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Iowa Industrial Energy Group Spring Conference 2013 Energy Efficiency and Industrial Customers Jennifer Easler and Fasil Kebede Iowa Office of Consumer.

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Presentation on theme: "Iowa Industrial Energy Group Spring Conference 2013 Energy Efficiency and Industrial Customers Jennifer Easler and Fasil Kebede Iowa Office of Consumer."— Presentation transcript:

1 Iowa Industrial Energy Group Spring Conference 2013 Energy Efficiency and Industrial Customers Jennifer Easler and Fasil Kebede Iowa Office of Consumer Advocate 1

2 Presentation Format Criteria for Iowa energy efficiency plans New plan development process – IPL as an example Applying cost-effectiveness requirement and associated benefit-cost tests Emerging opportunities for nonresidential sector EE Collaboration efforts on C&I programs Results of C&I focused industrial research Q&A 2

3 Criteria and Requirements for Iowa Energy Efficiency Programs Electric and gas public utilities shall offer energy efficiency programs Include range of programs tailored to needs of all customer classes Establish EE goal based upon assessment of potential, and establish cost-effective EE programs designed to meet the EE goal An energy efficiency plan as a whole shall be cost-effective; the Board shall apply the societal test, utility cost test, rate- payer impact test, and participant test. Energy efficiency for qualified low-income persons and for tree planting programs, educational programs, and assessments of consumers’ needs for information to make effective choices regarding energy use and energy efficiency need not be cost-effective and shall not be considered in determining cost-effectiveness of plans as a whole. 3

4 New Plan Development Joint Utility Assessment of Potential conducted June 2011- January 2012. The Board determines specific capacity and energy savings performance standards for each utility. New Plans Developed and submitted by utilities: IPL November 2012; MidAmerican February 2013; Black Hills April 2013 Among other items, new plans include proposed energy efficiency plans and associated budgets and impacts. The utility “shall submit an EE plan which shall include economically achievable programs designed to attain approved energy and capacity standards.” The Board shall conduct a contested case for review of energy efficiency plans and budgets filed by regulated IOUs. 4

5 IPL Benefit-Cost (Electric) 5

6 IPL Benefit-Cost (Gas) 6

7 IPL Proposed Budget Total Plan Budgets by Category - Electric and Gas EE Portfolio Only Budget Category20142015201620172018Total% Total Planning & Design$818,590$838,036$855,105$878,205$903,082$4,293,0181.83% Program Administration$3,329,112$3,396,268$3,449,059$3,529,030$3,613,695$17,317,1647.36% Advertising & Promotion$2,458,814$2,510,916$2,553,704$2,613,312$2,676,701$12,813,4475.45% Incentives$31,405,029$32,173,397$32,757,882$33,800,369$34,923,765$165,060,44270.17% Equipment Costs$2,812,369$2,834,006$2,855,673$2,881,284$2,906,994$14,290,3266.07% Installation Costs$3,188,903$3,226,016$3,263,586$3,304,744$3,346,178$16,329,4266.94% Monitoring & Evaluation$982,969$1,002,965$1,020,648$1,047,169$1,075,340$5,129,0902.18% TOTAL$44,995,785$45,981,604$46,755,657$48,054,112$49,445,755$235,232,913 7

8 Non-Residential Opportunities  Industry-specific focus  Industry-specific program outreach that specialize in that customer group. They would be most effective if providing a single point of contact for customers within the industry.  Establish ongoing opportunities for customers within industry groups to interact with and learn from their peers.  Behavior-based efficiency  Energy performance improvements and management practices    Building Benchmarking  Establishing baselines is integral part of understanding what can be achieved through comprehensive, strategic EE planning 8

9 Benefit Cost Tests B/C TESTSPartici pant UtilityRatepayersTRCSocietal Benefits Avoided energy costs√√√√ Avoided capacity costs√√√√ Avoided trans/dist costs√√√√ Avoided secondary fuel√√√ Bill reductions√ Externalities adder√ Utility incentives√ COSTS√ Incremental measure costs√√ Incentive costs√√ Other costs√√√ Lost revenues√ 9

10 Differences in B/C tests Societal Cost Test includes costs and benefits experienced by all members and society. It differs from TRC in taking account of non-monetized externalities, such as environmental costs Total Resource Cost (TRC) includes costs and benefits experienced by all customers and participant. It differs from Utility Test by also capturing other participant benefits, such as avoided water cost, reduced O&M, improved comfort, health and safety, etc. Utility Test focuses on costs and benefits experienced by the utility; consistent with the way that supply-side resources are evaluated by vertically integrated utilities. Participant Test focuses on benefit and costs to participant Ratepayer Impact test measures impact of EE programs on utility rates; it considers impact of lost revenues 10

11 Choice of Discount Rate The choice of discount rate to use for calculating present values of costs and benefits has significant implications for cost-effectiveness of energy efficiency programs. This is because program costs are typically incurred in the early years, while program benefits are enjoyed over the life of the energy efficiency measure. For the Societal Test, the social discount rate is used; in Iowa this is the 12-month average of 10-year and 30-year Treasury Bonds (3.56) For Utility and RIM B/C, use utility’s average cost of borrowing a/k/a weighted average cost of capital (debt and equity) For Participant Test, use consumer lending rate Additional Resources: National Action Plan for EE, Understanding C-E of EE Programs (EPA 2008); Best Practices in EE Screening (Synapse Energy Economics July 2012) 11

