ARKANSMPUBLICSERVTCE COMMXSSION 

# FLED

INTHEMATTER 

### OF 

### THECONTINUATION, ) EXPANSION, AND ENHANCEMENT

### OF 

## 1 DOCKET NO. 13-002-U PUBLIC

### UTILITY 

### ENERGY EFFICIENCY 

### 1 ORDERNO. 

### 7 

### PROGRAMS 

### INARKANSAS 

## 1

ORDER 

### On January 

### 4,2013, 

### by Order 

### No. 1in 

### this docket (“Order”),theArkansas Public Service Commission (Tommission”) 

### established 

### a process and a timeline to 

### resolve 

### issues related to

### the development and implementation 

### of the second

### three-year cycle of 

### comprehensive 

### utility energy efficiency 

### rEE”) programs in 

### Arkansas, The following investor-owned 

### public utilities (“IOUs’’ 

### or “utilities”) stre parties to 

### the proceeding: Entergy Arkansas, Inc. 

### rEAI”), Southwestern 

### Elecbic Power Company (“SWEPCO”), Oklahoma 

### Gas and Electric Company rOG&E”),

### The Empire 

### Disbict Electric Company (“Empire”), 

### CenterPoint Energy 

### Arkansas Gas (“CenterPoint”), SourceGas Arkansas, Inc. (“SourceGas”) 

### and Arkansas 

### Oklahoma Gas Corporation 

### rAOG”). The 

### Arkansas Attorney 

### General (the 

### “AG”) and 

### the 

### General Staff 

### of the 

### Commission (“Staff”) are also 

### parties. 

### Thefollowing

### intervenors are parties: 

### Arkansas Advanced Energy

### Association, 

### Inc, (‘(MEA’’), 

### Arkansas Community

### Action Agencies Association (“ACAAA”),

### Arkansas 

### Electric Energlr Consumers 

### and Arkansas Gas 

### Consumers rAEEC/AGC”), 

### National Audubon 

### Society YAudubon”),Sierra Club, and Wal-Mart Stores

### Arkansas, LLC (“Wal

### Mart”). 

### On January 17,2013, 

### the PartiesWorking ColIaboratively (the “PWC“)submitted

a 

### Joint Motion to 

### delay 

### the procedural schedule 

### and to 

### delay implementation 

### of theDocket Nos. 13-002-U OrderNo. 7 Page 2 of 91 second 

### three-yearprogram cycleby 

### one year, 

### in 

### order to allow

### time 

### for the 

### Commission andthePWC toresolvethe

### issues that 

### were raised in Order No. 1. The 

### PWCincludesall parties except Wd-Mart, 

### who did not object to the Motion. 

### The Commission granted this motion by Order No. 2, 

### on January 30, 2013, and 

### accordingly, parties 

### filed initial 

### comments 

### onMay 15,2013, 

### and Reply 

### Commentson June 3,2013. 

### The 

### delay in 

### the procedural 

### schedule was 

### granted 

### in part 

### because the first evaluation 

### of a 

### hllyear 

### of EE program 

### data, conductedby the Independent Evaluation Monitor 

### (%My’), Dr. Katherine 

### Johnson,would 

### not be filed 

### until 

### June 1, 2013. 

### Dr, Johnson 

### submitted her 

### testimony and 

### Annual 

### Summaiy 

### Report 

### on EuaZuation, Measurement 

### and Verifications 

### Findings rEMW 

### Repork’’) for Program 

### Year 

### (TY”)

2012 on

### June 3,2013. 

### On April 19,2013,the PWC 

### submitted aJoint

### Motion toRequest

### Potential Study (“Joint Motion,” 

### or “JM”). 

### On April 30, 2013, by Order 

### No. 4, the 

### Commission broadened 

### the scope of 

### testimony in this 

### docket to include 

### consideration of 

### lessons learned and proposed program improvements that 

### can reasonably 

### be implemented during 2013 and beyond to 

### address under-performance for 

### particular programs during

2012 andto

### more effectivelytarget hard-to-reach customer 

### segments. Issue 1: 

### EE Program Procedural Issues A 

### subset 

### ofthe PWC-the Joint CommentingParties ((‘JCP”)1-comment that

### the significant 

### evolution ofthe framework 

### surrounding 

### EE programs during the

### time since 

### the Conservation and Energy Efficiency C“C&EE”)Rules were adopted in 2007 

### merits changes to the current 

### schedule for reviewing 

### EE program performance 

### and tariff

1 The JCP are comprised of the IOUs, ACAAA, MEA, and Staff. While EAT is included in the JCP, it commentsseparatelyregardingavoided costs, non-energybenefits, and theincorporation ofavoided costs into the utility performanceincentive.DocketNos. 13-002-U OrderNo. 7 Page 3 ofgr.

20

### 14Annual Report &EECR (20 16 Budgct I 20I4 truc-up) OrderApprovingTransitionFiling Effective date of2015 EECR Rate Adjustment Order approvingMay 201 5 filings adjustment. JCP at 3-4. 

### The JCP 

### propose that the 

### date for 

### utilities and other 

### program administrators to 

### file 

### EE Program 

### Annual 

### Reports and 

### EECR rider updates 

### be changed 

### from April 1to

### May I 

### of each year, 

### with any approved 

### EECR rider updates taking 

### effect

on Januv 1 of the subsequent year. 

### The JCP 

### recommend that the Commission approve EECR adjustments

### by September 1following the 

### May 1 filing. 

### Id. at 

### 6. The JCP state that 

### this schedule will place program year expenditures, program 

### budgets, and 

### EECR rates on the same calendar year basis. Id. at 5-6. The JCP 

### recommend that 

### this schedule

### be implemented

### in 2015,with a one-time exceptionto

### the schedule

### in 2014to enable atransition

### between 

### schedules. Id. at 6-7. 

### Id. at 5.



### The

### JCP include the

### following tableindicating

### their recommended 

### timelinefor schedulechanges: JCP Pronoscd FilinPDatcs

May I, 2015 May 28,201 5 June 1,2015 September 1,201 5 .I 

### , I I 

# I Effective date of2014 EECR Rate 

### I June 1.2014 

### I 

# 1

~-

2016 Annual Report &EECR (2018 Budgetl2016 tme-up) Order approving May 2017 filings Effectivedate of2018 EECR Rate ~ 

### I7Fromm Filing- 

### I June 1.2014 

### I I

May 1,2017 September T,2017 Janum 1.2018 

### 1mlS-2017 Promrn Amroval 

### I I November27,2014 

### 1 

## I 2015 EECR Rate TransitionFiIing (2015 BudgetI no true- 

## I IApril 1,2015 

## IDocketNos. 13-002-U OrderNo. 7 Page4 of gi 

### The 

### JCP indicate 

### that the 

### January 1 

### implementation date 

### for 

### EECR adjustments to go 

### into effect 

### will provide concurrent recovery 

### of Commission-approved budgeted 

### program costs, thereby 

### eliminating the 

### regulatory lag that 

### has existed in the 

### current mechanism. 

### Id. at 5. 

### By way of 

### example, the JCP 

### recommend that 

### the 

### May 1, 2015 

### EECR filing 

### would include the 

### PY 2014 

### true-up 

### and the projected 

### costs €or the 2016 program 

### year. 

### The 2016 

### EECR filing

### will include 

### the PY 2015 

### true-up and the 

### projected costs 

### for the 2017 program year. 

### Id. The 

### JCP state that the proposed schedule represents a balanced approach, in that recovery of incentives for the prior program year 

### is delayed from the 

### current June I 

### until January I, 

### or 

### a full year 

### following the 

### programyear upon 

### which the 

### incentive

### was earned. 

### Id. Regarding thetransitional year, 

### the 

### JCP recommend that, during 2015, the trueup 

### of the 2014 

### program costs 

### would 

### be addressed 

### in the May 1 filing. 

### This one-time EECR update would 

### be effective through 

### December 2015 and 

### would be superseded by the 2016 Program Year EECR update, 

### which would become 

### effective JanuaryI, 2016. 

### In subsequentyears the recommended schedule 

### would continue without the need 

### for 

### an additional adjustment. 

### Id. The 

### JCP oppose 

### consolidation of 

### EE program approvals

### within a single 

### docket. 

### Id. at 

### 8. 

### The

### JCP state that 

### such consolidationwill result 

### in a

### massive, 

### confusingrecord 

### that complicates 

### the required 

### finding

### that each 

### utility's EE programs 

### are beneficid 

### to the utility 

### and ratepayers 

### alike. Id. at 

### 8-9.The JCP provide

### the example that it would be administratively inefficient and perhaps violate the requirement that 

### intervenors must have 

### a direct interest 

### at stake to involve 

### a party interested 

### only in a single utiliQ's

case 

### in a docket addressing

### all

### utility's 

### EE programs, 

### Id. at 

### 9-20. 

### Further,the JCP 

### stateDocketNos. 13-002-U OrderNo. 7 Page 5 of 91 that, with 

### multiple utilities 

### and parties, it 

### may be unclear whether a party is 

### addressing 

### all of the utilities’ 

### EE program 

### portfolios, the 

### portfolio 

### of 

### a single utility, 

### or a single program. Id. at: 10- 

### The 

### JCP recommend instead 

### that the 

### Commission 

### should retain separate utiliiy 

### EE tariff 

### dockets 

### for approval of 

### each 

### utilitfs EE program 

### and EECR adjustment, 

### and pursue administrativeefficienciesby 

### alIowingpre-filed 

### testimony 

### to

### be introduced intothe

### hearing 

### recordby stipulation. 

### Id. at 

### 8. Furkher supporting 

### the JCP’s opposition

### to 

### a consolidated 

### EE 

### docket, EAI states 

### that, if anything,it 

### may be more practicalto 

### have utilitiesbegin toimplementtheir own cycles 

### for portfolio submission, 

### with staggered filings, as 

### in the integrated 

### resource planning 

### (“XW”) process. 

### MI at 

### 8. EAI notes 

### that the PWC’s own efforts to gain administrative efficiencies by consolidating utiliiy 

### EE reporting and making it 

### more consistentwas 

### tabled 

### duetothe

### need 

### to respond to Order 

### No. I. 

### Id. EAI recommends that the PWC 

### be directed to 

### focus 

### on 

### this further 

### integration 

### of EE reporting. 

### Id. 

### AIso, EAI 

### generally commentsthat it is

### better for the 

### Commission

### topropose policy 

### issuesfor resolution by the 

### PWC,rather than proposing 

### solutions for litigated 

### comment, as in Order

### No. I. Id. at4-5. The AG agrees with the JCP regarding scheduling 

### changes, except that the AG views ahard September 1deadline

### for Commission EECR 

### approval as unnecessary 

### given that 

### complex issues 

### may 

### arise and that 

### the 

### new EECR would 

### not go 

### into effect until 

### January 1, 

### and the AG sees 

### no reason to 

### delay the transition

### year 

### to 2015, rather than

2014. 

### AG at IO, Other than 

### these two exceptions, the AG states 

### that the scheduling changes 

### will significantlyimprove the

### annual process, alIorving 

### time for moreevaluation and review of

### EE program savings 

### and EECR filings. 

### Id. at 10-11. The

### AG statesthattheDocketNos. 13-002-U OrderNo. 7 Page 6 ofgi merits of consolidating

### EE program review

### in a single 

### docket 

### areunclear: 

### while a single 

### docket might 

### streamline consideration of 

### core programs 

### and cross-cutting 

### issues, utility-specific 

### issues will always arise as long 

### as utilities 

### separately administer their 

### programs. 

### Id. at 11-12. AEEClAGC supports the JCP’s proposed 

### May 1 filing 

### date 

### for Annual 

### Reports 

### and EECR rider adjustments, with 60 

### days provided 

### for review of the

### filings

### by parties. AEEC/AGC at 2. AEEC/AGC favors a 

### schedule under 

### which 

### the Cornmission 

### would approve

### tariff 

### adjustmentswithin 120 days. Id. 

### AEEC/AGC statesthatthese extensions to the 

### current timelines 

### for review are 

### needed 

### in light of the 

### higher 

### level of costs being 

### requested for 

### full program 

### implementation, Id. at 2-3. 

### While AEEClAGC 

### opposes creation of a single 

### EE docket 

### for 

### review of individud utility programs, it supports consideration 

### ofpolicy issues common 

### to all utility EE programs within a single docket 

### in order to 

### ensureconsistency 

### and reduce administrative 

### and participation costs. Id. at 3. 

### Sierra Club 

### supports 

### a combined 

### EE 

### docket in 

### furtherance 

### of standardized 

### statewide programs, but 

### in the alternative would 

### favor handing 

### cross-cutting issues 

### within 

### a single docket. Sierra 

### Club at 2. 

### Audubon similarly 

### states 

### that a more unified procedural 

### approach would 

### be 

### congruent 

### with collaborative EE program planning, but 

### recommends that the Commission 

### consider alternative

### approaches that may 

### accompTish the 

### sameobjectives,

### ifnecessaryto address objectionsto

### consolidation. Audubon at 1. Ruling Rwardim Consolidated Docket and ProposedAlternative Schedule The Commission accepts the JCP‘s 

### recommendation 

### that individual utiIity tariff 

### dockets 

### be retained 

### for utili3 EE program and tariff adjustment approval, 

### in order toDocketNos. 13-002-U Order

### No. 7 Page 7of 91 preserve a distinct

### basis 

### in substantial

### evidence for 

### each decision. The 

### Commission also accepts the 

### recommendation 

### by parties that 

### cross-cutting or 

### common issues should 

### be addressed through 

### a separate,single

### docket or dockets. 

### The Commission 

### accepts the JCP’s recommended 

### schedule for 

### transition

### in 2015 

### to a May 1 annual filing date, 

### as indicated in the 

### table above, with a transitional-year 

### filing 

### in 2014,with the 

### exception that the 

### Cornmission will strive to approve 

### programs and tariff 

### adjustments by September I, 

### but 

### reserves the right 

### in cases 

### of controversy, 

### if necessary, to 

### investigate solutionsfor a longer 

### period of time. The Commission agrees with the 

### JCP that the recommended schedule 

### will enhance 

### the opportunity 

### for performance 

### review and that it will better align 

### program implementation and cost recovery. 

### Also, it is reasonable to schedule

### the 

### transitionalyear filing 

### for 2015 

### because the

### new

### three-year program cyclewillbe 

### implemented duringthatyear. Accordingly, 

### the Commission 

### approves the revised filing deadlines 

### and procedural 

### schedules for immediate use in 

### the preparation and 

### approval of the 

### next three-year 

### EE planning and program cycle 

### for 

### PY 2015-2017. 

### Also, the Commission directs Staff to file a draft 

### of any C&EE 

### rule amendments necessary for the implementation 

### of this scheduling 

### change on 

### or before noon of 

### January IO, 2014, 

### in Docket

### No. 06-004-R. Issue 2: Proposed CommissionTargets andMotionfor Potentia! Study 

### Xn support of 

### the Joint 

### Motion, the PWC state that Order 

### No. 1 contempIates substantial changes totheCommission’s C&EE Rules andthe associated

### EEframework, 

### and that the 

### PWC has met several times to discuss the issues associated with thoseDocket Nos. 13-002-U OrderNo. 7 Page 8 of gi changes.2 JM at 

### 11 1 & 3. In that 

### context, the PWC 

### has determined a need 

### for a Potential 

### Study on the Performance 

### Targets for 2015-2017. 

### Id. at 

### fl 3. 

### The 

### PWC recommend 

### that 

### the Commission 

### considerArkansas-specific 

### market 

### conditions

### through

a Potential 

### Study before establishing

### theproposed EE gods and targets 

### for years 2015- 2017. 

### Id. at: 

### 7 4. The 

### PWCstate that, absent 

### a Potential 

### Study,the 

### EE goals 

### or targets proposed in Order 

### No. 1 

### will 

### not reflect market 

### conditions and other factors specific to 

### Arkansas, such as changes 

### in residential and 

### commercial energy codes, availability 

### of savings, 

### avoided costs, and the 

### amount 

### of program expenditure 

### needed to achieve 

### energy savings. Id. at 14. 

### The PWC 

### seek approval to 

### expeditiouslyissue a 

### Request 

### for Proposal 

### (,,€WP’’) for theperformance of a 

### Potential Studythat 

### would 

### bejointly funded 

### by theIOUs, with costs 

### recovered through each utility‘s 

### Energy Efficiency Cost 

### Recovery (“EECR”)rider. 

### Id. at 

### 1 5. The 

### PWCstate thattime 

### is of the essence, since it will take 

### six to nine months 

### after issuance 

### of the 

### RFP to 

### complete the study, and then pdes would 

### need to 

### submit comments 

### to the Commission on how 

### to 

### interpret the results to set 

### EE goals. 

### Id, The PWC 

### indicate 

### that they “anticipate working 

### collaboratively to address the 

### scope 

### and other issues 

### in connection with the proposed 

### Potential Study.” 

### Id. at 73. 

### MI 

### comments in support 

### of the 

### Potential Study that having the 

### results of the first 

### full year 

### of existing programperformance-which were not 

### availableuntil afterthe targets 

### proposed in 

### Order 

### No. 14scritical to 

### evaluating the reasonableness 

### of the targets. EAI at 6. 

### EAI statesthat the 

### Commission’sproposed

### targets appear tobe based upon 

### results in other states, 

### and thus to assume that a 

### significant proportion 

### of savings

2 The Commission notes that, at this time, it has not proposed amendments to the Conservation and Energy EfficiencyRuIes (“CMERules”).DocketNos. 13-002-U OrderNo. 7 Page gofgi will be achieved through 

### lighting programs. Id. 

### EN notes that other issues addressed 

### in Order 

### No. I, 

### such as the AG’s 

### recommendationsto quantify avoided capacity 

### using a 

### Real Economic Carrying Charge (VECC”) 

### andto

### adjust 

### EE program 

### savings downward for 

### leakage 

### of installed 

### measures to 

### otherjurisdictions, would 

### significantly influence

### the reasonableness 

### oftheproposed 

### framework.3 Id. AEEC/AGC supports the Potential Study to ensure that gods and funding

### levels

are set at realistic 

### levels which reflect 

### recent reductions 

### in market energy 

### prices and 

### relativelylow economic

### growth, AEEC/AGC 

### Reply at 11. AEBC/AGC also 

### recommends that 

### any expansion of

### EE programsbe 

### deferred, Id. AEEClACG 

### asserts that 

### the cost 

### of most EE programs far exceeds the current market 

### price 

### fur energy 

### and capacity, providing

### theexamplethat 

### the 

### average cost 

### ofEAI’s

### EE program expenditures

### per MWh saved

### overthe

### last four 

### years was $334/MWh--more 

### than 13 times the 

### average SPP and MIS0 market 

### prices of approximately $25/MWh last year. AEEC/AGC Reply at 2. AEEClAGC states that EAI, SWEPCO 

### and OG&E’s 

### more recent 

### IRPsindicate a surplus of 

### low cost baseload energy, rendering EE 

### programs not cost effective 

### currently, nor 

### until market prices 

### increase significantly. 

### Id. at 2-3, AEEClAGC

### presents a table that



### sums 

### EASs

### EE annual program savings 

### in eachyear from 2009 

### through 2012: dividing those savingsby 

### MI’S total sales, AEEC/ACG 

### concludes that 

### M’sprograms 

### have saved only 0.28% of retail 1Wh sales. AEEC/AGC argues that it makes 

### no sense to approve

3 Leakage is the cross-territoryenergy savings that occurwhen EEprogram-incentivijsedefficientproducts are installed outside of the funding utility‘s service territory. Subsequent to this comment by W, the Commission, by Orders No. 63 and 85 respectively, of Dockets No. 07-082-TFand 07-085-TF, establisheda policy on Ieakage. OnAugust 30,2013, the parties activeIyparticipatingin the collaborative processin DocketNo. io-loo-R (?he Moving Parties”,comprisingtheutilities, Staff, theAG, AW, and Audubon) submitted a Joint Motion to ApproveTechnical ReferenceManual 3.0 and Waiver of Bearing, including a new Protocol K addressing leakage and incorporating the Commission’s directives in Order Nos. 63 and 85 above.DocketNos. 13-002-U OrderNo. 7 Page io of 91 W’s 2013 

### EE program 

### budget exceeding $70 

### million when alternative 

### supply 

### sources are 

### available at

### much lower cost. 

### Id. at 

### 6. Audubon supports the Joint Motion 

### and views the Potential Studfs results 

### as indicating 

### an approximate upperlimit on 

### reasonably achievable 

### savings, 

### Audubon at 2. 

### Audubon cautions that potential studies are not 

### program implementation plans and cannot account 

### for various 

### factors 

### such as program 

### portfolio design, 

### differences among program adminisbator 

### portfolios 

### and resources, 

### and the time required to “ramp up” 

### programs. 

### Id. at 2-3. 

### Audubon states

### that savings goals must

### be scaledto an 

### achievable level 

### given availabletime

### and resources. 

### Id. at3. 

### Sierra 

### Club states that 

### it supports 

### the targets proposed 

### by the Commission. 

### Sierra Club at 2. 

### Sierra Club, however, 

### also supports a Potential. 

### Study

### onthe 

### basis 

### that it will 

### increase confidence that the proposed 

### targets are 

### achievable, it 

### may show that 

### higher targets are 

### achievable,and it 

### will 

### enable amore informed 

### conversationregarding thetargets, 

### includingwhether 

### perceivedbarriers are

### technical, economic, 

### practical, or a 

### matter ofprogram 

### design. Id. at 2. 

### Dr. Johnson’s EM&V Report states 

### that, despite mixed 

### results, most programs achieved their savings goals and it is 

### clearthat the EE programs are gainingtraction 

### in the

### market, IEM 

### Report at 

### 72. She states thattheprogress

### made in the past 12

### months has 

### been 

### remarkable. Id. Sheurges 

### the utilities to 

### “Staythe Course-Collaborativelywith

### Additional Joint ImpTementation.” 

### Id, Her 

### <‘first, critical recommendation” 

### going forward is 

### for the performance 

### of a market potential study. 

### Dr. Johnson adds that she made this 

### same recommendation aDocket Nos. 13-002-U OrderNo. 7 Page 11 ofgr year ago 

### in 

### her 

### PY 2011 

### Report. 

### PY 2012 EM&V 

### Report ai xii and 70.4 

### She also states that 

### [all1three 

### evaluation teams engaged 

### by the IOUs (ADM 

### Associates, Inc. 

### rADM”), Cadmus, and EnerNOC 

### Utility Solutions 

### Consulting rEnerNOC”)} identified 

### the benefits 

### that 

### such a study 

### would provide, 

### including gathering 

### information about customer preferences, participation likelihood, and 

### savings potential across 

### the entire state, as 

### well 

### as additional technologies 

### to consider in 

### future program designs. She indicates that the 

### market 

### potential 

### study 

### should be a 

### multi-utility, cross-fuel 

### effort to



### ensure the 

### most efficient 

### use 

### of ratepayer funds, 

### requiring coordination 

### between 

### dl members ofthePWC.” 

### Id. at 

### 70. 

### The Commissiontakes 

### administrative notice 

### that 

### several 

### ofthe individual utility evaluation 

### reports referenced by Dr. 

### Johnson mention particular 

### benefits of a market potential study. 

### The evaluator 

### for Centerpoint, AOG, and SourceGas EE programs (ADM Associates, 

### IRC., 

### or “ADM”) found 

### that the current programs 

### of these utilities 

### have been designed and 

### implemented without the 

### benefit 

### of guidance from a 

### market potentid study, 

### which should be done to 

### make sure that program 

### resources are 

### allocated in an 

### efficient 

### manner. Centerpoint 

### Annual Report, Appendix A at 

### 2-8 

### through 2-9; AOG AnnuaI 

### Report, at 33 and Appendix A at: 

### 4-31, 5-21 and 

### 7-24; SourceGas Annual Report, Appendix A 

### at 2-10. 

### As part 

### of its program 

### evaluation 

### of theseprograms, ADM took 

### the opportunityto conduct 

### surveys-which fell 

### short 

### of afull 

### market potential study-of 

### several hundred customers 

### who did not participate 

### in the

4 In the Report for PY SOIT, the IEM recommended that utilities consider “performing market assessments,such as a market potentia1study based on primary data fromArkansas,” in orderto “ensure that planning projects are based on actual market conditions.n The IEM recornmended that the study “shouldbe coordinatcd statewide and linked to other EM&Vtasks to ensure cost-effectiveness.”Annual Summa y Report on Eualuotion, Measurement & VeriJcation Findings, Johnson Consulting Group, June I, 2012.DocketNos. 13-002-U OrderNo. 7 Page 12of gi Centerpoint, AOG, and SourceGas 

