34:45.600 --> 01:34:46.830
We also have Carmelita Miller,

01:34:46.830 --> 01:34:48.070
the director of energy equity

01:34:48.070 --> 01:34:49.100
from the Greenlining Institute.

01:34:49.100 --> 01:34:51.290
Many of you will know Greenlining

01:34:51.290 --> 01:34:54.730
as really a central player
in the state's conversations,

01:34:54.730 --> 01:34:56.810
not just around clean
energy and climate,

01:34:56.810 --> 01:34:59.070
but economic inclusion, justice,

01:34:59.070 --> 01:35:01.630
and really thought
leaders for a long time

01:35:01.630 --> 01:35:04.510
in the agenda that the
state is catching up with

01:35:04.510 --> 01:35:06.290
and rushing to implement,

01:35:06.290 --> 01:35:08.290
and then lastly, Kerry O'Neil,

01:35:08.290 --> 01:35:10.670
good friend and colleague
from Inclusive Prosperity Capital.

01:35:10.670 --> 01:35:13.730
Part of the cohort that Jeff
Schubb described this morning

01:35:13.730 --> 01:35:15.500
of state green banks.

01:35:15.500 --> 01:35:16.970
This is a fascinating entity

01:35:16.970 --> 01:35:19.010
born from the Connecticut Green Bank,

01:35:19.010 --> 01:35:20.690
now serving on a multistate basis

01:35:20.690 --> 01:35:23.540
with some really
groundbreaking financial products

01:35:23.540 --> 01:35:24.800
that Kerry well described for us

01:35:24.800 --> 01:35:29.030
that speak directly to
the state's agenda here.

01:35:29.030 --> 01:35:31.300
A couple of comments just in the context

01:35:31.300 --> 01:35:34.320
of the kind of broader clean
energy financing landscape.

01:35:34.320 --> 01:35:36.120
You did hear from Jeff Schubb

01:35:36.120 --> 01:35:37.530
and the Coalition Green Capital

01:35:37.530 --> 01:35:40.670
about what's happening
in states around the country

01:35:40.670 --> 01:35:42.060
with state green banks.

01:35:42.060 --> 01:35:43.490
These are crucial entities

01:35:43.490 --> 01:35:46.100
that help form capital
in organized markets.

01:35:46.100 --> 01:35:49.170
They are active in 12 states or more.

01:35:49.170 --> 01:35:50.360
Some states have more than one

01:35:50.360 --> 01:35:51.920
serving particular market segments

01:35:51.920 --> 01:35:53.900
are using different financial products.

01:35:53.900 --> 01:35:55.810
The point being there
is a rising interest

01:35:55.810 --> 01:35:57.460
in how policy meets finance

01:35:57.460 --> 01:36:01.130
and what both civil society
and private finance actors

01:36:01.130 --> 01:36:03.740
can do to innovate and
advance that agenda.

01:36:03.740 --> 01:36:05.800
This is timely because
as you've also heard,

01:36:05.800 --> 01:36:07.860
there is a push from
the federal government

01:36:07.860 --> 01:36:10.360
to provide new capital
into these structures.

01:36:10.360 --> 01:36:11.193
So to the extent

01:36:11.193 --> 01:36:13.840
California has models
that are new center proven,

01:36:13.840 --> 01:36:15.770
or can be created in time.

01:36:15.770 --> 01:36:19.630
We can, all things being
equal look to federal support

01:36:19.630 --> 01:36:20.880
for these new financing vehicles

01:36:20.880 --> 01:36:23.913
with non-dilutive federal
capital which is the best guide.

01:36:25.200 --> 01:36:26.810
Briefly on what's happening out there

01:36:26.810 --> 01:36:27.920
in Clean Energy Financing.

01:36:27.920 --> 01:36:30.220
There's some new data
literally in the last week

01:36:30.220 --> 01:36:32.890
from Bloomberg New Energy Finance,

01:36:32.890 --> 01:36:34.407
summarizing what happened in 2020,

01:36:34.407 --> 01:36:36.870
and I think it's worth reflecting on it.

01:36:36.870 --> 01:36:39.030
Despite COVID in 2020,

01:36:39.030 --> 01:36:42.350
the world saw for the
first time over $500 billion

01:36:42.350 --> 01:36:43.920
of private capital

01:36:43.920 --> 01:36:45.920
flowing into clean energy
and climate solutions

01:36:45.920 --> 01:36:46.960
across the board.

01:36:46.960 --> 01:36:49.900
This is up by 9%, despite
obvious recessionary forces,

01:36:49.900 --> 01:36:52.630
and just the difficulty
of addressing markets.

01:36:52.630 --> 01:36:53.870
China was in the lead,

01:36:53.870 --> 01:36:57.010
but its share declined
US in its second position,

01:36:57.010 --> 01:36:59.630
also down by about 11%,

01:36:59.630 --> 01:37:03.090
but categorically where we
saw some progress in the US,

01:37:03.090 --> 01:37:04.010
fascinating to me,

01:37:04.010 --> 01:37:06.130
and this I had frankly not anticipated.

01:37:06.130 --> 01:37:09.340
In third place was funding
for residential heat pumps

01:37:09.340 --> 01:37:14.340
coming in at $16 1/2 billion
up 7% from the prior year,

01:37:14.370 --> 01:37:17.200
really close to the second
category of transportation,

01:37:17.200 --> 01:37:18.870
innovations and infrastructure.

01:37:18.870 --> 01:37:20.170
Now, obviously a lot of attention

01:37:20.170 --> 01:37:22.900
on where the
transportation sector is going.

01:37:22.900 --> 01:37:25.310
I think some of us have been aware

01:37:25.310 --> 01:37:28.080
that heat pumps has a
solution both for climate,

01:37:28.080 --> 01:37:30.760
but also just generally
weaning off of natural gas

01:37:30.760 --> 01:37:31.810
is ready for primetime.

01:37:31.810 --> 01:37:33.730
This data suggests that
markets are catching up.

01:37:33.730 --> 01:37:35.540
So it's now a question for us,

01:37:35.540 --> 01:37:37.110
how do we capitalize on that momentum

01:37:37.110 --> 01:37:39.660
for behind the meter
solutions in that category,

01:37:39.660 --> 01:37:42.500
and use that momentum,
capital forming and innovation

01:37:42.500 --> 01:37:45.580
to broaden the set of
solutions we can deploy

01:37:45.580 --> 01:37:46.413
behind the meter,

01:37:46.413 --> 01:37:50.920
which is the key issue for
this for this agenda here today.

01:37:50.920 --> 01:37:53.740
The principal area of
growth on a global basis

01:37:53.740 --> 01:37:55.520
was in the European Union,

01:37:55.520 --> 01:37:59.530
considering that as a continent
of coordinated economies

01:37:59.530 --> 01:38:01.440
and if we think about
how that is taking shape

01:38:01.440 --> 01:38:03.670
it is really through
state policy directed,

01:38:03.670 --> 01:38:07.090
national policy directed,
infrastructure ambitions.

01:38:07.090 --> 01:38:08.020
I think we see that

01:38:08.020 --> 01:38:09.590
in the recovery out of
the European Union,

01:38:09.590 --> 01:38:11.023
probably more than
anywhere else in the world,

01:38:11.023 --> 01:38:13.110
where it's really building back better

01:38:13.110 --> 01:38:15.010
with green and climate solutions.

01:38:15.010 --> 01:38:16.880
That suggests more engagement

01:38:16.880 --> 01:38:18.560
from public policy from government,

01:38:18.560 --> 01:38:20.930
less of a belief that
private markets alone

01:38:20.930 --> 01:38:22.680
can solve this problem.

01:38:22.680 --> 01:38:25.370
What's California's version
of that hybrid model?

01:38:25.370 --> 01:38:27.780
And how does that speak to
what we heard this morning

01:38:27.780 --> 01:38:29.760
about financing being
a part of the solution,

01:38:29.760 --> 01:38:32.470
but we really need other
tools, techniques and actors

01:38:32.470 --> 01:38:33.840
to open up markets?

01:38:33.840 --> 01:38:35.150
So that's gonna be key for us

01:38:35.150 --> 01:38:36.910
and hopefully key in the discussion.

01:38:36.910 --> 01:38:40.240
In California, we continue
to have great advantages

01:38:40.240 --> 01:38:41.600
on the innovation front.

01:38:41.600 --> 01:38:42.950
We continue to lead the world

01:38:42.950 --> 01:38:44.517
in clean energy venture capital.

01:38:44.517 --> 01:38:46.840
The trend, beneficially in my mind

01:38:46.840 --> 01:38:48.620
is towards the later stage edge,

01:38:48.620 --> 01:38:50.090
meaning towards commercialization

01:38:50.090 --> 01:38:51.870
and getting ready for scale.

01:38:51.870 --> 01:38:54.603
Smart Grid as a category has
been rising for several years.

01:38:54.603 --> 01:38:55.740
I think that's relevant

01:38:55.740 --> 01:38:58.310
for certain aspects of this proceeding,

01:38:58.310 --> 01:39:00.330
but we don't have
good disaggregated data

01:39:00.330 --> 01:39:03.070
on Smart Grid as a category

01:39:03.070 --> 01:39:04.670
behind the meter and
in front of the meter.

01:39:04.670 --> 01:39:06.950
It still is lumped
together categorically

01:39:06.950 --> 01:39:08.830
when we track investment trends,

01:39:08.830 --> 01:39:10.340
which brings me to a broader point.

01:39:10.340 --> 01:39:13.120
We don't really have good
deployment data for the state.

01:39:13.120 --> 01:39:15.120
How are we doing in mobilizing capital

01:39:15.120 --> 01:39:17.640
in a relatively near term basis

01:39:17.640 --> 01:39:19.250
and tracking where money is going

01:39:19.250 --> 01:39:21.170
for our infrastructure goals.

01:39:21.170 --> 01:39:22.550
We do great on innovation.

01:39:22.550 --> 01:39:25.210
We need to continue to
nurture the innovations of today

01:39:25.210 --> 01:39:26.640
for infrastructure of tomorrow,

01:39:26.640 --> 01:39:27.840
but we could spend some more time

01:39:27.840 --> 01:39:30.820
focusing on where the
money is flowing in real time

01:39:30.820 --> 01:39:32.400
here in California.

01:39:32.400 --> 01:39:35.000
So lastly, the ambition for this panel.

01:39:35.000 --> 01:39:37.570
You can see that it is
about imagining scale,

01:39:37.570 --> 01:39:39.200
what success might look like,

01:39:39.200 --> 01:39:41.340
what are models that are proven,

01:39:41.340 --> 01:39:42.410
but just the frame

01:39:42.410 --> 01:39:45.586
that we put towards
our panel members here

01:39:45.586 --> 01:39:47.670
is really about financing structures.

01:39:47.670 --> 01:39:50.410
In the experience of these
experienced professionals,

01:39:50.410 --> 01:39:52.570
mobilizing resources, looking at policy,

01:39:52.570 --> 01:39:55.280
what is working in terms
of moving capital broadly

01:39:55.280 --> 01:39:57.580
and also specifically for the
behind the meter solutions

01:39:57.580 --> 01:39:59.330
that this agenda is concerned with?

01:40:00.390 --> 01:40:03.260
How do we get from observations

01:40:03.260 --> 01:40:05.690
about what's working and not
working to recommendations

01:40:05.690 --> 01:40:07.820
for the state and the
Commission to consider,

01:40:07.820 --> 01:40:10.650
and we need to, in
the course of doing that,

01:40:10.650 --> 01:40:13.000
hone in on a few principal things

01:40:13.000 --> 01:40:16.510
that this community would
suggest the Commission explore.

01:40:16.510 --> 01:40:19.210
Helps set the agenda for
this proceeding as it unfolds,

01:40:19.210 --> 01:40:22.290
but always bear in mind
as was said this morning,

01:40:22.290 --> 01:40:25.230
keeping up inclusivity
central to the conversation.

01:40:25.230 --> 01:40:26.890
It's no longer sufficient to say

01:40:26.890 --> 01:40:29.420
that we are in aggregate
improving our energy performance,

01:40:29.420 --> 01:40:30.700
or our climate performance,

01:40:30.700 --> 01:40:33.060
we need to look across
all aspects of society,

01:40:33.060 --> 01:40:35.370
socially, economically,
and geographically frankly,

01:40:35.370 --> 01:40:37.960
to make sure that these solutions
are reaching the customers

01:40:37.960 --> 01:40:39.030
that need the most.

01:40:39.030 --> 01:40:42.010
That is beneficially
highlighted everywhere

01:40:42.010 --> 01:40:44.250
in the proceeding materials
today and I'm hopeful

01:40:44.250 --> 01:40:46.000
that the conversation
that we're about to have

01:40:46.000 --> 01:40:47.400
keeps that front and center

01:40:47.400 --> 01:40:50.520
and I'm confident with the
speakers that we have before us

01:40:50.520 --> 01:40:51.830
they will do so.

01:40:51.830 --> 01:40:54.250
With that, I'm gonna turn
it over to Cisco DeVries

01:40:54.250 --> 01:40:56.690
from Ohm Connect for his presentation

01:40:56.690 --> 01:40:59.033
and comments on the
agenda in front of us.

01:41:01.970 --> 01:41:02.810
<v ->Thank you, Dan,</v>

01:41:02.810 --> 01:41:06.460
and thank you to the
Commission for having me.

01:41:06.460 --> 01:41:09.390
I am definitely not a
step up from Jigger Shop,

01:41:09.390 --> 01:41:11.820
but I am excited to be here nonetheless

01:41:11.820 --> 01:41:15.520
and to share a couple of thoughts.

01:41:15.520 --> 01:41:19.060
I'm gonna be relatively
straight and clear.

01:41:19.060 --> 01:41:21.650
This is a complicated issue

01:41:21.650 --> 01:41:23.700
and I'm gonna make some fairly

01:41:23.700 --> 01:41:26.330
straightforward and
simple recommendations.

01:41:26.330 --> 01:41:27.930
Of course, there's more
complications to it all,

01:41:27.930 --> 01:41:29.400
but I think it's helpful

01:41:29.400 --> 01:41:31.360
just to kind of set some boundaries.

01:41:31.360 --> 01:41:33.570
Let me just start a little bit, as Dan,

01:41:33.570 --> 01:41:35.780
my background here is relevant

01:41:35.780 --> 01:41:38.310
in that I was in the US
Department of Energy

01:41:38.310 --> 01:41:41.770
as an appointee of President
Clinton back in the '90s

01:41:41.770 --> 01:41:44.260
working on a whole
variety of issues there.

01:41:44.260 --> 01:41:46.530
More recently, chief of staff

01:41:46.530 --> 01:41:48.010
to the mayor of Berkeley, California.

01:41:48.010 --> 01:41:48.843
A number of years ago,

01:41:48.843 --> 01:41:51.060
where I created the PACE financing model

01:41:51.060 --> 01:41:53.620
and then helped get the
first program up and running

01:41:53.620 --> 01:41:54.750
there in Berkeley,

01:41:54.750 --> 01:41:56.823
left and started a company to do it.

01:41:58.310 --> 01:42:00.450
Today, I am the CEO of Ohm Connect

01:42:00.450 --> 01:42:03.630
and I what I know is
that in my previous world,

01:42:03.630 --> 01:42:06.660
in my previous company,
we didn't just do PACE.

01:42:06.660 --> 01:42:09.070
I did a billion dollars of
PACE financing there,

01:42:09.070 --> 01:42:12.300
but we also worked to do
the very first securitization

01:42:12.300 --> 01:42:16.260
of unsecured energy
loans in Wall Street history,

01:42:16.260 --> 01:42:17.730
and also had the opportunity

01:42:17.730 --> 01:42:20.810
to run two statewide
on-bill finance programs.

01:42:20.810 --> 01:42:22.510
So pretty significant experience

01:42:22.510 --> 01:42:27.510
bringing private capital at
some scale to solve this issue.

01:42:27.780 --> 01:42:29.990
Today, at Ohm Connect

01:42:29.990 --> 01:42:33.180
we pay California
families millions of dollars

01:42:33.180 --> 01:42:36.310
to reduce energy used
at key times for the grid

01:42:36.310 --> 01:42:38.510
and just recently announced $100 million

01:42:39.860 --> 01:42:41.900
to finance what will become

01:42:41.900 --> 01:42:43.850
the world's largest virtual power plant,

01:42:43.850 --> 01:42:46.850
which is simply just a
network of California homes

01:42:47.690 --> 01:42:51.370
that will engage with
the grid dynamically

01:42:51.370 --> 01:42:55.260
as the need arises.

01:42:55.260 --> 01:43:00.253
So let's jump in and
go to the next slide.

01:43:03.870 --> 01:43:06.400
I wanna start with
saying finance is critical.

