Senator Davis proposes the following amendment (LC-3309.HA0062S):

Amend the bill, as and if amended, SECTION 24, by striking Section 58-4-160 and inserting:

 Section 58-4-160. (A)(1) The Office of Regulatory Staff must conduct a study to evaluate the potential costs and benefits of the various administrator models for energy efficiency programs and other demand-side management programs funded by, or potentially funded by, electrical utilities in this State. This study must be conducted on each electrical utility in this State. For purposes of this section, administrator models for energy efficiency programs shall include the following models: utility administrator, state or government agency administrator, an independent third-party administrator, and a hybrid administrator.
  (2) For purposes of this section only, "electrical utility" means an investor-owned electrical utility that serves more than 100,000 customers in this State.
 (B) This study must consider which administrator model would most meaningfully improve programs offered by the electrical utility.
 (C) The study must also evaluate which administrator model offers the best opportunities to increase cost and energy savings, improve the quality of services rendered, reduce ratepayer costs, or more effectively serve low-income customers, within a program portfolio that is cost effective overall, as compared to similar program administration by individual electrical utilities, or to increase the cost effectiveness of energy efficiency program portfolios. This study must consider, but is not limited to, the following:
  (1) whether third-party administration subject to a pay for performance contract and independent third-party evaluation, measurement, and verification could reduce administrative costs, as compared to separate administration of energy efficiency programs by individual electrical utilities;
  (2) whether a system benefit charge or other funding or financing mechanism would more efficiently, effectively, and fairly fund energy efficiency and other demand-side management programs through an administrator;
  (3) which administrator model provides the best mechanism to increase ratepayer energy savings in the case of electrical utilities that have experienced lower historical performance in terms of annual and cumulative energy savings as a percentage of retail sales;
  (4) which administrator model provides the best mechanism to increase ratepayer energy savings in the case of electrical utilities that have experienced high historical performance in terms of annual and cumulative energy savings as a percentage of retail sales;
  (5) the legal and practical implications of implementing the various administrator models for an electrical utility with a multistate balancing authority area;
  (6) which administrator model could most enhance an electrical utility's delivery of nonenergy benefits, such as resiliency, reliability, health, economic development, industry retention, energy security, and pollution reduction; and
  (7) which administrator model could most effectively pursue nonratepayer funding including, but not limited to, federal, state, or local governmental support, as a means of either reducing reliance of ratepayer funds or increasing the scope, reach, or effectiveness of energy efficiency and demand-side management programs.
 (D) This study must be conducted with public input from stakeholders through written comments and at least one public forum.
 (E) The Office of Regulatory Staff is authorized to retain the services of an expert or consultant with expertise and experience in the successful implementation of energy efficiency administrator programs. The Office of Regulatory Staff is exempt from the procurement code for the purposes of retaining services for this study.
 (F) The provisions of this section are subject to funding. However, the Office of Regulatory Staff must initiate the study within one year from receipt of necessary funding and complete its report within six months. Upon completion of this study, the Office of Regulatory Staff must provide its report to the General Assembly and the commission. This report may include a recommendation as to which administrator model should be established for each electrical utility, draft legislation, and requirements that should be established.
 (A) For investor-owned utilities subject to the energy efficiency performance targets in Section 58-37-20(C):
  (1) As part of the review conducted under Section 58-37-20(G), the commission shall review each electrical utility's energy efficiency performance relative to the performance targets and requirements established in in Section 58-37-20(C) and 58-37-20(E). The commission is authorized to appoint a third party to serve as a third-party administrator to develop and implement the energy efficiency portfolio of behalf of investor-owned electrical utilities in South Carolina whose energy efficiency efforts fail to meet the performance target in Section 58-37-20(C) or the requirement to pursue all cost-effective energy efficiency under 58-37-20(E).
