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EXECUTIVE SUMMARY

Thanks is large part to the vision and charisma of program manager Ceedy Mewszel and her colleagues, Otter Tail Power Company has designed and implemented two rather exceptional programs to assist low income customers in Minnesota, North Dakota, and South Dakota. Their humor is apparent even in the programs’ names, House Therapy and Appliance Aid, the latter of which comes complete with a "ten-step process" in fond recognition of the program’s acronym, "AA".

While House Therapy began in 1988 as part of a mandated initiative it has evolved over time and is primarily designed to alleviate the financial pressures on low-income customers with all-electric heat, an expensive proposition in the cold winters of Minnesota. Over its five-year history the program has served 820 homes with deep levels of savings. The average savings per home is ~1,332 kWh per year at an installed average cost of ~$1,600.

A House Therapy treatment may include any number of cost-effective energy efficiency measures. Measures installed include ceiling, wall, floor, foundation, and rim insulation; weatherstripping and caulking; water heater jackets, water heater pipe insulation and electric water heater replacement; door and window replacement; thermostat relocation; space heater replacement; energy-efficient light fixture installation; stratification fan installation; and residential demand controller installation.

Appliance Aid is currently in its pilot stage and is available as a free service to all low income customers regardless of their space heating source provided they have electric hot water heating. AA promotes the efficiency of customers’ refrigerators, air conditioners, dehumidifiers, and other electric appliances. Compact fluorescent lamps, low-flow showerheads, water heater and pipe insulation, and if necessary a new electric water heater, are installed at no cost. On average Otter Tail spends less than $130 per home for measures installed and labor costs.

One of the unique and successful features of both programs is that they are delivered through Community Action Program (CAP) Agencies rather than using in-house staff or contractors. The utility and the CAP Agencies both reap benefits from this arrangement. Otter Tail credits much of the programs’ success to the CAP's ability to deliver the program as a result of their knowledge of the local communities. The sixteen CAPs involved deliver a valuable service to their customers and are allowed 7.5% of the installation costs to cover their administration of the programs. While providing a source of revenues for the CAPs, the delivery mechanism is also believed to provide substantial public relations benefits for Otter Tail Power.

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EXECUTIVE SUMMARY

Bidding programs represent what many DSM analysts consider the next evolution of utility-driven energy efficiency programs. Rather than relying on conventional or core DSM programs which typically induce a subset of customers to implement varying degrees and combinations of energy efficiency measures, bidding programs leave it up to the customers to determine what energy-efficient measures and process changes they might implement if paid a certain price to do so. Bidding has been the emphasis of Public Service Company of Colorado’s DSM activities to date, but the utility has also introduced several other programs for its customers since it began DSM in earnest in February of 1989.

Demand-side bidding is a process whereby a utility issues a request for proposal (RFP) for energy and/or capacity savings, the latter in the case of Public Service Company. The RFP is sent to customers, energy service companies, and other third parties. The premise behind DSM bidding is that the competitive nature of bidding will provide market driven costs for implementing DSM measures. As such, bidding programs allow customers a wide degree of latitude in determining how best to accomplish cost effective energy efficiency savings for themselves and for the benefit of their utilities.

For the purposes of this profile we consider Public Service of Colorado’s three DSM Bidding programs to date: a small 2 MW pilot program, the First 50 MW Bidding program, and the Second 50 MW Bidding program. In mid-1989 PSC began the pilot program and sent out an RFP for 2 MW. This solicitation resulted in the submission of nine proposals totaling 6 MW with an average cost of approximately $240/kW. Following the success of this pilot program PSC received authorization to solicit bids for 100 MW of demand savings in two 50 MW bid increments.

Perhaps the two most important aspects of the bidding programs have been for PSC to determine the cost of customer-driven conservation and to refine its bidding processes over time. To these ends, the bidding programs have been remarkably successful. In addition to finding out that a tremendous, cost effective DSM resource exists which can be delivered to the utility at about half its avoided cost, the bidding programs have provided a host of important lessons learned that other utilities will certainly want to consider as they "roll out" similar programs.

