State of Maryland Maryland Energy Administration

Transcription

1 State of Maryland Maryland Energy Administration IN THE MATTER OF BALTIMORE GAS * BEFORE THE AND ELECTRIC COMPANY S ENERGY * EFFICIENCY, CONSERVATION AND * PUBLIC SERVICE DEMAND RESPONSE PROGRAMS * COMMISSION PURSUANT TO THE EMPOWER MARYLAND * ENERGY EFFICIENCY ACT OF 2008 * CASE NO Initial Comments on Baltimore Gas and Electric Company s Programs by the Maryland Energy Administration Baltimore Gas and Electric Company ( BGE or the Company ) filed an extensive portfolio of energy efficiency and conservation ( EE&C ) programs that serve the residential and commercial sectors. The Maryland Energy Administration (MEA) offers Comments on the BGE programs in this filing. Overall Program Comments EmPOWER Maryland Targets The proposed BGE demand response program reaches 232% of the peak reduction goal established by the PSC for 2011 and 121% of the 2015 goal. BGE s energy efficiency plan claims to achieve only 52% of the 2011 target set by the PSC and the EmPOWER legislation and falls short, reaching just 62%, of the 2015 target. BGE s programs represent the entry level of energy efficiency and demand response programs. In order to reach the 2011 and 2015 EmPOWER Maryland goals BGE will need to significantly increase their program offerings to include more measures, higher incentives, and deeper outreach.

2 Cost-Effectiveness The Commission s August 18, 2008 Letter Order to BGE states that The Commission views cost-effectiveness as requiring a real rate of return on ratepayers investment, measured by meaningful bill savings for all ratepayers and the achievement of a greater share of the State s ambitious conservation goals. BGE s large commercial and industrial programs have a cumulative TRC of 2.69 while residential programs average MEA considers BGE s program offerings to be cost-effective based on the Commission s description of the meaning of cost-effectiveness because by achieving a TRC greater than 1, the programs necessarily provide greater benefit than cost to all Marylanders which indicates they are a good value. The current calculation of the TRC by all of the utilities filing DSM programs before the Commission does not include the price mitigation effect on electricity rates due to reducing load across the State. If these effects were included in the TRC in BGE s case, the TRCs would only increase which would effectively increase the level of cost-effectiveness above the cost-effectiveness at which they currently stand. Baseline Study In light of the lack of current market information, MEA offers to lead an effort, in collaboration with the PSC and Maryland utilities, to conduct a baseline study of the market penetration and opportunities for energy efficiency and demand reduction products in Maryland through a jointly funded effort. MEA recommends that that PSC incorporate this baseline study into its orders for the utilities pending cases. 2

3 Participation Rate Assumptions In the absence of information regarding current saturation of energy-efficient products, it is hard to know how strong an emphasis to place on increasing participation rates of DSM programs. It is very likely that all utilities will have to make great effort to achieve very high participation rates in order to meet the aggressive EmPOWER Maryland targets. That being said, BGE has only modest participation goals for its programs. The only way to better gauge how aggressive the participation rates of any of the utility filings are is to start implementing programs and evaluate them as programs move forward and consumer information is obtained. No utility can know exactly how their programs will fare until they actually start implementing them. They may find they have to change the incentive levels or marketing efforts to achieve participation rates that put them on a path toward meeting the energy consumption and demand reduction targets. Statewide Program Consistency During the summer of 2008, MEA, PSC, OPC and Maryland utilities developed a Standard Program Format that was adopted by the Commission as the format to use in filing energy efficiency and demand response programs with the Commission. The utilities were strongly encouraged to develop programs in each of the main program categories listed in the format. Most utilities complied with the request by filing programs in almost all of the common program categories. Due to the compressed timeline between the program discussions involving MEA and the utilities and the September 1, 2008 filing deadline, MEA was not able to negotiate final program designs and incentives on each common program run by multiple utilities. Utilities have indicated they are willing to adjust their rebate/incentive levels in most programs to be consistent with other utility program rebate/incentive levels once basic programs are approved by the PSC. MEA concurs with the PSC Staff recommendation proposed in the Delmarva 3

