IN-FOCUS: Flex Alert Funding

On January 20, parties responded to a ruling in the CPUC's Demand Response docket (R.25-09-004) regarding a staff proposal to extend funding for California’s Flex Alert marketing campaign through 2026.

Background

Flex Alerts are voluntary conservation appeals designed to reduce electricity demand during peak periods, particularly heat events, and have been funded by the Commission since 2021 as part of its broader grid reliability response following the outages of 2020.

• The staff proposal recommends maintaining the existing statewide paid media Flex Alert campaign for 2026 at the current annual budget of $22 million, funded by PG&E, SCE, and SDG&E, and administered by SCE under its existing contract with Doyle Dane Bernbach Communications Group.
• The proposal emphasizes rising electricity demand pressures from electrification and data center growth. Staff cites evaluation results that show near-universal public awareness of Flex Alerts and widespread voluntary load reductions during alert days, including significant reductions in air conditioning and appliance use.
• The proposal contains specific questions for parties on whether the program should continue in 2026, whether SCE should extend or renew the existing contract, what the appropriate 2026 budget should be, and whether additional conditions or program elements are needed for continued administration.

Parties' Positions

Across parties, there is broad agreement that Flex Alert has become a well-known statewide reliability tool, but disagreement over whether its current structure, funding mechanism, and scale remain justified absent the now-expired Power Saver Rewards program.

• PG&E and SCE support continuing Flex Alert in 2026, emphasizing its role as a low-cost, voluntary reliability resource during periods of grid stress and pointing to high public awareness levels and self-reported conservation behavior. PG&E and SCE argue that the program should evolve from broad awareness toward more targeted, action-oriented messaging, with an emphasis on real-time engagement, notification sign-ups, and measurable behavioral response. They support a one-year extension of the existing marketing contract to avoid disruption ahead of summer 2026, while recommending refinements to improve cost discipline, targeting, and performance measurement. PG&E specifically recommends reducing the budget from $22 million to $12 million, arguing the higher figure was justified by Power Saver Rewards marketing that is no longer needed.
• SDG&E takes a different position from the other investor-owned utilities, arguing that the program should have funding from taxpayers or a broader group of utilities beyond the three large IOUs. SDG&E also questions whether a marketing campaign can meaningfully address serious reliability issues, suggesting larger policy questions require attention from the CAISO and the Commission. If forced to continue ratepayer funding in the short term, SDG&E proposes slashing the budget to approximately $4 million annually, sufficient only for emergency alert messaging—and opposes creating any new marketing collateral.
• Community Choice Aggregators, efficiency providers, and demand-side trade groups also back continuation, but stress that Flex Alert is approaching maturity and should be modernized. CalCCA and the California Efficiency + Demand Management Council argue that future value lies less in mass-market saturation and more in tailored, customer-specific outreach that drives incremental load reduction. CalCCA specifically recommends the Commission analyze whether diminishing marginal returns at 93% awareness levels warrant adjusting funding levels for future program years. Several parties caution that, with awareness already near saturation, additional spending risks diminishing returns unless messaging strategy and metrics improve.
• Consumer advocates are more divided. The Utility Consumers' Action Network supports extending Flex Alert but urges a strategic shift away from generic conservation appeals toward messaging that explicitly links customer actions to long-term rate stability and avoided infrastructure costs. UCAN frames Flex Alert as a “soft battery” that, if properly designed, can empower customers as active participants in managing system costs. The Small Business Utility Advocates similarly support continuation but raise concerns about rate fatigue among small businesses. SBUA calls for rigorous, ongoing evaluation to verify that claimed behavioral changes translate into measurable peak demand reductions, particularly for customer classes with limited flexibility.
• In contrast, Leapfrog Power and Cal Advocates oppose extending Flex Alert funding in its current form. Leap argues that a $22 million annual marketing program with no performance obligations is misaligned with modern demand-response principles and should be replaced with pay-for-performance incentives targeted at customers capable of delivering verifiable load reductions. Cal Advocates goes further, contending that continued IOU ratepayer funding is inconsistent with Commission precedent and unjustified now that the Power Saver Rewards program has ended. Cal Advocates emphasizes that Flex Alert was previously intended to be administered and funded by the CAISO on a statewide basis, and argues that extending IOU-funded marketing without structural reform would perpetuate an inequitable cost allocation.
• TURN occupies a middle position, acknowledging Flex Alert’s reliability value while recommending only bridge funding for 2026. TURN urges the Commission to use that time to redesign the funding mechanism, potentially shifting costs to a statewide allocator such as the CAISO or the California Energy Commission, require competitive procurement for future contracts, and reduce the program’s budget to reflect the sunset of Power Saver Rewards and the program’s current maturity.

Reply comments are due January 30.

INSTANT ANALYSIS

Parties broadly support keeping Flex Alert in place for summer 2026, but the record shows limited appetite for extending the program unchanged. With Power Saver Rewards now expired, the longstanding concern over IOU ratepayers funding a statewide program has re-emerged as the main weakness in the Staff Proposal.

Most utility and CCA support is pragmatic rather than permanent, framing 2026 as a bridge year to avoid disrupting summer reliability. Notably, the three IOUs are not aligned: PG&E and SCE support continuation with reforms, while SDG&E's position aligns more closely with program skeptics, advocating for either termination of ratepayer funding or a dramatic budget reduction. At the same time, multiple parties suggest that continuation beyond 2026 would require changes to funding allocation, budget size, and program design.

There is also growing pressure to move beyond mass-market awareness toward measurable performance. Even supporters acknowledge diminishing returns at the current $22 million spend absent clearer evidence of incremental load reduction.

Net takeaway: a one-year extension is likely defensible, but 2026 looks like a crossroads. Without funding reform and a tighter link to demonstrable grid value, Flex Alert faces a harder path past next summer.