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DRAFT

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Item #16 (Rev. 1)

Agenda ID# 16234ENERGY DIVISION RESOLUTION E-4910

February 8, 2018

R E S O L U T I O N

Resolution E-4910. San Diego Gas and Electric Company’s (SDG&E) Marketing, Education and Outreach Plan in Compliance with the December 17, 2015 Assigned Commissioner and Administrative Law Judge’s Ruling and Decision 15-07-001 on Residential Default Time of Use Rates.

PROPOSED OUTCOME: Approves with modifications Advice Letter 2992-E

and Advice Letter 2992-E-A on SDG&E’s time-of-use marketing, education and outreach plan for 2017-2019.

SDG&E shall file a new Advice Letter in compliance with this Resolution by March 30, 2018.

SAFETY CONSIDERATIONS: There is no impact on safety.

ESTIMATED COST: The cost of SDG&E’s plan is estimated to be $19.4

million over 3 years.

By Advice Letter (AL) 2992-E, filed on November 1, 2016 and AL 2992-E-A filed on March 15, 2017.

__________________________________________________________

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Resolution E-4910 DRAFT February 8, 2018SDG&E AL-2992-E/E-A/BSS

SUMMARY

This Resolution approves, with modifications, SDG&E’s Marketing, Education and Outreach Plan (ME&O Plan) as presented in AL 2992-E and as supplemented in AL 2992-E-A.

On November 1, 2016, SDG&E filed its ME&O Plan in accordance with Decision (D.)15-07-001 and an Assigned Commissioner and Administrative Law Judge Ruling issued on December 17, 2015 (December 2015 Ruling) in Rulemaking (R.)12-06-013. AL 2992-E describes SDG&E’s time-of-use (TOU) customer engagement strategy for 2017-2019 leading up to the rolling default of approximately 1.3 million SDG&E residential customers onto a default TOU rate in 2019.1

SDG&E’s ME&O Plan was informed by decisions and rulings in (R.)12-06-013, portions of the Greenberg, Inc. Rate Reform ME&O Blueprint (Blueprint)2, and thoughtful input from the ME&O Working Group. SDG&E requests adoption of the proposed ME&O Plan and for proposed budget expenditures to be collected and tracked through its Rate Reform Memorandum Account (RRMA), as authorized in D.15-07-001.

The overarching goal of the ME&O Plan for TOU is to increase customer awareness, understanding, and engagement with rate options and with energy management tools and behaviors that can help manage energy use, and to increase adoption and retention of customers on TOU rates.3 The specific outcomes and objectives for default TOU marketing strategies are as follows:

Customers understand generally what TOU is, why and when transition to TOU is occurring, the benefits of a TOU rate, and that they have rate options.

1 The 1.3 million figure not adjusted for Public Utilities (P.U.) Code Section 745 exclusions.

2 The ME&O Blueprint was commissioned by the IOUs on behalf of the ME&O Working Group. The Blueprint was entered into the record of R.12-06-013 by ALJ McKinney’s Ruling dated October 7, 2016.3 AL 2992-E, Attachment A, p. 2.

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Customers are educated on what TOU specifically means to them and how to be successful on a TOU rate.

Customers who are structural benefiters are encouraged to transition to TOU and start saving before TOU default, and others are encouraged to make behavioral changes before TOU default.

Customers choose the “best” rate for them.

Customers retain their TOU rate after the first 12 months of default TOU.

BACKGROUND

Decision (D.)15-07-001 directed Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE) and San Diego Gas & Electric Company (SDG&E) (collectively the IOUs) to begin the process of defaulting residential customers to TOU rates in 2019 after undertaking a series of opt-in TOU pilots in 2016 and default TOU pilots in 2018. In D.15-07-001, the Commission discussed the importance of providing adequate ME&O to customers and directed the IOUs to work with other parties to create an ME&O Working Group.4 D.15-07-001 tasked the Working Group with examining ME&O strategies associated with customer awareness and understanding of changes to the tiered rate structure and the transition to default TOU rates, as well as consideration of long-term outreach to customers.5

ME&O Working Group and the Implementation Process

4 The Marketing Education and Outreach Working Group in the Residential Rate Reform Proceeding includes active members from the CPUC’s Energy Division and Business and Community Outreach, each of the three IOUs, the Office of Ratepayer Advocates (ORA), the Consumer Federation of California (CFC), the Center for Accessible Technology (CforAT), the City of Lancaster, the Environmental Defense Fund (EDF), the Greenlining Institute, Marin Clean Energy (MCE), Oracle (formerly Opower), Siemens, Tesla (formerly SolarCity) and the Utility Consumers’ Action Network (UCAN).5 Decision (D.) 15-07-001, p. 336.

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In late 2015 and early 2016, the Working Group met and created a set of draft metrics for ME&O activities and designed a baseline ME&O study to ascertain awareness and understanding of rates among ratepayers.6 SDG&E's initial baseline study found that 52 percent of customers surveyed were aware of TOU; however, 46 percent were unaware of which rate plan they were on. Furthermore, of the 9 percent that thought they were on a TOU rate, only 1 percent were actually enrolled in one.7 On December 17, 2015, the Assigned Commissioner and Administrative Law Judge (ALJ) issued a ruling (December 2015 Ruling) which described the Commission’s desire for greater integration of marketing activities between rate reform, demand-side management (DSM) and other IOU programs, as well as a more systematic approach to planning for default TOU ME&O. This ruling directed the IOUs to hire an expert consultant to advise the Working Group on appropriate ME&O metrics, goals, and strategies, including a plan for statewide ME&O program coordination.

The December 2015 ruling also directed the IOUs to prepare a comprehensive ME&O plan by September 1, 2016,8 with the following provisions:

Specific timelines for rate-reform related ME&O activities; Budgets for such activities; Descriptions of segmented ME&O for certain customer groups; Surveying methodologies and questions to evaluate the metrics; Coordination between the IOU’s’ ME&O activities and the

statewide ME&O program (Energy Upgrade California or EUC), including how messaging content, campaigns and communication plans will be aligned. 9

6 The IOUs contracted with HINER & Partners to conduct a telephone survey among a representative sample of residential customers in each service territory on their knowledge of basic rate concepts and time-of-use rates. This survey was initially run for SDG&E in March 2016.7 AL 2992-E, Attachment A, p. 14.8 This was extended to November 1, 2016 by ALJ Ruling on May 26, 2016.9 Assigned Commissioner and Administrative Law Judge's Ruling Requiring Utilities to Prepare Comprehensive Marketing, Education and Outreach, Metrics, Goals and Strategies for Residential Rate Reform, December 17, 2015, p. 7

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The Greenberg Blueprint

Following the solicitation of Requests for Proposals during the first quarter of 2016, the Working Group selected Greenberg, Inc. (Greenberg) as the ME&O consultant.10 After significant consultation with Working Group members, as well as Commission and IOU staff, Greenberg delivered its Blueprint on August 20, 2016.11 Through their research, Greenberg confirmed the findings of the baseline study, which indicated that customers are generally not engaged with energy. A set of focus groups and in-depth interviews with customers in the three IOU territories found that customers did not connect their personal actions with demand on the electric grid and did not adequately understand how they were billed for energy.12

The Blueprint included a strategic action plan for statewide and local utility marketing as well as a proposed vision, metrics, timeline and budgets for 2017 through 2019. The ME&O strategies and tactics include:

Steps to engage customers on an emotional level as well as an intellectual level in order to affect change in behavior, with an emotional quotient (EQ) based statewide message to increase customer engagement while the IOUs would provide a more intellectual quotient (IQ) based message (i.e. details on rate plans, rate comparisons, and tips on how to adapt and conserve);

An impact-based segmentation strategy which emphasizes spending the most time and money on customers who would be the most negatively impacted by default TOU rates, then

10 Greenberg Inc. is a communication research and strategy firm located in Emeryville, CA. The project included Greenberg staff and a number of subcontracted subject matter experts in advertising and program evaluation.11 ALJ McKinney issued a Ruling on October 7, 2016 adding Greenberg’s Marketing, Education & Outreach Blueprint v.2 into the record of Rulemaking (R.) 12-06-013 for reference purposes. A copy of the Blueprint can be found at: http://www.cpuc.ca.gov/WorkArea/DownloadAsset.aspx?id=6442451678. 12 Greenberg Blueprint, Appendix G.3.

