Volume III SCE s Demand Side Management Integration and Coordination

Transcription

1 Application No.: Exhibit No.: Witnesses: A SCE- G.E. Rodrigues (U -E) Volume III SCE s 00-0 Demand Side Management Integration and Coordination Before the Public Utilities Commission of the State of California Rosemead, California Law-# September 1, 00

2 SCE's 00-0 Demand Side Management Integration and Coordination Table Of Contents Section Page Witness I. DEMAND SIDE MANAGEMENT INTEGRATION AND COORDINATION...1 G.E. Rodrigues A. Background...1 B. Protocols For Funding Source Allocations And Disbursements... C. Funding Request... D. Proposed and Enhanced Programs to Advance DSM Integration Overview.... Program Proposals... a) Commercial New Construction DSM Initiative... b) Residential New Construction Integrated Delivery Model... c) Institutional Partnership Initiative... d) IDSM Pilot For Food Processing...1 e) Technology Resource Incubator Outreach Program (TRIO)...1. Roadmap To Integrated Technology...1. Collaborative Approach to Developing ZNE Metrics...1. Other Coordinated Activities...1 E. Coordinated DSM Marketing...1 F. Attribution of Energy Savings Background...0 -i-

3 SCE's 00-0 Demand Side Management Integration and Coordination Table Of Contents (Continued) Section Page Witness a) Commission Guidance...0 b) Foundational Issues...1 c) The Free Ridership Opportunity...1. Plan for Identification and Testing of Different Savings Attribution Methodologies... G. IDSM Cost-Effectiveness Background... a) Commission Guidance... b) Foundational Issues.... Plan For Identification And Testing Of Different Cost-Effectiveness Methodologies... a) SCE s Proposed Cost-Effectiveness Approaches Use The Standard Practice Manual... b) Separate Avoided Energy And Capacity Costs Are Required.... Sequential Analysis Of The Cost-Effectiveness Of A Combined IDSM Pilot or Program Package, Starting With The Most Cost-Effective Measure.... Use Of An Integrated Cost-Effectiveness Test That Assesses On A Cumulative Basis The Combined Cost-Effectiveness Of The Entire IDSM Pilot, Program Or Set Of Measures... H. Continued Coordinated DSM Activities Energy Efficiency/Demand Response Outreach Integration...1. Energy Efficiency/Demand Response Survey Integration...1 -ii-

4 SCE's 00-0 Demand Side Management Integration and Coordination Table Of Contents (Continued) Section Page Witness. Energy Efficiency/Demand Response Integrated Audits...1. Energy Efficiency/Demand Response Integrated Messaging.... Other Energy Efficiency/Demand Response Integration Pilots... I. Objective For J. Energy Efficiency And Low Income Energy Efficiency Coordination Efforts... K. Consideration Of Energy Division s Recommendations Coordinated IDSM Marketing, Education & Outreach.... Coordinated Presentation Of IDSM Options For Operational Improvements... -iii-

5 I. DEMAND SIDE MANAGEMENT INTEGRATION AND COORDINATION A. Background In D.0--0, the Commission directed the California IOUs to undertake a strategic planning process and develop a draft California Energy Efficiency Strategic Plan (CEESP) designed to lay out a comprehensive long-term strategy through This decision also directed that the CEESP include a strategy for integration across the full range of Demand Side Management (DSM) options. Further, the Commission directed the utilities use the draft CEESP (or The Strategy ) to inform the 00-0 portfolio of energy efficiency programs. The Commission convened a coordinated DSM workshop on March, 00, which included discussion of foundational issues and IOU presentations of proposed coordinated marketing efforts and program pilots. The Commission then issued the April, 00 Joint Assigned Commissioner Ruling (ACR) in R and R , providing additional guidance to the utilities in this regard. In particular, an order of priority was established for Integrated Demand Side Management (IDSM) activities: Comprehensive and coordinated marketing, packaging and delivery Operation improvements Optimization The Joint ACR also included instructions that IDSM programs involving the use of demand response funds should be clearly indicated in both energy efficiency and demand response applications. 1 D. 0--0, p.. Id., p.., D. 0--0, p.. Id., p.1. Joint Assigned Commissioners Ruling Providing Guidance on Integrated Demand-Side Management in 00-0 Portfolio Applications, dated April, 00, p.. Id., p