4 (Case 9156) hearing that the utilities and MEA should file a consistency plan for Commission approval within 60 days of program approval. Statewide Program Integration Including Low-Income All utilities have proposed a number of residential programs including Home Performance with ENERGY STAR and low income programs that are based upon a similar whole house approach to making homes more energy-efficient through the installation of multiple energy efficiency measures at one time. There is a significant implementation and marketing advantage to having all the utility programs follow a common model for these two program areas. Based upon discussions at the recent Pepco (Case 9155) hearing, MEA believes that common program design is essential to ensure effective program implementation for Maryland consumers, particularly with regard to Home Performance with ENERGY STAR and low-income programs. To that end, MEA proposes to provide the lead in developing an overall low and moderate income program model as well as providing key functions in the implementation of Home Performance with ENERGY STAR which is described in more detail later in this document. MEA held a utility and key stakeholder planning meeting on November 13, 2008 to develop program design and implementation recommendations on low-income programs as well as the Home Performance with ENERGY STAR program. MEA will provide specific program recommendations to the Commission by November 20, Evaluation, Measurement and Verification (EM&V) BGE s proposed expenditure for EM&V at 2.8% of spending is in the moderate range for spending on EM&V compared to programs across the country. MEA believes this is probably at the lower end of what will be needed to accurately verify savings targets, especially in the early years of programming when the 4

5 utility and its implementation contractor will be learning about providing programs at a much larger scale than has ever been done in BGE s territory. Programs that are attempting to verify aggressive savings targets like those in Maryland are spending 5% percent (New York) on EM&V. MEA proposes to lead the management of the evaluation, measurement and verification of program results through a common, statewide EM&V contractor funded proportionately by MEA and all utilities implementing programs. This would provide a more consistent development of technical standards as well as provide common reporting standards across all utility programs. The PSC and MEA would develop a common set of standards working with utilities, PJM and the Northeast Energy Efficiency Partnership EM&V Forum. Building Codes and Appliance Standards Comments Building codes are an important tool in the toolkit to advance building energy efficiency; however, they involve many players in crafting new versions of the codes. Adoption of new codes if often a lengthy process, and implementation into the building stock is even longer; therefore, implementation of cost-effective energy efficiency programs should continue with speed to reach the EmPOWER Maryland goals. In order to more quickly integrate advanced codes in Maryland, MEA and DHCD joined with the Northeast Energy Efficiency Partnerships, Inc. along with numerous other states in an effort to bring advanced energy code technical assistance to states and local governments. The grant was funded by DOE in September 2008 and it will allow Maryland to receive consulting assistance on how to add advanced energy codes to our mix of efficiency efforts. MEA will work with appropriate stakeholders to adopt advanced energy efficiency buildings codes. 5

6 MEA has been and will continue to be the agency charged with implementing appliance standards and recommending new standards that would move through the legislative process. We will continue the effort to add standards where necessary to move the efficiency bar to new but attainable levels. MEA recommends that the PSC endorse ACEEE s proposal to allow AP and other Maryland utilities establish a Utility Consortium for Codes and Standards Improvement that can apply utility resources and relationships to specific code and standards revisions and related education, information, and implementation. In return, utilities should propose to the Commission a mechanism for evaluating their participation, quantifying potential energy savings, and crediting an appropriate share of energy and peak demand savings to each participating utility s EmPOWER Maryland goals. This will allow MEA to work with the utilities to evaluate codes and standards that are more effective in reducing energy consumption and demand. Compliance with Statutory Requirements of the EmPOWER Maryland Act MEA believes BGE completed the requirements to meet and discuss programs with MEA as well as to submit the program plans required by the PSC. BGE was NOT able to present a plan that would achieve the 2011 EmPOWER Maryland energy efficiency (only 52%) target but projects hitting 232% of the peak demand reduction target specified by the Commission. The current BGE filing meets only 62% of the energy efficiency target, but exceeds the peak demand reduction target reaching 121% in MEA recommends that the Commission direct BGE and the other utilities to submit additional program modifications or new programs to reach the 2011 and 2015 EmPOWER Maryland energy efficiency targets. MEA s Findings and Overall Recommendations on BGE s Portfolio MEA is tasked with providing findings on the design and adequacy of the utilities plans to reach the EmPOWER Maryland targets. 6

