Energy Efficiency in Mississippi - Southeast Energy Efficiency Alliance

Energy Efficiency in Mississippi Mississippi Public Service Commission Working Session Thursday, May 19, 2016

1

Speakers

Southeast Energy Efficiency Alliance Mandy Mahoney, President Ashley Fournier, Director of Operations 2

The Southeast Energy Efficiency Alliance (SEEA) The Southeast Energy Efficiency Alliance (SEEA) promotes energy efficiency as a catalyst for economic growth, workforce development and energy security.

Regional Energy Efficiency Organization (REEO) Eleven-state footprint Non-profit, non-partisan

3

Speakers

American Council for an Energy-Efficient Economy R. Neal Elliott, Senior Director for Research Annie Gilleo, State Policy Manager

4

The American Council for an Energy-Efficient Economy (ACEEE) • ACEEE is a nonprofit 501(c)(3) that acts as a catalyst to advance energy efficiency policies, programs, technologies, investments & behaviors. • Over 50 staff across the country, based in Washington, D.C.

• Focus on end-use efficiency in industry, buildings, utilities & transportation • Other research in economic analysis; behavior; national, state & local policy.

• Funding: ◦ Foundation Grants (52%) ◦ Contract Work & Gov. Grants (20%) ◦ Conferences and Publications (20%) ◦ Contributions and Other (8%) 5

What We Will Cover Part 1 What is Energy Efficiency?

Part 2 Looking Back: History of Energy Efficiency in Mississippi

Part 3 Looking Forward: Comprehensive Phase & Beyond 6

Part 1 What Is Energy Efficiency? 7

Energy Efficiency – Definition

Energy Efficiency Using less energy to provide the same or better service

8

Energy Efficiency –Applicability Utility Energy Efficiency Programs ▪ Designed to overcome market barriers to investments in energy efficiency and cost-effectively meet demand.

▪ Help customers invest in energy efficiency by providing appliance and equipment rebates, weatherization services, low-cost financing for retrofits, education, and more. ▪ In 2014, utility investments in electric efficiency programs totaled about $6 billion and resulted in savings of nearly 26 million MWh. ▪ Result in significant benefits both for customers and utilities.

9

Energy Efficiency as a Least-Cost Resource Benefits of Energy Efficiency ▪ Defer or eliminate need for new generation & transmission, keeping rates lower

▪ Lower bills for participating customers AND lower rates for all customers ▪ Enhance system reliability by addressing grid constraints

▪ Improve health, comfort, productivity, the environment and job creation

10

Cost of Energy Efficiency Compared to Other Electricity Resources

11

Energy Efficiency Advancements ▪ Rule 29: Conservation and Energy Efficiency Programs ▪ Utility Energy Efficiency Programs

▪ Supporting Legislation (2013) ▪ HB 1296 - Energy Sustainability and Development Act of 2013.

▪ HB 1281 – Established Commercial Building Energy Code Standard ASHRAE 90.1-2010. ▪ HB 1266 – Requires ASHRAE 90.12010 Building Code for State Owned Buildings.

Mississippi advanced from 51st to 47th in ACEEE’s state score card 12

Part 2 History of Energy Efficiency in Mississippi 13

Timeline of Activity Energy Independence and Security Act Commission to considered implementing standards for integrated resource planning, rate design modifications to promote energy efficiency investments, smart grid investments and information.

2007

Docket No. 2008-AD-477 Commission reviewed standards and filed comments. Commission order declined federal standards.

2008-2009 14

Timeline of Activity Importance of Energy Efficiency MPSC acknowledged importance of energy efficiency and tailoring standards to serve Mississippi ratepayers.

2009

Docket No: 2010-AD-2 Established to investigate the development and implementation of energy efficiency programs and standards.

NARUC Grant MPSC awarded grant from National Association of Regulatory Utility Commissioners (NARUC) to assist in developing energy efficiency standards.

January 2010

June 2010 15

Timeline of Activity Collaborative Rule Development Stakeholder engagement through working groups, public hearings, comments and interventions.

Rule 29: Conservation & Energy Efficiency Programs Final order adopting rules issued by MPSC.

Quick Start Plans Submitted Quick Start plans submitted by participating utilities.