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http://www.cpuc.ca.gov/WorkArea/DownloadAsset.aspx?id=6442451678

http://www.cpuc.ca.gov/WorkArea/DownloadAsset.aspx?id=6442451678


applying psychographics to those segments to further refine the message;

A “go-to-market” plan which increases the amount of messaging closer to default on a 90/60/30 day timeline;

Plans for default and post-default messaging.

On September 12, 2016, a workshop was held by the Commission to discuss how best to incorporate the Greenberg Blueprint into the IOUs’ ME&O plans. Parties evaluated certain portions of the Blueprint at the workshop, including the proposed budgets.

Other parts of the Blueprint, such as establishing formal alignment and management processes between ME&O in different proceedings and programs, were evaluated and agreed upon internally by Commission staff. This resulted in a common outline that was provided to the IOUs by ALJ ruling on September 30, 2016 (September 2016 Ruling).13

The ME&O Plan and Supplemental Information

On November 1, 2016, SDG&E submitted AL 2992-E, setting forth its ME&O Plan, detailing strategies, tactics and timelines for customer engagement in accordance with the December 2015 Ruling. SDG&E’s ME&O Plan includes the following four phases for transitioning to TOU rates:

• Phase 1 in 2017 (outdated): SDG&E ME&O Plan activities technically began in 2017, and any expenditures recorded pending AL 2992-E and 2992-E-A review will be evaluated in a future GRC. In 2017, SDG&E focused on building awareness of TOU rates and setting the contextual groundwork for TOU. This will include an opt-in TOU customer acquisition campaign that continues through 2018.

• Phase 2 in 2018 : Emphasizes the benefits of TOU rates and how customers can be successful on them.

13 Administrative Law Judge’s Ruling inviting prehearing conference statements and setting next steps following the September 12, 2016 Marketing, Education & Outreach Workshop, September 30, 2016 (September 2016 Ruling).

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• Phase 3 in 2019: Will continue education and engagement efforts during TOU default rollout.

• Phase 4 in late 2019 : Will focus on sustained action and TOU rate retention.

SDG&E’s ME&O Plan includes established IOU metrics and those recommended by Greenberg as appropriate, associated targets, and plans for evaluating progress towards residential TOU goals. Moreover, it incorporates a modified version of the basic segmentation strategy identified in the Blueprint, with SDG&E tailoring the messaging, depth of engagement, and level of investment based on monetary impact per segment. A timeline which shows when each tactic will be deployed and a set of customer profiles showing when customers will be receiving specific messages were also provided. In addition, the ME&O Plan as presented contains a budget estimate of $19.4 million total for the activities described herein, and may be supplemented in the future based on input from the Working Group. In response to direction provided by ALJ McKinney at the February 6, 2017 prehearing conference (PHC), SDG&E submitted supplemental AL 2992-E-A on March 15, 2017, which included new information and updates to the ME&O Plan. AL 2992-E-A included a budget presented in more detail and in a manner comparable to the other IOUs, as well as additional information on the following: segmentation data, a sample of what customers will be receiving over the transition timeline, guidelines for tracking of community based organizations (CBOs) outreach effectiveness, and a description of how rate reform costs are incremental to DSM efforts. NOTICE

Notice of AL 2992-E was made by publication in the Commission’s Daily Calendar. SDG&E states that a copy of the Advice Letter was mailed and distributed in accordance with Section 4 of General Order 96-B.

PROTESTS

ORA Protest

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SDG&E’s Advice Letter AL 2992-E was timely protested by the Office of Ratepayer Advocates (ORA), and SDG&E replied to the protest on December 28, 2016.

In its protest, ORA requests that the Commission reject AL 2992-E due to SDG&E’s failure to provide sufficient cost information to justify its estimated ME&O budget. They request that SDG&E submit a budget with additional, line-item detail, and assert that the recovery of expenditures in the RRMA should be contingent on SDG&E achieving the finalized targets identified in the ME&O Plan in a cost-effective manner. Additionally, they request that SDG&E modify its quarterly Progress on Residential Rate Reform (PRRR) filings to include variations between budgeted and actual spending on ME&O activities.

In reply to ORA’s request for a detailed line item budget, SDG&E provided a spreadsheet of budget items linked to each planned activity. In addition, SDG&E opposed tying any recovery of costs to success metrics as they currently exist, citing the numerous interdependent proceedings that attempt to influence customer behavior and what SDG&E sees as the inability of customers to isolate their opinion and feedback on rate reform based on the other energy related offers in the market.

Center for Accessible Technology / Greenlining Institute Response to AL 2992-E

A timely response to AL 2992-E was filed by the Center for Accessible Technology (CforAT) and the Greenlining Institute (Greenlining), and SDG&E replied to the response on December 28, 2016.

In their response, CforAT and Greenling ask for the development of consistent and effective ME&O plans and budgets through coordination between the various programs that are involved in demand-side program messaging, including the CARE/ESAP proceeding (A.14-11-007) and the Statewide ME&O proceeding (A.12-08-007). They believe that rather than continuing with two overlapping plans, the ME&O effort in R.12-06-013 should coordinate and potentially consolidate with the Statewide ME&O effort and its associated brand, Energy Upgrade California (EUC). They agree with

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SDG&E that expert assistance should be engaged to help with these efforts.

While CforAT and Greenlining agree on the need for comprehensive ME&O, they point out the many unknowns in the default TOU process, whether a transition will be big bang or rolling, the categories of customer that might be excluded from default, the actual default rates and the results of the pilots, among a few, that could hinder a coordinated ME&O process. They ask that the Commission defer the expansive plans submitted by SDG&E and authorize the more targeted areas including the opt-in TOU campaign until after the integration with the Statewide ME&O effort.

SDG&E agreed with Greenlining and CforAT that coordination with the statewide campaign is preferable and agrees that an additional AL may be necessary once there is a clear path forward for the statewide campaign. They do not agree that only portions of the plan as presented should be approved and contend that all ME&O to be performed at the local level should be authorized.

DISCUSSION

Energy Division (ED) Staff reviewed AL 2992-E and AL 2992-E-A for consistency with the ME&O directives in D.15-07-001, the December 2015 Ruling, the September 2016 Ruling and the supplemental information requested by ALJ McKinney at the February 6, 2017 PHC. Additional guidance was provided through ME&O Working Group meetings and the September 12, 2016 workshop. SDG&E’s ME&O Plan includes a discussion of how it compares to the Blueprint, and follows a common outline as laid out in the September 2016 Ruling.

Timelines for Rate Reform Related Communications and Other Activities

The December 2015 Ruling requested that the ME&O plans include specific timelines for planned rate reform activities, and SDG&E included a series of milestones for rate reform activities between 2017 and 2020.14 While the proposed activities for 2017 are now outdated, expenditures for any activities undertaken through 2017

14AL 2992-E, Attachment B.

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will be reviewed in SDG&E’s Rate Reform Memorandum Account (RRMA). SDG&E launched its High Usage Charge (HUC) outreach in 2017 and will continue its outreach related to HUC and tier collapse throughout 2018 and 2019.

The Commission has not yet approved a start date for default TOU transition. The precise date in 2019 will be proposed by the IOUs in their January 1, 2018 rate design window applications as ordered by D.15-07-001. SDGE plans to launch ME&O efforts to support default TOU beginning in March 2019.15

SDG&E provides a communications calendar showing when communications will be deployed.16 SDG&E plans to send notices to customers 60 and 30 days before default, with the precise number of touchpoints for various segments (i.e. those potentially negatively impacted by TOU) to be determined after testing in the default TOU pilot. This does not align with the Blueprint recommendation that the optimal default TOU engagement strategy begins with a 90/60/30 communication cadence for prelaunch. Low customer engagement necessitates that default TOU messaging should be deployed 90 days prior to launch.17 We direct SDG&E to send notices to customers 90 days before default.

