Iowa Industrial Energy Group
Spring Conference 2013
Energy Efficiency and Industrial Customers
Jennifer Easler and Fasil Kebede
Iowa Office of Consumer Advocate
1
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
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, ratepayer 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.
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New Plan Development
• Joint Utility Assessment of Potential conducted June 2011January 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.
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IPL Benefit-Cost (Electric)
Cost of Energy Savings - Electric
2011 Actual
$/kWh
Energy-Efficiency Portfolio - TOTAL
Residential Prescriptive Rebates
Home Energy Assessments
Change-a-Light
Appliance Recycling
New Home Construction
Home Performance with ENERGY
STAR©
Multifamily
Weatherization
EnergyWise Education
Low Income Multifamily and
Institutional Efficiency Improvements
Home Energy Savers (= TREEO)
Nonresidential Prescriptive Rebates
Business Assessments
Performance Contracting
Custom Rebates
Commercial New Construction
Agriculture Sector
$0.17
$0.17
$0.26
2014-2018
EEP
$/kWh
% of 20142018
Budget
2014-2018
Societal
C-E
100%
29.1%
2.4%
7.6%
5.2%
0.3%
3.02
1.98
2.00
1.63
3.94
4.83
0.92
5.19
10.83
$0.11
$0.30
$0.22
$0.76
$0.31
$0.22
$0.16
$0.48
$9.09
n/a
$0.57
$0.16
$0.76
$0.28
$0.05
0.3%
2.0%
0.1%
$34.54
$0.68
0.2%
$0.79
$0.21
$0.55
$0.25
$0.18
0.1%
18.6%
1.6%
1.03
2.48
1.48
2.48
$0.13
$0.09
$0.25
26.1%
3.5%
2.7%
4.71
5.73
1.33
$0.08
$0.15
$0.28
$0.09
5
IPL Benefit-Cost (Gas)
Cost of Energy Savings - Gas
2011 Actual
$/therm
Energy-Efficiency Portfolio - TOTAL
Residential Prescriptive Rebates
Home Energy Assessments
Change-a-Light
Appliance Recycling
New Home Construction
Home Performance with ENERGY
STAR©
Multifamily
Weatherization
EnergyWise Education
Low Income Multifamily and
Institutional Efficiency Improvements
Home Energy Savers (= TREEO)
Nonresidential Prescriptive Rebates
Business Assessments
Performance Contracting
Custom Rebates
Commercial New Construction
Agriculture Sector
2014-2018
EEP
$/them
$3.32
$2.81
$4.82
n/a
n/a
$3.23
$6.51
$9.29
$7.68
n/a
n/a
$13.45
$59.84
n/a
n/a
$16.72
$0.33
$7.18
$11.66
$1.62
$6.34
$8.83
$2.31
n/a
$1.62
$1.04
$13.15
$0.14
$17.03
$3.91
$10.45
n/a
$2.52
$1.05
n/a
% of 20142018
Budget
2014-2018
Societal
C-E
100%
24.5%
18.2%
0.78
0.56
0.98
6.6%
0.38
0.3%
18.4%
0.3%
0.88
1.01
1.83
0.2%
3.2%
19.0%
3.9%
0.99
0.39
1.49
0.44
4.6%
0.8%
0.29
2.94
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IPL Proposed Budget
Total Plan Budgets by Category - Electric and Gas EE Portfolio Only
Budget Category
Planning & Design
Program
Administration
Advertising &
Promotion
2014
2015
2016
2017
2018
Total
% Total
$818,590
$838,036
$855,105
$878,205
$903,082
$4,293,018
1.83%
$3,329,112
$3,396,268
$3,449,059
$3,529,030
$3,613,695
$17,317,164
7.36%
$2,458,814
$2,510,916
$2,553,704
$2,613,312
$2,676,701
$12,813,447
5.45%
$31,405,029
$32,173,397
$32,757,882
$33,800,369
$34,923,765
$165,060,442
70.17%
Equipment Costs
$2,812,369
$2,834,006
$2,855,673
$2,881,284
$2,906,994
$14,290,326
6.07%
Installation Costs
Monitoring &
Evaluation
$3,188,903
$3,226,016
$3,263,586
$3,304,744
$3,346,178
$16,329,426
6.94%
$982,969
$1,002,965
$1,020,648
$1,047,169
$1,075,340
$5,129,090
2.18%
$44,995,785
$45,981,604
$46,755,657
$48,054,112
$49,445,755
$235,232,913
Incentives
TOTAL
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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


http://www.superiorenergyperformance.net
http://www.energystar.gov/index.cfm?c=guidelines.guidlines_index
 Building Benchmarking
 Establishing baselines is integral part of understanding what can
be achieved through comprehensive, strategic EE planning
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Benefit Cost Tests
B/C TESTS
Partici
pant
Utility
Ratepayers
TRC
Societal
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
√
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√
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
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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)
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2009 C&I Collaboration
COMMERCIAL AND INDUSTRIAL (C&I) ENERGY EFFICIENCY WORK GROUP MATRIX
New Collaborations and
Cooperative Efforts and
Consensus






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 followthrough
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
Future Opportunities – Consensus
Needed [See Next Steps for
resolution, if any]



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.]
Remaining Barriers
Next Steps - Steering Committee
08/26/09 and 11/12/09



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


o
o
o
o
o
o
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:
strategies to assist customers to
implement comprehensive and
holistic energy efficiency solutions;
small and mid-size commercial
efficient lighting opportunities and
barriers;
education and training needs;
reaching unserved/underserved
markets;
upstream market opportunities;
lessons learned
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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
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Collaboration – monitor progress on
C&I research
Targeted research for additional energy efficiency and demand
response opportunities and approaches in the following
• MidAmerican
IPL
• Primary metals
Food and Kindred Products
• Secondary Metal
Primary Metal
• Machinery
Paper and Allied Products
• Food Processing
Rubber 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.
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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
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