Planning for Oil Overcharge Funds: The California Experience

Within the next few years, states will be receiving some of the largest amounts of funds ($3-5 billion) ever released by the U.S. government to be spent on energy conservation and renewable energy programs and projects. The source of these funds is the Petroleum Violation Escrow Account (PVEA). The PVEA is derived from judgements against oil companies (and negotiated settlements with them) stemming from legal actions by the federal government for price over charges during the period from September 1973 to January 1981. California has already received $25.5 million and may receive over $500 million in the next few years. In anticipation of these funds, a PVEA planning process was developed in California to assist the Governor and the State Legislature in allocating the PVEA money. This paper reviews the evaluation process undertaken in California and presents the evaluations of ten energy programs as examples. The lessons learned in this process should be of interest to all states planning for these anticipated funds.

Energy projects proposed by state agencies and those generated from public workshops were evaluated on comparable bases according to sixteen different criteria in order to facilitate decision making. The evaluation criteria included certain unusual items (feedback and monitoring provisions, low-income impacts, and programmatic/technological innovations) that we believe are important in proposals. We introduced these items to stimulate agencies to consider them in the development of their proposals for this evaluation and in future program development. Proposals were not prioritized and criteria were not weighted leaving it to policymakers to use their own values to rank the proposals.

The evaluation process was unusual in several ways. First, this was the first time in California that all state agencies with energy conservation and renewable energy interests came together to express their views and priorities for developing energy programs. Second, through public workshops the general public was able suggest ideas for the allocation of these funds. And third, the evaluation was an iterative process in which the evaluators and the proposers were in close contact with one another in the development and final evaluation of the proposals.

While the evaluation process has been completed, the impact of the Evaluation Report continues. The Governor, State Legislature, and several state agencies have already made use of the findings of the report, and other states are reviewing the report to determine how they should determine their distribution of oil overcharge funds.