6 Southern California Edison Company s (SCE) proposed portfolios for energy efficiency and demand response for 00-0 comply with these directives. The portfolio includes new initiatives to promote IDSM and a fully integrated strategy of information, messaging, and outreach. Finally, SCE s proposed portfolio continues and expands its efforts focused on integration of energy efficiency and demand response programs. On August, 00, ALJ Hecht issued a ruling requiring amended 00-0 demand response applications from the IOUs. As such, SCE has reviewed its filing from July 1, 00 (made in connection with A , the 00-0 energy efficiency program application) and has coordinated with Energy Division to identify areas for amendment. As a result, SCE has amended its previous filing to provide additional information as requested by the Energy Division. In addition, it should be noted that all of the programs described below are time sensitive and should be approved for implementation in January of 00. Any delay will impact integration activities and related benefits. B. Protocols For Funding Source Allocations And Disbursements An important consideration for the successful integration and coordination of energy efficiency and demand response is the development of financial protocols for the allocation of program-specific costs across integrated delivery channels. This section will address the identification of appropriate funding sources for each of the coordinated IDSM technologies, pilots, and programs. SCE will draw from various authorized funding sources for the operational budgets for the IDSM programs identified in this Amended Application. There are two categories of costs associated with the program proposals: (1) additional stand alone operational costs associated specifically with the DSM programs proposed in this Volume, and () incremental marketing and incentive funding to be drawn from the existing energy efficiency, demand response, renewables, ALJ Hecht issued a Ruling Modifying Schedule for Amended Applications on August, 00, which modified the schedule for filing the IOUs amended demand response applications. --

7 and other programs as identified to achieve the energy and demand savings goals of the programs proposed. For each DSM program initiative or pilot program requested, there is a corresponding operational budget identified that is necessary to fund SCE s project management, third-party contractors, and other resources that are specific to the implementation of the program. Additionally, incremental incentives from other programs, such as the Business Incentives Element, New Construction, and Technical Assistance & Technology Incentives (TA&TI) will be added to the existing energy efficiency and demand response program budget requests and specifically set aside to fund the DSM initiatives. This specific and incremental funding source approach accomplishes three objectives: (1) provides the DSM programs with a specific operational focus by allocating specific funds for project management and third party contractors to accomplish the goals of the programs; () associates incremental incentive funding from the individual energy efficiency, demand response, and renewable programs, which maintains individual program funding and goal accomplishment; and () provides for a clean slate financial tracking mechanism to identify and report incremental DSM program costs under separate accounting that are distinct from the energy efficiency and demand response program portfolio funding. In cases where a joint energy efficiency/demand response program is implemented, SCE will identify the proportional budget share between energy efficiency and demand response, as appropriate. SCE will also look for opportunities to leverage third-party implementers to coordinate DSM offerings. Costs for this will be attributed to the applicable DSM program area. --

8 C. Funding Request Line No. Table I-1 IDSM Programs Forecast Expenses 00-0 Expense Type Forecast ($) 00-0 DR EE 1. Commercial New Construction,,,000. Residential New Construction,,0,000. Institutional Partnership,,,000. IDSM Pilot for Food Processing 00,,000. EARTH/SmartStudent LivingWise,0,0,000. EARTH/SmartStudent Green Schools,0,0,000. IDEEA Programs 0,01,000,000. TRIO Program 0,001 1,,000. Total,, 1,, D. Proposed and Enhanced Programs to Advance DSM Integration 1. Overview As part of its 00-0 energy efficiency and demand response applications, SCE proposes multiple initiatives designed to: (1) pilot new integrated program concepts; and () integrate additional DSM options into existing program designs that have been successful as stand alone energy efficiency or demand response programs. All of the proposed programs are viewed as pilots because the expectation of increased efficacy is based primarily on the best professional and technical estimation, but not on actual prior experience. SCE does this to offer a conservative approach. SCE selected markets and platforms for the pilots based on: (1) the professional knowledge of and experience with the segments and understanding which segments should have a high potential for end use consumer acceptance/adoption of recommended measures; () the fact that the pilots provide reasonable opportunities to maximize the benefits of integration; and () the fact that the pilots serve as good platforms for expanding/modifying the For energy efficiency, this includes Savings By Design, Automated Energy Review for Schools, and Sustainable Communities (primarily nonresidential). For energy efficiency, this includes California New Homes and Manufactured Housing New Construction. --

9 range of integration to further evaluate the best methods and technologies to promote integration. It should be noted that while SCE can promote the adoption of integrated measures, it is ultimately a customer choice to implement the recommendations. Section of this Volume presents an overview of each new and enhanced program. For more program information, please see the detailed program implementation plans (PIPs) in Appendix I.. Program Proposals The primary objective of each proposed program is to deliver energy and demand benefits to ratepayers in the immediate (00-0) and intermediate (01-01) future. The secondary objective is to pursue long-term resource and general environmental benefits by supporting the Zero Net Energy (ZNE) and sustainability goals embraced collaboratively through the CEESP planning process. Consequently, each program is comprised of both proven and promising elements. While promising, some program elements may prove unsatisfactory; those that do will be augmented or replaced. Those that succeed will be enhanced or expanded. In addition, with experience, additional ideas will develop and SCE intends to introduce new pilot efforts to continue to expand the understanding and benefits of integration. a) Commercial New Construction DSM Initiative The Commercial New Construction program proposed by SCE for 00-0 in its energy efficiency application, A , is a program that has already been proven to be a successful means of promoting energy efficiency measures. Therefore, this program serves as an excellent base for promoting integration through the inclusion of demand response and distributed generation (or self generation) technologies. The commercial new construction market is an ideal venue to promote DSM integration because it: is a proven means of cost-effectively introducing energy efficiency measures and technologies, leverages an existing established set of delivery channels, third-party providers and program methods and materials, --