At the February 6, 2017 PHC, ALJ McKinney requested detailed customer profiles which would show examples of the various communications customers would receive from SDG&E over the TOU transition timeline. In AL 2992-E-A, SDG&E provides information on their new18 residential segmentation by demographic, psychographic, and other characteristics as well as sample marketing phrases over the course of default TOU rollout. While this is valuable information about customers and the evolution of TOU messaging, it does not show examples of communications directed at specific customer segmentation groups over the default timeline or how those communications fit into the landscape of all the other communications a customer might receive from SDG&E.

15 Id. p.4.16 Id., Attachment B.17 Greenberg, “RROIR MEO Blueprint”, v2, p. 126.18 SDG&E states that its residential segmentation was refreshed in 2016.

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We approve SDG&E’s proposed rate reform implementation and customer communication timelines, but direct SDG&E to provide additional information defining and quantifying the customer contacts, or “touchpoints” at each of the 90/60/30 day communication intervals, with an emphasis on the touchpoints, touchstones, and outreach channels for customers defined as extreme non-benefiters. SDG&E should also provide examples of the communications customers will receive over the TOU transition timeline, with emphasis on customized information relevant to low-income and hard-to-reach customer segments. This information should be shared with the Working Group, and incorporated into SDG&E’s quarterly PRRR reports going forward.

Segmentation Strategy

The December 2015 Ruling directed the ME&O plans to include descriptions of customer segmentation, and SDG&E’s ME&O Plan incorporates the segmentation strategy identified in the ME&O Blueprint. SDG&E’s segmentation approach is intended to help target communications and customize messaging on a cost-effective basis, and will utilize bill impact data combined with customer segmentation that includes demographic and psychographic indicators such as a customer’s perceived ability and willingness to take action to manage electricity use and change energy consumption behaviors in response to TOU rates.

SDG&E proposes two scoring algorithms that will be used to assign customers to segments. The first is a classification algorithm, which includes a short set of questions that can be used to assign future qualitative or quantitative research participants to the segments, as needed. The second is a database scoringalgorithm, which will use data from SDG&E’s internal database to assign customers to the appropriate segment. The accuracy ratings for the classification and database scoring algorithms is 87.5% and 69.5%, respectively. After the residential customer base is scored,19 these segments and profiles will be used to inform ME&O efforts going forward.

19 SDG&E states that the total residential customer base would be scored by the end of Q1 2017.

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As requested by ALJ McKinney at the February 6, 2017 PHC, SDG&E provides its definition of whether a customer is a benefiter or non-benefiter. Customers will be grouped into general categories based on both the monthly impact in dollars as well as the percentage decrease/increase of the bill impact change, as follows:

Structural benefiters/TOU positive (>10% or $10 bill decrease on TOU)

Neutrals (+/- 10% or $10 of current average bill)

Structural non-benefiters/TOU negative (>10% or $10 bill increase on TOU)

The Blueprint suggests that a 15% bill impact be the threshold used for segmenting customers into one of the three impact categories, but that the specific bill impact breaks should be determined through analytics after the final default rates are set.20 Once the default rate is approved, SDG&E will utilizeresearch and analysis to determine the appropriate thresholds for classifying customers into impact categories. SDG&E will also leverage any relevant learnings from the default pilot.

SDG&E will leverage bill impact data and target customers based on how TOU rates are projected to affect their energy costs based on historical costs, i.e. the previous twelve months of billing data. Psychographic segmentation will be used as an overlay to further refine messaging by considering how each customer may respond to specific messages, consistent with the Blueprint recommendation.

The December 2015 Ruling emphasized the role of psychographic segmentation for ME&O effectiveness. In its AL, SDG&E includes psychographic segments that range from highly environmentally motivated customers to customers who care primarily about their bill, as well as the profiles of the five psychographic personas that will be used for rate reform marketing.

Community Based Organizations and the Network of Networks

20 Greenberg, “RROIR MEO Blueprint”, v2, p. 192.

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In the Blueprint, Greenberg emphasized the role of CBOs or the “network of networks” to bring information on rate reform to niche populations and those who are isolated due to language, geography, poverty and disability. Greenberg believed it was necessary to provide partner organizations with messaging relevant to the populations they serve in order to retain authenticity and increase engagement even when delivering potentially negative news. They also noted that customers who receive the same message from multiple sources (i.e. several CBOs, the IOU, a statewide campaign) would find the message more credible.

SDG&E’s Energy Solutions Partner Network has more than 250 active members throughout its service area and represents diverse communities from civic, chamber, environmental, multicultural, low-income, special needs, and seniors groups. Outreach plans will leverage opportunities with SDG&E’s community partner network and local governments to promote TOU in conjunction with comprehensive and integrated solutions which include energy efficiency and demand response programs, and services and tools with an emphasis on ongoing outreach to the most “at risk” and hardest to reach customer segments. Throughout SDG&E’s service area, multicultural / multilingual staff will be utilized at events, presentations, and workshops to help serve as ambassadors as needed to promote TOU education and solutions.

Marketing tactics to engage customers in TOU rate plan options are customized for CBO populations served. Messaging for CBO partners will be provided by SDG&E to the CBOs on a monthly basis and blended with seasonal energy solutions messaging as appropriate. Partners will use various tactics to connect customers to information about TOU, such as mail, email, social media, special events, workshops, and customized promotions. Additionally, collateral will be produced in multiple languages and accessible formats for use by CBOs for various customer segments, and will also be used by the outreach team, field representatives, and branch offices.

As requested by ALJ McKinney at the February 6, 2017 PHC with respect to specific CBO outreach methods and associated metrics for tracking and determining effectiveness, SDG&E states that it currently tracks a number of data points related to the activities initiated and/or implemented by its Energy Solutions Partner

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Network. This includes partner name along with the date, type of activity, and impact. SDG&E should continue to highlight rate reform and energy management solution activities undertaken with CBO partners in its quarterly PRRR reports.21

We direct SDG&E to develop additional effectiveness metrics that specifically address CBO efforts and reach TOU non-benefiters in hot climate zones. Furthermore, we find the ME&O Plan lacking with respect to customized information relevant to low-income customers on alternative ways to manage electricity through low-cost / no-cost tools and ongoing tips.22

We approve SDG&E’s proposed overall segmentation strategy as presented, contingent on SDG&E providing to the Working Group and in quarterly PRRR reports the following: (1) examples of customized information relevant to low-income and hard-to-reach populations, and (2) CBO effectiveness metrics and tracking data for TOU non-benefiters in hot climate zones. Strategic Plan

The strategies below will be aligned with each phase of the ME&O Plan and will include the following messaging and tactics appropriate for each customer segment:

Integrate and coordinate broad-reaching mass media and general marketcommunications with targeted direct channels to create awareness, understanding and engagement;

Differentiate between opt-in TOU and default TOU, specifically for opt-in target customers who will experience bill savings on an annual basis;

21 SDG&E’s Ninth Quarterly PRRR reports the following data: 294 events reaching more than 22,000 people; 91 presentations reaching more than 1,500 people; and 264 online activities (social media posts, e-blasts, website posts) reaching more than 587,000 people.22D.15-07-001 directs the ME&O Working Group to address programs to promote low-cost and no-cost energy efficiency options for current Tier 1 and Tier 2 customers, in accordance with OP 13 at 336.

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Utilize segmentation and marketing automation to create personalizedcommunications;

Use micro-targeted marketing and outreach to reach the most vulnerable or negatively impacted customers;

Leverage SDG&E’s network of networks consisting of community basedOrganizations (CBO), media and municipalities to help increase awareness of rate reform changes and provide solutions and resources as needed, including help enrolling customers in assistance programs, if applicable;

Leverage concurrent ME&O campaigns such as energy efficiency and low-income assistance programs and integrate messaging in other ongoing SDG&E marketing efforts, as appropriate.

