Webapp.psc.state.md.us
1
1 BEFORE THE PUBLIC SERVICE COMMISSION OF MARYLAND
2 - - - - - - - - - - - - - - - - - :
IN THE MATTER OF THE POTOMAC :
3 EDISON COMPANY D/B/A ALLEGHENY :
POWER'S ENERGY EFFICIENCY, : CASE NO. 9153
4 CONSERVATION AND DEMAND RESPONSE :
PROGRAMS PURSUANT TO THE :
5 EMPOWER MARYLAND ENERGY :
EFFICIENCY ACT OF 2008 :
6 - - - - - - - - - - - - - - - - - :
IN THE MATTER OF BALTIMORE GAS :
7 AND ELECTRIC COMPANY'S ENERGY :
EFFICIENCY, CONSERVATION AND : CASE NO. 9154
8 DEMAND RESPONSE PROGRAMS :
PURSUANT TO THE EMPOWER MARYLAND :
9 ENERGY EFFICIENCY ACT OF 2008 :
- - - - - - - - - - - - - - - - - :
10 IN THE MATTER OF POTOMAC ELECTRIC :
POWER COMPANY'S ENERGY EFFICIENCY,:
11 CONSERVATION AND DEMAND RESPONSE : CASE NO. 9155
PROGRAMS PURSUANT TO THE EMPOWER :
12 MARYLAND ENERGY EFFICIENCY ACT :
OF 2008 :
13 - - - - - - - - - - - - - - - - - :
IN THE MATTER OF DELMARVA POWER & :
14 LIGHT COMPANY'S ENERGY EFFICIENCY,:
CONSERVATION AND DEMAND RESPONSE : CASE NO. 9156
15 PROGRAMS PURSUANT TO THE EMPOWER :
MARYLAND ENERGY EFFICIENCY ACT :
16 OF 2008 :
- - - - - - - - - - - - - - - - - :
17 IN THE MATTER OF SOUTHERN MARYLAND:
ELECTRIC COOPERATIVE'S ENERGY :
18 EFFICIENCY, CONSERVATION AND :
DEMAND RESPONSE PROGRAMS PURSUANT : CASE NO. 9157
19 TO THE EMPOWER MARYLAND ENERGY :
EFFICIENCY ACT OF 2008 :
20 - - - - - - - - - - - - - - - - - :
(Caption Continued)
21
TUESDAY, OCTOBER 25, 2016 - 10:00 A.M.
22
SEMI-ANNUAL REPORT - 1ST HALF OF 2016
23 VOLUME I
2
1 - - - - - - - - - - - - - - - - - :
IN THE MATTER OF WASHINGTON GAS :
2 LIGHT COMPANY'S ENERGY EFFICIENCY,:
CONSERVATION AND DEMAND RESPONSE : CASE NO. 9362
3 PROGRAMS PURSUANT TO THE EMPOWER :
MARYLAND ENERGY EFFICIENCY ACT OF :
4 2008 :
- - - - - - - - - - - - - - - - - :
5
6
7 Public Service Commission
8 William Donald Schaefer Tower
9 6 St. Paul Street, 16th Floor Hearing Room
10 Baltimore, Maryland 21202
11 Tuesday, October 25, 2016 - 10:00 a.m.
12 Reported by: Marjorie Peters
13
14 BEFORE: W. KEVIN HUGHES, Chairman
15 HAROLD D. WILLIAMS, Commissioner
16 JEANNETTE M. MILLS, Commissioner
17 MICHAEL T. RICHARD, Commissioner
18 ANTHONY J. O'DONNELL, Commissioner
19
20
21
22
23
3
1 APPEARANCES:
2 On behalf of SMECO:
3 JEFF SHAW
4 Vice President, Distributed Energy
5 and Sustainability
6 15065 Burnt Store Road
7 P.O. Box 1937
8 Hughesville, Maryland 20637-1937
9 240-528-9801 (Voice)
10 301-274-4329 (Fax)
11 and
12 MINDY L. HERMAN, ESQUIRE
13 Saul Ewing
14 Lockwood Place
15 500 East Pratt Street
16 Baltimore, Maryland 21202
17 410-332-8690 (Voice)
18 410-332-8169 (Fax)
19
20
21
22
23
4
1 APPEARANCES: (Continued)
2
3 On behalf of Washington Gas Light:
4 JOHN C. DODGE, ESQUIRE
5 Associate General Counsel
6 101 Constitution Avenue, N.W.
7 Washington, D.C. 20080
8 202-624-6722 (Voice)
9 202-624-6789 (Fax)
10 and
11 SEAN SKULLEY
12 Project Manager, Energy Efficiency
13 Programs
14 6801 Industrial Road
15 Springfield, Virginia 22151
16 703-750-5869 (Voice)
17
18 On behalf of Efficiency First:
19 MICHELLE GRIFFITH
20 Manager, DeVere Insulation
21 JOSH NOTES
22 Managing Partner, GreeNEWit
23
5
1 APPEARANCES: (Continued)
2 On behalf of Maryland Alliance of Energy
3 Contractors and the Heating and AC Contractors of
4 Maryland, Inc.:
5 JAMES McGEE, ESQUIRE
6 Alexander & Cleaver
7 11414 Livingston Road
8 Fort Washington, Maryland 20744
9 301-292-3300 (Voice)
10 and SEAN SCHMIDT
11 R.M. Schmidt Heating and Air Conditioning
12 and MICHAEL GIANGRANDI
13 A.J. Michaels
14 On behalf of Montgomery County, Maryland:
15 LISA BRENNAN, ESQUIRE
16 Associate County Attorney
17 Montgomery County, Maryland
18 101 Monroe Street, 3rd Floor
19 Rockville, Maryland 20850-2580
20 240-777-6745 (Voice)
21 and MICHELLE VIGEN
22 Senior Energy Planner
23 Office of Sustainability
6
1 APPEARANCES: (Continued)
2
3 On behalf of Maryland Energy Efficiency Advocates:
4 SUSAN STEVENS MILLER
5 Earthjustice
6 1625 Massachusetts Avenue, N.W.
7 Suite 702
8 Washington, D.C. 20036
9 202-797-5246 (Voice)
10 and
11 JAMES GREVATT
12
13 On behalf of the Maryland Energy Administration:
14 STEVEN M. TALSON, ESQUIRE
15 CHRISTINE NEIDERER, ESQUIRE
16 Assistant Attorneys General
17 MARY BETH TUNG, Ph.D., Director
18 RACHEL E. WEAVER
19 EmPOWER Program Manager
20 Maryland Energy Administration
21 1800 Washington Boulevard, Suite 755
22 Annapolis, Maryland 21230
23 410-537-4000 (Voice)
7
1 APPEARANCES: (Continued)
2
3 On behalf of Maryland Office of People's Counsel:
4 MOLLY KNOLL, ESQUIRE
5 Assistant People's Counsel
6 Maryland People's Counsel
7 6 St. Paul Street, Suite 2102
8 Baltimore, Maryland 21202
9 410-767-8150 (Voice)
10 410-333-3616 (Fax)
11 and NIKKI KUHN
12 DAVID HILL
13 EMILY LEVIN
14 Vermont Energy Investment Corporation
15 128 Lakeside Avenue, Suite 401
16 Burlington, Vermont 05401
17 802-540-7734 (Voice)
18
19
20
21
22
23
8
1 APPEARANCES: (Continued)
2
3 On behalf of the Public Service Commission Staff:
4 DANIEL HURLEY
5 Assistant Director
6 Energy Analysis & Planning
7 AMANDA BEST, Energy Analyst
8 KEVIN MOSIER
9 6 St. Paul Street, 17th Floor
10 Baltimore, Maryland 21202-6806
11 410-767-8004 (Voice)
12 410-333-6086 (Fax)
13 and
14 JOSEPH LOPER
15 Itron
16
17
18
19
20
21
22
23
9
1 P R O C E E D I N G S
2 (10:00 a.m.)
3 CHAIRMAN HUGHES: Good morning,
4 everyone. Welcome to the Maryland Public Service
5 Commission EmPOWER Maryland semi-annual hearings.
6 At these hearings, we will review results from
7 quarter 1 and quarter 2 of 2016 for our utility
8 EmPOWER Maryland programs.
9 In terms of mapping out our next couple
10 of days, we will go to about 1:00 today. We'll
11 break for lunch, come back around 2, and I think
12 we'll go until 5 to 5:30 in that range. We'll be
13 back tomorrow. We'll start at 1:00 because we
14 have an administrative meeting in the morning and
15 then we'll probably either go until we finish or
16 until about 5:30 or so.
17 If we need additional time, hopefully,
18 we won't, but if we do, we have some holdover time
19 scheduled for Thursday morning starting at 10:00.
20 So, we'll see how we progress. Hopefully, we'll
21 be able to stay on schedule.
22 One other item I want to address before
23 we begin, and that is that a few -- actually,
10
1 several months ago, about, at least over a month
2 ago, we had a request from Baltimore Gas &
3 Electric Company to give them permission to move
4 money within residential programs as long as it
5 was in a budget neutral way. That was on our
6 administrative meeting. We had quite a bit of
7 discussion about that. The other utilities also
8 asked for that authority.
9 The Commission has deliberated on that,
10 and we are going to rule from the bench on that
11 with an order forthcoming. And the ruling is that
12 that request is denied. The Commission feels it
13 is very important that we and other stakeholders
14 have an opportunity to look at those proposed
15 transfers, ask questions, make sure we have all of
16 the information we need.
17 However, we are very cognizant of the
18 importance of utilities being able to make some
19 timely decisions on requests such as these, and so
20 we will allow utilities to bring those requests in
21 as part of our administrative meeting process,
22 with the caveat that they really need to be
23 judicial, that these need to be time-sensitive
11
1 requests.
2 Again, we will have an order
3 forthcoming on that item.
4 Okay. With that, we will begin with
5 our Staff. We have an agenda prepared, and I want
6 to thank our Staff for working on the agenda. I
7 won't go through it all but we'll begin with Staff
8 and then we'll go to the Alliance followed by
9 Efficiency First. So, I will welcome Mr. Hurley
10 and Ms. Best. Good morning.
11 MS. BEST: Good morning, Chairman and
12 Commissioners, Amanda Best on behalf of Staff. We
13 just have a short presentation for you all this
14 morning and we're available for any questions that
15 you might have. So, I guess we can get started.
16 The third EmPOWER Maryland program
17 cycle is about halfway completed with the end of
18 the first half of 2016. There were mixed results
19 across the portfolios in the various utilities in
20 the first half of the year; however, Q1 and Q2 of
21 2016 was the highest performing first half of any
22 program year in total energy savings achieved.
23 So, this just depicts where the
12
1 utilities would be in terms of the 2 percent
2 energy goal that they have. Statewide, the
3 utilities have achieved energy savings of nearly
4 0.8 percent of the energy sales as of the first
5 half of 2016. These goals are done on a yearly
6 basis. So, if 2016 is any indication of the
7 performance possible for next year, then a
8 majority of the utilities are likely to reach
9 their interim goals.
10 CHAIRMAN HUGHES: Ms. Best, let me stop
11 you there. I want to invite my fellow
12 Commissioners to jump in with questions as we go
13 along, just, you don't have to be recognized, just
14 jump on in, and we'll do that not only with Staff
15 but with all of our panelists. I think it will go
16 quicker that way. So, thank you.
17 MS. BEST: Thank you. So, this chart
18 just kind of summarizes where all of the
19 implementers of the programs for EmPOWER are in
20 relation to their forecast for the full 2015 to
21 2017 program cycle.
22 Most of the metrics are on track across
23 all of the implementers, and statewide, with some
13
1 utilities reporting ahead or behind the expected
2 piece of the metrics, just depending on where they
3 are and how their programs have been progressing.
4 This just summarizes the evaluation and
5 verification of cost effectiveness that was
6 completed by the statewide evaluation team, and
7 Itron, the Commission's independent evaluator. It
8 was concluded that the energy savings and demand
9 savings for evaluation year number 6 were over 80
10 percent for both the residential and commercial
11 portfolios, and in terms of cost effectiveness,
12 all of the utilities had both total EmPOWER
13 portfolios as well as residential and C&I
14 portfolios that passed the TRC test.
15 So, this slide goes over some of the
16 budget adjustments and budget requests that were
17 made for the first half of 2016. There were seven
18 budget adjustments filed by DPL, PEPCO, Potomac
19 Edison and Washington Gas & Light.
20 The HVAC program requests from DPL and
21 PEPCO were determined to be tier 3 under PHI's own
22 classification system, meaning that the increase
23 in funding is needed to meet demand for projects
14
1 that are not as cost effective as others.
2 PHI suggested other alternatives to
3 keeping the HVAC programs operating through 2017
4 including lowering incentives.
5 So, Staff recommends that the
6 Commission deny DPL and PEPCO's budget requests
7 and instead approve one of the alternative methods
8 proposed by the companies.
9 CHAIRMAN HUGHES: Ms. Best?
10 MS. BEST: Yes.
11 CHAIRMAN HUGHES: On that point, when
12 would the Commission see alternative methods;
13 would that be something that would come to us by
14 the end of the year? This is for 2017, or --
15 MS. BEST: So, they had a list in their
16 filing of about I think it was six or seven
17 different alternatives. One of them was to lower
18 the budget and the incentive levels. Another was
19 to maybe remove certain incentive -- remove
20 certain measures from the program. Trying to
21 remember the others. Those were the major ones
22 that are coming to the top of my head. Which I
23 think Staff would be in support of.
15
1 In terms of the incentive levels, the
2 standards changed, the federal baselines changed.
3 The Commission granted an extension to use the old
4 baseline of year '13 when these were approved just
5 to give the contractors sell-through time which is
6 a standard practice. There's usually a
7 sell-through period, and that time is about up.
8 So, it would make sense for us to change the
9 incentives based on the new incentive -- the new
10 baseline of year '14. That could definitely be
11 one alternative to be explored to keep them open.
12 CHAIRMAN HUGHES: Are these changes, I
13 guess my question is, are these teed up today for
14 us to make decisions, or is this something that is
15 going to need some more discussion with Staff and
16 a formal recommendation.
17 MS. BEST: I think if I -- in terms of
18 actual incentive levels, there would probably need
19 to be, we would need actual, a final proposal from
20 PHI, and if the other utilities would also like to
21 do it, if you would like to see consistent
22 statewide measure levels for the incentives, then
23 we probably need to see what their proposal is for
16
1 those reductions in the incentives.
2 The options are we could do a work
3 group to figure that out or we could just have the
4 utilities work with their contractors to figure
5 out what those appropriate levels would be and
6 have them file something.
7 CHAIRMAN HUGHES: Okay. Thank you.
8 MS. BEST: No problem.
9 COMMISSIONER RICHARD: Just in that
10 process, will there be opportunities for other
11 stakeholders to opine on the various options, for
12 instance, MEA, OPC? Will that be part of the
13 process in evaluating the options?
14 MS. BEST: Yes. If it was a work group
15 process, they would be invited to join the work
16 group and put their input in there. If you would
17 prefer to have the utilities file a report with
18 the proposal, it could be heard at a later meeting
19 and OPC and MEA and anyone else could file
20 comments on those proposals. So we could do it
21 either way, they could be involved in the process.
22 COMMISSIONER RICHARD: I wanted to
23 understand the process and understand there would
17
1 be an opportunity for the stakeholders to engage
2 and I guess we would have the opportunity at that
3 point to hear all of the views.
4 MS. BEST: Yes.
5 COMMISSIONER RICHARD: Okay.
6 MS. BEST: Potomac Edison requested
7 additional funds for the prescriptive program.
8 The request is needed to keep the program open
9 through 2017, meet customer demand and meet the
10 energy savings goals for 2017.
11 After further discussion with the
12 company, Staff discovered that 1.4 million was the
13 actual total needed to meet the energy savings
14 goals. While the remainder of the request is more
15 to meet the demand of the program and keep it open
16 for the rest of the program cycle.
17 So, with that information, Staff
18 recommends that the Commission approve the $1.4
19 million needed to meet the energy savings goal.
20 Potomac Edison also requested to reduce
21 the budgets for the appliance rebates and Quick
22 Home Energy Checkup programs. Staff recommends
23 that both of those requests be denied just because
18
1 there's really no resulting impact on the
2 surcharge due to those changes. The reductions
3 won't offset the surcharge since they're
4 residential programs and the prescriptive is a
5 commercial program, so there's no offsets going on
6 there. And the budgets for those two programs, if
7 they're not used, they just won't be collected.
8 So, that's why Staff suggested denying those
9 requests.
10 COMMISSIONER O'DONNELL: Back up to
11 Potomac Edison for a second.
12 MS. BEST: Sure.
13 COMMISSIONER O'DONNELL: Your previous
14 slide says they're meeting 93 percent of the
15 program cycle goals or forecasted goals at this
16 point. They look like an outlier in terms of
17 performance, very high performance. What's the
18 reason for that; why are they different? Why are
19 they the outlier? What's going on?
20 MS. BEST: I can pull up the data for
21 you, and get that for you.
22 COMMISSIONER O'DONNELL: So, I'm just
23 looking for a very high level, 30,000-foot level.
19
1 MS. BEST: Yeah, sure. I think to be
2 honest, they just had -- I think a lot of their
3 success came from the prescriptive program, so
4 they had a lot more demand savings than they
5 anticipated having at this point through the
6 program cycle.
7 So, I think that's where a large
8 majority of the 93 percent came. It's just there
9 was a greater deal of participation in certain
10 programs that led them to have higher demand
11 savings.
12 COMMISSIONER O'DONNELL: I suppose that
13 higher performance could be based on modest
14 setting of the forecasts, or it could be due to
15 enhanced performance, whatever the reason, but I
16 think we -- we need to start looking at what works
17 well and what doesn't in these programs, and so
18 that's the genesis of my question, why are they
19 performing very well relative to the other
20 programs.
21 MS. BEST: Certainly.
22 COMMISSIONER O'DONNELL: Thank you.
23 MS. BEST: Okay. The final adjustment
20
1 requests were from Washington Gas Light. These
2 are the first budget adjustment requests made by
3 the company since they began offering programs.
4 Both programs have pipelines with anticipated
5 projects that will cause the budgets to be
6 expended prior to the end of 2017. Staff is
7 hesitant to halt these programs from operating as
8 they are still new, and shutdowns could be
9 damaging to the longevity of these programs.
10 So, that's why Staff is recommending
11 that both requests be approved for WGL.
12 And that does it for the actual
13 adjustments. There is a reallocation request from
14 SMECO. The cooperative requested to move money
15 from the underperforming multifamily program to
16 the more productive HVAC and Quick Home Energy
17 Checkup programs. The request is budget neutral,
18 and has no surcharge impact; therefore, Staff
19 recommends that the request be approved by the
20 Commission.
21 CHAIRMAN HUGHES: Ms. Best, I think
22 Staff will be available when the companies come
23 up.
21
1 MS. BEST: Yes.
2 CHAIRMAN HUGHES: So, we can get into
3 more budget questions I think as the companies are
4 up and Staff will be available, too.
5 MS. BEST: Yes.
6 COMMISSIONER O'DONNELL: Can you just
7 quickly cover what a budget reallocation is versus
8 a budget adjustment; what's the difference between
9 the two budget actions?
10 MS. BEST: Sure. The budget
11 reallocation is where they are -- they are
12 proposing to take money from one program that they
13 don't foresee them spending the forecasted budget
14 for, and moving that money to other programs
15 within the same portfolio that they have demand
16 for and they have need for the budget for.
17 While an adjustment is they are just
18 requesting more money, or less, depending on what
19 kind of adjustment it is, but generally more money
20 for a program because they've exceeded or are
21 close to exceeding the forecasted budget for the
22 program. And in most cases they're just -- there
23 might not be money they could move somewhere else.
22
1 COMMISSIONER O'DONNELL: So, is it fair
2 for me to summarize an adjustment requires
3 surcharge action and a reallocation is just a
4 simple shifting of existing surcharge money?
5 MS. BEST: Yes. I think that's a fair
6 classification.
7 COMMISSIONER O'DONNELL: I want to
8 clarify that, thank you.
9 MS. BEST: And then our final slide is
10 on the program modifications that were requested.
11 BGE and DHCD both made program
12 modification requests. BGE is requesting to
13 consolidate its building operator certification
14 program under its retro-commissioning program.
15 This consolidation would make BGE's
16 program consistent with Delmarva and PEPCO's, and
17 so Staff recommends that the Commission accept
18 this proposal.
19 The Department of Housing and Community
20 Development has several requests. The first is to
21 discontinue completing desk reviews of all limited
22 income jobs that exceed $4500. Staff recommends
23 reducing the number of desk reviews to 10 to 20
23
1 percent of the total jobs that exceed $4500 and to
2 have DHCD include updates on the percentage of
3 deficiencies discovered in its next semi-annual
4 report.
5 The second request is the ability to
6 leverage MEEHA funding with the community solar
7 pilot program. Staff recommends that this request
8 be denied because of concerns over using surcharge
9 money to fund non-electricity-based projects as
10 well as DHCD's ability to utilize other funding
11 sources for this type of program instead of
12 EmPOWER money.
13 Not -- DHCD also made three other
14 requests. One was regarding changing the
15 proportion of DHCD's budget collected and paid by
16 each utility. Another was the application of the
17 realization rates to the 2015 to 2017 program
18 cycle forecasts, and the final was to have its
19 2018 to 2020 plans heard early.
20 Staff does not have enough information
21 to properly recommend approving or denying these
22 at this time due to some errors that were found in
23 the reporting, which led Staff to have some
24
1 concerns with hearing the plans in advance of the
2 typical schedule, which is September of next year.
3 So, Staff would prefer that DHCD would provide
4 correct information for these errors before we can
5 make final recommendations on those requests.
6 And that's all I have.
7 CHAIRMAN HUGHES: Okay. And are you
8 going to be covering the --
9 MS. BEST: Oh, no, you're right.
10 MR. HURLEY: One more slide.
11 MS. BEST: You're right. I got
12 excited.
13 So, I actually do have one more, and
14 these are on the various work group reports that
15 were filed in September. So, the first of the
16 four work groups was the Home Performance with
17 Energy Star work group which was directed to
18 discuss the current incentive structure of the
19 program and compare it with those offered in other
20 states.
21 The work group found that there were
22 four general incentives, incentive structures that
23 are used across the country. And that there was
25
1 also a proposal filed in that report for the
2 Commission's consideration on switching the
3 incentive structure to a performance-based
4 incentive structure to be implemented in 2017.
5 The prescriptive work group met to
6 review the incentive structure of the program with
7 a particular emphasis on lighting measures and was
8 directed to make any necessary recommendations to
9 the Commission. The work group found that with
10 the Commission's recent approval of the authority
11 to make commercial incentives in an up-to amount,
12 that no changes were needed at this time to the
13 prescriptive programs's incentive structure.
14 The appliance rebate work group was
15 directed to discuss the program, determine if
16 changes could be made to improve the program, and
17 if the program should continue operating for the
18 remainder of the 2015 to 2017 program cycle.
19 The work group found that Maryland's
20 program is in line with others that are offered in
21 other states that are similar to Maryland, and in
22 addition to that, a proposal was filed as an
23 attachment for the Commission's consideration to
26
1 add a midstream incentive structure to the program
2 in 2017.
3 Finally, the Commission directed the
4 EmPOWER marketing work group to determine ways of
5 increasing the transparency of the cost/benefits
6 and programs offered under EmPOWER to customers,
7 especially on customer bills. The work group
8 agreed that the best method would be to add a
9 simple line to the bill that explains the benefits
10 derived from funds invested into EmPOWER with
11 further reference to the utility's website to find
12 more information.
13 The work group also offered a list of
14 other areas in which marketing can be bolstered to
15 improve the transparency of the program across a
16 broad variety of mediums.
17 COMMISSIONER O'DONNELL: Quick
18 question.
19 MS. BEST: Sure.
20 COMMISSIONER O'DONNELL: Can you
21 describe what you meant when you said a midstream
22 incentive structure under the appliance rebate
23 recommendation from the work group?
27
1 MS. BEST: So, the general idea would
2 be instead of -- so, the current structure is the
3 rebates go directly to the customers for making a
4 purchase of a qualifying appliance under the
5 program.
6 With the midstream model, you would
7 have the incentives going instead to distributors
8 and retailers of the products instead of going
9 directly to the customer, and the idea behind that
10 is that it would promote, you know, further -- it
11 would promote the appliances to be sold more in
12 the stores; they could lower the price on the
13 other end to the consumer to push those products a
14 little bit more; and there's -- there is a program
15 being designed, which I can pull up the proposal
16 real quick, but there is a federal program being
17 designed with specific software that they can
18 actually use to kind of oversee the program. So,
19 I guess that's the main difference between the two
20 is that, where those incentives are going.
21 COMMISSIONER O'DONNELL: Just seems
22 like you're slicing the incentive dollars yet one
23 more time. Not you, but the work group is
28
1 recommending that. I'm trying to understand it.
2 So --
3 MS. BEST: Yeah. I can try and pull up
4 the proposal for further detail, if you want.
5 COMMISSIONER O'DONNELL: Thank you.
6 COMMISSIONER MILLS: I had a question.
7 MS. BEST: Yes.
8 COMMISSIONER MILLS: Back on slide
9 four, just looking at where the cycles are
10 relative to the forecast. I might have missed
11 this in your earlier comments. I guess my
12 question is, for the energy savings, it looks like
13 in total, it looks like it's about half, right?
14 MS. BEST: Yes.
15 COMMISSIONER MILLS: Which is great,
16 but then if you look at specific companies, are
17 you concerned whether, based on the information
18 that the companies provided, as to whether or not
19 they will actually achieve the savings, based on
20 the current plans?
21 MS. BEST: There are definitely
22 concerns with some of the utilities and
23 implementers.
29
1 You did see that SMECO is at 24
2 percent, and DHCD is at 23 percent, which is
3 significantly behind where they probably should
4 be. There are concerns that they might not make
5 up that. There's only, you know, three
6 semi-annual periods left to make up essentially 75
7 percent of the savings that they were supposed to
8 achieve.
9 So, I mean, we could look into further
10 details as to if there's ways to improve those
11 programs that they have or changes that could be
12 made to try and help them meet their forecast by
13 the end of 2017.
14 COMMISSIONER MILLS: Yeah, that would
15 be good, at least for this Commission to know,
16 like whether we think they are actually going to
17 get close to it.
18 MS. BEST: Yes. I mean, based on
19 these, it might be a struggle, but -- I mean,
20 things can change, changes can be made. So, I'm
21 not going to rule it -- I'm not going to say
22 definitely no, but it could be a struggle based on
23 just these numbers.
