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EXECUTIVE SUMMARY



The New England Electric System’s "direct installation" Small Commercial and Industrial Program (Small C/I Program) addresses the unique needs of small businesses with power requirements of less than 50 kW, a customer class that is vital to the resilience of the local economy. Small C/I customers have been hard to attract with rebates for the purchase of energy-efficient equipment, but by paying 100% of the cost of auditing customers' facilities and installing energy-efficient equipment and backed by the credibility of the utility, this program has demonstrated the potential for very high penetration rates while remaining cost effective. Perhaps the most elegant aspect of the program is that it is administered by a skeleton staff in coordination with regional labor and product vendors. These trade allies market the program, do the retrofit analyses, provide the equipment, and do the installations. This keeps the utility’s overhead low (and thus administrative costs low) and stimulates business in the local economy. All product is purchased locally to stimulate local distribution of energy-efficient goods while bolstering the economy.



While the NEES Companies do a first rate job of analyzing DSM program data, their programs are relatively young and thus critical impact evaluations are not yet complete. Many of the assumptions built into the savings data therefore are based on early estimates from the program’s Rhode Island pilot. NEES uses adjustment factors, based on limited subsets from the pilot, for estimating savings for the system-wide program



In 1991 the Small C/I program resulted in average customer savings of 7,256 kWh, up significantly from its pilot average of 4,011 kWh. To date the program has resulted in total cumulative savings of 54 GWh when factoring in NEES’s engineering estimate of savings. The measures installed in 1991 had an average measure lifetime of 15 years. In terms of capacity the program has delivered a total of 14.27 MW of peak summer capacity.



This program has been a key example of the cost effectiveness of direct installation. Since the program’s inception NEES has spent nearly $20 million on this effort, resulting in an a 1991 cost of saved energy of 5.15 cents per kWh. While paying an average of nearly $5,000 per installation, and nearly $17,000 for schools, NEES has demonstrated the benefit to the utility and to its ratepayers of such a program. NEES has pioneered incentive mechanisms that has made its DSM activities profitable for consumers and shareholders alike. Perhaps most encouraging are a host of lessons learned through the program, further lowering administrative costs and resulting in the implementation of efficiency measures in over 95% of solicited customers.





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EXECUTIVE SUMMARY



Southern California Edison (SCE) is unquestionably a national DSM leader. SCE has spent nearly a billion dollars on DSM since 1973. Its Low-Income Relamping Program is the oldest program of its kind operating today. SCE has cultivated a unique, synergistic relationship with community-based organizations (CBOs) to market and deliver the program. The CBOs provide a variety of social services to specific portions of the low-income community. For instance, the Maravilla Foundation specifically serves the Latin American community. These organizations are uniquely suited to provide energy services and education, as well.



SCE has had difficulty using traditional DSM approches and utility personnel to provide assistance services to its low-income customers. Many of these customers are recent immigrants to the United States, who often tend to be distrustful of governments and large institutions such as the utility. By paying the full costs of the compact fluorescent lamps and using the CBOs to interact with the customers, SCE can provide services to these customers in a nonthreatening manner. This relationship also provides SCE with a cost-effective means for fulfilling its PUC-mandated obligation to provide assistance to low-income customers. The CBOs benefit by earning much needed funds which aid in the operation of their organizations.



Although the general quality of data obtained from SCE is good, two shortfalls exist. First are concerns regarding the calculation of energy savings and in particular duty factors, persistence, etc. The other shortfall exists in quantifying the administrative costs of the program. The relamping effort is a sub-program of the larger Customer Assistance Program (CAP) for which cost data are not separated among the sub-programs.



To date, Southern California Edison has installed over 1.3 million compact fluorescent lamps through this program. These lamps have resulted in energy savings of 121 GWh and peak capacity savings of 14 MW, since the program's inception in 1985. From 1985 to 1991, the program has cost a total of $23.5 million. In the 1991 program year, the program saved 3 MW while providing over 5 lamps per home at an average cost per participant of $75.




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EXECUTIVE SUMMARY



Pacific Gas & Electric's Customized Electric Rebate Program is a "free-form" program where commercial, industrial, and agricultural customers can receive financial assistance for implementing electrical efficiency measures, subject to PG&E's approval. The program is designed to accommodate more complex projects than those covered by the menu-driven Direct Rebate Program. Projects range from commercial lighting retrofits, to industrial process changes, to agricultural irrigation efficiency measures. Customers learn of the Customized Rebate Program through personal contact with their PG&E customer representative; little direct marketing is conducted.



The program provides rebates based upon the quantity of energy that an efficiency measure saves in the first year of its operation. Rebates have varied between 2 and 7¢/kWh, since the program's inception in 1983, and are currently 6¢/kWh or 40% of the project cost, whichever is less. The maximum rebate per account is $300,000. (Gas efficiency measures are covered by the Customized Gas Rebate Program for which other rebate levels apply.)