  (2) Where the commission has authorized a third party to administer the energy efficiency programs for a public utility pursuant to Section 58-37-20(C) or 58-37-20(E), the commission shall open a proceeding to review and approve a transition plan and funding mechanism. Such proceeding shall include an opportunity for intervention, discovery, filed comments or testimony, and an evidentiary hearing. The commission must establish and the public utility shall collect a system benefit charge or similar funding mechanism to be imposed against end-use customers of each electrical utility. Such charge or mechanism shall replace any existing cost recovery mechanism used by a public utility to recover costs and incentives for energy efficiency programs, and it must be sufficient to cover the administrative and program costs necessary to design and implement the energy efficiency portfolio such that the portfolio meets the requirements of Sections 58-37-20(C) and Section 58-37-20(E). The utility and the third-party administrator must cooperatively develop a plan to transition implementation of a comprehensive program portfolio within one year while also ensuring customers have continuous access to energy efficiency program offerings during the transition period. The transition plan shall address how to coordinate energy efficiency program offerings with the design and implementation of an electrical utility's demand response programs.
  (3) Any investor-owned utility with energy efficiency programs administered by a third party shall not be eligible for recovery of lost revenues or financial incentives under Section 58-37-20.
 (B) For electrical cooperatives and the South Carolina Public Service Authority subject to the energy efficiency performance target in Section 58-37-20(I):
  (1) No later than July 1, 2028, and every three years thereafter, the commission shall open a proceeding to review the annual evaluation, measurement, and verification reports filed by electrical cooperatives and the South Carolina Public Service Authority for the purpose of evaluating those utilities' energy efficiency performance relative to the performance targets and requirements established in Section 58-37-20(I). The commission shall also determine whether to increase the energy efficiency savings target for the following three-year period.
  (2) The commission is authorized to utilize a competitive process to solicit bids and appoint a third-party administrator to develop and implement a standardized energy efficiency portfolio on behalf of those utilities whose energy efficiency efforts have failed to meet the energy efficiency performance target in two of the prior three years. Electrical cooperatives with fewer than 5,000 members may voluntarily opt-in to participate in any such statewide program, once established.
  (3) No later than six months after appointing a third-party administrator, the commission must conduct a proceeding to establish and approve:
   (a) A system benefit charge or other funding or financing mechanism that participating utilities will be required to collect and impose against end-use customers. Any such charge or mechanism must be sufficient to cover the administrative and program costs necessary for the third-party administrator to design and implement an energy efficiency portfolio that meets the requirements of Section 58-4-160(B)(5). Except for shared administrative costs, the third-party administrator must ensure that funding recovered from a particular utility is used to deliver demand-side management programs to customers in that utility service territory.
   (b) A plan to transition implementation of energy efficiency programs within one year while also ensuring customers have continuous access to energy efficiency program offerings during the transition period. Participating utilities and the third-party administrator must cooperatively develop and present this plan to the commission for approval.
  (4) The commission shall hold a proceeding every three years, following the triennial proceeding in Section 58-4-160(B)(1), to evaluate the performance of the third-party administrator relative to any applicable energy efficiency performance targets, determine whether changes to the funding mechanism or amount are required, and establish a process to integrate participation by any utility failing to meet the applicable energy efficiency performance targets in the prior three-year period.
  (5) The third-party administrator shall design and implement a demand-side management portfolio in order to cost-effectively meet or exceed applicable energy efficiency performance targets and in furtherance of the following goals:
   (a) promoting and increasing the availability of energy efficiency programs for customers of all participating utilities;
   (b) providing a standard portfolio of cost-effective energy efficiency programs that will ensure consistency in program availability for customers of participating utilities across the State;
   (c) prioritizing programs that deliver persistent energy savings and meaningful long-term reductions in customer bills, particularly for low income households;
   (d) providing training, education, and certification to promote a robust workforce of qualified energy efficiency contractors across the State.
The third-party administrator may seek out federal, state, or other funding sources available to improve or expand the availability of demand-side management programs or to reduce barriers to customer participation, to the extent allowed by law.
  (6) The third-party administrator shall be fully independent from participating utilities and the design and implementation of programs under this section shall not be subject to utility oversight or direction. The third-party administrator must ensure that no employee or agent involved with the design or implementation of the portfolio has a conflict of interest due to a current or prior affiliation with any utility subject to the requirements of this subsection.
 (C) Upon notice and hearings as the commission may require, the commission may issue rules, regulations, and orders pursuant to this chapter to implement applicable programs and measures under this section.
 (D) The provisions of this section are subject to available funding.