30
1 COMMISSIONER MILLS: Okay. Thank you.
2 CHAIRMAN HUGHES: Any -- are you
3 finished?
4 MS. BEST: Yes, I am. I'm finished
5 this time.
6 CHAIRMAN HUGHES: Any additional
7 questions now? Ms. Best and Mr. Hurley are going
8 to be close by and we can always bring them up and
9 of course be available when the companies come up,
10 too. Thank you very much. We appreciate it.
11 MS. BEST: Thank you.
12 CHAIRMAN HUGHES: Next let's call up
13 The Alliance which are the energy and HVAC
14 contractors of Maryland.
15 Mr. McGee, let me welcome you first and
16 let me, before you begin, ask you, do we have
17 before us a petition to intervene on behalf of The
18 Alliance?
19 MR. MCGEE: You do, Your Honor. For
20 the record, James McGee, Alexander & Cleaver, on
21 behalf of the Maryland Alliance of Energy
22 Contractors and the Heating and Air Conditioning
23 Contractors of Maryland, Inc. Collectively we
31
1 call them The Alliance. The Alliance has been
2 active in Case Number 9154 in BGE's service
3 territory for several years. Due to PEPCO's
4 filing about HVAC issues we felt it was necessary
5 to intervene specifically in PEPCO, so yes, you do
6 have a petition in front of you.
7 CHAIRMAN HUGHES: All right. Thank
8 you. That petition is granted.
9 MR. MCGEE: Thank you. Mr. Chairman,
10 Commissioners, thank you for the opportunity to
11 speak this morning. We want to speak on three
12 specific issues. One we heard from Staff about
13 PEPCO's budget, either allocation or reallocation
14 or adjustment, however you want to call it. The
15 Alliance does feel strongly that the HVAC program
16 should continue and it should not be allowed to
17 lapse or incentives should not be allowed to be
18 reduced to keep the program going.
19 PEPCO has identified $1.72 million
20 needed to have the program last through this
21 three-year cycle. We'll talk in a little bit
22 about where we think we can get that from, the
23 different residential programs that PEPCO has that
32
1 are overbudgeted or underperforming. And that
2 shift will have no impact on the ratepayers.
3 Also, we want to tell you briefly how
4 important the HVAC rebates are to the success of
5 the program and to selling units that are higher
6 efficiency units compared to without a rebate,
7 lower efficiency units would be sold unless energy
8 is saved. And finally, we want to give our
9 support to the performance-based proposal that was
10 attached to the Staff report.
11 Diving in a little bit more detail into
12 PEPCO's filing, what they did, they gave six
13 different options basically, identified the $1.72
14 million gap or shortfall and said, Commission, you
15 tell us what you want us to do. We could shift
16 some money from programs, so the reallocation is
17 budget neutral to some extent. We could have an
18 increase in budget dollars. We could decrease the
19 incentive. We could decrease the measures
20 eligible. They had -- or just do nothing and let
21 it go. So, they had many options.
22 Chairman Hughes when you asked Staff,
23 is it ripe, is it something before you today to
33
1 act upon. Yes, it is, in the sense of you could
2 direct PEPCO to do something to fix the gap. I
3 agree with Staff that it is not ripe before you as
4 to should we change the incentive dollars for all
5 of the HVAC or all of the service territories for
6 the HVAC incentive. So that I think does need
7 stakeholder input. We did have a meeting on that
8 actually a month or so ago, and have another one,
9 I think, to be scheduled shortly so that we can
10 continue to discuss that.
11 But you may recall in the summertime,
12 BGE came to you and asked you for the ability to
13 transfer a couple of million dollars to both its
14 HVAC and the QHEC programs saying that it was
15 budget neutral and it did not increase the
16 surcharge to the ratepayers. They took it
17 primarily, for the HVAC program took it primarily
18 from the appliance rebate program.
19 Staff supported that effort. Similarly
20 Staff supports as you saw SMECO's request. They
21 are requesting the same type of thing, they didn't
22 do it in the summer like BGE, they did it in this
23 filing here.
34
1 It's also my understanding that if
2 PEPCO came with just that proposal, so not to
3 increase funds, but just said here's what we're
4 going to do, we're going to fill this $1.72
5 million gap with other programs that we think
6 won't run out before the end of the cycle, that
7 Staff would support that type of request as well.
8 So what our filing did, we asked for
9 data from PEPCO, and we noticed that there were
10 several different programs that the Commission is
11 able to direct PEPCO to move dollars from, and the
12 primary one being the appliance rebate program.
13 Staff's report, the work group
14 report -- I'm sorry, PEPCO's report noted that the
15 appliance rebate program only achieved 30 percent
16 of its participation target goal for 2016, and
17 Staff had a work group report for the appliance
18 rebate work group that indicated that, quote,
19 neither measures nor energy savings have exceeded
20 the forecast statewide since 2013 and generally
21 the reported data is drastically less in 2015 and
22 2016 than previous program years. So I think it's
23 clear that the appliance rebate program has
35
1 dollars that can easily be transferred over to the
2 HVAC program to keep that running.
3 One of the recommendations, it was a
4 non-consensus recommendation, but it was a
5 recommendation nonetheless from the work group,
6 that the budget amount could be increased about
7 $150,000. That still would not -- even if that
8 was approved, that would not drain the appliance
9 rebate program or anything like that. You'd still
10 have a lot of money to transfer over to the HVAC
11 program.
12 COMMISSIONER WILLIAMS: Excuse me.
13 What do you think caused PEPCO to want to end up
14 taking $1.72 million from the program itself.
15 MR. MCGEE: Are you asking why there's
16 a shortfall in the HVAC program?
17 COMMISSIONER WILLIAMS: Right.
18 MR. MCGEE: I think it's apparently
19 statewide. BGE asked for it in the summer, SMECO
20 is asking for it here, Delmarva and PEPCO said
21 what should we do, Commission, in this filing. I
22 think it's something that's affecting the whole
23 state, not just PEPCO.
36
1 I'm not sure, to be honest with you,
2 the reason. Hopefully Staff or maybe the
3 consultants can give you an answer as to why, but
4 it's apparently an issue with the entire HVAC
5 program. It's overperforming than what all of the
6 utilities thought it would do.
7 COMMISSIONER WILLIAMS: I see. Thank
8 you.
9 MR. MCGEE: So we've identified
10 $1 million that can be transferred from the
11 appliance rebate program to the HVAC program
12 without causing any adverse effect on the
13 appliance rebate program. The other .72 million
14 we think can come from the behavioral program,
15 called the behavioral based home energy reports.
16 From what I understand, that type of
17 budget is fairly well known. It's not as a result
18 of someone doing something in their home to
19 increase energy savings or anything like that.
20 It's a relatively hard cost to send out the home
21 energy reports to customers. So I think that's a
22 budget number that's fairly well known. It would
23 be over a million dollars in that program that's
37
1 available to be transferred and still wouldn't
2 result in that program being underfunded by the
3 end of the three-year cycle. So, that's where we
4 would request the other $.72 million to come from.
5 The last program that is -- has a lot
6 of money in it, about two-and-a-half to three
7 million dollars, depending on how you look at it,
8 is the Home Performance with Energy Star program.
9 We do not recommend that you take money from that
10 program primarily based on the proposed
11 performance-based incentive that you have before
12 you. If that program does change to
13 performance-based, the utilities estimated that
14 the remaining budget statewide, not just for
15 PEPCO, about 80 to 99 percent of that budget would
16 be used.
17 So, while I was getting my numbers for
18 the other two programs just based on saying, okay,
19 we're halfway through the three-year cycle, 18
20 months, if the utilities spent the exact same
21 amount as they did for the first half of the year,
22 here's the surplus that we would have. I'm not
23 comfortable doing that with the Home Performance
38
1 program -- program, excuse me, because of the
2 potential change in it that would use more of the
3 budget dollars.
4 Michael wanted to talk about the
5 current sales of HVAC units and how they -- the
6 rebate has helped increase the percentage of
7 higher efficiency units sold.
8 MR. GIANGRANDI: Good morning.
9 CHAIRMAN HUGHES: Good morning. Nice
10 to see you again.
11 MR. GIANGRANDI: I'm Michael
12 Giangrandi. I'm the owner of a plumbing, heating
13 and air conditioning contract company in
14 Baltimore, A.J. Michaels. I'm also chairman of
15 the Maryland Alliance of Energy Contractors. And
16 we do represent HVAC and energy and Home
17 Performance contractors in Montgomery County,
18 Prince George's County, and the greater Baltimore
19 area, and that's one of the reasons we're here to
20 speak about PEPCO today.
21 I'm not usually known for brevity, but
22 today I'm going to be very brief. Commissioner --
23 CHAIRMAN HUGHES: I was going to say,
39
1 you must have been speaking to your counsel.
2 MR. MCGEE: We traded roles.
3 MR. GIANGRANDI: You know, it's a new
4 role. But Commissioner Williams, I think I have
5 an answer to your question.
6 COMMISSIONER WILLIAMS: Okay.
7 MR. GIANGRANDI: You asked about why is
8 the shortfall, and Jim said it was basically
9 statewide. And my answer to that question is
10 because the HVAC program has been so successful,
11 and the only thing I am here to talk about today
12 very briefly is that you don't take your star
13 pitcher out of the ballgame because he's pitching
14 a no-hitter.
15 So, HVAC is important to all of us.
16 Every one of you have a house, I'm sure every one
17 of you have an HVAC system in there, and every one
18 of you in this room needs one of us to come and
19 take care of you.
20 When the EmPOWER Maryland program --
21 and that's really -- that's really one of the
22 reasons why you have to think about, you know, the
23 impact of the HVAC industry on the EmPOWER
40
1 Maryland program.
2 When the EmPOWER Maryland program
3 started, the standard efficiency, low efficiency,
4 least expensive pieces of equipment had about a 90
5 percent share of the market. There was really no
6 reason for people to consider putting in more
7 expensive pieces of equipment. They had no
8 incentive to do so. And the economy at that point
9 in time was at a downturn.
10 It's improved over the years. I gave
11 testimony in 2012 and 2013 to show that we had
12 achieved from, say, a 10 percent to approximately
13 a 25 percent or so increase in sales for the high
14 efficiency equipment, and this was all due to the
15 EmPOWER Maryland program.
16 Today, we've done even better. Now,
17 one of the -- one of the mistakes, frankly, and
18 it's my fault, when we gave the Commission -- when
19 I gave Jim numbers for manufacturers about what
20 the current sales are, I categorized 16 SEER. The
21 boo-boo I made was it should have included 16 and
22 17 SEER equipment. A lot of manufacturers don't
23 necessarily hit 18 SEER. There's a lot of 17 SEER
41
1 sales that are grouped into the 16 SEER.
2 So the high efficiency equipment share
3 of the market today is roughly around 30 to 35
4 percent compared to less than 10 percent before
5 the program started.
6 It gives us an opportunity -- the
7 rebates give us an opportunity to talk to people
8 about saving energy, and a little bit of incentive
9 to move them towards spending another $2,000 to do
10 something that's going to increase their energy
11 savings by 20, 25 percent.
12 It's been successful for us. It's not
13 as successful as we'd like it to be because our
14 rebate on 16 SEER was $500, that's not a whole lot
15 when you consider it's a $7,000 or $8,000 system,
16 but right now it's been reduced to $450 because of
17 the budget shortfall with BGE, and we just want to
18 point out to you that our program has been very
19 successful and we're not asking for a raise, we're
20 just asking to keep us on the playing field
21 because we can produce. And we can make things
22 happen. We can make you more comfortable. We can
23 save you money. And when you combine our HVAC
42
1 performance with Home Performance, especially with
2 duct sealing, we can really save you 40 -- 30, 40,
3 50 percent of your energy costs depending upon the
4 equipment that we remove from your home.
5 So we are an important industry and we
6 want to stay alive and we want to be continuing
7 participants of the EmPOWER Maryland program and
8 that's it. Thank you very much.
9 COMMISSIONER WILLIAMS: Based on what
10 you're sharing with us, that it appears that it
11 makes sense to keep it alive, and moving funds
12 from one, from an area where it's not performing
13 back to the HVAC, but I thank you for your
14 explanation.
15 MR. MCGEE: Thank you.
16 COMMISSIONER O'DONNELL: Mr. Giangrandi.
17 MR. GIANGRANDI: Yes.
18 COMMISSIONER O'DONNELL: Do you
19 install, does A.J. Michaels or your fellow members
20 install those hybrid heat pump water heaters as
21 part of your energy efficiency?
22 MR. GIANGRANDI: You mean the water
23 furnaces?
43
1 COMMISSIONER O'DONNELL: Yeah. Well,
2 they're water heaters but they use heat pump
3 technology.
4 MR. GIANGRANDI: Oh, yes. Yes.
5 COMMISSIONER O'DONNELL: You do. Okay.
6 How's your success rate been with those?
7 MR. GIANGRANDI: I've never come before
8 this Commission and misinterpreted or mis-said
9 anything that I truly didn't believe in.
10 COMMISSIONER O'DONNELL: Sure.
11 MR. GIANGRANDI: They have some
12 advantages. They are efficient. But there are
13 disadvantages, too. So, they're not really widely
14 sold.
15 In some houses you can put a heat pump
16 water heater in a person's basement and it takes
17 all the warmth out of the basement and people --
18 I've gotten customer complaints all of a sudden my
19 basement is too cold. And they're not
20 inexpensive. So, it's a question of looking at a
21 product and determining what its features and
22 benefits are over a long period of time.
23 They are a little bit more involved
44
1 with servicing because you actually have a
2 mini-heat pump on top of a water heater to make it
3 work.
4 To be honest with you, there are
5 conventional hot water heaters on the market today
6 which are almost as efficient and much more
7 reliable. So it's not a question -- we've always
8 looked at it, even when we look at some of the
9 HVAC equipment that's maybe in the 20 SEER range,
10 we have to look at where the point, the tipping
11 point is as to what's most effective and good for
12 you as a customer and also save energy.
13 So, we may not recommend a heat pump
14 water heater for you in your home based on the
15 circumstances, because of the capacity of the
16 amount of hot water it can give you versus a
17 conventional high efficiency heater, it may not be
18 the best thing.
19 I can always recommend a high
20 efficiency air conditioning system to you because
21 it's a win-win situation. But on that particular
22 product, to be quite frank with you, there are
23 some drawbacks to it, and it's not at all being
45
1 widely sold by the plumbers, and I am a plumbing
2 contractor, too. It is a plumbing issue and it's
3 not being heavily sold by the plumbers in the
4 community.
5 COMMISSIONER O'DONNELL: Yeah. I
6 noticed that. So, they're one of the bigger
7 ticket items on the appliance rebate portion of
8 the EmPOWER program which is underperforming and
9 we need money in the HVAC side of things, it seems
10 to me, and I'm wondering if that's part of the
11 reason why appliances are underperforming.
12 MR. GIANGRANDI: I think -- now, I'm
13 not an expert on the numbers in that area.
14 COMMISSIONER O'DONNELL: Sure.
15 MR. GIANGRANDI: But I'd be willing to
16 bet my company that there isn't a whole lot --
17 there are not a lot of heat pump water heater
18 rebates being shipped out to people. So, if
19 there's money in that program that's available to
20 go to a program that is successful, you're not
21 going to be hurting yourselves, you're going to be
22 benefitting yourselves.
23 COMMISSIONER O'DONNELL: In fact,
46
1 you're correct there. Very few of those are being
2 incentivized right now. Thank you.
3 MR. SCHMIDT: Good morning.
4 Mr. Chairman and Commissioners, thank you for
5 allowing us to speak this morning. My name is
6 Sean Schmidt. I am the owner of R.M. Schmidt
7 Heating and Air Conditioning, along with Holistic
8 Home Energy Services. We do home energy auditing
9 and Home Performance work in addition to my HVAC
10 company.
11 So, I was trying to sit here and think
12 of a good sports analogy to Michael's, so, I guess
13 I'm the closer. So, I'll be very brief. Jim and
14 Michael had already spoken on a couple of my -- of
15 points I just want to continue on.
16 Jim had explained the Maryland Alliance
17 is collectively made up of several different trade
18 associations. I really want to speak today on
19 behalf of HACC of Maryland, which is Heating and
20 Air Conditioning Contractors of Maryland, and
21 AACP, which is the Association of Air Conditioning
22 Professionals.
23 Combined, both trade associations make
47
1 up over 250 HVAC contractors in the state of
2 Maryland, all of which are small business owners
3 and contracting businesses, size of two people up
4 to 50 people. So, we have a unique group of HVAC
5 contractors that are all small business owners in
6 the state.
7 Just this past Thursday, we had a
8 general membership meeting, and I was asked to
9 speak to kind of give our membership a history and
10 a general understanding of EmPOWER Maryland since
11 its inception in 2009, and then where I kind of
12 thought the program was going into the future.
13 After that meeting, many of the small
14 business owners came up to me and said, please, at
15 the hearings next week, this was Thursday, please
16 express to the Commission how important EmPOWER
17 Maryland has been to our small businesses.
18 These are small guys, three, four
19 employees, up to some of the larger contracting
20 businesses, all expressed the same thing. EmPOWER
21 Maryland has been vital to their small businesses
22 since 2009. So, I wanted to pass along their
23 sentiments from that meeting on Thursday.
48
1 In addition to that, I did want to
2 speak about the performance-based incentive
3 program, which was touched upon a little bit in
4 Staff and I think the utilities will speak to it
5 after us. But we -- the HVAC contractors for many
6 years have -- although the existing HVAC program
7 has been very successful and I think has been a
8 good model, we've always been a proponent of
9 performance-based initiatives.
10 So, in helping develop the program
11 through the stakeholders committee, we think it
12 could be a very successful change to the program
13 as it stands now.
14 Specifically the early retirement of
15 HVAC equipment has been something that has really
16 not been focused on by EmPOWER, and we think that
17 there's an enormous amount of equipment out there
18 that is being fixed in lieu of being replaced,
19 that has been a substantial drain on our energy
20 use as a state off the grid, and these
21 performance-based incentives will do two things.
22 Number one, it will help change the
23 behavior of the homeowners to move to more
49
1 efficient upgrades in their HVAC equipment, and
2 then also, and probably just as importantly, will
3 help bridge that gap between just unit changeouts
4 and having those homeowners look at the whole home
5 as a complete system, and pull in Home Performance
6 as well, which would be looking at improving their
7 existing HVAC equipment by early retirement,
8 looking at the home's building envelope and
9 addressing the air sealing and insulation through
10 the Home Performance program; in addition to
11 addressing the distribution system or the ductwork
12 that that equipment is attached to to make the
13 whole thing a whole home performance upgrade.
14 So, in terms of the Maryland Alliance,
15 we're in strong support of the continued
16 development of the performance-based incentive
17 program. We think it can be a huge enhancement
18 and change to EmPOWER.
19 CHAIRMAN HUGHES: Thank you,
20 Mr. Schmidt. Mr. Schmidt, just on kind of typical
21 AC replacement, what are the SEERs of the units
22 that you are usually replacing that are 20 years
23 old, and what are they operating.
50
1 MR. SCHMIDT: That's actually a great
2 question because one of the issues has always been
3 as a program, we've always looked at, in terms of
4 capturing the energy savings on the replacement of
5 equipment, we've always modeled that energy
6 efficiency to whatever the lowest standard is; in
7 other words, when the homeowner is replacing that
8 piece of equipment and the contractor is turning
9 in the rebate, the energy savings is always
10 modeled off of either 13 SEER and now 14 SEER
11 equipment.
12 It's always been astounding to me
13 personally as a contractor when I model it,
14 because we're looking at what you just, you know,
15 talked about, what is the actual operating
16 efficiency of this piece of equipment that we're
17 looking at.
18 So, when we're out there in the field,
19 and you have a -- let's say a 15-year-old piece of
20 equipment or a 12-year-old piece of equipment, if
21 we change that out with a tier 1 or tier 2 piece
22 of equipment, we're only modeling and capturing
23 that energy savings for the program to 14 SEER
51
1 now, where that piece of equipment may be up --
2 truly operating in the field as a 7, 8, 9 SEER
3 piece of equipment. So, there is a lot of energy
4 gap there that's not being captured currently in
5 the program.
6 As contractors, we certainly model that
7 and show that savings to the homeowner in terms of
8 the return on investment and so forth. But as far
9 as the program's concerned, when those rebates are
10 turned in, we're only capturing the difference
11 between the 14 SEER.
12 So, when I talk about early retirement,
13 there's a lot of customers now that are opting to
14 just fix their equipment, and that equipment stays
15 on the grid for another four, five years-plus,
16 when it otherwise should be pulled off and put --
17 a new piece of equipment should be put in at the
18 tier 1 or tier 2 level. Early retire that piece
19 of equipment, capture that energy savings for the
20 next four or five years, and then also bridge that
21 gap and start talking -- opening that conversation
22 with the homeowner about, well, let's look at your
23 insulation levels, how leaky is your home, and is
52
1 your ductwork that we're attaching this equipment
2 to leaking, and if so, let's seal it. Let's get
3 the envelope sealed, let's get your insulation
4 levels up to Energy Star standards, and then
5 capture that energy savings through the new
6 equipment.
7 CHAIRMAN HUGHES: Thank you.
8 Appreciate that. Any additional questions for our
9 panel? All right. If not. Thank you, gentlemen.
10 Appreciate your testimony this morning. Next, we
11 will hear from Efficiency First.
12 MS. GRIFFITH: Good morning. My name
13 is Michelle Griffith from DeVere Insulation.
14 Today I'm also here on behalf of Efficiency First.
15 For those of you guys that don't know or are not
16 familiar with Efficiency First, we are a national
17 non-profit trade association that represents the
18 members in public policy discussions on a state
19 and national level.
20 The Maryland chapter is here today to
21 represent our growing industry, which represents
22 about 500 companies and over 5,000 employees.
23 We came here today because we are in
53
1 support of the EmPOWER Maryland programs. We are
2 also in support of the new program design which is
3 the performance-based incentives. We believe that
4 this model will provide ratepayers more savings
5 per dollar spent than the current method because
6 the programs will be paying solely towards energy
7 savings.
8 We also believe that it will increase
9 jobs on a state level by allowing more companies
10 to work within the programs as well as align the
11 HVAC and the Home Performance industry.
12 Home Performance with Energy Star does
13 more than just save energy. It enhances the
14 home's existing market retail value. It also
15 allows buyers to take advantage of energy
16 efficient financing. It improves the health
17 outcomes of indoor air quality. It also allows
18 homes that would have never been tested for health
19 and safety issues through energy auditing.
20 Currently, the programs in Maryland
21 residents, all Maryland residents that have
22 natural gas can take advantage of EmPOWER Maryland
23 under the same rates that the electric fuel homes
54
1 can. In the new program design, the Maryland
2 residents can still take advantage of the
3 incentives but at a much lower rate.
4 Efficient First is in favor for the
5 Washington Gas proposal. Gas companies should
6 contribute to incentives that pay -- and save gas.
7 Oil and propane, we're asking that we tap into
8 some other type of funding through RGGI SEIF
9 funding. We are asking that the Commission ask
10 MEA and the Governor to develop a program that
11 extends the gas and electric incentives to oil and
12 propane. The main reason for this is as a
13 contractor, it helps, you know, keep consistent
14 messaging through market transformation.
15 Just a small testimonial on behalf of
16 myself. I am an insulation contractor that's been
17 in business for 30 years. In 2009, I branched off
18 and separated a separate division of our company
19 that focuses solely on energy savings, and we have
20 grown to over 50 employees that are doing that on
21 a daily basis.
22 This new program that we're talking
23 about with the performance-based incentives
55
1 program, it's going to allow all Maryland
2 residents to be able to use the funding. If the
3 gas incentives are able to be captured as well.
4 I have personally been with the company
5 for 15 years, and I think that EmPOWER Maryland
6 has definitely raised the bar. We're able to
7 educate a lot of homeowners that, you know, 15
8 years ago would just put insulation in their walls
9 and they didn't know about energy efficiency and
10 health and safety and indoor air quality. We've
11 grown very quickly and that is a benefit from
12 EmPOWER Maryland.
13 So, we, you know, we feel strongly that
14 EmPOWER Maryland is, you know, is great for our
15 industry.
16 MR. NOTES: So, my name is Josh Notes.
17 I'm co-chair of Efficiency First and also an owner
18 of a small business, GreeNEWit. We have started
19 from the bottom up doing energy audits and we
20 performed over 5,000 across the state of Maryland,
21 and tens of thousands of Quick Home Energy
22 Checkups where we have been able to educate
23 customers about the importance of energy
56
1 efficiency, and the importance of health and
2 safety within their homes.
3 We believe that the performance-based
4 incentive model is absolutely the direction to
5 head, and we are focused on the program continuity
6 that occurs right around the holidays into New
7 Year's. I can tell you as a small business, it's
8 very difficult to pivot your company overnight,
9 and this will be a big change.
10 So, we are asking for a pilot period of
11 the first quarter of 2017 where as the kinks get
12 worked out of the performance-based incentive
13 model, we don't miss our busy season, because it
14 gets cold and about a 40 percent increase occurs
15 and we're stretched as small businesses to the max
16 during that first quarter. So we are asking for a
17 90-day implementation period that we want to work
18 on collaboratively with the utilities and the
19 program administrators.
20 I also want to state that we are seeing
21 market transformation. We have been in business
22 now for nine years. We started out of a house.
23 We now employ over 30 people, and their families
57
1 and their friends have now gone through, you know,
2 one generation of being informed about energy
3 efficiency and telling their neighbors. It's
4 working.
5 The conversations that Michelle
6 mentioned as well as The Alliance members where
7 HVAC decisions, whole Home Performance decisions
8 are being made at the mailbox and at the grocery
9 store as opposed to just through a utility
10 marketing message.
11 So, the last thing that I'll state is
12 some of the non-energy efficiency components of
13 what we do is health and safety.
14 Personally, I got into Home Performance
15 on accident when I was looking into the health and
16 safety of the home that I owned and my parents'
17 home and my brother's home, and in all I found a
18 dangerous gas, CO in two of them, and natural gas
19 leaking in the third. Without Home Performance I
20 might not be here and a few members of my family
21 might not be here and every couple of months we
22 hear about an explosion on the news and it just
23 kind of drifts by.
58
1 But one in 100 has something very
2 dangerous going on and Home Performance and our
3 company specifically is finding one of those a
4 month. I just want to put that on the record,
5 that we're really proud of being able to have
6 tough conversations with folks and fix the most
7 important asset in their life.