As a result of the California Collaborative Process, PG&E has been allowed to earn a return on its DSM expenditures. Therefore, it has placed greater emphasis on carefully documenting its DSM programs' savings and costs. For the Customized Electric Rebate Program, PG&E is conducting billing analyses, metering of customers' facilities and operations, and on-site validation of measures installed. Due to these efforts, data reported after 1989 are much more easily analyzed and compared than data produced in previous years. Our analysis will therefore only examine data from 1990 and 1991.



During 1990 and 1991, the program realized 380 GWh of cumulative energy savings and 40.6 MW of cumulative capacity savings. The cost of this saved energy was 0.72¢/kWh at a 5% real discount rate. PG&E's program expenditure was $22 million, of which $19 million were rebates. The average cost per participant was $5,893.



One of the benefits of the Customized Electric Rebate Program is that it provides the utility with information on which types of energy saving projects and technologies are popular with its customers. If PG&E wishes to encourage such projects and technologies, it can determine standard rebates and procedures for them and incorporate them into the Direct Rebate program.




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EXECUTIVE SUMMARY



In 1990 the voters of Burlington, Vermont authorized the Burlington Electric Department (BED) to issue an $11 million bond to invest in energy efficiency. Many voters took the opportunity to make it clear that they favored energy efficiency over the prospect of buying additional increments of Hydro-Quebec's James Bay power, another element in the resource plan.



As part of its overall efficiency initiative BED staff opted to employ a lightbulb leasing mechanism that had been pioneered at Taunton, Mass. Municipal Lighting Plant. There, Joe Desmond had a rather elegant idea. By leasing customers compact fluorescent lamps wouldn't it be possible for a utility to offer positive cash flow for customers (where bill savings were greater than lease payments), while at the same time providing savings for the utility at low cost? The "Smartlight" program has been refined in Burlington and is the largest program of its kind in the country.



In the first fifteen months of the program BED had distributed almost 25,000 bulbs to over five thousand residential customers. After 20 months BED had installed 26,602 bulbs, averaging 3.4 lamps per customer, for estimated savings of 1,300 MWh/year. Burlington Electric, with a total of 33,647 energy-efficient lamps distributed in the community, is now in the process of extending leasing to commercial lighting.



BED's Smartlight Program also was able to effectively use college students on summer vacation to educate sustomers about energy efficiency and the leasing mechanism, and to install the lamps in appropriate applications. Selct students were retained during the school year to perform installations.



One of the interesting lessons learned from Burlington's Smartlight program is that the lease payments themselves have been a relatively insignificant aspect of the program. BED program managers feel that the point is the education of their customers, and their commitment to have the lamps only in cost effective sockets. The profile concludes with a discussion of the relative merits of the leasing concept versus direct installation programs for residential lighting.



BED provides a fascinating case study of an innovative, positive cash flow, DSM implementation strategy. Costs of the program are somewhat elusive, as lamps placed today have a net present value in terms of lease payments. This, however, is offset in part by attrition rates of the lamps. Finally, the savings data is complicated by the fact that a certain percentage of installed lamps maintain active leases, while another subset are likely in service but their leases have been broken.



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EXECUTIVE SUMMARY



The Osage Municipal Utility’s Comprehensive DSM program has been heralded as one of the most effective DSM efforts ever. In large part, Weston D. Birdsall, Osage’s recently-retired General Manager, is to be credited to this exemplary DSM effort. Birdsall believed and proved that the citizens of a small community could collectively take responsibility for their energy use (both electric and gas) and profit! By marshalling the support from all members of the community, from schoolchildren to professionals, Osage’s success in terms of gross savings and the remarkably low costs of the savings, has yet to be replicated.



The Osage program was designed to reduce the utility bills of all customers to improve the economic well-being of the community. Its other purpose was to reduce the growth rate of electric peak demand to delay the need to expand its generating capacity. Both objectives were met, the town actually experienced three electricity rate reductions and the capacity additions are still not necessary. For a total cost of less $500,000 over eighteen years, Osage has been able to save some 92.4 GWh, 4 MW, and about 8 million therms of gas since 1974. Furthermore, 100% of OMU's customers have participated in the program, at an average cost of only about $100 per customer total, or just over $6 per customer per year!



The most unique element of the Osage effort is the positive relationship that the utility has built with its customers. Through a series of educational programs and successful DSM measures, OMU has earned the trust of its customers. Once the people in the community realized that the utility was trying to help them reduce their bills and save money, it became successively easier to implement programs and achieve high participation rates.



Not only was OMU successful in achieving its main goals but an indirect benefit of economic development was realized. By keeping rates relatively low and helping businesses and industries reduce their energy consumption the economic viability of these businesses was also increased. This not only helped businesses and industries expand but also attracted new ones. Thus, the Osage community has enjoyed a stable local economy and unemployment rates far below the national average.

 

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