7 In reference to the program design of BGE s portfolio of programs, MEA accepts and agrees with their designs. MEA offers recommendations on methods to increase their effectiveness in attracting greater participation and in achieving deeper energy savings. In reference to BGE s portfolio of programs meeting the EmPOWER Maryland targets, MEA finds that BGE s portfolio will NOT meet the energy efficiency targets for 2011 (52%) and reaches only 62% of the 2015 target. BGE projects their demand reduction programs will exceed the peak demand reduction targets for both 2011 and MEA recommends that the Commission give approval to BGE s programs. MEA also recommends that the Commission direct BGE to make refinements to the proposed programs and to develop additional programs and measures in order to meet the full EmPOWER Maryland energy efficiency as long as the programs remain cost-effective with a Total Resource Cost (TRC) test above 1. MEA recommends that additional improvements to BGE s and the other utilities portfolios be made with concurrence from Commission Staff and guidance from MEA and other appropriate agencies to ensure consistency of program standards and incentive levels. MEA has provided additional recommendations on specific program enhancements and additions in the Program Design Comments section of this document. 7

8 Program Design Comments - Residential Programs Residential Lighting and Appliances Program Program Comments BGE s Lighting and Appliances program is modeled after successful programs in numerous states. The proposed program will be open to all residential customers, and will promote the use and purchase of ENERGY STAR certified lighting products and appliances. The goals of the program are to make the ENERGY STAR products readily available and to make them the standard choice by BGE customers. BGE estimates that the program will install 371,939 measures between 2009 and 2015, yielding 344,368 MWh in annual energy savings and 78.2 MW of peak demand reduction in 2011; and 895,142 MWh in annual energy savings and MW of peak demand reduction in MEA is encouraged that BGE is offering the Lighting and Appliances Program; BGE states that they will coordinate program offerings with Maryland retail businesses, including upstream, or markdown strategies to reduce costs and increase effectiveness. Particular focus on specialty CFLs will reach new customers and applications in the lighting market. To the extent possible, leveraging the ENERGY STAR brand is a proven strategy for achieving costeffective savings. BGE s Lighting and Appliances Program is a good evolution through which BGE will encourage customers to choose energy-efficient products when making purchases. In these hard economic times, Marylanders may need additional encouragement to use these efficient products which necessitates offering additional incentives like rebates. BGE s Residential Lighting and Appliances Program goes a long way toward enabling Marylanders to reduce their energy consumption and ensuring electricity reliability. Nationally, average electricity consumption per home is increasing primarily because of the growth in consumption associated with consumer electronics (TVs, VCRs, set-top boxes, satellite receivers, DVD players, computers, printers 8

9 and other home office equipment) and other plug loads. Any plan to reach the EmPOWER Maryland targets should address this portion of residential consumption. In California, the utilities are about to launch a new initiative targeted at consumer electronics, starting with TVs and computers and later expanding to other products. This initiative is an upstream one in which incentives are being provided to retailers, particularly retail chains. It is MEA's understanding that it is being structured so that program administrators in other states can piggy-back onto it without much difficulty. Further, we understand that other states (e.g. Vermont and New Jersey) are already planning to do so. The Maryland utilities should strongly consider doing so as well. MEA Recommendations Approve Filed Program Modifications Prior to Implementation: o Ensure statewide consistency of common incentives levels and common efficiency levels for each offered product among all utilities. MEA Role Coordinate effort to ensure consistency of program incentives across the State. Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Leverage statewide program activity to negotiate effective upstream incentives and ensure product availability. Several jurisdictions in the Northeast have begun exploring the use of upstream incentives to manufacturers and/or distributors as a way of (1) leveraging the marketing activities already taking place; (2) increasing consumer program participation by providing information about efficient equipment and program incentives through common central points of contact; and (3) reducing program costs by leveraging incentive dollars at the wholesale level and allowing manufacturers 9