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EXECUTIVE SUMMARY

Despite the fact that United Illuminating will likely not need additional generating capacity for at least ten years, the utility has been aggressively pursuing demand-side management as an economic development imperative, using energy efficiency as a means of retaining customers and providing them with a competitive advantage despite quite high rates for electricity. To this end Energy Opportunities is a multi-faceted program designed to help UI’s commercial and industrial customers identify and implement energy efficiency measures in existing facilities. Energy Opportunities is a companion program to Energy Blueprint, UI’s incentive program for commercial and industrial new construction. (See The Results Center Profile #50.)

Energy Opportunities was first implemented in 1990 and has five distinct components: free audits, free energy pricing reviews, co-funding for advanced energy engineering, cash incentives for installing qualifying measures, and turn-key installation services whereby UI provides all services necessary to implement conservation and load management measures. The first two components build awareness of the potentials for energy efficiency. Advanced energy engineering builds upon the audit component and cash incentives functionally buy-down customers’ payback periods for measures installed. Turn-key services provide the means for customers that can’t allocate time and resources to planning and implementing retrofits to do so with minimum involvement. In addition, UI has unveiled a Small Business component for the program to focus specifically on retrofitting small businesses with peak demands of less than 50 kW.

One of the unique features of the Energy Opportunities program is that different rebate levels are used based on a number of factors. For instance, measures with longer payback periods bear higher incentive levels. Small business customers are currently eligible for maximum incentives of 70% of the project cost, plus interest free financing for up to nine months, while this threshold is lower for state facilities at 50% of total costs. Finally, manufacturing customers are entitled to higher rebate schedules than commercial customers. Another feature of the program is that UI retains the right to perform post installation inspections and to require participants to guarantee that measures installed will provide savings for a minimum of ten years. Although rarely done, the utility can require participants to enter into service contracts with approved vendors to assure savings over a ten year lifetime.

To date, Energy Opportunities has significantly exceeded its energy and capacity savings goals in each year that it has been run. In 1992 it reached 151% of its energy goal and 178% of its capacity goal. The program is expected to continue in its present form and to provide 22% of UI’s peak reductions in the year 2000 and to provide 49% of all conservation and load management energy reductions in 2000.

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EXECUTIVE SUMMARY

The California Energy Commission staff estimates that California local governments spend over a billion dollars annually to purchase electricity, natural gas, and transportation fuels. While energy costs for cities and counties are a small portion of their overall operating budgets (typically 1-5%), it is one of the few costs that can be reduced because it is not fixed. Through its programs the Commission’s staff have projected that on selected local government facilities up to 25% can be saved on energy costs.

Thanks in large part to California State Senate Bill 880 (1986), the California Energy Commission has been given and has carried out a broad mandate to improve energy efficiency in the state’s cities, counties, and school facilities. The Energy Partnership Program (EPP), a subset of this activity, is the focus of this profile. EPP addresses the energy efficiency of city and county facilities and provides technical assistance for existing facilities, new construction design assistance, fleet management assistance and training, automotive and HVAC training, loans, and awards for participants.

While this profile addresses all components of the EPP program, technical assistance for existing facilities is the largest component in terms of participants, expenditures, and staff time. The Commission contracts with private consultants to provide technical assistance for all types of local government facilities including city halls, administration buildings, libraries, fire departments, police departments, and wastewater treatment plants. One interesting aspect of the program is that the Commission targeted jails and hospitals which have 24-hour, energy-intensive operations.

An important part of the program is to facilitate project financing for energy efficiency upgrades through its own revolving loan fund, federal funds, utility assistance, energy service companies, or other outside funding sources. In order to access its revolving fund which has a highly competitive interest rate, projects must have a simple payback of 6.5 years or less. Large funding requests (over $250,000) are often referred to private sector sources such as municipal leasing companies and pooled bond mechanisms. Pooled bond programs available include the FARECAL program administered by the California Municipal Utility Association, the CASTLE program administered by the California State Association of Counties, and the ABAG program administered by the Association of Bay Area Governments.

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