12 2009 C&I Collaboration COMMERCIAL AND INDUSTRIAL (C&I) ENERGY EFFICIENCY WORK GROUP MATRIX New Collaborations and Cooperative Efforts and Consensus Future Opportunities – Consensus Needed [See Next Steps for resolution, if any] Remaining BarriersNext Steps - Steering Committee 08/26/09 and 11/12/09  Agreed upon best practices: o Managed account approach that builds on long-term relationship o Renewed outreach or updating of previous efficiency assessments to encourage follow- through o IOUs routinely collaborate on best practices  Coordinated training through PIE2 (IEC, utilities, industry reps)  Coordinated Builder Operator Certification Program  Coordinated new construction program, including coordinated incentives for dual utility providers  New focus on comprehensive building assessment and efficiency plan to implement  Coordination opportunities open to other utilities  Through collaboration continue to share ideas on best practices in account management, screening tools, program approaches [Agreed]  Continue forum/process to help educate/inform C&I customers about program opportunities, perhaps targeted to particular industries. [Agreed]  Increase direct installation of efficiency measures during small commercial audits. [Resolution: inventory measures that are directly installed to determine whether there are gaps; address opportunities like plug load.]  Delivering energy efficiency message to key decision makers in a business  Persuading business to make efficiency investment and commitment to comprehensive EE audit and implementation plan  Training needs: customer survey and strategic planning under way with IEC/PIE2 to expand training that is targeted to needs and EE potential  Additional potential research in targeted C&I areas; results  2010 Collaboration Focus: o strategies to assist customers to implement comprehensive and holistic energy efficiency solutions; o small and mid-size commercial efficient lighting opportunities and barriers; o education and training needs; o reaching unserved/underserved markets; o upstream market opportunities; o lessons learned 12

13 2010 C&I Collaboration COMMERCIAL AND INDUSTRIAL (C&I) ENERGY EFFICIENCY WORK GROUP MATRIX (2010 Supp.) Strategies to encourage customer implementation of comprehensive energy efficiency in existing buildings : Existing coordination, collaboration, consensus best practices [2010 topics]  Managed accounts; build on long-term relationship  Timely and periodic follow-up with customers who have not moved forward with efficiency suggestions; update previous efficiency assessments  IOUs routinely collaborate on best practices; Share ideas on best practices in account management, screening tools, program approaches  Ongoing training/education and motivational strategies o PIE2 o External contractors and organizations o Internal technical support mgrs o Best practices resources and case studies  Coordinated training through PIE2  Comprehensive audits and multi-year efficiency plan to implement  Consistent audit components  A holistic, multifaceted approach is needed to support follow-through on comprehensive audit. Motivate decisions on efficiency options by providing key information when customer is interested. Counsel customer on audit report, cash flow analysis, benchmark or case studies, financing options, tax credit info, program incentives, qualified trade allies.  KAMs equipped to guide customer to other programs as appropriate, e.g.: o Builder Operator Certification Program o Retrocommissioning  Industry specific education/motivation o Industrial sector assessments of potential and case studies o Industry specific data mining Opportunities/next steps [2010 topics]  Reaching unserved/underserved markets o Rental/leased premises  Expanding awareness and adoption of efficient lighting in small and mid-size  C&I audit should convey efficiency priorities, associated savings, and cash flow analysis for small and medium customers too.  Customers expect to see estimated energy savings ($ and energy) opportunities in initial audit report, even when it recommends comprehensive audit to refine estimates. Objective is to deliver key information at a time when customer is motivated.  Large customers need to know and accept estimated cash flow benefits; develop longer term customer specific energy plans for larger customers in accordance with customers budgeting cycle  PIE2 o Develop/deliver training according to customer/ally needs and EE potential o Improve awareness of PIE2 activities and training o Expand natural gas training o Consider mission beyond training  Industry specific education/motivation o Utilize industrial sector assessments of potential and case studies  Understand role of and coordinate with DOE Industrial Assessment Centers Barriers/consensus lacking/further study needed [2010 topics]  Delivering energy efficiency message to key decision makers in a business  Persuading business to make efficiency investment and commit to comprehensive EE audit and implementation plan  Gain better understanding of customer finance needs to support implementation of comprehensive energy efficiency  Study use of market channel coordinator to support coordinated upstream market recruitment, training and awareness  Study solutions provider concept (dedicated resource personnel with industry-specific knowledge to support account managers)  Solutions for declining enrollment in BOC program  Study upstream coordination opportunities: o High efficiency motors o Industries served by a few major distributors o Advanced lighting 13

14 Collaboration – monitor progress on C&I research Targeted research for additional energy efficiency and demand response opportunities and approaches in the following MidAmericanIPL Primary metalsFood and Kindred Products Secondary MetalPrimary Metal MachineryPaper and Allied Products Food ProcessingRubber and Misc. Plastics Plastics This research will be used to educate and train staff and account management staff as well as developing market segmentation approaches for the appropriate industry. 14

15 Industrial EE Research Results – December 2010 Strong customer awareness and participation in EE programs: EE projects in the 4 sectors captured 26.3 million kWh for IPL; half of each sector using programs for MEC. Still much to do. IPL/MEC identified several opportunities to increase energy savings with industrial customers in these industries Lighting, Waste/Waste water, Motors/VSDs, HVAC/water heat, low voltage distribution transformers Using input from key customers in each industry, developed better understanding of the barriers faced by customers and areas where utility assistance would be beneficial Still hard to move EE projects even with relatively short payback periods IPL will develop a more systematic market segment approach for each industry: education, case studies, training, more trade allies 15

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