### EE programs. For example, 

### ADM 

### asked residential customers who did 

### not participate in Centerpoint

### EE programs 

### what percentage of

### them have tankless 

### water heaters versus 

### storage-tank water 

### heaters, and the age 

### of those 

### units; 

### similarly, ADM 

### asked commercial customers to 

### identify their 

### highest gas 

### loads and theage 

### of equipment serving

### those loads. 

### CenterpointAnnual Report, AppendixA at 

### 2-8through 2-9. Cadmus indicated that SWEPCO‘s 

### initial estimates of 

### market demand for some 

### programs (Load 

### Management Standard 

### Offering 

### Program, Appliance, 

### and Home 

### Performance 

### with Energy 

### Star) were Tow, and 

### others (CFL, 

### Small Business 

### Direct Install) 

### were high, SWEPCO

### Annual Report, Appendix A 

### (Energy-E’ciency 

### PorgoZio Evaluation Report 2012 

### Program Year) at 

### 5 and 15-16. 

### Cadmus recommends 

### that SWPCOconduct 

### market research 

### or a 

### potentials study to 

### better understand customer preferences andparticipation and savings

### potentid. Id. at 16. Similarly, Cadmus recommended that Empire conduct market research to better 

### understand residential 

### customers’ housing 

### characteristics and 

### purchasing habits to inform residential prescriptive 

### program design. Empire Annual Report, Attachment 

### B (Empire,

### Eualuation Report) at: 7. 

### As an example, Cadmus recommended that Empire seek to

### understand the types, ages, and 

### quantities 

### of electricWAC

### equipment found 

### in customers’

### homes, the types of 

### new equipment they are 

### likely to purchase, 

### and where they purchase 

### such equipment. Id. EnerNOC recommended that 

### OG&E should 

### research the target market for its commercial and industrial (“CH”) programs to 

### find the current market share of high efficiency equipment; 

### to understand the common characteristics of customers alreadyDocketNos. 13-002-U OrderNo. 7 Page 13 ofgi investing in 

### energy efficiency and 

### what characteristics 

### make up 

### the next tier of customers the 

### program 

### is hoping to reach; 

### and to proactively 

### identify 

### specific equipment 

### to promote. OG&E Annual 

### Report, Appendix 

### ID (Evaluation 

### of OG&E Arkansas PY2012 Energy

### Eficiency 

### Programs) atv. Dr. 

### Johnson further 

### testifies that 

### the various evaluators

### this year provided 

### more than 

### 400 recommendations 

### on ways in which 

### to improve 

### the 

### EE programs. Johnson Direct at 5. 

### Dr,Johnson 

### recommends that the 

### Commission 

### continueto 

### encouragejoint

### collaboration and implementation of 

### cross-fuel programs. 

### Id. at 

### 6. She 

### reports that suchjoint program implementation 

### can significantlyreduce 

### the cost per achieved 

### kWh

or therm, by sharing the adminisbative cost 

### of the programs, 

### and even more so 

### when

measure costs 

### are allocated across

### fuel types, IEM Report: at 

### 72. She 

### hrther recommends 

### that utilities continue to 

### improve database 

### tracking; that 

### evaluators undertake strategic primary 

### evaluation 

### research 

### in 2013 to 

### ensure 

### that the 

### TRM is reliable 

### and based on 

### Arkansas-specific data; that utilities 

### and evaluators should 

### track and report 

### on the implementation of IEM recornmendations 

### for program improvement; 

### and that 

### evaluators 

### should take 

### several steps 

### to improve the 

### timing 

### and conductof EM&V activities. 

### IEM Report at 

### 70-73. Besides 

### the evaluator 

### comments specifically addressing 

### the Market 

### Potential study and the IEM’s 

### general program improvement recommendations, the utilities’ Annual 

### Reports and accompanying

### (“Appendix A”)evaluator 

### reports provide 

### a snapshot of 

### progress, challenges, and recommendations 

### forimprovement after 

### the first fullyear of comprehensive program implementation. 

### For instance, EAI’s 

### EE Annual Report indicates that during this first fill year of comprehensive program implementation,DocketNos. 13-002-U OrderNo. 7 Page 14 ofgi energy 

### savings more 

### than doubled 

### and that EAI’s 

### programs are building a growing 

### network of vendors 

### and contractors to 

### support program 

### implementation. 

### Entergy Annual Report at 5-6.5 

### Overall, EAI achieved 111% 

### of the 

### Commission’s energy 

### savings goals, 

### while spending roughly $29 million (74%) 

### of its $39 

### million planned budget. Id, 

### at 5; 

### Workbook at AI, EAI served 

### about 510,000participants, rather 

### thanthe 934,568 planned (in 

### this 

### case, rrparticipants”includes each 

### individual light bulb or other 

### measure); for programs other than upstream lighting and Residential Benchmarking (which 

### each 

### reach a mass 

### market 

### of over IOO,OOO 

### customers), EAI 

### served 

### about 15,000 ofthe 

### planned 26,000

### customers. Workbook atA2. 

### Six of EM’S

### fourteen programs 

### became available to 

### customers later in 

### the 

### year than planned. 

### Id. at 10-11. 

### For instance, the EAI Residential Direct Load 

### Control program 

### (which installs controls 

### on air conditionersallowing EM to 

### reduce compressor cycling 

### during peak events) installed almost 8,000 

### air conditioner 

### control devices 

### during 2012. Id., Appendix A at 

### 247,Figure 39. However, 

### over 5,000ofthese 

### devices

were installed 

### after August, and only two events were 

### called in 2012. Id. 

### While the 

### program met only 

### 40% of its demand 

### reduction goal 

### in 2012, 

### EMSevaluators 

### indicate that 

### it 

### is well-positioned to 

### meet or exceed 

### its 2013 goals. Id. at 240. Furthermore, based 

### on the first year 

### level of achievement, 

### the program provided 32%of 

### the Totd Resource Cost 

### (“TRC”] test 

### net benefits for 

### the EAI portfolio, and

### was the largest factor contributing to a total EAI 

### portfolio RIM test 

### score of 0.98. EAI Annual Repod Workbook at B2.



# ’

This performancehas garnered anAward ofJkelIence atPlatt’s20x2 Global EnergyAwards. Id. at 6.DocketNos. 13-002-U OrderNo. 7 Page 15 ofgi EAI 

### notes that 

### its 2012 

### IRP 

### includes a 

### Toad forecast showingthat, 

### by 2023,EAI could 

### achieve 700 MW

### of cumulative peak demand

### reduction and 

### 1,788,584 cumulative MWh of 

### energy savings 

### for a total cost 

### of $750million, 

### which compares 

### favorablywith 

### other potential 

### resource options 

### under most 

### scenarios modelled. 

### Id. at 

### 134. EAI states that, 

### whiletheIRP DSM assumptionsremain

### validfor

### planning purposes, atthe

### current level 

### of

### EE effort, overthe

### longterm EAI 

### will surpass

### them. Id. M’s evaluator (Cadmus) 

### interviewed over 150 program participants across

seven programs and about 80 non-participants. M Annual Report, Appendix A at 

### 5. Cadmus states that “in.every case respondents listed 

### lack of funding as their primary program 

### barrier.” Id. at 5. 

### Cadmus thus 

### recommends offering 

### low-cost financing to customers

### through partnerships 

### with national 

### lenders or local 

### banks 

### through an on-bill 

### repaymentmechanism. 

### Id. Cadmus notes that seventy-five percent 

### of non-participating customers indicated

no awareness 

### of any EAI 

### EE programs. 

### Id. at 

### 6. 

### No more than 4% 

### of non-participants

are aware 

### of 

### any particular program, 

### and 1% of non-parIicipants 

### are aware 

### of most 

### individual surveyed 

### programs. 

### Id. However, for program participants, a 

### customer satisfaction survey of 400 participants 

### in nine programs 

### found 95%to 100%customer satisfaction

### for all but two 

### suweyed programs, 

### with the remaining 

### two having customer 

### satisfactionrates o€ 84%

### and 86%. Id. at 15. SWEPCO achieved 113% 

### of the 

### Commission’s energy 

### savings goals 

### while spending $5.3 million 

### (78%) 

### of its 

### $6.8 million planned budget. SWEPCO Annual Report at 7. SWEPCO served 94,807 customers rather than the planned 28,556, but 

### when 

### CFL sales are 

### removed from 

### the calculation, it served roughly 

### 3,800 of 15,600Docket

### Nos. 13-002-U OrderNo. 7 Page 16 of 91 planned 

### customers. 

### SWEPCO Annual 

### Report Workbook 

### at 

### Az. SWEPCO reports that 

### its long, 

### non-contiguous, narrow 

### territory is 

### a significant challenge 

### for implementation of 

### each 

### of its programs. SWEPCO Initial at 1-2. SWEPCO added new appliances to its 

### upstream CFL/Appliance program, 

### launched a new 

### Home Performance 

### with Energy 

### Star program, and added direct-install program components targeted to multi-family 

### housing, small businesses, and 

### (late 

### in 2012) 

### dual-he1 commercial 

### and industrial customers. SWPCO 

### Annual 

### Report at 

### 6-7. SWEPCO’s 

### evaluator (Cadmus) 

### found that, overall, 82% 

### of non-program participants 

### are

### not aware of SWEPCO’sEE programs,

### kth1-4%reporting 

### awarenessof individual programs, SWEPCO 

### Annual Report, Appendh A at: 

### 9. Cadmus 

### notes that these 

### results are not unexpected 

### or unusual during 

### early program 

### implementation, and that it 

### believes customer awareness will increase 

### over 

### time with strategic marketing efforts. 

### Id. Cadmus 

### reports 99% to 

### roo% customer satisfaction 

### with surveyed 

### programs. 

### Id. at 18. 

### Cadmus found that, 

### while SWEPCO’s programs are designed 

### to provide comprehensive offerings, few achieved comprehensive 

### uptake of 

### whole building 

### measures; that 

### program goals andbudgets 

### couldbe significantly

### better aligned; and

### that 

### SWEPCO does not 

### offer residential 

### load 

### control or promote appliance incentive programs to 

### its commercial 

### customers, Id. at 15-16 

### and 31-32. Cadmus 

### reports that SWEPCO is 

### exploring the 

### possibility 

### of offering energy-efficiency 

### home improvement 

### loans 

### in future years; Cadmus recommends that 

### SWEPCO continue to 

### explore 

### this option. 

### Id. at: 132.DocketNos. 13-002-U OrderNo. 7 Page 17of 91 

### Centerpoint achieved 114% 

### of the 

### Commission’s energy savings goal and spent 

### 78% of its planned 

### budget. Centerpoint

### Annual Report at 

### 45 

### and 6. Centerpointserved 

### 114,934 customers 

### rather than the planned 

### 61,546;however, 

### other than the 

### Home Energy 

### Reports program and 

### the program that 

### mails customers free, 

### low-flow showerheadsand 

### faucet aerators, CenterPoint 

### served 4,753 of 

### 7,746planned customers. 

### Id. at g,ii, 13,16,1g, 22,26,29,32, and 35. CenterPoint’s 

### evaluator (ADM Associates) reports that there are 

### many 

### opportunities

### for cross-fuel coordination that are 

### not being capitalized 

### upon, including joint implementation 

### of 

### mailer kits, and that the 

### portfolio has a gap 

### in residential building envelope 

### offerings, in that both the AWP 

### and HEAL programs 

### have participation 

### criteria that may prevent 

### most Centerpoint customers from participating, 

### Id., Appendix A at 1-3through 1-4. 

### Evaluators note, however that HEAL 

### could 

### serve as a 

### model 

### for cross-fuelsavings and 

### for its 

### measurefinancingprovisions. 

### Id. at 1-6. ADM states 

### that 

### CenterPoint’s C&I 

### Solutions

### program 

### (which produced over a quarter 

### of its portfolio therm savings) 

### was highly 

### successful and that many 

### projects 

### already 

### had incentives 

### reserved for 2013. ADM 

### notes, 

### however, that the program 

### has 

### not yet 

### engaged certainkeytrade 

### allies

### in a meaningful manner. 

### Id.at 1-5. TheAG suggests that 

### the 

### Commission mayneed toscaleback 

### itsproposed targets in order to reduce rate 

### impacts 

### on customers 

### who do not participate 

### in 

### EE programs. AG at 13 

### (theAG’s concerns 

### areMer detailedbelow in the 

### discussion 

### ofprogram cost effectiveness 

### evaluation). Sierra Club disagrees 

### that reduced targets are the answer to non-participant 

### rate impacts, 

### and states that reducing 

### program goals to avoid 

### nonparticipant impacts 

### would be inconsistentwith the purpose of the 

### Energy ConservationDocketNos. 13-002-U Order No. 7 Page 18 ofgi Endorsement Act 

### ("ECEA"), which aims to 

### achieve broader structural 

### and societal benefits. 

### Id. Audubon 

### recommendsthat making comprehensive programs available to 

### all customer 

### sectors is a 

### better way to address 

### equiw 

### and rate impact 

### concerns. 

### Audubon Reply at 4. Ruling Regarding Joint Motion andTargets The 

### Commission appreciates the 

### work of the parties 

### in reaching 

### consensus regarding 

### a coordinated,joint 

### Potential 

### Study; the 

### work of program 

### administrators in ramping up 

### EE program performance; 

### and the 

### assistance 

### of 

### Staff,the AG, 

### evaluators, and intervenors 

### in supporting, 

### verZying, and providing 

### constructive critiques 

### of that performance. 

### This 

### "remarkableprogress," 

### noted

### by 

### Dr.Johnson, is a 

### credit

### to

### the State. 

### Not 

### inconsequentially, according 

### to 

### the 

### IEM, "[c]ustorner 

### satisfaction, a critical 

### indicator 

### of programs 

### success, was overwhelmingly 

### positive 

### across the entire Arkansas 

### energy efficiency program portfolio" including 

### "high marks for a11 

### aspects 

### of the program operations 

### including the simplicity 

### of the paperwork, rebate processing time, and interactions with the contractors." 

### IEM Report at vii and 22. 

### The Commission 

### notes that its further rulings in 

### later parts of this order 

### are necessarily interconnected 

### with the issues 

### of 

### energy savings potential 

### and 

### target-setting, 

### because 

### the setting of 

### reasonable EE savings targets, and the 

### evaluation and achievement 

### of cost-effective

### EE potential, depends 

### in part 

### on the 

### rdes 

### for defining achievement 

### and determining 

### costeffectiveness. 

### The Commission suppork implementation of ajoint Potential 

### Study,but requires clarification 

### of several issues. The 

### Joint Motion does not 

### detail the purposes, scope, 

### orDocketNos. 13-002-U OrderNo. 7 Page 19 of91 methods 

### of the proposed 

### study. Rather, it indicates 

### that “the scope and 

### other issues” 

### wi11 be determined inthe future

### through

### PWCcollaborativedeliberation. 

### The Commission takes 

### administrative notice 

### that the National Action 

### Plan for 

### Energy Efficiency (WAPEE”) indicates 

### that potential studies 

### may generally 

### fdl within 

### three categories 

### (although a particular study 

### can perform 

### more 

### than one 

### function): (1) High-level 

### studiesthat generally

### build a case for 

### energy 

### efficiency; (2)

### Investment-grade 

### estimates 

### of specificsavings 

### needed to avoid a 

### p&cUlar supply-side 

### investment or 

### (3) Detailed Planning 

### and Program 

### Design studies. 

### Guide 

### for Conducting 

### Energy 

### Eficiency Potential 

### Studies, NAPEE, November 2007, at 

### ES-3. 

### NAPEE further indicates that such 

### studies 

### may estimate four types 

### of 

### EE potential: (I) 

### technical potential, (2) 

### economic potential, (3) 

### achievable potential (or 

### “m~mum achievable 

### potential”), and (4) 

### program potential (or 

### the potential achievable 

### through the implementation 

### of a specific set 

### of programs). 

### Id. 

### at 

### 2-4. Technical and economic 

### potentials are theoretical 

### maxima, independent 

### of program design and 

### real-world barriers 

### to program achievement. Maximum achievable 

### potential 

### and program potential, however, 

### are dependent upon 

### program budgets and designs and (the Commission 

### would 

### assert) on related

### jurisdictional policies. 

### Id. Finally, NMEEpoints 

### outthat, while detailed 

### potentialstudies useful 

### forprogram design must 

### include various types of baseline, 

### energy forecast, cost, 

### and disaggregated des

### data, the quality and availabiIity of 

### data is 

### often the limiting 

### factor of a potential study and 

### drives the methods 

### used. Id. at 

### 3-3. Audubon’s comments 

### that the 

### PWC Potential 

### study 

### would indicate an approximateupper limit on 

### reasonably achievable 

### savings; that itwould 

### not 

### accountforDocketNos. 13-002-U OrderNo. 7 Page 20 of 91 various 

### factors such as program portfolio design, differences 

### among program administrator 

### portfolios 

### and resources, 

### and the 

### time required 

### to “rampup”

### programs; and 

### that savings gods would 

### need to be 

### scaled to 

### an achievable 

### level given 

### available time 

### and resources. 

### These comments seem

### to indicate

### thatAudubon currentlyviews the proposed 

### Potential Study 

### as less than a 

### program design study, and 

### as an estimate 

### of maximum 

### achievable potentid, if not of 

### economic potential. 

### On the 

### other 

### hand, the 

### recommendations of Cadmus, ADM, and 

### the 

### EM (in some cases 

### with some 

### level of explicit 

### agreement by 

### utilities), appear to

### focus on primary data collection

### necessaryfor 

### the improvement 

### of specificprograms, 

### and for 

### the appropriate 

### developmentof program 

### portfolios 

### andthe strategicallocation of 

### fundingamongprograms within a

### portfolio, 

### The Commission interpretsthe Joint 

### Motion 

### to 

### refer to a study with 

### enough data 

### collection, analysis, 

### and detail to

### inform program andportfolio design--in 

### effecthelping 

### describe not only 

### what the maximum achievable potential 

### is, but also how 

### to better realize it. Each purpose 

### is legitimate, 

### and each requires careful 

### consideration of the types of 

### data 

### collection and analysis thatwould need to be specified 

### for an RFP bidder. Furthermore, 

### it 

### seems reasonable 

### that 

### a joint, 

### comprehensive Potential 

### Study would overlap in 

### purpose and 

### methodology (as indicated by 

### recent Cadmus 

### surveys and the recommendations 

### ofthe IEM), 

### withprogram 

### evaluation and the annual updating 

### ofthe TRM and 

### its Protocols. The Commission 

### therefore directs the 

### PWC to develop and 

### submit to the Commission 

### for its approval, 

### on 

### or before noon 

### on November 1, 2013, 

### an RFP and accompanying 

### testimony that 

### describes PWC’s 

### more detailed 

### recommendations

### for 

### an Arkansas 

### EE Potentid Study that reasonably lays the groundwork to maximize theDocketNos. 13-002-U OrderNo. 7 Page 21 of 91 achievement 

### of cost-effective 

### EE potential, 

### including: a clear set 

### of objectives and expected 

### outcomes and uses

### for the potentid 

### study; a scope 

### of 

### work that includes data 

### collection and 

### study approach as 

### well as a report 

### outline; a recommended budget (or budget 

### range 

### with options); 

### and a 

### schedulewith 

### timelinesfor solicitation 

### of a Potential Study 

### consultant,data 

### colIection, report preparation, review of drafts, 

### and presentation 

### of the final report. 

### The RFP should 

### provide 

### that all data, 

### assumptions, formulas 

### and algorithms used 

### to estimate 

### EE 

### potential shdl

### be 

### transparentto the 

### Commission and to stakeholders. 

### The Potentid Study 

### shall estimate 

### potential, taking 

### into account the rulings in this Order 

### regarding avoided 

### costs and program 

### and portfolio screening 

### for cost effectiveness. 

### The Commissionrecommends

### that 

### the PWC consider

### theparameters 

### of the Potential Study 

### with the following

### issues in mind and inform 

### the Commission of 

### the PWC’s recommendations

### about 

### themwhen 

### the

### RFP is submitted for approval:

I. Which of the four 

### common types 

### of 

### EE potential will be quantified, 

### and over what time 

### period? Will potential be presented as a specific 

### number or a range with 

### indicated estimates 

### of confidence and precision?

2. 

### What time period 

### will the 

### Study cover (5 years, 10 years, 20 

### years, etc.?); will 

### the 

### study assume 

### only 

### existing commercially 

### available technology and/or 

### make assumptions

### for 

### futureinnovation? 3. What will 

### be the source(s) 

### of data used to 

### generatethe indicated potentid 

### for energy efficiencyin Arkansas? 

### What 

### is the basis for knowing thatsuch data are availablewithin the cost and schedule indicated?Docket Nos. 13-002-U OrderNo.7 Page 22 of 91 4. 

