Jim Merriam: Efficiency Vermont builds on record of success

Editor’s note: This commentary is by Jim Merriam, the director of Efficiency Vermont.

In the year 2000, Vermont embarked on a ground-breaking experiment. It created the nation’s first “energy efficiency utility” – Efficiency Vermont – in recognition of the fact that the cheapest and cleanest unit of energy is the one that you don’t use.

In the years that have followed, Efficiency Vermont and our customers have won national recognition for finding innovative and effective ways for Vermont families and businesses to save money, save energy, and reduce their carbon footprint through energy efficiency.

Fourteen years into our efforts, it is natural to ask, “What’s next?”, or even, “Is there anything still left for Efficiency Vermont to do?”

To answer those questions, let’s start with where we are today:

• In 2013, Efficiency Vermont bought energy efficiency for less than half the cost of comparable electric supply: 4.1 cents per kilowatt hour for efficiency versus 8.4 cents for supply.

• A recent report from VELCO, the state’s transmission company, found that Vermont’s energy efficiency investments have resulted in the avoidance or deferral of $279 million in regional transmission projects.

• In 2013, Vermont’s electricity usage was 13 percent lower than it otherwise would have been, thanks to the work of Efficiency Vermont and our customers.

• An independent study commissioned by the Public Service Department in 2011 found that every $1 invested in energy efficiency returns $5 in benefits to the Vermont economy.

• In the area of thermal efficiency, Efficiency Vermont’s Home Performance with ENERGY STAR service helped nearly 1,200 Vermonters tighten up their homes in 2013, significantly reducing their heating costs.

Efficiency Vermont’s energy-saving efforts in 2013 had the environmental impact of taking more than 135,000 gasoline-powered cars off the road for a year.

This technology will provide Vermonters with a vastly improved ability to understand how they use energy, and how they can reduce their energy costs and use through both energy efficiency and conservation.

 

The fundamental drivers of these results have remained the same throughout Efficiency Vermont’s existence: Focusing on customer solutions that are cost-effective and innovative, and that leverage the private-sector marketplace. That focus is complemented by rigorous third-party oversight that provides accountability to the public and policy makers.

So what about the future?

From a strictly economic point of view, there is a lot of untapped, cost-effective energy efficiency savings in Vermont’s homes and businesses. Currently, electric energy efficiency is less than half the cost of electric supply. As long as efficiency is less expensive than supply, every unit of energy we save through efficiency saves money for Vermonters.

In addition, the technology and policy landscapes for energy efficiency, and Efficiency Vermont specifically, are constantly changing and evolving. Ten years ago, LED lighting — which can be up to 80 percent more efficient than incandescent technology and more than 50 percent more efficient than compact fluorescent technology — was barely a gleam in the eye of the marketplace. Today, it is becoming the standard: Thanks to an incentive from Efficiency Vermont, you can go to your local hardware store and buy a high-quality LED bulb for $4.99.

One of the most striking technology changes in recent years is in the use of electricity for heating. In years past, electric resistance heating systems were inefficient, costly to use, and a logical target for replacement with fossil fuel systems. But today, electric-powered air source heat pumps are so efficient that they can provide heat at half the cost of oil or a third of the cost of propane. As a result, after years of focusing on reducing the use of electricity, Efficiency Vermont is now identifying technologies such as this where it might actually make sense to use electricity instead of other sources of more costly, more polluting energy.

At the same time, Efficiency Vermont is becoming increasingly focused on the need to reduce peak demand as a way to minimize Vermont’s share of steadily-growing regional transmission costs. As noted earlier, this focus is already paying off, with VELCO finding that Vermont’s energy efficiency investments have helped to avoid or defer $279 million in transmission projects across New England – savings that flow to all ratepayers by reducing or offsetting future rate increases.

More and more, individual consumers will be able to play a larger role in helping to reduce these costs (and their own bills). Vermont is a national leader in the deployment of advanced metering infrastructure (sometimes referred to as the “smart grid”). This technology will provide Vermonters with a vastly improved ability to understand how they use energy, and how they can reduce their energy costs and use through both energy efficiency and conservation. Efficiency Vermont will be there to help Vermonters take advantage of these opportunities in ways that are effective for consumers and easy to engage in.