8 CHAIRMAN HUGHES: Thank you, Mr. Notes.
9 Good to see you and good to hear that your company
10 is doing well.
11 In terms of the 90-day period you
12 mentioned, are you suggesting that the Commission
13 delay it for three months in terms of if -- if the
14 Commission does approve a performance-based plan,
15 or I'm interested in how this transition would
16 work.
17 MR. NOTES: So we stand today at the
18 end of October, I don't know when the ruling will
19 occur, but as a company, to make that marketing
20 transformation, systems transformation, it's going
21 to take some time. We're looking for a dual path.
22 We're not looking for a delay but a dual path
23 where if the programs aren't set up right, we can
59
1 still run our existing business on the old
2 railroad as the new one gets the kinks worked out.
3 Now, our company will dive in first and
4 look to find those kinks and bring them back to
5 the utilities. For some of our member companies
6 that aren't as large and the paper shuffle isn't
7 as organized, it may be very difficult to turn
8 that on a dime with an announcement late December
9 and starting in early January.
10 CHAIRMAN HUGHES: I know. I appreciate
11 your input on that. Ms. Griffith, your
12 recommendation on a program for oil and propane
13 through MEA, is that something that Efficiency
14 First has brought to the attention of MEA yet?
15 MS. GRIFFITH: Not to my knowledge,
16 there hasn't been any proposals.
17 MR. NOTES: I would bet the
18 conversations have occurred through Brian Toll. I
19 think this is a sliver of the market, it's a small
20 sliver but it's an important one, because it's
21 inclusiveness. It's kind of the folks that are
22 being left out now. We think with RGGI funding or
23 some other form there is a way to make the
60
1 messaging consistent.
2 Because it's really difficult if
3 somebody tells their friend who lives just a mile
4 away from the natural gas pipeline that goes
5 across the country but they don't happen to get it
6 and they're on propane and now we have to exclude
7 them from the program, it kind of sours that
8 vitality.
9 CHAIRMAN HUGHES: And we as a
10 Commission certainly can make a request or talk
11 with our sister agency, but it would be good for
12 them to hear from you as well.
13 MS. GRIFFITH: Sure.
14 COMMISSIONER O'DONNELL: I concur on
15 that.
16 CHAIRMAN HUGHES: Any additional.
17 COMMISSIONER O'DONNELL: I concur.
18 MS. GRIFFITH: Okay.
19 CHAIRMAN HUGHES: I think we are going
20 to switch order a little bit. We're going to
21 bring up Montgomery County next and followed by
22 the Office of People's Counsel.
23 Good morning, Ms. Brennan.
61
1 MS. BRENNAN: Good morning, Chairman,
2 Commissioners. My name is Lisa Brennan for the
3 record, Associate County Attorney for Montgomery
4 County, Maryland. And with me today is Michelle
5 Vigen, senior energy planner with our Department
6 of Environmental Protection who will speak today
7 regarding our comments.
8 CHAIRMAN HUGHES: All right.
9 MS. VIGEN: Good morning, Chairman and
10 Commissioners. As Lisa mentioned, my name is
11 Michelle Vigen. I work with the energy programs
12 with the Montgomery County Department of
13 Environmental Protection, and I thank you for
14 taking our comments today.
15 Montgomery County has been a consistent
16 supporter of EmPOWER ever since its inception and
17 we continue to support programs -- the program and
18 efforts to enhance the efficiency of public and
19 private buildings. Further, the County firmly
20 believes that the programs' overall benefits
21 outweigh the surcharge and other costs.
22 Central to our comments is that the
23 County seeks innovation in the EmPOWER program, an
62
1 evolution, you might say, to an EmPOWER 2.0. The
2 sentiment is further underlined in our desire to
3 see full exploratory process under merger
4 condition 5 which we believe will align well with
5 efforts towards the next three-year filing of
6 EmPOWER. To that end, for building a strong and
7 reliable administrative foundation, we support
8 programmatic and budget transparency for
9 evaluation purposes and to better message the
10 benefits of EmPOWER to all ratepayers.
11 We also want to recognize the
12 collaboration of the utilities with our County
13 Department of General Services to ensure
14 implementation of public utilities projects. And
15 we underscore the opportunity for deeper savings
16 and increased collaboration as a local partnering
17 agency.
18 Our programmatic recommendations and
19 our written testimony seek qualitative innovations
20 in program design and implementation that would
21 result in increased economic, social,
22 environmental and financial benefits to increase
23 the return of investment for ratepayers.
63
1 Whether it's approaching the market at
2 a different intersection such as the mid-market
3 proposal for the appliance program or expanding
4 pilot programs with a record of success, namely
5 the Small Business Energy Advance, we look forward
6 to exploring new opportunities for EmPOWER to go
7 further in cost effectiveness and ratepayer
8 benefit.
9 One programmatic recommendation we
10 would like to highlight is our support for a full
11 fledged program by Washington Gas, including their
12 inclusion in the Low Income Energy Efficiency
13 Program and Multifamily Energy Efficiency and
14 Housing Affordability program. Washington Gas has
15 demonstrated their leadership and willingness to
16 support cost effective energy savings programs for
17 its customers and its request to enter as a full
18 participant should be granted.
19 To conclude, the County again voices
20 our support for EmPOWER. We thank the Commission
21 for their ongoing support and innovations that
22 have led to the success of the program thus far.
23 And we look forward to working with you, our
64
1 utility partners and stakeholders to see another
2 round of success in years to come. Thank you.
3 CHAIRMAN HUGHES: Thank you, Ms. Vigen.
4 I had a question about the County's programs,
5 energy efficiency programs that Montgomery County
6 will be launching as part of the PEPCO/Exelon
7 merger. There's funds that will be going to
8 Montgomery County. I know the Commission will not
9 be overseeing that, but I'm sure that you
10 certainly will have an interest in seeing how
11 that's progressing and seeing how you are spending
12 the money.
13 So, will the County be hopefully in
14 contact with our Staff or briefing our Staff as
15 you go along? I think that would be helpful for
16 us.
17 MS. VIGEN: Surely. The EmPOWER
18 programs and other programs under the Commission
19 are very much on our radar as we design and build
20 homes that will hopefully complement and further
21 enhance the work that you are already doing.
22 CHAIRMAN HUGHES: Thank you. We look
23 forward to seeing your progress. Additional
65
1 questions?
2 COMMISSIONER O'DONNELL: Just very
3 quickly to tag on to that, during a more recent
4 case in Montgomery County that we had a public
5 hearing on, we heard from some of your officials
6 that said that the street lighting program
7 appeared to have two different -- well, it
8 appeared to have the same tariffs, so if they
9 upgraded their street lighting to more efficient
10 LED style, that they weren't receiving any benefit
11 or incentives. We heard subsequent to that that
12 that necessarily wasn't true, there were two
13 different tariff schedules.
14 So there seems to be a disconnect and
15 frustration with some of the officials, maybe with
16 some of the municipalities and maybe with the
17 County, and it probably goes to other counties in
18 the state as well. There seems to be a disconnect
19 on the benefits and/or how we incent upgrading
20 street lighting programs to realize the energy
21 efficiency there, too, and I would encourage you
22 to take a look at that along with what the
23 Chairman is suggesting as well. Somewhere there's
66
1 a disconnect. I'm not sure we've put our finger
2 on it yet, but we certainly have a disconnect
3 somewhere.
4 MS. VIGEN: Duly noted, Commissioner.
5 COMMISSIONER O'DONNELL: Thank you.
6 CHAIRMAN HUGHES: Any additional
7 questions? If not, Ms. Vigen, Ms. Brennan, thank
8 you very much for your testimony.
9 We are going to take about a 15-minute
10 break and we'll be back at 11:30 and we'll bring
11 up the Office of People's Counsel.
12 (RECESS, 11:15 a.m. - 11:30 a.m.)
13 CHAIRMAN HUGHES: Welcome back,
14 everyone, to the Maryland Public Service
15 Commission. Next up, we have the Office of
16 People's Counsel. Ms. Knoll.
17 MS. KNOLL: Good morning, Chairman and
18 Commissioners, Molly Knoll on behalf of the Office
19 of People's Counsel. I have with me from Vermont
20 Energy Investment Corporation, I just call them
21 VEIC, I have David Hill, who is going to address
22 the overall picture of EmPOWER and what the
23 program is, and how it performs and what it does.
67
1 Then I have Ms. Kuhn and she will be talking about
2 the residential portfolio overall recommendations
3 that our organization has, and then I will have
4 Ms. Emily Levin who will be covering specific
5 program recommendations. Those are about the
6 various programs that comprise the residential
7 program overall. And I will be available
8 throughout for questions.
9 CHAIRMAN HUGHES: Thank you.
10 MS. KNOLL: Thank you.
11 CHAIRMAN HUGHES: Good morning,
12 Mr. Hill.
13 MR. HILL: Good morning. Nice to see
14 you all. Thank you very much for having us. My
15 name is David Hill, I have been with VEIC for
16 about 18 years, and since some of the
17 Commissioners are new, Vermont Energy Investment
18 Corporation is a non-profit based up in
19 Burlington, Vermont. We have about 300 employees.
20 We work nationally, so, we run the
21 Washington, D.C. Sustainable Energy Utility as
22 well as Efficiency Vermont, and then something
23 called Efficiency Smart in Ohio. So we have deep
68
1 knowledge of the design and implementation and
2 programs and we work throughout the country on
3 helping with program design and program advocacy.
4 We've been working with --
5 CHAIRMAN HUGHES: Can I ask you to pull
6 the mic in your direction.
7 MR. HILL: Sorry about that. Is that
8 better?
9 CHAIRMAN HUGHES: Yes.
10 MR. HILL: We have been supporting the
11 Office of People's Counsel in the EmPOWER Maryland
12 hearings since 2010. So, it's nice to talk with
13 you.
14 The themes, I think we'll stick with
15 some of the themes, both in being brief this
16 morning, and then also in highlighting some of the
17 things that have already been brought up. EmPOWER
18 Maryland, I think the comments made by Staff this
19 morning and others point to the continuing success
20 of the program. There is room for improvement and
21 then promise for the future.
22 I think the program will continue to
23 evolve and change as the markets change. I noted
69
1 as I pulled up this slide the other day, this is
2 EmPOWER Maryland's logo or emblem, if you would,
3 from the MEA website, which has a CFL, which these
4 days we've really moved beyond the CFLs. So as we
5 keep going, I think it's important to emphasize
6 how the program is changing, what it's done in the
7 past, and then what it can do in the future.
8 Most importantly, the program is
9 providing significant economic benefits for
10 everyone in the state. Energy efficiency is a
11 least cost resource, Maryland is investing in that
12 resource, and it's benefitting all ratepayers.
13 It's benefitting the program participants. It's
14 benefitting the state's economy.
15 You've heard today already from some of
16 the contractors who are working there as well.
17 They mentioned durability and health impacts.
18 Those are very important. So, it's significant
19 economic benefits.
20 It's a significant investment, but
21 Maryland every year spends on the order of $10
22 billion in buildings in energy and another $11
23 billion on transportation energy, but there's a
70
1 lot of expenditure every year on energy. So, the
2 investments in EmPOWER Maryland in efficiency are
3 very significant and important.
4 Second thing I'll go over is just that
5 there's broad consumer support. The success of
6 the utilities and the service providers in
7 providing at scale now, we're not talking about
8 little pilot programs, this is at scale, it's
9 having significant impact across the economy, and
10 that's a good thing.
11 Then finally, climate change. I mean,
12 Maryland has increased its greenhouse gas
13 reduction goals to be now 40 percent reduction by
14 2030 from 25 percent. There are benefits around
15 that element and that dimension as well.
16 There are many ways to look at, and as
17 the next round of program development gets -- the
18 next round of the program portfolios will be
19 subject, as the others have been, to significant
20 cost/benefit testing and designs. Many ways to
21 look at this, but the primary message, and I'm
22 just underscoring one way to look at it here, is
23 that efficiency is a least cost utility resource.
71
1 From the cycle to date, in the most
2 recent reports, the cycle to date energy costs and
3 savings from the residential, you will see on the
4 right-hand side what the equivalent reported cost
5 per life cycle KWH is. If you take a weighted
6 average of those, it's about 2.6 cents per
7 kilowatt hour.
8 Compare that to 7 cents for supply for
9 a kilowatt hour and you end up with about $260
10 million of benefit for the state.
11 It's one way to look at it, just from
12 the utility costs, would it cost the utility to
13 run -- would it cost more to buy supply, and yes,
14 the answer is it would.
15 We support informing the public of the
16 economic benefits. Right now, there is the
17 surcharge, you know, EmPOWER Maryland surcharge is
18 visible. It's -- and there's been some discussion
19 in the working groups about having something that
20 would inform the public and the ratepayers of the
21 benefit of this investment.
22 We think that for marketing and for
23 helping folks understand what they're getting in
72
1 return, that that's a good step to take. We would
2 support the working group's activities on that.
3 Maryland consumers are strongly in
4 support of efficiency. A recent study that was
5 done by Johns Hopkins and George Mason University
6 looks at the public knowledge, behavior and
7 preferences about energy and transportation.
8 Survey-based statistically significant polling,
9 and 80-plus percent of Marylanders support
10 expanding incentives to promote efficient lighting
11 and appliances. So that's four out of five
12 Marylanders saying yes, we support these
13 activities.
14 There was also strong support in this
15 document across all of the sustainable energy
16 activities. As we look forward to the next level
17 of the portfolio, I think continuing to think
18 about the ways, we just had Montgomery County
19 thinking about the ways that the EmPOWER Maryland
20 programs perhaps integrate with other activities
21 that are going on would be a valuable opportunity.
22 One trend in the report was that
23 actually awareness, consumer awareness of the
73
1 programs actually trended slightly downwards from
2 previous surveys. So, while people are in
3 support, I think this whole idea of continuing to
4 refresh and inform the public about what these
5 programs are and what they're doing remains
6 important.
7 The utility and service providers have
8 a track record of success. When we saw the
9 Staff's update on the current cycle, just as a
10 refresher, in the first two cycles of EmPOWER
11 Maryland, 99 percent of the statewide goals were
12 met. Again, referencing some of the information
13 that was in Staff's report this morning. Over 56
14 million measures have been installed.
15 So that's -- that's EmPOWER Maryland
16 program to date. But 56 million different points
17 of efficiency, if you would, efficient light bulbs
18 or everything else, but 56 million measures over
19 time.
20 The programs have demonstrated the
21 ability to exceed 2 percent savings as a percent
22 of retail sales. At the end of the last cycle
23 when we were ramping -- when there was a need to
74
1 ramp up, it was demonstrated that savings could
2 exceed those levels. And the markets continue to
3 transform.
4 The chart that I put up here is related
5 to the last bullet, that there are industry and
6 global trends that are increasingly investing in
7 energy efficiency and seeing energy efficiency and
8 economic growth as not being efficiency,
9 investment in efficiency as a mechanism for
10 economic growth. So, as economies grow, they are
11 still getting more efficient.
12 So, this is a slide from the
13 International Energy Agency, an energy efficiency
14 market report that was released a couple of weeks
15 ago, showing that globally, the percent of savings
16 2003 to 2013 was about a half a percent. It's
17 increased significantly by 2014 and 2015.
18 The slide -- the bars, slightly
19 different blue colored bars on the right show what
20 would be necessary to, the first one is what's
21 been included in what are called the national
22 commitments, intended commitments for the Paris
23 Accord, and then the ones to the far right relate
75
1 to the 450 parts per million scenario.
2 What this slide is intended to show is
3 that Maryland, in having targets on the order of
4 the 2 percent of retail sales, is leading, but
5 also consistent, with what's going on globally.
6 And certainly, if we consider climate change, we
7 now are in about 16 months straight of each month
8 being the record, highest record temperature
9 recorded for that month for 16 straight months
10 now.
11 So it's -- as global economies,
12 Maryland's economy, other economies start to deal
13 with this, the investments that Maryland is making
14 in EmPOWER Maryland for the reasons that we talked
15 about, the economic, the consumer benefits, the
16 durability, et cetera, but also the climate change
17 impacts are important to consider.
18 COMMISSIONER O'DONNELL: Can I ask you
19 a question, Mr. Hill, on the chart.
20 MR. HILL: Sure.
21 COMMISSIONER O'DONNELL: One of the
22 axes is change in energy intensity.
23 MR. HILL: Correct.
76
1 COMMISSIONER O'DONNELL: Is that
2 another word for consumption? What is energy
3 intensity?
4 MR. HILL: Energy intensity is the
5 consumption per unit of economic output.
6 COMMISSIONER O'DONNELL: So it is
7 consumption.
8 MR. HILL: Yes.
9 COMMISSIONER O'DONNELL: Thank you.
10 MR. HILL: So that's, on the
11 overarching points, that's the conclusion of my
12 comments. I'll turn it over to Ms. Kuhn.
13 CHAIRMAN HUGHES: Before we let you get
14 away.
15 MR. HILL: Okay.
16 CHAIRMAN HUGHES: Mr. Hill, one more
17 question for you. One is, going back to page 4,
18 the -- of your chart which -- yeah, that's it,
19 which shows the reported cost per life cycle.
20 Looking at Staff's report and their reported life
21 cycle savings, I started to see some, Q4 spends in
22 a couple of categories which I had not seen before
23 and I wanted to get your input on that, because it
77
1 seems like that may be attributable in part to
2 changes in lighting standards. Is that something
3 that we can expect to see creep up a bit as our
4 EmPOWER programs mature?
5 MR. HILL: I think as you get -- that's
6 an excellent question. People talk about low
7 hanging fruit often. As you attain broader energy
8 efficiency savings, there is kind of a logical
9 trend upward somehow in the supply cost, a curve
10 of the supply cost. At the same time, when you
11 scale programs, they often can achieve savings at
12 a lower cost.
13 And as the markets transform, the
14 incentive designs change, the new technologies
15 come on. There was some discussion about heat
16 pump water heaters earlier. Very often when you
17 are initially working with the technology, it may
18 have a higher cost, and then over time, as the
19 market starts to scale, there's broader consumer
20 acceptance, there's understanding of proper
21 installation and conditions under which this will
22 or won't work, the scale of the product gets
23 larger, so, the cost actually comes down. And you
78
1 see that consistently, it's kind of a push me,
2 pull you evolution over time.
3 So, it's not surprising that sometimes
4 the costs per KWH in some of the programs or
5 elements or measures are higher, and then what
6 you'd love to have is something like the lighting
7 savings that are at a base load level that are
8 really solid that are helping to keep the
9 portfolio very cost effective.
10 I think Staff's overarching slides
11 there on the benefit/costs for the residential
12 portfolio are about 1.7. So, that's $1.70 of
13 benefit for every dollar that's spent on the
14 program.
15 CHAIRMAN HUGHES: Right. It wouldn't
16 be a trip to Maryland unless we had a conversation
17 about lighting, especially residential lighting
18 going forward.
19 MR. HILL: True.
20 CHAIRMAN HUGHES: We've had some good
21 ones. In terms of your experience in Vermont and
22 other states, in Maryland we're phasing out and
23 rebates for CFLs and concentrating just on LEDs.
79
1 MR. HILL: Yeah.
2 CHAIRMAN HUGHES: Is the new
3 battleground between halogen and LEDs and do you
4 see other states that are further along than
5 Maryland focusing in certain directions in terms
6 of residential lighting?
7 MR. HILL: I'll let a little bit, I
8 think Ms. Levin's comments will talk specifically
9 about some of the program-specific elements.
10 CHAIRMAN HUGHES: Okay.
11 MR. HILL: The transition in the
12 lighting market has been very significant. The
13 good news is the technology, the economics and the
14 performance of these products is quite good. In
15 some cases where savings have been between
16 incandescent and CFLs, that also was a very large
17 savings.
18 So it does put -- it gives us creative
19 opportunity to figure out, well, what are the
20 portfolios that aren't going to have the same
21 level of savings strictly coming from lighting.
22 The Home Performance work, the HVAC
23 work, all of these, still savings in lighting. I
80
1 mean, we mentioned last time I think we were here
2 that some lighting saturation surveys that BGE had
3 done suggested that still 60 percent of the
4 sockets weren't efficient lighting. So there's a
5 great opportunity over time to get that all to be
6 the higher performing LEDs.
7 How much the program will need to
8 incentivize that going forward in the future as
9 the market transforms is to be determined.
10 CHAIRMAN HUGHES: You have heard
11 about -- is there any movement on the national
12 level in terms of lighting standards? Can we
13 expect to see over the next five years or more a
14 change in kind of efficiency standards on a
15 national level?
16 MR. HILL: Well, my understanding --
17 and again, I'll let Ms. Levin jump in if she wants
18 to correct what I'm saying. My understanding is
19 the changes in the lighting standards, the big
20 changes we have seen now, and so it's going
21 forward how will the markets evolve with the new
22 standards that are phasing out based on -- it's a
23 performance-based standard, but in essence, it
81
1 will phase out kind of the incandescent products.
2 CHAIRMAN HUGHES: Okay. Thank you.
3 Appreciate it.
4 MR. HILL: Yes.
5 CHAIRMAN HUGHES: Ms. Kuhn. Good to
6 see you.
7 MS. KUHN: Great to be back. Nikki
8 Kuhn with VEIC. I'm going to talk about the
9 residential portfolio recommendations, so we're
10 going to get into the reports here.
11 So what this chart shows is the
12 forecasted and actual reported savings rates for
13 each of the utilities through this first half of
14 the 2015 to 2017 cycle. What you see on the
15 vertical axis there are the savings rates. So
16 it's important to note here that this sort of is
17 an apples-to-apples comparison, whereas BGE and
18 PEPCO, because they're the largest utilities, are
19 in fact contributing the largest amounts of
20 savings. This is the savings rate across there,
21 their service territory.
22 So Commissioner O'Donnell, I think you
23 talked earlier about Potomac Edison and their
82
1 success at achieving their goals, but it's also
2 important to balance that success against the fact
3 that they have the lowest goals as far as a
4 savings rate is concerned of all of the utilities.
5 Whereas SMECO, when they haven't been successful
6 achieving their goals, has the highest savings
7 rate goals of all of the utilities.
8 It's not to say there isn't something
9 of concern there and that should be addressed, but
10 it's an important baseline to understand.
11 So, one of our high level
12 recommendations in our report was that the
13 utilities achieving the lower savings rates,
14 namely, SMECO, Potomac Edison and BGE, are going
15 to need to identify strategies to scale up their
16 savings to a level that's going to reach that
17 2 percent goal by 2020, and Ms. Levin is going to
18 talk through some of our program level
19 recommendations that we think could contribute to
20 helping scale those savings up. So, as they
21 review their portfolios and ensure they have plans
22 in place to ramp up those program savings starting
23 this next year.
83
1 Now, as has been discussed a little bit
2 so far in this hearing, Washington Gas has put
3 forward a plan for 2017 to 2020 which includes a
4 recommendation to coordinate delivery and funding
5 of existing programs that the electric utilities
6 have been running. Namely, more of the whole home
7 energy efficiency programs such as Quick Home
8 Energy Check, Home Performance with Energy Star,
9 residential new construction and the behavior
10 programs.
11 We strongly support this
12 recommendation. As we have said in previous
13 reports, we have seen in many cases throughout the
14 country different programs that when you can offer
15 more of a total energy type of approach, you're
16 able to not only serve your customers more
17 effectively because you're serving all of their
18 energy needs, but you're also making it easier to
19 reduce administrative overhead and streamline
20 those costs and also maximize the total energy
21 savings potential in that particular home.
22 So, as such, we believe that programs
23 should be addressing a full suite of gas savings
84
1 measures and that includes limited income and
2 we'll talk a little bit more about that in our
3 program level recommendations.
4 MS. KNOLL: This was addressed from the
5 bench. We will not go deeply into it, and we will
6 not be asking the Commission to reconsider,
7 obviously, but I would like to point out that when
8 we get into the program level recommendations and
9 we start discussing the situation with the HVAC
10 proposals, this flexibility would significantly
11 decrease the amount of budget increases the
12 utilities would need going forward.
13 And I think that while it was rejected
14 by the Commission on a blanket basis, it should be
15 then considered specifically for the current HVAC
16 situation, so we'll chat about it then.
17 MS. KUHN: We continue to recommend
18 that the utilities balance their mix of short and
19 long-lived energy savings programs. This has been
20 a pretty consistent theme in our reports and this
21 is due largely to the emergence of behavior-based
22 programs which are a really important part of
23 every utility's residential portfolio, but also
85
1 our lower-lived measures. So they have an average
2 savings of one year predominantly whereas when you
3 replace an HVAC system or add insulation and air
4 sealing to your home, those measures will last for
5 10, 15 years or longer.
6 So, the investments that you're making
7 with the surcharge should be trying to both, you
8 know, provide the energy savings, you know,
9 through, you know, innovative approaches like
10 behavior-based programs, but also to be improving
11 the overall building infrastructure for
12 longer-lived savings as well.
13 And on the last recommendation, I just
14 want to note that, you know, we agree with
15 Montgomery County when they said that it's
16 important that the EmPOWER programs continue to
17 innovate, and this is really kind of the thrust
18 behind this recommendation, that, you know, the
19 programs continue to look out at what is really a
20 rapidly changing field, you know, everything seems
21 to be evolving very rapidly with respect to how
22 energy is being distributed and people are using
23 it, and the opportunities to save energy through
86
1 some of these, you know, connected devices and
2 advanced analytics.
3 It's something that's important that
4 the EmPOWER programs remain on top of, and also
5 note that we saw that Staff had gotten released a
6 solicitation to the public to, you know, solicit
7 ideas for the 2018 to 2020 program cycle and we
8 look forward to participating in that process
9 going forward.
10 With that, I will turn it over to
11 Ms. Levin. Thank you.
12 MS. LEVIN: Hello. I'm happy to be
13 here.
14 CHAIRMAN HUGHES: Good morning.
15 MS. LEVIN: My name is Emily Levin, I
16 have been with VEIC for almost ten years and
17 during that time have been involved in reviewing
18 energy efficiency programs and recommending
19 program designs in, in addition to Maryland, in
20 New Jersey, Florida, Vermont, Washington, D.C.,
21 New York, and other states as well. So, I'm very
22 happy to have the opportunity to be here with you
23 today.
87
1 I'm going to walk through kind of the
2 more in-depth program-specific recommendations,
3 and would be happy to field your questions as well
4 with my colleagues.
