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The Efficiency Utility Model: The Proof is in the Results
by Blair Hamilton, Director, Efficiency Vermont
In 1999, Vermont made a bold move, creating the nation's first energy efficiency utility — Efficiency Vermont — to administer virtually all system-wide, electric-ratepayer funded energy efficiency at a statewide level. The impetus to create the statewide, non-utility alternative approach was to reduce both the confusion and inconsistent delivery of services resulting from multiple-utility providers, as well to eliminate the conflict of interest and resulting regulatory contentiousness.
The state chose a single, non-utility administrator/implementer, operating under a competitively awarded, performance-based contract, to deliver energy efficiency services. While some other states have created statewide non-utility administrators to implement efficiency efforts, none have had as broad a scope of responsibility; none have been as independent; nor have any been subjected to such rigorous accountability for measurable results. Now, Vermont 's experiment has had four years of field-testing, feedback, refinement and evolution. With the results in, this model is a clear success.
Results
Since it began delivering services in March 2000, one-third of all Vermont homes and businesses have participated in and directly benefited from Efficiency Vermont's technical assistance and financial incentives. Each $1,000 of Efficiency Vermont investment is leveraging $630 dollars of additional customer investment and yielding more than $3,500 dollars of lifetime economic value to Vermont. In 2003, the number of kilowatt hours saved was 45 percent of the growth in the state's electrical energy requirements. In addition, the saved kilowatt hours cost just 38 percent of what utilities would otherwise pay for comparable electricity supply on the wholesale market.
Today, Efficiency Vermont is meeting three percent of Vermont 's energy needs and we project, conservatively, that number will increase to 10 percent or more by 2012. If the nation were able to reduce its energy consumption at the same rate, America could build 200 fewer new power plants during this period.
In addition to the accomplishments of Efficiency Vermont in acquiring electricity resources, it also has led the nation in market impacts in areas such as market share for Energy Star room air conditioners, clothes washers and residential new construction.
How and Why It Works
Without a doubt, Vermont 's multi-year, competitively bid, performance-based contract is a key part of Efficiency Vermont's success. The statewide contract requires that a significant portion of compensation be paid only if and when Efficiency Vermont achieves clearly specified, quantitative energy savings and verifies that other performance goals have been met. Held to that standard, Efficiency Vermont views itself as a private sector entity with full accountability and one that relentlessly pursues returns on energy and financial investments.
The freedom and flexibility that are built into the Efficiency Vermont contract encourage adaptations in design and implementation, allowing it to respond to time-sensitive opportunities and market changes such as introduction of new technologies. Flexibility is critically important, as well-managed energy resource portfolios inherently involve balancing to achieve both near- and long-term objectives with multiple and potentially conflicting goals (resource acquisition versus market transformation, equity versus most bang-for-the-buck, etc.).
Putting energy efficiency all under one roof has created synergies in Vermont that allow for unprecedented recognition of opportunities that cut across traditional utility rate definitions. For example, these cross-sector opportunities can be found in ski areas which have multifamily, commercial and industrial buildings and facilities in one area, or products purchased by both residential and commercial users.
A Model for Other States?
Efficiency Vermont has demonstrated that a multi-year, statewide and competitively bid contract is a successful model. This type of structure can be created and modified to suit the energy efficiency needs of other states or provinces. The administrative structure, scope and objectives of Efficiency Vermont are the most critical factors in the model's success, not the size or scale of the model in Vermont. Six states and two Canadian provinces are currently using the Efficiency Vermont model as a basis for new approaches to delivering energy efficiency.
In recognizing Vermont 's Energy Efficiency Utility model as a recipient of its 2003 Innovations in American Government Award, Harvard University 's Kennedy School of Government commended this innovative approach as one to be considered for replication elsewhere. Big ideas can come from small states like Vermont, and what Efficiency Vermont has accomplished can be replicated.
Blair Hamilton is the policy director and a co-founder of Vermont Energy Investment Corporation (VEIC), an independent non-profit energy services organization that has designed and implemented energy efficiency programs in more than 20 states and eight countries since 1986. VEIC administers the Efficiency Vermont contract for the Vermont Public Service Board.
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Amid Storms, Regional Climate Policy Conference Held in Southeast
by Kate Offringa, Director of Market Transformation, Alliance to Save Energy
As the nation turned its attention to the Southeastern United States during an unusually turbulent hurricane season, over 50 representatives of state and local government and energy and environmental organizations from across the Southeast region gathered to discuss global climatic trends. On September 7-9, 2004, the first Southeast Regional Global Warming Summit was held in Atlanta, GA. Conference speakers and participants convened to discuss key obstacles and opportunities for global warming work in the Southeast. They sought to identify stakeholders and develop priorities for global warming work in the region. Two senior Alliance to Save Energy staff persons were among the presenters at the conference.
Harry Misuriello, Alliance Director of Buildings and Utility Programs, introduced the theme of energy efficiency as the nation's best tool for addressing climate change. Energy efficiency, he said, can reduce greenhouse gas emissions and other pollutants at the lowest cost. Meanwhile, energy efficiency also lowers energy costs to consumers, improves industrial productivity and profitability, reduces municipal budgets for services, and enhances national security and energy independence.
Mr. Misuriello noted for conference participants that energy savings achieved through efficiency improvements between 1973 and 2002 have resulted in:
- 40 Quads less energy used in 2002;
- Avoidance of 2 billion tons of carbon dioxide every year, representing 9 percent of total world-wide emissions; and
- $400 billion savings in consumer energy bills.