Finally, it is important to emphasize that Efficiency Vermont doesn’t operate in a vacuum. We evolve and improve based on the changing needs of our customers and the changing policy priorities of the state. Case in point: Our original mandate to focus solely on electric efficiency was expanded in 2008 to encompass heating fuel efficiency, recognizing the substantial cost and saving opportunities that an “all fuels” efficiency approach represented. As the state continues to chart its energy future, Efficiency Vermont is actively working to ensure that we are well-positioned to continue to help Vermonters meet their energy needs.

As Efficiency Vermont’s director, I’m proud of the results that we have achieved to date, but I never want to see us rest on our past successes. There is still a lot of work to be done to help Vermonters reduce their energy costs, and to help the state as a whole meet its energy and economic development goals. We are committed, and I am personally committed, to making sure that Efficiency Vermont continues to meet public expectations of high performance, innovation, accountability, and transparency in the years to come.

Comments

  1. Matt Fisken :

    It’s reassuring to read that Efficiency Vermont is not satisfied resting on its laurels.

    “Is there anything still left for Efficiency Vermont to do?”

    I don’t think anyone would claim EVT has done everything it can, even though many believe it’s time to scale back its operations and remove the 1¢/kWh tax for customers using less than an average amount of electricity (600 kWh/month). If EVT has, in fact, been so successful in getting this ball rolling, then surely there should be some momentum built up by now. If not, then it suggests there’s something missing from the program.

    I think what’s absent from the operation is a holistic approach to electricity efficiency. This includes examining power quality, power factor, light quality, electromagnetic fields AND considering how these variables affect our health.

    This is a tough challenge for EVT and society as a whole because it may mean accepting that we’ve made some mistakes along the way. But that’s okay! It is better to admit problems exist and work toward fixing them than hope/imagine it’s all good. I have a feeling this principle was at the root of EVT’s founding.

    This could include offering Vermonters discounted prices on EMF meters so that in addition to saving money each month on their bill, we can save money at the doctor by avoiding unnecessary visits and treatments related to EMF exposures.

    This could include identifying places in Vermont where the proximity of homes and businesses to electrical and wireless infrastructure put people at an increased risk of illness.

    This could include a program to encourage Vermonters to build their own microgrids in order to avoid using as much grid-supplied power. Not only would this allow Vermont to take stress off the grid during peak periods, but it would also protect important equipment during power outages. Saving a few dollars a month on electricity is meaningless if during an extended outage someone loses hundreds of dollars in spoiled food or has a basement destroyed due to an inoperable sump pump. Of course, there are other more critical examples like people who depend on keeping medicine refrigerated or other life-supporting medical equipment.

    This could include a program to use excess funds to help struggling Vermonters downsize their living arrangements. Pouring money into a building which is falling apart or entirely too large for its occupants is not an efficient use of ratepayer dollars. Screwing a bunch of new lightbulbs into a dilapidated old house may create more problems than it solves.

    As many know, I have no love lost for “advanced metering infrastructure” as it has been hastily deployed throughout most of Vermont. (see my video from two years ago)

    https://www.youtube.com/watch?v=hulChy3WSZk&

    It should not be surprising that freshly printed federal stimulus funds doled out with a “use it or lose it” condition would result in a useless, overbuilt, and dangerous system. What actually makes VT’s “smart grid” initiative so unique and progressive is that customers with wireless/RF/microwave meters (GMP, SED, BED) can opt out without incurring an extortionate surcharge. Residents in other states do not have this option or must pay hundreds of dollars a year just to retain a non-transmitting meter. Smart meters are THE definition of a “vampire” device. Not only do they consume power, but their consumption is variable, it is unaccounted for, and the more power they use, the more radiation is emitted, meaning the more negatively biologically affective they become. For customers who are energy conscious and do not need an in home monitor or web portal to inform them if the lights are on, self-reporting usage via the web, phone or snail mail would be the best way to save energy (in the form of trucks driving around). There is zero need for the thousands of microwave pulses a month being generated by each meter.

    If EVT wants to remain relevant and truly innovate, it needs to move beyond looking at only the easily accountable numbers. Utility bills, lumen:watt ratios, and “deferred” transmission upgrades do not tell the whole story. The true measures of EVT’s effectiveness should be how reliant Vermont is on the region’s fragile electric grid and how healthy homes, schools and businesses in Vermont due to lowered EMF exposures.

    Time will tell if EVT continues a BAU approach, or if it will encourage Vermonters to find non-electrical solutions to our energy constraints, understand the myriad health impacts of new technologies (especially on children and the elderly), and advocate for solutions which do not dramatically change our local/home environments with harmful electromagnetic emissions for the sake of theoretical or infinitesimal reductions in global GHG emissions.