01:43:06.400 --> 01:43:08.310
As Commissioner Shiroma
said at the very beginning,

01:43:08.310 --> 01:43:09.620
this is super critical.

01:43:09.620 --> 01:43:12.230
We cannot decarbonize our economy,

01:43:12.230 --> 01:43:16.553
nor can we democratize
clean energy without finance,

01:43:17.530 --> 01:43:20.940
but people often mistake its importance

01:43:21.850 --> 01:43:26.850
for its abilities to
actually create demand.

01:43:27.320 --> 01:43:29.300
People hate finance.

01:43:29.300 --> 01:43:30.810
It does not generate demand.

01:43:30.810 --> 01:43:34.030
In fact, in my career in this space,

01:43:34.030 --> 01:43:36.290
what we've learned
about finance is that,

01:43:36.290 --> 01:43:37.380
if you have to finance something,

01:43:37.380 --> 01:43:39.253
it's a reason not to do something.

01:43:40.230 --> 01:43:43.350
Quick example, we finance cars.

01:43:43.350 --> 01:43:46.303
Most cars that are purchased
in this country are financed.

01:43:49.160 --> 01:43:51.130
People want the car,
they wanna get around.

01:43:51.130 --> 01:43:52.510
They do not want to finance,

01:43:52.510 --> 01:43:54.810
but they're willing to
finance to get the car.

01:43:54.810 --> 01:43:58.510
Now, important thing to
understand is that finance,

01:43:58.510 --> 01:44:00.340
if car companies get this,

01:44:00.340 --> 01:44:04.610
if you adjust finance,
subsidize or make it easier,

01:44:04.610 --> 01:44:05.960
or do other things advanced,

01:44:05.960 --> 01:44:08.560
it could direct people's
car buying choices,

01:44:08.560 --> 01:44:10.900
but it does not make
people want to buy a car.

01:44:10.900 --> 01:44:11.840
They've already chosen that

01:44:11.840 --> 01:44:14.343
and I think energy and then efficiency,

01:44:15.700 --> 01:44:18.982
generally speaking, we
get this wrong all the time.

01:44:18.982 --> 01:44:20.450
Finance is often thought of

01:44:20.450 --> 01:44:22.450
as something that will generate demand.

01:44:22.450 --> 01:44:24.570
Oh, people don't want an energy project.

01:44:24.570 --> 01:44:27.080
If we can finance it
really cheaply, they will,

01:44:27.080 --> 01:44:28.410
and the answer to that

01:44:28.410 --> 01:44:31.600
is something to keep in mind
through all this is just false.

01:44:31.600 --> 01:44:34.010
People do not want to finance things.

01:44:34.010 --> 01:44:36.800
However, if they want an energy project,

01:44:36.800 --> 01:44:40.090
finance is an important tool
to allow that to be possible.

01:44:40.090 --> 01:44:41.490
Go to the next slide please.

01:44:46.568 --> 01:44:48.800
Second is we know how to do this.

01:44:48.800 --> 01:44:51.840
So what does success look like?

01:44:51.840 --> 01:44:55.120
And I'm gonna say
in this particular slide,

01:44:55.120 --> 01:44:59.150
if we look at success
as large scale, low cost,

01:44:59.150 --> 01:45:03.470
capital markets capital
billions to trillions of dollars

01:45:03.470 --> 01:45:08.470
flowing to individual customers,
residential consumers,

01:45:08.820 --> 01:45:10.610
we know how to do it.

01:45:10.610 --> 01:45:14.030
This is actually really important.

01:45:14.030 --> 01:45:15.970
We don't need to break
a ton of new ground.

01:45:15.970 --> 01:45:19.800
We need to take models that
exist and move them slightly.

01:45:19.800 --> 01:45:24.053
The three basic structures
that exist are unsecured lending,

01:45:25.130 --> 01:45:28.740
unsecured loans or
lightly secured UCC loans

01:45:28.740 --> 01:45:33.110
are very fast, ubiquitous, well-defined,

01:45:33.110 --> 01:45:35.710
easy access to the
capital markets at scale,

01:45:35.710 --> 01:45:38.550
but tends to be difficult for
low and moderate income

01:45:38.550 --> 01:45:41.250
and lower credit score
folks to participate

01:45:41.250 --> 01:45:42.733
for a variety of reasons.

01:45:44.000 --> 01:45:47.100
Second, property secured lending.

01:45:47.100 --> 01:45:50.030
PACE is obviously the
one I spend a lot of time on,

01:45:50.030 --> 01:45:53.160
but we also know a lot about
home equity and mortgages.

01:45:53.160 --> 01:45:54.910
We can talk more about PACE,

01:45:54.910 --> 01:45:57.750
but what I'd say about pace in general

01:45:57.750 --> 01:45:59.810
is that it was very successful,

01:45:59.810 --> 01:46:02.140
perhaps one of the most successful

01:46:02.140 --> 01:46:05.370
government interventions
and programs in finance

01:46:05.370 --> 01:46:09.270
to ever deliver capital
at scale where we want it

01:46:09.270 --> 01:46:11.060
and when we want it
to the people we want it.

01:46:11.060 --> 01:46:14.350
It served low and
moderate income families.

01:46:14.350 --> 01:46:16.920
The problems that we ran into with PACE

01:46:16.920 --> 01:46:20.300
were not about its ability
to deliver lower cost capital

01:46:20.300 --> 01:46:23.100
to important segments of society,

01:46:23.100 --> 01:46:24.450
but with other issues

01:46:24.450 --> 01:46:26.710
associated with the quality of projects

01:46:26.710 --> 01:46:29.690
and the channel that
it was delivered under.

01:46:29.690 --> 01:46:32.030
The one note I would say
on property secured lending

01:46:32.030 --> 01:46:34.210
is lending that comes

01:46:34.210 --> 01:46:38.120
as part of a primary mortgage
origination tends not to work

01:46:38.120 --> 01:46:39.490
and we can talk more about that.

01:46:39.490 --> 01:46:41.140
It's a very complex transaction.

01:46:41.140 --> 01:46:43.070
So looking at home equity

01:46:43.070 --> 01:46:46.040
and looking at PACE
for existing homeowners

01:46:46.040 --> 01:46:48.400
is much generally happier

01:46:48.400 --> 01:46:51.340
than looking at first time mortgages,

01:46:51.340 --> 01:46:53.320
and last utility secured lending

01:46:53.320 --> 01:46:54.560
and Holmes talked about this.

01:46:54.560 --> 01:46:57.040
I know this is a big
topic of conversation.

01:46:57.040 --> 01:46:59.920
There are a lot of examples
of what has not worked

01:46:59.920 --> 01:47:00.753
in this space,

01:47:00.753 --> 01:47:03.093
and there are good
examples of what has worked.

01:47:04.020 --> 01:47:07.320
They particularly help lower income,

01:47:07.320 --> 01:47:10.020
renters and others participate.

01:47:10.020 --> 01:47:13.040
It's great for smaller
projects, generally speaking,

01:47:13.040 --> 01:47:18.040
larger 20, $30,000 projects
and alike tend not to work

01:47:18.090 --> 01:47:20.617
and I really wanna note
the Hawaii GEMs program

01:47:20.617 --> 01:47:23.810
has a really unique
way to use the utility

01:47:26.530 --> 01:47:31.190
to finance large scale
capital using utility fee

01:47:31.190 --> 01:47:33.180
that are paid by consumers.

01:47:33.180 --> 01:47:34.230
Go to the next slide.

01:47:36.850 --> 01:47:39.570
Okay, so again, oversimplifying,

01:47:39.570 --> 01:47:41.803
but I think really important,

01:47:41.803 --> 01:47:44.360
a couple of five ground rules.

01:47:44.360 --> 01:47:46.700
Overarching theme,
do not make the perfect

01:47:46.700 --> 01:47:47.533
the enemy of the good.

01:47:47.533 --> 01:47:51.580
There is no way to retrofit
a million California homes

01:47:51.580 --> 01:47:53.833
and have every one of them go perfectly.

01:47:55.160 --> 01:47:56.360
We have to think big.

01:47:56.360 --> 01:47:57.900
You need large scale volume

01:47:57.900 --> 01:48:00.110
that's inclusive of
lots of different people

01:48:00.110 --> 01:48:01.323
and types of people,

01:48:02.550 --> 01:48:04.280
and let's make sure we keep it easy

01:48:04.280 --> 01:48:06.260
and that the consumer and the contractor

01:48:06.260 --> 01:48:08.883
wanna do it and are advocates.

01:48:09.890 --> 01:48:11.050
So I mentioned to begin with,

01:48:11.050 --> 01:48:13.590
we have finance mechanisms that work.

01:48:13.590 --> 01:48:15.300
Let's take those and adjust them,

01:48:15.300 --> 01:48:18.130
rather than trying to create
something brand new.

01:48:18.130 --> 01:48:19.100
Brand new can be great,

01:48:19.100 --> 01:48:21.270
but it takes a lot of time.

01:48:21.270 --> 01:48:22.363
Make it big.

01:48:23.300 --> 01:48:24.720
Volume, volume, volume.

01:48:24.720 --> 01:48:26.440
If you want large scale capital,

01:48:26.440 --> 01:48:28.330
you have to start from the notion

01:48:28.330 --> 01:48:31.550
of hundreds of millions of
dollars to billions of dollars.

01:48:31.550 --> 01:48:33.820
Pilots that do $10
million, or $20 million,

01:48:33.820 --> 01:48:36.310
or even $50 million simply won't do it.

01:48:36.310 --> 01:48:39.230
You cannot get to large scale capital,

01:48:39.230 --> 01:48:41.630
unless you are large scale capital.

01:48:41.630 --> 01:48:43.910
So how do we get to scale?

01:48:43.910 --> 01:48:48.350
Third, simplicity, and
this is one we have failed,

01:48:48.350 --> 01:48:51.520
in my opinion, in this
state over and over again.

01:48:51.520 --> 01:48:52.920
We have to keep it simple.

01:48:52.920 --> 01:48:55.600
This has to be
something that contractors

01:48:55.600 --> 01:48:58.293
and consumers find
easy, straightforward,

01:48:59.220 --> 01:49:00.970
or they won't do it.

01:49:00.970 --> 01:49:02.780
Often we think, oh,
we'll make it cheaper,

01:49:02.780 --> 01:49:04.610
interest rates will be lower.

01:49:04.610 --> 01:49:08.510
You know, cheaper is not
always better, simpler is better.

01:49:08.510 --> 01:49:12.210
Now, obviously simpler then
can conflict with number four,

01:49:12.210 --> 01:49:13.310
which is make it safe,

01:49:14.450 --> 01:49:17.350
and when we actually have
non-COVID public things

01:49:17.350 --> 01:49:19.710
when we all get
together I'll ask people,

01:49:19.710 --> 01:49:21.913
hey, how many people own a home?

01:49:22.950 --> 01:49:24.720
How many people have done a remodel

01:49:24.720 --> 01:49:27.430
or a home improvement with
a contractor on that home?

01:49:27.430 --> 01:49:29.010
Most people say yes.

01:49:29.010 --> 01:49:31.563
Say for how many of you
has that gone awesome?

01:49:32.510 --> 01:49:34.270
And most hands come down.

01:49:34.270 --> 01:49:38.840
The reality is that the home
improvement industry is messy.

01:49:38.840 --> 01:49:41.170
It is one of the most complained about,

01:49:41.170 --> 01:49:44.600
most challenged home services

01:49:44.600 --> 01:49:47.060
or consumer services that exists.

01:49:47.060 --> 01:49:51.350
The current systems in the
state to manage home contractors

01:49:51.350 --> 01:49:54.960
are flawed and do not
protect consumers adequately.

01:49:54.960 --> 01:49:57.450
So we have got to figure out

01:49:57.450 --> 01:49:59.030
how people can make safe choices,

01:49:59.030 --> 01:50:01.480
but it's as important to
the finance providers too,

01:50:01.480 --> 01:50:05.320
as we saw with PACE,
which is asking a bank

01:50:05.320 --> 01:50:10.320
to be a home contractor project
police agency is a problem.

01:50:11.660 --> 01:50:12.850
They're not good at it.

01:50:12.850 --> 01:50:15.670
Banks finance entities are
good at delivering capital.

01:50:15.670 --> 01:50:19.310
A great role for the PUC,
for the state, for other entities,

01:50:19.310 --> 01:50:23.900
is how do we ensure that we
have simple projects that work

01:50:23.900 --> 01:50:25.683
and that we can have confidence in?

01:50:27.970 --> 01:50:31.310
Lastly, I call it the hide
the spinach in the smoothie.

01:50:31.310 --> 01:50:33.210
That's my image there.

01:50:33.210 --> 01:50:34.910
People don't wanna buy efficiency.

01:50:35.810 --> 01:50:37.710
You should never think that they will.

01:50:38.730 --> 01:50:40.600
If your H-back breaks,
you need to H-back.

01:50:40.600 --> 01:50:44.680
How do we intervene using
finance and other mechanisms

01:50:44.680 --> 01:50:47.660
to get people to get the right H-back,

01:50:47.660 --> 01:50:50.530
to get a heat pump, to get
something else that's better?

01:50:50.530 --> 01:50:53.930
How do we get people who
when their hot water heaters,

01:50:53.930 --> 01:50:55.960
natural gas hot water heater breaks

01:50:55.960 --> 01:50:59.560
to switch to an electric
heat pump water heater?

01:50:59.560 --> 01:51:01.700
Those are moments where choices exist,

01:51:01.700 --> 01:51:05.370
and we can sneak in
and get the right outcome,

01:51:05.370 --> 01:51:07.240
but if you come to people and say, hey,

01:51:07.240 --> 01:51:09.030
how about a new water
heater and they don't need one,

01:51:09.030 --> 01:51:10.370
it's an irrelevant conversation.

01:51:10.370 --> 01:51:12.750
So we wanna make
sure that the efficiency,

01:51:12.750 --> 01:51:16.420
the policy benefits are part
of something people want.

01:51:16.420 --> 01:51:19.960
They're in the smoothie
that they already want,

01:51:19.960 --> 01:51:21.870
and maybe I'm just a parent

01:51:21.870 --> 01:51:24.050
who has snuck a lot of
vegetables in the smoothies,

01:51:24.050 --> 01:51:26.420
but I think I'm not the only one.

01:51:26.420 --> 01:51:27.470
Go to the next slide.

01:51:29.230 --> 01:51:31.940
I wanna deep dive for just a
moment on a couple of ideas,

01:51:31.940 --> 01:51:33.900
and these are just two ideas

01:51:33.900 --> 01:51:38.710
about how at scale we
deal with the safety issue.

01:51:38.710 --> 01:51:40.610
This is the thing we talk about PACE

01:51:40.610 --> 01:51:43.560
and the success and failures of PACE,

01:51:43.560 --> 01:51:45.790
but this is true of
solar leasing and loans.

01:51:45.790 --> 01:51:47.980
This is true of lots of
other types of products,

01:51:47.980 --> 01:51:50.130
which is how in the world

01:51:50.130 --> 01:51:55.020
does anybody know what
a good efficiency project is?

01:51:55.020 --> 01:51:56.600
What is success?

01:51:56.600 --> 01:51:59.940
How can I check a box
to know that that worked,

01:51:59.940 --> 01:52:01.480
that that was sufficient?

01:52:01.480 --> 01:52:05.490
And we don't have that
today in this industry.

01:52:05.490 --> 01:52:07.740
There are two very different
ways of approaching it.

01:52:07.740 --> 01:52:10.030
Both have benefits and flaws

01:52:10.030 --> 01:52:11.860
and there's lots of other
ways to approach it,

01:52:11.860 --> 01:52:13.810
but I wanna mention these two.

01:52:13.810 --> 01:52:15.710
The first is the US Department of Energy

01:52:15.710 --> 01:52:17.720
has a Home Energy Score.

01:52:17.720 --> 01:52:20.690
It can be done in an
hour, it cost about $100.

01:52:20.690 --> 01:52:22.410
It can be done by a home
improvement contractor

01:52:22.410 --> 01:52:24.934
or an H-back contractor,

01:52:24.934 --> 01:52:27.210
and it does a very good job

01:52:27.210 --> 01:52:32.000
of providing a simple,
understandable way

01:52:32.000 --> 01:52:34.620
of saying what is the
home efficiency score now,

01:52:34.620 --> 01:52:36.470
and what would it be with improvements

01:52:36.470 --> 01:52:38.310
and recommending improvements?

01:52:38.310 --> 01:52:39.930
Now, it's not super accurate,

01:52:39.930 --> 01:52:42.680
but it has the benefit
of being straightforward,

01:52:42.680 --> 01:52:44.260
fairly easy to do,

01:52:44.260 --> 01:52:46.500
and something that we
could build into these systems

01:52:46.500 --> 01:52:48.670
without dramatically having to change

01:52:48.670 --> 01:52:53.610
the mechanisms of delivering
home improvement projects.