### How 

### is the

### budget-or range 

### of budgets-for the 

### potentid study estimated? What 

### -trade-offs were 

### made between Study 

### schedule, costs, and accuracy 

### ofresults? Are 

### there some alternativebudget, schedule, and quality options 

### that the Commission should 

### consider for 

### the potential study?5. 

### Will the 

### Studyinclude

### baseline

### market 

### studies and

### will the 

### Study

use existing Arkansas 

### TRM and EM&V 

### data and/or be a 

### basis for a 

### coordinated 

### effort to strengthen 

### and update the Arkansas-specific measure/program baseline 

### informationin the

### TRM 

### and thus be 

### useful 

### for otherEM&Vactivities? 

### 6. Will 

### the 

### Study address 

### subsectors 

### ofresidential, 

### commercial and industrial customer 

### classes, such as: 

### low-income residential, multifmily, institutional, 

### agricultural and

### industry-specific industrial 

### subsectors? Will 

### the 

### Studyindicate

### results 

### as statetotals or by service 

### territories; and/or by different 

### regions (e,g., urbanlrural) 

### and demographicsin the state? 7. WilI the Study include an assessment 

### of the energy 

### efficiency delivery 

### markets (i.e. contractors, retailers, distributers, etc. that 

### do 

### or could servethe

### Arkansasmarket)? 

### 8. 

### How will the Study account 

### for inter-utili@ and 

### cross-fuel 

### EE savingsopportunities and

### the administrative

### improvements recommended by theIEM and program evaluators? While a Potential Study can help inform god setting, goal-setting and the establishmentof

### the related utilityperformanceincentive are ultimately the province ofDocketNos. 13-002-U OrderNo.7 Page 23 ofgi the Commission, in 

### its 

### role of 

### establishing a 

### framework that 

### produces a just and 

### reasonable balance 

### between utiliiy 

### and ratepayer 

### benefits. After 

### three years of 

### Quick Start programs 

### without Lost 

### Conbibution to 

### Fixed Costs (“LCFC”) 

### and utility performance incentives, the Commission in late 2010 approved 

### an overall 

### framework including those elements “onlyin 

### the context of significant god setting 

## . . .not [as] an independent right 

### of utilities, 

### but 

### rather [as] a 

### component of a coordinated 

### group of policies reasonably calculatedto deliver 

### overall benefits to 

### ratepayers, 

### to utilities and 

### to society in a 

### cost-effective manner.” 

### Order 

### No, 14, Docket No, 

### 08-137-Uat 

### 18. 

### The Commission 

### wiIl consider the results 

### of the Potential 

### Study-not 

### as a definitive statement 

### of what is possible-but 

### rather as part of its 

### reasoning in establishing gods and 

### incentivesfor 2016 and 2017 and in approvingthree-year plans. With regardto goal-settingfor 2015,theAnnual Reports and EM&V reports show 

### that most IOUs 

### are exceeding existing 

### Commission goals, despite spending 

### less than their 

### approved budgets and 

### reaching 

### fewer than planned participants. This 

### is 

### true despite growing pains 

### during 

### the first full 

### year 

### of program implementation, despite 

### partial-year implementation 

### of some programs and despite non-participant program



### awareness levels that are 

### frequently 

### at or near 1%. 

### Evaluators make over 

### 400 specific recommendations for program improvement, including 

### cross-fuel improvements, facilitation 

### of 

### financing to 

### address near-universal customer 

### concerns with thefirst cost 

### of measures, and 

### filling 

### of program 

### gapsthat canlower 

### adminisQative costs per 

### unit of energy saved and create 

### new energy savings opportunities. 

### Also, M indicates

### that 

### at the current level 

### of effort, it 

### will 

### exceed its long-term 

### energy savings 

### plans, which 

### formed one of the

### bases 

### for the targets 

### proposed in Order

### No. I. 

### This evidence is 

### not, asDocket Nos. 13-002-U OrderNo.7 Page 24 ofgi

some 

### parties suggest, borrowed 

### from 

### other states, 

### but 

### rather is rooted in 

### the 

### recent experience

### and considerable documentation

### by 

### andwork 

### ofparties 

### inthis docket. 

### Also, the Commission interprets 

### the JCP’s proposal 

### to 

### receive performance 

### incentives for meeting up 

### to 150%

### of Commission goals 

### as an indication that 

### the JCP believe that 

### some 

### level of 

### achievement 

### above the 

### current level is 

### possible. Multiplying the 

### current 

### level 

### of achievement (0.75% 

### for electric

### utilities and 0.40%for 

### natural gas utilities)

### by 150% 

### wouldyield 

### anupper bound 

### for 

### incentivesof 1.13% 

### for elecbic

### utilities and 0.60% 

### for natural gas utilities. This 

### is 

### one more indication 

### that 

### an initial, incremental increase in energy 

### savings goals is 

### reasonable. Finally, 

### no parly indicates 

### thatthe Commission’sproposed gods 

### areunacbievable. Thus, 

### given the time sensitivity 

### and the need to carefully 

### plan to maximize 

### the 

### usefulness of the Study, and 

### in order to provide 

### some clarit-y and 

### direction, the Commission hereby relies upon 

### the evidence of growing 

### and more cost-effective achievement

### toestablish a 2015 target 

### of 0.9% of

### kWh des 

### for electric IOUs 

### and 0.5% of therm sales 

### for natural gas IOUs. 

### In deferenceto the 

### concerns of the AG regarding 

### rate impacts, 

### thesetargets are 

### slightly

### below the

### first year targets proposed 

### in Order No

1. This slower

### ramp-up 

### of comprehensiveprogram offerings provides more 

### time

### for 

### the PWC 

### to 

### coordinate programs to 

### reduce duplicative costs, 

### and to 

### implement other 

### lessons learned and 

### efficiencies of scale. The Commission reserves 

### the right to revisit the 2015 

### target atthe time 

### that it establishestargets 

### for 2016 and 2017,

### based upon the Potential 

### Studyor other data

### that may become 

### available,DocketNos. 13-002-U OrderNo. 7 Page 25 of gi Issue 2: Utility EE Performance Incentive The

### JCPagree

### with the Commissionthatthe

### utility performance 

### incentive should 

### be reformed, but recommend alternatives tothe 

### Commission’s proposed revision. JCP at 11. 

### The 

### JCP agree

### that the incentive 

### should increase 

### linearly dong its range, 

### rather than increasing 

### step-wise

### from a cap of 

### 5% 

### of 

### EE program budgets to a cap of 

### 7% of 

### EE program budgets atthe

### transition from 

### 99% to 100% of goal 

### achievement. Id. 

### The JCP 

### further recommend 

### that 

### the cap on 

### the performance incentive

### should range 

### from 5% to 

### 15.5% of 

### program budgets, 

### rather 

### than the 4%to 

### 8% proposed by the Commission. 

### Id. at 12. The 

### JCP statethat this incentive 

### cap conformswith

### nationalbest practices, 

### which average 12-13%. 

### Id., 

### citing, Carrots

### for Utilities: 

### Providing Financial Returns

### for Vti&y 

### Inuestments in Energy Eficiency, 

### American Council for an 

### Energy Efficient 

### Economy PACEEE”), 2011~The JCP 

### furtherrecommend thatthe

### amount of

### the capped incentive 

### should be based on 15% 

### of net TRCbenefits, 

### rather than io%, as a means of 

### motivating utilities to 

### reach the higher 

### anticipated performance goals. 

### Id. The JCP recommend that performance 

### should be awarded between 80% 

### and 150% of god achievement,ratherthan the

### current 80% to 110% 

### of goal, or the 80% 

### to 120%proposed by the 

### Commission in Order 

### No, 1. 

### The JCP 

### note ACEEE’s finding that “when the 

### available 

### incentive falls within a

### range, most 

### utitilities have earned at 

### the high end of the range;” the

### JCP supports a

### performance

### range 

### and associated

### incentivesthat encourage utilities to 

### continueto 

### deliver 

### more energy 

### savings. Id. at 

### 13. The JCP also agree 

### with the Commission that the utility avoided cost 

### portion 

### of the net 

### benefits calculation 

### should

### beheld 

### constant during each3-year EE program cycle. 

### Id. at 

### 14.DocketNos. 13-002-U OrderNo. 7 Page 26 of 91 The 

### JCP recommend 

### that the 

### Commission retain 

### the practice of 

### awarding incentives 

### based on 

### annual performance, 

### rather than 

### shifing to a 

### cumulative, 3-year 

### performance award. Id. at 14. The 

### JCP indicate that a 

### cumulative incentive 

### will 

### be complex and may eliminate 

### a utiliQ+s ability 

### to earn an incentive in year 3 

### if its performance 

### is above goal in years 1 

### and 2, 

### or conversely 

### if its performance 

### in years I and 2 

### is substantially

### below goal. 

### Id. at 14-15. 

### If the 

### Commission 

### adopts a 

### cumulative incentive, 

### the 

### JCP oppose any 

### “claw-back” provision 

### requiring the utility to 

### refund earlier incentives based 

### on later under-performance because it would increase regulatory 

### uncertainty. Id. at 15. 

### While EAI is included 

### within the JCP, it 

### does 

### not agree with the 

### PWC that 

### avoided costs 

### should 

### be fixed for 

### three years 

### for purposes 

### of calculating the 

### EE performance incentive. 

### M at 

### 9. Rather, EAI favors annual adjustment of The avoided coststhatareincluded 

### in netbenefits,to avoid hindering theintegration 

### of EE resources within

### the 

### IRPprocess. Id. AEEC/AGC does 

### not favor the award 

### of 

### utility incentives, 

### but to the 

### extent they

are awarded, favors 

### modifying the existing 

### structure to provide a 

### linear relationship between performance and 

### incentiveawards, and limiting them to modest 

### levels that are paid 

### only for superior 

### performance. AEEC/AGC at 5. For instance, AEEC/AGC suggeststhat incentives 

### couldbe awarded only

### for achievement above 110% 

### ofgod, with the 

### incentive capped at 5% 

### of program budgets. Id. at 

### 5-6. AEEClAGC 

### object:that 

### the JCP’sproposal to

### allowincentives of 

### up to 15% 

### ofprogram 

### budgets,in combinationwith EM’S LCFC costs 

### of 15% of 2013 

### program budgets, 

### could lead to LCFC 

### and incentives comprising almost 

### a third of a utility‘s 

### program budget. AEECIAGC Reply at 17-18.DocketNos. 13-002-U OrderNo. 7 Page 27of91 AEEC/AGC opposes 

### any lowering 

### of the threshold 

### for allowing incentives and opposes 

### the award of incentive payments 

### for any 

### program with a Ratepayer Impact 

### Measure cost-effectivenesstest 

### rRTMtest”)score

### below 

### one. AEEClAGC 

### at 6. Audubon 

### and Sierra 

### Club support 

### the Commission’sproposed 

### revisions to 

### the utility 

### EE performance 

### incentive, including the three-year cumulative 

### goals. Audubon at 3; Sierra 

### Club at 3. 

### Audubon argues that it is appropriate 

### to use the same, ked avoided cost to 

### determine net benefits that is used in establishing program savings targets, 

### because this 

### structure 

### links financial 

### rewards to 

### factors that 

### the EE 

### program administrator can 

### control-such 

### as measure 

### selection and program implementation

### rather than uncontrollable market prices 

### for energy. Audubon 

### at 3-4. Audubon states 

### that updated 

### avoided cost projections at the end of 

### the three-year period 

### may be 

### no

more accurate than 

### those initially forecast. Audubon 

### notes that the Commission’s 

### proposal also 

### fms the total amount 

### of 

### available incentive based 

### on the three-year program budget, 

### eliminating further uncertain-ty, and that 

### the three-year cumulative 

### incentive will reward 

### midcourse adjustments by program adminisbators to 

### compensatefor underperformance. 

### Id. Sierra Club favorsthe

### increase

### ofthe maximum incentive cap to 

### 8%of program budgets, 

### but has concerns 

### about raising 

### the 

### incentive any higher; 

### Sierra 

### Club seeks to 

### maximize the 

### amount 

### of program funds 

### spent on implementation and to 

### ensure that incentives are 

### no larger 

### than necessary to motivate cost-effectiveprogram implementation. Sierra Club 

### at 3. Id. at 4.

The AG reviews the existing performance incentive structure, finding that it 

### includes some 

### incentive for utilities 

### to overspend due 

### to caps based 

### on EE program budgets, andtobenefit 

### from higher avoided cost numbers. AG at 4-5. 

### However, the

### AGDocketNos. 13-002-U OrderNo.7 Page 28 of 91 

### finds that, 

### overall, most 

### factors included in 

### the 

### shared savings 

### calculation diputility interests with 

### ratepayer interests. 

### Id. 

### The 

### AG states that the Commission’s 

### establishment of an 

### IEM 

### and robust EM&V 

### have %been critical 

### in producing 

### reasonably accurate estimates 

### of the 

### amount 

### of 

### enerw savings and 

### preventing 

### a disconnect” 

### between the

### reporting 

### andreality 

### of

### EEprogram benefits. 

### Id. at 5-6. 

### The AG supports a 

### modified version of 

### the proposed cumulative 

### 3-year goal, under 

### which the goal for 

### each year simply adds to a total cumulative god, 

### thereby rewarding early 

### achievement of the 

### total goal 

### and eliminating 

### any need for a 

### clawback provision.6 

### Id. at 12. The 

### AG also supports implementing 

### a 

### linear scale for incentive 

### rewards over a broader achievement range-particularly 

### with regard 

### to expanding the high 

### end ofthe 

### range. Id. at 12-13. TheAG 

### contendsthat there 

### is 

### no need 

### to increase the incentive caps 

### or to 

### increase the proportion 

### of shared savings available 

### for incentives 

### because the 

### current levels have 

### been smcient to incentivize 

### significant program 

### expansion. Id. at 13. The AG furher states that, 

### because 

### LCFC in practice includes 

### variable costs, it functions 

### as an additional incentive. 

### Id. at: 13. AOG finds

### the AG’s position 

### favoring a higher range 

### for 

### rewarding utility 

### performance, but opposing



### an increasein incentivecaps or shared savings, to

### beinconsistent. 

### AOG Reply at 

### 7. Ruling Regardingthe Utili& Performance Incentive 

### The Commission 

### accepts the recommendations 

### of the JCP to 

### retain an annual goal 

### and incentive 

### structure in order 

### to 

### avoid unnecessary complexity.7 

### The Commission acceptsthe

### widespread agreementthattheincentive 

### should

### be awarded on

6 TheAG does not specify how, orwhetherpartial performancewithin eachyearwouldberewarded. 7 The Commission notes khat, in evaluating Centerpoint programs, Cadmus suggested that utiIities currently have no incentive to over-perform in a single year, leading to mid-year shutdown of some programs and Ioss ofprogram momentum. Cadmus recommendeddowingover-performance in a singlc year tobecreditedto thesubsequentprogramyear goal. Centerpoint Annual Rcport,Appendix A at 3-5.Docket Nos. 13-002-U OrderNo. 7 Page 29 of91

a

### linear rather than 

### stepwise

### basis, 

### and that 

### therange 

### for award should

### not 

### reach below 

### 80% of 

### performance, and that 

### the 

### upper 

### end of the range should 

### be extended. 

### The Commission

### retains its original proposal to settheupper end ofthe

### performance zone at 120%; to cap the 

### incentive at the 

### sliding scalebetween 4% 

### and 8%of program budgets (such that the incentive 

### is capped at 4% ofbudgets 

### for 80% achievement; 5% for go% achievement; 6% for 100%

### achievement; 7% for 110% 

### achievement; and 8% for 120% achievement); and 

### to 

### limit 

### shared savings to IO% 

### of 

### net benefits, 

### in recognition of AEEC/AGC’s 

### argument that performance 

### incentives 

### themselves need not and should 

### notbecome a major shareof 

### EE program

### budgets. Issue 4: 

### UtilityAvoided Costs. 

### The JCP 

### generally agreewith the majority 

### of 

### the Commission’sproposals related to 

### the determination 

### of utility avoided costs. JCP 

### at 16. 

### The JCP 

### observe that the proposals leave sufficient opportunity 

### for utilities to account for differences in 

### their individual 

### circumstances regarding utility-specific avoided generation 

### capacie, energy, and

### transmission and disbibution rT&D”) costs. 

### Id. Regarding avoided energy costs, theJCP agree

### thatthey should includethevalue 

### of energyfreed 

### by 

### EE programs and sold 

### into the

### wholesale market or avoided market 

### purchases, Id. at 17. 

### The JCP also agree 

### that 

### utilities should differentiate avoided 

### energy costs by time and season so as 

### to facilitate the valuation of individual 

### BE programs, 

### orindividual 

### measures, ifthe measure forms a 

### significantportion ofportfolio 

### energysavings. 

### Id. Regarding avoided capaci’cy costs, the 

### JCP agree that they 

### may appropriately be based on the cost 

### of 

### a combustion turbine 

### (“’ or “peaking unit”), 

### as modified toDocketNos. 13-002-U OrderNo.7 Page 30of91 account for market conditions, 

### and 

### as applied 

### to years in 

### which 

### the utility or relevant 

### market area is 

### not in surplus 

### for capacily. 

### Id. at 18, 

### The 

### JCP note that it may be necessary and appropriate 

### to 

### use CT-based 

### values as a proxy 

### if 

### market based values 

### are not available. 

### Id. 

### The JCP support 

### the 

### avoided capaciw calculations based 

### either on actual prices that 

### are escalated, or 

### on modeling that 

### is based on available 

### market data, taking into account any signifmint, foreseeable changes to 

### marginal capacity costs 

### due to environmental 

### conh-01s. Id. 

### The JCP note, however, that specificvalues 

### may not be readily available

### in the latter case, and that the 

### JCP do not 

### expect that the 

### cost 

### of nonpeaking

### resourceswill 

### be

### brought to

### the margin 

### or avoided during

### the 

### planning 

### horizon. Id. Regarding 

### the 

### economic valuation 

### of capacity costs 

### over 

### time,the JCP support adoption 

### of a Real Economic 

### Carrying Charge (IIMCC,” described 

### more fully 

### below) to 

### annualizethevalue of avoided capacity savings,

### tothe extent that autility usesa 

### CI’ as a 

### proxy 

### for avoided capacity costs. 

### Id. at 19. 

### The JCP observe, however, that: a utility using 

### market prices will not have 

### a Tevelized capacity 

### price or 

### a smooth 

### adation of costs. 

### Id. Regarding 

### transmission and 

### distribution (“T&D”) costs, 

### the JCP support the 

### proposal that each 

### utility 

### should develop 

### avoided 

### T&D costs, 

### but question 

### whether specific costs 

### for these 

### categories 

### canbe determined, 

### and observe 

### that the calculation may 

### involve more utility-specific data than is appropriate for the purpose, Id. at 19. Regarding the value 

### of line losses, the 

### JCP support the proposal to require that 

### EE avoided costs 

### should

### reflect marginal, 

### ratherthan average, avoided line losses, although in some cases specificavoided costs

### maybe 

### difficult toaccurately

### estimate. 

### Id. at 19-20.DocketNos. 13-002-U Page 31 of 91



## oraer NO. 7 Regarding carbon pricing, the

### JCP are not 

### unified, with 

### contention surrounding 

### the Commission proposal to deveIop 

### a common assumption [per 

### unit) for 

### C02 compliance costs. 

### Id. at 20. 

### The 

### JCP state that agreement 

### is possible only 

### if the

common CO2 cost 

### is used solely 

### for evaluating 

### EE programs, 

### without 

### implied endorsement 

### by the 

### utiliw, and 

### not for 

### broader planning purposes. 

### The JCP seek 

### further time to 

### develop consensus 

### on this subject. 

### Id. 

### The JCP seek further 

### time to 

### consider this 

### issue, 

### but observe that the 

### U. S. Energy Information Agency’s 

### rEJA’s”) Annual 

### Energy Assessment 

### includes a 

### credible, readily-accessible, cost-free 

### estimate that may be 

### useful, 

### The JCP 

### note that 

### market prices for energy 

### and capacity 

### may include implicit estimates for 

### carbon prices, 

### and that a 

### distinction may 

### be drawn between projected C02 compliance 

### costs (Le., EPA compliance) and 

### broader COP damage costs (i.e., 

### health impacts). 

### Id. at 21. expressesgeneral 

### support 

### €or many 

### of the 

### Commission’s proposed 

### avoided cost guidelines, but 

### is concerned 

### that some elements 

### would require “wholesale 

### revisions” to EM’S

### current process 

### for calculating avoided costs, EAI at 

### io. EAI states that it 

### currently relies 

### on proxies for 

### market:based costs 

### for avoided capaciq, energy, and 

### T&D which are consistent with 

### the Commission’s proposals to use time

### differentiated costs, 

### and to integrate 

### avoided energy, 

### capaci’cy and T&D costs. 

### Id. EAI

uses a 

### levelized avoided capacity cost, 

### rather than a 

### WCC, because it views EE as a 

### long-term investment:and assumes that a 

### customerwould install a measure 

### as efficient 

### as, 

### or more efficient 

### than,the EEprogram installedmeasure at theend ofthe 

### measure’s life. 

### Id. at 10-11. EAI states

### that 

### a RECC approach

### would count 

### onlythe earliest, 

### lowestcost years of EAI’s long-term avoided costs, 

### and is thus inconsistent 

### with a long-termDocket Nos. 13-002-U OrderNo.7 Page 32ofgi view 

### of EE. 

### Id. 

### at 11. 

### EAI 

### references 

### AG Witness William 

### Marcus’s tabular representation 

### of levelized vs, 

### RECC avoided capacity values to argue that the 

### RECC approach undervalues 

### EE and 

### takes a short-term view, because 

### the value of 

### measures would be 

### calculated starting 

### from the 

### date 

### of individual 

### measure installation, which is always in the early, low-cost years of the cost 

### curve. 

### Id. at 14. EAI commentsthat this approach 

### never realizes the 

### fu11 cost 

### of avoided capacity 

### because individual 

### measures

never have 

### a lifethat 

### equals 

### that ofthe 

### CT. Id. EAI also 

### commentsthat the RECC’s 

### use 

### of measure-specific 

### lives is inconsistent

### with the

### Commission’sfocus on

### portfolio-based, rather 

### than measure- or program-specific 

### cost-benefit. 

### Id. EAI warns that adoption 

### of 

### RECC methodology will drive the cost-effectiveness 

### of comprehensive programs negative, eliminating 

### whole-house or 

### faciliv programs and leaving only 

### a few commercially-available EE measures for delivery through standard-offer or measure-bymeasure discount approaches. MI Reply at 

### 9. EAI 

### warns that 

### this decision will, in turn,

### affect:target-setting. 

### Id. EAI notes that 

### no party provides 

### an example of how the 

### RECChasbeen applied 

### elsewhere, andthatit 

### is thus not a 

### demonsbated ‘%best 

### practice.” Id, at 11-12. EM views the Commission’s proposals to 

### include non-peaking resources when they are brought to the margin, 

### or transmission 

### substation and line upgrade costs, as 

### laudable goals 

### if they increase 

### accuracy, but cautions that such 

### estimates are too granular, and

### potentially impossible

### todetermine. 

### Id, at 12. 

### EAI comments that avoided costs

### used for EE program screening 

### and evaluation 

### shouldbe utili@-specific andthatusing the 

### same avoided costs 

### acrossutilities would be inconsistent 

### with the 

### IRP Guidelines, and would lead to inconsistent assumptionsDocketNos. 13-002-U OrderNo. 7 Page33 ofgi within 

### a utility‘s 

### XW. AEEClAGC 

### agree with 

### this 

### comment. AEEC/AGC Reply at 15. EAI 

### also does 

### not agree 

### that the 

### PWC could or 

### should reach

consensus on 

### a single C02compliance cost forecast. EAI 

### at 15, 

### Id. at 11 

### and 15.

AEEC/AGC note that avoided cost 

### determination is 

### inherently uncertain and should 

### be pursued conservativdy 

### by incorporating 

### only costs that are known 

### and measurable, or 

### estimated 

### with reasonable 

### accuracy, AEEC/AGC 

### at 

### 6. AEEC/AGC support 

### the use of market-based, 

### hourly and seasonally differentiated avoided 

### energy costs that 

### are, tothe extent possible, 

### estimated using production 

### cost models using 

### the 

### most up-to-date energy

### pricing 

### data. Id. at 

### 6-7. 

### For capacity costs, AEEClAGC support the use 

### of the levelized cost of a 

### CT,as adjusted 

### for current market prices 

### and need for capacity. 

### Id, at 7. AEEC/AGC 

### are concerned that 

### T&D avoided costs 

### are difficult to reasonably 

### estimate, 

### but agree that they 

### are appropriately included 

### to 

### the extent they

can be identified

### and estimated 

### with reasonable certainty. 

### Id. AEEC/AGC support the

use of marginal 

### line losses. 

### Id. at 8. AEEC/AGC state that, until 

### carbon prices and compliance costs

### for other 

### fume environmental 

### regulations areknown and 

### measurable, their inclusion 

### in determining avoided costs 

### are purely speculative and would 

### likely overstate 

### market prices and EE Id. Sierra 

### Club supports the Sierra Club at 4. Sierra 

### Club program 

### benefits, increasing cost 

### risks 

### for consumers.

Commission’s proposed refinements 

### of 

### avoided costs. agrees with 

### the Commission proposal that properlyconductedproduction modeling may incorporate environmental costs into energy costs, but 