10 minimizes lost opportunities for energy efficiency and other DSM measures by introducing integration where it does not exist as a current standard practice and where cost is minimized, creates market pull for integrated methods and technologies at the design and engineering level, and provides for DSM enabling technology integration at the time of construction, thereby reducing implementation costs compared to retrofit and replacement approaches. Opportunities to implement energy efficiency measure implementation in commercial new construction have been successfully promoted for years under SCE s energy efficiency programs, dating back to the 10s. These programs are clearly defined and have been very successful in achieving improvements in commercial building energy efficiency over the current California building standards of each time period. Guidelines and measures for improvements for saving energy over the life of the building are clearly defined and prescriptive for the commercial new construction market segment. The Commercial New Construction DSM Initiative is a new approach that SCE will use to leverage the existing delivery channels for energy efficiency in the commercial new construction market, and combine energy efficiency, demand response, and renewable program components. This initiative is intended to serve promote and support the Commission s goal of ZNE. This effort is very flexible and can be modified over time to incorporate more and/or different DSM measures to ultimately meet the policy goal of ZNE. In 00, the program will be initiated with current and planned projects in the energy efficiency pipeline for quick wins throughout the first year. This integrated approach for new construction DSM delivery will build awareness and acceptance within the design and construction community and will result in enhanced price response program adoption and increased participation in dynamic pricing events through the implementation of demand response enabling technologies. This approach will also --

11 capture the lost opportunities for DR and other DSM options that can occur when equipment decisions are made that are too expensive to change after construction. By identifying specific energy efficiency/demand response/self generation applications for technology integration and utilizing the design and engineering community as key market adopters, the new construction sector can more fully comprehend the benefits of enabling technology integration, and move towards an integrated approach in their adoption of the building design. Many enabling technologies for energy efficiency have been shown to include a demand response functionality that is best enabled as early as possible in the design phase of a facility. By expanding beyond the scope of enhanced design savings for continuous savings, new buildings can increase their potential for saving energy on an hourly basis in a demand response program or dynamic pricing tariff by employing enhanced energy management systems, dimmable and dispatchable ballasts, intelligent lighting and heating, ventilation and air conditioning (HVAC) controls, and automated building control systems that can enable demand response responsiveness to web-based dynamic pricing signals (such as exemplified by the current Auto DR program). The initiative will also assess the opportunities for the integration of enabling technologies associated with distributed energy resources, which include renewable self generation. b) Residential New Construction Integrated Delivery Model As with the commercial market, the residential new construction market is a good venue particularly suited to promote DSM integration because it: is a proven means of cost-effectively introducing energy efficiency measures and technologies to this market sector so that homes are efficient from the outset, takes advantage of an existing and reliable set of delivery channels, third-party providers and program methods and materials, as well as numerous ongoing advanced efforts at the CEC to implement Zero Energy New Homes (ZENH), --

12 minimizes lost opportunities by introducing integration where it does not exist as a current standard practice and where cost is minimized, and creates market pull for integrated methods and technologies at the consumer level that ensures sustainable and persistent technology adoption. SCE s residential new construction offering, the California New Homes Program, is a proven channel for delivering energy efficiency to this segment. The Residential New Construction Integrated Delivery Model bundles demand response technologies and renewable generation measures with energy efficiency measures for cost effective delivery of the combined technologies. Southern California s population continues to grow, and often this growth includes the development of new residential single family, multi-family, and low income housing. While there is some back-fill in established coastal and valley communities, most new growth is in the eastern and northern portions of SCE s service territory in generally warmer areas, which means more air conditioning and more peak demand on the electrical system. The new growth is in homes that are larger than single family homes of earlier eras, and therefore more air conditioning is required to reach more space. Although State building standards have made the new developments relatively more efficient, peak demand and kwh consumption continue to grow per customer and for the service area in total. As the new home market is facing an economic downturn, the market participants also bring with them the challenges of meeting the requirements for energy efficiency under state standards, and exceeding that performance with SCE s new homes incentives programs, while attempting to keep prices low. As larger homes and larger cooling systems are built in warmer regions, the need for both increased overall efficiency and effective responsiveness to future dynamic pricing for electricity is apparent. For SCE, the residential new --

