Blog includes contributions by Greg Ehrendreich.
During this year’s MES conference, around 120 people filled the room to explore challenges with and possible responses to the U.S. Department of Energy’s Energy Independence and Security Act (EISA) for utility energy efficiency programs.
What is EISA and Why Are We Talking About It Now?
EISA was signed in 2007 by President Bush to reinforce energy reduction goals and introduce aggressive requirements to help move the US toward greater energy independence through increased the efficiency of buildings, vehicles and products. A recent ruling from EISA went into effect January 1, 2023 that raised the floor for the minimum efficiency levels for general service lamps to 45 lumens per watt and addressed some loopholes that effectively phase out the manufacturing and selling of inefficient, incandescent light bulbs. Increasing the minimum efficiency levels of light bulbs will help consumers save energy and money, however it also limits or completely restricts utilities from offering equipment incentives to help buy down the purchase price. Many utilities are now grappling with the impacts of this ruling, as they have relied on lighting measures to create program engagement opportunities for customers and help reach energy savings goals. Details of EISA, including enforcement rulings can be found at EPA.gov, Regulations.gov and Energy.gov.
With this recent ruling, many in the energy efficiency industry are seeing challenges related to cost effectiveness and the potential loss of customer touchpoints. This workshop was an opportunity to hear directly from utilities, implementation contractors, manufacturers and others on how EISA is impacting their programs, their business and the customers they serve.
An Illuminating Conversation
The moderator, a representative from an investor-owned utility, kicked things off by joking that if anyone came expecting to leave with all the answers, they might want to leave now, since he did not have many answers and didn’t think anyone else in the room did. Throughout the discussion it became apparent that national market characterizations of the prevalence of incandescent lightbulbs may paint a more optimistic picture than some utilities are seeing in their territories. A participant cited a national study finding about 30% of general service lamps in residential buildings are still incandescent bulbs, but other participants shared that their own market characterizations found higher prevalence of incandescent bulbs, perhaps up to 68%. With still so many incandescent bulbs in homes, the opportunity for energy savings is still present, however utilities now have a limited set of program activities to help their customers save energy from lighting retrofits. Several participants indicated that their home assessment programs were heavily impacted by the EISA ruling since the energy savings from lightbulb replacements have been key to making these programs cost effective. Without low-cost energy savings from lighting to offset higher cost measures, many home energy assessment programs will be scaled back or potentially eliminated for market rate customers, depending on the utility and the agreements with their commission. One person commented that 30,000 customer touches a year would disappear with these assessment programs while another expressed uncertainty on how they will respond to homeowners calling in with high usage without being able to offer a residential home energy assessment for all customer types.
Unique Approaches to the Challenge
Many attendees indicated that they were looking to the C&I programs to make up for the energy savings gap and ensure the portfolio as a whole is cost effective, though most expressed concern about leaving the residential sector behind. There was some discussion about increasing the emphasis on residential weatherization measures with one person noting they recently added an instant markdown for insulation and have seen great success with this in the market rate sector. Others are hoping that new technologies, including smart home devices, would help maintain touch points with residential customers. Others are exploring the possibility of continuing to offer lighting measures to income eligible customers without claiming savings, but not enough progress has been made to determine the feasibility of this approach.
We heard from a few programs that negotiated exceptions with regulators or other stakeholders to keep lighting and home assessment programs active in certain situations, specifically those that benefit income qualified communities, for at least a limited time. For programs that can still offer lighting measures, several people mentioned food banks, churches and other community service organizations as key partners that utilities continue to partner with on lighting programs to ensure their income qualified customers can still have access to free or reduced lighting equipment. In many cases these programs were hoping to increase support for weatherization programs with these partners.
Perhaps the most popular comment of the session, as measured by the applause that followed and the supportive comments from subsequent speakers, was from one utility representative who noted that it is time to rethink the existing regulatory construct and likely move away from traditional cost effectiveness requirements to allow the utilities the flexibility in serving customers who need assistance reducing their energy bills. This individual, and others, talked about the need for negotiations with regulators and legislators to redefine program goals and look more broadly at how best to serve customers.
What Happens Next?
Addressing this challenge won’t be easy and, as many people noted throughout the session, there is no silver bullet, but given the crowd in the room there are plenty of people ready to work for a solution. The first step is for stakeholders to share their thoughts and experiences, as they did in this workshop, so others may walk away with a new idea or new way to meet customers’ needs. Keep your eyes and ears open for additional opportunities to connect with MEEA members to brainstorm responses to this and other challenges facing your organization.
To connect this session to a project that MEEA has been working on for several years, rethinking the regulatory construct and cost-effectiveness requirements is exactly what the National Standard Practice Manual (NSPM) framework is designed to facilitate. The workshop showed that lighting clearly still serves valuable policy and utility goals. So, if it doesn’t provide the direct savings needed to maintain cost-effectiveness in the current construct, then working through the NSPM framework may help stakeholders understand a broader range of non-utility system impacts that come from lighting and how incorporating those impacts into the utility and regulator decision making might be a way to keep using lighting to reach those goals.