### cautions that such modeling 

### must incorporate likely fkture environmental regulations 

### such 

### as strengthened wastewater discharge 

### standards, disposalDocketNos. 13-002-U OrderNo. 7 Page 34of 91 

### requirements for coal 

### combustion residuals, 

### and more protective 

### air qualiw standards, in 

### order to avoid under-estimating EE benefits. 

### Id, Sierra Club also suggests that 

### agreement 

### by the 

### PWC on avoided carbon 

### costs 

### would be more 

### likely with the involvement 

### of an independent 

### facilitator. Id. at 5. 

### Sierra 

### Club suggests that 

### existing bansmission planning documentation should 

### provide a reasonable basis to 

### develop avoided T&D costs, 

### and notes that recent

### proceedings concerning 

### the

### proposed reb-ofit of the Flint 

### Creek power plant 

### (Docket 

### No. 12-008-U) demonskate that very smalI increasesin peak 

### load may 

### result in largeutility 

### investments. 

### Id. Audubon agrees that a market-based, 

### time- 

### and seasonally-differentiated 

### approach to determining 

### avoided energy costs 

### is appropriate and 

### environmental compliance costs 

### shouldbe included. 

### Audubon at 5. 

### Audubon supportsthe

### adoption 

### of



### a reasonable third-party 

### forecast 

### of carbon compliance costs to 

### be fixed 

### for the three

### year program cycle, and 

### as developed through PWC 

### review of the relevant literature. 

### Id. at 5-6. Audubon supports market-based avoided capacity costs, 

### or a proxy valued under the 

### RECC method. Id. at 6. 

### Audubon states that long-run 

### marginal utility 

### T&D

can serve as a

### reasonablebasis for the determination 

### of avoided costs, and 

### supportsthe

useof marginal 

### line

### losses. 

### Id. The AG 

### generally agrees with 

### the Commission’s 

### proposals to bring some standardizationto 

### the methods 

### for 

### estimating energy, capacity, 

### T&D, marginal line 

### loss, and carbon-related avoided 

### costs, 

### because better 

### avoided cost estimates 

### will lead 

### to appropriate 

### sizing of programs and 

### will increase ratepayer 

### benefits. 

### AG at 14-17.The 

### AG specificalIy agrees with theJCPthat marketprices, 

### where available, are preferable

### to proxies and that 

### either method should 

### be adjusted if necessary to incorporateDocketNos. 13-002-U OrderNo. 7 Page 35 ofgi 

### foreseeable changes 

### in price or 

### cost. Id. 

### at 15. 

### The 

### AG also agrees 

### with the 

### JCP that accurately 

### estimating avoided 

### T&D costs can 

### be 

### problematic

### because it 

### is difficult 

### draw

a

### linkagebetween aggregate efficiencymeasures and specific 

### avoided infrastructure, 

### Id Regarding 

### avoided carbon 

### regulatory costs, the AG 

### notes that 

### market prices, 

### if used, may include avoided carbon

### coststhatshould not

### be duplicated. 

### Id.at 16-17. Regarding theRECC 

### (whichwas 

### originallyproposed 

### by 

### theAG), theAG 

### indicates that, in 

### general, the

### lowest-available cost to supply 

### capacivwithin a 

### market wiIl 

### be less 

### than the cost of 

### market enby (Le., building a 

### new CT). AG at 5. 

### Also, he states 

### that, when the value 

### of a 

### CT is 

### used as a proxy for 

### avoided capacity costs, it 

### is more appropriate

### to say that a short-lived 

### EE measure 

### defers that cost during the 

### life 

### of the



### measure rather than avoids it, 

### AG at 5. 

### Further, at theend of 

### an 

### EE measure’s life, the 

### efficiency of any 

### replacement measure 

### should be measured 

### against the baseline for 

### efficiency at that future

### time, 

### according to theAG, 

### and cannotbe assumedto exceedthe



### newbaseline by 

### an 

### amount equivalenttothe 

### original measure. AG at 6, 

### In accordance 

### with these 

### observations, the

### AG argues that a 

### RECC method, 

### which estimates the 

### value of deferred capacity as an escalating 

### annual carrying 

### charge, more accurately annualizes the value 

### of deferring capacity 

### during the specific 

### life 

### of the 

### EE measure in 

### question, allocating 

### less value to short-term 

### deferral and more value to 

### long-lived 

### measures. Id. at 

### 6-7. Regarding incorporation 

### of 

### TRC results 

### within 

### IPS, the 

### AG states 

### that it 

### is not 

### unreasonable to use 

### different, appropriate approaches and assumptions 

### for comparisonsbetween 

### demand- and supply-side

### resources. 

### AG Reply at 7. 

### TheAG disagrees, 

### however, with 

### the proposal 

### to freeze avoided costs during the three-year 

### EE program cycle, and advancesthefollowing

### arguments: 

### (I.) while 

### all futureDocketNos. 13-002-U OrderNo.7 Page 36 of 91 estimates 

### will be 

### wrong, the 

### accuracy of estimating avoided costs for the next year improves as the year 

### gets nearer: avoided cost 

### estimates 

### for 2017 

### will be more accurate 

### in 2016 than 

### they 

### were in 2014 

### (Id. at 

### 17); (2) 

### prudent utility 

### operators must take 

### into account changing market prices 

### in managing generation, and ratepayers are similarly 

### best served if EE 

### program administers are required tomanage using the

### best and 

### most current available 

### information 

### (Id.at 17-18); and (3) the 

### increased accuracy 

### sought by the Commission through standardizing components of avoided costs 

### such as 

### line 

### losses and 

### T&D will likely

### be outweighed 

### by the inaccuracy 

### generated

### by freezing 

### avoided cost for 

### three years 

### (Id, at 

### 18-19). AEEC/AGC concurs 

### with the

### AG on 

### this point, favoring 

### annual updates to

### EE 

### avoided costs. AEEC/AGC 

### Reply at 15. AOG 

### responds, regarding freezing avoided 

### costs, 

### that the avoided cost 

### for a natural gas 

### utility is the commodiw cost of gas, 

### which 

### is set by the market. AOG Reply at 

### 9. AOG states that freezing 

### avoided costs during 

### an 

### EE program cycle

### is reasonable 

### because the 

### utility cannot control the

### fact that an 

### EE portfolio submitted in year 1

### can result 

### in dramatically 

### different 

### TRC test results in year 

### 3, inboducing 

### significant 

### risk to theutilitythat it 

### will not 

### earn an incentive. 

### Id. at 9-10. AOG also 

### notes that there are 

### practical barriers 

### to 

### making changes to 

### an BE portfolio because 

### program changes take 

### timetoplan and implement. 

### Id. at 10. 

### AAEA states that, 

### while the

### PWC notes that 

### market prices for capacity 

### and energy 

### may include implicit estimatesfor carbon prices, 

### carbon price estimates should include both 

### direct regulatory costs 

### and indirect costs 

### such as property 

### damage and healthDocketNos. 13-002-U Order No. 7 Page 37 of 91 

### impacts. AAEA 3.8 

### AAEA performed modeling to 

### estimate 

### direct: and indirect 

### Iifecycle emissions costs, 

### which it 

### offers for 

### consideration

### by the PWC. 

### Id,

### at:3-8.

### AAEA reports that 

### 14state 

### utility commissions 

### attempted 

### to 

### establish reliable 

### avoided-cost metrics 

### for 

### carbon costs as early 

### as 2008,and that 

### six 

### Mew England states 

### have assigned avoided carbon costs 

### for energy and capacity 

### from 2005 through 2030 

### on a levelized 

### basis. Id. at 

### 9-10. AAEA points to the 

### U. S. 

### DOE Annual Energy Outlook 

### as 

### another potential

source 

### of carbon cost 

### estimates. Id. at 11. MEA notes 

### that, 

### in recent Massachusetts estimates, carbon costs comprised 

### a sizeable part of total 

### avoided costs. 

### Id. at 12. The 

### AG replies to

### AllEll that the states cited 

### by MEA

### appear to have been 

### very successful at 

### saving energy, but that 

### nearly

### all have 

### seen 

### prices 

### for elecbicity rise 

### since the year 2000 at a 

### faster rate 

### than 

### Arkansas. 

### AG Reply at 

### 8. 

### The

### AG does not 

### assefi a causal 

### link between 

### EE program success and 

### higher prices, but does suggest that aggressive 

### EE programs 

### may not help to keep rates low. Id. at 8-9. ABEC/AGC similarly caution against modeling Arkansas 

### EE program policies onjurisdictions with 

### high 

### rates. AEEC/AGC 

### Reply at: 4. 

### While Sta€fsupports the PWC positions regarding avoided cost, Staff also agrees with 

### IEAIthat a levelized cost

### of aproxy 

### CT is a

### reasonable approach, 

### and that

### the

### RECC approach may 

### not be appropriate with determining 

### long-term avoided capacity costs. 

### Staff Reply at 5. Staff also agrees with EAI that 

### each 

### utiliv will have 

### utiliv-specific avoided costsforplanning purposes, includingutility-specific 

### carbon costs. 

### Id.

8While MEA agreeswith theCommissionproposal and ~4th theJCP that carbon regulatory costsshould be included within utility avoided costs, the Commissionnotes that MU'S comments regarding avoided indirect costscouldbe included 

### inthediscussion ofNEBS, below. In order to preserveWs integrated discussion,the Commissionsummarizesit here.Docket Nos. 13-002-U OrderNo.7 Page38 of 91 Ruling ReEardhg UtilitvAvoided Costs The 

### Commission accepts the JCP’s recommendations 

### (which were largely uncontroversid among parties) regarding the quantification 

### of avoided energy 

### and capaciv costs. 

### As recommended by 

### the JCP, avoided energy costs should include the value of 

### energy keedby 

### EE programs and sold 

### into 

### the wholesale 

### market or avoided 

### market purchases, and 

### avoided energy costs 

### should

### be differentiated

### by time and 

### season so as tofacilitatethe

### valuation of individual 

### EE programs, or 

### individual

### measures, if the

measure 

### forms a significant portion 

### of portfolio energy savings. 

### Avoided capacity costs 

### may 

### be based on the cost 

### of a 

### combustionturbine 

### (“CT” or “peakingunit”),

### as 

### modified to account for 

### market conditions, and as applied

### toyears 

### inwhich the

### utility orrelevant market area is not in 

### surplusfor capacity. Avoided capaciv costs also 

### may be based on 

### available market data, taking 

### into account any significant, 

### foreseeable changes to 

### marginal capacity costs, 

### including any such 

### foreseeable changes due to 

### major investments

### such 

### as environmentalconbols. 

### The 

### JCP and the

### AG, argue 

### persuasivelythat, when the cost 

### of building a 

### CT is used as 

### a proxy 

### for avoided capacitycosts, 

### the ECC is a more accurate

### reflection 

### ofthe annual 

### value 

### of capacity deferral. One 

### cannot assume that short-lived 

### EE program

measures 

### will 

### later be replaced by 

### measures that equally exceed 

### future efficiency 

### baselines. Adoption 

### of a 

### RECC approach also is in 

### alignment 

### with the Commission’s 

### original intent to 

### promote long-lived measures 

### by adopting a shared savings mechanism. The 

### Commission 

### adopts its proposed guidance, accepted by the 

### JCP and others, regarding 

### T&D avoidance, heeding the recommendation by 

### Audubon that long-runDocket Nos. 13-002-U OrderNo. 7 Page 39 of 91 marginal utility 

### T&D can serve 

### as a 

### reasonable basis 

### for the determination 

### of avoided costs, andthenumerous 

### cautionary comments that proving 

### specificT&Davoidance

### may 

### be unreasonably difficult. 

### The Commission adopts the use 

### of marginal, rather than average 

### line 

### losses, 

### which is 

### unopposed 

### by any paw, to quantify EE's 

### incremental effects. With regard to the estimated cost of 

### compliance with carbon regulation, the 

### Cornmission accepts the JCP's 

### recommendation to 

### allow 

### time for and accept for consideration 

### a collaboratively-considered, 

### reasonable

### third-party estimate 

### that would 

### be 

### used solely for evaluating 

### EE programs, 

### without implied endorsementby 

### the utility, and not for broader planning purposes. 

### The Commission 

### directs 

### utilities

### and 

### Staff,and requests the PWC 

### more generally, to recommend 

### a price 

### for carbon regulatory cost avoidance 

### as part 

### of the 

### EE Potential Study RFP 

### submission. If the PWC are unable to 

### reach consensus at thattime, parties

### maymakejoint or individual recommendations 

### for the selection 

### by the Commission. 

### The Cornmission accepts EAI's argument 

### that each utility 

### will have individualized 

### avoided costs, including individualized 

### forecasts of carbon compliance costs. Establishing 

### a common assumption for 

### the unit cost 

### of carbon, however, 

### brings 

### reasonableuniformity and cost-comparabiliwtothe evaluation of EE resources across 

### utiIities, while preserving the flexibility (as 

### the 

### JCP suggest) for potentialIy widely-ranging, individualized overall carbon cost impacts 

### on each utility's

resource portfolio. 

### The Commission retains

### the flexibilityto 

### take into account credible evidence 

### that 

### market prices for energy 

### and capacity include implicit estimates 

### for 

### carbon prices. The Commission also acknowledges 

### the distinction between projectedDocketNos. 13-002-U OrdcrNo. 7 Page 40 ofgx 

### C02compliance

### costs (ie., EPA compliance)

### andbroader C02 damage costs (i.e., health impacts),which are

### moreproperly 

### addressed

### as societal NEBs. The 

### Commission also accepts the 

### JCP‘s recommendation to 

### fix avoided costs during the 

### three-year program 

### implementation period. While EE program managers 

### must frequently and 

### rapidly 

### adjust to market 

### conditions, it is 

### the 

### changing markets 

### for

measure 

### technologies, for 

### consumer 

### and contractor 

### preferences and requirements, 

### and 

### for available delivery strategies, rather than fluctuating fuel and capacity prices (or forecasts 

### of prices) that 

### most require nimbleness in the pursuit 

### of a long-term, incremental 

### resource strategy. 

### Given that nearly 

### all portfolios submitted and approved to 

### date remained cost 

### effective through 

### implementation 

### under the TRC 

### test, 

### and even



### more so under the 

### Program Administrator Cost (“PACT’’) test, allowing 

### managers to 

### focus

### onthe factors

### they 

### can most 

### profitably control 

### will createabetter 

### linkagebetween performance and reward. Issue 5: Cost-Effectiveness Screenim and Evaluation and Non-Enerm Benefits ~NEBs”) 

### The JCP support the 

### Commission’sproposal to 

### include appropriate, reasonably 

### quantifiable NEBs in 

### program screening 

### and 

### evaluation 

### because EE programs 

### may provide 

### NEBs in addition to 

### currently-evaluated

### energy savings. 

### Id. at 21-22. 

### The JCP 

### do not, 

### however, compTetely agree 

### on which NEBs 

### should be 

### included and 

### what values theyshould be 

### given, and seek

### €ux“cher time to

### form agreement. 

### Id. at 22 and 23. The 

### JCP also favor 

### the continued 

### primary reliance 

### on 

### the 

### TRC test 

### with the inclusion of collaboratively-developed NEBs, 

### rather than a shifttowards reliance 

### on the 

### PACT test. 

### Id. 

### at 22. The JCP 

### recommend 

### that the same test 

### be 

### used in planning and 

### evaluation 

### of individual 

### measures, programs, 

### and program portfolios, 

### and that 

### theDocketNos. 13-002-U OrderNo. 7 Page 41ofgi 

### Commission continueto require the

### presentation 

### of 

### all four standard 

### cost-effectiveness tests, considering each as appropriate. 

### Id. at 23, Particularly, the

### JCP recommendthat 

### the Commission 

### retain the 

### flexibility 

### to include 

### individual education, training 

### and marketing programs that may 

### not pass TRC 

### Within 

### overall program portfolios 

### that are cost-effective. 

### Id.at 23-24. 

### The JCP agree 

### with the 

### Commission that 

### NEBS 

### may 

### fall into 

### three categories: 

### benefits to the utility, 

### benefits to 

### customers, and benefits to society not 

### captured in utility 

### or customer NEBs. 

### Id. 

### Noting the 

### Commission’s suggestion that parties could review the literature on 

### the comfort and health benefits of weatherization and recommend reasonably quantifiable, significant NEBs for inclusion 

### in program 

### screening,the JCP agree and recommend 

### that the phes

### should 

### work to 

### develop such 

### recommendations. 

### Id. MI

### generally agrees 

### with the 

### PWCregarding NEBS, 

### but believes NEBS 

### should only 

### be included 

### when they 

### are quantifiable and material. 

### Id. 

### believes &at 

### the statutory requirement that 

### EE programs 

### must be beneficial to both utility ratepayers and 

### the utility itself 

### may 

### limit the 

### Commission’s 

### authority to take NEBs into account. Id. 

### M supports reliance 

### on the TRC test 

### without NEBs as 

### the 

### most appropriate 

### approach, 

### but notes

### that 

### the current 

### C&EE

### Rules are flexible enoughto 

### allow a utilityto present the 

### Commission with 

### Societal Test 

### or other 

### cost benefit analysis that includes NEBs, 

### Id. at 16. EAI agrees with the

### JCP that 

### the samecost-benefit tests 

### that are used for 

### program screening 

### and approval 

### shouldbe used throughout the EE 

### evaluation and review

### process. Id.DocketNos. 13-002-U OrderNo. 7 Page 42ofgi AEEC/AGC urges the Commission to focus primarily upon the RIM test in 

### screening 

### EE programs, AEEClAGC at 

### 8. AEEC/AGC 

### emphasizes thatthe 

### majority 

### of ratepayers are 

### non-participants 

### in 

### EE programs, 

### and that the 

### RIM test is the 

### only test that capturesthe

### shift in costs among ratepayers 

### caused by 

### EE program 

### LCFC. Id. at 

### 9. AEEC/AGC recommends that 

### the Commission 

### require 

### EE programs to pass 

### the RIM test. 

### Id. at IO. AEEC/AGC states that utilities 

### may 

### in certain 

### instances 

### not include 

### utility 

### performance incentives within 

### RIM test 

### results, 

### and urge the Commission to establish 

### by rule the 

### standard components 

### of 

### each test, 

### Id. AEEC/AGC opposes 

### inclusion of health 

### and environmental externalities in 

### EE program cost 

### evaluation, noting that 

### such benefits 

### may 

### not accrue to

### ratepayers 

### who pay 

### all 

### EE program costs. 

### Id. at 10-11. AEEC/AGC argues 

### that Arkansas law 

### requires that EE programs benefit 

### ratepayers, whiIe 

### the 

### law of other states 

### such as 

### California and 

### Massachusetts is “in 

### direct conflict” with 

### this mandate, 

### providing that 

### EE is the highest-priority resource. AEEC/AGC Reply at 19. 

### As 

### indicated 

### above, MEA 

### favors inclusion 

### of societal and 

### customer NEBS, such

as 

### indirect environmental damage 

### and health 

### effects from air 

### emissions. MEAalso 

### indicates that its computer

### modelinghas the 

### ability

### to estimate dollar savingsfor 

### certain NEBS related to societal issues and economic development amenities 

### such as Tower taxes and improved business competitiveness. 

### AAEAat 23-24. 

### Sierra Club supports continued 

### reliance 

### on the 

### TRC test 

### for program screening rather than PACT, because 

### only the former 

### reflects customer 

### impacts. Sierra at 7. 

### However, at the portfolio level, 

### Sierra 

### Club supports use 

### of the PACT test 

### as the bestDocketNos. 13-002-U OrderNo. 7 Page 43 of 91 indication 

### of potential 

### customer bill 

### impacts, and 

### to provide 

### consistency in comparing demand- 

### and supply-side resources, 

### Id. at 

### 7-8. Sierra 

### Club supportsinclusion of NEBs within the 

### TRC on the

### basis that the 

### test 

### is distorted 

### if it includes 

### all costs, but 

### not key benefits. 

### Id. at 

### 6. Sierra 

### Club suggests that it is 

### penny-wise and 

### pound-foolish to forego quantifying the more complicated 

### NEBs, 

### sincethe 

### ultimate

### benefit realized through program implementation 

### may greatly 

### outweigh administrative costs 

### of estimation. Id. Sierra Club 

### indicates that 

### Arkansas

candraw 

### on the 

### work of states thatalready quantifycertain 

### NEBs, orfdow 

### the example of 

### other states that 

### employ adders 

### to account for hard-to-quantify 

### NEB, 

### Id. at 

### 6-7. (CenterPoint believes 

### that Sierra’s suggestion 

### to use 

### an “adder” to 

### reduce 

### NEB estimation costs 

### may have merit. 

### CenterPoint Reply 

### at 4.) Sierra 

### Club states that 

### inclusion of NEBS 

### within 

### TRC does 

### not 

### conflict

### withresource planning guidelines, asthe PACT is the

### propertest for comparing resources 

### inthat context. 

### Sierra Club Reply at 4. Audubon 

### supports program screening through 

### the 

### TRC test, 

### and not the PACT 

### test, 

### because TRC 

### is designed to 

### account for net 

### impacts on a11 

### resource costs, and because 

### PACi’ does not 

### account for costs and 

### benefitsof 

### program participation that 

### do not impactutility revenue requirements. 

### Id. at 

### 9-10.Regarding 

### NEBs,Audubon states that, 

### because EE 

### investmentsdo not serve the

### public 

### interest ifthey do not decreasethe cost of 

### end-use service, 

### program administrators 

### should include 

### only those NEBs that

can be 

### quantified 

### with a 

### level of confidence 

### commensurate with prirnw program benefits 

### such as 

### avoided energy costs. 

### Audubon 

### at 

### 6-7. Audubon therefore recommends that any included 

### NEE must (1) be well-defined in terms 

### of measurably reducing scarce resources; (2)

### have a quantifiable economic value; and (3) be clearlyDocket Nos. 13-002-U OrderNo. 7 Page 44 of gi applicable tothespecific program 

### or 

### measure at issue. 

### Id. at 

### 7. Audubon 

### recommends that the use of generic 

### “adders”

### should be avoided and 

### that 

### NEBs should 

### be subject to the same EM&V standards 

### and 

### review 

### as electricand gas energy 

### savings. 

### Id. Audubon offersthe

### following examples ofwell-defined, quantifiableNEBs:

a.avoided

### fuel 

### costs (e.g., propane, oil, kerosene,wood, 

### cod); b. avoided water and 

### sewer 

### costs;

c. deferredequipment 

### replacement 

### costs

### for early-replacementmeasures; d. avoided 

### equipment replacement costs for measures with 

### longer 

### useful 

### lives; and



### e. avoided equipment repair

### orrefurbishment costs (e.g., 

### motor rewinding). 

### Audubon at 7-8.Audubon also favors inclusion of the 

### folIowing NEBs 

### if they are 

### welldefined, 

### quantifiable, and 

### if their magnitude justifies the cost of assessment 

### and verification via

### Arkansas EMWimpact evaluations:

a. Avoided 

### utility 

### transaction costs associated with improved bill payment 

### and 

### reducedcustomer service calls; 

### b. Secondary space-conditioning 

### benefits resulting 

### in 

### resource savings (such as reduced spaceheater and

### fan 

### use 

### frominfiltration

### reduction);

c. 