Tactical Plan

In the market and situation overview section required by the September 2016 Ruling, SDG&E cites research showing that its customers have a low engagement with energy and that they view their relationship with energy and the utility as transactional in nature. In addition, the Blueprint noted that to connect with customers, the right message has to be delivered by the right entity at the right time, or customers will either not believe it or will not pay attention.SDG&E states that its tactical plan consists of a phased approach that aligns with the ME&O Blueprint. The tactical plan is designed to answer the basic questions with respect to default TOU in general, and to set the stage for information that follows via TOU bill impacts and solutions. Customers will receive messages to help them understand TOU, behavioral changes that may help them save on a TOU rate, and relevant tools to help them better manage energy use and reduce costs. The evolution of messages SDG&E plans to use through the four phases is described below:

Phase 1 – Awareness : This phase starts setting the contextual groundwork for TOU with an emphasis on answering customer

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questions that ask “what” default TOU is, and “why” default TOU is being implemented, including imparting the benefits of TOU. “When,” as in “when you use energy matters” will be conveyed using a term SDG&E created, “Whenergy”. SDG&E plans to use the term “Whenergy” as the creative theme and umbrella term that encompasses various rates and pricing options pertaining to time-based rates. SDG&E believes it is customer-friendly in tone and states that research has shown it is effective in conveying the concept of time-based rates.

Phase 2 – Acknowledge : This phase will build on phase one messages and will include rate choices, rate changes and how to be successful i.e. how to act including education on tools, solutions and behavior change. Any mass media during this phase will complement the default pilot ME&O efforts.

Phase 3 – Activation : This phase will build on the efforts from phase one and two with increased messaging related to personalized education and motivation through the use of targeted bill impacts and solutions.

Phase 4 – Agreement : This phase will reinforce the benefits and encouragemotivation with an emphasis on sustained action leading to TOU retention.

SDG&E plans to use various marketing tactics across the four phases to support the ME&O strategies and meet the overarching goal of increasing customers’ awareness, understanding, and engagement with rate options, energy management tools, and behaviors that can help to better manage electricity use. Marketing tactics are grouped into three types: (1) direct marketing tactics, (2) mass media tactics, and (3) “always on” tactics.

Direct marketing tactics will be part of specific, targeted campaigns that will leverage customer segmentation data, include a “call-to-action”, and be designed to generate a response. These tactics include rate comparison mailer campaigns to proactively communicate to customers that SDG&E has a menu of TOU rate options, a direct mail / e-mail opt-in campaign directed at structural benefiters and neutrals to consider a TOU plan to start saving in

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advance of default TOU rollout, a direct email/ e-mail campaign during the transition of eligible customers to TOU rates, outbound calling to the most potentially negatively impacted customers to educate them on TOU and connect them to solutions,23 and a personalized video that walks the customer through their individual bill components using the actual usage and costs for their most recent bill.

Mass media tactics will be leveraged to communicate to the broader residential audience and support direct marketing tactics. These tactics include radio and television spots which will direct customers to the “Whenergy” microsite or to log in to “My Account” to learn more, as well as digital advertising which will provide additional exposure and awareness for customers who frequent online channels (e.g. search engine optimization, pre-roll video, banner ads).

“Always on” tactics, which are available to customers at any time, or on someregularly scheduled frequency such as their monthly bill, will be leveraged to support the call to action in direct marketing and mass media. These tactics include the “Whenergy” website for information on pricing options and energy management solutions, bill packaging (e.g. bill inserts, bill newsletters and bill onserts) for TOU messaging, energy use alerts, social media channel messaging, and informational videos highlighting TOU features and benefits.

The Customer Contact Center is another channel to educate residential customers about rate options. SDG&E’s Customer Contact Center will provide rate option education to customers and advise them to consider their usage patterns, including when they use energy and how much they use, to determine their best rate.

SDG&E’s ME&O Plan does not address ME&O efforts to communicate to customers about their choice to opt-out of default TOU, nor does it address tactics to welcome customers to their new TOU rate and to reinforce load shifting behavior. We also find that the ME&O Plan does not address bill protection as part of the TOU default process.

23 This tactic is planned to be tested in the default pilot and is not currently included in the budget.

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We approve SDG&E’s proposed tactical plan but require SDG&E to include in its PRRR reports sample communications with clear language about customer choice to take action to not remain on a default TOU rate plan. We direct SDG&E to file a Tier 2 AL by March 30, 2018 that provides a detailed account of the following: (1) tactics to welcome customers to their new TOU rate; (2) tactics to reinforce load shifting behavior; and (3) plans to implement bill protection to address the apprehension customers may have over uncertain bill impacts that may arise from being defaulted to a TOU rate.

SDG&E’s ME&O Plan Budget

Our analysis of forecasted ME&O Plan budget activities includes a comparison of SDG&E’s proposal with that of Greenberg, which includes various assumptions:

A ‘big bang’ default of all eligible customers at the same time (January 2019);

A reach24 of 85-90% and a frequency25 of 10+ touches over an average of four weeks;

A cost of $13 per customer for direct marketing materials26; A heavy emphasis on continuous mass media at the statewide

and local levels.

These assumptions, particularly the high reach and frequency numbers, are intended to make energy use a more salient topic to all Californians. In the Blueprint, the estimated cost for SDG&E alone, not including any contribution to a statewide campaign, comes to roughly $23.4 million.

24 Reach is defined as the percent of people (unduplicated) within the target audience that are estimated to be reached by the advertising, during an average 4-week time period (4-week is the standard measure for the calculation).25 Frequency is defined as the number of times that the targeted number of customers is exposed to the message or ‘touched.’ 26 Greenberg arrived at this number by creating an estimate in between the $4/customer used for the Sacramento Municipal Utility District (SMUD) default TOU pilot, the $9.50/customer used for PG&E’s Small/Medium Business TOU default and Greenberg’s professional opinion of $25/customer.

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Budget Category 2017 2018 2019 Total

Mass MediaBlueprint for SDG&E

$0 $2,405,203

$4,572,091

$6,977,294

SDG&E $365,000 $2,175,000

$2,375,000

$4,915,000

Direct MarketingBlueprint for SDG&E

$1,600,000

$9,500,000

$4,700,000

$15,800,000

SDG&E $2,066,000

$3,562,000

$4,623,000

$10,251,000

Public RelationsBlueprint for SDG&E

$7,000 $14,400 $14,400 $35,800

SDG&E "Outreach"27

$300,000 $460,000 $816,000 $1,576,000

Research and EvaluationBlueprint for SDG&E

$217,000 $201,750 $201,750 $620,500

SDG&E $325,000 $425,000 $450,000 $1,200,000

In addition to the above categories, SDG&E includes $600,000 over three years for outreach related to the High Usage Charge and $832,000 for changes to its marketing and outreach software for a total of $19.4 million. The main reductions compared to Greenberg’s assumptions are in the areas of mass media and direct marketing.

However, SDG&E provides little detail as to how their budget differs from the recommendations made in the Blueprint, and we direct them to clarify these differences and provide justification in its March 30

27 SDG&E does not provide a budget line item for public relations. Here ‘outreach’ is defined as “events, blitz, sponsorship workshops and multilingual efforts’ per SDG&E’s Response to Protests on December 28, 2016.

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Tier 2 AL. In addition, any proposed 2017 budget expenditures that have been recorded in the RRMA thus far are approved subject to GRC review. We also direct SDG&E to address and clarify any timeline adjustments to proposed expenditures since the filing of 2992-E and 2992-E-A in this new Tier 2 filing.

We approve SDG&E’s proposed budget expenditures of $19.4 million for entry into the RRMA. SDG&E shall present in its March 30 AL a clarification of the differences between SDG&E’s proposed budget and the budget recommendations made in the Blueprint, with justification as applicable. In addition, we direct SDG&E to include any audit of the RRMA in the next applicable PRRR report.

Budgets are Subject to Change

SDG&E states that the ME&O Plan and its associated budget are subject to change based on based on new information derived from TOU pilots, additional customer research, implementation or operational requirements, and guidance from the Commission regarding statewide ME&O. The measurement and evaluation methodology and the test-and-learn approach described by SDG&E will also act as a guide to continuous adjustment to the plan based on results.