5 Starting with the lighting program,
6 we've discussed this already, but what's happening
7 really as opposed to new federal standards is the
8 phase-in of the federal lighting standards, which
9 were designed to phase in over time, and that
10 phase-in is now well under way such that 2017, I
11 think, will really be the final year in which we
12 see CFLs as part of energy efficiency programs.
13 There's a chart on page 26 of our
14 report with OPC that shows the market share for
15 LEDs in residential lighting programs for leading
16 programs and the Maryland utilities are actually a
17 bit behind other utilities. Vermont, for example,
18 is already at 78 percent market share for LEDs as
19 opposed to CFLs in its efficiency program.
20 So, given that phase-in schedule, the
21 EmPOWER programs are really going to need to be
22 fully transitioned to LEDs by the end of the first
23 quarter of 2017, which is coming on really
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1 quickly. And therefore, our recommendations
2 really focus on supporting the utilities in moving
3 aggressively to make that transition and work with
4 retailers and manufacturers on inventory planning
5 to ensure that that transition is done without
6 disruption and in as smooth a way as possible.
7 We also did see that there were, you
8 know, generally the utilities were somewhat below
9 their targets for the lighting programs. So there
10 are opportunities to scale up savings here, and
11 there are a variety of reasons for that, but we do
12 see opportunities to potentially expand beyond the
13 current successful programs to additional, for
14 example, types of retailers such as independent
15 hardware, grocery and drugstores, and do kind of
16 innovative promotions and community events and
17 expansions of food bank promotions and some other
18 tactics to continue to broaden the base for the
19 lighting programs.
20 We also -- we -- you know, obviously,
21 the inclusion of value LEDs was approved in the
22 previous order, but we do recommend that utilities
23 continue to monitor pricing trends around LEDs and
89
1 evaluate in the spring whether continued inclusion
2 of value LEDs is warranted. We are concerned
3 about the potential for lower quality and lower,
4 you know, real lifetime for the non-Energy Star
5 products, and it is anticipated that a new round
6 of Energy Star products that are likely to have
7 lower costs are going to be coming into the market
8 over the next few months. So we really encourage
9 the utilities to sort of monitor that trend and
10 evaluate whether it continues to make sense to
11 include value LEDs into 2017.
12 As we transition to the appliance
13 program, what we're really seeing here -- well, in
14 general, the -- as you see by all of these
15 requests to move funds out of the appliance
16 programs, the appliance programs generally fell
17 short of targets.
18 The reason for that is again sort of
19 this interplay with the federal standards where
20 more stringent federal standards came into play
21 and there weren't necessarily as much availability
22 of products at those high standards. So, we do
23 believe that that will start to mitigate. There's
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1 increasing availability of the higher tier
2 appliances at the CEE tier 2 and 3 level that the
3 utilities support. So, you know, we don't think
4 that that will continue in as pronounced a way
5 into 2017. It should get better.
6 But one piece of that is the utility
7 proposal to participate in the Energy Star retail
8 products platform, and we strongly support this
9 proposal and just wanted to speak a little bit
10 about this since there were some questions about
11 what a midstream program is. This is an important
12 emerging trend in how energy efficient programs
13 are delivered. Historically, most energy
14 efficiency programs have offered what we call
15 downstream rebates direct to the customer who's
16 installing those measures.
17 So, they install, you know, a high
18 efficiency refrigerator or an HVAC system and then
19 they fill out a form and they mail it in and they
20 get a rebate. That's a downstream rebate and
21 that's sort of the tried and true method.
22 Increasingly, leading utilities are
23 shifting to midstream and upstream approaches.
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1 Midstream programs apply approaches at the
2 distributor or retail level, midstream in the
3 market, and upstream programs apply incentives
4 directly through manufacturers.
5 Those programs are proving to be highly
6 successful in terms of driving real market
7 transformation as well as greater impact in terms
8 of much higher savings than what downstream
9 programs are achieving. That's because they can
10 largely function as kind of an instant discount.
11 So, as opposed to having to proactively
12 opt in to participate, a customer is going to
13 automatically receive a discount at point of
14 purchase or point of installation through the
15 retailer or through the distributor.
16 There's a lot of different ways these
17 programs can be designed. The Energy Star retail
18 products platform, for example, also has some
19 potential to mitigate this trend towards kind of
20 higher costs per unit because actually they're not
21 necessarily trying to incentivize sort of the full
22 incremental cost. What the Energy Star retail
23 products platform is trying to do is really trying
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1 to influence retailer stocking practices and, you
2 know, drive what they're really putting out on the
3 shelf, and in some cases a smaller incentive can
4 go farther when applied at that level than if it
5 was applied to an end use consumer.
6 So we strongly support this proposal.
7 We think it has the potential to really transform
8 the market. And just a couple of cautionary
9 notes. The utilities mentioned offering
10 incentives for select products only; things like
11 sound bars and other -- other measures that they
12 may not currently be supporting.
13 But we -- one of the things about that
14 Energy Star retail products platform is that it's
15 designed to take advantage of an economy of scale
16 in terms of the national collaboration. So what
17 it's doing is establishing a set of participating
18 products and eligibility criteria and really
19 coordinating with leading retailers, currently
20 Sears, Best Buy and Home Depot, to make that all
21 consistent so it's much easier for those retailers
22 to work with efficiency programs as opposed to
23 them having to deal with different criteria and
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1 different types of technologies in every single
2 state and utility that they're working with.
3 And part of that is supporting the full
4 range of products. So we encourage the utilities
5 not only to join the products platform, but to
6 support the full range of products.
7 And in cases where -- where products
8 they're currently supporting such as refrigerators
9 and clothes washers are not yet included in the
10 Energy Star retail products platform, they should
11 maintain the downstream incentives for now, being
12 ready to transition those when they're ready, but
13 make sure the eligibility criteria are consistent.
14 They should also be monitoring trends
15 with clothes driers. The EPA emerging technology
16 clothes drier standard is available and can be
17 included in the program. Heat pump clothes driers
18 are coming soon and we think there are
19 opportunities as well for the gas utilities,
20 Washington Gas and BGE, to offer incentives for
21 Energy Star gas clothes driers as well.
22 So, despite the lower performance of
23 the appliance program in this round, we think
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1 there's plenty of remaining opportunity there and
2 this program can continue to ramp up in future
3 rounds.
4 Residential retrofit. We strongly
5 support the proposal to transition to
6 performance-based incentives. The current
7 incentives as -- incentives as a percentage of job
8 costs have really driven sort of the lowest common
9 denominator project where the typical project is
10 exactly $4,000 because the incentive is exactly
11 $2,000, and it really hasn't contributed to
12 driving comprehensive and deeper savings.
13 So we think that that proposal makes a
14 lot of sense and will really go a long way to
15 drive deeper savings and to offer new
16 opportunities to coordinate between the Home
17 Performance and the HVAC programs.
18 We do have a couple of concerns with
19 the specific proposal, performance-based
20 incentives. The most important one is that the
21 proposed incentives for MMBTU electric savings are
22 much higher than the incentives for natural gas
23 savings and that's because currently the EmPOWER
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1 program focuses on electric savings. We think in
2 the context of Washington Gas proposing to join
3 the EmPOWER programs more broadly and jointly
4 operate these programs, you know, now is not the
5 time to adopt a non-fuel neutral incentive. Now
6 is the time to really fully embrace gas, make sure
7 it's included on par with electricity, and through
8 partnering with Washington Gas and BGE with its
9 own programs, really engage it as a full partner
10 in the program, because so many of the savings
11 opportunities are from natural gas and we're
12 concerned that if the incentives for gas savings
13 are much lower, that could really drive some
14 perverse outcomes in terms of how customers
15 perceive the programs and why is my incentive for
16 this activity so much lower than my neighbor's.
17 There's no reason to go there given the strong
18 interest and alignment among many parties and
19 including natural gas.
20 The other caution is the need to
21 integrate some minimum requirements for things
22 like health and safety and potentially some shell
23 measures like air sealing and insulation. We have
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1 seen performance-based incentives in other states
2 like New Jersey and in some cases there can be
3 some perverse results if those protections are not
4 included.
5 So we would encourage the work group to
6 take a look at that and propose some minimum
7 standards to make sure that all of the projects
8 included are achieving a minimum level of
9 comprehensiveness as well as health and safety
10 protection.
11 The next set of recommendations around
12 retrofit programs really center on the Quick Home
13 Energy Checkup program. There are opportunities
14 to more effectively coordinate between the
15 utilities and DHCD on outreach for limited income
16 QHEC.
17 This is increasingly important as a
18 number of the utilities are focusing on
19 master-metered QHEC, QHEC in buildings with master
20 meters, as well as opportunities to coordinate
21 with housing providers and low income groups.
22 There seems to be increasing overlap between the
23 Quick Home Energy program and what's going on in
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1 the DHCD programs, and we think the utilities and
2 DHCD should take a look at that and make sure
3 they're well coordinated.
4 The other comments that we wanted to
5 note are around kind of the future of QHEC. The
6 program has been very successful at its mission to
7 sort of return to consumers the same amount that
8 people are paying in. And achieve a substantial
9 amount of savings.
10 We think the time is right going into
11 the 2018 to '20 cycle to take a fresh look at QHEC
12 to see if any changes in program design are
13 warranted. There's a few reasons for that. One
14 is that the utility reports, several of them
15 talked about factors around market saturation
16 around QHECs. One factor is is this market
17 becoming saturated. Have many of the people who
18 were going to get QHECs already gotten them.
19 We're not sure and we think a work
20 group should take a look at that. We also note
21 that a lot of the savings from QHEC come from
22 lighting, and with the changes in the lighting
23 program, there may be diminishing levels of
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1 savings from lighting, not to mention Maryland has
2 a very successful lighting program, and it might
3 be somewhat duplicative to really be so heavily
4 emphasizing lighting in the QHEC program.
5 So we have some questions about the
6 remaining kind of market and savings potential for
7 both single family and multifamily QHEC and think
8 that we should take a look at that over the course
9 of 2017 and make a plan for that in the next
10 cycle. So no immediate change but just an item
11 for the future.
12 Another challenge is around how QHEC
13 relates to the entry point into EmPOWER and the
14 Home Performance program, particularly with this
15 shift to performance-based incentives that we
16 believe that program will become increasingly
17 effective as sort of the comprehensive vehicle,
18 sort of a shell and HVAC savings in the EmPOWER
19 program and looking at whether QHEC is as
20 effective as it could be as an entry point for
21 customers to gain access to EmPOWER is another
22 item the group should look at over the course of
23 2017.
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1 On the HVAC program, and Molly has
2 already mentioned this -- Ms. Knoll, excuse me,
3 has already mentioned this -- the most important
4 thing here is that, as I think you've heard from
5 The Alliance and Efficiency First, these -- the
6 HVAC program has been very successful, and it's
7 quite important to maintain market continuity.
8 What you don't want in any of your
9 energy efficiency program is a boom or bust or a
10 stop/start cycle. That's the worst thing for the
11 industry and for the market. So it's critical to
12 maintain continuity and we support whatever
13 adjustments and requests are needed to kind of
14 keep the program alive.
15 Within that, we do think there might be
16 some opportunities to adjust incentive levels.
17 There are some measures where -- and we have a
18 chart on page 65 of our report -- that shows this
19 from the work group discussion, but there are some
20 situations where the EmPOWER incentives do appear
21 to be quite a bit higher than other leading
22 programs. So there might be some opportunities to
23 adjust those.
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1 There are also some cases, for example,
2 natural gas furnaces, where EmPOWER utilities are
3 incentivizing at a lower criteria than most other
4 programs, so there might also be opportunities to
5 adjust the criteria upward and for example support
6 natural gas furnaces at 95 percent AFUE rather
7 than 92 percent AFUE.
8 So there are opportunities to adjust
9 incentive levels and criteria in ways that could
10 make the programs more cost effective, but that
11 should be done within a framework of maintaining
12 continuity for those programs and not disrupting
13 the market.
14 MS. KNOLL: I want to add one point,
15 while there is room in the rebate or the
16 incentives to shift things around, that's only one
17 of the tools available to the Commission and the
18 program administrators. Budget flexibility is
19 another tool and budget increases are a third
20 tool.
21 As long as we're working only with
22 changing incentives, we have a race to the bottom.
23 We have certain utilities that have already come
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1 to the Commission and asked for what they need and
2 have HVAC programs that are running through the
3 end of the program, no problem, and we have some
4 utilities that project they're going to run out of
5 money for the complete program cycle, which is all
6 of 2017, by the end of this year.
7 So if we're only doing it on the
8 incentive side, we're going to have a really hard
9 time accomplishing what we need, and we'll have
10 smaller utilities changing what's available for
11 85 percent of the population of Maryland, because
12 the uniformity with the incentives is really,
13 really important. That's important to the
14 utilities. It's important to the contractors.
15 Important to the customers. But the utilities
16 also need to have a certain amount of flexibility
17 both in moving their budgets and in budget
18 increases.
19 I just want to direct the Commission
20 very quickly, I think Einstein said he stood on
21 the shoulders of giants. Appendix A in Staff's
22 report does a very good breakdown of what the
23 flexibility gains the utilities in terms of
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1 decreasing the budget request and also breaks down
2 the budget impact on the surcharge, some of which
3 I think are in -- if I counted my decimals right,
4 a millionth of a penny per kilowatt hour for the
5 budget increase that was requested.
6 OPC would support those budget
7 increases that are necessary to keep the HVAC
8 program running particularly with the flexibility
9 the utilities requested. It takes a 1.7 million
10 request from PEPCO down to -- I'm sorry, 1.7
11 million down to 700,000, a similar decrease in
12 DPL, having the flexibility significantly
13 decreases the amount of money that they need.
14 The programs are complicated. There's
15 a bunch of levers and buttons that you can push
16 and the OPC would encourage the Commission to use
17 all of the levers and buttons to keep the programs
18 running well for each utility individually and the
19 state as a whole.
20 COMMISSIONER O'DONNELL: Ms. Knoll, so
21 isn't that an argument that you make for more
22 precise forecasts for where these monies should be
23 parked up front? Because if you're not
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1 forecasting more accurately, then you have these
2 downstream problems with where the monies go,
3 which may end up in the lap of the ratepayers that
4 you represent, right?
5 MS. KNOLL: So, this all ultimately
6 ends up in the lap of the ratepayer.
7 COMMISSIONER O'DONNELL: That's
8 absolutely correct. But even more so if forecasts
9 aren't right and budget adjustments have to be
10 made.
11 MS. KNOLL: That's accurate. But keep
12 in mind also the market is very dynamic. The
13 federal standards change. The EM&V that gets done
14 changes what savings we're actually realizing
15 versus what we originally forecasted. These
16 forecasts were done quite a long time ago. I
17 think that's actually a very good argument for the
18 budget flexibility.
19 COMMISSIONER O'DONNELL: So, and I
20 think that this Commission has said we have good
21 budget flexibility, we'll allow you to come in on
22 administrative meetings and give you the
23 flexibility you need, we're just not giving you a
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1 blank check.
2 MS. KNOLL: Certainly, and I don't
3 think any of the utilities requested a blank check
4 and OPC was not suggesting a blank check, we
5 limited to 20 percent as noted so we could come to
6 the Commission if there was any necessity to do
7 that. The utilities wouldn't be able to do this
8 without talking to anybody and without letting the
9 Commission Staff and OPC know. I don't want to
10 rehash the blanket flexibility.
11 COMMISSIONER O'DONNELL: Okay.
12 MS. KNOLL: But the forecasts that are
13 done are done a long time ahead of time, and, you
14 know, the utilities do need to have the ability to
15 address things that change and change their
16 footing and react.
17 COMMISSIONER O'DONNELL: Thank you.
18 MS. LEVIN: Before we move off of HVAC,
19 similar to the appliance program, we do think
20 there are opportunities, and this is potentially a
21 growth area for future cycles, to look at
22 midstream and upstream programs that would
23 incentivize HVAC products through distributors and
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1 retailers, and especially distributors are really
2 critical in the HVAC market, and this is an
3 increasing type of program that has seen great
4 success in other states where there might be
5 opportunities to really work more actively with
6 distributors around stocking of energy efficient
7 HVAC equipment in ways that would result in an
8 instant discount to the customer receiving that
9 equipment through an installer.
10 There may also be opportunities to
11 better integrate smart thermostats into the HVAC
12 program. This may be already being done with some
13 degree with the PeakRewards program. But right
14 now the smart thermostat efforts focus on demand
15 response with the potential for smart thermostats
16 to deliver energy efficiency savings potentially
17 kind of underexplored.
18 This type of smart learning thermostat
19 offers the potential to drive savings from
20 behavioral changes as well as HVAC optimization
21 and we think there's some opportunity there to
22 explore. That's really a recommendation focused
23 on the next cycle, the 2018 through '20 cycle, and
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1 one of those kind of new savings opportunities
2 that a work group could explore.
3 Residential new construction program,
4 this program actually has -- it was interesting,
5 while the participation levels were a little lower
6 than expected, the savings levels were higher than
7 expected, because with the transition to Energy
8 Star version 3.1, the utilities are achieving
9 really strong savings on a per unit basis in this
10 program. So there's a lot of really strong trends
11 in the new construction program.
12 So we encourage the utilities to build
13 on that by potentially creating a performance path
14 for Energy Star building in addition to a
15 prescriptive path. A prescriptive means that the
16 types of building methods are kind of prescribed
17 in advance. You need to have this insulation
18 level, and this level of air sealing, and, you
19 know, that type of thing. Whereas the performance
20 path would allow sort of modeled savings using
21 something called the home energy rating system,
22 and that type of approach could offer some more
23 flexibility and that could be helpful for
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1 innovation in the building sector. So, we're not
2 saying to give up the prescriptive path, but only
3 to offer a performance path as an option in
4 addition to that. That would also be well aligned
5 with the next energy code, the IECC 2015.
6 Leading programs are also incorporating
7 net-zero ready tiers. So we are at the point when
8 where new homes can be constructed at net-zero
9 with the inclusion of renewables pretty readily,
10 and we're seeing this as an important trend in a
11 lot of states, and believe that the EmPOWER new
12 construction program should be supporting those
13 builders and homeowners and home buyers to be
14 net-zero.
15 We strongly support Washington Gas'
16 proposal to, again, as with Home Performance,
17 Quick Home Energy Check and behavior, to jointly
18 operate electric and gas savings programs to go
19 after the full -- the full scope of savings
20 opportunities from both electric and natural gas
21 measures. That opportunity is really significant
22 in new construction programs.
23 We do have some questions about a
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1 proposal that Washington Gas made to offer a
2 separate residential new construction program
3 focused solely on high efficiency natural gas HVAC
4 systems, and we do have some concerns about
5 whether that separate program, you know, if a
6 joint program is created, which would be our top
7 choice, what would the second program do, how
8 would it avoid customer confusion and kind of
9 competing with the other programs. So probably
10 our preference would be to just offer a
11 comprehensive program that addressed both electric
12 and natural gas measures including HVAC measures.
13 Limited income program. Again,
14 continuing with our theme, we think there are
15 opportunities for these programs to fund gas
16 saving measures as well as electric savings
17 measures that would require potentially some
18 changes in how DHCD is targeting households,
19 because they're currently targeted based on high
20 electricity use, and you would need to look at a
21 different type of metric, around a total energy
22 consumption metric, but that said, we strongly
23 support moving aggressively to include natural
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1 gas, you know, fully and completely in these
2 programs.
3 As with the rest of the EmPOWER
4 portfolio, CFL is going to be phasing out and DHCD
5 will need to ensure that it's consistent with the
6 rest of the EmPOWER portfolio in its transition to
7 LEDs.
8 We support DHCD's request to have its
9 2018 to 2020 budgets considered in the spring
10 EmPOWER hearings so that it has plenty of time to
11 transition to the new program designs and
12 negotiate contracts with its partners.
13 And we do have some questions about the
14 request to use EmPOWER funds for solar
15 installations. If one of you wants to --
16 MS. KNOLL: So there was some confusion
17 about the approval for the use of EmPOWER funds to
18 install solar panels. I did a little research and
19 that was in the '15 through '17 plan. I checked
20 the comments of Staff. I checked the comments of
21 OPC. I checked the order of the Commission. It
22 appears to have simply gone under the radar
23 without anybody flagging the use of EmPOWER funds
110
1 for solar panels at that time.
2 If OPC had flagged it at the time, we
3 would have opposed it at the time. It was
4 approved in that the plan was approved as filed.
5 OPC would oppose the use of EmPOWER dollars for
6 solar panels as, if you go back to the language of
7 7-211, it is efficiency based items, so we would
8 oppose that request from DHCD.
9 MS. LEVIN: And last but not least,
10 demand response programs. Given that there really
11 aren't any demand reduction events in the first
12 half of the year, these are kind of general
13 comments. We support the utilities maintaining
14 their demand reduction capabilities for the
15 reliability and economic benefits. These are
16 crucial programs and contribute greatly to the
17 operation of the electric system and the overall
18 economic benefits from EmPOWER.
19 We do see opportunities to build on
20 utilities' efforts to coordinate demand response
21 program design and customer outreach with the rest
22 of the efficiency portfolio. As with smart
23 thermostats, there might be new opportunities to
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1 gain more on both fronts by coordination of these
2 programs, to get both efficiency and demand
3 savings from the same measures.
4 We encourage utilities and evaluators
5 to examine BGE's impact evaluation of the two-way
6 WiFi thermostat pilot program. There was a report
7 that we received a copy of in the data request
8 responses, and it will be important to see how
9 that type of program might continue or grow beyond
10 a pilot stage.
11 And in general, we encourage a thorough
12 review of the demand response programs in the next
13 planning cycle to encourage that demand reductions
14 are accurately valued. There have been some
15 questions about the value of demand reduction and
16 the contributions through distribution and
17 transmission activity, and that these programs
18 remain cost effective.
19 We think they are cost effective, but
20 we want to make sure we are all on the same page
21 about how, how the demand reductions are valued
22 and considered as part of the overall system.
23 That concludes my remarks. Thanks for the
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1 opportunity to present.
2 CHAIRMAN HUGHES: Thank you, Ms. Levin.
3 Great presentation. We really appreciate it.
4 Can you give us an update on the gas
5 driers, as to whether they're on the market,
6 coming on the market, and kind of price range
7 them. How they might fit in in the next four or
8 five years in terms of market penetration.
9 MS. LEVIN: Natural gas driers are a
10 long-standing measure. That's not kind of an
11 emerging technology. There have always been
12 driers that you can power with gas as opposed to
13 electricity, and programs in lots of other states
14 have long supported that.
15 CHAIRMAN HUGHES: Maybe I'm thinking of
16 Energy Star high efficiency natural gas driers.
17 MS. LEVIN: Yeah. So, there's two
18 things. One is that there is, gas driers are
19 included in Energy Star criteria to begin with.
20 And then on the electric side, there are kind of
21 Energy Star -- just looking up the term. Emerging
22 technology clothes driers.
23 So Energy Star has created some sort of
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1 higher tiers for driers that are even better
2 performing in terms of electric savings. So those
3 are actually kind of two separate things. One is
4 baseline Energy Star driers are also available for
5 natural gas, and we think those should be
6 supported, and one is that there's a lot of sort
7 of emerging technology work on the electric side
8 around clothes driers and that should also be
9 monitored and supported.
10 CHAIRMAN HUGHES: All right. Very
11 good. Thank you. Any additional questions?
12 COMMISSIONER O'DONNELL: I was going to
13 ask in that area anyway. The heat pump, the
14 emergence of the heat pump clothes driers and
15 technology. We heard earlier from the HVAC
16 contractors and The Alliance that one of the
17 reasons in the appliance program, the hot water
18 heaters using this technology aren't working well
19 is unlike the traditional heat pump technology,
20 the unit sits outside and takes the heat out of
21 the air and the consumer doesn't know it, but if
22 we're using these indoors, which is what this
23 technology does, it makes the basement colder
114
1 because it pulls the heat out of the basement for
2 the hot water heater and potentially makes
3 wherever the clothes drier is, it makes that a
4 heat sink and takes the heat out of the air in the
5 living spaces.
6 So the question arises in my mind, one,
7 is there a study out there that if you take a
8 traditional clothes drier that, you know,
9 resistive heat, and you compare it to the new
10 technology, heat pump technology, it's going to
11 show a greater efficiency improvement. Are there
12 studies that balance the heat removal in the
13 living space and accounts for that in terms of
14 efficiency as well.
15 Because now you're potentially robbing
16 Peter to pay Paul in the energy world and I'd like
17 to see that scientifically quantified because I
18 think it's part of the reason why these appliances
19 aren't successful at this point.
20 MS. LEVIN: I guess two points. One is
21 that heat pump technology generally requires a
22 higher level of contractor and installer training
23 than conventional technology, and people need to
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1 know how to install and recommend these units, and
2 in particular, where they are and are not suited.
3 So I disagree with a blanket assertion
4 that people just don't like heat pump water
5 heaters. We have seen in Vermont, for example,
6 very large scale participation and high
7 satisfaction with heat pump water heaters, and
8 that's in a very cold climate, where if it was
9 making it colder, people would be complaining
10 about that.
11 So, these programs can be successful,
12 but that requires that they are accompanied by a
13 lot of training and close partnership with
14 contractors and distributors to ensure that
15 they're being installed in the right kind of
16 settings and the right place.
17 The other piece of that comment, and
18 I'm not actually familiar with the degree to which
19 this has been addressed for clothes driers
20 specifically, but, for example, with heat pumps,
21 you know, actual heat pump equipment, not heat
22 pump water heaters but air source heat pumps,
23 there's been quite a lot of effort around
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1 so-called cold climate heat pumps where some of
2 these are better than others.
3 So there are ways to design these that
4 can make that problem worse or less bad, and there
5 is a whole group of people working on kind of very
6 well performing heat pumps generally that are
7 suited to installation in cold climates. So
8 there's a lot of work being done on that front.
9 So again, this isn't going to be a
10 technology that's right for everybody, but it is a
11 very high efficiency technology and there are ways
12 to mitigate some of the risks that you've
13 mentioned. So we would not agree with kind of
14 leaving it out. We think it should be monitored.
15 COMMISSIONER O'DONNELL: I'm not
16 arguing it. I'm just observing because our
17 appliance program is struggling very much and we
18 don't seem to be moving a lot of these. Right now
19 the hot water heaters, but I suspect we'll have a
20 similar problem with the clothes driers.
21 MS. LEVIN: Yeah, Vermont -- so one
22 note is that water heaters are actually included
23 in the appliance program, not the HVAC program,
117
1 although there's obviously overlap in terms of how
2 those are installed.
