California is facing a debate over the status of a $2-billion-plus energy-efficiency program that boils down to one essential question -- how to balance the benefits of spending money and creating jobs fast with the need to make sure that money is being spent effectively.
In 2012, California voters overwhelmingly approved Proposition 39, also known as the Clean Energy Jobs Act. The ballot initiative promised to collect billions of dollars from closing corporate tax loopholes and spend half the money on public school efficiency projects that would create thousands of jobs and save millions of dollars by avoiding wasted energy.
Last week, an Associated Press report found that the program has created far fewer jobs and spent less money on public-building efficiency projects than originally promised by this stage of its development. It has also failed to hold a meeting of its public oversight board and hasn’t collected much data on the funds that have been disbursed.
The AP report found that only 1,700 jobs have been created so far, in contrast to the 11,000 per year promised by initiative backers. Further, only about half of the $973 million now available for projects has been requested for projects so far, AP found. And of the $297 million already given to schools, more than half -- $153 million -- has been paid to consultants and energy auditors.
State lawmakers have reacted to the report by criticizing the program's lack of oversight so far, and by demanding that the California legislature hold hearings to look into the slow pace of job creation and project funding.
"It's clear to me that the Legislature should immediately hold oversight hearings to get to the bottom of why yet another promise to the voters has been broken," Senate Minority Leader Bob Huff, R-San Dimas, said in a statement last week.
But supporters of Prop 39 say this slow pace and emphasis on early analysis is all part of the plan. That’s because the California Energy Commission-run program requires that all money-seeking projects prove their “bang-for-the-buck” value, in terms of dollars spent versus efficiency improvements gained, they say.
"Most school districts are either in the planning phase or are preparing to launch large-scale, intensive retrofit projects that will maximize benefits to students, school sites and the California economy," State Senate President Pro Tem Kevin de Leon, D-Los Angeles, said in a joint statement with billionaire Prop 39 backer Tom Steyer.
Right now, it’s hard to judge the program’s effectiveness on the data collected so far. That’s because about 84 percent of the 253 projects approved so far are multi-year efforts that haven’t started yet, Peter Miller, senior scientist with the Natural Resources Defense Council, wrote in a blog post last week.
The program also requires school districts to take a comprehensive view of the projects they’re contemplating, seek outside funding to cover significant capital costs, and set up long-term auditing and verification plans to ensure the money spent is yielding the efficiency benefits being promised, he wrote.
Over the past few years, Greentech Media has been talking to a variety of energy-efficiency technology and services providers working on Prop 39-funded projects. They’ve described a process that demands far more upfront analysis to fine-tune spending plans to maximize long-term return on investment, and which is making far greater use of the energy data being collected from smart meters, energy management systems and other new technologies to ensure compliance with these goals.
“We’re at a point now where information is key,” David Casentini, senior director of California programs for efficiency contractor CLEAResult, told me in a 2014 interview about the company’s Prop 39-based work. “Being able to capture that data, and go beyond a simple lighting retrofit, is the key to being able to educate, influence and reform for deeper levels of energy savings that will carry the ball forward in future years.”
Whatever the numbers on Prop 39 are today, it’s clear that the program and its participants will be challenged to meet its long-term goals. The CEC requires that every dollar spent on projects yield at least $1.05 in energy savings, for example. The $170 million in spending approved for 788 schools so far is projected to yield about $25 million in annual energy savings, according to initial data.
That means that these schools collectively will have to ensure that those bill reductions persist for at least seven years to recoup the initial investment. That’s a proving point that will come long after the program has spent all its money. Still, that doesn’t absolve California’s energy-efficiency backers from coming up with the right methods to analyze and predict how today’s decisions are supporting, or undermining, those long-term outcomes.