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PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Agenda ID #16233ENERGY DIVISION RESOLUTION E-4895

February 8, 2018

R E S O L U T I O N

Resolution E-4895. Southern California Edison Company’s (SCE) 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 3500-E on

SCE’s time-of-use marketing, education and outreach plan for 2017-2019.

Approves in part and rejects in part Advice Letter 3500-E-A on SCE’s time-of-use marketing, education and outreach plan for 2017-2020.

SCE shall file a new Tier 2 Advice Letter in compliance with this Resolution by March 30, 2018.

SAFETY CONSIDERATIONS: There is no impact on safety.

ESTIMATED COST: The cost of SCE’s plan is estimated to be $39.4

million over 3 years.

By Advice Letter (AL) 3500-E filed on November 1, 2016 and AL 3500-E-A filed on March 15, 2017.

__________________________________________________________

SUMMARY

This Resolution approves, with modifications, SCE’s Marketing, Education and Outreach Plan (ME&O Plan) as presented in AL 3500-E. In addition, this Resolution also approves in part SCE’s AL 3500-E-

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Resolution E-4895 DRAFT February 8, 2018SCE AL 3500-E/-A/BSS

A with respect to the additional information provided by SCE in response to the request by ALJ McKinney at the February 6, 2017 prehearing conference (PHC). However, SCE’s proposal in AL 3500-E-A to revise the timeline and expand the budget for the ME&O Plan, in accordance with SCE’s default TOU implementation proposal in A.17-04-015, is rejected.

On November 1, 2016, SCE 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. Advice letter (AL) 3500-E describes SCE’s time-of-use (TOU) customer engagement strategy for 2017-2019 for the transition of most of its 4.3 million residential customers to TOU rates in 2019.1

SCE’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. SCE requests adoption of the proposed ME&O Plan and for proposed budget expenditures to be collected and tracked through its Residential Rate Implementation Memorandum Account (RRIMA), as authorized in D.15-07-001.

The overarching goal of the ME&O Plan for TOU is to achieve sustained customer satisfaction by providing an optimal customer experience as customers transition through rate changes and ultimately get on the rate that is best for them.3 The specific outcomes and objectives for default TOU marketing strategies are as follows:

Customers have support and easy access to timely, effective information in their transition to default TOU, to ensure retention and minimized customer effort.

Customers understand TOU rate changes and are aware that they have rate choices during the implementation period.

1 AL 3500-E, p. 1.2 The ME&O Blueprint was commissioned by the IOUs on behalf of the ME&O Working Group. The Blueprint Report was entered into the record of R.12-06-013 by ALJ McKinney’s Ruling dated October 7, 2016.3 AL 3500-E, Attachment A, p. 38

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Customers receive direct and personal communications which share individual anticipated bill impact information, encouragethem to take action, and recommend specific mitigation tools to help reduce negative impacts.

Customers are prepared and defaulted at the right time.

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 onto 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 ME&O Implementation Process

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 SCE's initial baseline study found that four in ten surveyed were aware of TOU; however, more than half did not know what rate they are on. Half of those surveyed indicated that they have rate choices or options available to them, but only about one-third

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). The Working Group is open to all interested participants.5 Decision (D.) 15-07-001, p. 336.6 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 run for SCE in Q1 2016.

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demonstrated awareness of what to do to manage their usage and/or bill amount.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

The Greenberg Blueprint

A Request for Proposals process was conducted during the first quarter of 2016 and the Working Group selected Greenberg, Inc. (Greenberg) as its 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 7 AL 3500-E, Attachment A, p. 17.8 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. 7.10 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 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.

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


Through their research, Greenberg confirmed the findings of the baseline study, which indicated that customers are not engaged with energy. Specifically, a set of focus groups and in-depth interviews with customers in the three IOU territories found that customers simply did not connect their personal actions with demand on the electric grid, and overall 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 applying psychographics to those segments to further refine the message;

A data collection and analysis strategy which includes IOU tracking studies and default “pulse” studies;

A measurement strategy to develop metrics for use over the next few years to assess customer acceptance of rate reform and especially of default TOU, as well as goals/targets for measuring that acceptance;

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.

12 Greenberg Blueprint, Appendix G.3.

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On September 12, 2016, a workshop was held by the Commission to discuss how best to incorporate the 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, SCE submitted AL 3500-E, setting forth its ME&O Plan detailing strategies, tactics and timelines for customer engagement in accordance with the December 2015 Ruling. SCE’s ME&O Plan includes the following timeline for transitioning to TOU rates:

2017 - 2018 : SCE ME&O Plan activities technically began in 2017, and any expenditures recorded pending AL 3500-E and 3500-E-A review will be reviewed in a future GRC. SCE’s initial focus in 2017 was building awareness through both statewide and local ME&O campaigns, as well as increasing opt-in adoption of TOU.

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

2019: SCE anticipates beginning the “rolling” transition of customers to default TOU in March of 2019, working to ensure that customers understand the TOU rate changes and are aware that they have rate choices during the implementation.

The ME&O Plan in AL 3500-E includes established IOU metrics and those recommended by Greenberg as appropriate, associated targets, and plans for evaluating progress towards residential TOU goals. Moreover, it utilizes the segmentation strategy identified in the 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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Blueprint, with SCE tailoring the messaging, depth of engagement, and investment based on monetary impact. In addition, the plan as presented contains a budget estimate of $39.4 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), SCE submitted supplemental AL-3500-E-A on March 15, 2017 which included new information and updates to the ME&O Plan. AL 3500-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 demand side management efforts.

The filing also included updates and revisions to: (1) reflect SCE’s proposed revised residential default TOU timeline due to SCE’s proposed Customer Service Re-platform (CSRP) project schedule; and (2) incorporate budgetary changes that impact the statewide ME&O Plan.

NOTICE

Notice of AL 3500-E and AL 3500-E-A was made by publication in the Commission’s Daily Calendar. SCE states that a copy of each advice letter was mailed and distributed in accordance with Section 4 of General Order 96-B.

PROTESTS

ORA Protest to AL 3500-E

SCE’s AL 3500-E was timely protested by the Office of Ratepayer Advocates (ORA) and a reply was filed by SCE on December 29, 2016. The Center for Accessible Technology (CForAT) and Greenlining Institute (Greenlining) did not timely protest, but jointly provide comments recommending that the Commission defer consideration of SCE’s ME&O Plan, and instead authorize a plan to combine the work

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being done in the statewide ME&O proceeding with the education effort underway in this proceeding.