3 COMMISSIONER O'DONNELL: I understand.
4 I'm asking about slide 16 which is your appliance
5 program.
6 MS. LEVIN: Yeah. So, one note,
7 Vermont's experience, for example, with heat pump
8 water heaters was that the traditional rebate
9 design where there's a customer rebate after
10 installation got pretty low participation because
11 consumers are not that familiar with the
12 technology, they might be nervous about buying it.
13 When there was a midstream incentive
14 offered through HVAC distributors and distributors
15 of plumbers and water heater distributors, that
16 actually, you know, participation really
17 skyrocketed. That's an example of how midstream
18 incentive designs can in some cases be more
19 effective because they really influence kind of
20 the installation decisions of the contractors that
21 are deciding and are accompanied by education and
22 training for those contractors, so they really
23 understand where they're appropriate and where
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1 they're not and know how to deal with them and
2 recommend them.
3 Those states that have a midstream
4 model and have worked with distributors for the
5 heat pump water heaters have had a much higher
6 participation than Maryland has.
7 COMMISSIONER O'DONNELL: Are you aware
8 of any technical evaluations that show the savings
9 and the technology of this technology offsets the
10 increased heat requirements that you have to put
11 into a residence? Maybe there is. I'd like to
12 see those.
13 MS. LEVIN: I'm sure there are, I'm not
14 aware off the top of my head, but we can follow
15 up.
16 COMMISSIONER O'DONNELL: Thank you. I
17 appreciate it very much.
18 MS. KUHN: We can follow up.
19 COMMISSIONER RICHARD: Yes, a question,
20 in the filings and also in the testimony today, I
21 have heard several times performance-based
22 incentive programs, and maybe I'm the only one up
23 here that doesn't really know what that is. Can
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1 you maybe get into the contours of what is
2 involved in this, and what I'm hearing is it does
3 sound like it's a shift. It's a big enough change
4 that it's causing some concerns.
5 So if someone could just help me
6 understand what this is.
7 MS. LEVIN: So, just a clarification is
8 that the specific proposal that's been made is
9 within the Home Performance with Energy Star
10 program, there might be ways to offer
11 performance-based incentives for other programs as
12 well, but the active proposal is really specific
13 to the Home Performance program. And what it
14 would do is the current incentive is 50 percent of
15 cost, so a contractor goes in and they install air
16 sealing and insulation, and say that job costs
17 $4,000, the customer will receive a $2,000
18 incentive. So it's purely a function of the cost
19 of the job. If the job is $3,000, they'll receive
20 a $1500 incentive.
21 Because of that structure, there's been
22 sort of an outcome, sort of not by design, but
23 it's just so happened that it's evolved such that
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1 the typical Home Performance project in Maryland
2 is about $4,000 and it includes kind of a basic
3 level of air sealing and insulation and people get
4 about a $2,000 incentive and there's sort of a
5 standard type of project that's pretty common.
6 What performance-based incentives would
7 do is to base the incentive on the energy savings
8 achieved, so the performance there is performance
9 in terms of energy savings.
10 So the way it would work is the
11 program's software that the contractors use, they
12 would conduct an energy audit. They would
13 estimate, we think a comprehensive improvement
14 project, upgrade of this home would save 20
15 MMBTUs. Million BTUs. And that's just sort of a
16 generic unit of energy savings. You can convert
17 kilowatt hours or natural gas therms into MMBTUs.
18 It's a generic energy savings.
19 What it says is we're going to pay, you
20 know, $10 -- I'm forgetting and I will let the
21 utilities speak to the details of the proposal,
22 but I think what they're actually proposing is
23 something more in the range of $18 in MMBTU for --
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1 from electric savings and $2 or $3 for MMBTUs for
2 natural gas savings. So the incentive would be
3 higher for projects that deliver more energy
4 savings based on the model of energy savings at
5 the time of the audit.
6 So what that would tend to do, and
7 what's been seen in states that have this type of
8 structure, is that it's going to tend to drive
9 larger projects, projects that are -- that save
10 more energy, projects, you know, with deeper
11 savings. So it creates an incentive to kind of go
12 further as opposed to sort of the current
13 structure that in a way artificially caps the size
14 at about $4,000. This would encourage somebody to
15 go, maybe do a 10 or $20,000 project to go after
16 deeper savings. As long as the savings are there,
17 the utilities would incentivize them.
18 COMMISSIONER RICHARD: Right. Thank
19 you. That's very helpful.
20 One other question I have, maybe,
21 Ms. Knoll, you can help me with this one. As I
22 hear your testimony, you find the EmPOWER program
23 pass the cost/benefit analysis they return. There
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1 is one element to the cost of the program and I
2 think it's just because it's become a large
3 program and it is amortized over five years, and
4 that is the financing costs.
5 These financing costs are basically
6 something that utilities, as I understand it,
7 correct me if I'm wrong, they provide the
8 financing at the rate of return. So these costs
9 are now, you know, on the order I guess this year,
10 if I added up all of the returns correctly, you
11 know, about $50 million.
12 Has OPC looked at that? Is that of
13 concern at all? Do you think it's just an okay
14 part of the overall program? Or do you think that
15 there's opportunities that we ought to look at,
16 you know, can we find better ways to run the
17 program. Maybe a competitive-based program or
18 maybe involving other entities besides the
19 utilities running the various suite of programs.
20 I'm just curious if you have any
21 opinions on that and specifically on just these
22 financing costs of the program.
23 MS. KNOLL: I guess I'm not entirely
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1 clear on the financing costs that you're referring
2 to.
3 COMMISSIONER RICHARD: I guess how
4 they're leveraged. The programs are amortized
5 over five years. So, in addition to paying back
6 the utilities for the programs, there's also the
7 financing charges. The cost of the -- of the
8 money.
9 MS. KNOLL: So, I think you're
10 referencing kind of a disconnect between when the
11 surcharge is collected and when the money goes out
12 for the --
13 COMMISSIONER RICHARD: And the fact
14 that it's done over a five-year period.
15 MS. KNOLL: Would OPC prefer to see
16 lower ROEs? Yes. Would -- but the utilities are
17 using this money for the benefit of ratepayers.
18 The Commission has set the ROEs the way they have
19 set them in the rate cases.
20 I'm not aware of any other funding
21 sources that would serve the same function that
22 the utilities are serving in terms of the money
23 coming in and the money going out.
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1 If we could tighten up, I guess,
2 recalculations of the surcharge to decrease the
3 amount of time between when the utility puts it
4 out and when they recover it, yes. I mean, if the
5 surcharges were trued up more frequently, that
6 might reduce those charges. But I, off the top of
7 my head, have no ideas for other funding sources
8 than the utilities to fix that issue.
9 COMMISSIONER RICHARD: Okay. I guess I
10 would just encourage, as the stakeholders get
11 together and look to the future, maybe it's again
12 more of a competition, maybe these don't all have
13 to be run by the utilities, because if they're all
14 run by the utilities, that means that necessarily
15 there's going to be a financing charge at the rate
16 of return.
17 MS. KNOLL: I can look into it.
18 COMMISSIONER RICHARD: But in any case,
19 I would just be interested to see if that could be
20 looked at. You know, $50 million, it's over $15
21 million this year, and that's a lot of money
22 that's being transferred from our ratepayers and
23 our electric and gas customers to the utilities
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1 that aren't going for the profit or going for the
2 uses that were intended.
3 MS. KNOLL: I can certainly take a look
4 into that. I would expect that an analysis would
5 probably show that taking this away from the
6 utilities and having different contractors running
7 things, duplicating certain administrative
8 expenses.
9 The benefit of the utility running it
10 is they have all of the customer information.
11 They have a single point of contact for the
12 customer. They have a single marketing budget. I
13 think there are probably economies of scale that
14 offset that, but we can certainly look into it.
15 COMMISSIONER RICHARD: Thank you. I
16 would note that, again, back in 1999, we passed
17 the Electric Customer Choice and Competition Act.
18 So, maybe that's a good thing. Perhaps there
19 ought to be competition in all areas of energy
20 services, and the concentration that you see as an
21 advantage, you know, perhaps we could actually do
22 better if there were true competition.
23 MS. LEVIN: I could speak to that a
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1 little bit, because that's certainly an emerging
2 area of discussion in states like New York with
3 the REV proceeding, Reforming the Energy Vision
4 proceeding, as well as California. I've recently
5 been researching so-called pay for performance
6 programs which could be operated more broadly than
7 what's being discussed with the performance-based
8 incentive structure in Maryland.
9 That concept would be sort of utility
10 offers to pay a certain amount per unit of energy
11 savings and sort of opens it up to the market to
12 come with solutions, and, you know, offer
13 innovative solutions to drive savings. There's
14 actually quite a lot of history and experience
15 with those types of programs and the results have
16 been mixed.
17 I think there have been cases, for
18 example, Con Edison has a Brooklyn/Queens project
19 where they open it up to the market to bring
20 solutions for an area that faced a lot of grid
21 constraints in Queens and Brooklyn, and that has
22 been very successful at bringing some innovative
23 solutions encompassing energy efficiency, demand
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1 response, storage, a whole bunch of solutions.
2 So there's some opportunity for
3 innovation but the experience has not largely been
4 that the programs have costed less than sort of
5 the traditional demand side management programs.
6 In fact, overall, the experience has been that
7 those types of programs have generally cost more
8 because they place more of the performance risk on
9 the private market actors as opposed to the
10 utilities who are bearing the risk.
11 If the goals are not met, it's the
12 utilities that are penalized in the current
13 structure, whereas that type of model potentially,
14 depending on how it was designed, would shift that
15 risk to the market in a way that the market would
16 have to charge more to do the same thing that the
17 utility is doing.
18 It also raises important questions
19 about kind of customer coordination, potential for
20 market confusion for competing programs. So
21 there's sort of a push and pull between the
22 innovation that can be driven and the potential
23 for some negative outcomes, and I think what New
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1 York and California are finding is that there are
2 some types of savings opportunities, market
3 sector, et cetera, that are suited to that type of
4 a design and there might be opportunities to open
5 them up, and there are others that are not, and we
6 shouldn't be throwing out the baby with the bath
7 water.
8 You know, we should be maintaining and
9 supporting the current programs that are working
10 well and potentially looking to use market-based
11 ways to drive innovation in some components of the
12 portfolio where that makes sense which is largely
13 at this point more in the C&I space than in the
14 residential space.
15 COMMISSIONER RICHARD: Thank you.
16 CHAIRMAN HUGHES: Any additional
17 questions for our panel? If not, thank you very
18 much. We really appreciate it. Great
19 presentations.
20 We are going to take a break for lunch
21 now, so we'll be back at quarter of 2, and we will
22 hear next from the Maryland Energy Advocates, and
23 I think after that, depending on whether MEA is
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1 here, we may go to WGL. See everyone back in an
2 hour.
3 (RECESS, 12:41 p.m. - 1:45 p.m.)
4 CHAIRMAN HUGHES: Welcome back,
5 everyone, to the Maryland Public Service
6 Commission's EmPOWER Maryland semi-annual hearing.
7 We'd like to welcome next the Maryland Energy
8 Efficiency Advocates and RGC.
9 MS. MILLER: Thank you, Mr. Chairman.
10 Good afternoon, Commissioners. My name is Susan
11 Miller, and I represent the MEEA, and with me is
12 Mr. Jim Grevatt who prepared our comments for the
13 proceeding. He will do a brief summary of our
14 comments and then be available for questioning.
15 CHAIRMAN HUGHES: All right. Good
16 afternoon. Good to see you.
17 MR. GREVATT: Thank you very much. For
18 those who aren't familiar with the Advocates, it's
19 a group that changes a little bit from filing to
20 filing, but we are made up of both environmental
21 organizations such as the Natural Resources
22 Defense Council and the Chesapeake Climate Action
23 Network, Sierra Club, and then we have low income
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1 advocates in our group such as the National
2 Consumer Law Center, Advocates for Affordable
3 Housing, the National Housing Trust and a variety
4 of other folks who, you know, participate in our
5 discussions and help formulate our comments.
6 I will try to keep my comments brief,
7 which seems to be the mode for today, which I
8 think is great. So what I'd like to do, if I can,
9 is offer a couple of framing comments for, or more
10 specific suggestions for the portfolio related to
11 the semi-annual filings.
12 I found myself over the last few months
13 reflecting on some of the discussions in the last
14 hearing which I thought were engaging and
15 fruitful, and just going back and reminding myself
16 of why we do utility demand side management in the
17 first place. And I'm sure this is familiar to
18 everyone here, but indulge me if you will.
19 I mean, we regulate utilities so that
20 they provide service, safe and affordable service
21 at the least cost to the ratepayers. When the
22 utilities developed monopolies on the wires, there
23 was no control over what they charged. That
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1 wasn't viewed to be in the public good so we
2 required them to deliver energy at the least cost.
3 And utility demand side management was
4 really conceived in that vein. When we go back to
5 the '80s and the '90s, before really anybody was
6 talking about global warming and climate change
7 and environmental benefits of energy efficiency,
8 we were talking about how do we deliver utility
9 service at the least cost. It's really purely an
10 economic formula, and there are plenty of
11 jurisdictions where that's still really the rule.
12 They don't include environmental
13 benefits in the cost/benefit analysis. They're
14 really talking about delivering rate -- service at
15 the lowest possible rates.
16 Just a couple of illustrations of how
17 that can play out. I co-authored a paper with my
18 colleague, Chris Neme, for the Northeast Energy
19 Efficiency Partnerships, that looked at energy
20 efficiency as a tool to mitigate transmission and
21 distribution investments. A couple of quotes of
22 that paper that amazed me.
23 One, Consolidated Edison estimated that
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1 through ten years of operating a demand side
2 management portfolio, they avoided a billion
3 dollars in infrastructure costs. Billion dollars.
4 And another Con Ed quote that's around
5 a specific project. They ran some pilots that
6 were designed to address growing demand in a
7 couple of constrained areas. Energy efficiency
8 programs geographically targeted. And they
9 estimate that they saved $85 million through
10 running those programs in distribution upgrades,
11 but the thing that just boggles my mind is that
12 they said we realize that what this energy
13 efficiency did is it gave us enough time to
14 understand that we never had to make those
15 investments in the first place. So it would have
16 been $85 million worth of distribution upgrades
17 that the service didn't need.
18 And to your point earlier, Commissioner
19 O'Donnell, about the precision, level of precision
20 in budgeting, certainly, I think it's very
21 important for utilities implementing programs to
22 do their budgeting as accurately as possible, but
23 there's a lot of uncertainty on the other side as
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1 well.
2 When we look at distribution
3 improvements, you know, distribution planners want
4 to make sure that the power is going to get where
5 it needs to get, and where there's uncertainty,
6 they really are forced to err on the side of
7 making sure there's enough infrastructure. And
8 that costs ratepayers a lot of money when there's
9 uncertainty. Again, this $85 million investment
10 that was going to be made, that was not needed,
11 that's pretty striking to me.
12 So, there are a lot of benefits in
13 keeping with this let's keep the rates down from
14 utility demand side management, and the EmPOWER
15 portfolio is, you know, a very strong tool in that
16 toolbag.
17 Just a couple of other things about
18 that, maintaining a strong contractor
19 infrastructure is critical for the programs to be
20 allowed to serve this purpose. And in the order
21 in the previous semi-annuals where the funding
22 increases were granted for PHI and Delmarva, and
23 BGE I believe to continue running, but especially
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1 for PHI, the utilities to continue running their
2 C&I programs, that was really important not just
3 because of the customer demand at that time, but
4 to ensure that in the future they could continue
5 to deliver the least cost services.
6 You know, the benefit that I think we
7 talk more about is very well known, that EmPOWER
8 is a critical tool in helping customers manage
9 their energy costs.
10 It was very interesting to me to see in
11 the semi-annuals, I noticed this in BGE's and in
12 PEPCO's filing, the number of residential
13 customers who have participated in these programs.
14 It's staggeringly high. I mean, PEPCO estimates
15 at 83 percent, I believe, of their customers,
16 their residential customers are participating in
17 the programs. So they're quite popular. And as
18 VEIC put up with the slide earlier, the recent
19 survey showed that over 80 percent of Marylanders
20 are in favor of the incentives for helping them
21 make energy efficient purchases.
22 But if the obligation for the utilities
23 is to deliver least cost service, I think that
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1 also applies to how they deliver their programs.
2 So, looking closely at the costs associated with
3 the programs, the rate impacts, the effectiveness
4 with which the programs are implemented is
5 important. I think it's critical.
6 So there are a number of things that
7 the utilities have referenced either through work
8 group filings or in their semi-annual reports,
9 requests, that, to my view, show a focus on
10 innovation and continuous improvement that are
11 designed to reduce the costs of achieving the
12 savings that they're setting out to achieve, that
13 I think merit consideration.
14 So a couple of those. I handed out the
15 summary notes. You can disregard 4A about
16 flexibility, since you've already issued a ruling
17 on that.
18 But if we go to B, approving the work
19 group's request for performance-based incentives
20 in Home Performance with Energy Star. Home
21 Performance with Energy Star is a challenging
22 program everywhere. And a lot of jurisdictions
23 are struggling with how to improve the
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1 performance, how to reduce the costs, how to get
2 more participation, and how to get greater savings
3 with every contact with each customer. And I
4 think shifting to the performance-based incentives
5 is a great idea to test, to see if this will
6 achieve the desired outcomes here.
7 A couple of caveats about that. I
8 completely understand why the utilities are
9 suggesting prioritizing the electric savings. I
10 think that that may work against what the
11 customers are actually looking for, because a lot
12 of customers typically are interested in doing
13 something about their heating costs.
14 So we would suggest giving strong
15 consideration to including a gas funded component
16 to the Home Performance with Energy Star program.
17 WGL has proposed this in their filing. They've
18 also proposed to work closely to share costs so
19 that the overall costs relative to the savings can
20 decrease and not just be carried by the electric
21 ratepayers. We think that's worth pursuing.
22 The retail products platform that the
23 working group suggested, as has been discussed
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1 earlier today, this is what leading portfolios are
2 going to, and in addition to all of the things
3 that Ms. Levin pointed out as benefits of this
4 type of program approach, fundamentally, it's
5 about getting the savings at a lower cost.
6 Because if you look at the cost of
7 providing a rebate that's large enough to attract
8 a consumer's interest, of processing and tracking
9 all of those one-off rebates, it's pretty
10 considerable for a relatively small increment of
11 savings. It's an increment that's worth going
12 after, but if you add all of those transaction
13 costs, you know, it's hard -- it's expensive
14 savings. Let's say that.
15 Whereas if you do it in a midstream
16 approach where the amount that you are paying for
17 each unit is quite a bit less, it's going to cost
18 quite a bit less. The classic example of this, we
19 look at retail lighting. In the early days of
20 retail lighting programs, every customer who went
21 into the store had to fill out a coupon and put
22 their name and their utility account number on it
23 and had to go to the register and, you know, the
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1 better programs they would at least get an instant
2 discount off of it when they went up to pay for
3 their things. But that was a lot of hassle, and
4 then there were organizations that specialized,
5 they built a business around processing all of
6 these coupons that would come in from the stores
7 and tracking all of those data. It was really
8 expensive.
9 So they went to buy-down, mark-down,
10 midstream, upstream type of approach where they
11 negotiate contracts with distributors and
12 manufacturers to reduce the costs of the bulbs at
13 retail. And the volumes that moved through those
14 programs soared. The growth was exponential and
15 the cost per unit was vastly less. That's the
16 kind of model that's now being tried with the
17 appliances.
18 This is not a specific request from the
19 utilities, but BGE talked about their use of
20 building analytics. Looking at the big data that
21 they get from the AMI meters and using that with
22 certain commercial customers to really target what
23 the best saving opportunities are, and I think
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1 that's great that they're doing that. Commend
2 them for that.
3 We would love to at least raise the
4 question of could this be something that could be
5 explored in the multifamily sector, especially in
6 the affordable multifamily sector, and that may
7 mean some coordination with DHCD around this. I
8 don't know what all of the implications are, but
9 if there are ways to target those savings to
10 identify them more effectively and in a more
11 streamlined way, we think that's worth pursuing.
12 I should say, I think most of you may
13 know this, but the -- several of the participants
14 in the Energy Efficiency Advocates group have a
15 particular focus on affordable multifamily
16 housing. There's an initiative called Energy
17 Efficiency For All which NRDC and National Housing
18 Trust are partners with a few other organizations
19 and there's been a non-trivial amount of effort
20 put into raising awareness of the opportunities
21 and the need for saving energy in affordable
22 multifamily housing.
23 It's a very tough market. That's a
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1 market that's often ignored in energy efficiency
2 programs because there's so many challenges to it.
3 But if using this building analytics tool can help
4 streamline the process for affordable multifamily,
5 we would really encourage that exploration.
6 We'd also support WGL's proposal to
7 ramp up their savings. If you may recall, in the
8 natural gas savings working group, the Advocates
9 participated in the working group, and we proposed
10 that a 1 percent savings target was appropriate
11 for natural gas.
12 What WGL has come in with is
13 considerably less than that, but still a
14 considerable increase from where their programs
15 would take them now.
16 We support that growth. We think it
17 will benefit the natural gas customers. They've I
18 think been -- I don't want to say a bit
19 conservative, but I think they've been -- they
20 have certainly -- they've been conservative.
21 They've done a study of what they think the
22 potential is and they've proposed programs that
23 will meet that and not aim for, you know, more
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1 than what is clearly cost effectively available
2 within their service base.
3 But a couple of caveats about WGL's
4 plan. Well, this one's not a caveat. This one is
5 something that we really like. They propose
6 coordinating with the electric utilities wherever
7 possible so that they don't have duplicative
8 programs that are effectively running parallel
9 administrative structures, but wherever possible
10 they're streamlining those costs. That's to the
11 benefit of the ratepayers and we think it's a
12 model that's been used in other jurisdictions that
13 we've provided some evidence to that in previous
14 hearings, and to the work group as well. We think
15 that's great that they came in with that.
16 We are disappointed to see that they
17 did not have a specific low income component to
18 their proposed program portfolio. And we think
19 that's something that should be addressed. We
20 have had conversations with WGL. They're very
21 receptive to this discussion. They're obviously
22 going to be on soon and I'm sure will be able to
23 speak to it. But we would look forward to
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1 continuing conversation with them about what those
2 low income programs could look like.
3 And, you know, in an area that's of
4 special concern for the Advocates, as I said,
5 affordable multifamily housing, it's come to our
6 attention through conversations with DHCD and BGE
7 and WGL that there's kind of a small-ish gap, I
8 think, but a notable gap, when they're trying
9 to -- when DHCD through the MEEHA program is
10 trying to provide efficiency services,
11 comprehensive services, to multifamily properties
12 that have natural gas common area systems.
13 So central gas heat and central gas hot
14 water, it typically would be on a commercial
15 meter. Our understanding is there's not a
16 mechanism for them to pursue cost recovery for
17 investments they make to provide efficiency
18 measures for that commercial gas meter.
19 Which means that if it's a multifamily
20 building, affordable, designated for affordable
21 population, that they can do lighting, they may be
22 able to do appliances, but this big central system
23 that's using a lot of energy, they can't really
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1 touch.
2 That seems like a gap that is solvable,
3 and I think that, you know, when we look at the
4 sort of the numbers of projects we're talking
5 about, I have not done the math, but I think the
6 rate impact would be pretty negligible. It's not
7 a huge pool that we're talking about, but an area
8 that we would like to see some attention.
9 Two more things I'd like to say. We
10 were pleased to see the food bank lighting
11 distribution program that a couple of utilities
12 are offering, BGE and PEPCO I noted. This has
13 been very successful in other jurisdictions. The
14 volumes that are being tested in those programs
15 are very, very, very small.
16 Now, that may make sense because in
17 Maryland there's been a very aggressive QHEC
18 program. It's very likely they have reached a lot
19 of lower income participants, so there may not be
20 as much of a need there. But just by comparison,
21 Ameren Illinois, in their residential service
22 territory, they have about 1.2 million customers,
23 about the same number as BGE. Their program
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1 proposes to distribute 600,000 bulbs a year for
2 two years, and BGE was in the tens of thousands,
3 10, 20, 30,000 or something like that in the
4 pilot. This is a really big difference there. I
5 think it's something that's worth exploring.
6 Lastly, the marketing work group came
7 forward with a report and a recommendation for how
8 to address the benefits on the bills, and this was
9 a consensus, an actual consensus on how to do this
10 among all of the parties in the work group, which
11 was great. I have seen a couple of comments
12 subsequent to the report kind of saying, well,
13 what about the details, how are we going to work
14 out the details.
15 And we proposed a framework for that in
16 our comments. We shared that with a couple of the
17 utilities and with the OPC, and while nobody's
18 ready to say, yes, that's exactly how we're going
19 to do it, everybody agreed that's a good starting
20 place for a conversation and we think that in the
21 work group we should be able to resolve this and
22 provide you with the specifics of how to go about
23 doing that.
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1 And that's all I came prepared to say.
2 Happy to answer any questions that you have.
3 CHAIRMAN HUGHES: All right, thank you,
4 Mr. Grevatt. I appreciate your presentation. I
5 had a question about the Home Performance with
6 Energy Star.
7 So, I appreciate your comments
8 supporting the performance-based approach, and I
9 wanted you to -- I wanted to get your thoughts on
10 whether we might see some unintended consequences
11 or at least bumps in the road if we do that.
12 I guess my concern is that I think
13 we're starting to now see some positive trends in
14 terms of participation. We -- the Commission
15 allowed for duct sealing to be included and it
16 increased the rebate amount to $2500. So we're
17 starting to see a trend in the right direction.
18 We certainly see Home Performance as an important
19 kind of next phase in the EmPOWER programs going
20 forward, and I wouldn't want to lose any of that
21 momentum that we're starting to see. So I wanted
22 to get your thoughts.
23 MR. GREVATT: Mm-hmm. I think it's
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1 always a risk when you make changes that there are
2 going to be unintended consequences. I think,
3 frankly, it's difficult to figure out everything
4 that's going to happen.
5 One of the things, you know, in any
6 program transition, and I'm -- I didn't
7 participate in the work group, but I trust the
8 work group considered these things carefully from
9 some conversations that I've had with people who
10 participated, you know, in the transition, when --
11 once it's announced, the contractors will look at
12 the incentives and they'll say, okay, under the
13 old rules I can get this much, and under the new
14 rules I can get this much, and depending on how
15 that transition is structured, there can either be
16 sort of a rush, if they think the old incentives
17 are better, to -- and you get all of these
18 participants and then everything drops off, or
19 everybody kind of holds on to their projects until
20 the new incentives become effective. I spoke to
21 folks from Efficiency First and they were very
22 cognizant of this and felt it was addressed in
23 their proposal.