### Reduced labor or other inputs resulting 

### from improved commercial space conditioning, lighting, 

### and industrialprocesses; and d. Reducedwaste disposal costs

### resulting

### from processimprovements. Id. at 

### 8,

### Audubon recommends critical review 

### ofthe literatureregarding putative health benefits of 

### weatherization 

### and does 

### not support exceptional 

### treatment 

### for NEBs associated with weatherization or other 

### particular programs. Id. at 

### 9. AudubonDocketNos. 13-002-U OrderNo. 7 Page45 of 91 

### cautions that NEBs do not lend themselves 

### to generic treatment and can vary significantly among customers participating 

### in the same or similar programs, so that 

### NEB policy should remain flexible. Id. 

### Audubon allows, however, that 

### consistent 

### treatment of NEBs 

### Within the

### TRM review process 

### does provide

### for initial stipulation 

### of documented values 

### that are applicable to specific measures and programs, pending EM&V review, as warranted by the magnitude of 

### the benefit 

### and the cost 

### of measurement and

### verification. Audubon Reply 

### at 5. ACMagrees with Audubon’s 

### recommendations regarding 

### specification of NEBs where they can be readily quantified through 

### EMW, and opposes the use of 

### generic adders. ACAM 

### Reply at 4. ACU,however, also recommends that, where values 

### for other NEBs 

### have 

### been established through extensive research relied upon in 

### jurisdictions that have implemented 

### EE 

### programs for many years, the PWC 

### should 

### review and 

### adapt such research appropriatelyto Arkansas, for Commission approval. 

### Id. at 

### 4-5. The AG 

### submits the 

### following views 

### regarding the 

### four standard costeffectivenesstests, which utilitiesmust applyunder the current C&EE Rules: 

### Inpractice the

### Participant CostTest: 

### (“PCT”)is nearly alwaysthe most positive and has little policy impact, 

### AG at 6, The next-highest scoring test 

### is usually the 

### Program Administrator Cost 

### Test (“PACT”), which includes avoided utility 

### system supply costs 

### and 

### amounts paid to 

### customers as 

### EE measure incentives, but not 

### LCFC,which the

### AG characterizes

as a weakness. 

### Id at 

### 6-7. PACT determines which system resources are 

### cheapestfrom the utility‘s perspective, but it only 

### addresses 

### aggregate 

### customer bill impacts, rather 

### thanimpacts to specific 

### customers, and thus 

### failsto recognize potential non-participantDocketNos. 13-002-U OrderNo. 7 Page 46 ofgr 

### rate 

### and bill increases. 

### Id. TRCtends to

### be 

### lower than PACTbecause it 

### adds thetotal cost of 

### EE measures tothe avoided

### utility supply costs, and 

### sharesthe same weakness of viewing 

### LCFC as atransfer

### within system costsratherthan 

### an added cost. 

### Id. at 

### 8. The Ratepayer Impact Test 

### (TIM”), 

### which alone includes 

### LCFC,determines whether rates will increase and 

### is often 

### overlooked, in part because utility 

### rates will 

### increase even without EE programs. Id. 

### RJM 

### results 

### below 1 indicate that both rates and bills 

### for non-participants 

### wilI rise, 

### and that 

### for these non-participants, 

### EE resources are 

### more costly

### than 

### supply-side

### resources, 

### Id. at 

### 8-9. The AG states that EE portfolios in 

### Arkansas tend to pass 

### Pa, PAa and TRC, indicating

### that participants and the system arebenefitting and that 

### utilities arechoosing the cheapest supply options, 

### but that lack of attention to RIM scores has given utilities little incentive to address 

### rate impacts. Id. at 9. The AG notes that, when customers 

### install 

### alternative 

### resources, 

### such as 

### solar panels, improved insulation, or 

### load 

### control 

### devices, they conbibute system 

### resources and it 

### is not necessarily

### unfair forthe

### share of supply 

### resources paid 

### by other 

### customers to increase. 

### AG Reply at 

### 3. The AG 

### emphasizes, however, that over-reliance on 

### EE programs that do 

### not pass 

### RIM can rapidly 

### increase 

### rates, Id. at 4. The 

### AG provides the example that 

### the 

### revenue requirement 

### for EAI’s current EECR, 

### at 

### $63,086,302, is comparable tothe 

### $73,781,760 increase in base revenues 

### approved 

### in its last 

### rate case, 

### and has resulted in 

### an 

### increase from $0.23 per 

### month to $3.55 

### per month for atypical customer 

### sincethe 

### inception 

### of 

### EE programs. Id. 

### The

### AG estimatesthat 

### EEprograms 

### havebenefited some customers and probably produced aggregate

### benefits, 

### but has notbenefited 

### al2 customers. Id. The AG concludes that the 

### TRC test 

### is a reasonable way to gauge 

### EE program costDocketNos. 13-002-U OrderNo. 7 Page47ofgi effectiveness 

### and to calculate 

### performance incentives, but that 

### the 

### Commission 

### should consider mitigating non-participant 

### impacts 

### by including RIM net benefits within the 

### shared savings calculation (while 

### still giving 

### TRC greater weight) or 

### by setting 

### less aggressivegoals, which 

### shouldbe

### based 

### on apotential study. 

### AG at 13;AG 

### Reply at4-5. 

### The AG contends 

### that only quantifiable 

### utility-perspecthe NEBS-such as avoided bad debt, 

### avoided arrearages, 

### and avoided customer service 

### are appropriatefor inclusion in a modified 

### TRC test, because 

### TRC is intended to estimate benefits to the system. 

### AG at 

### 19. According to theAG, any NEBs included within 

### a cost-effectiveness 

### test should 

### be those that 

### take the perspective 

### of the 

### particular 

### test-ie., 

### customerperspective NEBs shouldbe included in 

### the 

### Participant Test, 

### and societal

### NEBs should be included in the Societal 

### Test, but 

### neither customer nor societal 

### NEBs should be included within the TRCtest. Id. 

### at 19-20. Particularly, 

### customer NEBS 

### are abenefit 

### to individual customers, and not thesystem 

### as a

### whole. 

### Id. at 20. CenterPoint states that the AG’s suggestion 

### to include 

### RIM 

### net 

### benefits within the 

### shared savings calculation 

### shouldbe “summarilyrejected” on the basis that few EE programs pass the RIM test and that it 

### would thus reduce utility incentives 

### for 

### factors beyond

### their control. 

### Centerpoint Reply 

### at 3. 

### Sierra

### Club states

### that itis sensitivetothe non-participant 

### rate impacts 

### highlighted 

### by the 

### AG, but suggests that they can be minimized by requiring programs 

### to pass the PAatest, 

### or by giving preference to portfoliosthat includeprogramswith better 

### RIM test scores. Sierra Club 

### Reply at 2. Sierra 

### Club and ACAAA disagree 

### with the AG’s statement that 

### TRC assesses ‘“oenefits to the system,” 

### encompassing 

### “benefits to 

### the utilily,” 

### arguing instead 

### that it addresses all costs and 

### benefits tothe 

### utility and to customers. 

### Sierra Club 

### Reply at 3;DocketNos. 13-002-U OrderNo. 7 Page 48 of 91 ACAAA 

### Reply at 3. ACM argues that theAG's 

### concern that NEB inclusion may raise 

### rates or exacerbate non-participant 

### cost shifting 

### is misplaced

### because 

### inclusion ofNEBS influences how 

### EE budgets 

### are allocated, but not the size of thebudgets. ACAAA 

### Reply at 3. ACAAA states

### instead thattheCommission sets overall 

### EE budgets. 

### Id. Audubon, in 

### comments echoed by ACAAA, 

### rejects suggestions 

### by the 

### AG and Sierra 

### Club that 

### RIM test results should 

### be 

### incorporated 

### into program 

### screening or shared savings. Audubon Reply 

### at 1-2. 

### Audubon comments 

### that the 

### outcome of the RIM test 

### is intrinsically determined by 

### utili@cost allocation 

### and rate design, and that the same measure with identical cost, energy savings 

### and avoided cost can pass or fail the 

### RIM test depending on which utili'cy administers the program or even on the participant 

### rate class within 

### the same 

### utility. Id. at 2. 

### Audubon adds that 

### an energy saving 

### measure with

### zero total 

### resourceimplementation cost 

### will fail the

### RIM test 

### ifthe 

### resulting reduced 

### customer payment 

### for energy is less than the 

### avoided cost 

### of supplying and delivering the energy (i.e.,

### if marginal 

### rates 

### exceed marginal costs). 

### Id. AOG adds 

### on this point 

### that, for

### natural gas utilities, the retail rate 

### will alwaysbe higher 

### than the avoided cost€or

### a gasutility. AOG Reply at 9. Audubon further asserts that a negative RIM score indicates the amount that utili@ revenue must increase to maintain revenue requirements, but that it is independent ofthe mechanism for recovering the shortfallin 

### fixed cost recovery, 

### which might include 

### ratepayers (including program participants), 

### shareholders, 

### or a 

### combination 

### of the two, 

### Id. A program that fails RIM 

### will do so regardIess of the magnitude of 

### any subsequent 

### rate increase, according to Audubon. 

### Id. Audubon further notes that a customer who implements their own 

### efficiencies outside 

### of utilityDocketNos. 13-002-U OrderNo. 7 Page49 ofgi EE programs causes 

### a similar revenue 

### reduction and 

### potential 

### rate impact on other customers. Id. Audubon suggests that utilities 

### should be 

### encouraged to aggressively promote 

### the broad 

### distribution of such customer 

### benefits, 

### thereby transforming 

### markets so that, 

### over time, installation 

### of efficient equipment 

### becomes standard and

even non-participants benefit. 

### Id. 

### at 3-4, 

### Audubon arguesthat use of 

### the RIM test 

### for program screeningwill 

### preclude 

### or limit the attainment of suchbenefits, and statesthat the AG's 

### concerns are best 

### addressed through 

### implementing 

### a broad 

### EE program 

### portfolio that 

### makes cost-reduction available to all ratepayers 

### through broad participation. 

### Id. Audubon dso takes 

### issue with the AG's recommendation to include customer perspective NEBSwithin the Pa, but not within 

### TRC. Audubon Reply 

### at 5. According to Audubon, 

### the 

### CaZlj"ornia Standard 

### Practice Manual adopted 

### by the Commission provides forthe inclusion ofthe sameparticipant 

### avoided costs

### for alternatefuel devices

as abenefit in both the 

### PCT and TRCtests. 

### Id. 

### Audubon seesno 

### sound economicbasis toexclude any quantifiable

### energy 

### or non-energy cost savingsfromTRC, 

### Id at 

### 6. In response to the AG's recommendation to lower costs by including 

### RIM test 

### results within net benefits, 

### AOG indicates that 

### LCFC and incentives totaled 

### less than 

### io%ofprogram costsin 2012, andthatthe practical 

### impact 

### of relying 

### on RIM would 

### be to significantly

### decrease

### EE programs 

### and energy savings in Arkansas. AOG at 

### 8-9. Staffresponds

### to suggestionsthat the Commission givegreater weight tothe RIM 

### test 

### by recommendingthat the 

### Commission continueto require submission of all tests, 

### and continue 

### to 

### rely 

### on 

### TRC as the primary cost-effectiveness test. Staff Reply at 3.DocketNos. 13-002-U OrderNo. 7 Page 50of 91 Staff statesthat

### NEBs 

### shouldbe included onlywhen

### they are 

### quantifiable, material, and relevant tothespecificprogram or 

### portfolio. Staff

### Reply at 

### 6. Ruling ReEarding Cost-Effectiveness ScreenhE and Evaluation and NEBs 

### The Commission 

### accepts JCP's recommendation to rely primarily 

### on TRC with 

### the inclusion of 

### collaboratively-developed NEBs, 

### for the screening of programs 

### and portfolios rather 

### than 

### shift toward reliance 

### on PAa. 

### The Commission accepts 

### the recommendation of JCP 

### that the same test 

### be used 

### in planning 

### and evaluation of individual measures, programs, and program portfoTios, and that the 

### Commission continue to require the presentation 

### of d1 

### four standard 

### cost-effectiveness tests, 

### considering each as appropriate. 

### The Commission thus 

### retains 

### theflexibility to

### include individual education, 

### training and 

### marketing programs that may not pass TRC within 

### overallprogram portfoliosthat are cost effective. 

### The Commissiondeclines

### to 

### systematicallyincrease theweight of the RIM test, or to insert it into utility performance incentive calculations for 

### EE programs. 

### The Commission declined 

### to use 

### the RIM test 

### as the 

### primary means 

### of screening 

### EE programsin Order

### No. 12of Docket

### No. 06-004-R.9 Regarding the use 

### of the 

### RIM test 

### for utility performance incentives, the Commission credits Audubon's careful 

### reasoning regarding the 

### precise information 

### regarding 

### theoretical 

### rate impacts that is produced by the RIM 

### test. 

### Programs should 

### not be 

### developed 

### andplanned on 

### abasis which is inkinsidly 

### determinedby 

### utility cost allocation and rate design, rather 

### than 

### by comparing the total costs and benefits of

9 The Commission there found that various beneficial supply-side investments, such as tree trimming, wonId fail the RIM test, and that, with properprogramplanning and over time, all ratepayerswill benefit from programs approved after consideration of all of the standard tests. Order No. 12,Docket No. 06- 004-R at 32.DocketNos. 13-002-U OrderNo. 7 Page 51 of91 

### alternative

### resources. Nor 

### should programs that savenatural gas 

### be 

### excludedwhenever (as AOG 

### claims) the

### retail rate is higher 

### than the 

### avoided cost 

### for a gas utility. TRC 

### has theprimw

### purpose 

### of comparingtotalresource costs, 

### and 

### is the

### better test to evaluate overall program cost-effectiveness and performance. Furthermore, as ACAAA 

### notes, while cost-effectivenesstests are 

### used to 

### screen programs, they do not dictate program budgets, which are instead proposed by program 

### administrators 

### and approved by the Commission. 

### The 

### Commission, 

### however, appreciatesthe concernsofthe

### AG and ofAEEClAGC 

### regarding RIM 

### scores and rate impacts, which become more salient as EE portfolios reach scale. 

### As in 

### all ratemaking 

### matters, the 

### Commission 

### seeks to 

### maximizethe value of ratepayer funds invested, and to minimize overall ratepayer impact. The 

### evidence that the largest 

### EE program portfolio-that 

### of EAI-can 

### achieve a 

### neukal RIM 

### score 

### (0.98,as detaiIed above) in significantpart 

### through the first-year 

### implementation of 

### a residentid 

### load 

### control program is 

### one indication that portfolio 

### composition can reasonably address 

### RIM test cost-effectiveness. The IEM’s recommendations for crossfuel coordination and forprogram improvements also explicitly aim to

### yield cost-saving 

### efficiencies. Improved data 

### tracking also 

### should enable 

### Parties 

### and the Commission to 

### understand 

### whether and to 

### what degree 

### EE programs, 

### over time, are leading to lower bills 

### not only 

### for participating 

### ratepayers 

### and for ratepayers 

### in the aggregate, but also for the majority of ratepayers. The 

### one-year extension 

### of current 

### EE programs and the 

### Potential Study provide an opportunity for all stakeholdersto carefulIy 

### consider and 

### to develop strategies 

### on ongoing practicesthat maximizethe value ofratepayer investment and mitigate ratepayerimpacts related to

### EE portfolios.DocketNos. 13-002-U OrderNo. 7 Page 52 of 91 Further, with regard toAEEC/AGC’s concerns regarding 

### program cost 

### and costeffectiveness, the 

### $334/Mtvh average energy savings cost cited by AEEC/AGC 

### may 

### conflate first-year 

### EE program savings with 

### program 

### lifecycle savings.10 The $334/MWh average savings cost 

### cited 

### represents total 

### program costs divided by firstyear 

### savings, 

### and not savings over the

### lifecycle of the

### program; it thus 

### greatly overstates the lifecycle cost 

### of 

### energy saved. Similarly, AEEC/AGC’s summary 

### of EAI’s achievement (0.28% of retail sales 

### over 

### four years) appears to omit the persistence 

### of any savings from year 

### to 

### year, greatly understating the impact of the ongoing program portfolio. The Commission accepts JCP’s 

### proposal to 

### review the literature on the comfort and health benefits of weatherization and to 

### seek consensus on any recommended, reasonably quantifiable, significant NEBs for inclusion in program screening. 

### The Commission also 

### accepts 

### Audubon’s well-reasoned guidelines for NEB consideration 

### and 

### inclusion, with some modification: 

### Audubon recommends the inclusion 

### of only 

### those NEBs that 

### can be quantified with a level of confidence commensurate 

### with primary program benefits such as 

### avoided energy costs. 

### Audubon also 

### recommends that NEBs 

### shouldbe 

### well-defined 

### interms 

### of measurably reducing scarce resources; (2) 

### have a quantifiable economicvalue; and 

### (3)be clearly 

### applicable tothe

### specificprogram



### or measure at issue. The 

### Commission’s 

### modification of the Audubon guidelines is that



### some NEBS 

### should be quantifiedbecause they add value 

### or reduce costs, rather than 

### because they 

### reduce the use of scarce resources. 

### AIso, while 

### Audubon cautions that 

### weatherization should not receive special 

### treatment, the JCP’s proposal to seek

10 The Commission accepts this numberfor purposes of discussion only, without exploringwhether it is appropriately weighted for the different amounts of program savings in different years, whether it takes into account capacityavoided, orwhether it is otherwiseappropriateIy presented.DocketNos. 13-002-U OrderNo. 7 Page 53 of gi



### consensus 

### on any reasonably quantifiable, significant 

### NEBs specific

### to 

### weatherization need 

### not vary 

### horn Audubon’s recommendation 

### that NEBs 

### should be 

### well-defined, quantifiable, and 

### specific

### tothe

### program at issue. 

### To address concerns by AEEC/AGC, EAI, 

### the 

### AG and others that inclusion 

### of NEBs may require ratepayers to fund non-utility service, the 

### Commission clarifies that any 

### inclusion of 

### customer NEBs 

### within the 

### TRC is intended to make the primary program and 

### portfolio 

### screening tool accurately assess the 

### available 

### EE resource, The Commission intends 

### that, at the 

### measure incentive level, ratepayer incentives to customers, and 

### thus the

### ratepayer 

### resourcesspentto achieve 

### EE savings, would remain constrained by utility 

### system avoided costs 

### (Le,, 

### by PACT analysis, which might properly include utility 

### NEBs, 

### but not customer NE3s). A TRC test 

### properly 

### including NEBs 

### will 

### therefore give 

### program administrators a broader range of EE measures and programs from which to select,theoreticallyenabling lower cost 

### or more comprehensive services; but it WiIl 

### not entail 

### customer incentive spending to 

### subsidize individual customer NEBS, At the 

### portfolio level, the concern can be met 

### by ensuring that 

### EE program portfolios 

### pass both TRC and PACT tests. 

### In this way, 

### both programs and 

### portfolios will 

### remain cost effective as compared to alternative resources, while 

### retaining the

### flexibiliwto 

### include auxiliary programs 

### such astraining and education, or programs aimed at ensuringthat 

### allratepayers

### have access

### to

### EE senices.11 

### The Commission 

### does

### not specify, 

### as mentionedby 

### JCP,that individual measures 

### should pass the TRC test, 

### in order to allow for the possibility that 

### combinations 

### of

measures might reasonably be part of a program that passes TRC. Regarding the

11 OG&E’swindow air-conditionerprogram orM’s mobile home efficiencyprogram mightbe examples.DocketNos. 13-002-U OrderNo. 7 Page 54 of 91 Societal 

### Test (which includes societal NEBS), current C&EE 

### rules allow, 

### and the Commission continuesto accept,

### voluntary utility submission 

### of the SocietalTest forthe Commission’s consideration in approving 

### EE

### programs 

### and portfolios. Issue 6: Process andTasksfor ContinuousPromam Improvement Order 

### No. 1

### proposedthatutilities 

### and other stakeholders should collaborate over the 

### next program cycle to develop core 

### EE programs 

### €or

### each rate class 

### that, 

### insofar as possible, have 

### standardized, bansparent 

### features to promote comparability 

### across 

### utilities,better understanding and participationby customers, contractors,vendors, and 

### trade dies 

### across the state, 

### and increased administrative efficiency and cost savings. Order 

### No. 1 at 39. The 

### Commission 

### acknowledgedthevalue of

### the PWC’s 

### collaborative development 

### of proposed rules, ongoing management implementation issues, 

### and role in 

### creating and updating 

### the deemed savingsvalues, the TRM and its EMWProtocols, and standards 

### for administrative costs 

### and Reporting Needs. 

### Id. at 

### 40. Order 

### No. 1 

### proposed 

### to build 

### on these successes through an enhanced 

### Continuous Program Improvement 

### Collaborative 

### (“CPICollaborative”) that, under 

### the leadership 

### of Staff, 

### would select 

### and engage a facilitator with 

### extensive experience in the development 

### of utility EE programs to manage collaborative

### resolution ofissues, Id. The CoIlaborative would take advantage of experttechnical assistance,facilitation 

### and procedural reforms in order to facilitate stakeholder cooperation and Commission 

### reliance 

### on its 

### results. The 

### CPI Collaborativewouldinclude

### theutilities, Staff,

### theAG, all parties tothis docket, 

### and any other participants that the Commission might deem appropriate. Procedurally, itwould aimto reach consensus 

### on each 

### issue addressed, 

### make 

### a record of its 

### decisionsDocketNos. 13-002-U OrderNo. 7 Page 55 of 91 

### for reporting to the Commission, and 

### provide 

### for any 

### dissenting reports 

### to the 

### Commission

### on issuesnotresolved by the parties. 

### Id. The Commission proposed that the CPX 

### Collaborative would 

### address ten substantive tasks, developing a 

### core group 

### of statewide 

### EE programs.12 

### Id,ai41. 

### The CPI Collaborative's consultant(s) would 

### help identify 

### and capture opportunities 

### for program improvement 

### and increased statewide 

### coordination and standardization. The Commission proposed that the 

### consultants and the facilitator selected 

### should be independent 

### ofthe utilities and other stakeholders, i.e,they should not have financial



### or business 

### interests with 

### any of the 

### stakeholders, 

### and that they should 

### be paid 

### for 

### by using a 

### small 

### portion ofthe total 

### annual energy 

### efficiencybudgets, with costs alIocated to 

### all 

### utilitiesusingthe joint-utility cost 

### allocationmethods developedby theutilities for 

### the AWP, 

### EEA, and EM&V 

### programs. Id. at 

### 42-43. According 

### to the 

### Commission proposal, the consultants should have demonstrated technical expertise in the design, planning, implementation, and improvement of EE programs and strong fami1iarit-y with best 