Amend the bill further, SECTION 25, Section 58-37-10, by striking the MACROBUTTON NoMacro <> undesignated paragraph and inserting:

In evaluating the cost-effectiveness of a program or portfolio, a utility or program administrator must present the results of all four tests. The total resource costs test must include, as part of customer benefits, a reasonable estimate of all significant customer cost savings that will likely result from the implementation of the program. In calculating cost-effectiveness, a utility must use a standard utility practice for determining the percentage of energy savings that would or would not have been achieved through customer adoption of an efficiency behavior or technology without any incentive allowed pursuant to this chapter to install and utilize the technology as part of the associated demand-side management program. The utility must designate the expected useful life of the measure and evaluate the costs and benefits of the measures over their useful lives in the program application based on industry accepted standards. Further, in calculating the cost-effectiveness, the commission must consider the efficiencies and scale of programs that are or may be available across a utility's balancing area, even if that balancing area extends outside of the state.

Amend the bill further, SECTION 25, by striking Section 58-37-10(4) and inserting:

 (4) "Demand-side management pilot program" means a demand-side management program that is of limited scope, cost, and duration and that is intended to determine whether a new or substantially revised program or technology would be cost-effective.
 (4) "Percent of retail sales" or "percentage of retail sales," where used to describe energy savings levels in this chapter, means the proportion of annual net energy savings compared to total annual retail electric sales expressed as a percentage and consistent with data reported by the utility to the Energy Information Administration through Form 861.

Amend the bill further, SECTION 26, by striking Section 58-37-20(A), (B), (C), (D), (E), and (F) and inserting:

 (A) The General Assembly declares that expanding utility investment in and customer access to cost-effective demand-side management programs will result in more efficient use of existing resources, promote lower energy costs, mitigate the increasing need for new generation and associated resources, and assist customers in managing their electricity usage to better control their electric bill, and is therefore in the public interest. Within its function of reviewing and regulating utility service, the Office of Regulatory Staff shall use its expertise to promote demand-side management program improvement, comprehensiveness, and customer access.
 (B) The commission may approve any program filed by a public utility if the program is found to be cost-effective. Furthermore, the commission may, in its discretion, approve any program filed by a public utility that is not cost-effective, so long as the proposed demand-side management program is targeted to low-income customers, provided that the public utility's portfolio of demand-side management programs is cost-effective as a whole. The commission shall approve any program filed by a public utility if the evidence in the record supports a finding that the program is or is expected to be cost-effective, and may approve demand-side pilot programs that are of limited scope, cost, and duration to determine whether a new or substantially revised program or technology would be cost-effective. The commission may, in its discretion, approve any program filed by a public utility that is not cost-effective, so long as the proposed demand-side management program is targeted to low-income customers, provided that the public utility's portfolio of demand-side management programs is cost-effective as a whole. The commission may require the coordination of electric and gas utility programs to promote administrative efficiency, facilitate energy savings, and reduce complexity for home heating and air contractors, energy auditors, and other service providers, with a reasonable sharing of program costs among utilities. The commission shall prioritize energy savings measures that have a persistence greater than one year in order to count towards the performance targets. Demand-side management programs may be coordinated with distributed generation and other customer distributed energy resource programs, policies or tariffs.
 (C)The South Carolina Public Service Commission may adopt procedures that encourage electrical utilities and public utilities providing gas services subject to the jurisdiction of the commission to invest in cost-effective energy efficient technologies and energy conservation programs. If adopted, these procedures must: provide incentives and cost recovery for energy suppliers and distributors who invest in energy supply and end-use technologies that are cost-effective, environmentally acceptable, and reduce energy consumption or demand; allow energy suppliers and distributors to recover costs and obtain a reasonable rate of return on their investment in qualified demand-side management programs sufficient to make these programs at least as financially attractive as construction of new generating facilities; require the Public Service Commission to establish rates and charges that ensure that the net income of an electrical or gas utility regulated by the commission after implementation of specific cost-effective energy conservation measures is at least as high as the net income would have been if the energy conservation measures had not been implemented. For purposes of this section only, the term "demand-side activity" means a program conducted by an electrical utility or public utility providing gas services for the reduction or more efficient use of energy requirements of the utility or its customers including, but not limited to, utility transmission and distribution system efficiency, customer conservation and efficiency, load management, cogeneration, and renewable energy technologies.
  (1) By Dec. 31, 2027, each investor-owned electrical utility shall be required to achieve an energy efficiency performance target of 0.66 percent of retail sales. This performance target is a minimum and does not limit the obligation to pursue all cost-effective energy efficiency and demand-side resources in accordance with the requirements of Section 58-37-20(E). After a period of three years, the commission shall hold a proceeding to determine whether it is appropriate to increase or maintain this energy efficiency performance target.
  (2) By July 1, 2026, the commission shall open a proceeding to determine whether it is also appropriate to establish a demand response performance target for each of the state's investor-owned electrical utilities.
 (D) Failure to meet the energy efficiency performance targets as outlined in Section 58-37-20(C) qualifies as a failure of the utility to make every reasonable effort to minimize fuel costs as outlined in Section 58-27-865(F) and the commission shall grant a proportional disallowance based on evidence in record.
 (E) The commission must adopt procedures that require electrical utilities and public utilities providing gas services subject to the jurisdiction of the commission to plan for and invest in all cost-effective, reasonable, prudent, and available energy efficiency and demand-side resources. If an electrical utility fails to meet the requirements of this section as determined by the commission, the commission is authorized to appoint a third-party administrator pursuant to the provisions of Section 58-4-160 to carry out the electrical utility's energy efficiency duties pursuant to this section on behalf of the electrical utility. Upon such notice and hearings that the commission may require, the commission may issue rules, regulations, or orders pursuant to this chapter to implement applicable programs and measures under this section. If adopted, these procedures must: provide incentives and cost recovery for energy suppliers and distributors who invest in energy supply and end-use technologies that are cost-effective, environmentally acceptable, and reduce energy consumption or system or local coincident peak demand; allow energy suppliers and distributors to recover costs and obtain a reasonable rate of return on their investment in qualified demand-side management programs sufficient to make these programs at least as financially attractive as construction of new generating facilities; require the commission to establish rates and charges that ensure that the net income of an electrical or gas utility regulated by the commission after implementation of specific cost-effective energy conservation measures is at least as high as the net income would have been if the energy conservation measures had not been implemented, except as provided in Section 58-4-160(C).
 (D)(F) Each investor-owned electrical utility must submit an annual report to the commission describing the demand-side management programs implemented by the electrical utility in the previous year, provided the program has been operational for a reasonable period of time, as well as the results of such programs. The commission may require certain information including, but not limited toThis annual report must include:
  (1) net achieved savings levels from the utility's portfolio of programs in the prior year, reported as a percentage of the utility's annual sales;
  (2) program expenditures, including incentive payments;
  (3) peak demand and energy savings impacts and the techniques used to estimate those impacts;
  (4) avoided costs and the techniques used to estimate those costs;
  (5) estimated cost-effectiveness of the demand-side management programs;
  (6) a description of economic benefits of the demand-side management programs;
  (7) the number of customers eligible to opt-out of the electrical utility's demand-side management programs, the percentage of those customers that opted-out in the previous year, and the annual sales associated with those opt-out customers; and
  (8) any other information required by the commission.
 (E)(G) To ensure prudent investments by an electrical utility in energy efficiency and demand response, as compared to potential investments in generation, transmission, distribution, and other supply related utility equipment and resources, the commission must review each investor-owned electrical utility's portfolio of demand-side management programs on at least a triennial basis to align the review of that utility's integrated resource plan pursuant to Section 58-37-40. The commission is authorized to order modifications to an electrical utility's demand-side management portfolio, including program budgets, if the commission determines that doing so in the public interest.
 (F)(H) The provisions of subsections (C), (D), and (E)(E), (F), and (G) do not apply to an electrical utility that serves less than 100,000 customers in this State.
 (I) Beginning July 1, 2026, electrical cooperatives with more than 5,000 members and the South Carolina Public Service Authority shall be required to achieve an annual energy efficiency performance target of 0.50 percent of retail sales. Beginning July 1, 2027, these utilities must file with the commission on an annual basis an evaluation, measurement, and verification report from an independent third-party evaluator demonstrating compliance with this energy efficiency performance target or any subsequent target approved by the commission.

Renumber sections to conform.

Amend title to conform.