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1 I'm not sure how to respond more
2 specifically. I think that there -- well, I -- I
3 don't know the extent to which the work group
4 tested these concepts very broadly with
5 participating contractors. I know there was
6 contractor representation and they favored this
7 approach. It's always worth talking to a lot of
8 people to see what they think about it before you
9 do it.
10 I think, if I were managing that
11 program, I would also look at, somewhat carefully
12 about how I structured any caveats around what the
13 new incentive can be, because it's designed to be
14 higher so that it drives greater savings per
15 participant. I think it's good.
16 I would suggest let's look at a time
17 limit on that so that we have a tool to adjust it
18 downward without disrupting the market, if that
19 proves to be an appropriate thing to do. Things
20 like that.
21 I think it's always the balance of
22 providing a stable, consistent message to the
23 market without locking yourself into something
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1 that is going to cause problems. It's ongoing
2 management.
3 So, that's probably not as specific an
4 answer as perhaps you hoped for. I guess the
5 short answer is, yeah, there's some risk, but,
6 certainly, the many members of the work group feel
7 like there's an improvement that's needed and
8 that's possible, and that this is their best
9 proposal for directing that improvement.
10 So, you know, there's always -- you
11 know, if you're innovating, and you're trying to
12 make things better and drive improvement,
13 sometimes that's going to work and sometimes it's
14 not. So, the trick, I think, is making sure that
15 you have ways to measure that, as you go pretty
16 quickly, and that you have ways to address it
17 through changes, if needed.
18 CHAIRMAN HUGHES: I appreciate your
19 insight on it. Thank you. Any additional
20 questions?
21 COMMISSIONER O'DONNELL: Thank you,
22 Mr. Grevatt, for being here. We appreciate it.
23 We have a very efficient public
149
1 information officer. She shared with us this
2 morning something very timely, which we
3 appreciate, and it was a report that your parent
4 organization did. I don't know if you're familiar
5 with it or not, but it came as an attachment to a
6 Cleveland Plain Dealer article regarding how Ohio
7 policymakers could deal with this whole EmPOWER
8 portfolio issue in terms of a middle ground.
9 And I found it stunning, but not really
10 surprising, that it came out of NRDC and, you
11 know, the whole community that you represent.
12 Have you seen this. Were you aware of this?
13 MR. GREVATT: I had not seen it.
14 COMMISSIONER O'DONNELL: I had not had
15 a chance to peruse it all completely, but the
16 study that's kind of large, about 60 pages, kind
17 of lays out a middle ground with three scenarios.
18 One is kind of locking in the program gains you've
19 made. That's scenario one.
20 Scenario three is accelerating the
21 program you've already done, recognizing the
22 successes you've had, learning from what you've
23 done so far and really ramping it up, or as they
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1 called it intermediate pathway, somewhere in the
2 middle, some reasonable middle ground between the
3 two, and that's what they're advocating.
4 And I heard you talk about the
5 importance of the programs as one side of the
6 EmPOWER coin, but you also talked about the
7 efficiencies and the need to make sure it's done
8 in the most cost effective manner is the other
9 side of the coin.
10 So, I appreciate that and I had to note
11 that, and I thought that this report,
12 Mr. Chairman, was very timely. Thank you for
13 that.
14 MR. GREVATT: Yeah, absolutely. If I
15 may, I would say that I think an argument could be
16 made that the trajectory that EmPOWER is on
17 currently to reach 2 percent gross savings per
18 year, while relative to some portfolios is very
19 aggressive, relative to others is on the high end
20 of moderate.
21 So I wouldn't say that it's modest.
22 It's a very strong portfolio. But, you know, when
23 we look at states like Massachusetts, and anytime
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1 I've said Massachusetts in Maryland, I can see the
2 whole room going, well, we're not Massachusetts,
3 and understood. But they're getting 3 percent
4 savings, and that's 3 percent net savings, which
5 is probably 3-and-a-half to 4 percent gross. So
6 2 percent gross is, you know, considerably less
7 than that, a very, very strong middle ground.
8 COMMISSIONER O'DONNELL: Thank you.
9 CHAIRMAN HUGHES: Thank you.
10 Additional questions? If not, thank you very
11 much.
12 MR. GREVATT: Thank you very much.
13 CHAIRMAN HUGHES: Next, I think, I
14 don't think Maryland Energy Administration is with
15 us yet, so we will go to Washington Gas & Light.
16 All right. Mr. Dodge.
17 MR. DODGE: Good afternoon, Chairman
18 and Commissioners. John Dodge appearing on behalf
19 of Washington Gas. Always a privilege to appear
20 before you. Joining me at counsel table today is
21 Sean Skulley, who's the company's manager of
22 efficiency programs. As Commissioner Richard will
23 attest, I'm the meters guy, I'm not the energy
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1 efficiency guy. You won't hear from me today
2 unless you have a question. So, Sean, it's all up
3 to you.
4 MR. SKULLEY: You get off easy.
5 MR. DODGE: I get off easy. Tomorrow
6 might be a little different.
7 MR. SKULLEY: Thank you, Commissioner.
8 Again, my name is Sean Skulley. I'm the manager
9 of energy efficiency programs at Washington Gas.
10 Thank you very much for hearing my testimony today
11 in addition to what we filed back in August.
12 I have actually two presentations
13 today. One is on our annual report and then one
14 is on the proposed programs, and I just had a
15 question, would you like me to proceed with
16 back-to-back or just start with the annual report
17 and then semi-annual report and just move from
18 there.
19 CHAIRMAN HUGHES: Yeah, we can do
20 back-to-back if you want.
21 MR. SKULLEY: Okay. All right. Well,
22 thank you.
23 Well, through the -- just get right
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1 into it, for the semi-annual, we -- Washington Gas
2 had some very high participation rates in certain
3 measures over the last six months, in particular,
4 the tankless water heaters on the residential side
5 and the WiFi-enabled thermostats were high
6 participation rates.
7 In addition, we, since February or
8 since January, we sent out two of the home energy
9 reports in the winter months that went in addition
10 to the two home energy reports in the prior winter
11 months of the heating season.
12 We also sent electronic home energy
13 reports to customers that have e-mail addresses
14 available within the 48,000 or roughly 50,000
15 customers that we do have in our current
16 behavioral program. So there's additional, we're
17 going to be measuring what that lift is in terms
18 of people also getting the paper reports delivered
19 to their homes, but also e-mails. So there will
20 be somewhat of a subgroup of people, customers we
21 can analyze if they saved more energy because they
22 got additional e-mails in addition to the home
23 energy report they received in the mail.
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1 We are in the process of doing our EM&V
2 for 2015. It's the year that we launched our
3 program so there's really only about a half year
4 that we will have results. That will be finished
5 around January 1st, and beyond that, we will
6 immediately start the EM&V for the 2016 program
7 year.
8 The commercial programs did not have as
9 successful a start to the year as the residential
10 programs. We are seeing a lot of interest in
11 them, but some of the capital planning that some
12 of our small and medium sized businesses are
13 communicating towards us is longer term, they're
14 planning for different cycles, you know, there's
15 certain groups that or types of businesses or
16 verticals, as we call them at Washington Gas,
17 that, you know, plan for doing infrastructure
18 improvements at certain times of the year, like
19 summer months when -- like school systems and
20 such, you could have much larger boiler
21 replacement projects and things like that, which
22 we did see over the summer months, but that's not
23 included in the semi-annual report because that's
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1 happened before -- or that happened after June
2 1st.
3 We have also increased our marketing
4 outreach measures to tackle those lagging
5 participating measures, particularly the storage
6 water heaters for residential customers. We have
7 worked with Energy Star recently to try to get
8 some additional communication out to customers.
9 Through the EM&V process we're going to
10 try to see why there is such a lag in that area.
11 We're having a lot higher participation in the
12 tankless water heater, and that might be just what
13 the market is responding to, but it also could be
14 that the incentive level for the storage water
15 heater is just too low for people to really take
16 the effort to fill out a form and send it in.
17 We're going to try to examine that. It
18 might be something where the market is moving
19 towards just the higher efficiency tankless water
20 heaters but we don't want to remove that, because
21 a lot of customers are still, for the most part
22 probably would be able to afford the tank water
23 heater before the tankless. And also the tankless
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1 water heater comes with some additional venting
2 requirements that maybe some homes could not
3 afford to do at the time. So it's very important
4 to try to keep those options open for customers.
5 CHAIRMAN HUGHES: Are tankless water
6 heaters coming down in price at all from when they
7 first hit the market?
8 MR. SKULLEY: I don't have an answer
9 for you straight here, but I can look at some of
10 our -- we can look at the rebate applications over
11 time. That's actually something that we could
12 analyze the costs.
13 We tried to do that, too, especially
14 with some of the commercial incentives that seemed
15 to be high participation, because we want to see
16 where -- you know, if the incentive level is
17 correct. But we do have that information. We'd
18 have to really --
19 CHAIRMAN HUGHES: I was just wondering
20 if that was in part driving the increase in
21 purchases.
22 MR. SKULLEY: I think it is. I think
23 also the contractor community is communicating the
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1 benefits of those better, and they're just
2 becoming more widely accepted as a -- the new
3 technology for water heating with gas equipment.
4 Obviously there's a lot of places that,
5 you know, you are starting to see the market move
6 to smaller homes, and this is more just a
7 macro look at it because we're doing mostly
8 replacement work. We're not doing new
9 construction programs. But a lot of new
10 construction is moving in the direction of, you
11 know, smaller utility closets because they want to
12 maximize the space for the homeowner, and the
13 overall square footage is getting smaller for a
14 lot of new construction.
15 That is -- I think that we're seeing
16 pressures probably on prices to push down because
17 there's more popularity on new construction. So
18 that actually will be driving, you know, the price
19 down more than anything, and that's benefiting all
20 Maryland customers, probably, in this case,
21 because I would say if they're using it for new
22 construction in a lot of projects, they're
23 probably seeing it for the replacement, the prices
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1 going down for the replacement part as well.
2 CHAIRMAN HUGHES: Thanks.
3 COMMISSIONER MILLS: I had a question.
4 The issue of the lead time for the capital
5 intensity of the projects. Do you have similar
6 programs in your other jurisdictions and are you
7 seeing the same phenomenon there as well?
8 MR. SKULLEY: I manage our energy
9 efficiency in Virginia as well, and I mentioned
10 this to you before, but Commissioner O'Donnell
11 wasn't here when I last testified. I run the
12 energy efficiency programs in Virginia under the
13 Virginia CARE, Conservation and Rate-Making
14 Efficiency Act, and then I coordinate with the
15 D.C. Sustainable Energy Utility on their programs
16 where they need assistance for us on those
17 programs.
18 But, yes, in Virginia it was very
19 difficult for our prescriptive program. If the
20 participation is -- there's not a consistent
21 participation rate, especially without a lot of
22 hands-on outreach, personnel in the field
23 communicating with customers, going door-to-door,
159
1 educating them, especially in small business.
2 Difficult to do traditional marketing
3 to those groups. They're not always -- the person
4 receiving a traditional mailer or bill insert and
5 paying the utility bill might not necessarily be
6 the person making the equipment upgrades for --
7 and decision-making on that side for a business.
8 And that tends to be an issue with all
9 utilities, but I think one of the issues that we
10 have is just we -- the -- such a small scale
11 program, we don't have the personnel for outreach,
12 and that's one of the drawbacks, and probably
13 we'll talk about that in the next presentation,
14 coming in with a more conservative, smaller
15 program initially, clearly is showing some
16 constraints on our ability to communicate with
17 customers and make sure that participation,
18 particularly on the commercial side, is higher.
19 This is to give you a month-by-month
20 comparison of what we're looking at in terms of
21 what the participation was per measure for our
22 prescriptive programs. You know, some of the more
23 consistent programs have been the furnace and the
160
1 thermostats tend to be just because they're much
2 more visible to customers, and I think we're just
3 doing a better job of communicating with our trade
4 allies that these are the incentives that are out
5 there and the incentives are worth people, you
6 know, filling out the rebates and waiting for
7 their incentive to arrive.
8 Some of the commercial ones that we
9 see, have seen some of the participation in are
10 the boilers and the fryers, for the food service.
11 They have been very popular, but then there's
12 other measures within the commercial food service
13 area that have not been as popular.
14 And again, that's part of our EM&V to
15 find out what exactly is the disconnect there.
16 Are certain food service, you know, businesses
17 that's just not interested in the rebates. Is it
18 the amount of the rebate. Is it the equipment is
19 too efficient. That's not what they're putting in
20 right now. That's not what the market is really,
21 even to incent them to go to the high level,
22 that's just not in their price range to go to.
23 I think that's one of the areas that
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1 we'll look at. But the fryers is an area that I
2 think we set the price of the incentive at a -- at
3 a good place, but actually probably would
4 recommend that we're going to lower that because I
5 don't think that it needs to be as high.
6 That's one of those things that we, you
7 know, we make adjustments. We want the most cost
8 effective to ratepayers and that's an area I think
9 that is strange enough that you can see where the
10 participation is that it's a sign to look into
11 that more. Just make sure we start to pull the
12 applications and see what the business is paying
13 for that type of technology and how much is the
14 incentive covering so that we're looking at that
15 right now.
16 Just an overview of the program costs.
17 As you can see, because of the differences in the
18 programs, the outside services, we typically have
19 a little bit more in the residential programs,
20 that tends to be because where we group the costs
21 for things like the behavioral program, you know,
22 where most of that cost is outsourced. We don't
23 do much of that internally.
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1 That's why it looks quite different in
2 the two charts. Where the majority of the
3 commercial program costs come from marketing.
4 Marketing and outreach. So events. Getting out
5 there with customers and doing some of the
6 traditional awareness campaigns, try to see
7 whether or not they're getting traction, we're not
8 sure if they're getting the full traction as we
9 describe some of the difficulties we have in
10 reaching those customers.
11 But we do think there's ways that some
12 of the traditional marketing can still work
13 depending on, you know, looking through the trade
14 magazines that, certain commercial, you know,
15 magazines and newspapers that, you know, a lot of
16 customers will read and not just residential.
17 This is just a summary of our
18 semi-annual results. Overall, the program did
19 pretty well when coming in versus its target.
20 Again, that is skewed more, it helped a lot
21 because the residential program did a lot better
22 this half of the year versus the commercial
23 program.
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1 Any questions?
2 For the marketing and outreach update,
3 again, I mentioned we started -- signed an Energy
4 Star partnership, so essentially we have the
5 ability to use their logo and coordinate with them
6 on the materials where we have incentives that are
7 aligned with Energy Star, like water heaters.
8 And then we benefit a lot from like
9 their materials that they are able to provide to
10 us, which is a nice little partnership for us.
11 Because we, as a small size, small scale program,
12 it helps to have any help, especially a brand name
13 like Energy Star to help get the word out.
14 Washington Gas just coincidentally
15 introduced their social media channels. We didn't
16 have them before. We had them at the parent
17 company level. But Washington Gas now has
18 Twitter, Facebook, and a few other social media
19 channels that we have been using for -- it's a
20 really good low cost way to get out to customers,
21 but it's also -- it's highly -- it actually --
22 it's nice to be able to track it. That's one of
23 the things.
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1 I mean, with some of the traditional
2 mailings, you really don't know how many people
3 read what you sent to them or put in the bill
4 insert other than through the EM&V process. This
5 we can track almost real time, what people are
6 reading, what are they clicking on, what are they
7 click through, what website they go to of the
8 rebates websites or programs websites. Down to
9 how much time they spend on those pages. Using
10 Google Analytics is pretty phenomenal for a small
11 program to see how effective certain things are.
12 Moving forward, I think we're going to
13 continue with that strategy of tailoring social
14 media, but also advertising in the events that we
15 attend as well and trying to get or calculate a
16 return on investment on just the events that we
17 do.
18 Given that we only have a few staff
19 members, we do rely on some of our trade allies --
20 our trade ally organizations that we have. We
21 also have staff internally at Washington Gas that
22 does trade ally outreach with the plumbers
23 associations. A lot of really good networking,
165
1 because we do a lot of safety training and a lot
2 of updates on just general core Washington Gas
3 issues, and our staff always attends those and
4 gets an update on what our incentives are, and
5 that actually works out really well.
6 And we have launched our EmPOWER ally
7 network which essentially is a more formal
8 outreach to trade allies that are doing natural
9 gas equipment, high efficiency equipment
10 replacement work. We're going to have in-person
11 trainings, online trainings, e-mail blast them to
12 understand any changes in the program, and just
13 have a better line of communication as we try to
14 expand our awareness in the program and get more
15 participation. Because we know that the trade
16 allies are probably the key to success on a lot of
17 these, especially because ours are so skewed to
18 prescriptive programs right now.
19 This is again just a summary of the
20 trade ally network that we have initiated, and,
21 you know, just getting that awareness out there
22 and having that relationship so people can pick up
23 the phone and know who to talk to at Washington
166
1 Gas specifically about energy efficiency.
2 So if they had a question about a
3 safety issue, they know who to go to at the
4 company, but now they know for Washington Gas who
5 to contact. That's either myself or one of the
6 people on my staff that is in charge of outreach
7 and managing that at the trade ally network.
8 Something new that we're going to use
9 in terms of trying to increase participation, we
10 spent some of our outreach dollars on implementing
11 what is an engagement tool. This is not an energy
12 savings tool and I want to say that up front.
13 Essentially, it's an online energy
14 audit, but as a standalone product it doesn't have
15 energy savings. We don't couple with anything
16 right now. If we did, what we're going to do with
17 this in Virginia is someone who completes this,
18 that completes a survey here that has a Virginia
19 zip code in our service territory, they'd end up
20 getting a home energy conservation kit sent to
21 them.
22 We're not -- we're proposing that in
23 our new proposal that you will see in a few
167
1 minutes, but additionally, if they're a Maryland
2 residential customer and they go through this
3 process, it's an educational process. For one,
4 gets them to think about how their home, you know,
5 what their home is like, everything from their
6 insulation in their home to how old their water
7 heater and their gas furnace is, and at the very
8 end it gives recommendations based off the home of
9 what you can do, and what essentially I'm trying
10 to do is steer them back to our website for the
11 most part for it to take part in our prescriptive
12 rebates.
13 And some of it is tailored so if they
14 fill out that they have a gas furnace, it's going
15 to have a link to say, you should see what our --
16 you know, check out our gas furnace incentive that
17 we have available.
18 There's also other programs that we're
19 trying to, with EmPOWER Maryland that we're trying
20 to increase participation in even though we're not
21 directly a part of it, and one of the comments
22 that came up often today I think is that we, in
23 our new programs that we're going to propose, we
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1 don't have a -- we're not contributing to DHCD's
2 low income programs. Well, in this, our
3 recommendations will have, you know, for customers
4 that are taking this, the recommendations will be
5 tailored to say, you know, click on this to find
6 out more about the low income programs available
7 from DHCD, other programs in the state that are
8 offering that might help low and moderate income
9 customers.
10 I think that's very helpful because
11 we're not -- as I'm trying to say, we're trying to
12 move to a more coordinated approach. This is an
13 engagement tool that starts steering people to all
14 of our programs and I think it's pretty helpful
15 that we'll be able to help people think about
16 their energy a little bit more and then steer them
17 towards some of our incentive programs.
18 We think this might actually be more
19 highly effective in understanding our customers'
20 needs as well. Even down to the fact that someone
21 completes this survey and determines that they
22 have a -- they have a furnace that's over 20 years
23 old and they opt in for to us communicate to them,
169
1 we could send them information directly by e-mail
2 about our rebate incentive for our furnace, and
3 see if they would be more proactive in replacing
4 that early instead of waiting to the winter months
5 when, unfortunately, a lot of furnaces, that's
6 when they decide to give up on you.
7 So we want to make sure that we're
8 proactively doing that so people replace early
9 before the winter heating season. So it gives us
10 market intelligence for that and be able to
11 communicate back to our customers with specific,
12 tailored messages about our incentives.
13 CHAIRMAN HUGHES: Mr. Skulley, do you
14 have experience with these older systems like the
15 20-year-old furnace, for example --
16 MR. SKULLEY: Yeah.
17 CHAIRMAN HUGHES: -- where a customer
18 might be interested in the -- I don't know if
19 that -- the highest efficiency replacement, do
20 they typically have to do vent work to their
21 house, you know, have a bigger diameter pipe that
22 would have to exit their house?
23 MR. SKULLEY: If they're going from a
170
1 non-condensing to a condensing furnace, yes. They
2 would have to have additional venting work done to
3 their house. They could have a traditional vent
4 pipe either -- and sometimes it has to go out the
5 side of the house if they don't have it currently
6 set up. A lot of them would be through other
7 means. A chimney. If they don't have a chimney,
8 they would have to go outside the house.
9 CHAIRMAN HUGHES: Is that a real
10 barrier to getting customers to make that leap to
11 that highest tier? I imagine there's quite a bit
12 of expense involved.
13 MR. SKULLEY: It's a concern especially
14 as the furnace standards increase and will be
15 increasing the next few years. I know our
16 American Gas Association has done a study about
17 the attrition that might happen in the case that
18 if you have a standard, say, 95 percent efficient
19 furnace, so therefore all furnaces will have to be
20 condensing furnaces that need additional venting,
21 customers might go away from gas and might replace
22 it and put a heat pump in or do an electric
23 furnace in, that they would give up on it because
171
1 the cost was prohibitive to do or the structure of
2 their home was prohibitive for them to be doing
3 additional venting. Townhomes, something like
4 that, where you only have two walls to go out and
5 essentially only the back wall, that's an issue.
6 We know that's a big concern especially
7 for gas utilities right now. That's the way that
8 the incentives -- not the incentive, excuse me,
9 the standard is going.
10 So, yes, it is -- they do have to do
11 that on some cases. Some of them, they already
12 have the venting in place where they could work
13 off other, you know, other additional venting they
14 already have for their home. The space sometimes
15 just doesn't work and then they have to pay a
16 contractor to do additional work on their home.
17 CHAIRMAN HUGHES: In terms of Energy
18 Star gas clothes driers, is that something that
19 you're involved with in terms of incentivizing
20 or --
21 MR. SKULLEY: We're proposing it in the
22 new program for both prescriptive and new
23 construction. It would essentially be pretty a
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1 low price point small program. We don't expect a
2 huge participation rate, and it's only about a $50
3 incentive to do that, but we have customers that
4 are looking to do that. It would just be nice to
5 see if whether or not they would be -- we can
6 convince more customers to go gas because we do
7 think it's more efficient and a lot of energy gets
8 used up by the drier.
9 CHAIRMAN HUGHES: Is there a similar
10 venting issue? Does the venting for the gas drier
11 have to connect with the main, I guess, system?
12 MR. SKULLEY: I don't know. I don't
13 know the answer to that question in terms of that,
14 but I can take note and get back to you on it.
15 CHAIRMAN HUGHES: Yeah. That would
16 be -- thank you.
17 MR. SKULLEY: Looking forward, the
18 launch of the EmPOWER ally network and having
19 additional training launching in the next couple
20 of months. Again, the specific focus on the
21 outreach dollars for key events and marketing
22 channels, we want to use our outreach dollars
23 wisely. We -- as a small program we just want to
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1 make sure that every dollar counts.
2 The online energy audit will be
3 launched in approximately two-and-a-half weeks or
4 so, that will be up and running for customers to
5 do. We expect anywhere between 3,000 and 10,000
6 customers a year to take that audit. So we're
7 really excited and hope to see what that
8 participation is and we're going to try to do some
9 outreach on that as well to make sure that people
10 know it's a way that they can find out more about
11 their own energy use in their home and start
12 participating in all our programs, but also
13 several other EmPOWER programs by other -- other
14 programs.
15 So we're going to also roll out
16 specific marketing campaigns for the low
17 participation measures. Again, it's more
18 increased outreach for contractors servicing
19 businesses and multifamily buildings.
20 We do see -- I think there's a lot of
21 potential for the -- the group metering, we call
22 them group metering, GMA, it's a commercial
23 tariff, customers that have a central meter that
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1 Jim Grevatt was talking about. A central meter
2 boiler system in a multifamily building is
3 considered for us a commercial customer, unlike a
4 residential multifamily building with individual
5 meters is classified as a residential customer.
6 We have to market our programs differently for
7 those customers, even though the building type
8 looks the same from the outside.
9 There are, you know, large water
10 heaters, large boilers in the central system
11 multifamily buildings. I think that's an area of
12 outreach with property managers, and not just the
13 major ones. A lot of small property management
14 companies in Maryland that we could be working
15 with to inform them about these programs. I think
16 that's a big area of improvement where we can get
17 higher participation rates on our commercial
18 products.
19 That's it for my first presentation.
20 CHAIRMAN HUGHES: All right. Thank
21 you. Any additional questions on this? If not,
22 thanks.
23 COMMISSIONER O'DONNELL: Yes.
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1 CHAIRMAN HUGHES: All right.
2 COMMISSIONER O'DONNELL: I'm not sure
3 where you're going to cover it, Mr. Skulley, or
4 where it was going to be discussed so I'll just
5 ask it now. I think it's part of the 2016 plan
6 and the budget adjustments that you're
7 contemplating.
8 MR. SKULLEY: Yes. Yes.
9 COMMISSIONER O'DONNELL: I didn't hear
10 that.
11 MR. SKULLEY: Yes, we are requesting
12 additional funds to cover. In the absence of
13 approved programs essentially. One thing is to
14 just to get us to the end of 2016, we have -- we
15 are projecting oversubscription for the WiFi
16 network thermostats and also the tankless water
17 heaters.
18 And the WiFi-enabled thermostats, we
19 have already actually suspended the program for
20 now. We're taking -- we put it into a wait-list,
21 any new customers that's applying for those.
22 Funding for that is completely exhausted.
23 I think initially we thought -- I think
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1 you made a comment earlier about forecasting to
2 one of the other participants. I think it's one
3 of those things that we're learning along the way.
4 When we initially proposed the programs, they were
5 very small, and not knowing what the market was
6 going to do or what the -- what that participation
7 was going to be, I don't think we knew that it
8 would be that popular of a program.
9 We are requesting funding particularly
10 in those because there's a decent amount of
11 wait-listed customers. There's about 300-plus
12 right now that are being held by our rebate
13 processor. It would be nice, since they knew
14 about the program, they took the steps, they
15 applied for the program, to be able to give them
16 that rebate and not have customers be upset about
17 that.