### practices in those areas. 

### The Commission stated its view that the 

### CPI Collaborative should be the client of the consultants, who are 

### expressly intended to 

### perform 

### tasks separatefrom the consultants and 

### vendors 

### used by the 

### utilities and 

### EE program administrators 

### to design, 

### implement, 

### and evaluate 

### their programs 

### and

12 These tasks were (I) Standardizing and achieving efficiencies in the delivery of whole-house weatherization senices; (2) Developing joint-utility EE senicesofferings to national accountscustomers; (3) Eqloring an expanded role in EE planning and implementation for Arkansas Manufacturing Solutions YAMS") and the Arkansas Industria1 Energy Clearinghouse ("AIEC"); (4) Increasing participation and achieving deeper energy and demand savings in the industrial sector; (5) Improving cost-effcctivcnessofcommercial programs; (6)Making EE programs more consistent across the state; (7) Separating new constructionEE programs fkom retrofit programs; (8) Strengthening EEprogram delivery methods in order to increase participation; (9)Improving pIanning assumptions so that EE plans better reflect likely savings, participation, and cost estimates and (io) Exploring creation of a statewide database.DocketNos. 13-002-U OrderNo. 7 Page 56of 91 

### separate

### from the

### EM&V 

### responsibilities performed 

### by the 

### EM. Order 

### No. 1

### indicated that the Commission would 

### establish a 

### procedural schedule for the work to

### be done by the 

### CPI CoTlaborative following its review of comments received 

### in response to the proposal. 

### Id. at 

### 41-42. Finally, Order 

### No. 1 stated that

### the CPI 

### Collaborative’s mission should

### be ongoing,

### withannual reporting 

### of

### ib findingsandrecommendations. 

### Id. The 

### JCP respond 

### that 

### a new collaborative 

### with a third-party 

### facilitator is not 

### needed and that theexisting framework, includingthe EM&V 

### activities

### and input 

### of the 

### IEM,effectively address 

### the development and improvement 

### of 

### EE programs and 

### other issues. JCP at 

### 24. The

### AG agreeswith the JCP’s comments, AG 

### I~tial at 21. The 

### JCP oppose creationof a duplicateprocesswith 

### additional uazlecessaxlf costs and activities. Id, at 25. 

### The JCP 

### recommend instead that the Commission direct the PWC to 

### engage third-party 

### consultants as needed, or the PWC 

### may request 

### such authorization,

### including for issues 

### such as program planning, financing, 

### cross-company program 

### coordination, 

### and others. Id. at 25 

### and 33. 

### The JCP present, 

### for example, the PWC’srequestto hire a consultantto 

### conduct a 

### Potential 

### Study. Id. at 25. The JPC note that EM&V activities 

### and planning activities are interrelated and should not be separated, and 

### that NAPEE 

### has similarly endorsed the concept that 

### EM&V should 

### provide a 

### feedback loop 

### for timely 

### program enhancement. 

### Id. at 25-26, 

### The JCP indicate that that the PWC process 

### is already addressing program 

### standardization; program cost 

### and NEB 

### issues; incorporation of lessons learned to increase consistency, transparency, 

### and comparability among programs; resolving differences among 

### stakeholders; 

### strengthening 

### EEprogram delivery options 

### to increase participation; and improving EE program planning assumptions to

### better reflect 

### likelyDocketNos. 13-002-U aacr NO. 7 Page 57of91 cost: and energy savings 

### per participant and expected 

### pdcipation. 

### Id. 

### at 30-31. The JCP state that 

### the current EM&V 

### activities 

### already support program consistency, 

### transparency, 

### and comparability across the state, 

### while preserving 

### the ability 

### of individual utilities to design, propose, and 

### implement 

### EE programs that best fit their respective customers. 

### Id. at 

### 34.The 

### JCP add that theXOUs 

### currentlysecurethe services of experienced national and international 

### consulting 

### firms that develop, 

### design and 

### implement “best 

### in 

### class”

### EE efforts. Id,at 33. While the JCP agree that consistency among 

### IOU programs is desirable where 

### possible, they indicate that 

### program consistency is 

### not achievable 

### in all 

### sectors 

### of the Arkansas market and that it is not practical to offer completely uniform portfolios for 

### each utility. Id. The 

### JCP note that many states that began mandating statewide programs subsequently modified this stance after realizing that customers are not 

### homogeneous from 

### one utility

### to another. Id. The 

### JCP note that the IOUs continue to share best practices to promote program consistency, particularly in the area 

### of home 

### weatherization and 

### energy services. Id. at 34-35. EAI supportstheJCP’s comments and assertsthattheutilities

### should continueto determinewhat programsthey 

### will offer totheir customers, subjecttothe Commission’s approval,

### because 

### theutilities 

### areultimatelyresponsible 

### for achieving the

### EE goals. EAI 

### Initial Comments at 17. 

### Ifutilities

### lose control 

### overtheir programs, statesthatthey 

### shouldbe relieved 

### of responsibility

### for achieving

### results. Id,at 

### 19.M 

### addsthat 

### a new, facilitated collaborative 

### process 

### may hamper the 

### abirity to adapt to 

### real-time market changes, create market confusion by changing programs and requiring 

### new training, conflictwith 

### the Cornmission’s 

### Comprehensiveness Checklist 

### (whichrequires, inter alia,DocketNos. 13-002-U OrderNo. 7 Page 58 of 91 

### EE senices 

### for 

### all major end-uses of electricity and natural gas), 

### lower the costeffectiveness of programs 

### administeredby individual utilities, 

### and stifle innovation. Id. at 17-20, 

### EAI 

### notes that the program 

### improvement proposals in Order No. I 

### were issued at atimewhen 

### only

### partial-year, 

### PY 2011 results were 

### available, and thatin 2012 EAI exceeded

### EE targetsusing

### best practice programs

### that were 

### planned 

### in conjunction with world class

### consuTtants and expertlyimplemented. 

### EM 

### at 5 and 21. 

### Centerpoint and Staffalso agreethat, whilethere is 

### value toprogram consistency,

a “one-size-fits-all“ approach to 

### program standardization 

### is “unlikelyto be a 

### workable model 

### in 

### the State of

### Arkansas,” Centerpoint Reply at 5, Staff Reply at 7. 

### Centerpoint statesthat 

### the degree 

### of 

### standardizationthat is appropriate

### in a rural state

### bears further discussion, 

### parficularly considering the waiver 

### from C&EE 

### Rules 

### granted to rural 

### ekctric cooperatives. Centerpoint Reply 

### at 5. Sierra 

### CIub states that the 

### proposed enhanced stakeholder 

### collaborative is an excellent way to 

### achieve increased standardization 

### and transparency 

### in 

### order to create economies 

### of sdein program 

### delivery. Sierra 

### Club at 8. Sierra 

### Club indicates that independent, neutral facilitation 

### is important and 

### has worked 

### in Arlm~sas and 

### in 

### other states. 

### Id. Sierra Club 

### cautions that, while it supports the 

### creation of statewide, 

### standardized 

### programs, utilities 

### need flexibilityto 

### meet unique senice categorieswhen 

### their customers

### have 

### very different

### needs, Id.at 

### 9. Audubon notes that the success 

### of collaborationultimately depends 

### on effective communication, 

### consultation, and decision processes that 

### promote a focused 

### effort to 

### achieve consensus on 

### major issues and to advance the 

### collaborative planning agenda toward the 

### fulfilhent 

### of its stated 

### objectives. 

### Audubon adds that an 

### experiencedDocketNos. 13-002-U OrderNo. 7 Page 59 ofgi facilitator can

### render critical 

### assistanceto

### organize

### and 

### run effectivemeetings, facilitate group decisions, and create a record 

### of collaborative deliberations

### and decisions 

## - all 

### of which activities 

### canconstitutea 

### contixluousprogram improvementprocess in which the 

### stakeholders 

### and the 

### Commission canplace their confidence. Audubon Initial at 10-12. 

### Audubon replies to the JCP’s 

### concern that time and expense 

### would be needed 

### for a 

### facilitator to become familiar 

### with the unique characteristics of 

### Arkansas 

### EE program 

### experience, asserting that the 

### requirement of neutrality does 

### not ide out the employment 

### of 

### a facilitator that 

### has direct experience 

### with the Arkansas 

### EE issues. 

### Audubon Reply 

### at 7. Audubon maintains, 

### however, that neukality does prohibit 

### the assignment 

### of 

### such a role or responsibility to 

### collaborative stakeholders, aparty tothese proceedings, or others 

### who 

### have interests with 

### any 

### of the 

### parties or stakeholders. Audubon accordingly proposes that a 

### neutral third 

### party facilitator with 

### previous experience in 

### Arkansas 

### be considered as a 

### qualified candidate to 

### assume this responsibiliw, 

### but that 

### such 

### experience should not 

### be a 

### prerequisite for consideration. 

### Id. See also Sierra 

### CIub Comments at 5, 

### 8 andACAAA Reply Comments at 1-2. ACM agreeswith JCPthat it is not 

### necessarytofund a new collaborativeto promote 

### statewide consistency 

### among EE programs and 

### shares their concern 

### regarding the cost and 

### time needed 

### to educate a facilitator unfamiliar with the 

### Arkansas 

### EE experience. ACAAA Reply at 1. ACAAA states that these views can

### be reconciled withAudubon’s support

### for



### an independentfacilitator 

### andtechnical expertsby 

### relying 

### on a 

### member of Commission 

### advisorystaffto facilitateresolution

### of the

### issuesproposedin Order

### No. I. 

### The advisory staff facilitator would propose agendas, organize meetings, facilitate consensus, and ultimately 

### present a proposal on behalf 

### of 

### the collaborativeto the Commission withoutDocket Nos. 13-002-U OrderNo. 7 Page 60 of 91 divulging party 

### negotiations or supporting the proposal with testimony. 

### Id. at 2. AEEC/AGC is concerned 

### that: the CPI 

### Collaborative would increase costs and 

### recommends that any decision 

### to implement: 

### a 

### new collaborative 

### should be deferred 

### until its

### need 

### is further evaluated and cost-justified. AEEClAGC at 11. Ruling on Procedurefor ContinuousPromam Improvement 

### The Commission generally 

### agrees 

### with the JCP that a duplicative 

### CPI ColIaborative 

### is not 

### necessary to promote increased consistency, 

### coordination, 

### and standardization of 

### EE programs, 

### Further, as noted by EAI, 

### PY 2012 

### program performance 

### generally exceeded targets, 

### and 

### program administrators and 

### EM&V evaluators are focusing 

### on cross-utility and cross-fuel 

### coordination, achievement of deeper 

### savings, standardization of 

### processes, improvement of data 

### collection and participant 

### backing, and a host of other 

### program improvement recommendations that overlap 

### with many of the objectives outlined 

### in Order 

### No. 1. The Commission also 

### acknowledges the JCP’s summary 

### of areas 

### of overlap between 

### the 

### current PWC’s 

### activities and the proposals in 

### Order No, I, 

### and EM’S suggestion 

### that a 

### new Commission-orderedprocess could disruptprogress

### onresolving theseissues. The record 

### does not indicate, however, how the 

### collaborative is operating with 

### respect to the PWC’s schedule, agendas, 

### or methods of building consensus 

### and making 

### and/or recording and reporting decisions, 

### For example, it is unclear tothe Commission 

### whether theAWP and other 

### weatherization

### issues discussedbelow are being 

### addressed by the full PWC 

### or 

### by a 

### subgroup of the 

### PWC,and whether 

### the 

### collaborativeprocess 

### is currently 

### facilitated by Staff, the IEM, the AWP 

### program administrator (the 

### Central Arkansas Development Council, 

### “CAD C”) or program coordinator (ACU). Moreover,Docket Nos. 13-002-U OrderNo. 7 Page 61 of 91



### no evidence was submitted regarding what procedures 

### or practices guide 

### the provision. of notice for meetings, information gathering and 

### sharing by 

### parties, 

### and issue 

### discussion 

### and resolution. The Commission is under the impression that the 

### IEM currently

### serves as a 

### convener for 

### some purposes 

### and that Staff 

### and/or ACAM 

### doesfor 

### others. The Commission also finds that certain issues such as cross-fuel coordination (particularly 

### with 

### regard to 

### weatherization) and 

### facilitation of 

### uniform offerings 

### for commercial customers-including national accounts customers-should 

### be addressedto the fullest extent possible prior to the initiation of the next program cycle, which was 

### delayed in part to 

### allotv resolution of these 

### issues. The 

### Commission agrees 

### that 

### each utility 

### needs flexibility 

### to address 

### customer 

### segments 

### and utility circumstances unique to itsterritory. 

### The Commission also does not wish to burden the detailed, vital ongoing 

### work 

### ofthePWC with

### unnecessary bureaucracy. ReasonableuniformiQ

### in 

### coreprograms, however-particularly 

### as theyappear to 

### and affect 

### customers and 

### trade allies-need 

### not 

### conflict with necessary variation in program offerings among utility territories. Also, the increased administrative 

### duties of faciIitation 

### and increased transparency 

### have 

### value when parties with differing interests address a 

### complex, 

### time-sensitive 

### task with significant 

### resources at stake. 

### The Commission 

### is not persuaded that 

### such facilitation must 

### be an expensive and timeconsumingundertaking. 

### Further, while 

### afacilitator

### with exhaustive

### experiencewith the 

### Arkansas 

### EE landscape would 

### be a strength, a capable facilitator that lacks such familiarity might 

### bring the benefit of neutrality, which is typically required in issue resolution 

### among parties with different points of view and disparate resources forDocket Nos. 13-002-W OrderNo. 7 Page 62of 91 

### collaborative participation. 

### Moreover, a skilled facilitator 

### with strong 

### experience in 

### energy 

### utility issues should 

### be 

### able to 

### study and prepare 

### in relatively 

### quick course. 

### As the PWC embarks 

### on its 

### second 

### three-year cycle, it is 

### evidentthat it 

### has reached 

### a stage 

### of maturity 

### inwhich 

### a 

### more sophisticated

### process is necessary to

### match the objectives of providing 

### Arkansas citizens with comprehensive, cost-effective energy efficiency programs. 

### The 

### Commission agrees with the 

### JCP that 

### d1 

### FWC meetings 

### do not require independent, 

### outsidefacilitation, 

### andthat

### the PWC may request authorization

### to engage third-party 

### consultants 

### as needed, andthat in some 

### cases 

### the Commission

### should direct the PWC to engage facilitation or technical expertise. 

### To that 

### end, the 

### Cornmission herein directs that (1) general 

### meetings 

### of the 

### PWCshould, nevertheless, follow certain 

### basic procedural

### guidelines led by a facilitatorthat may be 

### chosen

### from within the

### PWG and (2)

### that the 

### specific 

### task of developing 

### a more unified approach 

### to 

### residential weatherization 

### shouldbe facilitated 

### eitherby a

### member 

### ofthe IEM's team 

### who 

### is expert in weatherization, or by an outside facilitator, with adequate technid expertise 

### availabletothePWC. 

### These decisions acknowledgetheprogress 

### ofthe 

### PWCasreflected in advances in program achievementduring 2012 

### and the 

### indicationsthat the

### PWCwilI address program coordination and 

### improvement, 

### as recommendedbythe

### IEM. 

### The Commission directs the PWC to propose for Commission approval on or 

### before 

### noon on January IO, 2014, 

### procedural guidelines to govern meetings and deliberations of the 

### PWC. The Commission requests 

### that 

### such guidelines address the designation of a facilitator for meetings, notice 

### and development 

### of agendas, 

### thetimelyDocket Nos. 13-002--U OrderNo. 7 Page 63 ofgi provision of information 

### and materials, 

### and the manner in which decisions are 

### made andrecorded, includingtherecording of any dissenting opinions. 

### The Commission also accepts JCP’s general recommendation that the 

### colIaborative 

### may request 

### authorizationto 

### hire, 

### or may be 

### directed to hire, facilitation



### or technical expertise 

### as needed with respect to any 

### issues being addressed by the colIaborative. 

### In the event that there is no consensus on this point, 

### any party may petition the Commission 

### at any 

### time to 

### seek technical assistance 

### or facilitation for the collaborative. With respect 

### to 

### weatherization, which includes services 

### for not 

### just severely 

### energy inefficient

### homes,but for all 

### residential 

### customers,the Commissionprovidesthe 

### following 

### procedural directive: The 

### PWC shall identi@ 

### a facilitator 

### to guide deliberations concerning 

### the standardization of the 

### existing models 

### of weatherization approaches detailed 

### below and 

### coordination of weatherization 

### programs in time for 

### implementation during the next 

### three-year 

### EE program cycle, taking into 

### account the discussion 

### below regarding existing weatherization 

### programs. The IEM, through a person 

### on 

### the IEM’s 

### team with specific expertise in weatherization may serve as the weatherization facilitator, 

### or the PWC may identify a person 

### independent of all the parties and with 

### expertise in the coordination and delivery 

### of utiIi@-funded and/or federally-funded weatherization senices. 

### The 

### PWCshall also 

### ensure that any technical 

### expertise necessary to establish best-practice 

### program elements, to maximize the leveraging of the resources of the 

### federal WAP 

### program and other potential program partners, 

### and to establish 

### financing mechanism[s) that enable customers 

### to implement comprehensive whole-house retrofits and to 

### avoid lost opportunities for savings, isDocketNos. 13-002-U OrderNo. 7 Page 64 of 91 

### made available to 

### the 

### members of the 

### weatherization colIaborative throughout its process 

### for timely, in-depth 

### consultation. To provide greater transparency to the existing and the enhanced PWC process, 

### the 

### weatherization facilitator 

### shalI 

### folIow the procedures 

### enumerated above

### for all faditation. With respect 

### to the 

### utilities’ respective C&I 

### Prescriptive and 

### Custom programs the PWC 

### shall, 

### as detailed further below, also develop 

### uniform 

### offerings that allow commercial customers-including particularly 

### national accounts customers-to transparently access EE services 

### through a single application process 

### across fuels and utilities. 

### These two 

### taslrs (weatherization 

### and 

### enhanced C&I program 

### standardization), along with a 

### third 

### area of exploration (continuing improvement 

### of 

### uniform data 

### collection and reporting) 

## - each 

### of which is 

### further outlined below 

## - represent 

### a prioritized, 

### simplified consolidation of 

### the 

### ten collaborative agenda items 

### origina1Iy proposed in 

### Order No. 1. The Commission 

### adopts this more focused 

### agenda in consideration ofthe 

### evidence in the record that:utilities have made substantial 

### progress toward, 

### and thatprogram evahtors

### and the

### IEM, through their 

### program improvement 

### recommendations 

### are substantiallyadvancing, 

### the samegoals 

### that the Commission had in 

### making 

### its earlier 

### proposals. Given 

### the 

### need to ensure that the objectives 

### of this Order are met with 

### due consideration 

### of all the stakeholder positions and with proper Commission oversight 

### of the process 

### and the budget that may be required 

### for 

### such purposes, the Commission directs utilities and Stafl, 

### and requests other members of the 

### PWC,to submit on or before noon 

### on November I, 2013, a plan describing 

### how the 

### PWCwould engage aDocket Nos. 13-002-U OrderNo. 7 Page 65 ofgi 

### facilitator(s) and 

### other consdtants to assist 

### the PWC 

### in developing 

### a unified weatherization approach and weatherization program coordination, 

### and how the PWC 

### will address standardizationof core C&I programs across fuels and utilities, 

### The 

### plan shall describe the PWC collaborative process 

### going forward, 

### including 

### the roles 

### performed 

### by Staff, 

### the IEM, 

### and other parties, and a proposed 

### scope 

### of 

### work that addresses the 

### enhanced responsibilities 

### outlined above pertaining to the weatherization collaborativeand that identifies the

### tasksto

### be performed by the collaborative 

### for which

afacilitatorand/or 

### consultant 

### are sought. Utili&-Funded WeatherizationPromams and Services in Arkansas 

### In 

### Order 

### No. 1, 

### the Commission proposed that the 

### PWC,or perhaps a 

### subgroup 

### of the PWC that 

### has a particular interest 

### in weatherization and building 

### thermal envelope 

### issues, should develop 

### a standard approach to 

### whole-house weatherization 

### activities that would be 

### followed 

### by all utility programs, and 

### ultimately by 

### a single, statewide 

### coordinated utility weatherization 

### program. The Commission stated

### thatthis approach should 

### dlow

### trade allies, customers, and the Commission

### itself tounderstand

one set of rules the eligibility 

### and analysis of residential buildings; 

### for the ranking, selection, 

### and implementation 

### of covered measures; for rebates 

### and incentives to customers 

### and trade allies; and for the training, 

### and qualifications required of contractors, 

### andfor EM&V activities. In addition, 

### the Commission proposed 

### that the 

### FWCexplore the development 

### of appropriate 

### financing mechanisms for statewide weatherization sewices 

### for both residential and 

### small 

### commercial buildings, through exploration of state 

### or federal

revenue bond financing or otherwise 

### leveraging non-utility program resources as aDocket Nos. 13-002-U OrderNo. 7 Page 66 ofgi complement to the ratepayer-funded AWP, 

### The 

### Commission also stated its belief 

### that the 

### PWC should convene the program 

### administrators of the AWP program, the statewide 

### federally-funded Weatherization Assistance 

### Program for Low-Income 

### Customers 

### ((IWAP”), the joint-utility dual-fuel 

### weatherizationprogram offered by 

### OG&E and AOG, and the 

### Home Energy Assistance 

### Loan C“HEAL”) Program Partnership 

### between Centerpoint and the William J. 

### Clinton Foundation’sClinton 

### Climate

### Initiative (TCI”), as 

### well as the other utilities 

### and the state’s electric 

### cooperatives, to 

### explore these issues. 

### The Commission summarizes 

### below testimony, comments, 

### and other 

### evidence 

### in the record regarding 

### these and other utility-funded programs providing 

### weatherization services 

### in

### Arkansas. 

### I. TheArkansasWeatherization Program I“AWP”1 The AWP is 

### a utility-funded 

### program administered by 

### the Central Arkansas Development 

### Council (TADC”), a 

### CommuniQ Action 

### Program (YAP”)agency, 

### and coordinated by ACAAA. 

### For a home to 

### be eligible 

### for AWP services, it 

### must be buiIt prior to 

### 1997 and 

### must be “Severely

### Energy Inefficient,”

### based 

### on a 

### checklist 

### of features such 

### as inadequate insulation, 

### or a non-working heating system 

### or heating system 

### with 

### lessthan 

### 70% efficiency. AWP Annual Report at 

### 42. Since 2007,AWP 

### has weatherized nearly 4,000 homes. ACAAA at 2. AWP weatherized 

### 641 homes 

### in 2012-a slight 

### decrease from 2011. Annual 

### Report at 3. WAP-eligible customers accounted 

### for d1 

### but four of 

### these 

### homes. Id. at 4. AWP performed 

### 1,047projects at the 

### 641 homes, 

### which was 

### 61% 

### of its 

### planned target. 

### Id. AWP 

### implemented nineteen 

### different types of EE 

### measures, including insulation, reduction 

### of infiltration,tune-up 

### or replacement of air conditioners, furnaces, and heatDocket Nos. 13-002-U OrderNo. 7 Page 67 ofgi pumps, 

### lighting 

### improvements, water heater insulation 

### and replacements, window sealing 

### and replacements, and storm windows. Ceiling insulation 

### and infiItration reduction were 

### among the top 

### three 

### sources of savings for 

### both 

### electriciw and 

### natural gas. 

### Lighting improvements and 

### refrigerator 

### replacements contributed significantly to electricity 

### savings, and window replacements contributed significantly 

### to natural gas 

### savings. AWP EM&V Report at 1-5. 

### Because ofits connection tothe 

### federal

### WAP, AWP provides non-cost-effective 

### heating unit replacements and 

### home repairs that save little tono energy.13 Utilities 

### spent almost $1.2 million 

### on AWP, 

### and federal 

### funds 

### (including American 

### Recovery 

### and Reinvestment Act 

### (“ARRA”)funds) contributed 

### about $3 million. 

### Id. AWP 

### produced over 1.1 million 

### kWh 

### in annual energy savings 

### within IOU territories and almost 

### igo,ooo in 

### annualtherm savings. 

### Id.at 3-5.AWP also produced

an estimated 1.8 million 

### kwhoflifecycle 

### (not annual) savings in 

### municipal and electric cooperative 

### territories (although theseutilities did 

### not participate in 

### program funding). 

### Id, 

### at 3-4. Accomplishment 

### of targetswithin specific 

### IOUterritoriesranged from a low of 30% 

### for SWEPCO to a high of 

### 78% for Centerpoint. 

### Id. at 5. AWP 

### cost effectiveness 

### in 2012 ranged 

### from a 

### TRC score of 1.06 to 5.01 

### among natural gas utilities, 

### and 

### from

0.31to 

### 3.65 among 

### elecbic

### utilities. Table 8.2.,

### Annual

### EE Report Workbooks. 

### The network 

### of WM/AWP providers 

### received nearly 7,000 

### person-hours of training 

### in 2012, resulting 

### in 335 certificates awarded to trainees. Annual 

### Report at 

### 8. Taking 

### into account non-AWP 

### WAP homes, this network currently has the 

### capacity to 

### weatherize 

### over 2,000 homes peryear,

### Id. at 22.

13 AWP measures may include replacement of glass and/or windows, doors, ground cover, duct and plenum repair, return air cavity sealing, CO detectors, and smoke detectors, some ofwhich may not be cost-effectivefor energy savings. OG&E PY 2012Annual Report at 47.Docket Nos. 13-002-U OrderNo. 7 Page 68 ofgi 

