By Azad Hassan Khanzadeh Faal
On August 28, 2025, the California Public Utilities Commission (“the CPUC” or “commission”) adopted Rulemaking 25-04-010, which set out new long-term energy efficiency objectives for California’s investor-owned utilities regarding ratepayer-funded energy efficiency portfolios for 2026–2037.
Public Utilities Code sections 454.55 and 454.56 require the CPUC to establish efficiency targets for electrical and gas corporations. The CPUC conducts studies to assess the cost-effective energy savings and associated system benefits potentially available in the state’s various energy sectors. The CPUC then sets goals for the larger investor-owned utilities to inform the energy efficiency portfolio administrator. These goals reflect the CPUC’s intent to pursue all feasible, reliable, and cost-effective energy efficiency opportunities, with the important objective of providing reliable estimates for resource planning.
The proposed decision incorporates new information into required energy efficiency work products more regularly, such as the study above. This decision adopts a new total system benefit (TSB) goal metric to replace energy and peak demand saving goals as the single goal metrics. The TSB metric reflects lifecycle energy, capacity, and greenhouse gas benefits in dollar terms, in contrast to the separate energy and peak demand measures previously adopted. The commission stated a need to adopt goals for 2026 and to incorporate new information that updates or modifies some of the inputs and approaches to estimating energy efficiency potential.
On May 1, 2025, Chief Administrative Law Judge (ALJ) Cooke issued a ruling inviting parties to comment on the draft 2025 potential study (draft potential study). The draft potential study outlined three scenarios of energy efficiency potential based on different assumptions about cost-effectiveness, incentive levels, program engagement, and the extent of fuel substitution adoption. According to the CPUC, the statewide forecasted TSB for 2026 is $589 million, which will aid in cost-effective energy savings across California.