18 In addition to that, we'd love to be
19 able to provide those -- that offering to our
20 customers next year as well, and that's why we
21 requested additional 2,000 or 2500 rebates for the
22 WiFi-enabled thermostat.
23 The tankless water heater, we're just
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1 seeing a -- there's a decent amount of work
2 happening in our service territory in Maryland
3 where there is a central meter, kind of a GMA
4 meter, multifamily, moving to individually metered
5 multifamily. I'm not sure what the driver
6 necessarily of that is, but we're seeing a lot of
7 projects with that.
8 We've had developers contact us asking
9 if they would be eligible for the tankless water
10 heater, if they went that route. Gas to gas is
11 not fuel switching or anything like that, and, you
12 know, we made the decision, it was like
13 absolutely, that would be something that we want
14 to incent you to go to the high efficiency. They
15 love the tankless water heater if it's welded to
16 their utility closet. The pipeline of that
17 exceeds what our current forecast would be.
18 That's why we're requesting funds for those two
19 specific measures.
20 COMMISSIONER O'DONNELL: And remind me,
21 your participation in the EmPOWER program is much
22 shorter lived than the first program.
23 MR. SKULLEY: That's right. The first
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1 program year was last year in 2015. We probably
2 didn't launch the programs after ramp-up until
3 about -- the prescriptive programs until about May
4 or June. So we have got about a little over a
5 year participation in the program. So, not long.
6 COMMISSIONER O'DONNELL: Kind of makes
7 sense. Something we probably should be flexible
8 with.
9 MR. SKULLEY: I would hope so, but I
10 understand there's concerns about budget. I
11 appreciate it.
12 All right.
13 MR. DODGE: That may be the first time
14 I have given somebody correct laptop advice.
15 MR. SKULLEY: Next I wanted to present
16 to you about the program plan that we had
17 submitted in August.
18 A little unorthodox, I know. It's not
19 on the normal planning cycle. So I appreciate
20 your time in discussing this. It is -- there are
21 several reasons why we wanted to push this
22 forward, and we think that it really is a proposal
23 that is a little dynamic, and it will allow us to
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1 achieve certain savings now and not waiting until
2 the next program cycle of 2018.
3 Given that we have only had the
4 programs since 2015, there's a lot for us to do in
5 terms of ramping up, and one of the lessons
6 learned for us, I think, and when I first started
7 out with this program, there were other colleagues
8 of mine who were no longer with the company, they
9 retired or otherwise, so they had a lot of input
10 in the strategy on this, and I think that this is
11 a little bit more of kind of what I see given the
12 last year-and-a-half of participating in this
13 program. Where I think it would be fit in much
14 better in order to help our customers save energy
15 where we think we're missing some, you know, the
16 EmPOWER programs seem to be missing, there's a gap
17 there.
18 There's a lot of energy savings left on
19 the table, and all of the programs are proposing
20 cost effective under the screening tests that have
21 been accepted by Staff before. So we want to make
22 sure that what we're proposing going forward takes
23 into account also the concerns about EmPOWER
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1 budgets.
2 I think that's one of the things we're
3 trying to put forward is the balance of what are
4 new programs, what are expanded programs on our
5 current ones, and what are the coordinating
6 programs that are going to be the most cost
7 effective for all ratepayers and making sure that
8 we're not making duplicative programs, and I do
9 want to respond to some of the comments by some of
10 the other stakeholders today including some of the
11 concerns on the low and moderate income programs,
12 which I wanted to provide a solution to that today
13 as well.
14 So, to get into it, I think that we are
15 looking at targeting specific customer segments in
16 a broader sense. I think we have some of the
17 programs now that address the existing customer
18 base, which is great, but we also -- what we
19 lacked was scale on that side, the number of
20 measures that I think that we could be offering to
21 customers, and in addition to that, the amount
22 of -- the programs that would target also new
23 construction, because I think that -- with that
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1 side of the -- you know, there's a lot of growth
2 still happening in our service territory and we
3 want to make sure that people are making the most
4 efficient -- have the most efficient options laid
5 out to them, but also, you know, making sure that,
6 you know, if they're making a choice to go with
7 gas, then they're going to be educated on the
8 highest efficiency available for those products,
9 that equipment.
10 I think that there are some successes
11 on the existing programs, particularly on the
12 residential, but I think there also is just -- I
13 really do think that the commercial program could
14 be more successful with the proper outreach. You
15 know, so, just bigger programs do provide for
16 additional support.
17 The staff that I currently have,
18 essentially myself and two others, I think if we
19 had additional staff members to support these
20 programs, we would do a much better job of
21 participation rates, especially specifically on
22 the commercial side.
23 One of the lessons learned is I think
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1 we stepped in with a very small program to a very
2 mature EmPOWER program. So not only do we have
3 to, you know, run our programs effectively, we
4 also have to manage all of the other work groups
5 going on, all of the other orders that happen,
6 things that happen to other utilities that get
7 directed back to us as well.
8 We do a lot of coordination with the
9 other utilities. We have to do it in order to
10 make sure that we're not stepping on each other's
11 toes and figure out, you know, as we said from the
12 last hearing, coordinating better on things like
13 data sharing, which we submitted some comments
14 about that on Friday.
15 There's a lot of successes but there's
16 also been a lot of constraints on our program. I
17 think a revised program would help just in general
18 covering the standard meetings and all of these
19 other requests that we get, data requests, the
20 reporting, we want to make sure that we're doing
21 it in a timely manner and we're not lagging behind
22 the other utilities in that sense because
23 sometimes we are constrained on time and
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1 resources.
2 So, the other part of it is when we
3 initially proposed the program, we didn't propose
4 a budget so, a lot of the costs that are
5 associated with what we do for program design are
6 the utility, you know, the -- that eats those
7 costs and they're not in the pit budgets. I think
8 that's one of the things we're asking for,
9 requesting for in the proposed programs.
10 Granted, the second bullet point is
11 probably going to be a little contentious, because
12 I understand the idea of being able to move
13 incentive levels up and down seems to, you know,
14 the Commission would like to go a certain route
15 with that, so given in hindsight some of the
16 comments earlier, it might not be the best part of
17 the proposal being put forward, but it does
18 provide us, as I kind of said, the adjustment to
19 also move down -- move incentive levels down, like
20 as I was saying before, the gas fryers is
21 something that we're considering maybe would be
22 adjusted down, because it just seems to be that
23 they were so popular and it might be an issue with
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1 how high the incentive level is as compared to the
2 actual cost of the equipment.
3 Additionally, proposing a custom
4 program where would you have a -- a bonus
5 incentive level structure for site level energy
6 usage savings.
7 So, as you can see, if you -- an
8 example, if you have 15 percent reduction in site
9 level savings would result in a 15 percent
10 incentive bonus. That's pretty typical for a
11 custom program, but we'd love to hear some
12 feedback on that and whether or not it should be
13 considered for our gas programs.
14 Here's a summary of essentially what
15 we're recommending and kind of give you a feel of
16 what we already are doing and what we're expanding
17 on.
18 The residential programs consist of
19 five programs, and commercial programs have four,
20 and a lot of this comes down to coordinating with
21 the electric utilities. A couple of years ago
22 when we first started the gas/electric work group
23 and we met and Staff did a presentation
185
1 essentially on cost sharing, that was the initial
2 idea was, you know, we were going to move that
3 role of cost sharing on things like Home
4 Performance, QHEC, where there are gas savings
5 already happening and then maybe start integrating
6 certain gas measures that are being left on the
7 table.
8 They're going to do these audits and
9 everything, but it's so focused on the electric
10 savings that they're missing out. You have
11 someone in the home. You have someone able there
12 that can be communicating what the other
13 incentives are, and they can be doing upgrades as
14 well that might help with gas savings that are not
15 being done.
16 We want to take that step in the right
17 direction. A lot of the proposal is kind of a
18 provisional proposal to say, you know, we would
19 like your permission, this is a general outline of
20 what we want to do in terms of coordination, and
21 maybe we don't need your permission necessarily
22 outright, since we have the gas and electric work
23 group, but it's one of the things we want to make
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1 sure is very clear that this is one of the areas
2 where we think that we could be very cost
3 conscious on running programs, and where we're not
4 driving up costs, we're not increasing surcharges,
5 you know, incrementally because there's already
6 gas savings happening.
7 What we would be doing for like, for
8 example, for Home Performance, we would be buying
9 down the gas savings that are already happening
10 from the program. So we've done some estimations
11 from it, we have worked with third-party
12 implementers to figure out what the gas savings
13 are there and they're already calculating it and
14 negotiating with the electric utilities of what
15 that per therm cost would be, $1, $2, $3, are you
16 including covering some of the marketing cost. Is
17 Washington Gas also doing some of the marketing of
18 the programs in order to increase participation
19 which could be very helpful in the participation
20 rate of the lower programs.
21 I think there's some advantage and it's
22 been proven in other jurisdictions across the
23 country that this is the way to go. It's just
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1 that we're stepping into it years after it's
2 already been implemented. So we're trying to find
3 a way to fit right without completely coordinated
4 programs.
5 I think if you said, joint program is
6 probably a word that is probably a little too
7 strong. We're not having a joint program. We're
8 having a coordinated program. We just pay for the
9 savings and then see if there's additional
10 measures that would be added to the audit, the
11 Home Performance program or the QHEC program or
12 some of the other programs.
13 I heard one of the comments earlier was
14 why, I think it was from OPC, why hasn't
15 Washington Gas considered coordinating on some of
16 the new construction. We're clearly open to that,
17 but I think it's -- I think that's very helpful to
18 have those discussions of whether or not -- that's
19 the most cost effective way to go.
20 We shouldn't be competing with each
21 other. We should have a single message to
22 builders, developers: These are your options.
23 What works best for you. And the market can
188
1 decide that, but at least we can provide a single,
2 you know, coordinated marketing -- I wouldn't say
3 coordinating marketing, but figure out what's the
4 best way to present that information to builders
5 and developers on new construction.
6 So I'd like to think that we're pretty
7 open to all of these things. We're the new person
8 on the block. So I want to make sure that we're
9 taking everybody's consideration, opinions,
10 concerns, into account before just saying this is
11 the way we should be going.
12 No, we're saying we just need to figure
13 out what is that way to go, and some of the --
14 it's going to require some legal work to determine
15 what can be shared, what information can be
16 shared, what memorandum of understanding in terms
17 of what the dollar amount per therm we'd be
18 buying. There is some coordination of meetings
19 that have to happen pretty soon in order to
20 achieve what we're trying to in terms of
21 projections for savings moving forward.
22 CHAIRMAN HUGHES: Mr. Skulley, what
23 happens today, let's say I'm a PEPCO/WGL customer
189
1 and I order a Home Performance audit. Is that
2 automatically shared between the companies?
3 MR. SKULLEY: No. It's all PEPCO.
4 CHAIRMAN HUGHES: Okay.
5 MR. SKULLEY: It's all PEPCO. That's
6 how it's been the last few years. It would be
7 wise to figure out what the -- how -- at least
8 cost sharing the savings, and if not, marketing
9 the programs. I just want to make sure that like
10 maybe, you know -- I don't know, there's just a
11 certain ability for us to be able to communicate
12 to our customers, while it's another channel
13 directly to existing customers, to let them know
14 about these programs that exist.
15 They get multiple utility bills and
16 maybe they open ours instead of PEPCO and they see
17 our insert in our bill. So there's opportunities
18 there, I think, to catch some additional
19 participation.
20 CHAIRMAN HUGHES: Yeah, they may see
21 your behavioral report.
22 MR. SKULLEY: That's right. There's a
23 lot -- there's different channels we reach them.
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1 That stuff that we want -- the e-mails that go
2 along with the behavioral report as well. I think
3 there's some benefits there in just having
4 customers -- if they want to take part in the Home
5 Performance, they want to know they're getting
6 everything out of it, especially when you take
7 time to have someone come to your home and have
8 them do that improvement to your home, you know,
9 what are you leaving on the table, and why -- in
10 other words, you know, why isn't Washington Gas
11 helping me as well, which we actually do get that
12 sort of feedback quite a bit.
13 One of the reasons why it's important
14 for us to be part of EmPOWER is that we're, you
15 know -- you're a utility. You pay our bill as
16 well. We want to make sure that you're getting
17 the services that you want to get. And they don't
18 necessarily -- you know, not everyone can fully
19 understand the whole EmPOWER program, I think, and
20 I think that goes back to Commissioner Richard and
21 people understanding the programs a little bit
22 better, even on their bill.
23 It's, you know, if someone is getting
191
1 charged for these programs, we want to get the
2 best opportunity for them to get as much savings
3 as possible out of every dollar we spend. And I
4 think that there's -- for the dollar per therm, I
5 think if we did these programs, we'd see after a
6 year or two that we're getting some pretty good
7 returns on doing -- making sure that we're
8 coordinating on those programs.
9 I think, you know, those are the
10 easy -- that's kind of the lower hanging fruit.
11 It's already a program that runs and is active.
12 It's more of how do we contribute to it and
13 squeeze as much energy savings out as possible.
14 This is a chart of the projected
15 annualized savings in therms. This does project
16 us to get to .6 percent as a percentage of sales,
17 which is the metric that we proposed in the last
18 hearing about the goal setting.
19 Again, I somewhat disagree with
20 comments made earlier that this isn't a stretch
21 goal. We actually think this might be a stretch
22 goal because of the way that, you know, there's
23 just not a lot of -- not all of the programs that
192
1 we can run, that are run in other states can be
2 run here effectively and cost effectively. Some
3 of them don't even meet the screening requirements
4 that run in other states. Just given the lower
5 amount of therms being consumed in the home,
6 there's only so much percentage you can get out of
7 cost effective programs.
8 Start going above .6, we're going to
9 start getting into proposing cost effective
10 programs and I'm sure that's not what anybody
11 wants right now. You can't have those in the mix
12 of having a cost effective portfolio level and it
13 does work in other states because it can bring
14 participation up in other programs, but we're
15 trying to strictly stay to cost effective measures
16 even if that measure level would roll up to a cost
17 effective portfolio.
18 But it's a considerable amount. Again,
19 it would put us in the top -- it would put us as
20 the top state in terms of gas savings, at least
21 from a Washington Gas perspective, from when we
22 measure it in our climate zone. There's just
23 not -- utilities in our climate zone that reach
193
1 across southern Illinois and Arkansas, even parts
2 of the Pacific Northwest, they struggle to
3 get .5, .45 percent savings with pretty
4 significantly robust programs where they're
5 spending probably more in terms of dollar --
6 overall program dollars to try to achieve those
7 from what we're proposing.
8 We're trying to propose as efficient as
9 possible what we think we can get to .6. That's
10 just offsetting our own goal. You're not
11 prescribing a goal to us right now, but it's good
12 to have a goal and strive to that and design a
13 program behind that goal.
14 CHAIRMAN HUGHES: When do you project
15 it will get to .6?
16 MR. SKULLEY: 2020. Yeah.
17 CHAIRMAN HUGHES: Okay.
18 MR. SKULLEY: I apologize. I don't
19 have it on the chart. It's in the first couple of
20 pages of our submitted report. The second page of
21 that.
22 COMMISSIONER MILLS: What would be the
23 staffing impact? You said it's yourself and just
194
1 two other folks now.
2 MR. SKULLEY: Yeah. The model would
3 have to change a little bit, we'd have to increase
4 internal staff by -- I haven't done the full --
5 Commissioner Mills, I haven't done the full
6 resource impact on it.
7 But in terms of the budget, we did set
8 aside monies for labor and I think that internally
9 it will probably take us about three more staff
10 members in order to manage the vendors, and if
11 not, you know, one of the models that we'll look
12 at is actually going -- we'll have to work with
13 the third-party implementer this time around to be
14 the most efficient that we can and use things like
15 the rebate processing and some of the expertise
16 that they have.
17 We won't be on the scale of what the
18 electric utilities are doing, but at the same time
19 we have to coordinate with those third-party
20 implementers anyways if we're going to do the
21 coordinated programs. We think it's probably a
22 cost effective way to go.
23 So, you know, right now, I'd say
195
1 probably three more, maybe four people where you
2 have people doing outreach, people managing the
3 vendors and doing the reporting, which is always
4 key to make sure we do it in a timely fashion.
5 So, the next chart is the projected
6 annual budgets. I will -- I will say this: You
7 know, this is in line with programs and we did
8 benchmark a lot of this to achieve that .6 percent
9 goal.
10 You know, it -- and this also could
11 vary quite a bit based off of what the true
12 coordinated programs do cost. It's again
13 something that we'll go back into the work group
14 or go back with the utilities specifically and
15 determine what is that cost sharing that we would
16 do.
17 We estimated in our proposal what the
18 costs would be, but exact costs might vary
19 slightly.
20 Again, nothing would be done that
21 wouldn't be cost effective and everything would
22 have to be rescreened and resubmitted to the Staff
23 and Commission and OPC to review. All of those
196
1 programs that are essentially the coordinated
2 programs still require us to resubmit something in
3 a formal manner.
4 COMMISSIONER O'DONNELL: Quick
5 question.
6 MR. SKULLEY: Sure.
7 COMMISSIONER O'DONNELL: What does this
8 translate to in terms of surcharge?
9 MR. SKULLEY: I thought you'd ask.
10 Hold on a second. It's right here.
11 I want to give you pretty close to it.
12 I had run the numbers, I have to have our
13 regulatory affairs double-check them, but I did,
14 you know, have a model that I plug it into.
15 Seems to not want to be agreeing with
16 me right now. So I believe it was somewhere
17 around -- for the residential surcharge was
18 somewhere around $9 per year, or, you know,
19 somewhere around there, 75 cents per month for
20 residential customers.
21 I broke the commercial surcharge down
22 by a therm basis and applied that to what is the
23 average therms for small commercial, medium
197
1 commercial -- or small commercial, large
2 commercial and GMA being that multifamily
3 group-metered account.
4 Seems to be -- I don't remember the
5 other -- here we go.
6 MR. DODGE: We'll follow up in writing
7 as well on that.
8 COMMISSIONER O'DONNELL: That would be
9 fine.
10 MR. SKULLEY: Sorry. I apologize for
11 that.
12 COMMISSIONER RICHARD: Are you also
13 designing this program to be amortized over five
14 years or is it year on year?
15 MR. SKULLEY: Yes. That would be over
16 five years on average and, you know, put it
17 through the amortization schedule and then layer
18 it on to see what each individual year would be.
19 When I said the $9, the $9 is actually in year
20 2020 when you would have the -- you know, the full
21 program ramp-up and the maximum surcharge.
22 So, initially, it's about $4 per year,
23 I believe, if I remember, on the residential side.
198
1 Again, apologies for not having it memorized, but
2 it ramps up to about $9 per year by 2020 given the
3 amortization schedule.
4 I think it goes from about 45 cents per
5 month to about 75 cents per month for residential
6 customers. And then obviously a different scale
7 for the commercial side. The commercial budgets
8 are smaller but then we have fewer customers as
9 well, so you see a little higher impact on
10 commercial customers per month than compared to
11 the residential.
12 COMMISSIONER RICHARD: I guess I would
13 ask for Staff, is that required by the program
14 that -- going into the future, we have to continue
15 to do this amortization and also then pay these
16 financing costs, or is that something that can be
17 looked at again?
18 MS. BEST: The surcharge has
19 historically been done with a five-year
20 amortization schedule. I'm not aware of anything
21 that requires that so it could certainly be looked
22 at if the Commission would like to restructure the
23 surcharge or look into other ways of collecting
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1 the funding for these programs.
2 COMMISSIONER RICHARD: Yes, I would be
3 interested in knowing -- in some cases this will
4 just mask the size of the program. And perhaps we
5 would design more modest programs, more affordable
6 programs, and we wouldn't also be later incurring
7 these carrying charges, finance charges. So it
8 would be maybe good to see, you know, different
9 options.
10 MR. SKULLEY: Mm-hmm.
11 I would like to follow up, though, on
12 your concern on the surcharge as well. What I'm
13 not including in this is actually the -- what
14 would be some potential, like, dollar-for-dollar
15 reduction from the electric utility programs on
16 the coordinated side.
17 So that is -- this is what our
18 surcharge would be. Any of the coordinating
19 programs would almost be a dollar-per-dollar net
20 cancel out. That's helpful to know. Some of the
21 new programs are incremental.
22 So, again, the work group would
23 determine what, you know, if we're having a -- a
200
1 $4 surcharge, maybe only two-and-a-half dollars of
2 that is incremental to the overall EmPOWER
3 program. You know what I mean?
4 COMMISSIONER RICHARD: Okay. $2 --
5 MR. SKULLEY: I don't know. Estimate.
6 COMMISSIONER RICHARD: Estimate $2
7 would --
8 MR. SKULLEY: Something like that where
9 things would come back. We overlap with other
10 utilities as well. The coordinated programs are
11 going to be more than just PEPCO, just to let you
12 know.
13 CHAIRMAN HUGHES: Who else do you
14 overlap with?
15 MR. SKULLEY: SMECO and Potomac Edison
16 and a little bit of BGE. There's a tiny bit of,
17 two sections I believe that overlap between BGE
18 electric customers and Washington Gas customers.
19 I believe in Prince George's and Montgomery
20 County.
21 COMMISSIONER MILLS: I have a question.
22 So I'm looking at your budget, and what I'm trying
23 to do, and I guess I should have verified the
201
1 numbers in the reports, but I'm trying to say if
2 we put a line and say, you know, separate the
3 program years since we've been doing the
4 three-year programs.
5 MR. SKULLEY: Yes.
6 COMMISSIONER MILLS: And we put a line,
7 and took '18 and -- 2018 through 2020 as a
8 separate program, and then we just look at the
9 2017, you have the $8 million here.
10 MR. SKULLEY: Yeah.
11 COMMISSIONER MILLS: How does that
12 compare to what's been spent, or what was the
13 original budget for the original program. I mean,
14 if I said, look at the program in 2015 and 2017
15 and after that, you said a million dollars. Does
16 this new projection add another million or two
17 million?
18 MR. SKULLEY: No, that is a new program
19 budget. So our existing program is approximately
20 $2.5 million per year. So, this incremental, this
21 $8 million includes that $2.5 million.
22 COMMISSIONER MILLS: All right. So,
23 the difference is about, what, 5, 5-and-a-half
202
1 million dollars additional if I just said look at
2 2015 through 2017.
3 MR. SKULLEY: Yes, that's correct.
4 COMMISSIONER MILLS: Separately.
5 MR. SKULLEY: That's correct.
6 COMMISSIONER MILLS: Okay.
7 MR. SKULLEY: That's assuming full
8 participation and assuming a lot of things are
9 able to roll out quickly.
10 COMMISSIONER MILLS: That's a
11 significant amount.
12 MR. SKULLEY: Yes. Yes, it is.
13 Just to give you a summary of what the
14 TRC test is, overall residential/commercial
15 sector, this is positive and also the total
16 portfolio is positive. We ran all of the tests,
17 all of the portfolios submitted to make sure that
18 you were able to see all of the tests, the
19 qualified tests.
20 You know, and this is a little bit of
21 just summary of kind of what we talked about the
22 communication and outreach. I think one of the
23 important points would be, to Commissioner Mills'
203
1 asking about resources and, you know, conducting
2 an RFP to assist with some of the implementation
3 of the programs, given that the, essentially,
4 hiring expertise especially on things like custom
5 programs, we don't have necessarily the expertise
6 internally, we could hire that, and it would
7 probably be efficient to engage with an
8 implementer in order not to have delays in rolling
9 out programs that are ramping up.
10 The other big point here is, again, the
11 coordinated programs which still have, you know,
12 what we're proposing is somewhat of a general
13 outline of what we think would be the best path
14 forward. We still need to get in a room and
15 determine what, if everyone is on board with that,
16 and what is that path forward, what are the
17 details with, the legal details with the
18 procedures and the policies that would have to be
19 implemented.
20 I think part of this just kind of
21 highlights -- a lot of text in this one, but some
22 of the things, a lot of it, the second bullet
23 point is the simplicity in customer engagement
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1 particularly around the coordinated programs.
2 Messaging would be more consistent. I think we
3 would hit more customers per dollar of EmPOWER
4 funds if we were also trying to use, say, like our
5 low cost or no-cost marketing channels, you know,
6 that we already have in order to increase
7 engagement in certain programs that are already
8 with participating electric customers like Home
9 Performance.
10 Administrative cost savings. Again,
11 coordinated programs. That's helpful. And I do
12 say that in many ways we wouldn't be -- at no
13 point do we want to be running competing programs.
14 I think a lot of that is where we see
15 the cost savings comes in, you know, in the Home
16 Performance -- say, I use that as an example. If
17 we're just buying savings, we're not necessarily
18 changing, we're not increasing budgets but we're
19 not decreasing budgets, either. We're
20 appropriately allocating costs to the right
21 ratepayer.
22 I think that's important. I think
23 that's a best practice that's done by a lot of
205
1 other utilities across the country. It seems to
2 be a very -- the model that we use I think was
3 Peoples Gas and ComEd in Chicago is a good one
4 where they had, the existing gas program came in
5 later and tried to integrate with certain
6 coordinated programs and they -- it's a good model
7 for us to follow in terms of the cost savings.
8 Then the program delivery cost savings
9 as well in terms of just making sure that all of
10 the benefits are achieved in these programs,
11 including the gas savings.
12 Again, some of the likely programs that
13 we would have to discuss. I think the Home
14 Performance and the QHEC program are probably the
15 first ones we probably could tackle. Again, some
16 of the prescriptive programs, C&I programs, new
17 construction, it's doable, it just has to be --
18 it's going to take a lot of time, not a lot of
19 time, but it's just going to take the time to do
20 it.
21 I think we need to have the effort in
22 the working group, if we're going to -- if
23 Washington Gas is going to be a part of this, and
206
1 depending on, I haven't spoken directly to BGE
2 about it, if they want to have, you know, be a
3 part of it as well, on the gas side, more
4 robust -- you know, more robust programs, then we
5 have to -- we have an opportunity to figure this
6 out. I think what we're just doing is proposing a
7 path forward, and hope people would be on board at
8 least the discussion of how to do the coordinated
9 programs more effectively.
10 Areas to be addressed. Again, I think
11 we would probably need Staff's help on some of
12 the -- on some of the working group meetings in
13 order to determine the coordination. Maybe just a
14 moderator if not some guidance along the way.
15 This is kind of a new area for I think all of us.
16 I think -- oh, so the second point, and
17 I do want to say this. We have had meetings
18 recently with DHCD to talk about supporting the
19 low and moderate income programs. I know that was
20 absent from our plan, but we were trying to figure
21 out what's the best way to move forward with that,
22 without just proposing, oh, we are going to work
23 with DHCD.