13 construction delivery channel has been a proven program for enhancing the delivery of energy efficient measures to this market in a cost-effective manner. The Residential New Construction Integrated Delivery Model is a new model that seeks to leverage this proven delivery channel to incorporate demand response enabling technologies as well as renewable generation measures that could be integrated with the new homes efficiency measures for an even more cost effective delivery of the combined technologies. By integrating multiple DSM technology applications at this early stage in the residential market, the cost benefits as well as consumer adoption and education are enhanced and improved. One distinct advantage of the Residential New Construction Integrated Delivery Model is that it will leverage the existing marketing, outreach, and collaborative partnership relationships with the new construction community. SCE intends to leverage these relationships, enhance the understanding and adoption of demand response program participation, and combine with energy efficiency and renewable program components already integrated with energy efficiency. As an example of how this approach might work, SCE envisions paying a mid-stream incentive to builders to sign customers up for the demand response program the Summer Discount Plan at the time of home customization/appliance selection. SCE has already intervened at this stage with builders to up-sell energy efficiency appliances, so adding on a demand response element is simply another opportunity for the homeowner. The homeowner would be provided with a copy of the signed application and the necessary contact information should they choose to modify their level of participation. This approach allows the customer to exercise the full range of choice (rather than just have the option to opt-out) and targets those customers whose homes are best suited to continue to provide comfort even during summer peak events. In addition, SCE gets inexpensive participant recruitment, peak reduction where needed --

14 most on the grid, and achieves some cost efficiencies in installation, assuming multiple installations in the same neighborhood. This model is part of the effort to align the suite of current and proposed DSM measures to achieve the policy goal of ZNE. In 00, as the Edison SmartConnect program is rolled out, the program will integrate enabling technologies to enhance the desirability, salability, and overall load profile of new homes. A significant new effort for this program will also be to enhance the current residential modeling energy tools with demand response features and capabilities to ensure that both the time differentiated value of energy usage and the short term conservation effects are captured in the building simulations. While most efficiency modeling for new construction compares the sensitivities to long-term savings of improved building envelopes, appliance efficiency, and systems integration, the current simulations may not fully capture the behavioral aspects associated with demand response. This program will develop a fully integrated simulation tool that will assess and compare behavioral effects associated with innovative efficiency construction design as well as enabling technology benefits for demand response program participation in the residential market. This Residential New Construction Integrated Delivery Model builds upon the existing market presence of the California New Homes Program to deliver demand response enabling technologies. This approach avoids lost opportunities and reduces costs by installing enabling technology at the time of construction. Examples of these technologies include communicating thermostats, in-home displays, plug-load controls, and peak shaving/peak shifting technologies. The model will also explore the integration of enabling self-generation technologies including district wind and solar generation (as opposed to house-by-house), standby storage, and plug-in hybrid vehicles. Once builders recognize that customers see value in the presence of these technologies, builders will compete to incorporate such measures into their homes. This will drive further penetration into the market, and create the market pull necessary to achieving ZNE --

15 goals. In brief, without a dedicated effort to address occupant behavior and plug load, there is little chance of achieving the ambitious goals of ZNE homes. The range of technologies deployed under the rubric of demand response, including Edison SmartConnect, is the best way, if not the only way, to do this. c) Institutional Partnership Initiative The institutional segment includes primarily public sector customers such as colleges and universities, hospitals, police, and fire. SCE has established a successful institutional partnership program, and has proposed expanding this program for SCE has a number of these energy efficiency partnership programs in place, with varying levels of market penetration, partnership models, and bilateral agreement terms. A good example of an effective and collaborative delivery of DSM program features is the SCE Energy Leaders Partnership model that creates energy partnerships with local governments to generate savings through municipal retrofits, and community outreach. Programs such as these have the potential to enhance specific DSM program participation, with the potential to integrate other DSM measures such as demand response program education, community specific dynamic pricing education and outreach, and self-generation rebate incentives. While SCE s current energy efficiency partnership model already somewhat integrates non-energy efficiency programs through information and education, these have been undertaken as separate activities and program deliverables such as rebates and incentives are not fully integrated into the partnership due to separate administrative activities. This proposal would integrate those aspects of the programs and target customers that would best benefit from integrated measures and then develop and promote adoption of integrated proposals that include a comprehensive range of DSM options. This integrated DSM emphasis is new to SCE s partnership program and is the focus of this initiative. Rather than duplicate emerging integration efforts or interfere with the existing established delivery process at the community level for SCE s energy efficiency --