In its protest of AL 3500-E, ORA requests that the Commission reject the AL due to SCE’s failure to provide sufficient cost information to justify its estimated ME&O budget. ORA further requests that SCE be directed to update its ME&O Plan for any impact that billing system problems may have on the timing of default TOU implementation. Recommendations are made by ORA to tie cost recovery to program success metrics approved by the Commission, and to improve cost tracking transparency by including more budget detail in SCE’s quarterly ME&O report.

In its reply to ORA’s protest, SCE provides an itemized budget for each ME&O activity along with the objectives each activity intends to accomplish. In addition, SCE has been updating the ME&O Budget Table in its quarterly Progress on Residential Rate Reform (PRRR) reports with recorded ME&O expenditures.

SCE’s AL 3500-E-A was timely protested by ORA on April 3, 2017 and a timely response to AL 3500-E-A was filed by the City of Lancaster on April 4, 2017. A reply to ORA and the City of Lancaster was filed by SCE on April 11, 2017.

ORA and City of Lancaster Protest to AL 3500-E-AORA’s protest of AL 3500-E-A requests that the Commission reject AL 3500-E-A due to significant, unsubstantiated increases to the 2017 -2019 budget. ORA notes that SCE raised its total estimated ME&O budget (2017-2020) by $32.1 million, from $39.4 million to $71.5 million, with $24.4 million of that increase coming from an increase in the estimated mass media budget. ORA states that it cannot meaningfully determine the reasonableness of SCE’s proposed budget in AL 3500-E-A.

In its reply to ORA’s protest of AL 3500-E-A, SCE indicates that the increased mass media costs result from a perceived delay in statewide ME&O budget approval, prompting SCE to execute its own ME&O contingency plan to ensure an appropriate level of education is being provided in advance of customers being defaulted to TOU rates. SCE acknowledges that, “SCE planned ME&O Plan expenditures may significantly decrease should a broader statewide effort in

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collaboration with a statewide consultant be enacted.”14 In addition, SCE states it has proposed to continue to track all costs in its Residential Rate Implementation Memorandum Account (RRIMA), which will be reviewed for reasonableness by the Commission in the future.

In its comments with respect to AL 3500-E-A, the City of Lancaster expresses appreciation for the inclusion of a “Community Choice Aggregator (CCA) specific ME&O plan”.15 The City of Lancaster requests that the Commission establish additional, formal requirements applicable to SCE before distributing any marketing material to CCA customers. In addition, Lancaster states it “wishes to ensure that SCE is working now on the billing technology features that will be necessary to accommodate bill comparison features for CCA customers in SCE’s service area.”16 Lancaster also requests that the issue of cost allocation be noted in the Commission’s authorizing resolution.

In its reply to the City of Lancaster’s comments, SCE offers a solution:

SCE intends to continue working with Lancaster to better understand the engagement and formal review protocol developed by PG&E and its existing CCAs, Sonoma Clean Power and Marin Clean Energy (MCE), to ensure consistent, timely, acceptable messaging, and to provide a positive customer experience for IOU and CCA shared customers.17

SCE also acknowledges the City of Lancaster’s request that SCE’s bill comparison tools consider CCA rates and customers and explains that it is evaluating a longer-term bill comparison solution, and like PG&E, is “assessing vendor capabilities to accommodate the growing number of CCA programs and needs to serve shared customers.”18 With respect to appropriate cost recovery, SCE refers the City of Lancaster to Resolution E-4847 approving SCE’s Default TOU Pilot AL 3531-E, wherein the Commission states SCE will track revenue shortfalls related to bill protection by component (generation or distribution).19

14 SCE’s Reply to ORA’s Protest and Lancaster’s Response to AL 3500-E-A, p. 3.15 City of Lancaster’s Response to AL 3500-E-A, p.1.16 Id., p. 7.17 SCE’s Reply to ORA’s Protest and Lancaster’s Response to AL 3500-E-A, p. 4.18 Id., p. 5.19 Resolution E-4847, Finding 18, p. 28.

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DISCUSSION

ED Staff reviewed AL 3500-E for consistency with the ME&O directives in D.15-07-001, the December 2015 Ruling, and the September 2016 Ruling. Additional guidance was provided through ME&O Working Group meetings and the September 12, 2016 workshop. SCE’s ME&O Plan includes a discussion of how it compares to the Blueprint, and follows a common outline laid out in the September 2016 Ruling.

SCE’s Modified ME&O Plan and the CSRP Project

In AL 3500-E-A, SCE proposes to revise its default TOU timeline to align with an anticipated Customer Service Re-Platform (CSRP) project timeline. SCE’s CSRP project approval is pending in its General Rate Case (GRC) Application (A.) 16-09-001 and involves replacing its aging Customer Service System with a customer relationship and billing (“CR&B”) product suite.

On November 3, 2016, SCE notified ED Staff of its intent and request to defer default of its non-exempt residential customers to TOU until late 2020.20 SCE asserts that other ongoing business efforts and system transformations that are currently scheduled to take place during the same timeframe as TOU rollout may present SCE with significant challenges involving its IT and billing systems, customer service, and other key areas that impact the overall customer experience.21 A billing system replacement, as part of an overall CSRP project, is estimated to begin in mid-2017.

SCE’s proposal would accelerate TOU default implementation from spring 2019 to Q4 2018 through Q1 2019 (Wave 1) and halt TOU default activities between March 2019 and 2020 for CSRP testing and stabilization, requiring a major “system freeze” that prevents SCE from undertaking any significant new transactions during that period. They would recommence default TOU in mid-to late-2020 (Wave 2).22

Dismissal of A.17-04-01520 Notice of Ex-Parte Communication dated November 7, 2016. A previous ex-parte communication dated September 22, 2016 that was served, but not filed, in R. 12-06-13, references the Customer Service Re-Platform project, but does not describe its potential impact on default TOU implementation.21 Id.22 Additional details regarding its default TOU proposal were provided by SCE in A.17-04-015. This application was dismissed by the Commission on August 24, 2017.

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SCE then filed Rate Design Window (RDW) application A.17-04-015 on April 14, 2017, which included this proposal for expedited Commission approval to implement residential default TOU rates for eligible residential customers and bifurcated rollout in 2018 and 2020. In D.17-08-024, the Commission dismissed SCE’s application on August 24, 2017 and ordered SCE to file a RDW application by January 1, 2018 with a proposal for default TOU rates and an implementation timeline.