  2. Don Peterson :

    Matt makes a good point.

    People who use the least electricity pay the most for it, due to the billing structure used by Vermont electric utilities.

    Its time to remove the monthy user fees, which punish efficiency, and replace them with a flat increase in kwh charges. The change would likely be a very small amount per kwhr.

    Efficiency Vermont could lead the charge here by persuading rate setters that high effective rates on small consumers is a drag on energy efficiency efforts.

    EVT might also consider outreach to management circle in the utility industry to remind them that their mandate in this age of global climate change is to do more with less, not the other way around.

    Consumers hardly need reminding of that.

    • Matt Fisken :

      Thanks Don,

      Even though I didn’t make that specific point, I have previously and I wholeheartedly agree that power sippers should pay a lower customer charge than energy hogs. It would be wonderful if EVT advocated for this as well.

      The argument that “we all need to pay to keep the poles and lines up” went out the window when net metering customers figured out they could eliminate their customer charges by installing a large enough PV array.

      The question is, what is the actual value of simply being connected to the grid? For a customer who uses very little power, that value is less. For a customer who installs a large PV array and requires the grid to both draw and “store” power (uses it as a battery), that value is much greater.

      I’d go so far as to suggest making the customer charge proportional to one’s power consumption plus their power generation. Something tells me the centralized-distributed “renewable” crowd wouldn’t go for that.

    • Avram Patt :

      Actually, Vermont’s co-op and municipal utilities have long had a two-tiered residential rate structure for most residential ratepayers. ( I believe all the municipals do but I haven’t checked each one.) Depending on the utility, the first 100-200 kWh are sold at a rate considerably lower than all usage after that. A very low user will have all usage billed at that lower rate. A customer that uses less than the average Vermont household will pay a blended rate, a significant portion of which will be based on the low cost block. A high user will pay a blended rate with most of it determined by the higher cost block. These rate structures have been an efficiency incentive for many years.

      Since the fixed costs of providing service are a significant part of the total cost and must be paid by the utility regardless of how much you use, the monthly customer charge helps recover a portion ( not all) of that. Especially in a rural, predominantly residential area with not a lot of kWhs sold per meter, the cost of power can be as little as one third of total cost.

      An inclining rate structure such as what the co-op and municipal utilities have allows recovery of some fixed cost, while providing an economic incentive to lower usage customers.

      • Don Peterson :

        This is disingenuous on your part, as you know perfectly well.

        My first 100 kwhr costs me a $16.00 monthly charge and 8 c kwhr — a total of 24.00 for 100 kwhrs. That is 24 cents per kwhr.

        My second 100 kwhrs costs me an additional 16.00, making my total bill for 200 kwhrs 40.00. That is 20 cents kwhr.

        This seems like less money than 24 cents a kwhr, although what do I know about long division? It ‘s tiring to walk people through this simple math when they ought to know better, and as a former utility executive, I think you do know better.

  3. Avram Patt :

    It’s not disingenuous at all. You can go away for a month, turn everything off and not use a single kWh. Whenever you happen to return, you flip the switch and the lights come on. The utility is serving you 24/7 that whole time and maintaining the systems, from poles and wires, billing, property taxes insurance and everything else, regardless of the amount you use, or don’t use. All those costs are the same per meter regardless of usage. If anything is disingenuous, it’s including the monthly charge in the kWh rate calculation. Regardless of your usage, it costs the same to maintain 24/7 service to a 200 kWh/month household as an 800 kWh/month household.

    Vermont has historically kept the customer charge low. In a number of other other places, many utilities have been raising the customer charge (and lowering the kWh charge.) Even though this does not in itself raise more total revenue, it means the customer charge can be in the $30 range and a lower rate for actual usage. While this may in fact more accurately reflect the cost components to serve a residential ratepayer, it certainly doesn’t encourage efficient energy use. Inclining rate structures do that for those Vermont utilities that have them.

    • Don Peterson :

      I have no quarrels with the need to maintain a useful, vital service.

      Roads are a useful vital service. I can sit at home for a month, and if I want to drive to dinner at Aunt Bess’s one sunday, there the road is, waiting to take me.

      And how is that road maintained? Taxes on the gasoline. How hard is that to understand? I use the road less, I pay less to maintain it.

