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PAYS: AN OPPORTUNITY FOR WORKING TOGETHER. A presentation for Creating Energy-Air Quality Collaboratives in the Northeast and MidAtlantic States Westbrook, CT October 22, 2002 Nancy Brockway, Commissioner New Hampshire Public Utilities Commission. Enormous untapped potential.


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A presentation for

Creating Energy-Air Quality Collaboratives

in the Northeast and MidAtlantic States

Westbrook, CT October 22, 2002

Nancy Brockway, Commissioner

New Hampshire Public Utilities Commission

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Enormous untapped potential...

  • 15-16% of total electrical consumption by 2010 [1997 - Five Labs Study]

  • 64K mW displaceable in a decade [ACEEE 2000]

  • Lighting = 25% peak commercial demand -- lighting energy needs could be cut 30 - 50% [Environmental Media Services 2000]

  • Over 30 % of present electricity needs could be replaced by efficiency.[VEIC report, summer 2002]

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Huge savings are left on the table...

  • The same market barriers persist:

    • lack of customer information/trust

    • hassle factors

    • first-cost factor/lack of access to capital

    • split incentives

    • tragedy of commons

    • volatility vs. “price signals”

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Public/Utility Funding Has Its Limits

  • Total utility DSM $ down 45% since 1993

    • $750M foregone = 53K more tons SO2, 26K more tons NOx

  • CA DSM down 50% since 1994

    • CA lost 1100 mW in potential demand savings

    • Crash program since blackouts - disruptive boom and bust

  • SBC Funds = +/- 25% of 1993 DSM

    • Explicit competition with other public goods

    • Exposed to political pressure on rates

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    Old DSM Programs Have Limited Scope

    • Greater subsidy = greater impact? Yes, but

      • Message = “no value” proposition

        • “You wouldn’t want this if you had to pay full freight”

        • “This only makes sense if your neighbor pays for it.”

      • Still requires:

        • Large up front payments

        • Hassle and capital spending

        • L/L investment in T’s benefit

  • Public/Utility funding has an iron ceiling...

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    The PAYS AlternativeHow it works...

    • Customer selects (qualifying) measure

    • Customer signs up for PAYS treatment of cost

    • Measure and installation fully funded upfront

      • Customer pays over time on DISCO bill

      • Measures are Certified to provide savings right away

      • Payment never more than savings

      • DNP for non-pay just like other DISCO charge

  • Portable measures

    • when customer leaves, take and pay balance

  • Permanent measures

    • when customer leaves, pay off or “run with meter”

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    PAYS:Unleashes Pent-up Demand for Efficiency

    • Value proposition:

      • Guaranteed you’ll save more than you pay.

        • Pay only if you save.

    • No need to shell out money up front.

    • Easy repayment terms on utility bill.

    • Duty to repay runs with benefit of savings.

      • Allows for larger, more permanent measures

  • “You’ve wanted to save - Now you can!”

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    PAYS: Breaks through iron $ ceiling

    • Low or no cross-subsidies

    • Revolving fund, in effect

    • Minimizes SBC burden on non-Participants

    • Investment limited only by demand

    • True market transformation:

      • VENDORS can run/promote/drive uptake

      • Investment driven by consumer self-interest

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    PAYS at work in New Hampshire

    • Two Pilot Programs in operation today

      • PSNH - -municipal customers

      • NHEC - -all customers, with focus on smaller customers

      • Utility runs program/arranges installation

      • Utility fronts costs, “owns” measures until paid off

      • NH PUC Orders ok DNP and “run with meter”

        • Order No. 23,751, 8/1/01; Order No. 23,751, 8/1/01

      • Revolving fund and low overhead

        • started with 10% of overall SBC budget

        • Utility overheads low - about 11% so far (including start-up)

    • In tandem w/ CORE ENERGY EFFICIENCY programs

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    NH “Core Efficiency Programs”

    • NH Saves - Residential

      • Residential Lighting (Energy Star)

      • Energy Star Homes

      • Energy Star Appliances

      • Residential Retrofit (with low-income module)

  • NH Saves - C&I

    • C&I New Construction

    • Large C&I Retrofit

    • Small C&I Retrofit

  • Other Utility-specific programs

    • PSNH - RFP program

    • CVEC - torchiere turn-in

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    PSNH & Munis Opening Doors

    • “2/3 savings, 3/4 life” rule = conservative

    • @ 2Q 02:

      • 52 projects submitted, from 25+ municipalities

      • 36 qualified to date ($427K); 8 not meet savings criteria, 2 pending

      • Mostly lighting so far

      • Est. lifetime savings about 12,440,000 kWh

      • Est. lifetime dollar savings about $1,550,000

  • “We could not have done it without PAYS.”

  • Not a loan, but a utility bill

    • not require voter approval if have regulatory out.

    • voter approval impossible despite robust savings

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    NHEC - a service for members

    • “Why pay now when you can pay as you save?”

    • Differences from PSNH pilot:

      • Fuel neutral - not just electric savings

      • May average measure savings to qualify project package

  • Bill stuffer with June bills:

    • 52K customers, 358 positive responses.

    • Target customers with audits but no action

  • 1st PAYS multi-metered apartment project

  • PAYS Point of Purchase lighting promotion.

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    PAYS Lessons So Far

    • PAYS is working largely as expected.

      • Vendors can be interested in offering.

      • Utilities can handle bill payment issues.

  • PAYS does overcome barriers.

    • Customers with audits who can’t/don’t take action

    • Government agencies who have financing issues

    • Potential to overcome split incentives

    • Required payback does not “scare off” customers.

  • Pilot experience surfacing issues.

    • Running program by IOUs can add issues.

    • “It’s not a mortgage, not a loan, it’s a PAYS product!”

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    Shall we collaborate?

    • What is our goal for efficiency advocacy?

      • More ratepayer dollars in SBC?

      • More utility dollars for efficiency?

      • More government dollars in program?

    • OR:

      • More efficiency in energy use, and

      • More consumer participation, and

      • Greater market for efficiency applications.

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    PAYS:A Value Proposition for Efficiency

    • “It’s not just the subsidy, stupid!”

    • “Try PAYS. You just might like it!”

    • Unlikely allies are likely:

      • Government budget overseers

      • Business community

      • Vendors

      • Consumers who want control AND efficiency

      • Trees, birds, lungs, energy bill payers, people whose land is desired for transmission lines and generators, etc.

    • So, let’s talk!

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