Accordingly, we acknowledge that changes to SDG&E’s ME&O Plan and associated budget may be necessary. SDG&E is directed to report actual cost deviations from the budget (or subsequently updated budgets) that are greater than $250,000 at the line-item level28 as well as the reason for the deviation. In addition, SDG&E is directed to provide a comparison of budgeted and actual costs in its quarterly PRRR reports. For any activities that require additional funds above and beyond the approved ME&O Plan amounts, SDG&E shall seek approval as appropriate from the Commission. Further, the budget approved in this resolution is subject to revision in SDG&E’s pending 2018 RDW application, when it will be reviewed again to ensure that it reflects necessary and reasonable estimated costs for the implementation of residential default TOU rates. We also require that future budget adjustments be accompanied by budget assumption information, such as changes to the cost per customer (for

28 Line-item level as reported by SDG&E in its quarterly PRRR reports.

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direct marketing) and cost per touch or number of impressions (for mass media) for ease of comparison.

Integrating Budgets from Other Programs

One concern of the Commission is how any rate reform ME&O effort interacts with other residential programs, including CARE and ESA, current energy efficiency and demand response programs, and the effort to increase uptake of energy management technology per AB 793. We also remain concerned as to how the IOUs’ ME&O plans integrate with the Statewide ME&O proceeding (A.12-08-007). Utility energy efficiency (EE) and demand response (DR) programs currently have significant budgets and ME&O efforts of their own. It is a priority of the Commission to use the various budgets that have been allocated for different ME&O activities for targeting residential customers in an effective manner. The December 2015 Ruling directed the utilities to “coordinat[e] or co-market[] with other rate-related ME&O programs,”29 and the September 2016 Ruling required that the IOUs “provide ideas for leveraging current ME&O budgets through co-marketing or potential synergies that can lower costs.”30 Specifically, rate reform marketing tactics and messaging should align with DR, EE, and CARE communications.

Customers should understand that technology incentives may be available not simply to lower their energy use overall through EE programs, but also to help customers shift their energy use regularly in response to TOU rates or through enrollment in DR programs in which the customer can be called upon to reduce electricity use during particular events. These could include rebates for smart communicating thermostats, which can help customers shift their energy use on a TOU rate, as well as other AutoDR incentives. Marketing customer enrollment in demand response programs that also promote or facilitate load shifting should be used to reinforce TOU messaging in integrated marketing campaigns.

Energy management technologies (such as “smart” thermostats) can facilitate peak-shifting and could be leveraged and promoted as bill mitigation strategies in both TOU opt-in and default campaigns. SDG&E should ensure that the timelines for this ME&O Plan, 29 December 2015 Ruling, p. 9.30 September 2016 Ruling, p. 3.

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marketing efforts in compliance with AB 793, and ME&O funded through DR programs are coordinated to provide the maximum benefit for customers when transitioning to TOU. The update to SDG&E’s ME&O Plan should include discussion as to when it intends to inform customers about the availability of technology incentives.

SDG&E states that residential rate reform related messaging and marketing will be integrated into ME&O efforts for CARE, EE and DR programs when appropriate. Different tactics and channels will be evaluated on an individual basis for their potential to carry multiple messages. In furtherance of this effort, we direct SDG&E to provide additional information comparing ME&O strategies, describing the leveraging of rate reform and other DSM campaign funding streams, describing cost allocation methods across programs, and providing examples of integrated rate reform marketing in its March 30 Tier 2 AL. Going forward, this information shall be presented on an annual basis in SDG&E’s end of year PRRR filings.

Integration of SDG&E ME&O Plan with Statewide Proceeding

The December 17 Ruling directed the IOUs to include plans for coordination between the IOUs’ ME&O activities and the activities ordered in the Statewide ME&O proceeding (A.12-08-007), and to include details about messaging content, campaigns and communication plans will be aligned. Greenberg recommended a statewide plan that would overlay the IOU plans with a high-level, generalized message on how to use energy that would appeal to customer's emotions while leaving the communication of details on TOU programs and rates to the IOU marketing efforts.

Under this integrated statewide/IOU marketing effort, the statewide campaign would provide 'air cover' to prepare customers to receive the message of default TOU. At the September 12 Workshop, parties expressed support for an emotion-focused 'air cover' message, but disagreed on the governance structure and discussed concerns with the format of the statewide campaign. Specifically, parties were concerned about who the “messenger” would be for the emotion-focused ‘air cover’ message.31 31 In workshops and in the Blueprint, Greenberg proposed the ideas of using the CPUC’s brand, the governor or the Energy Upgrade California brand to communicate with customers

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The Commission is exploring how best to work with the current Energy Upgrade California (EUC) contractor to enact a statewide campaign that is fully aligned with the current EUC campaign and builds on that work to achieve rate reform objectives. We direct SDG&E to provide revisions to its ME&O Plan in consultation with the Working Group as well as the consultant hired to align the work between rate reform and statewide ME&O in its March 30 AL.

Metrics, Measurement and Research / Evaluation Plan

Working Group Metrics and Tracking vs. Goal Metrics

In November 2015, the Working Group met to establish metrics and design a baseline survey to measure current values for those metrics. The group solicited proposed metrics from Energy Division, the IOUs and ORA to create a single list of draft metrics as set forth below: Metric #

Metric Goal vs. Tracking

1 Customers are aware that there are rate plans that may help them mitigate electricity expenditures

Goal

2 Customers know where to go to get more information about how to manage their energy use

Goal

3 Customers understand how energy use can impact bills Goal4 Customers understand the benefits of lowering their

energy useGoal

5 Customers are aware of the rebates, energy efficiency programs, and tips offered by their utility that can help them manage their energy bill

Goal

6 Customers feel they were provided useful info explaining their bills

Goal

7 Customers were provided with information explaining their bill

Tracking

8 Customers were provided with information and services to help reduce their energy bill

Tracking

9 Percentage of CARE/FERA/Non-CARE customers on arrearage remains stable based on the average of last five years (2010 – 2014)

Goal

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Metric #


10 Percentage of CARE/FERA/Non-CARE customers experience service disconnection remains stable based on the average of last five years (2010 – 2014)

Goal

11 Customers are provided with information and service to be able to avert service disconnection

Tracking

12 Number of rate reform-related escalated customer complaints

Tracking

13 Number of community partners utilized to support Rate Education outreach and education and number of people reached

Tracking

14 Number of events and presentations held in support of Rate Education outreach and education and number of people reached

Tracking

15 Percent of customers provided a personalized pricing plan comparison report

Tracking

16 Open rates and click-thru rates for Rate Education-related emails

Tracking

17 Number of views to Rate Education web pages Tracking

18 Number of customers who have changed rates over the last quarter

Tracking

19 Percentage of customers on opt-in TOU rates Tracking20 Percentage of customers using bill comparison tools Tracking

ORA Suggested Metrics21 Proportion of customers that are aware of the rate

changes and potential impacts on their billsGoal

22 Website activity: Length of time, # of pages visited, unique visitors, referrals to outside sites such as Energy Upgrade CA

Tracking

23 Digest of featured stories in news and social media regarding rate reform

Tracking

One of the key distinctions made was the difference between 'tracking' and 'goal' metrics. Tracking metrics are key indicators of outreach activities and customer actions, and measure tactical decisions and responses to those decisions. Goal metrics are those that assess changes in 'year over year' customer understanding, as described in the December 2015 Ruling. SDG&E launched the baseline survey based on these metrics in Q1 of 2016.32

32 This survey was launched simultaneously in all three IOU territories. Results from this baseline survey can be found in SDG&E’s PRRR reports.

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Metrics from Blueprint

Greenberg reviewed the set of draft metrics against the strategic goals that they set in the Blueprint and chose which should be retained and which should be discarded. Of the draft Working Group metrics, Greenberg proposed to retain five of the goal metrics and two of the tracking metrics. These metrics measure the work of the IOUs in educating customers on the specifics of the new rates.

Metric #


1 Customers are aware that there are rate plans that may help them mitigate energy expenditures

Goal

2 Customers know where to get more information about how to manage their electricity use

Goal

3 Customers understand how energy use can impact their bills

Goal

4 Customers understand the benefits of lowering their electricity use

Goal

5 Customers are aware of rebates, energy efficiency programs and tips that are offered by the utility that can help them manage their electricity bill

Goal

6 Customers were provided with information and services to help reduce their energy bill

Tracking

7 Percentage of customers on opt-in TOU rates Tracking

In their AL, SDG&E agrees with the metrics suggested by Greenberg and provides examples of supporting measurements for these goals. In addition, SDG&E will track the remaining draft metrics developed by the Working Group (those marked as ‘tracking’) as operational outputs to be reported quarterly. We direct SDG&E to work with the other IOUs to provide any supplemental metrics, supporting analysis, and a common metrics “dashboard”, to be updated in its quarterly PRRR reports.