10 and distributors to bear some of the administrative costs of implementation and incentive handling. This strategy is similar to the current CFL programs being implemented by BGE, Pepco, and DPL. MEA suggests that BGE and the other Maryland utilities modify their plans to allow for a change to such an approach in the future. We further suggest that the plans make explicit that the Maryland utilities will explore collaboration with other program administrators in the Northeast on such initiatives in the future. Coordinate with neighboring utilities to deliver a seamless message at the retail level, and reduce implementation headaches. When sufficient penetration of ENERGY STAR clothes washers has been reached, offer incentives only for Tier 2 appliances instead of mid-level clothes washers. Explore additional measures such as efficient consumer electronics and cable set-top boxes on which to offer incentives and higher incentives on more efficient products to increase participation. Greater participation and early retirement of operational equipment and appliances in exchange for more efficient products will increase the level of savings achieved under this program. Residential New Construction Program Comments BGE is offering a proven and well planned structure for implementing the ENERGY STAR residential new construction program. MEA particularly appreciates BGE s focus on builders, the ENERGY STAR label, the development of a home rating network, and the inclusion of an advanced lighting package incentive. The services outlined in this program are modeled after successful programs in several jurisdictions that deliver a program based on the US EPA s ENERGY STAR Homes program. BGE estimates that the program will enroll 4331 new home units from 2009 to 2015; yielding 6085 MWh of annual energy 10

11 savings and 3.9 MW of peak demand reduction through Some improvements can be made and are recommended here. MEA Recommendations Approve Filed Program Modifications Prior to Implementation: o Double proposed program incentive levels for at least the first year or two, until it can be demonstrated that the program can generate significant participation. They can then be reduced. Note that a builder can get greater incentives under the HVAC program for doing less. HVAC program incentives for a SEER 14 central A/C and 92% AFUE furnace which together should not be enough to get to the ENERGY STAR standard for a new home ($475) are greater than the $400 offered for a new ENERGY STAR home (with the net incentive being lower since it appears from the program design that the builder must pay for his/her own energy rating to document attainment of the ENERGY STAR level). The filing makes clear that you can t take the HVAC equipment incentives if you take incentives for the new construction program. This incentive structure will drive builders to the easiest but less efficient path. MEA Role Coordinate with the utilities to ensure statewide consistency of message and participation, ensure that a sustained marketing and outreach effort results in significant market share. Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Increase marketing effort to ensure the largest possible share of the new construction market. Successful programs elsewhere have achieved participation rates as high as 40% 11

12 Include high performance windows and quality installation of air conditioners (QIV). Create greater differentiation between the three tiers of program participation. Rather than the proposed 85/80/75, use 85/75/65 or even greater spreads so that greater savings are developed and the next generation of efficient building is more easily developed. Switch from promotion of efficient fixtures under the ALP to direct installation of CFLs which may be less expensive to the program and easier to sell to builders. Expand program eligibility to include multi-family, building on successes in other states such as NJ particularly for affordable new multi-family construction or redevelopment. Gas and Electric HVAC Program Program Comments BGE has done a good job designing this program. The objective of BGE s HVAC program is to achieve energy and demand savings by encouraging customers to choose more efficient HVAC equipment. This program is open to all residential customers in BGE s service territory. The HVAC and DHW program is modeled after successful programs in other jurisdictions and leverages the accomplishments of BGE s Fast Track programs. BGE estimates that the program will install 34,775 measures from 2009 to 2011, yielding 17,346 MWh of annual energy savings and 7.0 MW in peak demand savings in MEA Recommendations Approve filed program Modifications Prior to Implementation: o Continue development of upstream incentives to manufacturers and/or distributors as a way of generating greater program participation 12