2010-2013

July 11, 2013

January 11, 2014 16

Rule 29: Two-Phased Approach Quick Start Phase

Comprehensive Portfolio Phase

Applies to utilities with +25,000 meters

Applies to all utilities

Benefits majority of ratepayers

Benefits all ratepayers

Quick to implement and tested Expanded programs building off programs Quick Start experience

17

Quick Start Portfolio Phase ▪ Applies to gas and electric utilities with 25,000 or more meters ▪ Includes well-tested programs that can be implemented quickly ▪ Encourages early implementation for all customer classes ▪ Provide experience on which to build Comprehensive Portfolio programs

18

Common Quick Start Programs ▪ Customer education and outreach ▪ Energy audits and direct install ▪ Heating, ventilation, and air conditioning (HVAC) inspection, tune ups and retrofits ▪ Lighting and appliance rebates ▪ Weatherization

19

Comprehensive Portfolio Phase ▪ Long-term programs intended to achieve widespread implementation of all types of significant cost-effective energy efficiency improvements for all customers. ▪ Will apply to all utilities subject to MPSC jurisdiction, including those with fewer than 25,000 meters.

20

Timeline of Activity Quick Start Programs Approved Participating utility portfolios and cost recovery approved for implementation

2014

Quick Start Programs Launched Programs offered to customers

Quick Start Programs Implemented Utilities will run programs and prepare for Comprehensive Phase

Late 2014 - Early 2015

2014 - 2017 21

Utility Program Highlights 22

Coast Electric Power Association Offering Energy Efficiency Programs since mid-1980’s  Over 13,900 members have participated in the Comfort Advantage program since 1998, saving members an average of 245 kWh monthly and projected 40,866,000 kWh annually.  In 2015 Coast Electric’s Comfort Advantage Program incentivized 453 energy efficient units with over 3,000 kWh per unit saved annually.  Coast Electric incentivized over $173,000 to member’s for energy efficiency upgrades made to their homes in 2015. Current Energy Efficiency Programs  Comfort Advantage New Home and Existing Home programs  CFL Bulb Distribution and Recycling (over 1000 CFLs placed in members homes)  Kill-A-Watt meter Check Out Program (Meters available at all public libraries in the service territory)  Time of use Rate (currently over 13,900 members on Time-of-Use Rate program) Residential Energy Audit Program in 2015  Coast Electric members completed 1200 online energy audits and energy efficient page views  Residential Energy Management Representatives conducted over 462 on-site energy audits Member Education  Energy Fairs annually at each district office (over 700 members participated in 2015)  School and civic club presentations (excess of 1000 members were presented energy efficient information)  Senior Fairs (over 2500 seniors informed on energy efficient programs in 2015) 23

Singing River Electric Power Association ▪ 7,000 members in residential energy-efficiency program since 1988 ▪ Average annual savings of 2,900 kWh annually. ▪ The savings generated over the life of the 174 projects installed in the 2015 Comfort Advantage Program (8,202,390 kWH), is enough energy to light all the homes in the SRE service area for a month.  600 on-site residential, commercial and industrial energy audits in 2015  SRE members completed nearly 1,000 online energy audits in 2015.  Commercial, industrial custom audit pilot program launched in 2015  The co-op distributed over $14,000 in rebates to commercial members that year.  LED lighting options offered to members  SRE concluded a commercial LED pilot in 2015, began residential program in 2016. 24

Atmos Energy SmartChoice Energy Efficiency Programs* ▪ Achievements:  Presented and participated in 71 community events statewide  Exceeded energy savings projections by 39%  Over $700,000 in incentives and rebates paid to customers and contractors  Over $66,000 paid to MS school districts and universities  $2.64 cost/therm saved is lower than national average $3.93  Saved industrial customers over 200k therms & identified future projects with savings potential of over 1M therms Equipment Rebates ▪ Totals September 2014 – March 2016:  Savings: 675,745 therms  Measures: 14,503 installed  Participants: 6,556 in 31 counties  Trade Allies: 163 builders/contractors  Total Spent: $1,785,204

92, 4.9%

7, 0.4%

173, 9.1%

Furnace Thermostat

317, 16.7% 439, 23.2%

Water Heater

867, 45.8%

Clothes Dryer/Gas Stub Commercial Kitchen Equipment Boiler Equipment

Administered by *Programs: Residential Solutions – Existing Homes, New Construction, Multi-Family; Small Commercial & Industrial; Large Commercial & Industrial

25

CenterPoint Energy ▪

Quick Start EE programs grew in 2015: ▪ Achieved 200,228 Therms of natural gas savings, 35% more than last year ▪ 2,380 participants from both residential and C&I rate classes with a total expense of $436,300.



The EE Program efforts were successfully expanded to more customers and trade allies.



▪ ▪

Customers participated in all seven EE programs.

▪

Water heating rebates were more successful with builders.