### ACAAA comments 

### that, 

### when AWP was established in 2007, it 

### offered the promise of 

### leveraging existing, trained personnel, infrastructure, and 

### funding from 

### the federd Weatherization Assistance Program (“WAF’), reaching severely 

### energyinefficient

### homes, and serving alongwaiting 

### list ofhard-to-serve homes

### through 

### a dual

### fuel, comprehensive 

### approach.14 ACU at 1-2. ACAAA 

### indicates that Am‘s

### strengths includeongoing 

### collaboration amongthe 

### IOUs 

### and their 

### contractors, 

### CAP agencies, and the 

### Arkansas Department 

### of Human Senices (“ADHS”) 

### (until July 1, 2013, 

### the state administrator of

### the WAP), 

### and the ability

### toprovide one point of 

### contact

### for customers

across 

### electric and gas utilityservices. Annual Report at 7. ACAAA reports that 

### three major challenges have become apparent. 

### Id. at 2. First, Am’s success 

### has proven 

### to 

### be dependent 

### on fluctuating 

### federal funding: the 

### number ofAWP-weatherizedhomes 

### fell 

### in 2012 because CAP agencies 

### were required to prioritize the spending 

### of ARMfunds 

### on the WAP program, 

### and 

### also 

### because federal 

### fundingdeclined 

### for 

### the regular WAP 

### funds that provide 

### a match for 

### utility funding 

### for WAP-eligible AWP customers. Id. Second, AWP 

### has had difficultyin 

### reaching non-WAP 

### eligible customers (who might 

### otherwise provide an 

### independent 

### source of program 

### funding). Id. 

### This is because their incomes exceed the WAP eligibility limit (200 percent of 

### the Federal Poverty Level) and thus do not 

### qualify

### for federal

### funds

### topay the $1500 co-pay to 

### cover AWP 

### weatherization services. Many 

### of 

### these customers 

### are working-poor 

### or near-poor and thus 

### lack the resources to 

### cover the co-pay costs. Id. Third, AWP has experienced

The current DOE WAP waiting list is over 3,000,many of which likely arc eJiblefor AWP. AWP Annual Report at 22. Some CAP agenciesreport that they have stoppedpromoting the program or are no longer referring customers to WAF because customersbecome un-interested in the program when thcy learn aboutthewaittime. AW EM&V Report at 3-5.DocketNos. 13-002-U OrderNo.7 Page 69ofgi 

### geographic gaps in service 

### delivery 

### because, under the WAP 

### program 

### individual CAP agencies can opt nottoprovide services withintheir territories 

### (and somehave done so). 

### Id. ACAAA 

### notes that the 

### Arkansas General Assembly in 2013 enacted Act 1111, which authorizesthetransfer ofthe WAP program 

### from ADHS tothe

### Arkansas Energy Office (,,AEO”). ACU reports 

### that 

### AEO is 

### restructuring

### WAP to include the Clinton 

### CIimate Initiative’s (TCI”) Home 

### Energy 

### Affordability 

### Loan (“HEAL”) program in an as-yet-to-be-determined 

### role, and to involve 

### the PWC 

### in determining 

### a new WAP program design, 

### Id, ACAAA agrees with 

### AEO that the existing AWP Collaborative 

### should 

### discuss restructuring of 

### WAP and 

### AWP, Id. 

### at 3. ACM indicates that 

### the transfer and restructuring of 

### WAP should allow modifications that 

### can enhance program delivery for 

### both WAP and AWP. AWP Annual Report at 7. Given the 

### uncertainty 

### facingWAP and AWP, ACAAA.

### recommends no specific 

### changes

### for 

### PY 2013 

### forAWP, but reports

### that CCI 

### has recommended 

### that HEAL should have access

### toAWP funding for the remainder 

### of 2013 in order to 

### offer services within under-subscribed parts

### ofthe state. 

### Id. ADM evaluated Am‘s 2012 activities. ADM agrees 

### that 

### dependence on federal 

### funding andthe ability of

### individual CAP agenciesto decidetheir 

### level of involvement in WAP have been AWF 

### program barriers, and 

### that decreased 

### federal funding could be a 

### greaterbarrier in the future. AWP EM&V 

### Report at 1-5 through 1-6. ADM also agrees that 

### financing and marketing issues hamper AWP’s 

### ability to serve non-WAP eligible 

### customers. ADM finds 

### that AWP will 

### likely be unable to attract 

### many non-WAP-eligible customers without addressing the 

### upfiont cost barrier presented by the co-payDocketNos. 13-002-U OrderNo. 7 Page 70 of 91 

### requirement, Id, at 

### 1-7. ADM 

### adds that the WAP 

### waiting 

### list is a barrier to AWP performance, and that the association between AWP 

### and 

### WAP creates confusion requiring new marketing approaches 

### if AWP 

### is to 

### reach 

### out 

### to non-WAP-eligible customers. 

### Id,at 1-7

### and 3-2, ADM 

### notes further that, while measures are 

### installed 

### for WAP 

### customers based 

### on cost-effectiveness, AWP 

### customers may choose which



### measures to 

### instalI, creating the 

### risk that 

### customer choices will erode the costeffectiveness 

### enjoyed 

### by WAP. 

### Id. at 

### 1-9.ADM cites the 

### comprehensiveness of AWP 

### whole-house 

### offerings as a strength. Id. at 1-6 and 2-2 at 

### Table 2-1. ADM’s interviews 

### with CAP agency staff suggest that, 

### while the current 

### collaborative structureis sufficient 

### for operating the 

### program as it 

### is 

### currently designed, it 

### would be difficult for it to produce 

### agreement in 

### a timely fashion 

### among all involved parkies 

### on specific program improvements. 

### Id.at 

### 3-7. II. 

### The Home EnermAssistance Loan ?‘HEAL’’) Promam The HEAL

### program is administered

### by the Clinton 

### ClimateInitiativeand 

### is apart 

### of the 

### Centerpoint Energy 

### Arkansas’s Bnergy 

### Eficiency 

### Program 

### PorvoIio. Large employers with a 

### minimum 

### number of low-to-moderate income 

### employees receive a 

### free audit and 

### complete energy efficiency

### retrofits to their facilities. 

### The employer 

### then makes fuxlds generated 

### by energy efficiency 

### savings available to its employees. 

### Alternatively, 

### an employer works 

### with commercial 

### pmers such as credit 

### unions to provide 

### Tow- or no-interest 

### loans to employees to 

### retrofit their homes. Centerpoint 

### AnnuaI Report at 12 

### and Appendix A at 11-1. 

### In some cases, NEAL 

### may offer the program to

### non-emplops living in 

### neighborhoods adjacent

### to participating employers, 

### Id, at 12.Employees receive a 

### free home energy 

### audit, including a 

### blower-door test 

### andDocketNos. 13-002-U OrderNo. 7 Page 71 ofgi duct blaster. Loans to employees for 

### EE measures are repaid through payroll deductions. Id. 

### Centerpoint’s HEAL

### program

### began in mid-2011

### and 

### installed217 

### measures at 

### 75 homes in 

### PY 2012. 

### Id. 

### While 

### there is 

### no income 

### restriction 

### on program participation, HEAL, 

### is largely limited to participating employers. 

### Id. at 12 

### and 14. HEAL 

### produced annual savings of 19,636therms 

### in PY 2012 and 

### had a TRC cost effectiveness of 2.80. 

### HEAL achieved these savings through 

### three measures: 

### air sealing, ceiling insulation, and ductrepair. 

### Id., AppendixA, at: 11-6.15 ADM evaluated 

### the HEAL 

### program 

### and found that, although it 

### is a very small portion 

### of Centerpoint’s 

### overall 

### EE portfolio, it could provide a model going forward 

### for cross-fuel services 

### and 

### customer financing. Centerpoint Annual Report for 

### PY 2012, 

### Appendix A at 1-6. ADM notes that, 

### while 

### CCI 

### frequently obtainsboth Centerpoint and 

### EAI 

### incentives for HEAL customers, there is litkle 

### cross-utility 

### coordination between Centerpoint and Entergy and as a result, someparlicipants 

### may 

### be receiving retrofits at



### no cost when incenthized by both utilities. 

### Id. at 11-5. ADM also indicates that, 

### other 

### than for that limited number of customers eligiblefor and served

### by HW, Centerpoint 

### lacks residential building envelope rebates. ADM recommends that Centerpoint 

### make 

### such 

### rebates available 

### more broadly, citing

### the successful example of the OG&E/AOGjoint weatherization program. 

### Id. Id. at 3-3.

15TheCommission notes that electricitysavings for those CenterpointHEALcustomers who also are IOU electriccustomerspresumablyareincluded in the reportingfor electricutility EEresidential programs, to the degree that HEAL assembled natural gas and eIectric rebates for the customer to achieve these savings

## .DocketNos. 13-002-U OrderNo.7 Page 72 ofgi 111. TheAOG/OG&EWeatherization Prosam The AOG/OG&E 

### Weatherization Program 

# rllint 

### Weatherization Program,” or “Program”) is a cooperative program funded by both utilities. 

### To be 

### eligible for weatherization,the structuremust showthat it has “substantialenergy efficiencyneeds” by requiring three 

### of seven 

### listed weatherization measures 

### in 

### order to 

### receive sentices. 

### ADM 

### Evaluation 

### of Joint 

### Weatherization Program (“Joint Evaluation”) at 1-1. The auditors for 

### this program are 

### certified 

### by the Building 

### Performance 

### Institute 

### or the Residential Energy Services Network (“RESNET”). 

### OG&E Annual 

### Report at 

### 15. 

### The total utility contribution 

### (from 

### both utilities 

### combined) is limited to $3,000 per 

### eligible customer, with no out-of-pocket costs

### required ofthecustomer. Joint Evaluationat 3-1. The Program 

### served a total 

### of 1,631 OGMhomes (7% of the homes 

### in OG&E’s Arkansas 

### territory] axld 1,360 AOG 

### homesin 2012. 

### OG&EAnnual Report: at 

### 6and Joint Evaluation at 1-4. It produced 

### 3.6 million 

### kwb 

### in mud 

### electricity savings and 0.2 

### million 

### therms in 

### annual natural gas savings. Joint 

### Evaluation at 

### 1-4. Three highly

### cost-effective 

### measures (air infiltration reductions, ceiling insulation, 

### and CFLs) 

### accounted

### for almost all of theprogram’s gross energy savings. Joint 

### Evaluation at 2-3. 

### The Program also covers water heaterjackets and pipe wrap, 

### and occasionallyprovides refrigerator replacement. Id. at 1-4. For instance, while 

### 1,387 OG&E 

### customers receivedceiling

### insulation, only 158

### received 

### refrigeratorreplacements. Id. at 5-8. 

### ADM notes that despite limited marketing, 

### the Program 

### has high 

### customer 

### awareness, participation, and 

### satisfaction, with several hundred customers per month seeking sentices. 

### Id. at 3-3 and 3-5. ADM finds that word-of-mouth marketing, theDocketNos. 13-002-U OrderNo. 7 Page 73 of 91 

### Program’s short wait time, and its high incentive 

### levels account 

### for the high 

### level of 

### customerparticipation, ADM 

### Evduation at3-3 through 

### 3-5. 

### Program 

### conbactors indicated to ADM that 

### the majority of participant homes 

### would benefit from further energy efficiency improvements that are 

### not 

### covered 

### by Program offerings. 

### Id at 3-6. 

### However, 

### the contractors expressed concern that the 

### further improvements might not be adequately cost-effective. 

### Id. Some customers 

### expressed

### interest 

### inpaying 

### forfurtherimprovements,but did notfoIlowthrough due to the cost. Id. at 

### 3-5. ADM 

### recommends 

### that OG&E 

### and AOG 

### explore offering further 

### services 

### such as 

### wall insulation or heating 

### system 

### improvements and 

### explore opening the 

### program gradually 

### to alarger pool of homes than 

### those meeting the

### current criteria. 

### Id. ai 

### 1-7. IV. Other 

### EE ProErams ProvidinEWeatherization Services. Under M’sHome 

### Energy Solutions (,,HES’’) program, customers 

### may seek an energy audit 

### through 

### the program to 

### learn about potential 

### EE improvements, or may directly 

### contact a contractor 

### if they are aware 

### oftheir needs. EAI Annual Report at 26. HES offers incentives

### for energy audits, direct-install measures 

### such 

### as faucet aerators 

### and low-flow 

### showerheads, ceiling and 

### wall insulation, 

### infiltration 

### reduction, duct sealing, 

### and replacement of WAC equipment. In order to promote 

### Id. at 

### 30. 

### comprehensive home 

### EE improvements, EAI provides a 

### bonus incentive to customers 

### who choose to implement multiple measures. 

### Id. at 26-27. Customers installing 

### multiple measures increased from 

### 9% in 

### PY 2011 to 23% 

### in 

### PY 2012. For testingintensive measures 

### such as 

### duct and air sealingand 

### wall insulation, 14%of participants 

### who had 

### an energyassessment in 

### PY 2012 

### adopted

### these measures, 

### as opposedto 

### 7% inDocket Nos. 13-002-U OrderNo. 7 Page 74of 91

2011. Id. Implementation 

### contractors also 

### may 

### receive a 

### bonus for installing multiple

measures. 

### Id. at 

### 27. Just over 

### 350 customers ordered an assessment in 2012. Id. This 

### constitutes 0.64% 

### of M’s

### 584,559 residential customers. 

### EAI FERC 

### Form 1 

### Supplement 

### Annual Report for 2012 

### at 

### E-I. Of those, 

### 38% (138)installed 

### at least 

### one measure and 72% 

### of that subset 

### (loo) instalIed two or more measures. EAI Annual 

### Report at 27. 

### EM notes 

### that some 

### HES customers were also CenterPoint HEAL customers. 

### HEM, performed 157 

### assessments, of which 32% (50) installed at least one measure and 

### 66% of those (33) installed two

### or more measures. Id. at 

### 27-28. 

### HES achieved over 

### 3.2 million 

### kwhin 

### net annual savings 

### in 

### PY 2012,

### which was 101%

### ofits goal. 

### Id. at 

### 28. In 2013,EAI 

### plans to

### require all participating contractors to 

### have at 

### least a BPI-Building Analyst or RESNET 

### Home Energy 

### Rater 

### Certification (except that insulation-only 

### con*actors may have appropriate certifications 

### from Pulaski Technical College 

### or BPI), 

### and to grow its contractor network to include out-ofstate firms. EAI also 

### plans to 

### use more 

### mass marketing to raise customer awareness, 

### and to 

### implement 25 

### recommendations by its independent evaluator, 

### Cadmus. Id. at 29-30, 

### Cadmus 

### found that HES 

### served 1,970homes with either direct 

### install 

### measures, rebated measures, or

### both, EM EM&V 

### Report at 70.

### (The 

### Commission does not discern 

### how many of the 1,970 

### homes were served only with direct install measures 

### and how 

### many received 

### more 

### comprehensiveservices.) Approximately 82% of 

### kwhsavingsfrom rebated measures 

### in 

### PY 2012 

### derived from ceiling 

### insulation. Id. at 62. Duct sealing, heat pump replacement, 

### and air 

### sealing accounted 

### for 8%, 3%,and 

### 3%of rebated lcwhDocketNos. 13-002-U OrderNo. 7 Page 75 of 91 savings, respectively; direct-instal1 

### measures 

### as a 

### whole produced lower total 

### kWh savingsthanthese

### individual

### rebatedmeasures. Id. at 62-63. SWEPCO offers customers a Residential

### Standard Offer Program (“MOP”) and a 

### Home Performance with Energy Star rHPwES”) 

### Program. 

### RESOP pays incentives to customers and to conbactors 

### for 

### insulation, infiltration reduction, duct sealing, 

### AC tune-up, ENERGY STAR windows, 

### window 

### film, and 

### replacement of central 

### air conditioners and 

### heat pumps. 

### SWEPCO Annual Report at 

### 36. 

### RSOP completed 545 projects (aside 

### from direct install measures targeted through the same 

### program to multi-family housing). 

### Id. at 39. 

### This constitutes 

### 0.56% 

### of SWEPCO’s 

### 95,979 residential customers in 2012. SWEPCO FERC 

### Form 1 Annual Report 

### at E-1. Among non-direct-install customers 

### and measures, ceiling 

### insulation at 

### 348 homes provided the vast majority 

### of energy savings, 

### followed 

### by 39 

### heat pump replacements 

### and 75 

### central air conditionerreplacements. 

### SWEPCOEM&V

### Report at 

### 96. 

### HPwES, which 

### SWEPCO launched 

### in 

### the Spring of 2012,

### is a 

### US DOE and EPA

### backed, whole-house program that begins 

### with a comprehensive home 

### energy 

### audit. SWEPCOAnnud Report at 

### 40. The

### program covers similar measurestothe RSOP, but also 

### promotes the comprehensive 

### energy 

### audit, contingent 

### upon installation of at least two 

### major measures, 

### Id. at 

### 41. 

### HPwES offers 

### enhanced incentives compared 

### to the 

### RSOP for 

### installation 

### of major measures such 

### as insulation and €WAC

### replacement. Id. at 41. After having onlytwo HPtvES participants in 2012,SWEPCO began in December

2012

### to

### partnerwith 

### HEALto deliver HPtvES 

### services; 14 of 20 auditedby HEAL

### homes installed measures 

### in early 2013. SWEPCO reports that, despite extensive 

### Id. marketing efforts, HPwES participation was constrained 

### by low customer awareness,DocketNos. 13-002-U OrderNo.7 Page 76 ofgi challengingmarket conditions, and limited contractorengagement. 

### Id. at 

### 43. SWEPCO also 

### reports that: 

### many contractors are unfamiliar 

### with building-science-based efficiency. 

### Id, 

### SWEPCO is discussing

### joint 

### implementation of HPwES 

### with various gas utilities. Id. 

### at 

### 4. According to SWEPCO's 

### evaluator, Cadmus, 

### a large percentage of 

### SWEPCO customers cannot afford to 

### make significant 

### purchase or repairs to increase home energy efficiency, and approximately 

### one third 

### of these may be eligible 

### for WAP, SWEPCO EM&V 

### Report at 112. 

### SWEPCO is 

### reportedly considering offering home 

### improvement

### loansas onewaytoremovefinancial

### barriersto

### participation. Id. RulinE Regarding Weatherization Collaborative Since 2007, weatherization program administrators in 

### Arkansas have innovated to meet the considerable challenges inherent in seeking to provide comprehensive, whole-house 

### EE senices. 

### These challenges 

### have included creating an educated 

### and trained contractor 

### sector; 

### educating consumers; keeping 

### program 

### offerings costeffective 

### and within budget; tracking projects, 

### customers, 

### and energy 

### savings; delivering 

### services 

### in various overlapping 

### or non-contiguous territories; 

### accounting 

### for administrative 

### and marketing costs (whether

### for 

### an individual

### utility or across utilities) and helping 

### customers address the cost ofhome improvement, 

### The Commission salutes the 

### effort 

### and accompIishment to date and 

### finds that it 

### is 

### time to consolidate lessons learned so far. AWP 

### offers 

### the longest 

### track record of cross-fuel energy savings 

### and the 

### most comprehensive services, but its abiIity to deliver within 

### any particular 

### year 

### is strongly influencedby federal rules and funding affectingWAP. WhiIeAWP has 

### allowedWAP toDocketNos. 13-002-U Order No. 7 Page 77 ofgi



### senealarger number 

### ofWAP-eligible 

### customers,AWP hasbeen largely

### unable to

### reach beyond 

### this 

### core market, although senice to other 

### customers might reduce its 

### dependence

### onfederalfunds. Also, avariety 

### of

### constraints 

### have limitedAm’sability to deliver senices 

### on behalf of utilities, thereby negatively 

### affecting 

### the expected 

### performance of utility 

### portfoTios 

### in some cases. 

### The variation 

### in AWP 

### performance among utiliv

### territories demonstrates 

### both the challenges involved in funding services through CAP agencies that 

### may decide not to participate, 

### and also the strong costeffectivenessthat can

### result when implementation runs

### more smoothly. 

### The original AWP goals 

### of leveraging federal 

### funding 

### and trained personnel, providing 

### comprehensivewhole-house semices across 

### fuels, ensuring the 

### participation of low-income 

### customers in ratepayer-funded services, 

### and targeting 

### severely energyinefficient 

### sbwtures 

### remain valid. 

### Experience has shown, however, 

### that 

### these goals 

### cannot be fully realized 

### without 

### further colIaboration and 

### program development. 

### While 

### the Commission does 

### not 

### regulate WAP, ratepayers 

### have a 

### strong stake in 

### WM’s improved operation 

### because AWP cannot reach its goals so long as it merely “piggybacks” 

### on the 

### federal program. Rather, AWP stakeholders 

### should take 

### the opporhmity ofWAP 

### reorganizationto contributeto the 

### coordination ofWAP with AWP

so 

### that the state plan for WAP 

### provides 

### as much flexibility under 

### federal regulation as possible in 

### order to 

### enable the achievement 

### of joint WAP, utiliw, and AWP goals, Technical 

### expertise regarding ways to achieve regulatory flexibility and to build a

### joint AW-WAP 

### structure that can address theWAP waiting 

### list and reach out to non-WAP 

### eligiblecustomers must

### be apart of that ColTaborative

### effort.Docket Nos. 13-002-U OrderNo. 7 Page 78of 91 

### The AOG/OG&E 

### Joint Weatherization 

### Program has demonstrated an ability to coordinate utility efforts across fuels, and to weatherize a significant percentage 

