The California Public Utilities Commission (CPUC) has adopted new long-term energy efficiency objectives for the state’s investor-owned utilities. The move aims to further programs that reduce energy use, lower customer costs, and support California’s climate and clean energy goals.
The updated framework is based on findings from the CPUC’s 2025 Energy Efficiency Potential and Goals Study. This study estimates how much cost-effective energy savings and fuel substitution can be achieved through 2037.
A metric called Total System Benefit (TSB) is used to measure these benefits by assigning a dollar value to long-term savings from both energy efficiency improvements and fuel substitution efforts. TSB takes into account reduced energy use, lower greenhouse gas emissions, and avoided costs related to electricity generation as well as transmission and distribution.
According to the statewide forecast, the TSB for 2026 is expected to reach $589 million, indicating strong opportunities for cost-effective energy savings across California.
The CPUC noted that its decision considers changes in available efficiency opportunities and current market conditions. These include increased adoption of fuel substitution—such as switching from natural gas to electric appliances—a decrease in traditional efficiency measures in industrial and agricultural sectors, and a more stringent cost-effectiveness threshold.
“These updated objectives not only guide utility programs but also play a critical role in statewide energy planning, supporting the CPUC, the California Energy Commission, and the California Independent System Operator in ensuring energy efficiency is factored into long-term resource planning,” according to today’s announcement.
While performance targets are now set for utilities, budget determinations will occur separately. Utilities must submit funding requests through applications to the CPUC; appropriate budgets will then be established to meet these goals.
The CPUC oversees utility services throughout California with a focus on consumer protection, environmental safeguards, and reliable infrastructure. More information about its activities can be found at www.cpuc.ca.gov.
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