More trade allies (builders, plumbers, HVAC dealers, supply houses) were contacted and educated.

200,228 Therms in savings are equivalent to gas usage of 500 homes in Mississippi, and it also represents 1,100 Metric Tons in CO2 emissions reduction or 180 cars removed from the road annually. 26

Mississippi Power Company Program Portfolio 1. Neighborhood Efficiency 2. Behavioral Analysis 3. Residential Energy Audit and Direct Install 4. Residential and Commercial HVAC Tune-up and Replacement 5. Small Business Direct Install 6. Large C&I Custom and Prescriptive 7. Residential and Business Lighting 8. School Kits and Education

2015 Program Results • 18,633,001 kWh’s Total Annual Energy Savings • 4,579 kW Savings • 35,192 Participants

27

Residential Solutions Programs

READI

• Walk thru assessment; report left with customer • Installation of bulbs, aerators, showerheads, smart strip, and refrigerator coil cleaning

Heating & Cooling

• Tune –Ups – up to $100 rebate, free for income-qualified • HVAC Equipment – up to $1000 rebate for high efficiency units

Lighting

• Instant in-store discounts for participating Energy Star® CFL and LED bulbs • Partner with community-based organizations for bulb distribution to low income customers

Business Solutions Programs

Prescriptive

• Defined rebates for specific measures • Includes Lighting, HVAC, cooking, refrigeration

Custom

• For technologies or applications not included in Prescriptive program • Up to $0.08 per kWh

Entergy Solutions Programs Dear Mr. Brown:

As a petroleum marketer with a chain of convenience stores in Bolivar County, I learned of the Entergy Solutions program which encourages the conversion from metal halide and fluorescent lighting to LED fixtures. I contacted them for information on retrofitting area and interior lighting at our bulk plant, truck stop, convenience store and a car wash. Bill Vaughan and Angelica Rawls were invaluable in working through the technical information required in the applications. They also advised me in the differences in the quality of fixtures such as those not approved by the rating agencies. With their expertise and dedication to the mutual objectives of our company and Entergy, we were successful in obtaining three grants for exterior and interior lighting improvements, without which we would have cancelled or delayed implementation.

The improvements in illumination and the significant reduction in electrical expenses are remarkable. And we eagerly anticipate the savings in maintenance costs with LED lighting. Please accept this letter as our deep appreciation for the availability of this quick start program and for the assistance of the persons mentioned above. This is a wonderful and much needed project and I encourage the Public Service Commissioners to continue and even expand programs such as this. from a Letter mailed to Commissioner Brown

Entergy Mississippi Program Highlights:  Conducted 1,846 residential HVAC tune ups to date  Residential Energy Audit and Direct Install (READI) personnel have conducted 5,727 home audits with 80,888 energy saving measures installed thru mid-May  89 Stores promoting the retail lighting program selling 697,664 bulbs to Mississippians  232 participating Trade Allies promoting energy efficiency programs in Mississippi  25 identifiable new jobs created as a result of the Residential and Business Programs  Business Program has approved $1.7M for savings measures for EMI non-residential customers  25% of those funds to Mississippi Schools and Universities Residential Program Income Qualified Distribution 7000 6000

Participants

TOTAL Savings to Date (October 2014 - May 2016):  Savings: 53,860 MWhs  Measures: 830,207  Participants: 33,623 in 45 counties  Incentives Paid: $3.8M

5000

3000 2000 1000

* Programs: Residential – Energy Audit and Direct Install, Lighting, and HVAC; Commercial, Industrial, and Governmental Prescriptive and Custom

2686

4000

0

1430 416 Tune-ups Market Based

3039

READI Audits Income Qualified

31

Discussion

32

Part 3 Comprehensive Phase & Beyond 33

Considerations for Comprehensive Phase 1. Comprehensive Phase Timeline 2. Target Setting 3. Cost Recovery 4. Evaluation, Measurement & Verification 5. Types of Programs

34

Comprehensive Phase Timeline 35

Specific Numerical Target Rule 29 States ▪ Filing for Commission approval of Comprehensive Portfolio Plans will occur, “By the later of 36 months from the date of the Commission's order approving its Quick Start Plan or nine (9) months following the Commissions approval of the specific numerical energy savings target for programs in Comprehensive Portfolio Plans…”

36

Comprehensive Phase Timeline COMPREHENSIVE PHASE Target Setting MPSC will approve specific numerical energy saving target for Comprehensive Portfolio Phase

2016 - 2017

Comprehensive Portfolio Programs Implemented Utilities will implement programs to achieve savings target

2018 & beyond

37

Timeline Considerations ▪ Maintain open communications to understand utility Quick Start program experience ▪ Provide sufficient time for program planning and approval ▪ Allow for flexibility to avoid stopping and starting programs

38

Target Setting

39

Section 106 of Rule 29 Specific Numerical Energy Savings Target “Prior to the Comprehensive Portfolio Plan filing deadlines, the Commission intends to establish specific numerical energy savings targets expressed as percentages of energy sales based on the experience of Quick Start and other relevant information.”