Consistent with our rationale in dismissing D.17-08-024, we find that SCE’s proposal for bifurcated timeline for TOU rollout in AL 3500-E-A to delay default TOU implementation to 2020 due to the contemplated IT system freeze is inconsistent with the 2019 timeline set forth in D.15-07-001:

…the IOUs must file a residential rate design window (Residential RDW) application no later than January 1, 2018 that proposes default TOU rate structure to begin in 2019 assuming that the statutory conditions have been met.”23

Consequently, we reject the timeline and budgetary adjustments made to the ME&O Plan that reflect SCE’s proposed revised residential default TOU timeline in AL 3500-E-A, and will take up SCE’s revised default TOU implementation timeline proposal in its pending 2018 RDW application.24 Specific Timelines for Rate Reform Related Activities

The December 2015 Ruling asked that the ME&O plans include specific timelines for planned rate reform activities.

SCE provides a rate reform go-to-market tactical plan showing its 2017-2019 activities.25 SCE will continue providing tiered rate-related (i.e. tier collapse and high usage charge) outreach throughout this three year period. SCE proposes to conduct its opt-in TOU campaign in 2017 and 2018 to ease operational burden and engage in advocacy for TOU.

23 D. 15-07-001, p.5.24 However, D.17-08-024 follows that “In dismissing this application, we do not address or prejudge the issue of whether SCE should be authorized to delay implementing residential default TOU rates until Q4 2020.” 25 AL 3500-E, Attachment A, Appendix C.

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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 RDW applications as ordered by D.15-07-001. SCE plans to transition eligible residential customers to default TOU rates starting in early 2019 in a manner that supports both operational feasibility and overall positive customer experience.26

Rate Reform Communications

SCE provides a communications calendar showing when communications will be deployed.27 SCE will provide customers with customized rate comparisons to begin to educate and provide context about the need to move to TOU. The frequency and level of communication (e.g. number of touches) will adjust depending on the degree of impact: negatively impacted customers will receive high touch communications 90 days prior to default and then again at 60 days and 30 days prior to default, neutrally and positively impacted customers will receive medium touch by communicating 60 and 30 days prior to default. This aligns with the Blueprint recommendation that the optimal default TOU engagement strategy begins with a 90/60/30 communications cadence for prelaunch.28

We approve the proposed rate reform implementation and customer communication timelines as presented in AL 3500-E, but direct SCE to provide additional information defining and quantifying the number of customer contacts or “touches” (e.g. “high touch” = X number of touches) as well as the types of touch (e.g. direct mail/email/phone). SCE shall also provide additional information regarding the communications timeline, frequency of touches, and outreach channels for customers defined as extreme non-benefiters. This information should be shared with the working group and incorporated into SCE’s PRRR reports going forward.

Segmentation Strategy

The December 2015 Ruling asked that the ME&O plans include descriptions of customer segmentation. The ME&O Plan will utilize the segmentation strategy identified in the ME&O Blueprint, and SCE will tailor messaging and depth of engagement based on monetary 26 AL 3500-E, Attachment A, p. 18.27 AL 3500-E, Attachment A, Appendix C.28 AL 3500-E Attachment A, Appendix E, p. 42.

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impact price of both electricity and the relative cost of electricity (i.e. energy burden), consistent with the ME&O Blueprint recommendation.

As requested by ALJ McKinney at the February 6, 2017 PHC, SCE provides its definition of whether a customer is a benefiter or non-benefiter. This determination is based on both the bill impact in dollars as well as the percentage decrease/increase of the bill impact change, as provided in the following table:

For customers with higher negative bill impacts, SCE’s micro-targeting segmentation approach will provide increased and highly targeted communication to the most impacted customers. In addition, SCE will use a psychographic scheme as an additional layer of analysis on top of these segments to improve the conversations and further refine messaging, as recommended in the Blueprint. The December 2015 Ruling emphasized the role of psychographic segmentation for ME&O effectiveness. SCE’s set of psychographic segments range from highly environmentally motivated customers to customers who care mostly about their bill. SCE provides in its advice letter the profiles of the five psychographic personas that will be used for rate reform marketing.

Other customer segmentations may be used as well. For instance, SCE’s ME&O efforts will have increased emphasis on addressing the needs of low-income and hard-to-reach customers. Low-income customers are segmented in various ways throughout SCE’s ME&O campaign. SCE will customize information relevant to low-income customers with materials on alternate ways to manage electricity cost through low-cost and no-cost tools29, ongoing tips, and energy management tools. In addition, relevant programs will be highlighted 29 See D.15-07-001, p.336. OP 13 directs that the ME&O Working Group address programs to promote low-cost and no-cost energy efficiency options for current Tier 1 and Tier 2 customers.

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that provide assistance such as CARE, the Energy Savings Assistance Program (ESA) and Energy Assistance Fund (EAF), as well Payment Arrangements and Level Pay Plan which may be used as a tool to mitigate higher monthly bills in the summer season and spread equal payments over an entire year.

Community Based Organizations and the Network of Networks

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.

SCE plans to leverage partnerships with community and faith-based organizations, business partners, local governments and other third parties to extend reach into the service territory. Key collateral will be created in-language for some segments of non-English speaking customers and large type font will be used to highlight information that is critical to customers who may be visually impaired.

SCE states that it has ongoing partnerships with over 500 CBOs that provide services to a wide variety of diverse customer segments across SCE’s service territory. Established relationships exist with groups that work with: Hispanic communities, Asian-Pacific Islander communities, African American communities, Native American communities, faith-based organizations, veterans groups, LGBT communities, immigrant communities, consumer advocacy groups, environmental groups, and other customer segments.

CBO partners are regularly updated on important issues of mutual concern, such as Residential Rate Reform. Rate reform engagement plans with CBO partners include meeting on a regular basis with a focus group made up of about a dozen CBO leaders called the Consumer Advisory Panel (CAP). During these meetings information is shared on upcoming SCE activities and input is solicited from CAP members, which is often incorporated into work products.

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Prior to the implementation of default TOU, SCE will begin proactively pushinginformation to its CBO partners and encouraging them to cascade this information to their clients and stakeholders. Messaging shared with CBOs will encourage them to direct customers to SCE.com, CBO partner websites, and social media platforms for additional information. SCE will ask CBO partners to share information in their newsletters, and will work with CBOs that organize major events to explore opportunities during those events for SCE to share TOU information and messages. For approximately one year after the implementation of default TOU, SCE will continue to work with CBOs to push TOU information out to the public. The emphasis will be on actions customers can take to avoid peak use times and encourage the use of cost management tools and programs.