01:52:53.610 --> 01:52:57.380
I did a bunch of work
on this a few years ago.

01:52:57.380 --> 01:53:02.003
The second is very near
and dear to my heart, data.

01:53:03.520 --> 01:53:05.500
How do we pay for performance?

01:53:05.500 --> 01:53:10.150
What we care about is
did we move the end?

01:53:10.150 --> 01:53:12.380
Do we reduce the amount of
energy being used by the home,

01:53:12.380 --> 01:53:14.480
or do we move around the use of energy

01:53:14.480 --> 01:53:16.010
to a more appropriate times

01:53:16.010 --> 01:53:21.010
when solar or other less
expensive power is available?

01:53:21.080 --> 01:53:22.850
This has some complications

01:53:22.850 --> 01:53:24.630
because it's hard to know exactly

01:53:24.630 --> 01:53:27.000
what energy savings you're
gonna get until afterwards,

01:53:27.000 --> 01:53:29.100
and a lot of occasions comes into it,

01:53:29.100 --> 01:53:31.730
but Pay-for-Performance
is the wave of the future,

01:53:31.730 --> 01:53:35.010
and giving people large scale
abilities to finance projects

01:53:35.010 --> 01:53:38.700
based on the future energy
savings or energy movement,

01:53:38.700 --> 01:53:40.710
because a lot of times right
now we don't want savings

01:53:40.710 --> 01:53:42.690
as much as we want energy electricity

01:53:42.690 --> 01:53:44.480
to be used at different times.

01:53:44.480 --> 01:53:45.370
The value is there,

01:53:45.370 --> 01:53:47.927
and of course Recurve
has done a lot of work on this

01:53:47.927 --> 01:53:49.910
within the state of California.

01:53:49.910 --> 01:53:51.370
I grabbed this one from New York,

01:53:51.370 --> 01:53:52.720
this example from New York.

01:53:53.750 --> 01:53:54.773
Last slide, please.

01:53:59.610 --> 01:54:01.150
Now I wanna talk about one other thing,

01:54:01.150 --> 01:54:03.450
and this is not a consumer loan.

01:54:03.450 --> 01:54:04.720
This is a different set of things

01:54:04.720 --> 01:54:07.400
and this is more related to
what I'm doing at Ohm Connect

01:54:07.400 --> 01:54:12.130
and related to our issues
with embedding finance

01:54:14.800 --> 01:54:17.200
and using data and actual energy,

01:54:17.200 --> 01:54:19.990
the cost of energy and
electricity in real time

01:54:19.990 --> 01:54:21.260
to pay for things.

01:54:21.260 --> 01:54:23.040
So what we've done recently

01:54:23.040 --> 01:54:25.230
and announced recently with Ohm Connect

01:54:25.230 --> 01:54:28.550
is that we have financed
a new power plant.

01:54:28.550 --> 01:54:33.400
We have $100 million to build
a 550 megawatt power plant,

01:54:33.400 --> 01:54:37.260
except there's no
infrastructure on this power plant.

01:54:37.260 --> 01:54:41.880
This financing, which is from
large scale New York capital,

01:54:41.880 --> 01:54:43.730
sidewalk infrastructure partners

01:54:43.730 --> 01:54:48.730
is coming in to pay for
individual consumers to sign up

01:54:48.940 --> 01:54:50.970
and get small devices

01:54:50.970 --> 01:54:55.560
that allow for control of
energy in their home for free,

01:54:55.560 --> 01:54:56.830
or very reduced prices.

01:54:56.830 --> 01:54:59.190
So the financing is at the macroscale

01:54:59.190 --> 01:55:01.030
for building the capacity

01:55:01.030 --> 01:55:04.460
to reduce the energy
needed on the grid in real time.

01:55:04.460 --> 01:55:07.770
The way a consumer
experience it is not alone,

01:55:07.770 --> 01:55:10.830
but they're experiencing
getting a benefit,

01:55:10.830 --> 01:55:13.780
a Nest thermostat or
smart plugs or other things,

01:55:13.780 --> 01:55:18.780
and getting paid in order to
deliver a service over time.

01:55:18.910 --> 01:55:20.320
So the way this again,

01:55:20.320 --> 01:55:21.860
really simple, the
way that it works here

01:55:21.860 --> 01:55:24.910
is when wholesale energy prices spike,

01:55:24.910 --> 01:55:27.960
people reduce their
energy use in their homes,

01:55:27.960 --> 01:55:32.540
the grid manages the
chico that actually pays

01:55:32.540 --> 01:55:34.330
for that energy reduction

01:55:34.330 --> 01:55:36.350
and then consumers receive that benefit.

01:55:36.350 --> 01:55:38.340
So this is a way of hiding the finance,

01:55:38.340 --> 01:55:40.860
being the finance at the
large scale infrastructure level,

01:55:40.860 --> 01:55:45.260
but actually delivering real
benefits savings and dollars

01:55:45.260 --> 01:55:47.520
to individual consumers.

01:55:47.520 --> 01:55:50.550
So another way of approaching finance

01:55:50.550 --> 01:55:53.210
that doesn't involve a
consumer taking out a loan,

01:55:53.210 --> 01:55:55.250
but involves finance
at a different level

01:55:55.250 --> 01:55:57.710
embedded into the energy system,

01:55:57.710 --> 01:55:59.530
and I think a really exciting way to go.

01:55:59.530 --> 01:56:01.840
So I will stop there and
turn it back over to Dan,

01:56:01.840 --> 01:56:04.113
and thank you very
much for having me today.

01:56:05.560 --> 01:56:07.260
<v ->Thank you, Cisco,</v>

01:56:07.260 --> 01:56:08.420
before we go to Carmelita

01:56:08.420 --> 01:56:10.580
I'm gonna use my moderator preference

01:56:10.580 --> 01:56:13.590
and ask you one question
about this last slide.

01:56:13.590 --> 01:56:14.910
Talk a little bit about the distinction

01:56:14.910 --> 01:56:18.630
between customer
behavior in this instance

01:56:18.630 --> 01:56:21.130
and an automated response.

01:56:21.130 --> 01:56:23.080
How that shows up in both your business

01:56:23.080 --> 01:56:24.730
or maybe in the sort
of policy architecture,

01:56:24.730 --> 01:56:28.100
you would suggest if we're
gonna enable solutions like this.

01:56:28.100 --> 01:56:31.110
Obviously, the behavior
is a little bit unpredictable

01:56:31.110 --> 01:56:32.270
from a policy perspective,

01:56:32.270 --> 01:56:33.620
and so if you're setting up a program

01:56:33.620 --> 01:56:37.740
that relies on this solution
to deliver at critical moments,

01:56:37.740 --> 01:56:40.920
that can create tension in
the decision making process.

01:56:40.920 --> 01:56:41.870
<v ->Oh, that's great.</v>

01:56:44.236 --> 01:56:45.910
So we do a lot of the behavior of work

01:56:45.910 --> 01:56:48.120
and all of our users
have behavioral elements.

01:56:48.120 --> 01:56:49.180
Here's the thing.

01:56:49.180 --> 01:56:50.610
It is very hard to predict

01:56:50.610 --> 01:56:53.950
what an individual user is going to do.

01:56:53.950 --> 01:56:56.240
It is actually not that hard to predict

01:56:56.240 --> 01:56:58.130
with time, energy and data

01:56:58.130 --> 01:57:01.760
what 100,000 consumers
are gonna do on average.

01:57:01.760 --> 01:57:03.430
So Dan, I don't know
what you're gonna do,

01:57:03.430 --> 01:57:07.030
but I do know what 100,000
people like you are going to do.

01:57:07.030 --> 01:57:08.520
Some of them will opt out in an event

01:57:08.520 --> 01:57:09.680
and some will participate,

01:57:09.680 --> 01:57:13.470
and within that we can
become very, very predictable.

01:57:13.470 --> 01:57:14.680
So this is a combination.

01:57:14.680 --> 01:57:18.350
The way we approach this is a
combination of communication

01:57:18.350 --> 01:57:20.320
directly to individual users

01:57:21.580 --> 01:57:23.330
with text messages and information

01:57:23.330 --> 01:57:24.800
about what reductions we want

01:57:24.800 --> 01:57:28.200
and allowing them to
manually make adjustments,

01:57:28.200 --> 01:57:32.490
but increasingly, we are
relying on devices in their homes.

01:57:32.490 --> 01:57:36.340
Smart plugs, thermostats,
car charging systems,

01:57:36.340 --> 01:57:40.440
hot water heaters and
other allied kind of appliances

01:57:40.440 --> 01:57:42.170
that allow us to reach in

01:57:42.170 --> 01:57:45.140
with the permission of
the user or the consumer

01:57:45.140 --> 01:57:48.420
to reach in and reduce the energy use

01:57:48.420 --> 01:57:51.050
or cycle off that device
for a period of time,

01:57:51.050 --> 01:57:54.190
and this means that it
is entirely predictable

01:57:54.190 --> 01:57:57.750
and entirely replicable.

01:57:57.750 --> 01:57:59.850
The consumer often doesn't
know what's happening,

01:57:59.850 --> 01:58:02.500
but if it isn't convenient,
they can opt out.

01:58:02.500 --> 01:58:05.520
That said, that device control,

01:58:05.520 --> 01:58:07.370
and this is why we can pay upfront

01:58:07.370 --> 01:58:08.840
for a device to go into a home

01:58:08.840 --> 01:58:13.250
allows us then to monetize those savings

01:58:13.250 --> 01:58:15.410
over the course of the years to come

01:58:15.410 --> 01:58:17.380
in ways that are very
valuable to the grid

01:58:17.380 --> 01:58:19.770
and valuable to the consumer themselves.

01:58:19.770 --> 01:58:22.410
<v ->Got it, so you're talking
about sort of an equivalent</v>

01:58:22.410 --> 01:58:24.130
to the expected uptime

01:58:24.130 --> 01:58:26.890
or availability factor of
a traditional power plant,

01:58:26.890 --> 01:58:29.540
which is knowable has
some deviation around it,

01:58:29.540 --> 01:58:32.830
but has been a pretty good
data and performance behind it.

01:58:32.830 --> 01:58:34.210
<v ->Yeah, I mean,
what I think changed</v>

01:58:34.210 --> 01:58:35.980
or what's allowed, for example,

01:58:35.980 --> 01:58:39.230
as to build a 500 mega
watt virtual power plant

01:58:39.230 --> 01:58:41.140
made up of a network of homes,

01:58:41.140 --> 01:58:45.950
is that we have
figured out that at scale

01:58:45.950 --> 01:58:49.460
you can get very predictable
megawatt reductions.

01:58:49.460 --> 01:58:53.930
So we can say we need 50
megawatts for this hour at 7 p.m.

01:58:53.930 --> 01:58:56.630
and we can hit 50
megawatts almost exactly,

01:58:56.630 --> 01:58:58.380
and with the level of specificity

01:58:58.380 --> 01:59:00.740
that a traditional power plant can

01:59:00.740 --> 01:59:03.400
because of the scale and
the data that goes into it,

01:59:03.400 --> 01:59:06.730
and this allows us now
using the smart meter data

01:59:06.730 --> 01:59:10.250
to actually cut the homeowner,
the resident, the renter,

01:59:10.250 --> 01:59:12.490
anybody in on the deal, right?

01:59:12.490 --> 01:59:15.030
They can actually then
get paid for that reduction

01:59:15.030 --> 01:59:17.590
because the price of
electricity, the wholesale market,

01:59:17.590 --> 01:59:20.670
even with time of use
rates can vastly exceed

01:59:20.670 --> 01:59:23.000
the retail price of energy
that they're paying.

01:59:23.000 --> 01:59:26.360
So we're trying to connect
those dots back to the consumer,

01:59:26.360 --> 01:59:29.120
cut them in on the ability
to make some money

01:59:29.120 --> 01:59:30.250
by reducing energy use

01:59:30.250 --> 01:59:33.120
when the price at the wholesale
energy market is very high.

01:59:33.120 --> 01:59:35.570
You can't do this as
an individual consumer.

01:59:35.570 --> 01:59:38.700
You can only do this aggregated at scale

01:59:38.700 --> 01:59:40.880
with all but a lot of
folks working together

01:59:40.880 --> 01:59:42.080
kind of like a symphony.

01:59:43.000 --> 01:59:44.330
<v ->Excellent, thank you very much.</v>

01:59:44.330 --> 01:59:46.553
Okay, over to Carmelita Miller, please.

01:59:53.496 --> 01:59:56.151
Carmelita Miller you're on.

01:59:56.151 --> 01:59:57.450
<v ->Can you hear me okay?</v>

01:59:57.450 --> 01:59:58.830
<v ->We've got you so far.</v>

01:59:58.830 --> 02:00:00.340
I know you're having
some connection problems.

02:00:00.340 --> 02:00:01.410
Hopefully we're stabilized.

02:00:01.410 --> 02:00:03.060
Thank you so much for joining us.

02:00:04.020 --> 02:00:08.210
<v ->Absolutely, good morning
or afternoon everyone.</v>

02:00:08.210 --> 02:00:09.530
My name is Carmelita Miller

02:00:09.530 --> 02:00:11.050
and I direct the energy equity team

02:00:11.050 --> 02:00:12.500
at the Greenlining Institute.

02:00:13.470 --> 02:00:16.210
I thank Commissioner
Shiroma, CPUC staff,

02:00:16.210 --> 02:00:18.090
and all of the panelists here again

02:00:18.090 --> 02:00:20.350
for inviting me to participate today.

02:00:20.350 --> 02:00:23.880
I'm gonna change everything
in the conversation a little bit

02:00:23.880 --> 02:00:27.023
and talk about the
perspective of our communities.

02:00:28.531 --> 02:00:31.420
Let me start by just
introducing Greenlining.

02:00:31.420 --> 02:00:33.370
For those of you who don't know,

02:00:33.370 --> 02:00:36.380
Greenlining's mission is to
advance economic opportunity

02:00:36.380 --> 02:00:38.570
and empowerment for people of color.

02:00:38.570 --> 02:00:41.570
We say that Greenlining
is the opposite of redlining,

02:00:41.570 --> 02:00:43.830
and other manifestations of racism

02:00:43.830 --> 02:00:46.780
that have been excluded people
of color from homeownership,

02:00:46.780 --> 02:00:50.340
banking and other forms of
wealth building opportunities.

02:00:50.340 --> 02:00:52.700
Ongoing racist policies versus today,

02:00:52.700 --> 02:00:54.090
this is not a surprise,

02:00:54.090 --> 02:00:56.630
and the effects of this historic
and current discrimination

02:00:56.630 --> 02:00:58.590
are reflected in the racial disparities

02:00:58.590 --> 02:01:00.500
across income, wealth,

02:01:00.500 --> 02:01:02.723
and health or well-being of our people.

02:01:04.030 --> 02:01:05.500
People of color are experiencing

02:01:05.500 --> 02:01:07.830
the lowest levels of wealth in decades

02:01:07.830 --> 02:01:11.860
compared to their White counterparts,

02:01:11.860 --> 02:01:15.970
who are achieving record
wealth at the moment.

02:01:15.970 --> 02:01:16.803
Next slide.

02:01:20.860 --> 02:01:23.500
I'm outlining here the
energy equity principles

02:01:23.500 --> 02:01:25.260
that we live by at Greenlining.

02:01:25.260 --> 02:01:28.820
We say that we want
affordable access to clean power.

02:01:28.820 --> 02:01:30.470
We want healthier, safer,

02:01:30.470 --> 02:01:34.890
and thriving homes and
neighborhoods, communities.

02:01:34.890 --> 02:01:36.290
We wanna be actively engaged

02:01:36.290 --> 02:01:38.580
in the energy decisions
that impact our lives,

02:01:38.580 --> 02:01:42.053
and attain wealth-building
opportunities in a green economy.

02:01:43.050 --> 02:01:45.720
Climate change, adaptation
and mitigation investments

02:01:45.720 --> 02:01:47.700
can be tools for wealth building

02:01:47.700 --> 02:01:50.760
in our communities
and alumni communities,

02:01:50.760 --> 02:01:54.250
and this adjustments can
simultaneously help communities

02:01:54.250 --> 02:01:56.200
to become more resilient

02:01:57.924 --> 02:02:01.040
and to present a way to really prevent

02:02:04.160 --> 02:02:08.170
all of the harmful impacts of racism,

02:02:08.170 --> 02:02:10.470
compounded with climate change

02:02:10.470 --> 02:02:12.943
and now a pandemic
that's affecting their life.

02:02:14.120 --> 02:02:14.953
Next slide.

02:02:20.770 --> 02:02:23.110
Wesley and Holmes earlier highlighted

02:02:23.110 --> 02:02:26.580
that incredibly high rate of
energy burden in the southeast,

02:02:26.580 --> 02:02:28.220
and if you're in California

02:02:28.220 --> 02:02:30.860
you all know that we're
not fairing any better.