16 partnership programs for the pilot, SCE has identified the energy efficiency Institutional Partnership delivery channel as a means to maximize comprehensive DSM opportunities. With an already established relationship with multiple federal, state, and local government agencies, SCE s energy efficiency division can enhance the program delivery on non-energy efficiency benefits to this hard-to-reach conservative customer segment that is somewhat hesitant to adopt new concepts, providing an excellent opportunity for deploying integrated DSM programs, including demand response, dynamic pricing, and renewable generation. In addition, since this market sector typically has multiple approval steps, a long sales cycle for relationship building, stringent financial requirements, and longer construction lead times, it makes sense to work with the current established energy efficiency partnership delivery channel rather than to develop a parallel effort that may duplicate and possibly neutralize current partnerships. The opportunity for maximizing benefits through an integrated approach of partnership program delivery is perhaps unique for this customer sector. For the institutional customers, energy efficiency, demand response, and renewable power all have the same look and feel to them as an energy category, and delivery of these program components are best suited by an integrated approach. Though SCE s DSM programs are currently separated by regulatory definitions and organizational boundaries, the opportunity for demonstrating and determining best practices for combining different DSM programs in both delivery and operation present themselves in this initiative. At the very least, collaboration within the larger delivery channel will provide benefits to customers from non-energy efficiency programs such as a comprehensive message, a unified program, and coordinated incentives, which can reduce costs and increase customer satisfaction. d) IDSM Pilot For Food Processing California has a traditionally large agricultural and food processing industrial base. This customer sector represents an important opportunity for coordinated DSM program integration because of energy and demand profiles (on-peak processing, pumping, etc.). The IDSM Pilot for Food Processing combines integrated auditing, resource efficiency labeling, -1-

17 and continuous improvement methods to enhance the operating efficiency of customer facilities. Incentives will be provided through existing individual DSM program delivery channels, and the costs of the pilot are limited to administrative, technical support, and customer technology consulting services. Projects in this initiative will be site-specific and will be tailored to each facility to seek comprehensive resource efficiency improvements. Additional benefits will include behavioral improvements across energy utilization and waste management, and water usage. The program s integrated approach combines traditional long term efficiency measures (energy efficiency retrofits/upgrades) along with strategies to help customers manage/reduce their energy demand during peak dynamic pricing periods, especially during hot summer days, and to provide short term demand and energy reductions during episodic demand response price events. This integrated approach will provide the customer with a comprehensive solution to manage day-to-day energy costs and will develop a demand response plan to enable the facility to respond to days of high energy use (peak periods) when energy demand is critical. While the primary program focus is energy efficiency, the development of measures emphasizes both energy and demand savings to support cost-effective energy and financial solutions for these stakeholders. The IDSM Pilot for Food Processing will deliver an integrated solutionsdriven approach specific for this customer segment, while leveraging the offerings of SCE s portfolio of energy efficiency and demand response incentive-based programs. For more details, please see the IDSM Pilot for Food Processing PIP in Appendix I. e) Technology Resource Incubator Outreach Program (TRIO) New technologies and methods are required to achieve the best benefit from DSM Integration. TRIO is a new program designed to find, fund, and field-test the best of new technologies and technology delivery approaches from the university marketplace and to provide the opportunity to mainstream them into the overall SCE-managed energy efficiency portfolio of proven, successful, and reliable programs. -1-

18 TRIO places emphasis on innovation and development of promising technologies. These promising technologies will be developed through workshops designed to teach the implementer how to best capture utility energy efficiency and demand response offerings. The workshops will guide the technology developer through required workpaper format and E calculator (the Commission s approved cost-effectiveness tool for EE) training. Once this training has been completed, a proposal for a new program concept will be submitted to IDEEA program and will be scored using the scoring criteria for the 00-0 program cycle. The best ideas will be selected for implementation. Integrated measures will be emphasized as a pilot effort in the inaugural years of the TRIO Program.. Roadmap To Integrated Technology In R and R , the Commission directed the utilities to include a roadmap to integrated technology. The TRIO Program is a significant element of SCE s approach to pursuing technologies that support integration and ZNE. SCE s approach to promoting integrated technologies is to combine market pull forces through programs (particularly new construction) with targeted financial resources (TRIO Program, Emerging Technologies Program, and IDEEA). TRIO and IDEEA will provide financial incentives to develop and demonstrate new integrated technologies. Financial incentives of this type create a pushing force in the market. The Emerging Technologies Program helps to mainstream technologies that are commercially available, but not proven and is being enhanced to prefer technologies that are integrated (or enable integration). SCE s programs (particularly new construction, as described above) create a pulling force that influences research design & development and manufacturers to create and produce integrating technologies. Combining market push and pull in a coordinated fashion is an effective means of achieving market objectives.. Collaborative Approach to Developing ZNE Metrics In R and R , the Commission directed the utilities to include a collaborative approach to testing ZNE metrics. ZNE metrics are substantially identical to -1-