As requested by ALJ McKinney at the February 6, 2017 PHC, SCE provides thefollowing table detailing specific CBO outreach methods and associated metrics for tracking and determining effectiveness:

The CBO effectiveness metrics measure efforts and reach to populations served. We direct SCE to track the effectiveness metrics, above, in its quarterly PRRR reports and encourage SCE to develop additional CBO effectiveness metrics that specifically address CBO efforts and reach to TOU non-benefiters in hot climate zones.

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CCA Customer Segment

Community Choice Aggregation (CCA) programs are rapidly expanding throughout California, with CCA providers increasingly representing this customer segment. Presently, the City of Lancaster and the City of Apple Valley are the CCAs operating within SCE’s territory. At this time, the Cities of Lancaster and Apple Valley have declined to participate in the spring 2018 default TOU pilot. However, SCE and the City of Lancaster have agreed to closely follow the efforts of PG&E and at least two CCAs in their service territory intending to participate in the default TOU pilot.

Whether or not the Cities of Lancaster and Apple Valley choose to participate in the full default rollout, an agreement should be reached on how best to coordinate ME&O efforts, in order to avoid potential CCA customer confusion. SCE is to provide a proposal describing how it intends to engage with CCAs in its service territory regarding the development of default TOU ME&O materials in a new Tier 2 AL by March 30, 2018.

We approve SCE’s proposed segmentation strategy overall as presented in AL 3500-E, conditioned on SCE providing to the Working Group, and in PRRR filings on an ongoing basis, examples of customized information relevant to low-income and hard-to-reach customer segments.

Strategic Plan

SCE proposes a strategic ME&O Plan that will target the right customers with the right message and expand their awareness of rate reform while encouraging energy usage behavior changes. The approach will also seek to leverage the “one voice” approach through all communications and touchpoints including EE, DR, low income and existing programs and services.

SCE’s rate reform objectives are to ensure that customers understand the impact of associated changes and are aware that they have rate choices. SCE will communicate directly to customers who are at risk of being impacted by the High Usage Charge (HUC) and recommend mitigation tools to help reduce negative bill impacts. This communication and mitigation strategy will continue with the

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“rolling” transition of customers to default TOU.30 SCE’s messaging platform aims to do this by engaging with customers in emotionally-based conversations influenced by research and segmentation.

Tactical Plan

In the market and situation overview section required by the September 2016 Ruling, SCE cites research31 showing: (1) a disbelief that a utility would wantto provide its customers with ways to lower their monthly bill and (2) a fundamental misunderstanding about how power is procured, delivered, and priced. SCE further states that customers historically have had a low-involvement mind-set – but that is changing – and SCE is working to effectuate that change by educating customers about the rate options, energy technologies, and opportunities they have to make choices that will lead to a more efficient and reliable grid.

SCE’s tactical plan consists of a phased approach that aligns with the ME&O Blueprint. The tactical plan is designed to leverage the right communications channels at the right time throughout the customer’s journey. SCE will optimize existing customer touchpoints and develop a variety of communications and resources to help residential customers to learn more about rate options and how to reduce their energy bills by taking advantage of off-peak pricing and/or modifying their energy usage behaviors.

In 2017, SCE was scheduled to begin building TOU awareness and proactively getting positively- and neutrally-impacted customers to opt-in to TOU32 through test and learn campaigns. This ongoing approach is intended to provide valuable insight and increase understanding of opt-in customer profiles and behaviors, as well as potentially creating TOU advocates who share their success stories. Any test and learn campaign-related expenditures recorded in the RRIMA in 2017 are subject to review in a future GRC proceeding.

During the awareness building phase, the statewide ME&O message will predominately be distributed through traditional mass media (e.g.

30 Decision Addressing Marketing, Education and Outreach for Residential Rate Reform (D.17-12-013), OP 10 at 63.31 Common themes were found through the Quigley Simpson and Hiner Studies as described in SectionsIII.C.1, and III.C.2 of AL 3500-E.32 Current opt-in TOU rates are: TOU-D & TOU-D-T.

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radio, newspaper). SCE will focus much of its advertising during this phase in digital mass media (e.g. website, social media, digital media) to place TOU options front-and-center.

In 2018, the TOU focus will shift from general awareness to motivating customers to take action and shift their energy usage. SCE willgo directly to customers where they are in their everyday lives by leveraging channels like retailers, schools, neighborhood gatherings and events to provide easy access to timely information. In addition, digital advertising and social media will be key channels as identified in the awareness phase.

Other tactics for motivating customers to take action include games, reward programs, turnkey marketing toolkits with third parties (e.g. manufacturers, retailers), home automation promotions, and a high school “energy fair” contest. In addition, SCE may hold town hall meetings to educate interested customers on rate changes.

SCE is anticipating the “rolling” default process to begin in early 2019 and to continue through 2020. SCE plans to work to default customers sequenced by impact: positively-impacted customers first, then neutrally-impacted and negatively-impacted. SCE states that this cadence allows it to refine the process and make sure customers are as prepared as possible. Direct marketing tactics (e.g. direct mail / email, bill onsert, text messaging) will be used for pre-launch default TOU communications. Neutrally- and negatively-impacted customers will receive communications recommending mitigation tools. In addition, live agents will perform targeted outbound calls to support highly negatively- impacted customers to help them prepare for and/or mitigate a high bill.

At the February 6, 2017 PHC, ALJ McKinney requested the IOUs to provide samples of communications that customers would be seeing or hearing over a timeline. In AL 3500-E-A, SCE stated it is still developing specific communications. In its last quarterly PRRR report, SCE included drafts of its 90-day communications for TOU default pilots, which were sent in mid-December 2017, and stated that it will include other drafts and finalized materials in future reports.

SCE’s ME&O Plan does not address efforts to communicate to customers about their choice to opt-out of default TOU. We find SCE’s

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ME&O Plan lacking in this respect and direct SCE 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.

Welcome Kit and Other Customer Tools

The focus in 2019 during the default TOU transition phase is to welcome customers to their new TOU rate with simple, easy to understand explanations of how the rate works and how they can benefit; all designed to encourage retention, but with the understanding that there are some customers whose lifestyles may not be a good fit for TOU, in which case the focus shifts to getting these customers on the right rate that is best for them. The primary communication tactics to promote retention on the default TOU rate and reinforce load shifting behavior include welcome kits, email, direct mail, bill onserts, text alerts and the contact center.

The Welcome Kit will acknowledge the customer’s enrollment in TOU and will reinforce the customer’s ability to control their energy bills by shifting more of their electricity use to off-peak time periods. Within each kit, large font will be used for certain key messages to enable customers with impaired vision to be able to read the information more easily.