40

Key Questions to Consider in Target Setting ▪ What is the baseline against which savings will be measured? ▪ How do we frame goals and measure savings? ▪ How far into the future should we look? ▪ How do we decide what the right target is?

41

Target Setting – Options for Getting Started ▪ Consider historical performance ▪ Look to other states as indicators of reasonable ramp-up rates over time ▪ Conduct a potential study—ACEEE completed one in 2013 ▪ Engage stakeholders

▪ Solicit public input

42

Target Setting –Baseline Considerations Fixed Baseline Based on consumption in a given year (i.e. 2016) ▪ Gives certainty in the amount of required savings ▪ Not affected by market conditions ▪ Examples: PA, AR

Rolling Baseline Based on prior retail sales (i.e. previous year or average of previous three years) ▪ May create uncertainty unless targets are converted to MWh during planning process ▪ Responsive to market conditions ▪ Examples: AZ, IA 43

Target Setting – Accounting for Savings What Did Utilities Do This Year? ▪ Savings in a given year resulting from EE measures installed in that year. (Incremental savings) ▪ Compliance assessment focuses on first year savings ▪ May incentivize lower cost measures with shorter measure lives

44

Target Setting – Accounting for Savings What’s The Big Picture? Savings in a given year resulting from EE measures installed in that year and also those installed in prior years that continue to provide savings (Cumulative or total annual savings) ▪ Compliance assessment focuses on lifetime savings ▪ Incentivizes measures that provide savings both in the nearterm and long-term ▪ Less prescriptive about actions taken in a single year

Cumulative And Incremental Targets Can Be Combined ▪ Utilities can have a long-term goal (over a 3-year phase or for lengthier period of time) with interim targets to hit each year. 45

Target Setting – Timeframe Considerations ▪ Allow time within a cycle for utilities to ramp up programs and refine program delivery ▪ Create market certainty for customers (no “switching on/off” of programs) ▪ Encourage deep savings and long-lived measures, not just “cream skimming”

▪ Consider potential for adjustments based on changing market conditions ▪ Persistence and market awareness are important

46

Target Setting - Examples Arkansas

▪ Target Timeframe: Multi-year cycles ▪ Baseline: 2010 consumption 47

Target Setting - Examples Arizona

▪ Target Timeframe: 2011-2020 ▪ Baseline: Prior year’s consumption ▪ Cooperatives must achieve 75% of targets 48

Target Setting - Examples Pennsylvania

Specific targets vary by utility

▪ Target Timeframe: 3-5 year phases ▪ Baseline: 2010 sales forecast 49

Cost Recovery

50

Cost Recovery, Throughput and Incentives ▪ Need to address three elements of cost recovery for utilities: ▪ Program Costs Allow recovery of program costs, including marketing ▪ Lost Contribution to Fixed Costs (LCFC) Remove the throughput incentive with Lost Revenue Adjustment Mechanism (LRAM) or decoupling ▪ Performance Incentive Provide an incentive for performance at or above savings target ▪ By addressing all three components, utilities can save customers electricity and natural gas while meeting company needs. 51

Evaluation, Measurement & Verification (EM&V) 52

Key goals of EM&V

Make EM&V as useful as possible by: • Ensuring consistency between utilities’ evaluation plans, analysis, and reporting efforts • Reporting annually and as contemporaneously as possible Image source: SEE Action (2012) 53

EM&V – Document Impacts ▪ Count Utility Accomplishments ▪ First-year savings

▪ Lifecycle savings ▪ Net to gross ratios ▪ Cost-benefit ratios

54

Three Fundamental Concepts in Evaluating Impacts Freeriders ▪ Program participants who would have implemented the program measure in the absence of the program

Spillover ▪ Additional savings that occur when people are inspired to take EE actions but don’t claim an incentive

Market Effects ▪ Change in the structure of a market that is reflective of an increase in the adoption of EE products, services, or practices, and is related to market interventions 55

EM&V – What Savings Counts? Gross Savings Savings resulting from programrelated activities by all participating consumers.