02:02:30.860 --> 02:02:32.530
While there's currently a moratorium

02:02:32.530 --> 02:02:34.110
against utility disconnection,

02:02:34.110 --> 02:02:37.560
we know that this
protection will end sooner

02:02:37.560 --> 02:02:39.330
than when Illinois residents

02:02:39.330 --> 02:02:41.500
have recovered from
financial devastation

02:02:41.500 --> 02:02:43.370
caused by this pandemic.

02:02:43.370 --> 02:02:47.130
Currently, we have more
than 450 million residents

02:02:47.130 --> 02:02:48.593
in growing utility debts.

02:02:49.430 --> 02:02:52.820
That's as of the data that I
got a couple of months ago.

02:02:52.820 --> 02:02:55.393
It might be different now,

02:02:56.310 --> 02:03:01.310
but don't quote me on
this exact number for today,

02:03:02.250 --> 02:03:03.730
but it's bad, right?

02:03:03.730 --> 02:03:05.033
Whatever the number is,

02:03:06.080 --> 02:03:10.660
and on your screen are three
versions of the map of Oakland,

02:03:10.660 --> 02:03:13.740
where you can see that
in the darker shades of red

02:03:13.740 --> 02:03:15.710
for East Oakland, specifically,

02:03:15.710 --> 02:03:20.530
are in all three maps
show the impact of lying

02:03:20.530 --> 02:03:22.840
to the very left historic redlining

02:03:22.840 --> 02:03:25.090
that echoes across multiple issues

02:03:26.290 --> 02:03:28.260
in this particular community,

02:03:28.260 --> 02:03:30.530
and this is true with
many redline communities

02:03:30.530 --> 02:03:32.230
across the state.

02:03:32.230 --> 02:03:34.683
So to the left, the lack
of financial investment.

02:03:35.690 --> 02:03:39.713
This is what we call actual redlining.

02:03:40.870 --> 02:03:43.690
In the middle is the Cal
EnviroScreens result.

02:03:43.690 --> 02:03:45.250
We also see that the same community

02:03:45.250 --> 02:03:50.040
is affected and impacted
by incredible pollution,

02:03:50.040 --> 02:03:55.040
and then finally to the
right is the impact of COVID,

02:03:55.080 --> 02:03:58.703
the devastating impact of
COVID on our community's health.

02:03:59.990 --> 02:04:00.823
Next slide.

02:04:05.250 --> 02:04:07.780
For renters and
homeowners in California,

02:04:07.780 --> 02:04:10.790
the pandemic's economic
fallout is far from over.

02:04:10.790 --> 02:04:13.830
Before the pandemic we
were already in a housing crisis

02:04:13.830 --> 02:04:16.620
and now hundreds of
thousands of households

02:04:16.620 --> 02:04:18.790
are confronting housing insecurity

02:04:18.790 --> 02:04:21.960
from the combination
of job and income losses,

02:04:21.960 --> 02:04:23.240
high housing cost burdens

02:04:23.240 --> 02:04:25.423
and threats of eviction and foreclosure.

02:04:26.290 --> 02:04:27.980
We all know that in California

02:04:27.980 --> 02:04:30.600
there's a temporary
ban on certain evictions

02:04:30.600 --> 02:04:33.020
that has prevented or at least delayed

02:04:33.020 --> 02:04:35.120
thousands of residents
from losing their homes

02:04:35.120 --> 02:04:38.540
during a pandemic for non-payment.

02:04:38.540 --> 02:04:41.380
For use, income and job losses

02:04:41.380 --> 02:04:44.460
have hit rental households the hardest.

02:04:44.460 --> 02:04:47.040
According to UC,
Berkeley's Terner Center,

02:04:47.040 --> 02:04:50.413
it estimates that nearly
55% of renters in California

02:04:50.413 --> 02:04:54.160
have experienced some
loss of employment income

02:04:54.160 --> 02:04:56.010
since March of last year

02:04:56.010 --> 02:04:58.600
when the shelter-in-place orders began,

02:04:58.600 --> 02:05:00.370
and although homeowners have steered

02:05:00.370 --> 02:05:03.910
better than renters
bill, 40% of homeowners

02:05:03.910 --> 02:05:06.820
have experienced a loss
of employment income.

02:05:06.820 --> 02:05:09.173
So why does this all matter, right?

02:05:10.030 --> 02:05:11.750
It matters because,

02:05:11.750 --> 02:05:13.860
like many of the speakers
that went before me,

02:05:13.860 --> 02:05:16.950
we are now talking about
how to transition to stay

02:05:16.950 --> 02:05:19.187
into a cleaner energy,

02:05:19.187 --> 02:05:21.673
and a cleaner economy,
and cleaner environment,

02:05:22.900 --> 02:05:25.210
and we cannot do that,
and I can honestly tell you

02:05:25.210 --> 02:05:27.140
that many of our community members

02:05:27.140 --> 02:05:29.150
are currently not thinking

02:05:29.150 --> 02:05:31.930
about how to electrify their home,

02:05:31.930 --> 02:05:34.780
not even how to
make it energy efficient.

02:05:34.780 --> 02:05:37.780
When their homes
that we're talking about

02:05:37.780 --> 02:05:40.553
they're about to lose because
they cannot pay the rent.

02:05:42.489 --> 02:05:44.840
So that's why it all matters

02:05:44.840 --> 02:05:47.563
and I just wanted to
put the context here,

02:05:48.680 --> 02:05:50.130
but I think most of us know

02:05:50.130 --> 02:05:53.050
that this is already
happening in our state.

02:05:53.050 --> 02:05:53.883
Next slide.

02:05:56.432 --> 02:05:58.093
So all of this is disheartening,

02:05:59.350 --> 02:06:04.350
and well, it is often, for me
as an advocate, hard to do.

02:06:04.580 --> 02:06:06.520
I will try my best to
rise to the challenge

02:06:06.520 --> 02:06:11.070
and theme that Dan and
this panel had given me,

02:06:11.070 --> 02:06:13.580
which is to talk about aspirational

02:06:13.580 --> 02:06:15.800
on the hopes for our communities,

02:06:15.800 --> 02:06:17.630
and more than just a wish.

02:06:17.630 --> 02:06:18.770
We at Greenlining know

02:06:18.770 --> 02:06:22.823
that a better future is truly
attainable for people now.

02:06:24.120 --> 02:06:25.310
A couple of years ago,

02:06:25.310 --> 02:06:28.990
we launched our work on
building decarbonisation.

02:06:28.990 --> 02:06:30.760
We wanted to make sure

02:06:30.760 --> 02:06:33.920
and focus on ways that this transition

02:06:33.920 --> 02:06:38.920
is not only ways to prevent harm

02:06:39.620 --> 02:06:44.620
for folks who might be left
behind on aging gas system,

02:06:47.120 --> 02:06:49.860
when others and especially
more affluent residents

02:06:49.860 --> 02:06:51.700
have already transitioned,

02:06:51.700 --> 02:06:53.450
but also how can we benefit?

02:06:53.450 --> 02:06:56.540
How can we use electrification?

02:06:56.540 --> 02:07:00.150
How can we use
decarbonization as an actual tool

02:07:01.750 --> 02:07:05.733
to help with wealth
building in our communities?

02:07:07.540 --> 02:07:08.903
Next up, sorry, next slide.

02:07:10.860 --> 02:07:13.620
So the next slide
outlines the different steps.

02:07:13.620 --> 02:07:17.720
I'm summarizing here,
please go to our website,

02:07:17.720 --> 02:07:20.340
you'll find our framework, a
copy of our framework there.

02:07:20.340 --> 02:07:21.980
So I'm summarizing here

02:07:21.980 --> 02:07:23.500
to show you the different steps

02:07:23.500 --> 02:07:26.790
and I'll be talking about step
number four after this slide,

02:07:26.790 --> 02:07:30.270
but really quickly, we
have recommended

02:07:30.270 --> 02:07:34.563
that in order to truly
and equitably transition,

02:07:35.800 --> 02:07:37.450
this whole process

02:07:37.450 --> 02:07:41.270
should start with assessing
our community's needs.

02:07:41.270 --> 02:07:45.370
As I said earlier, many of
our community members

02:07:45.370 --> 02:07:49.100
are not thinking about buying
an induction stove, right?

02:07:49.100 --> 02:07:51.440
Many of our community
members are thinking about

02:07:51.440 --> 02:07:54.090
how they're gonna
pay their electric bill,

02:07:54.090 --> 02:07:55.900
how they're gonna pay their rent,

02:07:55.900 --> 02:07:58.600
and so how do we reconcile all of this

02:07:58.600 --> 02:07:59.990
that's happening in our communities

02:07:59.990 --> 02:08:03.143
while we're also figuring
out how to transition the state.

02:08:04.060 --> 02:08:05.630
The second step is to establish

02:08:05.630 --> 02:08:08.010
a community-led decision making process.

02:08:08.010 --> 02:08:12.290
So that we're doing more
than just handing flyers

02:08:12.290 --> 02:08:15.040
or pamphlets to our residents.

02:08:15.040 --> 02:08:17.640
We're actually asking for their input,

02:08:17.640 --> 02:08:19.080
asking for their experiences

02:08:19.080 --> 02:08:23.893
and asking for how they wanna
see clean energy investments

02:08:25.020 --> 02:08:26.313
transform their lives.

02:08:27.150 --> 02:08:29.370
Third, we were saying
that we need to develop

02:08:29.370 --> 02:08:31.910
equity-driven metrics from the get go

02:08:31.910 --> 02:08:34.630
because without this we
can't possibly measure

02:08:34.630 --> 02:08:38.053
whether a program is
achieving its equitable goals.

02:08:38.940 --> 02:08:42.260
Fourth, leverage program
benefits and funding,

02:08:42.260 --> 02:08:44.620
like I said, I'll talk a
little bit more about this

02:08:44.620 --> 02:08:46.430
as it relates to financing,

02:08:46.430 --> 02:08:47.920
and then lastly we say that

02:08:47.920 --> 02:08:51.170
you have to keep tracking and improving

02:08:51.170 --> 02:08:53.890
the performance of policies and programs

02:08:53.890 --> 02:08:56.763
to ensure that they're really
meeting our people's needs.

02:08:58.250 --> 02:08:59.083
Next slide.

02:09:02.150 --> 02:09:05.960
Now, the CPUC is also
tasked to help create a plan

02:09:05.960 --> 02:09:09.500
to transition our economy
away from fossil fuels, right?

02:09:09.500 --> 02:09:10.600
There's another proceeding

02:09:10.600 --> 02:09:12.010
where we're also participating,

02:09:12.010 --> 02:09:14.223
Greenlining along with other
environmental justice groups

02:09:14.223 --> 02:09:17.790
that are participating in
order to figure out this issue,

02:09:17.790 --> 02:09:19.353
but how are we going to make sure

02:09:19.353 --> 02:09:22.900
that communities are not
left out of this transition?

02:09:22.900 --> 02:09:25.910
Currently, participation of
rates and energy programs

02:09:25.910 --> 02:09:29.740
suggest that we're likely
to again be left behind.

02:09:29.740 --> 02:09:30.660
In our framework,

02:09:30.660 --> 02:09:33.760
we talked about making sure
that we leverage the funding

02:09:33.760 --> 02:09:36.450
and the programs that currently exist

02:09:36.450 --> 02:09:38.700
because currently, it's not serving

02:09:38.700 --> 02:09:41.040
many of our community members,

02:09:41.040 --> 02:09:43.290
especially environmental
justice communities.

02:09:44.510 --> 02:09:45.870
We're also saying that,

02:09:45.870 --> 02:09:49.080
I'm saying now that the
Commission has the foundation

02:09:49.080 --> 02:09:50.580
on which you can create

02:09:50.580 --> 02:09:55.580
through its environmental
and social justice action plan,

02:09:56.200 --> 02:09:58.610
its work in SB350 barriers studies,

02:09:58.610 --> 02:10:00.490
and many other proceedings.

02:10:00.490 --> 02:10:03.080
It has what it needs to create

02:10:04.070 --> 02:10:06.920
a better and more
inclusive financing solutions

02:10:06.920 --> 02:10:08.023
to address the gap.

02:10:09.680 --> 02:10:12.290
The fourth step of
our framework calls for,

02:10:12.290 --> 02:10:14.300
like I said, calls for the
leveraging of programs

02:10:14.300 --> 02:10:17.730
and finding solutions to address the gap

02:10:17.730 --> 02:10:19.820
across multiple CPUC proceedings

02:10:19.820 --> 02:10:22.450
and during the robust
stakeholder engagement

02:10:22.450 --> 02:10:26.020
to create and implement
the SB350 barriers study.

02:10:26.020 --> 02:10:29.310
Greenlining and many
other environmental justice

02:10:29.310 --> 02:10:33.050
and racial equity organizations
have highlighted repeatedly

02:10:33.050 --> 02:10:35.210
the barriers to increasing access

02:10:35.210 --> 02:10:39.344
and uptake of energy
improvements in our communities.

02:10:39.344 --> 02:10:40.840
As pointed out to the fact

02:10:40.840 --> 02:10:45.340
that scale of funding rebates
and subsidies is inadequate,

02:10:45.340 --> 02:10:46.700
the current scale is inadequate

02:10:46.700 --> 02:10:48.360
to address the needs of our people

02:10:48.360 --> 02:10:51.540
who have largely been left
out in the energy investments

02:10:51.540 --> 02:10:52.790
that the state is making.

02:10:53.630 --> 02:10:55.570
I want to quickly note,

02:10:55.570 --> 02:10:58.400
in case I need to restate the obvious

02:10:58.400 --> 02:11:01.683
that in our case, at least personally,

02:11:03.407 --> 02:11:05.760
we don't think demand is the issue.

02:11:05.760 --> 02:11:07.430
Demand is not the
issue in our community.

02:11:07.430 --> 02:11:08.740
The demand is there.

02:11:08.740 --> 02:11:09.763
We want these solutions, right?

02:11:09.763 --> 02:11:12.170
We want clean energy in our communities.

02:11:12.170 --> 02:11:14.220
We want to improve our lives.

02:11:14.220 --> 02:11:17.330
We've spoken up repeatedly
that we demand energy solutions

02:11:17.330 --> 02:11:20.010
that improve the lives of our children,

02:11:20.010 --> 02:11:23.260
the lives of our neighbors,
the lives of our family.

02:11:23.260 --> 02:11:26.780
I take part in these
financing conversations,

02:11:26.780 --> 02:11:30.970
not to figure out how financing
options can drive up demand,

02:11:30.970 --> 02:11:32.840
but how financing solutions

02:11:32.840 --> 02:11:36.130
can augment the
financial gap that is needed

02:11:36.130 --> 02:11:39.453
to make our communities
more resilient and sustainable.

02:11:41.370 --> 02:11:44.760
If available, funding is insufficient,

02:11:44.760 --> 02:11:49.760
as we've seen before and
as we're presenting now,

02:11:50.150 --> 02:11:53.810
cost effective investment
opportunities can be financed.

02:11:53.810 --> 02:11:55.960
Let us look at financing solutions

02:11:55.960 --> 02:11:57.680
that protect the consumers,

02:11:57.680 --> 02:11:59.300
but do not use criterias

02:11:59.300 --> 02:12:03.480
that systematically
disqualify on a status

02:12:03.480 --> 02:12:06.790
based on ownership,
income and credit score.

02:12:06.790 --> 02:12:09.100
We've all heard that and
various speakers today

02:12:09.100 --> 02:12:12.013
that these are barriers
to LMI consumers.

02:12:13.270 --> 02:12:17.320
When these issues
that I've just discussed

02:12:17.320 --> 02:12:19.430
are taken all together,

02:12:19.430 --> 02:12:22.260
it truly becomes imperative

02:12:22.260 --> 02:12:26.140
to consider some demonstrated ability,

02:12:26.140 --> 02:12:26.973
and we have them,

02:12:26.973 --> 02:12:29.710
demonstrated ability of utilities

02:12:29.710 --> 02:12:32.400
to offer inclusive
financing to all customers,

02:12:32.400 --> 02:12:34.810
regardless of their income credit score,

02:12:34.810 --> 02:12:37.260
whether you're a renter or a homeowner.

02:12:37.260 --> 02:12:39.553
Let's look at examples where there are,

02:12:39.553 --> 02:12:42.720
so this is my aspiration
for the Commission

02:12:42.720 --> 02:12:45.229
and the current proceeding,
the financing proceeding,

02:12:45.229 --> 02:12:49.230
with examples where there are
high uptake of grades reported

02:12:49.230 --> 02:12:52.420
by other utilities offering
inclusive financing,

02:12:52.420 --> 02:12:55.223
even persistent poverty areas, right?