SCE will also be deploying seasonal campaigns. Customers will receive direct mail or email three times-yearly (Winter, Spring, and Summer) that will provide seasonally-relevant low and no-cost energy savings tips, reinforce lower cost off-peak time periods, and may include additional educational elements such as customer testimonials and other pertinent information that can help customers maximize their savings potential.

SCE will ramp up resources for critical two-way dialogue through its contact center to effectively and efficiently handle negative customer feedback and help customers through the change. In addition, Bill Protection for one year will be offered as part of the TOU default process. This will help to address any apprehension customers may have over uncertain bill impacts that may arise from being defaulted to a TOU rate.

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At any point during the transition period, educating new or transferring service customers about their rate choices at the time of an inbound transaction with SCE is an opportunity to engage with customers differently as compared to the outbound communications for existing customers described above. When the customer contacts SCE to turn-on or transfer their service, the customers will have the choice to complete their turn-on request online or via a phone callto a customer service representative (CSR).

As part of the online experience, customers are directed to a dedicated landing page that welcomes the customer to SCE and provides them with information on programs, services and rate options. If the customer elects to call the call center, the CSR will advise the customer that there are available options and will eitherdirect them to the rate options landing page on sce.com or will offer to send them informational materials in the mail.We approve SCE’s proposed tactical plan as presented in AL 3500-E, conditioned on SCE including in its PRRR reports sample communications with clear language about customer choice to take action to not remain on a default TOU rate plan.

Budget

Greenberg Blueprint Budget for SCE

In the budget Greenberg created for ME&O activities that would start in 2017 and end in 2019, the estimated ME&O cost for SCE alone comes to $97.4 million dollars, or about $23 per SCE customer.33 The Blueprint budget assumptions are:

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

A "reach"34 of 85%-90% and a 'frequency'35 of 10+ over an average of four weeks;

A total population of 10.2 million customers, with shared costs allocated as follows: PG&E - 43%, SCE - 45% and SDG&E - 12%;

33 This is assuming that all 4,300,000 customers are included.34 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).35 Frequency is defined as the number of times that the targeted number of customers is exposed to the message or ‘touched.’

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A cost of $13 per customer for direct marketing materials36; Excludes Creative Development and Production (CD&P) costs; No statewide ME&O campaign costs are included.

Blueprint Budget for SCE

2017 2018 2019 Total

Mass Media $0 $13,222,875

$23,564,300

$36,787,175

Direct Marketing37 $5,900,000

$36,000,000

$18,000,000

$59,900,000

Public Relations38 $26,000 $51,600 $51,600 $129,200Research and Evaluation

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

Total $6,143,000

$49,476,225

$41,817,650

$97,436,875

The mass media budget estimate includes TV, radio, print, OOH (out-of-home), digital, and social on a region-by-region basis. Direct marketing costs are for physical marketing materials (e.g., outbound calls, mailers, welcome kit). Public relations costs are based on efforts to ensure customers receive timely and accurate residential rate reform and TOU information as well as proper positioning from the media and partner publications. The research budget accounts for the embedded metrics and measurement activities recommended in the Blueprint, including survey pretesting.

Comparison of SCE vs. Greenberg Blueprint Budgets

The SCE budget as presented herein, includes ME&O Plan activities that were slated to begin in 2017 during the pendency of this resolution. The timelines for some of the activities slated for 2017 may have changed, but regardless of timing, we approve 2017 proposed expenditures subject to review in the RRIMA reconciliation process in a future GRC. As presented in AL 3500-E, SCE’s proposed

36 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 (data from SCE’s SMB was not used) and Greenberg’s professional opinion of $25/customer.37 The direct marketing costs were based on an estimated cost of $13/customer and allocated per IOU on number of accounts. Yearly allocations were weighted based on campaign and customer engagement needs (2017 - 10%, 2018 - 60% and 2019 - 30%).38 The public relations cost estimates were based on $10,000 per month in PR support costs, with a June 2017 start and allocated per IOU on number of accounts. Does not include placement costs.

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budget estimate of $39.4 million, or about $9 per SCE customer39, is considerably lower than the budget recommended in the Blueprint. SCE’s budget assumptions are:

A “rolling” transition of customers to default TOU; Leverages key insights gained from previous rate-related ME&O

campaigns; Includes Creative Development & Production (CD&P) costs; No statewide ME&O campaign costs are included.

SCE Budget 2017 2018 2019 TotalMass Media $2,000,0

00$2,000,00

0$1,500,00

0$5,500,00

0Direct Marketing

$6,060,312

$9,757,269

$15,953,514

$31,771,095

Public Relations $226,666 $226,666 $226,666 $679,998Research and Evaluation

$250,000 $250,000 $250,000 $750,000

Other Support $350,800 $221,705 $92,588 $665,093Total $8,887,7

78$12,455,6

40$18,022,7

68$39,366,1

86

SCE’s “Mass Media” budget estimate includes media buys, however, the media mix is not detailed.40 SCE’s mass media budget total, $5.5 million, is significantly less than the Blueprint budget for SCE mass media of $36.8 million, reflecting its use of mass media to fill gaps or address emerging issues as needed. Radio in the form of public service announcements might also be utilized to target customers that are not online. Print advertising may also be utilized to reach an older demographic as well as to reach specific ethnic communities.

SCE’s proposed Direct Marketing campaign activities budget is substantially less than that of the Blueprint for SCE, centered on total direct mail costs of $23.0 million and total other direct marketing costs of $8.8 million.41 Direct mail costs include paper bill comparisons, default notifications, and post-default education and rate optimization mailers. Other direct marketing costs include outbound calls, text messaging, social platform costs, face-to-face events, and brochures.39 Again, this is assuming all 4,300,000 customers are included.40 SCE’s Reply to ORA’s Protest of AL 3500-E, Attachment A41 Id.

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SCE’s Public Relations budget includes costs for CBOs and employee outreach, resulting in a higher budgeted total of $0.7 million as compared to the Blueprint for SCE total of $0.1 million, allocated solely to public relations costs. We agree with SCE’s assessment that third party partners, including CBOs and schools, can assist in reinforcing energy usage behavioral changes for customers. We therefore support SCE’s proposal to deviate from the Blueprint budget to augment investment in this area.

SCE’s proposed $0.8 million Research and Evaluation budget is higher than that presented in the Blueprint for SCE, as it includes the full cycle of survey activities i.e. survey design, interviewing, and data analysis and reporting42, whereas the Blueprint Research budget only includes survey pretesting.43 SCE’s “Other Support” budget, which was not itemized in the Blueprint budget for SCE, includes $0.2 million total for web development (i.e. period web updates) and $0.5 million total for marketing automation (i.e. leveraging data analytics).

