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 promote cost-effective programs that reduce energy consumption, lower customer costs, and help meet California’s climate and clean energy goals.
The framework is based on the CPUC’s 2025 Energy Efficiency Potential and Goals Study, which projects how much cost-effective energy savings and fuel substitution can be achieved through 2037. The study uses a metric called Total System Benefit (TSB), which assigns a dollar value to the long-term savings from both energy efficiency and fuel substitution efforts. TSB accounts for reduced energy use, lower greenhouse gas emissions, and avoided costs related to electricity generation, transmission, and distribution.
For 2026, the statewide forecasted TSB is $589 million. This figure indicates continued opportunities for significant cost-effective energy savings across California.
According to the CPUC, the updated objectives reflect shifts in market conditions and efficiency opportunities. These include an increase in fuel substitution—such as switching from natural gas to electric appliances—a decrease in traditional efficiency measures within industrial and agricultural sectors, and stricter requirements for what counts as cost-effective.
“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,” stated the CPUC.
The decision establishes performance targets but does not set budgets at this time. Utilities will need to submit separate applications for funding to support these goals. The CPUC will review those requests before determining appropriate budgets.
The CPUC regulates services and utilities across California with a mission to protect consumers, safeguard the environment, and ensure access to reliable infrastructure throughout the state. More information about its work can be found at www.cpuc.ca.gov.
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