Approved SDG&E Goal and Tracking Metrics

http://www.cpuc.ca.gov/General.aspx?id=12154

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Metric #

Metric Goal vs. Trackin

g1 Customers are aware that there are rate plans that may

help them mitigate energy expendituresGoal

Potential measurements: Customers are aware of TOU Customers are aware they have rate choices Customers are aware of the rate changes Customers are aware of potential impacts on their

bill2 Customers know where to get more information about

how to manage their electricity useGoal

Potential measurements: Customers can identify channels where to find more

information3 Customers understand how energy use can impact their

billsGoal

Potential measurements: Customers strongly agree that what time they use

electricity matters Customers strongly agree that how much electricity

they use at certain times of the day matters Customers can recall peak windows Customers feel they were provided useful

information explaining their bills4 Customers understand the benefits of lowering their

electricity use and of shifting their electricity use to non-peak hours

Goal

Potential measurements: Customers are motivated to reduce or shift peak

load Customers indicate they will take peak load

reduction or shifting actions in the future Customers strongly agree that they are able to

reduce or shift their peak load Customers strongly agree that peak load reduction

or shifting positively benefits them5 Customers are aware of rebates, energy efficiency

programs demand response programs, energy management technologies and tips that are offered by the utility that can help them manage their electricity bill

Goal

Potential measurements: Customers are aware of solutions and offers

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Metric #

Metric Goal vs. Trackin

g Customers who need assistance to alleviate

costs/impacts received assistance

Operational Tracking Metrics

1 Number of rate reform-related escalated customer complaints

Tracking

2 Number of community partners utilized to support Rate Education outreach and education and number of people reached

Tracking

3 Number of events and presentations held in support of Rate Education outreach and education and number of people reached

Tracking

4 Percent of customers provided a personalized pricing plan comparison report

Tracking

5 Open rates and click-thru rates for Rate Education-related emails

Tracking

6 Number of views to Rate Education web pages Tracking

7 Number of customers who have changed rates over the last quarter

Tracking

8 Percent of customers on opt-in TOU rates Tracking9 % of customers using bill comparison tools Tracking10 Website activity: Length of time, # of pages visited,

unique visitors, referrals to outside sites such as Energy Upgrade CA

Tracking

11 Digest of featured stories in news and social media regarding rate reform

Tracking

In addition to the approved metrics above, Greenberg recommended a set of three high level ‘vision metrics’, which were adopted by the Working Group:

1. A percentage of Californians feeling more personally connected and aware of their energy use;

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2. A percentage of Californians33 remaining on TOU 15 months after default;34 and

3. A percentage of Californians sustaining at least one peak load reduction action 12 months after default.

These three additional metrics were assigned as a goals for the statewide campaign, the IOU campaigns, and both the statewide and IOU campaigns, respectively.

September 12 Workshop

On September 12, 2016, parties met to discuss the Blueprint and how it should be incorporated into the IOUs' ME&O plans. Setting the 'vision metric' for TOU retention was a controversial process among stakeholders, whether it should be the retention of customers on the TOU rate, the level of customer understanding and acceptance of their rates, or load shifting and behavior change.35 The IOUs and several intervenor groups recommended that customer satisfaction and awareness of rate choices be the primary focus of any ME&O campaign but acknowledged that Commission guidance would be necessary.36

Vision Metrics: Affinity, Retention, and Sustained Actions

Vision Metric #1 refers to customer “affinity” and personal connection to energy usage, while Vision Metric #2 addresses “retention” on TOU. Vision metric #3 is intended to measure “sustained actions”, and SDG&E agrees that it is critical for customers to understand what actions or behaviors will help them to be successful on TOU.

33 Assembly Bill 327 (Perea) which authorized the Commission to set default TOU rates also required that certain customers be exempted from default, including medical baseline customers. The Commission is currently in the process of determining if there will be additional exemptions.34 15 months refers to the end of ‘bill protection’ which is required for 12 months for customers defaulted to TOU by AB 327.35 September 12, 2016 Workshop in R. 12-06-013, Reporter’s Transcript (RT) page 3 lines 10-19.36 Id., RT page 18, lines 3-28.

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SDG&E addresses the three vision metrics, stating that there is more work to be done to develop both a statewide campaign vision and targets for retention on TOU. SDG&E agrees that retention is an important goal metric but claims that it is too soon to set a target, noting that the default pilot will provide additional insight and will better inform expectations for retention during the default rollout. In addition, SDG&E notes that additional regulatory guidance is required on the definition of success on default TOU, retention or customer satisfaction (“right rate”) as parties discussed at the September 12th Workshop.37

D.15-07-001 did not provide specific metrics for measuring the success of the IOUs’ default TOU rates, but did provide guidance on the Commission’s view of a successful transition to default TOU. One of the goals of default TOU is to manage residential demand at high cost hours by having customers respond to price signals. For that purpose, it is critical to maintain a high percentage of customers on some TOU rate, for those on TOU to sustain peak load reduction actions and for them to have a positive experience with TOU rates.

Vision Metrics: The “Right Rate” Approach

It is also a priority of the Commission to provide customers with options and education so they can understand and choose which rate best suits their usage and lifestyle.38 This allows customers to be on a tiered rate if they cannot respond to TOU pricing or to be on a more complex or real time rate if the customer has the right in-home technology.

We agree that ensuring that customers are on the right rate for them is an appropriate measure of success, and highlights the need to consider both the attributes of the customer and the attributes of the rate. A more detailed description of the 'right rate' is set forth as follows:

37 AL 2992-E, p.7.38 “For a default TOU rate to be successful, the design should be based on empirical evidence that supports both measurable benefits of TOU on the grid, and the acceptance and understanding of TOU rates by the residential customer.” D.15-07-001, p. 130.

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Objective : To get the right customers on the right rate so that load shift is maximized, system costs are reduced and customers have the opportunity to save money by reducing electricity usage at appropriate times. Customers who cannot shift load without significant adverse impacts, or who should not shift load due to unique health reasons, should be aware of the tiered-rate and other rate options.

Example Scenarios for Right Customer/Right Rate :

1. Customers who can respond to complex TOU rates are on complex opt-in TOU rates.

2. Customers who can handle moderate load shift are on default TOU.

3. Customers who cannot shift load without suffering significant adverse impacts, or who should not shift load due to exceptional health reasons, should understand whether they would benefit from exercising their option to be on a tiered rate.

4. Customers who can respond to event-based overlay rates (such as CPP and matinee rates) are enrolled on these rates.

The Updated Blueprint Vision Metrics and New Directives

A chart updating the three vision metrics and supporting sub-metrics proposed in the Blueprint is reproduced in Appendix 1. The updated chart reflects (1) changing the “right rate” metric to Vision Metric #2, and (2) the corresponding change of “retention” from a metric to a sub-metric. We further direct SDG&E to present integrated vision metrics and sub-metrics as illustrated in this updated chart to the Working Group for review and eventual implementation into SDG&E’s ME&O Plan.

SDG&E suggests that it will “consider incorporating questions about taking action to conserve energy into the tracking surveys”, asserting however that the impact of conservation actions is best measured through load impact studies. Therefore, in addition to presenting the updated vision metrics to the Working Group, we direct SDG&E to

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incorporate these questions into their tracking surveys and to incorporate the results into the next applicable PRRR report.

Evaluation Calendar

SDG&E plans to run its survey three times a year starting in 2018, in contrast to Greenberg’s suggested quarterly surveys beginning in late 2018. SDG&E does not include any plans for ‘pulse’ surveys as recommended by Greenberg to monitor the actual default through quick real-time feedback. We direct SDG&E to incorporate pulse surveys during the roll-out of default TOU rates in 2019 into its evaluation plan and to provide resulting data in its quarterly PRRR reports.

