Vermont’s energy efficiency utilities under inspection in new investigation

Public Utility Commission

The Public Utility Commission and the Department of Public Service are housed at 112 State St., Montpelier. Photo by Bob LoCicero/VTDigger

[A]lmost 20 years after Vermont became the first state in the country to start a separate energy efficiency utility, members of a state board are now re-examining how those utilities operate.

But multiple players, including the efficiency utilities themselves, would like to see a broader examination of ratepayer funded energy efficiency programs. The work of the efficiency utilities -- Efficiency Vermont, Burlington Electric Department and Vermont Gas -- needs to be more closely tied to electricity utilities’ requirements to reduce customers’ greenhouse gas emissions, say utility managers.

Vermont has seen “a dramatic change in the energy industry landscape” since the creation of Efficiency Vermont — the statewide energy efficiency utility — in 2000, according to a filing made by the Department of Public Service. Peak usage times have moved to later in the day, electric loads are flat or declining and efficient appliances have become more mainstream, says the filing.

Tom Knauer, policy director for the Public Utility Commission, said the panel launched the investigation to make sure efficiency programs are operating in “the most optimal way.” The focus of the commission’s study is primarily administrative, looking at budgeting, resource planning and tracking.

The PUC says that Vermont’s efficiency programs, which were the first of their kind when established, have been successful to date. Future efficiency efforts must focus on meeting the state’s greenhouse gas reduction targets and achieving further savings for customers, the commission states in its order opening the investigation. The state’s latest greenhouse gas inventory shows an uptick in emissions between 2012 and 2015.

“I would say that the value for us and other efficiency utilities, and, frankly, for the ratepayer, is figuring out how all of this (work) could be done more efficiently,” said Abby White, director of marketing for Efficiency Vermont.

Vermont electric utilities historically were required to provide energy efficiency measures to their members. In 1999, Gov. Howard Dean signed a bill granting the Public Service Board, as the PUC was then called, the authority to create a separate statewide energy efficiency utility funded through a ratepayer charge. Nonprofit Vermont Energy Investment Corp. won the contract to operate Efficiency Vermont as that utility.

A simultaneous settlement between the Department of Public Service, Vermont’s electric utilities, the PUC and other parties paved the way for the creation of Efficiency Vermont. Burlington Electric Department was designated a separate efficiency utility for its customers in 2000.

Starting in 2008, funding from Vermont’s participation in the Regional Greenhouse Gas Initiative goes toward home weatherization and other heating efficiency efforts, White said. Vermont Gas Systems Inc. has served as the energy efficiency utility for natural gas customers since 2015.

Efficiency Vermont provides a wide range of services to homeowners and businesses, from energy audits to rebates for efficient appliances to low-interest financing for building upgrades. The utility also partners with other organizations to provide energy saving services to low-income homeowners. White said that over the years, the utility has focused on promoting different technologies — in the past, lightbulbs were a big focus, now cold climate heat pumps are the technology du jour.

“We kind of repeat that cycle of identifying technology, building markets and helping with consumer adoption again and again,” said White.

She added that Efficiency Vermont also works with “private actors” by training contractors and others involved in the construction industry. Efficiency improvements, like building retrofits, provided work for 10,610 Vermonters in 2017, according to a report commissioned by the state’s Clean Energy Development Fund.

The city of Burlington is using 4 percent less electricity today than in 1989, despite population growth, said Mike Kanarick, communications manager for Burlington Electric Department. BED’s efficiency arm has focused more in recent years on improving building efficiency, according to Kanarick. Vermont Gas and BED have partnered to provide a “one-stop shop approach” to reduce electricity and fossil fuel use in multi-family residences.

In comments made to the PUC, the efficiency utilities, the Department of Public Service, Green Mountain Power and Conservation Law Foundation all call for improved coordination between electric utilities and Efficiency Vermont.

Both the efficiency utilities and GMP see the demand resource planning process, which is how the commission and utilities set three-year budgets and savings goals, as a way to better align requirements for efficiency and electrical utilities. White said the planning process could be “streamlined” as it is an “18-month, complex process that is not really amenable to the general public just understanding what’s going on.”

Currently, the goals of the planning process focus on energy reduction, said White, but greenhouse gas emissions reduction targets could be added to that as well. Under tier three of the state’s renewable energy standards, electrical utilities fund efforts that lead to electrification of transportation and heating, such as rebates for cold-climate heat pumps or electric vehicle incentives. Those sectors are the largest contributors to the state’s greenhouse gas emissions.

“We’re each playing a role in this space,” said White. “How might the regulatory structure evolve so that we can be operating in a similar framework?”

In a filing about this investigation, Sandra Levine, attorney for CLF, called for the PUC to broaden what is considered an energy efficiency service in order to “expand customer access” to products that combine efficiency with “other building, transportation, electricity and power needs.” Levine said in an interview that efficiency efforts and differing utility requirements “have turned into silos without the clear incentive to make sure they work together well.”

“CLF reads the statute as an electric car is an electric motor that should be available for energy efficiency services,” said Levine, adding that the “commission declined to accept that” interpretation.

Brian Otley, chief operating officer of Green Mountain Power, said a next “big step” for partnership between Efficiency Vermont and electricity utilities is reducing “peak energy consumption while at the same time encouraging smart electrification.”

An area of discord was the level of savings generated by reduced electricity consumption. Efficiency Vermont’s 2017 savings claim report says that $1 invested by the utility and participants yields $2.10 in lifetime savings for participants.

White cited language from a PUC order approving their 2017 budget and goals as affirming those savings. “Continued investment in cost-effective energy efficiency” will “not only yield savings for customers who install electric and natural gas efficiency measures, but also result in savings for all ratepayers through reduced need for power purchases by utilities and deferred need for system upgrades such as new transmission facilities,” states the order.

In their PUC filing, Green Mountain Power called for a reassessment of the notion that one dollar invested in efficiency yields twice that in savings for customers. “GMP wants this process to examine that old adage, which we believe under review will no longer be true,” said Otley.

Otley said that Vermonters are using less electricity today than they were 13 years ago, and future predictions show a continued decline in electricity usage. Otley expressed concern “that further investment in baseload reductions of energy actually increase(s) the per kWh charge” for customers.

He added that “while load is not growing in New England in a measurable way, there are still literally billions of dollars of regional infrastructure reliability projects that will need to be paid for,” such as cybersecurity investments.

PUC Order Opening Investigation Into Regulation of Efficiency Utilities (Text)

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Elizabeth Gribkoff

About Elizabeth

Elizabeth Gribkoff is VTDigger's energy and environment reporter. She graduated from UVM's Environmental Studies program in 2013, receiving departmental honors for her thesis on women's farming networks in Chile and Vermont. Since graduating, Elizabeth has worked in conservation and sustainable agriculture. Most recently, she was a newsroom and reporting intern with VTDigger.

Email: egribkoff@vtdigger.org

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