As we get closer to 2019 conversations are increasing about the role of 3rd parties in energy efficiency programs. Previously programs have been designed by utilities and then assigned to a 3rd party to implement, or run by the utilities in-house. Last year legislation passed that mandates 60 percent of EE programs shall be executed by 3rd parties going forward. The intent is to encourage new and innovative approaches to increasing participation and savings. What makes this transition interesting is that the third parties are responsible for the design and implementation of their programs. Shifting the design of the programs to 3rd parties is a significant fundamental change in how things operate, there is plenty of concern about the outcome. As we near the 2019 deadline to implement this decision, the conversations are getting more specific. Some of the topics include the experience and abilities of the 3rd parties and what skills to expect from the workforce. Without a doubt, the paradigm of EE incentive programs is changing and from what I can see the transition will have some more bumps in the road before the dust settles. The next two years will be interesting.
The CPUC has created a staff proposal on market transformation. Market transformation occurs after a transition occurs. In theory, you plan for the market to transform and then use incentives to drive the market. When a market has “transformed” consumer demand exists that supports the growth without incentives. The challenge is how do you determine when the market has transformed and will stand on its own? The CPUC Staff proposal has defined some market transformation indicators or MTIs. There have been a couple of workshops on the topics with another scheduled for November 6th. Comments are being accepted and considered and will likely have some impact on the overall definition and efforts to achieve real market transformation.
Last month we mentioned the changes PG&E is making to its Advance Home Upgrade Program (AHU). In response, we solicited comments from our members and prepared a response letter to which we added several contractor concerns we have heard over the past several months. Our response letter was sent to PG&E and Build It Green. The comments in our letter were part of the conversation between PG&E and the CPUC.
PG&E reached out to us directly to discuss the situation and explain their position. PG&E required to meet CPUC performance standards for all of their EE programs. Some programs don’t cost much and save significant amounts of energy per dollar paid out. Other programs, like home performance programs, require large amounts of oversite and administration and don’t provide as substantial energy reductions per dollar spent. For example, the PG&E program that mails out savings comparisons – you know the graph with your house vs. your neighbor’s house vs. an energy efficiency house – actually manages savings of roughly 3 percent. This result is pretty good for just creating a bit of peer awareness. In fact, this peer motivation program has a TRC of 4; this means it saves $4 for every dollar spent which is huge.
In comparison, the Advanced Home Upgrade program saves $0.44 of energy for every dollar spent, mostly due to its complexity. There have been efforts to include the value of non-energy benefits of home performance upgrades in the equation, to date, the only metric used by the CPUC is dollars spent for savings returned. The truth is if it were not for the low-cost peer comparison programs success, PG&E’s AHU program would likely fail to exist. In essence, the savings generated by the low-cost programs are covering the losses of the more complicated programs. PG&E is struggling to improve the performance of the AHU program and must both improve savings and reduce costs if the AHU program is to survive. Hopefully, this sheds some light on the motivation behind the recently announced changes to the program.