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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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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
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]
huge savings are left on the table
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”
public utility funding has its limits
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
old dsm programs have limited scope
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...
the pays alternative how it works
The PAYS Alternative How 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”
pays unleashes pent up demand for efficiency
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!”
pays breaks through iron ceiling
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
pays at work in new hampshire
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
nh core efficiency programs
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
psnh munis opening doors
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
nhec a service for members
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.
pays lessons so far
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!”
shall we collaborate
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.
pays a value proposition for efficiency
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!