13 and reducing program administrative costs. This could be integrated with similar efforts in other Northeastern states. MEA Role Coordinate with the utilities to ensure statewide consistency of message and participation, participate in evaluation, measurement and verification process. Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Add next generation water heating equipment to program. Three major manufacturers are supposed to introduce heat pump water heaters to the market in Solar DHW is also worth assessing, though it may be less cost-effective. Home Performance with ENERGY STAR Program Comments This program is a good addition to the BGE portfolio. It includes many good features including emphasis on contractor training & certification, target marketing to high users, direct installation of low cost measures at time of audit, sales training and co-op advertising. The Home Performance with ENERGY STAR Program will earn 18,742 MWh in total energy savings and a demand reduction of 3.9 MW through the treatment of 3705 existing homes from 2009 to However, several problems with the design will likely limit program development and savings: Third option of Quick Home Energy Check-Up proposed for good reasons, but will likely undercut market demand for HPwES. The idea of having program staff drive some of the participation in the HPwES program is a good one, particularly in early years as the contractor infrastructure is still developing. However, the Home Energy Check-Up is 13

14 a much less expensive audit and customer gets virtually the same service. The only difference is no diagnostic testing, but most customers won t see enough value in that to pay the higher full HPwES audit cost. The result is that we expect few customers will take anything but this approach and those contractors who want to develop a Home Performance business model will be undercut and unable to sell services themselves. High expected audit price to consumers may limit program participation, particularly in early years. Limitations on measure installations at time of audit will reduce program savings since experience in other jurisdictions suggests close rate on audits likely to be 50% or lower. Addition of on-line audit for consumers not ready or good candidates for HPwES fills important gap at modest cost. MEA Recommendations Approve filed program as long as it works within the larger Maryland Home Performance with ENERGY STAR Program currently offered by MEA. Modifications Prior to Implementation: o Ensure statewide consistency of common incentives levels and common efficiency levels for each offered product amongst all utilities. o MEA suggests participating contractors offer the HPwES audit at $100 in first year or two. If necessary the program can offer a uniform audit subsidy to convince contractors to do that. o Eliminate the Home Energy Check-Up program element. Allow program staff to recruit customers, perform audits and refer major work to HPwES contractors. There should be only one service, with the only difference being who delivers it (program staff vs. market driven contractors). Price of program supplied audits should be same as recommended private sector price. o Eliminate limit of 6 CFLs per home. Should perform all cost-effective installations. 14

15 MEA Role Coordinate effort to ensure consistency of program incentives across the State. Statewide consistency is especially important in the HPwES Program. This is because Maryland is a small state with overlapping media markets. Home Performance contractors inevitably will cross service territory lines in delivering their services to customers. It is important that contractor participation rules and standards are the same across the State so the Home Performance contractors can succeed in the program with as little bureaucracy as possible. The Home Performance with ENERGY STAR Program can be divided into five components: Contractor Training, Contractor Certification, Marketing, Incentives for Contractors and Consumers, and Quality Assurance of Contractor Work. MEA proposes to be responsible for Establishing Program Standards, Contractor Training, Contractor Certification, and Quality Assurance. BGE would be responsible for Marketing and Incentives for Contractors and Customers. Incentives for contractors could include rebates for training and certification upon completion of a certain number of projects as well as some equipment rebates. Customer incentives could include below-market financing or rebates for the cost of the individual project. Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Depending on both uptake and close rate of program in early years, consider offering free air sealing at the time of the audit to ensure that more savings are realized from participants who never follow through on other measures. This approach is being proposed in NJ for Offer bonus incentive for customers who agree to comprehensive jobs that get deep savings (e.g. 30% or 40% or more). Explore potential for offering on-bill financing of major measure installations. 15

