Open Letter to CA State Senator Lois Wolk on Energy Efficiency Program Access

This open letter is a project of the 2012 Presidio Graduate School's Capital Markets class.  To read more letters, visit the project page here. Dear Senator Wolk, We are Presidio Graduate School MBA students, working on an innovative, impactful idea intersecting economic, social and environmental benefits to help expedite California reaching the 2020 mandate of getting 33% electricity from renewable sources. Your legislative work to increase access to clean, renewable energy is greatly appreciated, and we think you will be interested in our project. Our research shows that the greatest impact to help California get 33% energy from renewable sources is a significant reduction in energy consumption by businesses of all size. Yes, this sounds basic, but please read on. If California is to be a model state, we cannot prioritize “providing” more renewable energy, because this also provides people an entitlement to “using” more energy guilt-free. We must help businesses and society become an effective, creative model in efficiency, in order to show the nation and world how working together has exponential benefits that create savings, efficiencies, money multipliers and even employment multipliers. What’s the problem? Small and medium sized businesses are challenged in accessing the capital required for costly energy efficiency systems. Yet these systems are necessary in providing the savings required to increase profits, which in turn increases competitiveness. And of course, increased profits means increased funds for the state. We have an idea that will (i) make investment funds more easily accessible to help small and medium sized business; (ii) broaden the investor base so more people can invest and realize returns; (iii) help the state and the state’s utilities reach the 2020 mandate; and (iv) bring communities and utility companies closer together. How does it work? We propose forming cooperatives and Social bonds within communities to pool funds to assist the businesses operating in these regions. The model also involves the utility company. Here’s how it works:

• People invest through their regional or local cooperative, and/or purchase social bonds.
• These funds are made available to businesses for the purchase and installation of energy efficiency systems. The company will repay the “loan” starting 3 months after installation, or the start of realized energy expense savings, whichever occurs sooner.
• The utility company would also contribute to repayment. The utility company’s contribution could be based off of a percentage of the monetized savings that help contribute to the utility’s reaching of their goals. Perhaps this can be in the form of a percentage of rebates provided to energy efficiency users.
• A percent of the contributions above the principal would be set aside for the local or regional cooperative for use towards community improvements, such as community gardens, bike lanes, etc.

This moderate funding model will help utility companies strengthen community relationships. With the aggregation of local utility companies, and certain historical incidents such as San Bruno Fire, utilities are accounting more frequently for the value of strengthened community ties. Our proposal provides a positive catalyst for utilities to strengthen community ties while also providing a powerful tool to help reach the state mandate. We are sad to hear that SB843 failed passage in the Assembly Committee on Utilities and Commence. Much of our research shows that the market often has greater leverage in creating change than politics or social movements. Our proposal includes collaboration of all three, which will help produce a unique and creative model that catapults California even further into the lead as an innovate and effective economy. The state is indebted to you for your strong advocacy in sustainability efforts and willingness to lead. We hope you will consider supporting our proposal, helping ease the collaboration of utilities, markets and businesses toward this common goal, with potential enabling legislation in the future. We look forward to discussing this further with you. Sincerely, Eric Waldspurger and Jiale Zhao Image c/o State Capitol