Actual costs will be recorded in the RRIMA and are subject to review as part of SCE’s 2018 GRC Phase 1 proceeding. In its 2018 GRC Phase 1 proceeding, SCE requests that the Commission find reasonable SCE’s recorded entries in the RRIMA and its forecasted costs through December 2017.44 As ME&O actual costs through December 2017 will be forthcoming shortly and may reflect lower amounts than presented in the 2017 budget above,45 the amount for 2017 reflects spending that may be deferred to later periods, assuming adequate justification is provided.

We approve SCE's proposed budget expenditures as presented in AL 3500-E for entry into the RRIMA.46 This budget is inclusive of 2017 expenditures that may have already occurred in 2017, and which are subject to GRC review in the RRIMA. SCE shall present in its new Tier 2 AL the proposed budget expenditures for 2018 – 2019, including any adjustments to the timing of its proposed activities, presented in a comparable manner to the budgets of the other IOUs, as requested by ALJ McKinney at the February 6, 2017 PHC. In 42 Id.43 AL 3500-E Attachment A, Appendix E, p. 286.44 A.16-09-001, p. 845 TOU Default Full Rollout ME&O expenses reported in SCE’s Ninth Quarterly PRRR through 2017 Q3 are $92,599.46 AL 3251-E established the RRIMA to track appropriate rate reform implementation expenditures.

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addition, we direct SCE to include any audit of the RRIMA in the next applicable Progress on Residential Rate Reform (PRRR) report. Budgets Are Subject to Change

SCE states in AL 3500-E that the ME&O Plan and its associated budget are subject to change based on new information derived from TOU pilots, additional customer research, input from interested parties, implementation or operational requirements, and guidance from the Commission regarding statewide ME&O.47 The measurement and evaluation methodology described by SCE will also act as a guide to continuous adjustment to the plan based on results, with test- and-learn strategies built into the overall ME&O plan.

Accordingly, we acknowledge that changes to SCE’s ME&O Plan and associated budget may be necessary. SCE is directed to report actual cost deviations from the budget included in AL 3500-E (or subsequently updated budgets) that are greater than $250,000 at the tactic level48 and the reason for the deviation in its next applicable quarterly PRRR report.49 We also require that future budget adjustments be accompanied by budget assumption information, such as changes to the cost per customer (for 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

47 AL 3500-E, Attachment A, p. 1.48 SCE reports budget versus actual cost at the tactic level in its quarterly PRRR. Tactics are budget line items such as Bill Comparison, Customer Research, etc.49 Per Resolution E-4847, SCE is required to track actual expenses to date against its estimated costs as part of its PRRR reports.

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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,”50 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.”51 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. SCE should ensure that the timelines for this ME&O Plan, 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 SCE’s ME&O Plan should include discussion as to when it intends to inform customers about the availability of technology incentives.

We direct SCE 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 SCE’s end of year PRRR filings.

Measurement and Evaluation Plan50 December 2015 Ruling, p. 9.51 September 2016 Ruling, p. 3.

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Working Group Draft 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 chose among a group of proposed metrics from Energy Division, the IOUs and ORA to create a single list of draft metrics as shown 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

Goal

4 Customers understand the benefits of lowering their energy use

Goal

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

Goal

10 % 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 Tracking

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Metric #


customer complaints13 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 Percent of customers on opt-in TOU rates Tracking20 % of customers using bill comparison tools Tracking

ORA Suggested MetricsMetric

#Metric Goal vs.

Tracking21 Proportion of customers that are aware of the

rate changes and potential impacts on their bills

Goal

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 developed to measure market progress. These metrics are more granular and tactical, and designed to monitor customerresponses on an on-going basis. Goal metrics are those that assess changes in 'year over year' customer understanding and require assigned targets. SCE launched its baseline ME&O survey based on these metrics in Q1 of 2016.52

Core Metrics from Blueprint52 This survey was launched simultaneously in all three IOU territories. Results from this baseline survey can be found in SCE’s PRRR reports. See http://www.cpuc.ca.gov/General.aspx?id=12154 .

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


Greenberg reviewed the set of draft metrics against the strategic goals that they set in the Blueprint, identifying which should be retained and which should be discarded. For core IOU goal-tracking metrics, Greenberg’s recommendation was to retain draft Metrics 1 through 5, drop Metric 6 in favor of Metric 8, and add Metric 19. These core metrics are shown below:

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


Tracking

19 Percentage of customers on opt-in TOU rates Tracking

SCE Primary Metrics

For its primary metrics, SCE retains core metrics #1 - #5 and #8. SCE believes there is value in retaining draft metric #6, which measures customer perceptions about the effectiveness of billing information as opposed to the utility’s view of this measure, as provided in Metric #8. In addition, SCE has not retained core metric #19, the tracking metric identifying the percentage of customers on non-pilot opt-in TOU rates.

Additional metrics under consideration by SCE will provide a bridge to other measures of the customer experience, i.e. customer effort (ease or difficulty of transaction with the utility), and customer satisfaction with rate (confidence in rate selection, or “best for you”).

We adopt SCE’s proposed primary metrics, but also direct SCE to retain core tracking metric #19 in order to track the overall impact of

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the opt-in TOU campaign that SCE has proposed, and also to fulfill the requirement of the December 2015 Ruling. We also request that SCE expand metric #5 to include demand response programs in addition to energy efficiency programs.

The approved primary metrics are as follows:

Metric #

Metric Goal vs. Trackin

g1 Customers are aware that there are rate plans that may

help them mitigate energy expendituresGoal

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

Goal

6 Customers feel they were provided useful information explaining their bills

Goal


Tracking

19 % of customers on opt-in TOU rates Tracking

SCE states that targets will be established for each of the designated goal metrics (and any additional newly created ones) and will focus on:53

• Customer Satisfaction• Customer Understanding of TOU Periods• Customer Understanding of TOU versus Tiered Rates• Customer Understanding of Rate Choice• Customer Awareness on How to Shift or Reduce Load• Understanding of Why Customers Opt-off of TOU Rates

D. 15-07-001 did not provide specific metrics for measuring the success of the IOUs’ default TOU rates, but did provide guidance on 53 AL 3500-E, Attachment A, p. 64.

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the Commission’s view of a successful transition to default TOU. One of the goals of default TOU for the Commission 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 in order to sustain peak load reduction actions and for them to collectively have a positive experience with TOU rates.