16 Re-assess conclusion that upgrading to high efficiency windows at the time of replacement is not cost-effective. Assumptions leading to this conclusion appear potentially overly conservative. If high efficiency windows are cost-effective, they could provide significant additional savings potential. Multi-Family Program Program Comments BGE s decision to include a Multi-family component is laudable, and absent in other utilities plans. BGE clearly identified key market segments and key market actors that need to be addressed, and will save 36,021 MWh and 3.0 MW by 2011 by serving 19,176 apartments in 591 buildings. The program integrates with Weatherization activity, and can benefit from those leads and services. However, apparent exclusive initial focus on common area lighting is problematic. Such opportunities are probably the most cost-effective. However, for that reason, treating them alone may make it difficult to re-engage with landlords and others. The economic benefits resulting from assistance in common areas (where the building owner pays the utility bills) can be leveraged to encourage investment in tenant areas as well. For example, while a contractor is treating common area lighting, residences can be fitted with CFLs and served with appliance assessments and options for upgrades. By bundling measures across the building, the owner can be encouraged to make investments resulting in non-energy benefits that improve tenant retention and occupancy rates (such as comfort, better lighting, and lower bills). MEA Recommendations Approve filed program. Modifications prior to implementation Ensure statewide consistency 16

17 Add program features designed to achieve savings in apartments themselves, rather than just common areas. This is accomplished by building a relationship with the building owner and leveraging energy savings in common areas to achieve investment in the residential units. MEA Role Coordinate effort to ensure consistency of program offerings and incentives statewide. Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Explore development of purchasing guidelines or even bulk purchasing of efficient equipment or Public Housing Authorities, not-for-profits, and possibly others. Build relationships with owners to affect change in larger portions of housing stock. Leverage investments that directly benefit the building owner to encourage investment in the residences. Low income Program Comments BGE s commendable low-income program provides low-income customers with home performance improvements implemented at a vigorous rate with growth projected at 50% over the period. The program enhances Weatherization and Home Performance services that will save low-income customers 11,809 MWh and reduce load by 1.5 MW by Energy efficiency assessments, energy education and retrofit services will be provided free to qualified program participants. The Low-Income program is modeled after successful programs in other jurisdictions. 17

18 BGE estimates that the program will install 62,700 measures between 2009 and resulting in 2,035 MWh of annual energy savings and 0.33 MW in peak demand savings in 2011; and 2,261 MWh of annual energy savings and 0.37 MW in peak demand savings in MEA Recommendations Approve filed program as long as it works within the larger Assisted Maryland Home Performance with ENERGY STAR Program currently offered by MEA. Modifications Prior to Implementation: o BGE and the other gas and electric utilities should work with MEA, OPC, DHCD, PSC Staff, and DHR to ensure statewide consistency of all program standards and incentives. MEA Role As stated in the Overall Program Comments section of this document, MEA held a stakeholder planning meeting on November 13, 2008 to discuss the options for low-income program consistency in Maryland. MEA will provide the Commission with its recommendations on low and moderate income programs by November 20, Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Install all cost effective measures to increase participation rates with specific measures (see Table 1 in the filing). Coordinate with the multifamily component to leverage building owner investment to make efficiency improvements. Small Commercial Direct Install/Prescriptive 18

19 Program Comments This program targets customers with peak demand of less than 60 kw. Customers can participate either through a comprehensive, turnkey, direct install effort aimed at early retirement or through prescriptive opportunities aimed at time dependent market opportunities. The Direct Install effort will pay for 80% of the full installed cost for early retirement of inefficient equipment. The prescriptive rebate effort will provide between 50% and 75% of the incremental cost of more efficiency measures, and will be consistent with those offered through the Large I&C prescriptive program. The Direct Install program does not appear to include HVAC equipment, even though the text suggests it does (Section 3.1.2, p. 154). The list of measures that were analyzed, as presented in Attachment 11, does not include unitary AC equipment in either the list of measures that passed or those that did not pass. It is unclear whether BGE included this type of equipment in its analysis. BGE estimates that 4,243 participants will install 873,148 measures through 2011, resulting in an annual energy savings of 88,051 MWh and 24.9 MW of peak demand reduction. MEA Recommendations Approve Filed Programs MEA Role o Coordinate effort to ensure consistency of prescriptive incentives across the State. o Work with distributors, wholesalers, and retailers state-wide to ensure stocking and availability of promoted products. Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals 19