02:12:56.390 --> 02:12:57.223
Because it's showing,

02:12:57.223 --> 02:13:00.580
and we have seen examples
that we've heard of today

02:13:00.580 --> 02:13:04.010
and I'm sure we'll hear about more

02:13:04.010 --> 02:13:05.500
this afternoon and tomorrow.

02:13:05.500 --> 02:13:08.823
Examples where there's a
viable solutions for our community,

02:13:10.010 --> 02:13:11.760
and now is the time to do that.

02:13:12.640 --> 02:13:13.473
Next slide.

02:13:15.020 --> 02:13:18.610
And, again, wanting to
keep my presentation quick

02:13:18.610 --> 02:13:19.443
'cause I also don't know,

02:13:19.443 --> 02:13:22.700
my internet is pretty
unstable at the moment,

02:13:22.700 --> 02:13:27.100
but above all, if there's
one recommendation,

02:13:27.100 --> 02:13:31.420
or one thing that I want
to leave everyone here

02:13:31.420 --> 02:13:33.700
is that whatever we do,

02:13:33.700 --> 02:13:37.120
we have to center
and start with the needs

02:13:37.120 --> 02:13:39.960
of our communities fist, right?

02:13:39.960 --> 02:13:44.960
And in creating financing
solutions that's our North Star

02:13:45.100 --> 02:13:47.480
because California and Californias

02:13:47.480 --> 02:13:49.023
cannot continue to suffer.

02:13:49.900 --> 02:13:53.680
I'll stop here and
hopefully, I can stick around

02:13:53.680 --> 02:13:56.217
and engage in the Q&amp;A portion.

02:13:58.527 --> 02:13:59.820
<v ->Thank you so much, Carmelita,</v>

02:13:59.820 --> 02:14:02.480
and just reflecting the
fact that we might lose you.

02:14:02.480 --> 02:14:04.670
Let me ask you one
follow-up question now

02:14:04.670 --> 02:14:07.523
and hopefully you'll be
able to stay with us for later.

02:14:08.530 --> 02:14:11.880
You mentioned the need to
focus on where we see an uptake

02:14:11.880 --> 02:14:13.950
in similar markets, similar programs,

02:14:13.950 --> 02:14:16.200
and I'm thinking about the dynamic

02:14:16.200 --> 02:14:17.830
of the renter and the landlord,

02:14:17.830 --> 02:14:20.460
which is fraught and
complicated and diverse

02:14:20.460 --> 02:14:22.090
even in non-pandemic times,

02:14:22.090 --> 02:14:24.860
but it makes me wonder if
you have recommendations

02:14:24.860 --> 02:14:27.710
about specific things,
specific measures,

02:14:27.710 --> 02:14:29.870
that LMI communities

02:14:29.870 --> 02:14:33.400
are more likely to find
attractive in their homes

02:14:33.400 --> 02:14:34.620
that we should be focusing on

02:14:34.620 --> 02:14:37.600
from sort of the behind the
meter technology solution set,

02:14:37.600 --> 02:14:39.690
which is of interest to this proceeding.

02:14:39.690 --> 02:14:41.080
Things that if we could figure out

02:14:41.080 --> 02:14:42.540
the partnerships and financing for

02:14:42.540 --> 02:14:44.640
we'd have more residents saying,

02:14:44.640 --> 02:14:46.450
yeah, that's what I'm looking for,

02:14:46.450 --> 02:14:48.100
that meets my family's needs,

02:14:48.100 --> 02:14:49.760
and then we'll figure
out how to get it paid for

02:14:49.760 --> 02:14:52.190
through the landlord
relationship and the utility,

02:14:52.190 --> 02:14:55.420
but are there specific measures
that seem obvious to you,

02:14:55.420 --> 02:14:57.683
or do you want the Commission
to have front of mind?

02:15:01.340 --> 02:15:02.570
<v ->Okay, so I hope to.</v>

02:15:02.570 --> 02:15:05.380
Okay, sorry, my computer
again is telling me

02:15:05.380 --> 02:15:07.480
again unstable connection.

02:15:07.480 --> 02:15:08.680
I hope you can hear me okay

02:15:08.680 --> 02:15:10.263
and everyone can hear me okay.

02:15:12.650 --> 02:15:15.410
I would say that first and foremost,

02:15:15.410 --> 02:15:16.710
and in the way that we have surveyed

02:15:16.710 --> 02:15:20.220
and studied LMI renters.

02:15:20.220 --> 02:15:25.220
One of the things that really
drive up fear and anxiety

02:15:26.540 --> 02:15:30.940
is the idea that they
will not financially benefit

02:15:30.940 --> 02:15:32.670
from something that
they're paying for, right?

02:15:32.670 --> 02:15:36.850
And so I don't have
specific recommendations

02:15:36.850 --> 02:15:38.380
of particular measures.

02:15:38.380 --> 02:15:39.980
I do know that there are ways

02:15:39.980 --> 02:15:43.000
that we can figure out how to balance

02:15:44.359 --> 02:15:46.410
instead of talking
about the split incentives

02:15:46.410 --> 02:15:51.373
with balance incentives between
the renters and the owners.

02:15:52.440 --> 02:15:53.610
At the end of the day,

02:15:53.610 --> 02:15:55.610
really what folks are looking for

02:15:55.610 --> 02:15:59.570
is to make sure that they're
getting what they need,

02:15:59.570 --> 02:16:02.000
or they're getting
what they're paying for,

02:16:02.000 --> 02:16:03.680
they're keeping their families safe,

02:16:03.680 --> 02:16:04.700
and if anything,

02:16:04.700 --> 02:16:09.350
if they can also get some
more monetary investments,

02:16:09.350 --> 02:16:13.250
and so for us we've seen
that actual bill savings,

02:16:13.250 --> 02:16:18.250
or even credits have really
skewed that kind of fear,

02:16:21.570 --> 02:16:24.840
or alleviated the fear and the concerns

02:16:24.840 --> 02:16:28.060
around participating in
programs, just in general,

02:16:28.060 --> 02:16:32.650
and so I would say that
led to financing solutions

02:16:32.650 --> 02:16:35.345
that would address all of that

02:16:35.345 --> 02:16:39.220
and will, again, bridge that gap

02:16:39.220 --> 02:16:42.930
and make the split incentive
more of a balanced incentive

02:16:42.930 --> 02:16:44.730
for both parties.

02:16:44.730 --> 02:16:46.210
<v ->That's great,
that's a great frame.</v>

02:16:46.210 --> 02:16:47.580
Thank you so much.

02:16:47.580 --> 02:16:49.570
Okay, over to Kerry O'Neil,

02:16:49.570 --> 02:16:51.420
Inclusive Prosperity Capital, please.

02:16:53.490 --> 02:16:56.253
<v ->Thanks, Dan, and
thanks, everybody.</v>

02:16:57.330 --> 02:16:59.193
So if you go to the next slide.

02:17:00.450 --> 02:17:02.640
As Dan mentioned in the intro,

02:17:02.640 --> 02:17:04.060
Inclusive Prosperity Capital

02:17:04.060 --> 02:17:06.760
is a spin out of the
Connecticut Green Bank,

02:17:06.760 --> 02:17:10.113
we're a not for profit
boundaryless green bank.

02:17:11.210 --> 02:17:12.553
If you can go, okay,

02:17:16.267 --> 02:17:18.720
and you can go to the next
slide after that if you'd like,

02:17:18.720 --> 02:17:21.650
and I'm gonna talk about strategies

02:17:21.650 --> 02:17:24.920
for financing underserved markets

02:17:24.920 --> 02:17:26.090
and disadvantaged communities.

02:17:26.090 --> 02:17:27.540
You can go to the next slide,

02:17:30.280 --> 02:17:33.763
and we're focused,
okay, all right, that's okay.

02:17:34.620 --> 02:17:39.543
So think about IPC as a piece
of green bank infrastructure,

02:17:41.504 --> 02:17:44.620
and if you just go to the
prior slide, really quickly.

02:17:44.620 --> 02:17:48.730
I just wanted to echo what
Carmelita discussed about

02:17:48.730 --> 02:17:53.520
in terms of financing can
help have all these additional,

02:17:53.520 --> 02:17:56.090
they can enable all
these additional benefits

02:17:56.090 --> 02:17:57.010
of clean energy.

02:17:57.010 --> 02:18:00.020
So the sort of things that
Carmelita was focused on

02:18:00.020 --> 02:18:03.090
in terms of we want our
communities to be cleaner,

02:18:03.090 --> 02:18:06.280
and more resilient, and
healthier, and have jobs,

02:18:06.280 --> 02:18:07.113
and what have you.

02:18:07.113 --> 02:18:11.400
So I'm gonna be talking about
underserved market strategies,

02:18:11.400 --> 02:18:14.970
which we defined as low to
moderate income credit-challenged

02:18:14.970 --> 02:18:19.570
and places where capital
is not currently flowing.

02:18:19.570 --> 02:18:23.260
So if we go to the next
slide just really quickly,

02:18:23.260 --> 02:18:26.430
we think about approaching this problem

02:18:26.430 --> 02:18:29.610
in terms of where are
there gaps in the market?

02:18:29.610 --> 02:18:32.320
Solutions that don't
exist that need to exist,

02:18:32.320 --> 02:18:34.760
or, again, where capital isn't flowing?

02:18:34.760 --> 02:18:37.010
And then where are the intersections

02:18:37.010 --> 02:18:39.150
that we can kind of join up with

02:18:39.150 --> 02:18:41.340
and get our solutions into the market?

02:18:41.340 --> 02:18:43.780
This is all about who you partner with,

02:18:43.780 --> 02:18:44.613
and at the end of the day

02:18:44.613 --> 02:18:47.920
it's really about going to
school on the ecosystems

02:18:47.920 --> 02:18:52.100
and the specific communities
that we're looking to work in.

02:18:52.100 --> 02:18:56.030
Energy and energy
affordability and clean energy,

02:18:56.030 --> 02:18:57.710
these things don't exist in a vacuum,

02:18:57.710 --> 02:18:58.720
is commonly to talk about

02:18:58.720 --> 02:19:00.420
there are many, many, many challenges

02:19:00.420 --> 02:19:01.700
communities are facing.

02:19:01.700 --> 02:19:05.960
So we got to figure out how
to plug into these other issues

02:19:06.960 --> 02:19:10.160
and make ourselves part of the solution.

02:19:10.160 --> 02:19:13.200
Next slide, I just want
us to think quickly about,

02:19:13.200 --> 02:19:15.070
instead of like a silver bullet,

02:19:15.070 --> 02:19:16.840
if I just had this one
piece of the puzzle,

02:19:16.840 --> 02:19:18.480
everything's gonna be great.

02:19:18.480 --> 02:19:22.720
I want us to be thinking about
Lego pieces, building blocks,

02:19:22.720 --> 02:19:26.070
the tools in the toolbox
that we're gonna put together

02:19:26.070 --> 02:19:28.720
to put together the
full range of solutions

02:19:28.720 --> 02:19:31.910
that we're gonna need for all
the different market segments.

02:19:31.910 --> 02:19:32.743
Next slide.

02:19:32.743 --> 02:19:33.760
I'm gonna start with the punchline

02:19:33.760 --> 02:19:36.040
and then we'll go through some examples.

02:19:36.040 --> 02:19:37.640
So first of all, I just wanna say

02:19:37.640 --> 02:19:40.320
financing does work
for underserved markets.

02:19:40.320 --> 02:19:43.430
It can be done, but
it's not one size fits all.

02:19:43.430 --> 02:19:46.230
You've gotta bring a
range of financing tools

02:19:46.230 --> 02:19:48.660
and programs into the market

02:19:48.660 --> 02:19:50.120
and it's all down here.

02:19:50.120 --> 02:19:53.260
Subordinated debt,
co-investment concessionary debt,

02:19:53.260 --> 02:19:56.220
bridge and incentive financing,
warehousing, aggregation,

02:19:56.220 --> 02:19:59.340
loan loss reserves, other
forms of credit enhancement.

02:19:59.340 --> 02:20:01.230
You're going to need the full panoply

02:20:01.230 --> 02:20:03.730
to solve issues and underserved markets,

02:20:03.730 --> 02:20:06.640
and just echoing what Carmelita said,

02:20:06.640 --> 02:20:09.050
being grounded in the market data.

02:20:09.050 --> 02:20:11.420
What are the specific energy burdens,

02:20:11.420 --> 02:20:13.970
and income, and rent
burdens, and housing burdens,

02:20:13.970 --> 02:20:15.900
and that issues in the properties

02:20:15.900 --> 02:20:17.840
that we're looking to serve,

02:20:17.840 --> 02:20:20.140
not just from residential
but in commercial as well

02:20:20.140 --> 02:20:22.780
and then you gotta tailor solutions.

02:20:22.780 --> 02:20:26.150
Partnerships are going
to be absolutely critical.

02:20:26.150 --> 02:20:27.990
You need to get into communities

02:20:27.990 --> 02:20:29.700
that haven't always been well served,

02:20:29.700 --> 02:20:31.120
and so to do that

02:20:31.120 --> 02:20:33.590
you need partners on
the ground that are trusted,

02:20:33.590 --> 02:20:35.843
and as Cisco mentioned,

02:20:35.843 --> 02:20:38.630
this is way more than
about just financing.

02:20:38.630 --> 02:20:40.290
There's all kinds of
technical assistance

02:20:40.290 --> 02:20:42.810
and programmatic
support, partner support,

02:20:42.810 --> 02:20:44.590
that's needed to do it,

02:20:44.590 --> 02:20:48.200
and last, somebody is gotta
own the deployment target

02:20:48.200 --> 02:20:51.450
and that deployment
target needs to be tight.

02:20:51.450 --> 02:20:53.700
These things don't happen on their own,

02:20:53.700 --> 02:20:56.310
and so if you don't
have an owner for this,

02:20:56.310 --> 02:21:00.300
they're gonna languish
and I'll just mention.

02:21:00.300 --> 02:21:02.240
In Connecticut through
the Connecticut agreement

02:21:02.240 --> 02:21:05.950
we've mobilized over
$480 million of investment,

02:21:05.950 --> 02:21:09.770
extrapolating to California
that would be $6.25 billion

02:21:09.770 --> 02:21:11.160
in underserved markets, right?

02:21:11.160 --> 02:21:12.470
That's pretty cool.

02:21:12.470 --> 02:21:13.490
So let's go to the next slide

02:21:13.490 --> 02:21:15.430
and let's dig into some examples.

02:21:15.430 --> 02:21:17.240
I'm gonna give one example

02:21:17.240 --> 02:21:22.240
of a low to moderate
income-targeted lease

02:21:22.290 --> 02:21:26.630
for solar and energy
efficiency for homeowners.

02:21:26.630 --> 02:21:28.970
So very specific market segment.

02:21:28.970 --> 02:21:33.300
The reason we focused here
was that in 2014 we realized

02:21:33.300 --> 02:21:36.570
that the penetration of
residential solar was lagging

02:21:36.570 --> 02:21:39.130
10X in lower income communities

02:21:39.130 --> 02:21:40.920
than it was upper income communities,

02:21:40.920 --> 02:21:42.630
and that was unacceptable.

02:21:42.630 --> 02:21:43.913
So next slide.

02:21:46.150 --> 02:21:49.220
We put a range of tools together

02:21:49.220 --> 02:21:52.300
to bring the solution into the market.

02:21:52.300 --> 02:21:53.610
For the Connecticut Green Bank,

02:21:53.610 --> 02:21:58.610
we administered a financing
RFP to find partners who had,

02:21:58.620 --> 02:22:01.280
or were willing to bring
into the market solutions.

02:22:01.280 --> 02:22:03.020
We provided subordinated debt

02:22:03.020 --> 02:22:04.760
to the tune of 15 to 20 million

02:22:04.760 --> 02:22:07.800
that attracted a capital
stack of $90 million

02:22:07.800 --> 02:22:09.920
for Connecticut projects.

02:22:09.920 --> 02:22:13.560
We provided an elevated solar incentive.

02:22:13.560 --> 02:22:16.480
We sponsored a Solar for All program

02:22:16.480 --> 02:22:18.020
and everything that comes with that,

02:22:18.020 --> 02:22:19.610
outreach support in marketing

02:22:19.610 --> 02:22:23.260
and running solarize campaign,
Solar for All campaigns,

02:22:23.260 --> 02:22:26.923
and then we had IPC really
kind of behind the scenes.

02:22:28.568 --> 02:22:31.600
We are financing that
performance-based incentive,

02:22:31.600 --> 02:22:33.920
which is important for the company

02:22:33.920 --> 02:22:37.030
who's trying to like
manage their cash flow.

02:22:37.030 --> 02:22:38.870
So you bring all these things together,

02:22:38.870 --> 02:22:40.980
and go to the next slide

02:22:40.980 --> 02:22:44.810
just speaking a little bit
about the product itself.