Marketing Automation

In the Blueprint, Greenberg recommended that the utilities pursue a marketing automation strategy to complement the extensive targeting and segmentation required for default TOU rollout. Greenberg defined marketing automation as a category of software (cloud-based or installed) that becomes a platform (ecosystem) upon which IOU marketing, sales, customer service, and communication is based.

Greenberg emphasized that utilities had extensive data on customers, e.g. their usage from smart meter data, their location, their payment behavior, CARE enrollment status, communication preferences and psychographic profile. This data should exist within a single ecosystem in order to carry out a complex marketing campaign and to target customers with the correct message based on their individual information.

SDG&E describes its current approach to marketing analytics as mostly manual but partially automated, leveraging IBM Marketing Cloud (Silverpop) for the majority of promotional emails and text messages.39 SDG&E is unlikely to implement a fully automated platform before launching its ME&O Plan, yet intends to implement aspects of marketing automation for rate reform in the interim.

39 SDG&E AL 2992-E, pp. 57-59.

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SDG&E is in the initial phases of implementing a new software package that allows personalized content and customer experience; a simplified version of marketing automation. New functionality for message customization will be integrated, including the ability to weave IBM Marketing Cloud into theprocess, and other potential automation offerings from other companies will be evaluated. We direct SDG&E to complete the implementation of a fully automated platform by the end of 2018, and to track the evaluation, implementation timelines, vendors, and costs for marketing automation updates in its PRRR reports on a going forward basis starting in Q1 2018. We direct SDG&E to include an implementation plan for full marketing automation in its March 30 Tier 2 AL filing.

Integration of SDG&E’s Plan with Statewide ME&O Activities

The December 2015 Ruling directed the IOUs to include plans for coordination between the IOUs’ ME&O activities and the ME&O activities ordered in the Statewide ME&O proceeding (A.12-08-007), including details as to how messaging content, campaigns and communication plans will be aligned. Greenberg proposed a statewide plan that would overlay the IOU plans with a high-level, generalized message containing energy usage tips and strategies that would appeal to customers on an emotional level while leaving the technical details about TOU programs and rates to the individual IOU marketing efforts.

At the September 12, 2016 Workshop, parties expressed support for an emotion-focused 'air cover' message to prepare customers to receive later communications about default TOU, but raised concerns about the governance structure and format of the statewide campaign. For instance, parties were concerned with who the ‘messenger’ would be for the emotion-focused ‘air cover’ message.40

Taking these concerns about the statewide campaign41 into account, the September 2016 Ruling asked the IOUs to provide their own

40 In workshops and in the Blueprint, Greenberg proposed the ideas of using the CPUC’s brand, the Governor of California, or the Energy Upgrade California brand to communicate with customers.

41 September 16, 2016 workshop.

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recommendations about what an appropriate statewide campaign format should look like. Instead of providing a specific plan for coordination between the IOU and statewide ME&O activities, SDG&E provided input on issues it believes must be resolved before any statewide campaign should be implemented, and agreed with the other IOUs that a consultant be hired to align the work between the current Energy Upgrade California (EUC) statewide campaign and the rate reform work.

The Commission is currently exploring how best to work with the current EUC contractor to enact a statewide campaign that is fully aligned with the current EUC campaign and expands that work to include strategies for achieving our rate reform objectives. In accordance with D.17-12-013, this process will involve the Working Group and the engagement of a statewide consultant, which may require significant revisions to SDG&E’s ME&O Plan. We direct SDG&E to include revisions to its ME&O resulting from work with the statewide consultant to coordinate and align rate reform and statewide ME&O outreach in its Tier 2 filing by March 30, 2018.

Protested Issues

ORA Protest

In its request for more granular, itemized budget information, ORA recommended that SDG&E’s quarterly Progress on Residential Rate Reform (PRRR) filings should include variations between budgeted and actual spending on ME&O activities. While we find that SDG&E was appropriately responsive to ORA’s protest in providing appropriate supplemental budget information in its reply, we agree with ORA’s recommendation, and direct SDG&E to provide this information in its reports going forward.

Furthermore, while SDG&E opposed tying any recovery of costs to success metrics, citing the numerous interdependent proceedings that attempt to influence customer behavior, we delegate to the Working Group the discretion to further evaluate goal metrics and targets, and to amend SDG&E’s ME&O Plans to incorporate a performance standard that links cost recovery to success metrics.

CforAT / Greenlining Protest

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In its reply to the CforAT / Greenlining protest, SDG&E acknowledges that coordination with the statewide campaign is the preferred path and agrees that an additional AL may be necessary once the statewide campaign is established. We address the issue of statewide integration above, and direct SDG&E to work with CforAT, Greenlining, and the rest of the Working Group to optimize integration opportunities in conjunction with guidance from the statewide consultant.

COMMENTS

Public Utilities Code section 311(g)(1) provides that this resolution must be served on all parties and subject to at least 30 days public review and comment prior to a vote of the Commission. Section 311(g)(2) provides that this 30-day period may be reduced or waived upon the stipulation of all parties in the proceeding.

The 30-day comment period for the draft of this resolution was neither waived nor reduced. Accordingly, this draft resolution was mailed to parties for comments, and will be placed on the Commission's agenda no earlier than 30 days from today. on January 5, 2018. SDG&E filed comments on the draft resolution on January 29, 2018.

In its comments, SDG&E requests moving the Tier 2 AL compliance filing from March 30, 2018 to May 1, 2018 to more fully incorporate the scope of changes to the Blueprint and other activities by the statewide ME&O consultant. We appreciate SDG&E’s request to provide a more comprehensive response at a later date. However, we reject this request, and direct SDG&E to file its Tier 2 AL on March 30, 2018, and additionally require that SDG&E develop, track, and include in its next applicable PRRR report a progress report on statewide ME&O campaign integration efforts, in order to capture updates to the Blueprint and other activities by the statewide ME&O consultant that may be forthcoming. after March 30, 2018.

Similarly, in response to SDG&E’s request to extend the compliance filing date to provide a fuller plan for marketing automation, we direct SDG&E to file its Tier 2 AL on March 30, 2018, with updates to its

34


marketing automation plan to be provided via quarterly PRRR reporting.

SDG&E states in its comments that it is not opposed to the items listed in OP 4 regarding what needs to be presented to the Working Group but requests that these items be seen as directional and for guidance only, particularly in light of the recent selection of a Coordinating Consultant to facilitate Working Group meetings. SDG&E is reminded that the Working Group was formed pursuant to OP 14 of D.15-07-001 to address issues regarding marketing, education and outreach and will review the submitted items under this designated role.

FINDINGS

1. Decision 15-07-001 directed SDG&E, along with the other two electric IOUs, to form a Working Group to address issues regarding marketing, education and outreach (ME&O).

2. The December 17, 2015 Assigned Commissioner and Administrative Law Judge ruling (December 2015 Ruling) directed SDG&E to prepare a comprehensive ME&O plan.

3. The December 2015 Ruling also directed the IOUs to hire an expert consultant to advise the Working Group on appropriate ME&O metrics, goals, and strategies.

4. Greenberg was the consultant hired to advise the Working Group, and delivered its Blueprint on August 20, 2016.

5. Consensus agreement was reached by the Working Group on the strategic foundation, segmentation and measurement strategies described in the Blueprint, resulting in a common outline that was provided to the IOUs by ALJ ruling on September 30, 2016 (September 2016 Ruling).

6. On November 1, 2016, SDG&E filed its ME&O Plan in accordance with (D.) 15-07-001 and the December 2015 Ruling.

7. Up to 1.3 million SDG&E residential customers may be defaulted to TOU rates.

8. SDG&E's initial baseline study found that 52 percent of customers surveyed were aware of TOU; however, 46 percent were uncertain about their rate plan.

9. Focus groups and interviews with customers in the three IOU territories found that customers did not connect their personal

35


actions with demand on the electric grid or adequately understand how they were billed for energy.

10.Customers must be engaged on an emotional as well as intellectual level to affect change in behavior.

11.In accordance with the Blueprint, SDG&E’s ME&O Plan includes an impact-based segmentation strategy to spend the most time and money on customers who would be the most negatively impacted by default TOU rates, then applying psychographics to those segments to further refine the message.

