The California Public Utilities Commission (CPUC) has approved new long-term energy efficiency targets for the state’s investor-owned utilities. The decision aims to promote cost-effective programs that reduce energy use, lower customer costs, and help California meet its climate and clean energy goals.
The adopted framework is based on the CPUC’s 2025 Energy Efficiency Potential and Goals Study, which projects achievable cost-effective energy savings and fuel substitution through 2037. The benefits are measured using a metric called Total System Benefit (TSB), assigning a dollar value to long-term savings from energy efficiency and fuel substitution. This includes savings from reduced energy use, lower greenhouse gas emissions, and avoided costs in electricity generation as well as transmission and distribution.
For 2026, the statewide forecasted TSB is $589 million, highlighting significant opportunities for cost-effective energy savings across California.
The new objectives reflect changes in market conditions and efficiency opportunities. These include increased adoption of fuel substitution—such as replacing natural gas appliances with electric ones—a decrease in traditional efficiency measures within industrial and agricultural sectors, and stricter standards for determining cost-effectiveness.
According to the CPUC, “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.”
The commission clarified that while performance targets have been set by this decision, it does not establish budgets. Utilities will need to apply separately for funding, at which point the CPUC will determine appropriate budget levels to achieve these goals.
More information about this decision can be found on the CPUC website at www.cpuc.ca.gov.