02:22:44.810 --> 02:22:46.850
We came to this from the perspective

02:22:46.850 --> 02:22:50.240
of we are trying to bring
solar and efficiency together

02:22:50.240 --> 02:22:52.260
in a lease product for homeowners

02:22:52.260 --> 02:22:55.700
that's going to eliminate
the affordability gap,

02:22:55.700 --> 02:22:59.340
bring that energy burden
down to where it would be

02:22:59.340 --> 02:23:01.050
if you're affluent.

02:23:01.050 --> 02:23:03.720
So really aspirational
goal and we hit it

02:23:04.580 --> 02:23:06.450
and we did it through the combination

02:23:06.450 --> 02:23:09.190
of all the things on the previous page.

02:23:09.190 --> 02:23:11.820
We've done this with an
alternative underwriting product,

02:23:11.820 --> 02:23:14.220
so no credit score required,

02:23:14.220 --> 02:23:17.570
and importantly, this product
while it's available to all,

02:23:17.570 --> 02:23:21.840
it's focused on low to
moderate income consumers,

02:23:21.840 --> 02:23:24.260
and because public dollars are at play,

02:23:24.260 --> 02:23:27.000
we get to ensure they're
good consumer protections,

02:23:27.000 --> 02:23:29.880
good quality work, all
those things that you need.

02:23:29.880 --> 02:23:30.890
Go to the next slide.

02:23:30.890 --> 02:23:32.950
I just wanna talk about impact.

02:23:32.950 --> 02:23:34.970
This has had tremendous impact.

02:23:34.970 --> 02:23:36.390
There's a lot going on in this slide.

02:23:36.390 --> 02:23:39.580
You guys you'll get them
and you can study them,

02:23:39.580 --> 02:23:41.360
but what it says on the left essentially

02:23:41.360 --> 02:23:44.010
is today we are beyond parity.

02:23:44.010 --> 02:23:47.940
We actually have greater
proportional installations

02:23:47.940 --> 02:23:51.250
of rooftop solar in lower
income census tracts

02:23:51.250 --> 02:23:53.890
than we do in higher
income census tracks,

02:23:53.890 --> 02:23:57.060
and then we also studied
communities of color,

02:23:57.060 --> 02:24:00.840
and again, greater
proportional penetration

02:24:00.840 --> 02:24:05.213
than in White communities.

02:24:06.170 --> 02:24:07.670
Again, this is only for homeowners

02:24:07.670 --> 02:24:10.310
and understanding you need
different solutions for renters,

02:24:10.310 --> 02:24:11.380
but I just wanna point out.

02:24:11.380 --> 02:24:14.640
If you focus on it, you can have impact,

02:24:14.640 --> 02:24:16.580
which is really exciting.

02:24:16.580 --> 02:24:19.150
Next slide, I'm gonna talk
about another category,

02:24:19.150 --> 02:24:21.530
affordable multifamily housing.

02:24:21.530 --> 02:24:25.010
Really challenging market segment,

02:24:25.010 --> 02:24:28.410
and here, this is all
about the ecosystem.

02:24:28.410 --> 02:24:31.960
We went to school on the
housing finance ecosystem,

02:24:31.960 --> 02:24:33.210
who the players are,

02:24:33.210 --> 02:24:35.740
and we tried to come up with a roadmap

02:24:35.740 --> 02:24:39.080
that really focused on where
the gaps were in the market

02:24:39.080 --> 02:24:41.530
and there are a couple
of products were needed

02:24:41.530 --> 02:24:44.630
and a lot of capacity
and technical assistance.

02:24:44.630 --> 02:24:47.350
We've partnered with our
State Housing Finance Authority,

02:24:47.350 --> 02:24:49.830
our Department of Housing, CDFIs,

02:24:49.830 --> 02:24:53.360
the nonprofit trade
association, our utilities.

02:24:53.360 --> 02:24:55.500
I should have put them in here as well,

02:24:55.500 --> 02:24:58.450
and again, while these programs
are open to all multifamily,

02:24:58.450 --> 02:25:01.030
we've focused our time and attention

02:25:01.030 --> 02:25:02.750
on the social justice mission

02:25:02.750 --> 02:25:06.140
of the low to moderate
income components here.

02:25:06.140 --> 02:25:08.130
A lot of different tools.

02:25:08.130 --> 02:25:10.040
Pre-development, brought to the market

02:25:10.040 --> 02:25:13.090
through foundation
PRI and a CDFI partner

02:25:13.090 --> 02:25:14.980
for below market loans.

02:25:14.980 --> 02:25:16.690
One of the missing
products in the market

02:25:16.690 --> 02:25:20.310
was a lightly secured
loan, quasi unsecured.

02:25:20.310 --> 02:25:21.910
In partnership with a CDFIs

02:25:21.910 --> 02:25:25.570
we provided them with a loan
loss reserve and low cost debt.

02:25:25.570 --> 02:25:26.710
CPACE is in the market.

02:25:26.710 --> 02:25:29.010
It's got specific applicability

02:25:29.010 --> 02:25:31.440
and so there was an
aggregation play there.

02:25:31.440 --> 02:25:33.410
So solar power purchase agreements

02:25:33.410 --> 02:25:35.710
for those nonprofits
and housing authorities

02:25:35.710 --> 02:25:38.360
were providing the
solar ownership platform

02:25:38.360 --> 02:25:39.840
and the debt, and the aggregation,

02:25:39.840 --> 02:25:42.630
and tax equity should
have been on here as well.

02:25:42.630 --> 02:25:44.710
Health and Safety, huge issue,

02:25:44.710 --> 02:25:46.840
these barriers and
multifamily properties

02:25:46.840 --> 02:25:49.410
that are old and
disinvested for decades.

02:25:49.410 --> 02:25:51.080
So state gave us dollars

02:25:51.080 --> 02:25:53.760
to provide a below market
rate loan to address those

02:25:53.760 --> 02:25:55.890
so that energy could happen,

02:25:55.890 --> 02:26:00.310
and then a range of
programmatic and technical support.

02:26:00.310 --> 02:26:05.310
Bench marketing, capacity
building, housing consultants.

02:26:05.550 --> 02:26:09.890
The UHAB focuses on co-ops and condos.

02:26:09.890 --> 02:26:13.410
Trainings, we manage
a peer-to-peer network

02:26:13.410 --> 02:26:15.680
of leading industry practitioners

02:26:15.680 --> 02:26:19.140
that are focused on for
instance, passive house.

02:26:19.140 --> 02:26:22.070
We have solarize campaigns
with our housing authority.

02:26:22.070 --> 02:26:26.180
So go to the next
slide, and as of today,

02:26:26.180 --> 02:26:27.620
oh, a couple of case studies.

02:26:27.620 --> 02:26:29.100
I'm not gonna spend a lot of time here.

02:26:29.100 --> 02:26:32.100
On that lightly secured loan,

02:26:32.100 --> 02:26:35.860
we pay for the debt service
out of the energy savings

02:26:35.860 --> 02:26:37.610
and in some of these
properties you can get,

02:26:37.610 --> 02:26:39.740
for instance, a whole new
roof out of the energy savings

02:26:39.740 --> 02:26:42.470
and financing that too, really exciting.

02:26:42.470 --> 02:26:45.850
Next slide, there might be
another case study there.

02:26:45.850 --> 02:26:47.540
No, okay, impact, great.

02:26:47.540 --> 02:26:51.090
So the impact today in
Connecticut, 100 projects.

02:26:51.090 --> 02:26:52.780
Again, these are multifamily properties.

02:26:52.780 --> 02:26:55.240
We've touched about 7.5%

02:26:55.240 --> 02:26:58.610
of the low to moderate
income multifamily housing units

02:26:58.610 --> 02:26:59.550
in the state.

02:26:59.550 --> 02:27:01.830
So scale that up to California,

02:27:01.830 --> 02:27:05.920
that 45, $46 million of
energy improvements

02:27:05.920 --> 02:27:09.000
would be about 600
million in California.

02:27:09.000 --> 02:27:10.300
On the total investment,

02:27:10.300 --> 02:27:12.300
because remember, a
lot of these are having

02:27:12.300 --> 02:27:13.650
other housing work done

02:27:13.650 --> 02:27:16.320
that's paid for through housing dollars,

02:27:16.320 --> 02:27:18.640
that would be the
equivalent of like $4 billion

02:27:18.640 --> 02:27:22.730
in housing improvements
going on in California.

02:27:22.730 --> 02:27:23.563
Next slide.

02:27:24.640 --> 02:27:25.760
I'm just gonna run through

02:27:25.760 --> 02:27:28.410
a couple of like, what
else could you do?

02:27:28.410 --> 02:27:32.240
If you had this full
panoply of tools or legos

02:27:32.240 --> 02:27:34.840
in your toolbox what could you do?

02:27:34.840 --> 02:27:36.833
Love the Pay As You Save program.

02:27:37.760 --> 02:27:39.520
Holmes you know a lot about this.

02:27:39.520 --> 02:27:41.550
So from a financing perspective,

02:27:41.550 --> 02:27:42.970
a loan loss reserve,

02:27:42.970 --> 02:27:46.130
and either subordinated
debt or co-investment

02:27:46.130 --> 02:27:48.990
if utilities need a third
party capital source

02:27:48.990 --> 02:27:51.863
to be able to attract
other private capital.

02:27:52.790 --> 02:27:54.990
Loan loss reserves to
mobilize local lenders

02:27:54.990 --> 02:27:57.323
to offer a standardized product,

02:27:58.250 --> 02:28:00.550
loan product to homeowners.

02:28:00.550 --> 02:28:02.120
I know you guys have the REEL program,

02:28:02.120 --> 02:28:04.240
I just wanna give you
some stats on scale.

02:28:04.240 --> 02:28:05.850
Connecticut, Michigan, Colorado,

02:28:05.850 --> 02:28:08.780
statewide program, 16 lenders.

02:28:08.780 --> 02:28:12.410
We've done over $250
million, 23,000 loans,

02:28:12.410 --> 02:28:15.530
over 1,000 contractors
are participating.

02:28:15.530 --> 02:28:17.830
In Michigan, over half
of these are happening

02:28:17.830 --> 02:28:19.930
in LMI census tracks.

02:28:19.930 --> 02:28:22.300
Connecticut goes down to 580.

02:28:22.300 --> 02:28:25.110
Michigan comes down
to 600 in the credit score.

02:28:25.110 --> 02:28:26.460
California is a bigger market

02:28:26.460 --> 02:28:27.820
than all three of those combined.

02:28:27.820 --> 02:28:31.350
So I think something like
REEL could be vastly scaled up.

02:28:31.350 --> 02:28:33.543
Next slide, couple more examples.

02:28:34.760 --> 02:28:36.760
Partnering with housing developers

02:28:36.760 --> 02:28:38.940
is a really cool opportunity.

02:28:38.940 --> 02:28:41.500
So you could help portfolio owners

02:28:41.500 --> 02:28:43.170
greening up their portfolio.

02:28:43.170 --> 02:28:44.880
You could take a
standardized loan product

02:28:44.880 --> 02:28:47.500
and kind of tailor it
to their specific needs,

02:28:47.500 --> 02:28:51.560
and that gives you
access to a whole footprint

02:28:51.560 --> 02:28:55.840
of deploying capital and
greening up multifamily housing.

02:28:55.840 --> 02:28:57.710
The virtual power plant model.

02:28:57.710 --> 02:29:00.160
Cisco touched on that, so cool,

02:29:00.160 --> 02:29:02.330
and so here you could be providing

02:29:02.330 --> 02:29:04.480
subordinate debt or co-investment

02:29:04.480 --> 02:29:08.240
specifically for those LMI communities

02:29:08.240 --> 02:29:10.650
or credit-challenged credit,

02:29:10.650 --> 02:29:12.750
again, to attract in other capital

02:29:12.750 --> 02:29:14.600
that maybe a little skittish on that.

02:29:15.550 --> 02:29:18.710
For your big efficiency
and solar financiers,

02:29:18.710 --> 02:29:19.950
their Wall Street capital

02:29:19.950 --> 02:29:21.960
doesn't like credit-challenged borrowers

02:29:21.960 --> 02:29:24.300
and these guys are having
to turn away good projects

02:29:24.300 --> 02:29:26.280
that they know will save folks money.

02:29:26.280 --> 02:29:29.850
So you could help credit enhance again,

02:29:29.850 --> 02:29:33.100
lost reserves, or subordinate
debt, or co-investment,

02:29:33.100 --> 02:29:37.130
to get at that alternative underwriting.

02:29:37.130 --> 02:29:38.003
Next slide.

02:29:40.660 --> 02:29:43.830
There are some proof of
concept models that you could use.

02:29:43.830 --> 02:29:45.980
IPC has done this with BlocPower,

02:29:45.980 --> 02:29:47.890
who's focused on a lease,

02:29:47.890 --> 02:29:51.030
a heat pump lease in
underserved markets,

02:29:51.030 --> 02:29:52.910
and so we're basically the first money

02:29:52.910 --> 02:29:56.600
in their credit facility,
and then as they scale,

02:29:56.600 --> 02:29:58.570
big money like Goldman
Sachs kind of money

02:29:58.570 --> 02:29:59.460
can come in, right?

02:29:59.460 --> 02:30:03.190
So that's another way to think
about getting a model going.

02:30:03.190 --> 02:30:04.360
Being that first money in

02:30:04.360 --> 02:30:06.940
that then will attract other money,

02:30:06.940 --> 02:30:08.820
and then don't forget
about your friction points

02:30:08.820 --> 02:30:09.653
in the market.

02:30:09.653 --> 02:30:11.020
This is just like making sure

02:30:11.020 --> 02:30:12.750
the trains are running on time,

02:30:12.750 --> 02:30:14.680
especially coming out of COVID time

02:30:14.680 --> 02:30:16.770
and getting your
contractors back to work.

02:30:16.770 --> 02:30:20.530
Smaller contractors really
struggle with working capital.

02:30:20.530 --> 02:30:22.470
So provide bridge financing

02:30:22.470 --> 02:30:24.730
to bridge that period of getting paid

02:30:24.730 --> 02:30:26.390
from the utility, or out of the RECs,

02:30:26.390 --> 02:30:28.150
or what have you on incentives.

02:30:28.150 --> 02:30:29.010
This is a really big one,

02:30:29.010 --> 02:30:32.170
especially for small
and minority contractors.

02:30:32.170 --> 02:30:34.393
Last slide, I think
this is the last slide.

02:30:35.900 --> 02:30:38.250
Oh, no, okay, this one we can skip over.

02:30:38.250 --> 02:30:40.930
Keep keep going, but
there's all kinds of ways

02:30:40.930 --> 02:30:45.930
you might work with your
housing and your Medicaid dollars

02:30:46.140 --> 02:30:48.940
to unlock dollars from the Medicaid side

02:30:48.940 --> 02:30:51.850
to come into housing and energy

02:30:51.850 --> 02:30:54.690
and address those
health and safety issues.

02:30:54.690 --> 02:30:57.370
So wrapping up ingredients for success.

02:30:57.370 --> 02:31:00.220
Partnerships are absolutely critical.

02:31:00.220 --> 02:31:03.840
Think about how to fill the
gaps in a data-driven way.

02:31:03.840 --> 02:31:06.840
Understanding what
the energy burdens are.

02:31:06.840 --> 02:31:09.950
What sort of product
do you wanna put out?

02:31:09.950 --> 02:31:12.370
And targeted outreach is critical,

02:31:12.370 --> 02:31:16.210
and often, we've seen the
product itself wasn't the problem.

02:31:16.210 --> 02:31:17.260
It was our execution,

02:31:17.260 --> 02:31:19.180
we weren't focusing on the right market.

02:31:19.180 --> 02:31:22.953
So let's focus on contractors
serving our target markets,

02:31:24.080 --> 02:31:25.380
and consumer protections.

02:31:25.380 --> 02:31:27.100
Remember, if the
public dollars are at play,

02:31:27.100 --> 02:31:29.483
you can get the consumer
protection you want,

02:31:30.326 --> 02:31:32.830
and to repeat, no one size fits all.

02:31:32.830 --> 02:31:34.550
You're gonna need a range of approaches,

02:31:34.550 --> 02:31:36.560
you gotta have a long horizon,

02:31:36.560 --> 02:31:39.950
think about how to sequence
out your product roadmap,

02:31:39.950 --> 02:31:42.590
and aim high on your goals.

02:31:42.590 --> 02:31:46.270
Make sure someone
owns the targets, that's it.

02:31:46.270 --> 02:31:48.133
Rory, you can skip through the rest.

02:31:51.580 --> 02:31:52.413
Thanks, Dan.