20 Increase the depth of savings from each customer. While moving beyond standard lighting retrofits will typically increase the per-customer cost of a direct install effort, it is less expensive than returning to the same customer a few years later to perform additional work. The program should seek to identify the most cost-effective HVAC equipment measures, included instrumented tune-ups, to be installed at the same time as lighting upgrades. Increase the number of participants over time. National Grid, with roughly the same number of customers in Massachusetts, is currently reaching approximately 2,000 customers per year with similar direct install services. Direct install programs are scalable programs that can be ramped up to rapidly acquire durable savings. Consider coordination with other Maryland utilities seeking to implement a small commercial direct install program. This could generate additional economies of scale, reduce costs to ratepayers, and facilitate state-wide marketing messages. Ensure consistency of messaging for the prescriptive rebate programs for all I&C customers. Large Commercial/Industrial/Institutional (LCII) Prescriptive Program Program Comments The Prescriptive Program offers financial incentives and technical assistance to nonresidential customers seeking to improve the efficiency of existing facilities, as well as the efficiency of new equipment purchases, and facility modernization and new construction projects. Participants can choose from a menu of incentives for a wide range of measures such as: lighting and controls, motors, variable speed drives, HVAC equipment, refrigeration equipment, office equipment, and food service equipment. Incentives and claimed savings are based on predefined technologies and calculation methods. BGE estimates that 1,729 participants will install 797,890 measures through 2011; resulting in an 20

21 annual energy savings of 254,256 MWh and 41.3 MW of peak demand reduction. By 2015, BGE estimates that the LCII program will yield 601,180 MWh in annual energy savings along with 97.5 MW of peak demand reduction. MEA is encouraged that BGE is offering the LCII Prescriptive Program; which is modeled after successful programs in other jurisdictions. During these hard economic times, Maryland businesses may need additional encouragement to install energy efficiency measures which necessitates offering additional incentives like rebates. BGE s Commercial Prescriptive Program is a fine starting point through which to introduce BGE s LCII customers to incentives for energy-efficient measures; and goes a long way toward enabling Marylanders to reduce their energy consumption and ensuring electricity reliability. The proposed program also includes a sound EM&V plan and awareness campaign in which BGE will coordinate program offerings with key trade allies to educate and promote participation to their customers. MEA Recommendations Approve Filed Program Modifications Prior to Implementation: o Work with distributors, wholesalers, and retailers state-wide to ensure stocking and availability of promoted products. o Develop sub-program structure to account for separate rate classes that comprise the LCII Customer Sector. o Ensure statewide consistency of incentives levels, efficiency levels, EM&V and general awareness with other utilities. MEA Role Coordinate effort to ensure consistency of program incentives across the State; Coordinate effort to develop consistent general awareness module specific to commercial prescriptive measures; 21

22 Coordinate effort to implement consistent statewide EM&V methodology; Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Increase participation through more aggressive outreach. C&I Custom Measures and Programs Program Comments This program provides a variety of services to large industrial and commercial customers, including audits and financial incentives. Any and all electricity-saving measures or approaches will be considered. Customer engagement will typically begin with a facility audit to identify energy efficiency opportunities. Incentive levels will be project specific based on prescribed calculations. BGE estimates 255 participants and 153,000 MWh of savings through 2011, with peak demand reduction of 11.7 MW. Forms of technical assistance offered under this program will include benchmarking, facility audits, feasibility and project development studies, design assistance, and commission services. Delivery channels will include trade allies, direct communications, and BGE s existing account representatives. Although each of these approaches has value, the latter is likely to result in the best response from large customers. Overall, BGE describes a comprehensive and integrated approach to program delivery that, if well-managed, will generate costeffective efficiency savings from the target customers. BGE suggests that incentives will be set to reduce customer payback times to 1.5 years, and implies that this is a requirement for project acceptance by C&I customers. This oversimplifies the decision-process of business owners and fails 22