He then highlighted federal and state policies and programs for the promotion of energy efficiency. State-level policy and program successes of particular interest to the regional conference participants included the following:
- Building codes and standards
- 39 States have adopted energy efficient building codes
- Purchase incentives
- Sales tax exemption for high efficiency appliances
- Tax credits & deductions for hybrid vehicles
- Use of HOV lanes by hybrids and AFVs
State research, deployment & voluntary programs
- 23 states have programs funded through utility surcharge
Appliance standards
- States adopting standards where federal standards have not been established
Mr. Misuriello engaged the audience on the challenges to energy efficiency in the Southeast, as the region leading the country in population growth and new housing starts, but lagging behind the rest of the country in Energy Star market penetration and per capita spending on energy efficiency. These trends are coupled with significant, regional air quality problems that make investment in energy efficiency all the more necessary.
Misuriello recommended several next steps for the region. These included working with an Alliance-led coalition in the region to form a Southeast Energy Efficiency Alliance. An important part of that work will be the formation of centralized technical services to support state and regional activities for the promotion of energy efficiency.
Gail Hendrickson, Alliance Director of Transportation, presented on the impact of transportation on global warming. She also presented energy efficient transportation options for addressing climate issues, and highlighted federal and state policies to encourage increased use of energy efficient transportation.
Ms. Hendrickson related to conference participants that in 1998, transportation became the leading source of carbon dioxide greenhouse gas emissions in the United States, surpassing emissions from industrial sources. Motor vehicles alone, she said, account for approximately 25 percent of total U.S. emissions of carbon dioxide.
In a review of behavioral and technology options to mitigate this problem, Ms. Hendrickson explained the following policies and tools available to overcome barriers to greater energy efficiency:
- Research and Development
- Financing
- Financial Incentives
- Pricing
- Voluntary Agreements - Government & Private Sector
- Regulations
- Information Dissemination and Training
- Procurement (Government led)
- Market obligations (e.g. Renewable Portfolio Standards)
- Planning techniques
She then went on to highlight state tools and success stories. These included the following recommendations:
- Allow single-occupant drivers of high efficiency vehicles (HEVs) in high occupancy vehicle (HOV) lanes, as done in Arizona, California, Colorado, Florida, Georgia and Virginia.
- Exempt 50 mpg HEVs from vehicle emissions testing and inspection requirements, as done in Maryland, Virginia and Washington .
- Exempt HEVs from state excise tax if they achieve an EPA fuel economy rating of at least 27.5 mpg, as done in New Mexico .
- Require 50 percent of all new state light-duty vehicle acquisitions to be clean fuel vehicles by 2005 and 100 percent by 2010; and require state agencies to issue plans to acquire energy efficient heavy-duty vehicles, as in New York.
- Regulate the operation/use of low speed electric vehicles (LSVs) on roadways with speed limits of 35 mph or less, as done in 17 states.
- Institute statewide, county or citywide anti-idling ordinances or regulations limiting diesel vehicle idling times, as done in approximately 20 states.
In the concluding sessions of the conference, participants voiced recognition that constituencies in coastal, urban and rural areas may be impacted in different ways but share a common concern regarding climate change. Energy efficiency in buildings and transportation was recognized as a key strategy for mitigating the effects of global warming, and the group expressed substantial interest in establishing a regional coalition to educate and advocate on the issue of climate change.
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California
House Bill 653 passed the Assembly on 5/29/04 (AYES 78, NOES 0) and the Senate on 8/19/04 (AYES 24, NOES 11). The Assembly is currently considering the Senate amendments.
HB 653 would expand the authority of the State Public Works Board to finance cogeneration and alternative energy equipment and conservation measures in public buildings. The bill would require a full-life energy savings analysis rather than current administration requirement of a 10 year pay-for-itself investment.
For more information click here
House Bill 2311 passed the Assembly on 5/17/04 (AYES 54, NOES 26) and the Senate on 8/19/04 (AYES 23, NOES 11). The Assembly is currently considering the Senate amendments.
HB 2311 would create a sustainable building goal to make new and current state buildings more efficient. The bill would require the Secretary for State and Consumer Services to facilitate the incorporation of sustainable building practices into the planning, operations, policymaking, and regulatory functions of state agencies.
For more information click here
House Bill 2628 passed the Assembly on 5/06/04 (AYES 60, NOES 13) and the Senate on 8/24/04 (AYES 29, NOES 7). The Assembly is currently considering the Senate amendments.
HB 2628 would allow hybrid or ultra-low emission vehicles that achieve a fuel economy highway rating of at least 45 miles per gallon, and conform to any additional emissions category of the federal Environmental Protection Agency or the California Air Resources Board, to use exclusive or preferential highway lanes or highway access ramps.
For more information click here
Senate Bill 1703 passed the Senate on 5/19/04 (AYES 21, NOES 12) and the Assembly on 8/24/04 (AYES 48. NOES 30). The Senate is currently considering the Assembly amendments.
SB 1703 would establish a voluntary California certified green business program to certify businesses that engage in environmentally beneficial operations.
For more information click here
Senate Bill 1851 passed the Senate on 5/24/04 (AYES 25, NOES 11) and the Assembly on 8/24/04 . The Senate approved the changes to the bill on 8/27/04 .
SB 1851 would require until July 1, 2007 , all new state public buildings for which design and construction begins after January 1, 2005 , except for publicly funded schools, to exceed the minimum building energy efficiency standards mandated by the California Building Standards Code if the measures achieve certain cost savings.
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Illinois
House Bill 4099 Signed By Governor 8/13/04 
HB 4099 establishes an Energy Efficient Commercial Building Code that applies to commercial buildings in this State. Additionally, it provides for technical assistance to certain design professions to explain the requirements of the Code.
For more information click here |