However, 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.54 This allows customers to opt out to 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 find that ensuring that customers are on the ‘right rate’ for their usage and lifestyle is an appropriate objective, and therefore direct SCE to add a seventh goal metric with customer satisfaction targets into the next applicable quarterly PRRR report. In setting targets for this goal, both the attributes of the customer and the rate should be considered.

Vision Metrics

The Blueprint proposed three high-level vision metrics for measuring progress towards the recommended vision for rate reform, with each of the three metrics assigned to either the recommended statewide campaign, SCE’s campaign, or both, as follows:

Objective Metric ResponsibilityAffinity X% of Californians feel a

personal connection to electricity and feel strongly about being thoughtful about when they use energy

Statewide (SW) ME&O

Retention X% of customers stay on TOU 15 months after default

IOU ME&O

Sustained Actions

X% of Californians sustain at least one significant peak reduction action for 12 months after defaulting

Both SW and IOU ME&O

54 D.15-07-001, p. 130. “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.”

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SCE asserts that there is value in pursuing all three vision metrics.55 In line with Greenberg’s assumption, SCE assumes that the actual measurement of these vision metrics would involve a series of appropriate sub-metrics. We direct SCE to develop the vision metrics and sub-metrics that Greenberg recommended56 in order to align and guide residential rate reform ME&O toward common objectives. These vision metrics and sub-metrics shall be provided to the Working Group for review and implementation.

Targets

The December 2015 Ruling charged the Working Group and eventual consultant with creating specific targets for the “goal metrics” in the Blueprint. Greenberg declined to set specific targets, but provided background research on how to set ‘benchmarks’ while suggesting that additional research was required to establish baselines for some metrics.

With the additional research being conducted and data from the opt-in TOU pilots being released, we believe it is appropriate for the Working Group to begin the process of setting targets to measure year over year improvement. SCE, in consultation with the Working Group, shall submit targets for the 7 goal metrics approved above in its March 30 Tier 2 AL.

Surveying Methodologies

The December 2015 Ruling asked that the ME&O plans include surveying methodologies to evaluate the metrics. SCE’s metric evaluation plan in AL 3500-E includes adjustments to the current baseline ME&O survey57 to accommodate learnings from additionally planned surveys. Tracking studies which began with the baseline survey conducted first quarter 2016 will continue on a semi-annual basis through 2019-2020.

Greenberg proposed conducting short mobile platform-based surveys during the default TOU rollout period to “take the pulse” of customer sentiments and experiences in real time, and to identify emerging 55 AL 3500-E, Attachment A, p. 63.56 AL 3500-E Attachment A, Appendix E, p. 32.57 The Hiner survey conducted in 1Q 2016.

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issues or problems. SCE believes there may be value in this type of on-going, real-time customer feedback in 2019 and possibly 2020, and will likely implement the surveys through its “Voice of the Customer” email survey platform.

SCE proposes to perform segment-specific outreach and surveys to better understand responses from various groups (including low-income, hard to reach, benefiter vs. non-benefiter, and psychographic groups). Additionally, SCE will leverage ad hoc research (surveys or other methodologies) in order tofocus on customer responses to rate design and specific outreach efforts.

SCE engaged Bovitz Research to conduct research with residential customers to better understand the impact TOU rates might have on different types of customers, how customers might make TOU rates work best for them, and what SCE can offer to facilitate customers’ success on a TOU rate. The SCE - Bovitz research sessions took place from late October to mid-November 2016, and a final report was delivered in December 2016.

The Bovitz findings showed, among other things, that customers are interested in tools to help them manage their energy use, especially to maximize use during lower-cost periods and shift use away from peak periods. As a result, one tactic SCE will be exploring in 2017 is a TOU Text Alert study. This study will target customers who have recently switched to a TOU rate, offering them the choice to “opt-in” to receive a regular text alert reminder of off-peak hour times. The studywill help SCE determine whether or not this type of alert is helpful to customers. If the results show customers are interested and want to receive this type of alert, SCE will consider incorporating this type of communication into the Default TOU plan.

These surveys and tracking data will be substantial amounts of information that requires organization for Working Group and Commission review. Therefore, we direct SCE (with assistance from the other IOUs) to implement Greenberg’s proposal of a “data visualization dashboard” or similar tool containing metrics and tracking data for interested parties to access, to be updated in its quarterly PRRR reports.

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We approve SCE’s surveying methodologies on the condition that pulse surveys are done in the first wave of rolling default, with results to be reported in the applicable quarterly PRRR report.

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.

In AL-3500-E, SCE states that it has access to software that can deliver, optimize and measure digital communications, but does not currently have the technology in place to automate those activities.58 SCE further states it is pursuing marketing automation as part of a future project called Enhanced Contact & Alerts Management Program (ECAM)59. ECAM enables centralization of customer contact information and alert preferences into a centralized repository. By centralizing data, an application program interface (API)60 can be established.

We direct SCE 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. In addition, we direct SCE to include an implementation plan for full marketing automation in its March 30 Tier 2 AL filing.

58 AL 3500-E, Attachment a, p.73.59 Id.60 An API is a set of routines, protocols, and tools needed for marketing automation.

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Integration of SCE’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.61

Taking these concerns about the statewide campaign62 into account, the September 2016 Ruling asked the IOUs to provide their own 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, SCE provided a list of elements it believes must be resolved before any statewide campaign should be implemented, and suggested that a consultant be hired to align the work between the current Energy Upgrade California (EUC) statewide campaign and the rate reform work.

While this was not in compliance with the September 2016 Ruling, we accept SCE's suggestion. 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 SCE’s ME&O Plan. We 61 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.62 September 16, 2016 workshop.

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direct SCE to include revisions to its ME&O resulting 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

In its protest to AL 3500-E, ORA requested a more detailed cost breakdown of SCE’s budget and requested that SCE submit a proposed budget in sufficient granularity. SCE provided further details on its proposed TOU ME&O budget in an attachment to its December 29, 2016 Reply to ORA’s protest. In order to ensure continued budget reporting uniformity among all IOUs, we direct SCE to file in its Tier 2 AL a more detailed, itemized ME&O Plan budget, presented in a comparable manner to the budgets of the other IOUs, as requested by ALJ McKinney at the February 6, 2017 PHC. In addition, we also require actual cost deviations from the budget included in AL 3500-E (or subsequently updated budgets) that are greater than $250,000, and the reason for the deviation, be described in SCE’s next applicable quarterly PRRR report. ORA’s protest of AL 3500-E-A requests that the Commission reject AL 3500-E-A due to significant, unsubstantiated increases to the 2017 -2019 budget. The adjustments made to the budget in AL 3500-E-A are rejected.