### of customers‘ homes within a 

### short period 

### of time, It 

### minimizes marketing costs 

### and maintains 

### a pipeline 

### of projects, 

### in part 

### because it 

### shares with WAP the characteristic that a 

### certain 

### level 

### of highly-cost-effective, core senices are free to the customer. 

### As with AWP, it 

### offers 

### the largely unrealized opportunity to 

### provide 

### additional costeffective measures. 

### Its implementation 

### contractors report customer interest 

### in these 

### furthermeasures, butnotethat customers 

### areunlikely toimplement them 

### solong 

### as

### the initial cost 

### isunmanageableforthem. The HEAL program 

### is short in 

### numbers (perhaps due to budgetary 

### consbaints), but 

### by combining electric and gas rebates 

### for 

### some 

### customers, it appears to achieve something similar 

### to WAP and to the OG&E/AOG 

### program: 

### free, or near-free weatherization services 

### for the most cost-effective 

### measures. Early results in SWEPCO 

### territory suggest that this approach 

### increasesthe rate at which 

### the 

### administrative costs spent 

### on comprehensive audits are 

### converted to 

### cost-effective, multi-measure 

### projects. 

### Furthermore, HEAL 

### appears to offer a 

### model 

### for customer financing 

### of more comprehensive 

### projects, at least for that portion 

### of customers 

### who may have access to payroll deduction 

### for 

### loan re-payment. It is clear that 

### HEAL has so far been made 

### available 

### onlytoa 

### small portion of CenterPoint’s (and 

### EAI’s)customerbase. 

### By virtue of EAI’s large customer 

### base, the HES program 

### has developed the essential market of auditors 

### and implementation 

### contractors in a way that no other utility 

### could. It exceeded 

### energy savings goals on only 75% 

### of 

### budget, 

### and offers a rebate structure designed to inceniivize 

### more comprehensive projects, 

### which may beDocketNos. 13-002-U Order No. 7 Page 79 of91 gaining traction, although 

### not 

### all 

### of the 

### evidence is 

### clear 

### on 

### this at 

### this stage 

### of implementation. For instance, per-house annual savings appears to be significantly greater 

### for the 

### OG&E program than 

### for HES (2231 

### kWh per home vs. 1629 kWh), 

### althoughEAI 

### obtains greaterpeak savingsper 

### home and simiIar energy lifetime savings. EM may 

### be 

### less IikeIy to capture infiltration savings (based on the fact that only 3%

### of HES program savings derive 

### from 

### infiltration, as opposed to 14% 

### for 

### OG&E), but HES 

### achieves air-conditioner 

### and heat pump 

### replacement savings 

### not covered by 

### the 

### OG&E program. While each program had similar TRC 

### scores (1.57 

### and 1.47), the

### levelized cost of HES savings 

### in 2012 

### was g 

### centsper lWh andthat

### for 

### OG&E weatherization

### was 

### just above 2 cents. While these 

### kinds of differences are subject 

### to variation from year to year as programs 

### develop, they provide evidence that 

### lessons from each program can 

### be consolidated to

### form a 

### more optimal unified 

### program. 

### Also, the

### fact that the 

### number 

### of homes weatherized, the number 

### and 

### me of measures 

### implemented at each home, the amount of electricity 

### and the natural gas saved per 

### home based on specific 

### measures, 

### and the ratepayer-funded cost per 

### home and per measure cannot easily 

### be compared 

### amongutilityterritories (exceptto 

### some degree

### for AWP and the OG&E/AOG 

### program)

on 

### the basis of the 

### same metria, 

### is one strong indication 

### that further 

### standardization wouldbenefit all ratepayers. 

### Based 

### on this 

### review, theCommission

### refines its 

### originalproposal and directsthe utiIities and Staff, 

### and requests the PWC in general, to 

### collaboratively 

### develop uniform whole house program 

### offerings for 

### dI residential customers, including those 

### in severelyDocket Nos. 13-002-U OrderNo. 7 Page 80 of 91 

### energy inefficient homes, for implementation by January, 2015 that include the following elements:

I. Joint funding

### between electric 

### and natural gas utilities 

### of whole 

### house energy assessment 

### and energy efficiency services that are available 

### to customers, 

### to the fulI extent that elecbic and natural gas utility 

### territories overlap, and with uniform offerings 

### to all-electric IOU customers in non-gas 

### areas, and to 

### natural gas customers within municipal 

### and elemiccooperativeterritories. 

### Thejointly-funded 

### program 

### should particularly 

### address 

### anyfirst 

### costsfor comprehensive auditing 

### and should provide unified incentives 

### and services 

### for 

### measures that benefit both heating 

### and cooling applications, thereby reducing the 

### overall administrative cost

### for implementationofmeasures wherethe costs canbe reasonably 

### allocated 

### between 

### the gas and electric utilities, 

### The 

### PWC should carefully consider the value 

### of an approachthat offers major, costeffective services 

### such 

### as insulation and 

### idhation reduction and potentially other 

### services-up to

### some initial dollar

### amount, for little 

### or no upfront costto

### thecustomer.

2. A comprehensive technical standard that governs the 

### qualification and energy assessment of 

### homes, the recommendation and selection of measures, and the 

### implementation 

### of measures performed by 

### all utility-sponsored and government-funded energy 

### efficiency programs. 

### This technical standard should 

### ensure high-quality, best-practice work 

### that 

### maximizes 

### available savings and avoids lost opportunitiesto

### improveDocket Nos. 13-002-U OrderNo. 7 Page 81 of 91 

### homes and equipment, It also 

### should include a single set of standardsfor 

### education, training, certification, and 

### continuing education 

### of implementation personnel delivering IOU-funded programs, 

### and should 

### be coordinated to 

### the fullest 

### extent possible 

### withthe 

### standards that apply to

### federally-funded 

### weatherization services, 3. A proposal by the PWC 

### for the provision 

### of a 

### financing 

### mechanism 

### or 

### mechanisms by utilities, 

### or the facilitation of a financing 

### mechanism or mechanisms through 

### non-utility parties 

### that dlow 

### customers to 

### finance any measures with significant costs that go 

### beyond 

### initial no-cost measures and 

### to thereby 

### implement multiple cost-effective 

### measures, in effect allowing 

### the 

### customer to implement a multiplemeasure, cost-effective 

### energy plan to substantially reduce 

### whole-house 

### energy use. Based on the apparent success 

### of 

### the 

### HEAL model, the Commission favors financing 

### options that feature automatic repayment 

### through payroll or utility colledion 

### (regardless 

### of whether the utili@ actually finances 

### the 

### measures). 

### The Commission requests that 

### the PWC

assessthe extent to

### which HEAL’S 

### financingmechanism could

### be extended to and would 

### likely be implemented 

### by employees 

### of state agencies and 

### other 

### employers

### who maybe willing to adopt its

### payroll 

### collectionmethod. The financing mechanism should, inter alia, enable non-low-income residential utility 

### customers to obtain or afford the “goodfunds” required toparticipate 

### intheAWP;DocketNos. 13-002-U OrderNo. 7 Page 82of91 4. 

### The elimination of duplication in programs that would prevent implementation 

### contractors 

### and wade 

### allies 

### from searnksdy providing services 

### across participating utility territories, 

### or that might engender 

### confusion among customers. 5. Active participation in the

### reorganization 

### of

### WAPto optimize

### its coordinationwith utilityfundedweatherization services, and 

### coordination 

### of utility-funded whole house 

### weatherization 

### services 

### with WAP so 

### as to 

### leverage 

### availablepersonnel and

### federal funding. 6. A plan to effectively marketjoint-utility weatherization services,

as appropriate to the various sub-sectors 

### of residentid customers 

### and 

### markets, including exploration 

### of 

### the marketing aspects 

### of the 

### HEAL Program model. 

### The weatherization 

### collaborative 

### shdl file 

### in this docket a 

### report 

### on 

### or before

noon on April 1, 2014, 

### which includes its 

### recommendations 

### for implementation by January 1,2015,

### ofthestatewide weatherization

### program meetingthese requirements. RulinE Rwarding

### Joint-UtilityEE Services Offerings to Commercial and National Accounts Customers During the 2012 

### hearing to review OG&E’s EECR, 

### OG&E Witness Billy Dean 

### Pollock 

### testified that there 

### is merit 

### to working out a national 

### chain 

### program with the other 

### utilities

### because all 

### of the utilities 

### confront the 

### same barriers when they address 

### big-box storemanagers

### who 

### often lack decisional andbudget authority to

### sign up 

### for 

### EE programs. Docket No. o7-075-TF, June 

### 14, 2012,

### Tr, at 118. Only the JCP commented

on the Commission’s

### proposal thatthe PWC should focus 

### on this 

### task,in that it included 

### “Focus on National Accounts” 

### as a 

### proposed new requirement: 

### for the 

### collaborative.DocketNos. 13-002-U OrderNo. 7 Page 83of gi 

### However, theJCP 

### did not comment 

### onits importance orhow it might 

### be accomplished. Joint Commentsat 

### 27,Table 1. Given the 

### lack of objection to this task, the Commission directs the 

### PWC to 

### develop a 

### joint, 

### cross-utility and 

### cross-fuel program to 

### submit in 

### time for 

### implementation 

### on or before 

### January I, 2015, 

### that provides energy 

### auditing, technical assistance, prescriptive measure (including lighting, WAC, 

### building thermal envelope, refrigeration, 

### and other common 

### end uses), 

### custom 

### measure, 

### and marketing provisions that 

### are appropriate for the end-uses represented by national 

### accounts 

### customers 

### in Arkansas.16 

### Such offerings need 

### not represent 

### aseparatenational accounts programper se, 

### but 

### should

### give national accounts customers asingle

### pathway 

### for participation in the C&I 

### programs of all 

### Arkansas IOUs. Such offerings should thereby 

### avoid program overlap and duplication, reduce confusion over programme 

### names, standardize elements 

### offered measures, rebates and services, and facilitate 

### marketing to these 

### customers. The development

### ofthese 

### uniform offerings

### shall 

### be responsivetothe 

### many 

### recommendations 

### for C&I program improvement of the 

### evaluators and 

### of the IEM. Utilities 

### need 

### not and should not abandon cost-effective 

### EE services 

### appropriate to commercial sectors that are uniquely 

### important in their individual territories, 

### but rather, may 

### and should provide such sewices additionalIy to the core offerings, as appropriatewithin their EEprogram 

### porkfolios, 

### In order to develop these offerings, the PWC may hire facilitation 

### and technical expertise 

### as needed for this task, and shall

16 The Commission takes administrative notice that the U. S. Department of Energy‘s Building Technologies Office has, subsequent to the initiation of this proceeding,launched an Advanced Rooftop Unit (“RTU”) Campaign to address the air conditionersused in 60%of commercial buildings nationally, which might provide a model or supporting technical information for one aspect of service to national accounts customers.Docket Nos. 13-002-U OrderNo. 7 Page 84 of gi submit any request

### forbudgetary

### resourceneededto 

### accomplish 

### thistask as 

### an addition totheweatherization 

### collaborativefiling

### on orbefore

### noon 

### on November I, 2013.

RulinE Regardingexploringthe Benefits and Challenges Involvedin Establishing and Maintaining a Statewide

### EE DatabasewithEnhanced Tracking ofPromam Participation Order 

### No. I requested comment 

### on the development 

### of a statewide database that 

### would consolidate 

### of all 

### EE planning and 

### achievement data, particularly 

### including 

### unduplicated, cumulative data for customer 

### participation and 

### for program and 

### measure impacts and costs. 

### The proposed database would be publicly available on the internet, and 

### would allow a 

### user to aggregate 

### and 

### manipulate the 

### data using standard data base queriesand searches, and toproduce a variety of reports 

### in

### formats dictated 

### by the

### user. The database

### would facilitate information sharing among utilities 

### and 

### comparison 

### and reviewby all parties. Order at 

### 63-64. The 

### JCP states 

### that it does 

### not support creation of such a database at this 

### time. 

### JCP at 31. 

### No party commentson any ofthe specificparameters outlined 

### above, 

### and no party 

### comments in direct support of the Commission proposal. The JCP, the utilities, and AEEClAGC argue that it would 

### be duplicative of ongoing efforts, costly, and time 

### consuming. 

### JCP Initial at 

### 31-33; AEEC/AGC Initial at 12;

### EAI 

### Initial at 20-21.

### The JCP 

### detail a 

### series of 

### tasks that would 

### be 

### necessary to implement a statewide 

### database and concludethat it wouldtake 12

### to 

### 18 months, JCP at 32. AEEC/AGC commentregarding customer privacy that the only 

### information that 

### could be provided to the data base would

### be usageinformationinthe aggregate

### by customer class. AEEClAGC 

### Reply at 12, 21.Docket Nos. 13-002-U OrderNo.7 Page 85 ofgi 

### The Commission clarifies 

### that assembly 

### of the 

### database might start 

### with information that 

### is currently 

### presented in 

### the EE 

### Plans, the 

### Annual Repork 

### and Workbooks, and the EM&V reports of the evaluators and the IEM, such as program implementation costs, broken out by categories of costs; energy and capacity savings; 

### benefits; net 

### benefits; benefit-cost ratios; customerparticipation 

### and participation 

### rates. With refinement, it might 

### allow useful metria 

### such 

### as energy savings,

### the cost to save a 

### unit 

### of energy, 

### and costs per 

### participant, 

### to 

### be calculated across programs, 

### across utilities, and over time, and to be aggregated in a non-duplicative manner. The development of 

### such capabilities 

### could enhance

### program 

### review and improvement and facilitateevaluation

### ofhow many ratepayers

### benefit directlyfrom programs overtime. The Commission notes that much 

### of 

### this data is 

### already collected, 

### in utilityspecific 

### form, 

### as part 

### of 

### the Energy 

### Efficiency Standardized 

### Annual Report Packet 

### (,,SARP”) approvedby the Commissionin Docket 

### No. io-010-U 

### on September 14,2012. 

### On November 19, 2012, 

### the PWC 

### filed in 

### that docket, and the Commission 

### granted 

### by Order No. 

### 15, a motion requesting 

### that the PWC 

### be given until September 27,2013,to file comments 

### and/or 

### testimony 

### in support 

### of any 

### proposed changes to the SARP. Given that

### those comments may

### reasonably 

### address someof

### the Commission’s concerns regarding 

### program comparability, 

### enhanced analfical value, and non-duplicated participant 

### tracking, the 

### Commission defers 

### further ruling 

### on this 

### issue 

### until &er the imminent SARP filing. Finally, AEEClAGCrequested that the Commission initiate arulemalcingto enact



### new rules consistent with the provisions 

### of Act 253 

### of 2013 and encouraged the Commission to decrease the peak demand requirements for 

### a non-residentialbusinessDocketNos. 13-002-U OrderNo. 7 Page 86 of gi



### consumer to

### opt-out 

### of utility 

### energy efficiency programs to an electrical demand of at least 200 

### kW at: a 

### single 

### facility+ AEEClAGC 

### Reply 

### Comments at 

### 9. Staff responded 

### that theSelf-Direct (SD) 

### Rules are not part 

### ofthe

### issues identifiedby

### the Commission in Order No. 1, noting that the 

### SD Rules were developed 

### in 

### Docket No, io-101-R and approved by Commission 

### Order No. 

### io and subsequently 

### modified by Order 

### No. 28. Staff asserts, and the 

### Commission agrees, that this docket is not the appropriate proceeding 

### inwhich toaddress modificationstothe 

### SD Rules. StaffReply at4. 

### On July 8,2013, 

### by Order No. 29 

### in Docket No. IO-IOI-R, the Commission 

### directed Staffto 

### file proposed amendments tothe

### Commission’s C&EERules as they pertain to

### SDprograms to 

### complyWithAct 253 

### of 2013. Accordingly, 

### based 

### on the 

### comments and evidence 

### in 

### this docket, the Commissiondirects and 

### orders:

1. That 

### the programs,portfolios; and tariffs 

### of individual utilities 

### will continue tobe considered within 

### individualutility tariff dockets;

### provided that 

### cross-cutting 

### issues may be addressed, 

### as needed, in separate policy dockets; and 

### that filings

### related toEEprograms, 

### portfolios 

### andtariffsshall 

### conform to the JCP’s proposed 

### schedule (as displayed on page 3 

### of this Order); provided that the Commission 

### will strive

### to approve portfolios by September 1 of each year, but reserves the right to 

### extendthat deadline as necessary; and 

### that Staff 

### shall file, 

### on orbefore 

### noon of January 

### io, 2014, 

### any proposed changes to the 

### C&EE Rules necessary to 

### effectuate 

### this amendedfilingschedule.DocketNos. 13-002-U OrderNo. 7 Page 87 of 91 2. That the 

### PWCmay and shall 

### cause to

### be performed 

### an 

### EE Potential Study,jointly funded by the utilities; provided that 

### an RFP 

### and testimony 

### describing the study and its purposes, 

### in accordance with the more 

### detailed directives 

### outlined above, 

### shall 

### be 

### filed 

### in this Docket for Commission

### reviewand approval on or

### before noon 

### onNovember I, 2013; 

### and that the energy savings goal 

### for 2015 

### is established at 0.90% 

### of 2014 retail 

### kwh sales for electric utilities and 0.50%

### of 20x4 retail natural gas sales for 

### natural gas utilities, with 

### the Commission reserving the 

### right to 

### revisit the 2015 target at the 

### time that it establishes 

### targets 

### for 2016 

### and 2017, 

### based upon the Potential 

### Study or other data that 

### may 

### become available 3. 

### That the utility 

### performance incentive 

### shall

### be awarded in a linear, 

### rather than stepwise 

### basis, within a range 

### from achievement 

### of 80% to EO% of the Commission's 

### established goals; annual performance incentive earnings 

### shall

### bebased 

### on 

### io%ofprogram netbenefits, 

### but 

### shall be capped on a 

### sliding scale between 4% 

### and 

### 8% of approved 

### program budgets, 

### as described in the

### ruling under Issue 3 

### inthis Order. 4. That 

### the development 

### and application of utility avoided costs for the purposes of EE 

### program and portfolio 

### screening and approval 

### and performanceincentive 

### calculation shall 

### follow tbe guidance established in 

### the ruling on Issue 4 

### in this Order; and that the PWC 

### shall consider and 

### recommend, as part 

### of the 

### testimony supporting 

### the proposed EE Potential Study 

### RFP,the 

### adoption of a reasonable third-party estimate ofDocketNos. 13-002-U OrderNo. 7 Page 88of gi thecost 

### of 

### compliance with carbon regulation; and that, 

### forthe purpose 

### of calculating any 

### utility 

### EE performance incentive, the 

### approved avoided 

### cost component of net benefits 

### shall be fixed during 

### the three-year 2015-

2017

### EE program cyde. 

### 5. That utilities

### shall continue to

### submittheTRC, 

### RIM, PACT, and 

### PT tests 

### for consideration, as 

### currentlyprovided in the 

### C&EERules; and that the Commission 

### will 

### continue to evaluate approval 

### of portfolios and 

### programs primarily based upon 

### the TRC test, retaining 

### the 

### flexibiliw to 

### include measures 

### and 

### programsthat individually

### do 

### not pass theTRC 

### test; and that the 

### TRC test 

### shall include 

### well-defined NEBs 

### which (a) measurably 

### reduce scarce resources, add significant

### value 

### or reduce costs; (b) 

### have a 

### quantifiable

### economicvalue; 

### and (c) are clearly

### applicabletothe specific

### program or measure at: 

### issue; provided that 

### the 

### PWCshall 

### review the literature 

### on the non-energy 

### benefits 

### of weatherization services and seek 

### consensus on any reasonably quantifiable, significant NEBs 

### for inclusion 

### in program screening

### for the 2015-2017 

### EE program cycle; 

### the Commission, however, 

### constrains the amount 

### of customer rebate 

### or incentives

### provided at the 

### level 

### of a 

### measure (or group 

### of measures) to an amount equal

### to

### theutility's avoided cost, 6. improvement: That 

### with respect 

### to procedures 

### for continuous EE 

### program

a. the 

### PWC may request authorization 

### to engage third-party facilitation 

### ortechnical consultants

### as needed toaddress issues;DocketNos. 13-002-U OrderNo. 7 Page 89 of 91 

### b. in some 

### instances the 

### Commission may 

### direct the 

### PWC 

### to engagefacilitation

### ortechnical expertise.

c. meetings of the 

### PWC, whether facilitatedby a Party, the 

### IEM,or



### an outside 

### facilitator, 

### shall follow procedural guidelines proposed by thePWC 

### and approved

### bythe 

### Commission; d. 

### the specific 

### task of developing a more unified approach to residentid 

### weatherization shalI 

### be facilitatedby either a member of the IEM’s team who 

### is expert 

### in 

### weatherization, 

### or by 

### an outside 

### facilitator, with adequate technical expertise 

### available to the PWC; and

e. the 

### cost of facilitation 

### and technical 

### consultants 

### shdl be allocated 

### to all utilities using the joint-utility cost 

### allocation methods developed by the utilities 

### for other 

### EE programs such as theAWP. 

### 7. That, 

### with respect to

### weatherization services 

### for 

### residential 

### customers, the facilitator identified by 

### the PWC shall guide deliberations 

### concerning the standardizationof 

### existingweatherization approaches 

### inArkansas 

### and the coordination 

### of 

### such programs 

### in time for implementation during the next three-year

### EE program cycle. 

### 8. That, with respect to 

### the 

### utilities’ 

### Commercial 

### and Industrial Prescriptive and Custom programs, the PWC shall develop uniform offerings that allow commercial 

### customers, including 

### national accountsDocketNos. 13-002-U Order No. 7 Page 90 ofgi customers,totransparently access 

### EE servicesthrough a singleapplication process acrossfuels and utilities. 

### 9. That 

### theutilities and Staff,withtheparticipation of the other members of the PWC, 

### shall submit 

### on orbefore 

### noon on November I, 2013, a 

### plan describing 

### how the 

### PWC would engage a facilitator(s) 

### and other 

### consultants to assist 

### the PWC in developing a unified weatherization 

### approach 

### and weatherization program coordination as described in 

### this Order, and how the PWC 

### will 

### address standardization 

### of 

### core C&I programs acrossfuels and utilities. io. That the PWC shall file on 

### or 

### before 

### noon of 

### January 

### io, 2014, a 

### proposed general collaborative process going 

### forward, 

### in accordance with 

### the ruling 

### in Issue 6 

### of

### this Order.

11. That the weatherization 

### collaborative shall file in this docket a report



### on or 

### before 

### noon on April I, 2014, which includes its 

### recommendations for implementation by 

### January 1, 2015, of the statewide weatherization 

### programs meeting therequirements 

### of

### this Order.

12. 

### That, regardingthe Commission’sproposal to

### require development 

### of



### a statewide database consolidating 

### all EE planning and achievement 

### data, the Commissiondefers a ruling 

### pending 

### the 

### PWCfiling 

### on September 27, 2013, 

### of

### theupdated 

### EE SARP.Docket Nos. 13-002-U OrderNo. 7 Page 91of91



### BY ORDER 

### OF THE COMMISSION, 

### This q'day of September, 2013.

Colette

### D.Honorable, 

### Chairman



### Oh W. Reeves, Commissioner

Elana 

### C. Wills, Commissioner 

# D& hsti

### mude, Secretary

### ofthe Commission