19 integration metrics as the one is wholly dependent on the other. Section G..of this Volume provides a discussion of IDSM metrics. In that section, SCE establishes the process whereby integration and ZNE metrics will be developed and advanced in a collaborative fashion. SCE will continue to coordinate its IDSM piloting efforts with the other IOUs. In addition, SCE will reach out to a wide array of potential partner organizations and agencies, including developers, architects and builders, municipalities and redevelopment agencies, the CEC Public Interest Energy Research (PIER) program, professional building and trade associations, research institutions, state, federal and regional agencies and the CPUC itself to provide input to and feedback on its plans with respect to additional pilot plans and conclusions about costeffectiveness generally and other metrics for evaluating goals and progress toward ZNE. Of particular importance is the means to developing an overall metric that is consistent with the Commissions established loading preference for new resources.. Other Coordinated Activities As part of the 00-0 energy efficiency portfolio proposed to the Commission in A , SCE, in compliance with seeking external participation for 0 percent of its portfolio, will solicit new vendors. In coordination with these solicitation activities, SCE will look to third-parties for ideas on how to integrate and coordinate with other offerings as part of the energy efficiency implementation and delivery. With respect to costs, SCE will use the same attribution rules discussed in Section B of this Volume. Coordination activities in the 00-0 portfolios include: IDSM Third-Party Solicitation (IDEEA): The third party solicitations are designed to solicit program ideas centered on technologies and/or program designs that integrate energy efficiency with other demand-side offerings, such as demand response, self-generation, California Solar Initiative (CSI), etc. The objective is to deliver persistent, innovative, and sustainable electric energy savings and to reduce utility administration costs. Joint Assigned Commissioner s Ruling Providing Guidance on Integrated Demand-Side Management in 00-0 Portfolio Applications, April, 00, pp

20 EARTH Education and Training Program (energy efficiency)/smart Student Program (Demand Response): This education program leverages the energy efficiency EARTH Education & Training Program to promote demand response programs, and is delivered through two proven coordinated program strategies Green Schools and Living Wise. SCE will modify the energy efficiency portfolio s LivingWise kit contents as well as the Green Schools Compact Fluorescent Lamp Exchange events to include information and incentives tied to enrollment and participation in demand response s Summer Discount Plan (SDP). Through the Green Schools program, in 00, SCE will continue distributing the SCE Residential Savings Guide to students in 00 which includes demand response/sdp. Online Buyer s Guide: Promotes incentives available through demand response and CSI programs. K-1 Private Schools Program: Provides referrals to demand response and information about distributed generation, as applicable. Comprehensive Home Performance Program: Encourages and integrates demand response, CSI, self-generation and Edison SmartConnect. Energy efficiency for Entertainment Centers: Encourages and assists enrollment in demand response programs. Appliance Recycling Program: Energy efficiency s Appliance Recycling Program will coordinate with demand response s SDP by designing joint marketing messages that will increase participation in both energy efficiency and demand response programs. Mobile Education Unit: The Mobile Education Unit is a converted recreational vehicle equipped with program literature, educational materials and technologies and displays that promotes SCE s DSM offerings including energy efficiency, demand response, and CSI. Edison SmartConnect : In the Edison SmartConnectTM Phase III Application (A.0-0-0), SCE has proposed to install. million state-of-the-art smart meters in households and businesses under 00 kw throughout its service territory over a five year period beginning in 00. These smart meters will be part of SCE s advanced metering infrastructure -1-

21 (AMI), Edison SmartConnect TM. This system of. million meters and ubiquitous yet secure communication standards enables powerful customer tools to manage energy consumption, enhances the customer service efficiency, opens up new services with smart technology, expands dynamic rate alternatives, and provides a flexible, robust platform that can create additional future value for SCE s customers. As such, Edison SmartConnect more than adequately supports federal and state energy policy objectives. Customer access to interval electricity information is one of the core tenants of AMI. Such data is currently only available to large customers with demands greater than 00 kw. Edison SmartConnect will allow SCE to expand the availability of both historical and near-real time interval usage data to the masses. Both forms of data can be presented and analyzed through a variety of communication channels, including the Internet and customerowned home area network (HAN) devices. The availability of these various forms of information is a critical component of SCE s IDSM efforts, which is focused on sustaining socially responsible changes in customer energy consumption through energy conservation, DR, EE and other advanced technologies. SCE expects customers to conserve energy from the combination of customer access to historical and near real time usage data provided by the Edison SmartConnect TM meter. Whereas near real time information works like a speedometer showing the current rate of energy consumption the historical cumulative displays act like an odometer showing total energy used to date. Experience to date indicates clearly that information feedback reduces total electricity consumption. In a Meta-study of over 0 DR programs, electricity customers cut energy consumption by as much as 0 percent. The results indicate that information feedback provides a positive reinforcement from changes in customers behavior. A clear and positive conservation effect is derived from providing customers historical and near real time usage information. The evolution of providing information feedback will eventually move from passive to proactive whereby customers will have notifications or automated responses to signals from the utility. By providing proactive communication in the style of alerts and notifications, -1-