      Your fixed monthly fee model is out of date, and not useful in the face of global climate change. Maybe in 1939 it made sense, but not now.

      • Avram Patt :

        Actually your local roads are paid for by property taxes. So your roads are paid for by a mix of consumption tax and taxes that have less relation to benefit than a utility monthly charge does.

        You may see a similar issue come up with super efficient and/or electric vehicles as they become prevalent, which may travel the same number of miles as you drive today, put the same wear on the roads, but pay less for their maintenance. It is an issue some states are already beginning to grapple with. Consumption-based revenue needs to be complemented by at least some revenue that everyone shares in, otherwise the infrastructure becomes vulnerable and economic inequity worsens.

        You can call it a 1939 model but it actually predates that in many ways. There is a reason why at least some of the fixed costs of public service infrastructure are socialized (not a political but a utility term). That’s a good thing. We are all free to generate our own electricity off grid, or to not use electricity at all. But: Those of us that choose to benefit from having the grid connect to our homes, and supply 24/7 power at whatever amount you demand at any given time, all have a shared responsibility to contribute something to that cost in a way that balances things fairly, for everyone.

        Again, an inclining rate structure penalizes higher consumption. When you cross the line, the next kWh you use costs you more than the last one. Having fielded many complaints in the past from higher users, it was clear that they got the message.

        • Karl Riemer :

          Thanks, Avram, for explaining this clearly. Never having used >200 kWh/month I hadn’t realized a step existed. Of course, that means the “service charge” portion of my bill looks inordinately large, but that’s because the total isn’t.
          My own uninformed opinion is that maintaining the infrastructure bringing power to my house for a measly 47¢/day is a bargain. If it were up to me, we’d be paying twice that to make it more robust rather than barely holding its own.

  4. Matt Fisken :

    “If anything is disingenuous, it’s including the monthly charge in the kWh rate calculation.”

    You should tell that to the EIA.

    http://www.eia.gov/electricity/sales_revenue_price/pdf/table5_a.pdf

    “All those costs are the same per meter regardless of usage.”

    This is obviously not true.

    There are the total costs of building and maintaining a grid, which are simply divided up evenly among all ratepayers. The customer charges are all the same out of convenience, but the cost to the utility to provide a connection for each ratepayer varies widely.

    Because it would be impossible to fairly set this cost for each customer, the ideal option would be to pro-rate the customer charge based on consumption, which would’t be hard at all. Just make the customer charge 2.5¢/kWh and most customers (using between 400-800 kWhs/month) would hardly notice much of a difference in their overall bill. However, such a structure would slash a 200 kWh/month customer charge to $5 and hike a 1200 kWh/month customer charge to $30. This would ensure the lines and poles don’t fall down while actually encouraging efficiency. The worst possible outcome is that the average usage dropped precipitously, in which case the CC/kWh would simply be raised.

    Although other utilities in other states have done away with customer charges all together and calculate bills entirely based on usage, I am willing to accept that Vermont may be an exception due to its low population density and rugged terrain.

    If the customer charge MUST BE FIXED, as Avram claims, then how about providing the first 100 kWhs for free and charging a slightly higher rate to compensate?

    Avram, can you imagine another way to incentivize efficiency using the residential rate structure? In other words, do you think it is worth rewarding customers who only use 200 kWh/month for putting so little strain on the grid and probably being more forgiving of a power outage than an 800 kWh/month customer? If so, how?

    Lastly, commercial and industrial customers who use a great deal more power than the average home are provided a huge rate discount. That’s hardly an inclining rate structure.

    After fleshing out this comment, it continues to seem to me that utilities, especially investor owned ones, simply do not want to encourage/reward deep efficiency because the more power they sell, the more their shareholders benefit.

    The climate and frugal be damned!

  5. Don Peterson :

    Avram: Maybe a lifetime of being safe within the confines of a regulated industry has made you fail to recognize change, but change is coming, and its not plug in cars that I’m referring to.

    Carbon intensive industries, like power generation, will have to help throttle back consumer consumption or the world comes to an end for the human race. (Hardly a disaster, when you think of it that way, actually)

    So when I proposing a minor cost shift from a billing model put in place in the last century, you resist the notion by supplying non sequiturs about the highway system.

    You just want to win the rebuttal, but this isn’t a debate. We either reduce our carbon output, or turn the place into Mars.