We agree with the City of Lancaster that coordination regarding default TOU ME&O materials with the CCAs in SCE’s territory should be a requirement for SCE and direct SCE to provide a proposal describing how best to coordinate these efforts. In reference to the development of bill comparison tools for CCA customers, to the extent that SCE and the CCA Parties agree that CCA customers will be included in the full rollout of default TOU, a rate comparison tool for these customers would necessarily be a part of that plan and would be reviewed as part of SCE’s 2018 RDW application. Lastly, with respect to the City of Lancaster’s question of cost allocation for default TOU ME&O expenses, this matter should likewise be addressed by parties as part of SCE’s upcoming RDW application proceeding.

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

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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."

FINDINGS

1. Decision 15-07-001 directed Southern California Edison (SCE), 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 SCE 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. The consultant hired to advise the Working Group, Greenberg, delivered its Blueprint on August 20, 2016.

5. 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, SCE filed its ME&O Plan in accordance with (D.) 15-07-001 and the December 2015 Ruling.

7. Up to 4.3 million SCE residential customers may be defaulted to TOU rates.

8. SCE's initial baseline study found that more than half of SCE's residential customers are not sure what rate plan they are on.

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

10.SCE will adjust TOU pre-default communications frequency and number of touches depending on the degree of customer bill impact.

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11.SCE will use a micro-targeting segmentation approach for customers with higher negative bill impacts, with a psychographic scheme overlay.

12.SCE 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.

13.Third party partners, including CBOs and schools, can assist in reinforcing energy usage behavioral changes easier and more motivating for customers. SCE will leverage partnerships with CBOs, business partners, local governments and other third parties to extend reach into the service territory.

14.CBO effectiveness metrics measure efforts and reach to populations served.

15.SCE will propose how it intends to engage with CCAs in its service territory regarding the development of default TOU ME&O materials.

16.SCE’s tactical plan consists of a phased approach that aligns with the ME&O Blueprint.

17.SCE is conducting an opt-in TOU campaign from 2017-2018 that will focus on those who would benefit from switching to TOU.

18.SCE will focus much of its advertising during the 2017-2018 TOU awareness building phase in digital mass media to place TOU options front-and-center.

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 right entity at the right time.

22.SCE is anticipating a “rolling” default TOU process to begin in early 2019 and to continue through 2020.

23.The majority of SCE’s ME&O Plan consists of direct marketing, supplemented by targeted digital channels.

24.Direct marketing tactics will be used for pre-launch default TOU communications, and should include clear language with respect to the choice to opt-out of default TOU.

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25.SCE’s default TOU engagement strategy begins with a 90/60/30 communications cadence for prelaunch, in alignment with the ME&O Blueprint.

26.SCE will ramp up resources for critical two-way dialogue through its contact center to effectively and efficiently handle negative customer feedback and help customers through the transition to TOU.

27.SCE will provide customers with seasonally-relevant low and no-cost energy savings tips and seasonally reinforce lower cost off-peak time periods.

28.Bill Protection for one year will be offered by SCE as part of the TOU default process to help address the apprehension customers may have over uncertain bill impacts that may arise from being defaulted to a TOU rate.

29.In Greenberg’s proposed ME&O budget, the estimated total cost for SCE comes to $97.4 million dollars, or about $23 per customer, exclusive of Creative Development and Production (CD&P) and statewide ME&O costs.

30.SCE’s proposed budget estimate of $39.4 million, or about $9 per customer, inclusive of CD&P costs and exclusive of statewide ME&O costs, is considerably lower than the budget recommended in the Greenberg Blueprint.

31.SCE’s mass media budget total, $5.5 million, is significantly less than the Greenberg Blueprint for SCE mass media budget total of $36.8 million, reflecting its use of mass media to fill gaps or address emerging issues as needed.

32.SCE will record ME&O expenses in its Residential Rate Implementation Memorandum Account (RRIMA).

33.Changes to SCE’s ME&O Plan and associated budget may be necessary.

34.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.

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

36.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.

37.SCE should 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.

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38.Having customers feel that they are on the ‘right rate’ for them is a reasonable and appropriate objective.

39.The Bovitz findings show that customers are interested in tools to help them manage their energy use, especially to maximize use during lower-cost periods and shift use away from peak periods and as a result, one tactic SCE began exploring in 2017 is a TOU Text Alert study.

40.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.

41.Instead of providing suggestions on the format a statewide campaign should take, as ordered, SCE recommends hiring a consultant to align the work between the rate reform proceeding and the statewide ME&O proceeding.

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

43.It is reasonable for SCE to coordinate with CCAs like City of Lancaster regarding the development of default TOU ME&O materials.

THEREFORE IT IS ORDERED THAT:

1. SCE’s proposed ME&O Plan as requested in AL 3500-E is approved as modified herein.

2. The request of SCE to adopt the revised ME&O Plan timeline and associated budget as requested in AL 3500-E-A is rejected. SCE’s response in AL 3500-E-A to request for additional information by ALJ McKinney at the February 6, 2017 PHC is approved.

3. SCE shall file a new Tier 2 AL in compliance with the directives in this Resolution by March 30, 2018, proposing the following:

a. How it intends to engage with CCAs in its service territory; regarding the development of default TOU ME&O materials;

b. Targets for the seven goal metrics adopted herein; c. Presentation of budget expenditures for 2018 – 2019 in a

comparable manner to the budgets of the other IOUs;

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

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

4. SCE shall include in its Tier 2 compliance AL ordered above in OP 3, 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.

5. SCE shall develop and present to the Working Group the following: a. Customized information relevant to low-income and hard-

to-reach customer segments; b. Direct marketing efforts for customer opt-out of default

TOU;c. The number and type of direct marketing communication

touches;d. The communications timeline, frequency of touches, and

outreach channels for extreme non-benefiters; ande. The vision metrics and sub-metrics that Greenberg

recommended to align and guide residential rate reform ME&O toward common objectives.

6. SCE 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 marketing automation and data integration efforts;

c. The results of pulse surveys to be conducted in the first wave of rolling default;

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

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e. Results of any internal or external audit of the RRIMA, 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, SCE shall seek approval as appropriate from the Commission; and

g. Budget assumption information, such as changes to the cost per customer and cost per touch, as applicable for any future budget adjustments.

7. SCE 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.

8. SCE shall record all ME&O Plan costs within the RRIMA.

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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