12.SDG&E will adjust TOU pre-default communications frequency and number of touches depending on the degree of customer bill impact.

13.SDG&E will use a micro-targeting segmentation approach for customers with higher negative bill impacts, with a psychographic scheme overlay.

14.SDG&E will customize information relevant to low-income customers with materials on alternate ways to manage electricity cost through low-cost and no-cost tools and tips.

15.Third party partners, including CBOs and schools, can assist in reinforcing energy usage behavioral changes easier and more motivating for customers.

16.SDG&E will leverage partnerships with CBOs, business partners, local governments and other third parties to extend reach into the service territory.

17.SDG&E’s tactical plan consists of a phased approach that aligns with the ME&O Blueprint.

18.SDG&E is conducting an opt-in TOU campaign from 2017-2018 to focus on those who would benefit from switching to TOU.

19.Beginning in 2018, the TOU focus will shift from general awareness to motivating customers to take action and shift their energy usage.

20.In Decision 15-07-001, the Commission ordered the IOUs to file a residential RDW application no later than January 1, 2018 that proposes a default TOU rate structure to begin in 2019, assuming that the statutory conditions have been met.

21.ME&O messages and timing must be carefully crafted and coordinated to ensure the right message is delivered by the appropriate entity at the right time.

22.The majority of SDG&E’s ME&O Plan consists of direct marketing, supplemented by targeted digital channels.

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23.SDG&E’s default TOU engagement strategy should begin with a 90/60/30 communications cadence for prelaunch, in alignment with the ME&O Blueprint.

24.SDG&E should provide customers with low and no-cost energy savings tips and seasonally reinforce lower cost off-peak time periods.

25.SDG&E should offer Bill Protection for one year as part of the TOU default process to help address the apprehension customers have over uncertain bill impacts that may arise from being defaulted to a TOU rate.

26.Greenberg’s proposed ME&O budget for SDG&E totals $23.4 million, exclusive of and statewide ME&O costs.

27.SDG&E’s proposed budget estimate of $19.4 million, or about $13 per customer, exclusive of statewide ME&O costs.

28.SDG&E will record ME&O expenses in its Residential Rate Memorandum Account (RRIMA).

29.Changes to SDG&E’s ME&O Plan and associated budget may be necessary with input from the Working Group and the statewide consultant.

30.It is a priority of the Commission to use the various budgets that have been allocated for different ME&O activities across different program areas in an efficient manner.

31.Rate reform marketing tactics and messaging should align with DR, EE, and CARE communications.

32.Tracking metrics are designed to monitor customer responses on an on-going basis, while goal metrics are those that assess changes in year over year customer understanding.

33.SDG&E is to retain the core tracking metric of the percentage of customers on opt-in TOU rates in order to track the overall impact of this campaign.

34.Having customers feel that they are on the ‘right rate’ for them is an appropriate objective, and should be added to SDG&E’s vision metrics.

35.The Commission is currently exploring how best to work with the current Energy Upgrade California (EUC) contractor to enact a statewide campaign that is fully aligned with the current EUC campaign and expands that work to achieve rate reform objectives.

36.Instead of providing recommendations on the format a statewide campaign should take, as ordered in the September 2016 Ruling, SDG&E recommended that a consultant be hired to align the work

37


between the rate reform proceeding and the statewide ME&O proceeding.

37.It is reasonable for SDG&E to provide itemized budget information in its quarterly PRRR filings.

38.It is reasonable for SDG&E to work with the Working Group to optimize coordination and integration of SDG&E’s proposed marketing activities with the statewide campaign in conjunction with the statewide consultant.

THEREFORE IT IS ORDERED THAT:

1. SDG&E’s proposed ME&O Plan as requested in AL 2992-E and AL 2992-E-A is approved as modified herein.

2. SDG&E shall file a Tier 2 AL in compliance with the directives in this Resolution by March 30, 2018, including the following:

a. Development and/or clarification of targets for the goal metrics adopted herein;

b. Clarification of the differences between SDG&E’s proposed budget and the budget recommendations made in the Blueprint;

c. Revisions to its ME&O Plan resulting from the hiring of a consultant to align the work between default TOU and statewide ME&O;

d. An implementation plan for full marketing automation, to be completed by the end of 2018.

3. SDG&E shall include in its Tier 2 supplemental AL, and report on an annual basis in its PRRR filings, the following additional information:

a. A comparison of ME&O strategies across TOU and Demand Side Management (DSM) programs;

b. Descriptions of strategies for aligning funding streams for default TOU and DSM programs;

c. Descriptions of ME&O cost allocation methods across programs; and

d. Descriptions of examples of integrated marketing strategies across programs;

e. Tactics for achieving the following: (1) welcome customers to their new TOU rate; (2) reinforce load shifting behavior;

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and (3) implement bill protection to address the apprehension customers may have over uncertain bill impacts from being defaulted onto a TOU rate.

4. SDG&E shall develop and present to the Working Group the following:

a. The number of touchpoints at each of the 90/60/30 day communication intervals, with an emphasis on the touchstones and outreach channels for customers defined as extreme non-benefiters;

b. Customized information relevant to low-income and hard-to-reach customer segments;

c. Direct marketing efforts for customer opt-out of default TOU;

d. The number and type of direct marketing communication touches;

e. The communications timeline, frequency of touches, and outreach channels for extreme non-benefiters;

[f.] The vision metrics and sub-metrics that Greenberg recommended, as updated in Appendix 1; and

f.[g.] Integration opportunities with the statewide marketing campaign.

5. SDG&E shall develop, track, and include in its next applicable PRRR report:

a. Metrics for the percentage of customers on opt-in TOU rates and percentage of customers who feel they are on the ‘right rate’ for them;

b. A progress report on complete marketing automation and data integration efforts, including information on the evaluation process, implementation timelines, vendors, and costs for marketing automation updates;

c. A progress report on statewide ME&O campaign integration efforts;

d.[c.] The results of pulse surveys during the roll-out of default TOU rates in 2019, which are to be incorporated into SDG&E’s evaluation plan;

e.[d.] CBO effectiveness metrics for TOU non-benefiters in hot climate zones;

f.[e.] Results of any internal or external audit of the RRMA;

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g.[f.] Cost deviations from the budget that are greater than $250,000 at the tactic line item budget level, and the reason for the deviation. For any activities that require additional funds above and beyond the approved ME&O Plan amounts, SDG&E shall seek approval as appropriate from the Commission;

h.[g.] A comparison of budgeted and actual costs;i.[h.] Budget assumption information, such as changes to the

cost per customer and cost per touch, as applicable for any future budget adjustments;

j.[i.] Itemized budget information as recommended by ORA in its protest;

k.[j.] Questions about “sustained actions” in SDG&E’s tracking surveys to better understand what behaviors and actions assist customers on TOU.

6. SDG&E shall work with the other IOUs to provide supplemental analysis on metrics and a common metrics dashboard, to be updated in its quarterly PRRR reports.

7. SDG&E shall record its ME&O Plan costs within the RRMA.

This Resolution is effective today.

I certify that the foregoing resolution was duly introduced, passed and adopted at a conference of the Public Utilities Commission of the State of California held on February 8, 2018; the following Commissioners voting favorably thereon:

_____________________TIMOTHY J. SULLIVANExecutive Director

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APPENDIX 1

Updated Vision Metrics from the Greenberg Blueprint

Vision Metrics Sub-metrics that contribute to the

Vision metrics% of Californians feel a personal connection to electricity and feel strongly that it is important to be thoughtful about when and how much they use

% of customers who strongly agree that they have a personal connection with their electricity use% of customers who agree that it is important to thoughtfully manage their electricity use% of customers who strongly agree that how much electricity they use at certain times of day matters

% of IOU customers who are on the ‘right rate’ for them

% of customers who are aware that they have rate choices

% of non-exempt customers (as defined by Commission decision) who remain on the TOU rate 15 months after default (3 months after bill protection ends)% of customers who are satisfied on their rate

% of IOU customers on TOU rates sustain at least one significant peak reduction action for 12 months after defaulting to the TOU rate

% of customers who are motivated to reduce peak load% of customers who indicate they will take peak-load reduction actions in the future% of customers who cite significant peak load-reducing behaviors

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