    You maintain that we can’t even nibble on the edges of the status quo, which is like maintaining that we have a god given right to cut every tree, pollute every lake, and pave every hayfield, as long as it keeps the lights on.

    Consumers who use more carbon, should pay more for the privilege. That can’t be so hard to understand, unless it upsets a profitable revenue model.

    A failure to adapt to change is the hallmark of extinction.

    • Avram Patt :

      Don, I guess I’ll finish by saying that if you knew a little more about me, you’d know that I did not spend a lifetime in the utility industry, that my work has involved energy efficiency in one way or another since the early 1980s in 3 previous non-utility jobs, and that the utility I did end up working for championed and achieved energy efficiency starting before I worked there, at a time when most utilities had to be forced to do that. It was in fact my realization that we needed to move away from damaging unsustainable energy sources that got me involved in energy issues in the first place, well before I started working in the business and before carbon impact became the prevalent motivation. It’s easy to assume things about people.

      I started the conversation by expressing a concern about economic fairness and balance, having seen what the “you’re on your own” restructuring of the industry did to residential ratepayers in other states 15 or so years ago. I’ll add that the raw household kWh usage is not necessarily a true indicator of household energy efficiency. A 5-person household using 600 kWh/month is likely more efficient and has a lower carbon impact than a 2-person household using 400 or 1 person using 200, but your proposal would not balance these factors.

      And the only reason I noted how we pay for roads was because you brought the subject up in the first place.

      (I’m done.)

      • Karl Riemer :

        Done you may be, but thanks you will get. In a hotbed of hyperbole and well-intended, well-said, ill-considered emotional arguments and pseudo-solutions, your dispassionate rationality is always the adult voice. You aren’t only better informed than the rest of us, you’re more thoughtful, reasonable and respectful. Thanks for taking the time to bring facts to the table.

  6. Karl Riemer :

    “Ten years ago, LED lighting — which can be up to 80 percent more efficient than incandescent technology and more than 50 percent more efficient than compact fluorescent technology — was barely a gleam in the eye of the marketplace. Today, it is becoming the standard”

    Balderdash. 10 years ago LED lighting was expensive but far more than a gleam in the eye of anyone ostensibly conversant with efficiency trends. Today it is definitely the standard. Yet, 10 years ago right up to and including today, Efficiency Vermont promotes poisonous, obsolete CFLs. They’re less heavy, ugly and half-assed than they used to be, but CFLs were never the answer. They were never even the best use of fluorescence (straight tubes are), much less the best use of electricity. They aren’t the best use of natural resources nor of Efficiency Vermont’s time and energy. They were arguably superior to incandescent bulbs, though more for longevity than efficiency, but that very longevity impedes the transition to LED lighting. CFLs were a mediocre idea with a short life. Yet Efficiency Vermont continues championing them, subsidizing them, flooding Vermont with their mercury vapor in thin-walled glass tubes.

    If for no other reason, that’s an indictment of Efficiency Vermont’s efficacy and intelligence.

    • Matt Fisken :

      Karl’s shrewd critique of CFLs is appropriate, but only scratches the surface. Jim’s commentary and the opinion of many who have bought, sold or subsidized these curly cue catastrophes is that they have been a helpful bridge technology, allowing us to save energy until the price of LEDs comes down. One could make the same weak argument about nuclear power helping get us to a renewable energy economy. As Karl astutely points out, the promotion of and obsession with the former has delayed the latter.

      Like nuclear power, the focus now should be on transitioning away from CFLs in the best way possible. A recent Canadian survey found that only 1/3 of consumers properly recycled their CFLs, with most throwing them in the garbage.

      http://www.cbc.ca/news/technology/compact-fluorescent-bulbs-often-end-up-in-trash-1.2580693

      This is assuming the bulb burns out in a preferable way. If it breaks, smokes or catches fire at the end of its life, your home can quickly become hazardous.

      Of course, there are serious problems with these bulbs besides their elemental contents and fragility, but I won’t get into that now.

      The general problem is that as a society, we love progress traps. Corporations love designing them and financially wouldn’t think of accepting liability for their flaws, while consumers, after being duped, refuse to allow their intelligence to be further insulted by simply giving them up. CFLs are just a single product in a long list of things we foolishly buy and allow to be promoted because we’re afraid to look closely at the truth, fearing that doing so would cause panic or wreak havoc on the economy. It is quite incredible how our brains allow believe the benefits of something outweigh the downsides when in reality they do not.

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