22 SCE s customers will experience an even greater conservation effect. In the above automotive analogy, the alerts work like warning indicators showing a condition that should be responded to. The Tier Alert program is a clear example of SCE s approach of leveraging the Edison SmartConnect TM infrastructure to provide important customer feedback to encourage energy conservation. In addition, Edison SmartConnect will be instrumental in designing new DR programs for managing peak consumption among millions of customers. The availability of interval usage information enables dynamic pricing options which provide incentives for customers to shift their usage, in part or whole, to off-peak hours, resulting in avoided capacity benefits. Edison SmartConnect will also allow all residential and business customers to participate in reliability and economically dispatched programs as part of a more comprehensive IDSM approach, in addition to current base load control and DR programs. The ability for the new meter to communicate and exchange data with other devices on the customers premises serves as a critical component in the design of future DR programs. The added dimension of interval data provides SCE the opportunity to design advanced rates and programs to assist over five million customers better manage and understand their energy consumption. Furthermore, as customers receive more informative data and analyses about the cost of their energy usage through Edison SmartConnect, it is expected that their interest will increase in EE programs that help them to more permanently reduce their energy consumption. For example, with Edison SmartConnect, a customer can view the bill impacts of installing an energy efficient appliance the day after it is installed using historical comparative analysis. In addition, SCE will be able to expand valuable energy analytic tools, which currently are only available to its large customers. These tools can help customers forecast bill reductions that result from investments in energy efficient products and services. Finally, promising new technologies enabled by Edison SmartConnect offer the potential to significantly broaden the field of stakeholders in the energy management arena of the future for IDSM programs, thereby promoting more effective use of capacity resources. In -1-

23 anticipation of future changes in technology and changes in regulatory policy objectives, SCE has designed flexibility into its Edison SmartConnect system to accommodate the likelihood of IDSM programs (including plug-in hybrids), future building code changes, in-home energy information displays, smart grid management, and distributed resources. By expanding interval usage information to essentially all of SCE s customers, Edison SmartConnect is a critical component in facilitating the effective delivery of IDSM to over five million SCE customers. As the gateway into these customers premises, Edison SmartConnect will serve as a critical component in the infrastructure required to support the entire portfolio of IDSM measure types (a) Edison SmartConnect provides the technology necessary to extend time-of-use rates to customers less than 00kW and (b) SmartConnect provides the functionality that enable those customers to measure the effectiveness of energy efficiency solutions. In short, Edison SmartConnect is that platform that will serve as the springboard to wide-scale adoption of IDSM programs in the future. E. Coordinated DSM Marketing The objective of SCE s marketing, education and outreach efforts from 00 to 0 is to enhance energy efficiency savings and move customers towards adopting an energy-efficient lifestyle. Marketing, education and outreach campaigns, and materials will be developed in a manner that leverages statewide branding, in order to maximize participation, market transformation, and adoption of long-term energy efficiency behaviors. SCE s marketing efforts are consistent with The Strategy s objectives in that they leverage an integrated portfolio of DSM programs. SCE will also continue to develop integrated marketing campaigns, which have been a key part of the utility s marketing efforts since 00. The integrated marketing campaigns use customer segmentation research to better understand customers and provide them with a wide range of action-oriented solutions that will maximize energy savings. Segmentation will also enable SCE to customize the characteristics of its offerings, providing customers with solutions that are relevant to their needs. -1-

24 In order to accomplish SCE s key objectives, marketing efforts will be designed to move consumers through a continuum from awareness, to attitude change, to long-term behavior change. Given the diversity of SCE s customer base, SCE will use multiple layers of integrated marketing via direct mailing, , and other media outreach (coordinated with statewide marketing efforts that include the current FYPN campaign) to effectively reach customers and drive them to action. Integration will be achieved by presenting IDSM as the complete energy management solution that can help customers save energy and manage their energy costs, while helping the environment. SCE will work to ensure that customers clearly understand energy management as a whole with respect to how all of the components of the DSM portfolio work together. Integrated marketing begins with understanding the customer and providing them with relevant solutions, which may include program offerings from energy efficiency, demand response, the Low Income Energy Efficiency (LIEE), CSI, and Edison SmartConnect offerings. Customer segmentation will enable SCE to target customers with integrated marketing solutions that are relevant to their specific needs. By providing customers with relevant solutions made up of programs and services from across SCE s DSM portfolio, customers will be able to more effectively take action that benefits them, the environment, and SCE s community. F. Attribution of Energy Savings 1. Background a) Commission Guidance The Joint ACR states that the utilities pilot programs should enable and include the identification and testing of different energy savings attribution methodologies potentially feasible for use in IDSM pilot projects or programs, and that this should include testing the stepwise attribution approach outlined by Energy Division at the March workshop. -0-