23 to consider other benefits that may accrue from project implementation as well as the expected life-time of the measure. BGE s filing also suggests that for custom measures, incentives will be based on a per-kwh value. While this is preferable to a buy-down based on simple payback, it still ignores other important factors, such as the relative kw reduction of the project and the timing of this reduction, which can have substantial economic impacts for customers who pay demand charges. Negotiating the incentive based on all factors that apply to the specific situation may reduce the amount of incentive necessary to ensure project implementation. Other jurisdictions are moving towards custom incentives that begin with a cash-flow analysis. MEA Recommendations Approve Filed Program MEA Role- N/A Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Consider moving from existing account representatives to dedicated efficiency account managers. Utility account representatives already have several responsibilities to their customers, including billing issues, power factor problems, tariff and rate structure issues, etc. More importantly, asking account reps who may have been tasked with building load from their customers (through exterior lighting, incentives for enlarging or upgrading facilities or fuel-switching) to now work to decrease the load from these customers creates a conflict of purpose. Therefore, dedicated efficiency account reps have the potential to better support aggressive efficiency programs and capture higher savings for the utility. Consider developing a custom incentive strategy that incorporates cashflow analysis and that acknowledges the wide range of non-energy benefits that may result from the proposed programs when setting initial incentive offers. 23

24 Re-Commissioning Program Program Comments The objective of the Re-commissioning (RCx) Program is to help LCII customers identify and implement low cost tune-ups and adjustments that improve the efficiency of existing buildings operating systems by returning them to intended operation or design specifications, with a focus on building controls and HVAC systems. BGE states that it will partner with commissioning firms to provide these services to BGE customers. BGE estimates that 184 participants will install 1,633 measures through 2011; resulting in an annual energy savings of 94,320 MWh and 10.0 MW of peak demand reduction. By 2015, BGE estimates that the RCx program will yield 205,812 MWh in annual energy savings along with 20.6 MW of peak demand reduction. MEA is encouraged that BGE is offering Re-commissioning Program; which is modeled after successful best practices programs in other jurisdictions. During these hard economic times, Maryland businesses may need additional encouragement to install energy efficiency measures which necessitates offering additional incentives like customer-utility cost sharing. BGE s Re-commissioning Program is a fine starting point through which to introduce BGE s LCII customers to incentives for energy-efficient measures; and goes a long way toward enabling Marylanders to reduce their energy consumption and ensuring electricity reliability. The proposed program also includes an EM&V plan and awareness campaign in which BGE will coordinate program offerings with key commissioning professionals to educate and promote participation to their customers. MEA Recommendations Approve Filed Program 24

25 Modifications Prior to Implementation: o Ensure statewide consistency of incentives levels, commissioning methodologies, and EM&V. o State clearly whether the program is for re-commissioning or retrocommissioning or both. Retro-commissioning is for existing buildings that have not been previously commissioned; Re-commissioning applies to buildings that have previously been commissioned or retrocommissioned. MEA Role Coordinate effort to ensure consistency of program incentives across the State; Coordinate effort to develop consistent commissioning-specific awareness module amongst utilities; Coordinate effort to implement consistent statewide EM&V methodology pertaining to commissioning; Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Provide incentives for real-time commissioning; Provide incentives for commissioning of new buildings. General Awareness Program Program Comments Participation in BGE s array of DSM programs will greatly depend on BGE s marketing strategy and ability to reach customers. Also, during these hard economic times, Marylanders may need additional encouragement to install 25

26 energy efficiency measures; which necessitates providing awareness, educational, and outreach materials to consumers. Accordingly, MEA is encouraged that BGE is offering the General Awareness program. The goals of BGE s General Awareness program are to educate and engage customers in learning about how they can conserve energy and save money. The general outreach largely will focus on mass market customers, and will complement BGE program-specific marketing. BGE does not provide data linking energy awareness to actual savings; however, BGE states it will perform continuous evaluation of the program s effectiveness. BGE s General Awareness program has good potential; and is a fine starting point through which to introduce BGE s customers to energy-efficient measures and demand response technologies. MEA Recommendations Approve Filed Program Modifications Prior to Implementation: o Ensure statewide consistency with other utilities. MEA Role Coordinate effort to develop consistent general awareness messages and information amongst utilities. Recommended Future Enhancement Opportunities to Achieve EmPOWER Maryland Goals Develop a general awareness program that focuses on LCII customers. 26