Net Savings Savings resulting from programrelated activities by all participating consumers adjusted for freeriders, spillover, and market effects.

• Reduces complexity of measuring savings

• Increases complexity of estimating savings

• Does not account for freeridership, spillover, or other market effects

• Ensures that utilities are investing in energy efficiency that would not otherwise occur 56

States Reporting Savings as Net or Gross Net 15% Both 39%

Gross 46% Source: Kushler et al. 2012 (ACEEE) 57

EM&V – Process Improvement ▪ Consider what works and what doesn’t: ▪ Key findings from process evaluation ▪ Summary of recommendations ▪ Adjust programs as needed

Image source: SEE Action (2012) 58

EM&V – Budget Allocation ▪ Typical spending is about 3-5% of annual portfolio budgets US Electric Energy Efficiency Expenditures by Category (2013) Marketing and Administration 18% Research and Evaluation 3% Customer Rebates and Incentives 54% Other 25%

Source: Consortium for Energy Efficiency 2014 Annual Industry Report 59

Comprehensive Phase Programs 60

Energy Efficiency Opportunities in Mississippi ▪ In 2013 ACEEE projected 12.8% reduction in electricity available in 2025 through energy efficiency ▪ Programs began in 2014 with spending of $8.1 million.

2025 Electricity Savings 6,815 GW (Total savings 12.8%)

6.2%

▪ Program savings in 2014 of 0.15% of sales. ▪ Significant opportunity for EE savings remains

4.2%

2.4%

Industrial EE

Residential EE

Commercial EE

Source: ACEEE 2013

61

Types of Energy Efficiency Programs Prescriptive Programs Provide set incentive for EE product purchases or measures (e.g., lights, appliances, insulation) Direct install Programs Implementation contractor installs measures directly (e.g., lighting, thermostats, low-flow shower heads) Custom Programs Incentivizes complex measures that offer large savings (e.g., whole building upgrades, industrial processes) Behavior & Human Dimension Programs Encourage or motivate users customers to change their behavior to save energy 62

Building Low-income EE Programs Best Practices 1. Offer a range of eligible measures 2. Coordinate with other organizations 3. Use a portfolio approach 4. Address health, safety, and building integrity issues 5. Incorporate customer education 6. Develop dual-fuel/fuel-blind programs 7. Coordinate efficiency and bill payment assistance

8. Increase electric savings through high efficiency products & equipment 63

Myths About Energy Efficiency & Large Customers ▪ Large energy users will invest in all cost-effective energy efficiency on their own as a matter of good business practice. ▪ Utility programs can’t respond to the needs of large industrial customers ▪ Participation in efficiency programs creates a competitive disadvantage and may force companies to relocate to other states. ▪ Costs will stay the same for small businesses & residential customers if large energy users are allowed to opt out of energy efficiency programs, so there is no harm in letting them do so.

64

Importance of Large-Customer Energy Efficiency ▪ Large customers represent the largest fraction of electricity consumption ▪ Large customer energy efficiency programs produce saving at a fraction of residential and commercial programs ▪ Not including large customers increases the overall energy efficiency portfolio costs—increasing costs for all customers

▪ Energy efficiency improves the competitiveness and resilience of large customers, reducing their vulnerability energy market volatility ▪ Important to design and operate good programs for large industrials that are responsive to their unique needs

65

Building Industrial EE Programs Best Practices 1.

Clearly demonstrate the value proposition

2.

Develop long-term relationships

3.

Offer quality technical expertise

4.

Provide both prescriptive and custom options

5.

Accommodate customer schedules

6.

Streamline application processes

7.

Conduct targeted outreach

8.

Leverage partnerships

9.

Set energy savings goals

10. Undertake measurement and verification

66

Other Considerations

67

Resources to Support Success ▪ Southeast Energy Efficiency Alliance (SEEA) ▪ American Council for an Energy Efficient Economy (ACEEE) ▪ Southeast Chapter Association of Energy Service Professionals (AESP) ▪ Regulatory Assistance Project (RAP) ▪ National Association of Utility Regulatory Commissioners (NARUC) ▪ The Southeastern Association of Regulatory Utility Commissioners (SEARUC) ▪ U.S. DOE SEE Action Guides ▪ U.S. EPA’s National Action Plan for Energy Efficiency ▪ Leverage Existing In-State Initiatives & Resources ▪ Mississippi Department of Environmental Quality ▪ Mississippi Development Authority ▪ Mississippi Department of Human Services (MDHS) ▪ Innovate Mississippi 68

Discussion

69

THANK YOU! 70