25 b) Foundational Issues One of the projected key benefits of IDSM programs is enabling broader and deeper penetration of markets to reach the multiple program goals of energy savings, peak demand reductions, system-callable load management, and displacement of other energy sources with renewable energy sources. Two critical principles for integrated programs are to assure that: All these benefits are accounted for, and They are each counted only once for the combined program effect. In fact, satisfying these principles is actually more feasible for an integrated program than for programs that are not coordinated. When programs are not coordinated, the effects of one program on another are easily overlooked. Energy efficiency programs that reduce peak demand generally reduce the callable load reduction potential of demand response programs. A demand response program that provides addressable dimmable ballasts to enable load reduction when a demand response program is called, also provides a possible conservation option that may or may not be captured by the customer, and is not counted. c) The Free Ridership Opportunity Free Ridership occurs when a customer is paid an incentive to invest in an action that she would have taken in the absence of the incentive (such as a green customer who had already planned to buy and buys an Energy Star refrigerator and gets a rebate for doing so). In general, based on SCE program experience, integration of energy efficiency and demand response has not occurred independently in the marketplace. Free ridership is expected to be minimal, at least in the short term. The key issue for integration and attribution of savings is not free ridership, but rather the loading order and attribution of savings. SCE will follow the Commission s preferred loading order for both developing recommendations and calculating incentives. Energy efficiency free ridership is currently under consideration by the Commission. -1-

26 Free ridership for self-generation will be managed based on Commission guidance for CSI and for the Self-Generation Incentive Program.. Plan for Identification and Testing of Different Savings Attribution Methodologies Initial identification of potential measurement approaches to be tested should be completed by Fall 00. Evaluation, Measurement, and Verification (EM&V) staff at the utilities and the Commission and/or their assigned contractors should review the literature on attribution methods and identify and develop approaches that are most appropriate for IDSM programs. These approaches should be informally communicated to the other organizations. Utility EM&V staff should then schedule a workshop to discuss the options and the issues each one raises, and identify which options may work best with which programs. Utility EM&V staff will then work with the pilot program managers at their utility to assure that detailed program design and implementation procedures take into account the need to gather data necessary for the testing of a the most appropriate approaches. These approaches will include the stepwise approach described by Energy Division. As is the case with other EM&V plans, it is not feasible to develop strong impact evaluation plans before program and portfolio plans are completed. There are numerous other important issues that could be illuminated by process and impact evaluations of the pilot programs. Among them are: The hypothesis that integrating or coordinating programs will reduce program marketing and administration costs The hypothesis that integrated/coordinated programs will enable deeper and broader program penetration in the target population The mix of individual program goal achievements The role of integrated approaches in furthering progress towards ZNE goals The effects of alternative cost allocation approaches The tradeoffs between customer choice and technology optimization. --

27 G. IDSM Cost-Effectiveness 1. Background Cost-effectiveness analysis of IDSM measures presents significant challenges because of the different characteristics and resource values associated with the different types of measures that could conceivably comprise IDSM programs. As directed in the Joint ACR, SCE has provided recommendations regarding methodologies to perform cost-effectiveness analysis of IDSM programs. However, SCE views its recommendations simply as a starting point for discussion. SCE recommends that a series of workshops be held during Fall 00 to further examine and develop cost-effectiveness methodologies for IDSM programs. Ideally, these workshops would be conducted in conjunction with workshops to examine attribution (i.e., measurement and evaluation) protocols for IDSM programs. In addition, SCE asserts that IDSM metrics are the relevant ZNE metrics and the following addresses Commission directives for both IDSM and ZNE metrics. In order to get to measure ZNE, one must first use IDSM metrics. a) Commission Guidance There is currently no Commission guidance regarding specific methodologies to perform cost-effectiveness analysis for IDSM programs. The Assigned Commissioner s and Administrative Law Judge s Ruling Regarding Cost-Effectiveness Metrics and Energy Efficiency Policy Manual, dated March 1, 00 (March 1 Ruling), identified onestop shop coordinated DSM delivery and statewide IDSM Marketing, Education and Outreach (ME&O) activities as specific strategies in the CEESP that may require alterations to the Energy Efficiency Policy Manual in order to affect their launch and full implementation in a timely fashion. In their comments to the March 1 Ruling, the Joint Utilities requested that the Commission ensure consistency of cost-effectiveness methodologies across the various DSM proceedings, including a consistent value for a carbon adder that can be used for demand-side and supply-side resources: Assigned Commission s and Administrative Law Judges Ruling Regarding Cost-Effectiveness Metrics and Energy Efficiency Policy Manual, dated March 1, 00, pp