02:31:53.380 --> 02:31:54.213
<v ->Thank you, Kerry.</v>

02:31:54.213 --> 02:31:56.600
Wow, that was-- &lt;v
-&gt;That was a whirlwind.</v>

02:31:56.600 --> 02:31:59.630
<v ->Intense overview, a
lot of content in there.</v>

02:31:59.630 --> 02:32:02.020
I need your slides myself to dig in,

02:32:02.020 --> 02:32:04.730
but let me put one one to you
based on what you just shared

02:32:04.730 --> 02:32:08.270
and then I'll do a few
questions for the full panel,

02:32:08.270 --> 02:32:10.340
but when you think about this,

02:32:10.340 --> 02:32:11.900
the different states
you're operating in,

02:32:11.900 --> 02:32:14.810
and the role of those
regulatory environment,

02:32:14.810 --> 02:32:17.380
the equivalents of the PUCs out there

02:32:17.380 --> 02:32:19.880
that touch the market
you're trying to address,

02:32:19.880 --> 02:32:21.720
is there anything
that stands out for you

02:32:21.720 --> 02:32:24.930
as kind of an obvious
or binary type choice,

02:32:24.930 --> 02:32:26.620
like Commissions that do this,

02:32:26.620 --> 02:32:28.630
make the kind of work you're pursuing,

02:32:28.630 --> 02:32:29.920
more feasible, more effective,

02:32:29.920 --> 02:32:32.070
or Commissions that do something else

02:32:32.070 --> 02:32:33.840
just sort of stalls all progress?

02:32:33.840 --> 02:32:35.110
What's sort of high level guidance

02:32:35.110 --> 02:32:37.350
you would put to the
regulatory community

02:32:37.350 --> 02:32:38.630
that enables your innovation?

02:32:38.630 --> 02:32:40.690
<v ->Yeah, so I think
about it this way.</v>

02:32:40.690 --> 02:32:43.330
I think about it as setting the table.

02:32:43.330 --> 02:32:46.080
So that strategies like,

02:32:46.080 --> 02:32:47.870
Cisco talked about,
or I'm talking about,

02:32:47.870 --> 02:32:50.170
or the challenges that
Carmelita talked about

02:32:50.170 --> 02:32:51.003
can be addressed.

02:32:51.003 --> 02:32:54.330
So it's about setting the
table in the policy framework

02:32:54.330 --> 02:32:58.343
and thinking about stacking policies.

02:33:00.410 --> 02:33:01.730
You've got incentives,

02:33:01.730 --> 02:33:04.050
you've got leveraged finance tools,

02:33:04.050 --> 02:33:05.880
loss reserves, credit enhancements,

02:33:05.880 --> 02:33:08.070
you've got on-bill,
you've got direct bill,

02:33:08.070 --> 02:33:11.080
but you've got to
enable a range of things

02:33:11.080 --> 02:33:14.650
so that the creative building
blocks can be put together

02:33:14.650 --> 02:33:16.640
to put the right solution in place

02:33:16.640 --> 02:33:18.890
for the right market segment.

02:33:18.890 --> 02:33:21.050
I almost wanna answer
it the opposite way.

02:33:21.050 --> 02:33:23.420
What we see which is unhelpful

02:33:23.420 --> 02:33:27.540
is Commission saying, I'm just
gonna watch this one program.

02:33:27.540 --> 02:33:28.870
Pick up any program you want.

02:33:28.870 --> 02:33:30.920
This one on-bill finance program.

02:33:30.920 --> 02:33:33.360
That's it, we're done
raising homeowners,

02:33:33.360 --> 02:33:36.890
everybody 100% solved, no
problem, like go on to the next.

02:33:36.890 --> 02:33:38.387
Let's go on to commercial next.

02:33:38.387 --> 02:33:40.340
No, no, no, no.

02:33:40.340 --> 02:33:42.650
Lots of different
behaviors and motivations

02:33:42.650 --> 02:33:44.700
amongst all our market segments,

02:33:44.700 --> 02:33:46.420
all sectors of society.

02:33:46.420 --> 02:33:49.593
So the one and done
silver bullet thinking,

02:33:50.510 --> 02:33:52.030
that to me is the biggest challenge.

02:33:52.030 --> 02:33:55.713
Set the table and allow a lot
of different things to happen.

02:33:56.590 --> 02:33:57.810
I think the other thing is,

02:33:57.810 --> 02:34:00.150
maybe the other thing
is like not aiming high

02:34:00.150 --> 02:34:02.170
on what success looks like.

02:34:02.170 --> 02:34:03.310
Cisco talked about this,

02:34:03.310 --> 02:34:05.380
a pilot program and not select success.

02:34:05.380 --> 02:34:10.350
No, like, quantify, if
you've got, I don't know.

02:34:10.350 --> 02:34:12.820
In this country, if we've got what?

02:34:12.820 --> 02:34:14.980
100 million LMI homes,

02:34:14.980 --> 02:34:18.340
like that's successes we've
done 100 million homes,

02:34:18.340 --> 02:34:19.880
whatever that number is in California.

02:34:19.880 --> 02:34:21.450
Successes we've gotten to all of them,

02:34:21.450 --> 02:34:24.333
not we ran a pilot and got
$10 million in the market.

02:34:26.450 --> 02:34:28.960
<v ->Yeah, death by pilot
is a real phenomenon</v>

02:34:28.960 --> 02:34:30.640
in the clean energy business.

02:34:30.640 --> 02:34:31.770
Thank you for that.

02:34:31.770 --> 02:34:33.690
Okay, let me put a few
questions to the full panel,

02:34:33.690 --> 02:34:37.390
but I think we may have
unfortunately lost Carmelita Miller,

02:34:37.390 --> 02:34:39.450
is that correct?

02:34:39.450 --> 02:34:42.050
I'm not seeing her in our
participants list anymore.

02:34:44.960 --> 02:34:46.610
Maybe I'll just pleasantly
surprise otherwise,

02:34:46.610 --> 02:34:48.450
but I actually wanted to build

02:34:48.450 --> 02:34:50.260
from that last question to Kerry

02:34:50.260 --> 02:34:52.850
about since this is a PUC proceeding,

02:34:52.850 --> 02:34:54.500
it has ambitions in the marketplace,

02:34:54.500 --> 02:34:56.170
it has partnerships
with other state entities,

02:34:56.170 --> 02:34:59.380
it's got great kind of
industry partnerships as well,

02:34:59.380 --> 02:35:01.220
but starting with the core things

02:35:01.220 --> 02:35:03.410
that the Commission can consider doing

02:35:03.410 --> 02:35:04.773
to advance this agenda.

02:35:05.760 --> 02:35:07.890
I've got a couple of
questions in this category

02:35:07.890 --> 02:35:09.540
for the two or maybe three of you.

02:35:09.540 --> 02:35:11.760
When you think about policy design,

02:35:11.760 --> 02:35:15.520
what are the key elements
that enable success in the market

02:35:15.520 --> 02:35:16.740
that you're trying to address

02:35:16.740 --> 02:35:20.580
with creative finance for
behind the meter solutions?

02:35:20.580 --> 02:35:22.620
A couple of things that
have come up so far already

02:35:22.620 --> 02:35:24.640
have been split incentives problem,

02:35:24.640 --> 02:35:25.950
that's perennial and efficiency.

02:35:25.950 --> 02:35:27.460
It's frustrating that
we still wrestle with it,

02:35:27.460 --> 02:35:29.480
but we do need to face up to it.

02:35:29.480 --> 02:35:30.490
Another would be,

02:35:30.490 --> 02:35:33.240
Cisco, was you touched on
the structure and dynamics

02:35:33.240 --> 02:35:34.950
of real time market pricing

02:35:34.950 --> 02:35:37.520
and how we connect what's
really happening on the grid

02:35:37.520 --> 02:35:39.220
all the way through to customers

02:35:39.220 --> 02:35:40.930
and in the financial
incentives they face,

02:35:40.930 --> 02:35:42.010
but the core question

02:35:42.010 --> 02:35:45.520
of what about policy
design that enables capital

02:35:45.520 --> 02:35:47.410
as opposed to directly providing capital

02:35:47.410 --> 02:35:48.710
from the policy community?

02:35:52.910 --> 02:35:53.760
Whoever wants to go first.

02:35:53.760 --> 02:35:54.870
Maybe I'll pick on Cisco

02:35:54.870 --> 02:35:57.513
since he's kind of spoken in a while.

02:36:00.400 --> 02:36:02.810
<v ->I mean, I think you've
hit on a couple of things.</v>

02:36:02.810 --> 02:36:04.690
I mean, I generally think

02:36:04.690 --> 02:36:08.363
that from a policy of PUC perspective,

02:36:10.240 --> 02:36:13.570
we haven't solved a challenge.

02:36:13.570 --> 02:36:14.437
You mentioned a couple of things,

02:36:14.437 --> 02:36:17.740
but I wanna reiterate
what I said earlier,

02:36:17.740 --> 02:36:20.500
which is we haven't
solved a particular problem

02:36:20.500 --> 02:36:22.010
around the projects themselves,

02:36:22.010 --> 02:36:25.560
particularly when we're
dealing with a home,

02:36:25.560 --> 02:36:27.070
folks who live in homes,

02:36:27.070 --> 02:36:28.730
and maybe they're not as sophisticated,

02:36:28.730 --> 02:36:33.600
or they're financially are not
as sophisticated technically,

02:36:33.600 --> 02:36:34.550
and I wanna go back.

02:36:34.550 --> 02:36:36.350
Actually, when I was
in the city of Berkeley

02:36:36.350 --> 02:36:38.770
and I was trying to solve the problem,

02:36:38.770 --> 02:36:39.916
how do we get people

02:36:39.916 --> 02:36:42.600
and anybody who
wants or could use solar,

02:36:42.600 --> 02:36:44.210
or an inefficiency project in their home

02:36:44.210 --> 02:36:46.060
to be able to have one?

02:36:46.060 --> 02:36:49.870
And obviously, finance just
as now was a huge issue.

02:36:49.870 --> 02:36:51.620
Where is the money gonna come from?

02:36:52.740 --> 02:36:54.550
And as we started to design

02:36:54.550 --> 02:36:56.640
the very first Berkeley PACE program,

02:36:56.640 --> 02:36:58.390
is before he even called it PACE.

02:36:58.390 --> 02:37:01.193
He called it this SEFD
program and you can tell

02:37:01.193 --> 02:37:03.800
it's been too long in
government at that point.

02:37:03.800 --> 02:37:05.893
Sustainable Energy Financing District.

02:37:07.960 --> 02:37:11.710
We were like, okay, well,
solar, the CEC has rules

02:37:11.710 --> 02:37:14.160
about which solar panels
and inverters are accepted.

02:37:14.160 --> 02:37:16.620
There is interconnection
requirements from the utilities.

02:37:16.620 --> 02:37:17.940
It might be messy,

02:37:17.940 --> 02:37:19.960
but at least it exists as a set of rules

02:37:19.960 --> 02:37:21.030
and people are operating in it.

02:37:21.030 --> 02:37:24.070
So I can just say, okay,
our program will require

02:37:24.070 --> 02:37:28.150
that you, contractor, and you, consumer,

02:37:28.150 --> 02:37:30.680
must follow the same
rules for a solar project

02:37:30.680 --> 02:37:31.783
like anyone else does,

02:37:32.690 --> 02:37:35.440
and as I say, you can
hang your hat on that, right?

02:37:35.440 --> 02:37:36.850
You can say, as a finance entity,

02:37:36.850 --> 02:37:38.210
as a city, as a government,

02:37:38.210 --> 02:37:42.220
you can say, okay, there's
a set of statewide rules

02:37:42.220 --> 02:37:44.190
that govern this and
we're going to require

02:37:44.190 --> 02:37:46.150
that everybody follow those rules,

02:37:46.150 --> 02:37:47.070
and that really helps

02:37:47.070 --> 02:37:49.853
'cause it's not that every
solar project is perfect,

02:37:50.890 --> 02:37:52.652
it is however, that
there is a set of rules

02:37:52.652 --> 02:37:54.510
that are bigger and
broader for the industry

02:37:54.510 --> 02:37:56.240
that we can follow.

02:37:56.240 --> 02:37:57.422
Now, at the time,

02:37:57.422 --> 02:38:00.340
I was like, well, we
have to do efficiency too

02:38:00.340 --> 02:38:02.270
and we couldn't figure out how to do it

02:38:02.270 --> 02:38:03.660
because there was no standard.

02:38:03.660 --> 02:38:06.380
Now things have improved
some, but not nearly enough.

02:38:06.380 --> 02:38:09.700
One of my proudest moments
was Art Rosenfeld called me

02:38:09.700 --> 02:38:11.510
and gave me the what for

02:38:11.510 --> 02:38:14.760
because that first PACE
program is just for solar.

02:38:14.760 --> 02:38:17.800
That very first program
partly we did was just for solar,

02:38:17.800 --> 02:38:19.767
and he said, "How could you possibly,

02:38:19.767 --> 02:38:21.207
"everything you know we've talked

02:38:21.207 --> 02:38:24.597
"Cisco you've just disappointed
me so totally and utterly

02:38:24.597 --> 02:38:25.970
"that you're not doing efficiency."

02:38:25.970 --> 02:38:30.120
And my answer was what
is an efficiency project?

02:38:30.120 --> 02:38:31.530
Like, we can talk about it,

02:38:31.530 --> 02:38:33.450
but there's no
standard, there's no rule,

02:38:33.450 --> 02:38:34.340
there's no thing that says

02:38:34.340 --> 02:38:36.240
this is a good project and this isn't,

02:38:37.383 --> 02:38:40.150
and we struggled with that
all the way through PACE.

02:38:40.150 --> 02:38:41.970
We struggled with that
through a lot of things,

02:38:41.970 --> 02:38:43.770
and so what I think happens now

02:38:43.770 --> 02:38:46.200
is from a regulatory perspective

02:38:46.200 --> 02:38:48.290
defining that in a simple,
straightforward way

02:38:48.290 --> 02:38:49.123
for the industry

02:38:49.123 --> 02:38:52.280
so that we can say, yes,
we're gonna do, to Kerry's point.

02:38:52.280 --> 02:38:56.300
We're gonna do 10 million projects

02:38:56.300 --> 02:38:57.980
and we know that this is the floor,

02:38:57.980 --> 02:38:59.310
they can't be underneath,

02:38:59.310 --> 02:39:00.750
and it's simple and straightforward,

02:39:00.750 --> 02:39:02.520
but we know we've defined success.

02:39:02.520 --> 02:39:05.050
It's not perfect, but it is success.

02:39:05.050 --> 02:39:06.200
We've never done that,

02:39:06.200 --> 02:39:08.330
we've never been able
to do that for efficiency.

02:39:08.330 --> 02:39:10.590
So I've provided a couple
of ways of looking at,

02:39:10.590 --> 02:39:12.500
but I do think that's really critical.

02:39:12.500 --> 02:39:14.840
The thing from a finance
perspective at scale

02:39:14.840 --> 02:39:16.860
is a finance entity

02:39:16.860 --> 02:39:19.410
like back putting my
finance company hat on

02:39:19.410 --> 02:39:21.070
is we looked for that.

02:39:21.070 --> 02:39:21.967
That's what wrecked me

02:39:21.967 --> 02:39:23.930
and well, I couldn't do it in Berkeley

02:39:23.930 --> 02:39:25.520
and it's why we struggled with PACE

02:39:25.520 --> 02:39:26.920
all the way through the years.

02:39:26.920 --> 02:39:30.630
So I'd love for that to
be a real focus of effort

02:39:30.630 --> 02:39:33.010
because I think it will clear up

02:39:33.010 --> 02:39:34.630
the ability to deliver capital

02:39:34.630 --> 02:39:36.680
and will give people
a lot of confidence.

02:39:38.450 --> 02:39:41.080
When we look at the data,
we look at energy there,

02:39:41.080 --> 02:39:43.220
the smart meters have now
created a real opportunity

02:39:43.220 --> 02:39:45.460
we did not have 12, 15 years ago.

02:39:45.460 --> 02:39:49.120
We know what actually happens
in the house with that energy

02:39:49.120 --> 02:39:51.000
and that data has value.

02:39:51.000 --> 02:39:53.410
So we can use that to define success.

02:39:53.410 --> 02:39:56.600
We can use that to put
financial incentives in place

02:39:56.600 --> 02:39:57.930
in a way we didn't have before,

02:39:57.930 --> 02:40:01.580
but we need some standards
as to what success looks like

02:40:01.580 --> 02:40:04.110
if we're gonna use
the data as the arbiter.

02:40:04.110 --> 02:40:07.520
So all of that requires
somebody somewhere to say,

02:40:07.520 --> 02:40:11.250
this is an acceptable
project, go for it,

02:40:11.250 --> 02:40:12.390
and until we have that,

02:40:12.390 --> 02:40:13.820
I think we're really gonna struggle

02:40:13.820 --> 02:40:16.243
with both consumer protection and scale.

02:40:17.420 --> 02:40:21.660
<v ->I think about it as like
organizing the market.</v>

02:40:21.660 --> 02:40:22.820
I think that's what
you're talking about,

02:40:22.820 --> 02:40:24.580
the rules of engagement, right Cisco?

02:40:24.580 --> 02:40:26.730
For organizing the market

02:40:26.730 --> 02:40:29.610
and one of the things
that we've realized

02:40:29.610 --> 02:40:31.110
now that we work across the country

02:40:31.110 --> 02:40:33.650
is how fortunate we were in Connecticut

02:40:33.650 --> 02:40:38.620
to have a Green Bank that's
part of the policy framework,

02:40:38.620 --> 02:40:41.810
with our PUC, with our
Department of Energy Office,

02:40:41.810 --> 02:40:44.640
or in our short energy
environmental folks

02:40:44.640 --> 02:40:47.830
with the Department of
Consumer Protection at the table

02:40:47.830 --> 02:40:51.460
with us meeting quarterly
on contractor issues,

02:40:51.460 --> 02:40:53.510
and then the Medicaid like bring it

02:40:53.510 --> 02:40:54.630
and then Department of Housing

02:40:54.630 --> 02:40:58.270
like bringing people
together and working with it.

02:40:58.270 --> 02:41:02.240
So finances working within
a broader policy framework

02:41:02.240 --> 02:41:06.100
and then intervening
in dockets as necessary

02:41:06.100 --> 02:41:08.277
because you have to go
through that process with the PUC

02:41:08.277 --> 02:41:10.520
informing the legislation,

02:41:10.520 --> 02:41:13.430
and California is like
the Wild West man.

02:41:13.430 --> 02:41:15.450
You guys are super complicated,

02:41:15.450 --> 02:41:18.980
like, whoa, my head is
exploding thinking about it,

02:41:18.980 --> 02:41:20.710
and we often get that,

02:41:20.710 --> 02:41:22.323
like why are you doing
more in California?

02:41:22.323 --> 02:41:24.330
It's like tell me where to start man.

02:41:24.330 --> 02:41:26.260
Like come out, I'd love to,

02:41:26.260 --> 02:41:28.770
but it's so complicated

02:41:28.770 --> 02:41:31.200
and we need a partner on the ground,

02:41:31.200 --> 02:41:33.600
who wants what we can bring

02:41:33.600 --> 02:41:35.650
and in the absence
of an organized market

02:41:36.970 --> 02:41:38.920
we can go where it's easier to operate.

02:41:40.100 --> 02:41:41.750
<v ->Yep, well, I can tell you</v>

02:41:41.750 --> 02:41:43.200
that Kerry it makes perfect sense

02:41:43.200 --> 02:41:44.710
when you're inside
California government.

02:41:44.710 --> 02:41:46.600
<v ->That's great.</v>

02:41:46.600 --> 02:41:48.000
<v ->We got it all figured out.</v>

02:41:50.410 --> 02:41:52.930
Another category of things
that need to be influenced

02:41:52.930 --> 02:41:55.440
that arguably the PUC
has the ability to influence

02:41:55.440 --> 02:41:57.960
is the capital itself, organizing money,

02:41:57.960 --> 02:42:01.380
either from rates, or
incentives to utilities to invest,

02:42:01.380 --> 02:42:02.840
or working within the state context

02:42:02.840 --> 02:42:05.410
to find pools of capital to put to work.

02:42:05.410 --> 02:42:06.510
If we were to consider that,

02:42:06.510 --> 02:42:08.310
or there was an opportunity to do that,

02:42:08.310 --> 02:42:10.670
what would be the highest
leverage point of intervention

02:42:10.670 --> 02:42:12.380
as it specifically relates to money?

02:42:12.380 --> 02:42:14.800
Well, Kerry you hit on the end there

02:42:14.800 --> 02:42:16.900
the sort of broad category
of pre-development,

02:42:16.900 --> 02:42:18.310
if you're financing incentives upfront

02:42:18.310 --> 02:42:19.970
so people can get things done.

02:42:19.970 --> 02:42:20.858
<v ->I read the--</v>

02:42:20.858 --> 02:42:21.740
<v ->It's actually across the board.</v>

02:42:21.740 --> 02:42:23.250
<v ->I read this to one thing.</v>

02:42:23.250 --> 02:42:24.633
It's the tool set.

02:42:25.986 --> 02:42:28.830
You know having the
ability to have a tool set.

02:42:28.830 --> 02:42:30.920
In some cases, you wanna credit enhance,

02:42:30.920 --> 02:42:33.130
in some cases, you wanna
put capital out the door

02:42:33.130 --> 02:42:36.193
and a co-investment, or a
subordinate debt investment.

02:42:37.954 --> 02:42:41.010
I resist that, like if you
just had this one tool

02:42:41.010 --> 02:42:42.340
that's what you would do,

02:42:42.340 --> 02:42:45.060
unless you're talking about a
very specific market segment

02:42:45.060 --> 02:42:46.540
and you've analyzed that market segment

02:42:46.540 --> 02:42:49.030
and you know that tool
is gonna address 100%

02:42:49.030 --> 02:42:50.414
of that market segment.

02:42:50.414 --> 02:42:53.255
<v ->Yeah, okay.</v>

02:42:53.255 --> 02:42:54.450
So I wanna hear from you too Cisco.

02:42:54.450 --> 02:42:58.970
So maybe it's a
capitalized flexible vehicle,

02:42:58.970 --> 02:43:01.440
green back if you like,
that can take that money

02:43:01.440 --> 02:43:02.850
and use it in a range of different ways

02:43:02.850 --> 02:43:05.800
based on markets that are
needed from a policy perspective.

02:43:06.948 --> 02:43:09.160
<v ->I mean, I think that
absolutely can be the case,</v>

02:43:09.160 --> 02:43:10.500
although you could create a green bank

02:43:10.500 --> 02:43:12.270
kind of methodology or approach

02:43:12.270 --> 02:43:15.910
and still come up against
exactly the challenges

02:43:15.910 --> 02:43:17.710
in California that
Kerry just talked about,

02:43:17.710 --> 02:43:21.100
which is you can have
a great intention there

02:43:21.100 --> 02:43:25.580
until we make certain
definitional approach changes.

02:43:25.580 --> 02:43:29.263
Kerry is right in the
sense that it is a toolbox.

02:43:31.070 --> 02:43:33.510
I would attack that
question slightly differently.

02:43:33.510 --> 02:43:35.760
I'd say what problem
are you trying to solve?

02:43:36.720 --> 02:43:38.420
What problem are we trying to solve?

02:43:38.420 --> 02:43:42.620
And then what's out
there that is close to that.

02:43:42.620 --> 02:43:43.540
So for example,

02:43:43.540 --> 02:43:47.980
if you want more people
to get unsecured loans

02:43:47.980 --> 02:43:49.890
and you wanna make
those cheaper and easier

02:43:49.890 --> 02:43:54.003
and more democratized
to folks in the community,

02:43:55.070 --> 02:43:56.930
there are unsecured loans

02:43:56.930 --> 02:44:00.160
that are happening at
scale in a variety of ways.

02:44:00.160 --> 02:44:02.380
You can look at
California firms like Mosaic

02:44:02.380 --> 02:44:03.390
or others who are doing it.

02:44:03.390 --> 02:44:06.510
You can look at smaller
credit union programs.

02:44:06.510 --> 02:44:08.490
Then the question is okay,

02:44:08.490 --> 02:44:11.030
how do I get those that exists?

02:44:11.030 --> 02:44:13.100
There's already billions
of dollars flowing there.

02:44:13.100 --> 02:44:17.440
How do I get that to shift
down the credit spectrum?

02:44:17.440 --> 02:44:18.273
What is required?

02:44:18.273 --> 02:44:19.770
And you're talking to folks.

02:44:19.770 --> 02:44:21.380
Is it a low loss reserve?

02:44:21.380 --> 02:44:22.213
Maybe.

02:44:22.213 --> 02:44:23.250
Is it some other kind of mechanism?

02:44:23.250 --> 02:44:24.380
It could well be.

02:44:24.380 --> 02:44:27.090
Similarly what we're doing
with Ohm Connect in homes

02:44:27.090 --> 02:44:30.380
is 40% of our customers are
lower and moderate income,

02:44:30.380 --> 02:44:32.884
and we are often, they tell us,

02:44:32.884 --> 02:44:35.770
we have 150,000 customers in California.

02:44:35.770 --> 02:44:40.770
They tell us that we are
often the first tangible benefit

02:44:40.900 --> 02:44:41.810
they have ever seen

02:44:41.810 --> 02:44:44.150
from the clean energy
change that we're making,

02:44:44.150 --> 02:44:45.990
because they don't have access.

02:44:45.990 --> 02:44:47.833
Most there's a lot of renters,
a third of them are renters,

02:44:47.833 --> 02:44:49.970
a third of our customers or renters.

02:44:49.970 --> 02:44:52.860
So they haven't had
access to this before,

02:44:52.860 --> 02:44:53.693
they don't know this.

02:44:53.693 --> 02:44:54.680
So partly with that

02:44:54.680 --> 02:44:56.320
we're saying like what
problem are you trying to solve?

02:44:56.320 --> 02:44:57.430
And I would say,

02:44:57.430 --> 02:44:59.440
what problem are they
trying to solve, right?

02:44:59.440 --> 02:45:00.610
What is the financing thing?

02:45:00.610 --> 02:45:01.830
What is their problem, right?

02:45:01.830 --> 02:45:02.840
And this is where we get back to like,

02:45:02.840 --> 02:45:04.990
our problem is when
we change over the grid

02:45:04.990 --> 02:45:07.310
and electrify all these
things, that's important.

02:45:07.310 --> 02:45:08.897
What problem are they trying to solve?

02:45:08.897 --> 02:45:11.870
And what they're trying to
solve is very different, often,

02:45:11.870 --> 02:45:14.420
and so then how do we intervene in that

02:45:14.420 --> 02:45:16.080
to help them solve the problem they have

02:45:16.080 --> 02:45:17.270
with what we need to do?

02:45:17.270 --> 02:45:19.040
So again, that framing

02:45:19.040 --> 02:45:20.070
of what problem we're trying to solve

02:45:20.070 --> 02:45:22.800
and then using different
tools to solve the problem

02:45:22.800 --> 02:45:24.960
without trying to reinvent everything

02:45:24.960 --> 02:45:26.460
feels like a really critical thing.

02:45:26.460 --> 02:45:28.650
The states frankly have
gotten wrong quite a bit

02:45:28.650 --> 02:45:29.543
over its history.

02:45:31.400 --> 02:45:33.390
<v ->Okay, last one,
lightning round style</v>

02:45:33.390 --> 02:45:36.130
then you guys can bring
us home for the noon hour.

02:45:36.130 --> 02:45:38.780
A lot of talk about the
importance of outreach,

02:45:38.780 --> 02:45:39.780
who should be doing it?

02:45:39.780 --> 02:45:41.907
How the entities that do that

02:45:41.907 --> 02:45:44.370
and the relationships they
have in the communities

02:45:44.370 --> 02:45:47.180
affects the outcome of a
financing or policy program?

02:45:47.180 --> 02:45:49.843
What would be your
thinking about outreach?

02:45:50.990 --> 02:45:52.940
Sorry, we don't have
Carmelita on this key question,

02:45:52.940 --> 02:45:55.910
but when you think about
what again the PUC could do,

02:45:55.910 --> 02:45:59.190
and empowering actors to go
and make markets addressable,

02:45:59.190 --> 02:46:02.543
what would be your
recommendations to the top level?

02:46:02.543 --> 02:46:04.327
I listen to the community,

02:46:04.327 --> 02:46:08.090
the community knows who's
trusted in that community

02:46:08.090 --> 02:46:10.060
and figure out how to
empower that community

02:46:10.060 --> 02:46:13.207
to bring the right
solutions to that community,

02:46:13.207 --> 02:46:15.060
and it's gotta be funded.

02:46:15.060 --> 02:46:16.130
Don't expect them to do it

02:46:16.130 --> 02:46:18.430
out of the goodness of their hearts.

02:46:18.430 --> 02:46:19.880
<v ->Good point, good point.</v>

02:46:19.880 --> 02:46:22.140
<v ->Yeah, Kerry, I
mean, that's spot on.</v>

02:46:22.140 --> 02:46:23.420
Folks are telling you, right?

02:46:23.420 --> 02:46:24.867
We hear it all the time.

02:46:24.867 --> 02:46:25.700
Currently did a griding,

02:46:25.700 --> 02:46:28.270
I mean, the COVID situation,

02:46:28.270 --> 02:46:29.810
the number of our customers

02:46:29.810 --> 02:46:32.310
who lost their jobs during things like,

02:46:32.310 --> 02:46:33.710
they know what their pain points are.

02:46:33.710 --> 02:46:35.690
They know what
they're trying to solve for.

02:46:35.690 --> 02:46:37.560
We have an analysis we've just done,

02:46:37.560 --> 02:46:39.810
for example, that said we do constantly,

02:46:39.810 --> 02:46:42.150
which is the pain
point of the utility bill.

02:46:42.150 --> 02:46:44.550
Really understanding
who is it who's struggling,

02:46:44.550 --> 02:46:46.280
who to the utility bill is a pain point.

02:46:46.280 --> 02:46:50.260
However big it is, isn't
painful relative to their income.

02:46:50.260 --> 02:46:53.540
Those folks have a very
specific economic challenge

02:46:53.540 --> 02:46:55.140
that they're trying to solve,

02:46:55.140 --> 02:46:56.170
and we can help them solve it,

02:46:56.170 --> 02:46:58.860
and so how do you reach
those people and talk to them?

02:46:58.860 --> 02:46:59.940
And how do those communities

02:46:59.940 --> 02:47:01.870
get their information is important,

02:47:01.870 --> 02:47:05.510
but this is not one size fits all.

02:47:05.510 --> 02:47:06.590
We have to listen to communities,

02:47:06.590 --> 02:47:09.140
we have to listen to
what they're telling us

02:47:09.140 --> 02:47:11.370
is their challenge, and
right now their challenge

02:47:11.370 --> 02:47:13.120
is not hey, I wanna be energy efficient.

02:47:13.120 --> 02:47:14.120
That is not a thing.

02:47:14.980 --> 02:47:17.980
<v ->Humility goes a long way too.</v>

02:47:17.980 --> 02:47:19.163
<v ->Yeah, exactly.</v>

02:47:20.190 --> 02:47:21.323
<v ->Yeah, that's--</v>

02:47:22.210 --> 02:47:23.043
<v ->Just a sec.</v>

02:47:23.043 --> 02:47:26.450
We do talk about kilowatt,
kwh, kilowatt hours,

02:47:26.450 --> 02:47:29.260
and we are doing focus
groups with our members

02:47:29.260 --> 02:47:30.810
and they would refer to them as quads

02:47:30.810 --> 02:47:32.350
and we didn't know what
they were talking about.

02:47:32.350 --> 02:47:35.920
This sounds like we live in a world

02:47:35.920 --> 02:47:38.670
that is very different from
the vast majority of people

02:47:39.761 --> 02:47:42.750
in terms of policy and
understanding what's happening

02:47:42.750 --> 02:47:45.130
and we gotta hear
that and listen to that

02:47:45.130 --> 02:47:47.970
and make sure we're reflecting it.

02:47:47.970 --> 02:47:49.490
<v ->Well said,
excellent last words.</v>

02:47:49.490 --> 02:47:50.323
Thank you both so much.

02:47:50.323 --> 02:47:53.030
Thank you to Carmelita in absentia

02:47:53.030 --> 02:47:54.720
and back over to you, Peter.

02:47:54.720 --> 02:47:56.350
<v ->Thank you guys.</v>

02:47:56.350 --> 02:47:58.900
Two panels this morning so far,

02:47:58.900 --> 02:48:01.250
both of which have come in at the wire.

02:48:01.250 --> 02:48:04.490
So the challenge has been
laid to our two afternoon panels

02:48:04.490 --> 02:48:06.320
to come in on time.

02:48:06.320 --> 02:48:07.710
We are going to take a break for lunch.

02:48:07.710 --> 02:48:12.530
We'll be back at 1 p.m.
for our third panel of the day

02:48:12.530 --> 02:48:15.890
that will cover the magnitudes
of investment needed,

02:48:15.890 --> 02:48:18.040
that will run from one to 2:15.

02:48:18.040 --> 02:48:20.330
Thanks, get away from
your screen for a while.

02:48:20.330 --> 02:48:21.700
If you can go outside and take a walk

02:48:21.700 --> 02:48:24.790
or do something other
than stare at your screen,

02:48:24.790 --> 02:48:26.060
please, by all means do,

02:48:26.060 --> 02:48:27.510
and we'll see you in an hour.