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1 So we met a few weeks ago and talked
2 about what some of the gas measures that
3 potentially could be added to their programs cost
4 effectively to make sure they work well with the
5 existing programs. Enhance some of the ones
6 especially in the multifamily side of things. We
7 see a lot of low and moderate income success
8 and -- for our program in Virginia, on that side
9 of things, and tackling the multifamily side of
10 low and moderate income.
11 They can be more cost effective and
12 there also tends to be more opportunities in that
13 area than the single family detached home audits
14 and weatherization.
15 So, but for us, I think that what we're
16 planning to do, and I've already talked to staff
17 at DHCD about this, is over the next couple of
18 months put a plan together to get our teams
19 together and figure out what -- and do some
20 analysis on vetting, you know, changes to the
21 program that we would like to propose as being a
22 partner with them in order to try to find some gas
23 savings on the low income side and then coming
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1 back and submitting that to you say around early
2 January, so for consideration moving forward, and
3 something that we can implement hopefully quickly,
4 but, you know, that will be up to you what you
5 consider what is an appropriate timeline and if
6 the programs are -- you know, are appropriate and
7 you think they're helpful and cost effective.
8 That's not something -- it wasn't a
9 part of our plan, but it was because we want to
10 make sure it's well thought out. I know there's
11 been some issues in the past with that program
12 that we don't want to just start to, propose to,
13 you know, add additional funding to that program
14 that doesn't really help anybody.
15 I think that's probably the best way to
16 do it is have a well thought out program design to
17 assist them in making sure that they're achieving
18 gas savings to the maximum extent for their
19 customers or for their participants in their
20 programs.
21 That's the end of my presentations.
22 CHAIRMAN HUGHES: Thank you,
23 Mr. Skulley. I had a question of this proposal
209
1 for 2017 through 2020. If the Commission is not
2 going to take up the program for the next cycle
3 for the electric utilities until next year, if the
4 Commission decided it was going to do the same
5 thing for Washington Gas, could Washington Gas
6 still implement 2017 if it's got -- if it got
7 approval this fall to do so?
8 MR. SKULLEY: Could we -- if we could
9 do -- can we still actually implement 2017 --
10 CHAIRMAN HUGHES: 2017.
11 MR. SKULLEY: -- as we're proposing it?
12 The only area of concern that I have is just the
13 coordinated programs that might take time to sort
14 out. I'd rather start sooner than later. If it
15 takes several months for that to sort out, at
16 least we're well ahead of the next program cycle
17 for the electrics and maybe build that into their
18 program plan as well for 2018. But, yes, I mean,
19 our plan was to be able to implement starting in
20 January, if this is approved.
21 CHAIRMAN HUGHES: Okay. Thank you.
22 Any additional questions? Well, thank you very
23 much, gentlemen.
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1 MR. DODGE: We will be following up
2 with answers to the few questions and we'll file
3 that hard copy.
4 CHAIRMAN HUGHES: Very good. We are
5 going to take a short break. We will be back at
6 20 of, and we will bring up next the Maryland
7 Energy Administration, followed by SMECO, and that
8 will be our last presenter for the day.
9 (RECESS, 3:19 p.m. - 3:38 p.m.)
10 CHAIRMAN HUGHES: Welcome back,
11 everyone. If I can ask you to take your seats, we
12 will continue our EmPOWER Maryland hearing.
13 Before we go to the Maryland Energy
14 Administration, I first want to recognize our
15 Staff. I apologize, I forgot to do this. Our
16 Staff would like to make a few comments on WGL's
17 proposals, the Q1 and Q2, as well as the proposals
18 for 2017 and beyond. Ms. Best.
19 MS. BEST: Good afternoon, Chairman and
20 Commissioners. Amanda Best again on behalf of
21 Staff. I will keep my comments brief. I just
22 wanted to make a few points of consideration on
23 WGL's proposal for 2017 as well as for 2018
211
1 through 2020.
2 Staff isn't in support or in opposition
3 really at this time explicitly, we just have a few
4 points for you to consider when you're looking at
5 this proposal that just jumped out at us when we
6 reviewed it.
7 First, the design of the proposed
8 energy savings goal is something to look at a bit
9 deeper. It's going to take a large amount of
10 energy savings to achieve those goals as proposed,
11 as well as the baseline being used to measure the
12 goal, it looks from the proposal that it's not a
13 static baseline like what's used on the
14 electricity side. It looks like it changes every
15 year.
16 So if you're looking for something a
17 bit more consistent between the two fuel types,
18 that could be something to be explored a bit
19 further.
20 They talked about the coordinated gas
21 and electricity programs that were proposed, which
22 is a Staff -- you know, I think is generally
23 supportive of the idea, but we think that more
212
1 data and input is needed from the other utilities
2 that would be involved, which I know WGL -- which
3 Washington Gas addressed that they would need more
4 input. So I think it's just important to see
5 what's going on on the other side, on the
6 electricity side.
7 Staff has a few concerns with some of
8 the new programs that were proposed, including the
9 new construction programs and the kit program.
10 Just concerning possible duplicities among the
11 programs on the natural gas and electricity side.
12 As well as confusion among customers. So any way
13 we could reduce that would be in the best
14 interests, we think, for the ratepayers.
15 And finally, we did a quick review of
16 the costs that were proposed in their filing, and
17 the residential costs appear to be reasonable in
18 regards to when you look at the breakout among the
19 cost categories, a majority, around 60 percent,
20 are going to customer incentives.
21 What we would like to see, if there is
22 a way to increase that percentage on the
23 commercial side. It was a little bit lower. It
213
1 was closer to 50 percent. So we'd just like to
2 explore if there was a way to get more of the
3 funding and the budget in that proposal to go
4 towards customer incentives instead of some of the
5 other cost categories. So, those were my
6 comments.
7 CHAIRMAN HUGHES: Thank you, Ms. Best.
8 Any questions for our Staff? Okay. None. Thank
9 you very much. We appreciate that.
10 Next we'll hear from the Maryland
11 Energy Administration, Dr. Tung. Very good to see
12 you. Welcome. And Mr. Talson, why don't I turn
13 it over to you to kick things off.
14 MR. TALSON: Good afternoon, Chairman
15 and Commissioners. Steve Talson, Assistant
16 Attorney General for MEA. With me this afternoon
17 is Mary Beth Tung, director for MEA, and Rachel
18 Weaver, the EmPOWER program manager for MEA, and
19 also Christine Neiderer, who is also an Assistant
20 Attorney General for MEA. With that, I will turn
21 the table over to Dr. Tung.
22 DR. TUNG: Thank you, good afternoon.
23 As Mr. Talson said, my name is Mary Beth Tung, and
214
1 I'm the director of the Maryland Energy
2 Administration. I'd like to thank the
3 Commissioners and the Staff for all of your
4 efforts in putting these hearings together. Our
5 testimony -- our written testimony has been
6 submitted and I believe you have that.
7 MEA is supportive of EmPOWER in its
8 original intent in using energy conservation to
9 ensure the state of Maryland has access to clean,
10 reliable, and affordable energy. Energy
11 efficiency is among the least expensive ways to
12 meet the growing electricity demands in the state,
13 and it's especially true as our economy has grown
14 tremendously in the last few years and obviously
15 we hope it continues to do so.
16 MEA commends the creative solutions
17 offered by many of the utilities, as we have all
18 gained more experience in the last few years and
19 face new challenges in implementing measures now
20 that much of the low hanging fruit has been
21 picked.
22 MEA is especially pleased with the
23 progress of the five utilities in achieving 49
215
1 percent of their total 2016 energy efficiency
2 goals thus far.
3 Our filing included a few pointed
4 recommendations, and I'd like to highlight them
5 for the Commission's evaluation, and I think most
6 of these are in our written testimony, but I
7 wanted to highlight them. I'd like to quickly
8 address the proposed budget request.
9 This filing included a few budget
10 increase requests from DPL, PEPCO and WGL. These
11 increases were mostly a result of higher than
12 forecasted participation. MEA does not support
13 these particular increases but encourages the
14 Commission to explore other options provided,
15 including reducing rebate levels, implementing
16 reservation systems, shifting budgets between
17 programs where appropriate, and making adjustments
18 to the measures offered.
19 These options provide creative and
20 effective solutions that benefit both the impact
21 on the dollar per kilowatt hour and the strong
22 popularity for participation. Given the progress
23 the utilities have made toward their 2016 goals,
216
1 MEA would like to see the utilities explore every
2 possible option before relying on ratepayers to
3 provide additional funding.
4 Second, transparency in the EmPOWER
5 utility bills. MEA has concerns about the EmPOWER
6 charge, how the EmPOWER charge is explained to
7 customers, and supports the marketing work group's
8 recommendation to add language to bills that
9 specifically address the charge. The proposed
10 line would read for every $1 invested in EmPOWER,
11 X dollars are saved. And for more information, go
12 to the following website.
13 MEA supports this concept and
14 encourages the Commission to also consider the
15 other suggestions, including additional messages
16 to rebate letters, e-mails, bill inserts, press
17 releases, web messaging and call center dialogue.
18 Again, I'd like to highlight that the
19 utilities should be commended on their progress
20 thus far in 2016. MEA supports energy efficiency
21 in the state of Maryland and believes that the
22 progress made by the midway point of 2016 shows
23 that the 2016 goals can be met with existing
217
1 funds.
2 MEA takes its role seriously in
3 ensuring these programs are run cost effectively.
4 The Navigant report, cost effectiveness results
5 for 2015 energy efficiency programs in Maryland
6 submitted by Staff, found that for every dollar
7 invested in EmPOWER, Maryland is realizing about
8 $1.98 in benefits.
9 Although this metric refers to the
10 portfolio programs, MEA is also pleased to note
11 that each individual utility has a cost effective
12 portfolio often by a very comfortable margin.
13 I would like to emphasize that our
14 first priority to the Maryland energy customer is
15 to the Maryland energy customer and making sure
16 that these programs are keeping energy affordable.
17 Thank you for your time, and I'd be happy to
18 answer any questions.
19 CHAIRMAN HUGHES: All right. Thank
20 you, Dr. Tung. Again, thank you for coming today.
21 I appreciate your presentation very much.
22 I had -- I wanted to talk to you
23 briefly about the commercial and industrial side
218
1 of EmPOWER Maryland, and specifically ways that
2 utilities through EmPOWER and MEA have been able
3 to partner together in terms of leveraging dollars
4 for combined heat and power, and we had some
5 examples where that's worked very well, I think,
6 and it's helped us to reduce the ratepayer impacts
7 when businesses have been able to rely on some
8 grant funding.
9 So I wanted to get your perspective
10 going forward whether through CEEEP, that combined
11 heat and power is a program that you think MEA is
12 going to continue to offer, and that's something
13 that perhaps we could even partner a little bit
14 more closely in the future.
15 DR. TUNG: Combined heat and power is a
16 program that we are standing up and support very
17 strongly, and there's, you know, so many benefits
18 to that. You know, not letting the heat go away,
19 using it more effectively. Hospitals are using
20 it, and as you mentioned, in the C&I, commercial
21 and industrial sectors. I don't know if -- did
22 you have any, Rachel.
23 MS. WEAVER: In follow-up -- I'm sorry,
219
1 I'm sick. We can follow up with the exact
2 numbers, but I'm pretty sure that all of the
3 applications that we approved in the last two
4 years also participated in EmPOWER programs and
5 utility programs, but we can get back to you with
6 what those exact numbers are.
7 CHAIRMAN HUGHES: That's fine. I'm
8 curious. Going forward that sounds like something
9 that MEA is going to continue with.
10 MS. WEAVER: Absolutely.
11 DR. TUNG: Absolutely.
12 CHAIRMAN HUGHES: Any additional
13 questions? Commission Richard.
14 COMMISSIONER RICHARD: Thank you very
15 much for your presentation this afternoon. I did
16 appreciate and read over your statement.
17 I did, in your top line recommendation,
18 EmPOWER Maryland is a leading example of balancing
19 cost effective energy efficient solutions with the
20 needs of a growing economy. That was an important
21 line.
22 Of course, MEA was crucial and
23 instrumental in creating the current EmPOWER
220
1 program, and I think everyone agrees here, it has
2 been a very big success. I think it was probably
3 the right program at the end of the, 2009 when
4 deregulation was really going into effect and we
5 saw some spikes in the electric costs just because
6 the caps were coming off. We had, I guess, major
7 hurricanes in the Gulf, and so it was really
8 needed to have, I would say, a bold program, a
9 very robust program that infused a lot of money
10 into the system, and I think it's been largely
11 effective.
12 Now we're at a point where I think MEA
13 is going to again be needed to bring their best
14 minds together and see where we are, and, as you
15 put it, how are we going to balance the needs of
16 the economy and how are we also going to, you
17 know, balance the concerns of the impacts on the
18 ratepayers.
19 So I just wanted to find out, are you
20 engaged now, is MEA engaged in this process as
21 they begin to look at the 2018 through 2020
22 period; will MEA be actively engaged?
23 DR. TUNG: Absolutely. As you know,
221
1 we're still in the process of rebuilding and we
2 have some policy folks coming on within the next
3 couple of weeks that we intend to start getting
4 into some of these very questions.
5 As you know, part of the issue for
6 effectiveness is, you know, how are these savings
7 calculated? You know, what are the assumptions
8 that go into the calculations for energy savings
9 and how many dollars are you saving for every
10 dollar you're putting in.
11 Those are the kind of, being a
12 scientist and having sort of a math background,
13 it's something that I look at very carefully. So
14 these are some of the issues we do want to delve
15 into a little bit. And where we can best spend
16 our money.
17 As I mentioned, a lot of the low
18 hanging fruit has already been picked, but that
19 does not mean there's still not more out there and
20 we want to get the most bang for our buck.
21 COMMISSIONER RICHARD: Okay.
22 DR. TUNG: Partnership with the various
23 stakeholders, utility companies have a lot of
222
1 smart people working with them, and different
2 groups in the public arena also have some very
3 good ideas, and working with our folks and other
4 stakeholders, hopefully we can come up with even
5 better improvements over what we have already
6 done, you know, at as reasonable costs as we can.
7 COMMISSIONER RICHARD: Very good. Just
8 wanted to -- I was interested that in 2015, the
9 legislature, Senator Astle actually introduced
10 legislation suggesting that maybe these EmPOWER
11 programs, the energy efficiency and various
12 programs actually be shifted to and run by the
13 Energy Administration.
14 At that time it was reported favorably
15 out of finance, but not putting you on the spot
16 right now, but I would be interested if, you know,
17 if maybe MEA would be in a position to consider
18 that, and if the administration would be
19 interested in that approach.
20 Maybe not exactly what the Senator
21 introduced, but I think there could be some
22 advantages of maybe not having a program run by
23 the regulatory agency, but maybe by the state's
223
1 energy office. So, anyway, I just throw that out
2 there for your thought.
3 DR. TUNG: That's an interesting
4 thought. Obviously, I have no answers for you.
5 I'm not sure we're in empire building mode here,
6 but -- and that's not what you're suggesting, I
7 know.
8 One thing that I've been trying to do
9 since, I have been here since May, I have been
10 there a little bit longer now than I was in my
11 last hearing here, but one thing I'm trying to get
12 my arms around is the energy policy statewide,
13 who's doing what. And where we need to insert
14 ourselves or not.
15 But there definitely needs, I think, to
16 be a little bit more centralized policy statewide,
17 but, you know, again, if a certain process is
18 working, then why fix what ain't broke, but it's
19 something that I'm -- I have been working on and
20 we have been working on with Staff. So,
21 interesting proposal. I hadn't heard that, so --
22 COMMISSIONER RICHARD: Great. Thank
23 you very much.
224
1 COMMISSIONER O'DONNELL: Thank you,
2 Dr. Tung, welcome today. Good to see you again.
3 DR. TUNG: Thank you. Good to see you
4 again, too, sir.
5 COMMISSIONER O'DONNELL: Kind of a
6 follow-on, I was thinking I guess kind of along
7 the same lines. I notice on page 4 of your
8 submittal testimony, you talk about the additional
9 filings, and something caught my eye.
10 On September 15th, the marketing work
11 group created by the Commission under that order
12 talked about assessing the opportunities to
13 enhance transparency of EmPOWER building benefits
14 reports and marketing activities, and there's a
15 footnote there, and this is what caught my eye,
16 it's a footnote that talks about the composition
17 of the work group. Here's who appears on the work
18 group. BGE, PEPCO, DPL, the PHI companies,
19 Potomac Edison, SMECO, Washington Gas Light, ICF
20 International, the Office of People's Counsel,
21 Montgomery County, Natural Resources Defense
22 Council, Creative Co-Op LLC and Staff, our Staff,
23 or the Commission Staff. I don't see Maryland
225
1 Energy Administration listed there.
2 This is an informal advisory work group
3 and I know they're independent and we're separate,
4 and I also know in the legislature, if we were
5 going to create a work group, an informal advisory
6 work group to the General Assembly or to the
7 House, we would often invite the executive branch,
8 sometimes the judicial branch, even though we're
9 separate and coequal branches of government and we
10 have separation of powers, because they added
11 value to those work group processes.
12 How does MEA engage in these work
13 groups, if at all, and what are your thoughts on
14 how that would add to the robustness of what some
15 of these work groups are doing?
16 DR. TUNG: Do you have -- I'm not sure.
17 MS. WEAVER: Previously, MEA did
18 participate in all of those work groups. There
19 has been a bit of a transition at MEA, and that's
20 why we weren't included there, because we weren't
21 participating in that work group.
22 I don't know what the number is. Maybe
23 there were like 10 or 15 work groups at one time,
226
1 and MEA did not participate in every single one of
2 those. We tried to see which ones had the most
3 value. And we fully anticipate to start getting
4 back into those working groups, but I would say it
5 was an anomaly that we were not participating that
6 year.
7 COMMISSIONER O'DONNELL: I see. Well,
8 that makes sense, because it makes sense to me
9 that we have a coordinated energy policy at the
10 state, if you are disengaged from some of this
11 stuff, we probably won't get completely there,
12 we'll get there more slowly. So I thank you for
13 that, and I would encourage you, not crossing any
14 bounds of separation or independence, but
15 certainly to participate where possible and where
16 it makes sense. That's a positive thing. So
17 thank you for that. I appreciate it.
18 COMMISSIONER RICHARD: Can I ask -- add
19 one more. On that point, I was interested in
20 that, that question, and I brought it up last time
21 about the greater transparency, and I guess I was
22 looking at it from both the discussion so the
23 ratepayers, the electric customers are aware of,
227
1 you know, the value of the program, but I also
2 wanted to make sure, I was interested in the
3 ratepayers also knew that their money was being
4 contributed to this, and also the concern that a
5 lot of times when you go to the websites or you
6 listen to the radio spots or other ads, it appears
7 as if the money is coming from the utility, and I
8 thought that it could be helpful if customers,
9 electricity customers and gas customers knew that
10 they were actually contributing and paying for
11 these programs and maybe that would also make them
12 more inclined to participate and be better
13 informed.
14 So I just wanted to make that point.
15 It looked like part of the work group
16 recommendation acknowledges the, yes, let's inform
17 customers about the benefits program, but I think
18 the other part of that, I was trying to bring to
19 the discussion last time, was the -- making sure
20 that they had the full picture, and perhaps this
21 may be another place where rather than directing
22 customers to the utilities, maybe MEA should have
23 the website and then they can better inform the
228
1 public as to what this program is about.
2 And again, make it clear that this is a
3 program that Maryland electric customers and gas
4 customers are paying for, not the electric -- not
5 the utilities. Anyway, I just wanted to --
6 DR. TUNG: I think that's kind of a
7 common across the board issue that I've seen on
8 not just this program but other programs, you
9 know, there's a lot of money from the state going
10 into some of these programs, energy efficiency
11 programs, renewable energy programs, and the state
12 doesn't get any credit whatsoever for, you know,
13 letting the taxpayers know this is, you know, your
14 tax dollars that are helping out here.
15 And I think people like to know that.
16 You know, you pay your tax bill and you watch your
17 paycheck go down and it's kind of nice for people
18 to know where the tax dollars are going and in
19 this case where their utility dollars are going.
20 COMMISSIONER RICHARD: It's a
21 compulsory fee.
22 DR. TUNG: Yes.
23 COMMISSIONER RICHARD: It has value,
229
1 but I think customers should be informed where
2 it's coming from. Thank you.
3 DR. TUNG: I agree. Thank you.
4 CHAIRMAN HUGHES: Thank you Dr. Tung,
5 Ms. Weaver. We appreciate your presentations
6 today.
7 Last panel for the day will be our
8 second utility, SMECO.
9 MR. HUGHES: All right.
10 MS. HERMAN: Good afternoon. I'm Mindy
11 Herman. I'm here for Southern Maryland
12 Cooperative today. Next to me is Jeff Shaw, the
13 vice president of distribution energy and
14 sustainability, and he's going to walk through a
15 summary of SMECO's comments and answer any
16 questions that you have.
17 MR. SHAW: Good afternoon, Chairman and
18 Commissioners. It's been a while since I've been
19 before you, so it's good to be back and back doing
20 some EmPOWER-related business. So, thank you.
21 I also want to thank you this morning
22 for kicking off with the notice about the budget
23 modifications and how we are to proceed going
230
1 forward as utilities. It gives us some clarity on
2 what we need to do going forward, and we
3 appreciate that.
4 So, with that, I'll go ahead and dig
5 in. We've heard this morning from Staff, the
6 Office of People's Counsel, and even Commissioner
7 Mills was asking about what SMECO was looking like
8 relative to the other utilities and how we are
9 behind.
10 We are behind. There's some of the
11 programs before you and where we are lacking. One
12 of the other programs that is not up there, but is
13 under our EmPOWER goal for us, is our conservation
14 voltage reduction. That is the program that we
15 were going to release and be out there with our
16 AMI installation.
17 Perhaps you remember under a different
18 case jacket that we are behind for our AMI
19 installation, and as that comes on board and gets
20 further down the line, that will give us the tools
21 necessary to do some of that conservation voltage
22 reduction end of the line measurements that we
23 need to do our CVR program.
231
1 So, we hope in '17 going forward with
2 further deployment of AMI that we can deliver more
3 of our CVR savings that we are not showing today
4 because we just simply don't have it.
5 CHAIRMAN HUGHES: Mr. Shaw, how much
6 rollout will you need of AMI before you can begin
7 your CVR program?
8 MR. SHAW: I have had those discussions
9 with engineering. They're looking to a third to
10 maybe half of that AMI installation before we can
11 do some serious measurement of that CVR project.
12 So, that would look like middle '17.
13 So, going forward with this as well, I
14 plan just to go program by program and talk a
15 little bit about the deficiencies that are before
16 us and what we're planning to do to take care of
17 those deficiencies.
18 Lighting, as you saw earlier, we are
19 behind in lighting. We've heard some comments
20 today from intervenors and stakeholders about food
21 banks. That's something that SMECO has done in
22 the past and we can commit to doing going in the
23 forward.
232
1 The independent hardware stores. For
2 SMECO, that's necessary for us. We currently do
3 that. We do not have a lot of big box retail
4 throughout our service territory, and we're doing
5 our best to deliver that mechanism through that
6 retail market chain, but it doesn't always deliver
7 what we think it should and of course we've missed
8 our goals with that.
9 So we'll continue going forward with
10 that. And I believe it was the Office of People's
11 Counsel that took us way back into the early years
12 of EmPOWER where we did lighting coupons and
13 that's where we started with a lot of this and we
14 still have that in some mom and pop retail
15 applications where it's still necessary. They
16 don't have the back office necessary to deliver
17 the savings that we need through the computers, so
18 we still deal with some actual coupons.
19 Appliances. No surprises there. When
20 the federal standards changed, that really put us
21 behind. We had a great reduction in the amount
22 that we were incenting or rebating, and then the
23 manufacturers still need to get up to speed in
233
1 their delivery of those necessary appliances that
2 we can rebate.
3 One thing we are a little excited about
4 is our online store. We're a little unique with
5 that versus some of the other utilities, that we
6 do deliver some pretty simple measures through our
7 online store. That's CFLs, LEDs, some smart strip
8 shower heads, aerators, and we're entertaining
9 thoughts of taking that broader and deeper into
10 the appliances and seeing what we can offer as
11 well. That's one way we are a little unique in
12 that.
13 Commission O'Donnell, you've been
14 asking a lot today about the heat pump water
15 heaters. We have had decent success with those.
16 In our first quarter of last year, the first two
17 quarters of last year, we delivered 32 of those,
18 and then the first quarter of this year we
19 delivered 84. So, we have seen an up-take in the
20 heat pump water heaters.
21 A lot of people spoke earlier today
22 about them. They are unique. They do need
23 certain applications and installation areas. It's
234
1 not a one-size-fits-all and necessary for -- you
2 heard them talk about the stripping of the heat
3 out of the basements, and people could feel
4 cooler. I'll give you a counter-argument to that
5 that maybe that's a benefit come some of the
6 summertime as well that maybe you do have some
7 cooling aspects that way as well.
8 It's a give and take. We're working
9 our way through it. It's not perfect yet. We get
10 a lot of savings from this measure. This is the
11 measure that we -- we have a lot of savings in our
12 appliance program tied up into this and we'd like
13 to see that continue going forward.
14 Appliance recycling. No surprises
15 there. The entire state of Maryland felt this
16 problem in 2015, and into early 2016, where the
17 vendor that handled the state went out of
18 business, and we had to scurry to get around that
19 and get stood back up.
20 We are stood back up. Everyone is
21 stood back up. The vendor we're currently
22 utilizing, as you can see there, is ARCA, and we
23 are going to struggle to make up the difference of
235
1 that lost recycling opportunity for the better
2 part of six to eight months.
3 That's before us. We know it. We're
4 trying to get after it now through marketing
5 application, but we've got to play some catchup.
6 Just think of it like a program that possibly ran
7 out of money, and you've heard all of the
8 stakeholders talk today about what it's like for a
9 program to start and stop, well, this one did, and
10 we're playing some catchup with this.
11 There was some comments in, not today,
12 but I believe they were made in an Office of
13 People's Counsel's written comments about doing
14 recycling events. SMECO did one not in the first
15 part of 2016, but we did one here in the latter
16 half. We had great success with it. It was even
17 the weekend of hurricane Matthew.
18 Even though Maryland didn't feel the
19 brunt of the hurricane, we had the event scheduled
20 as a pickup event in Southern Maryland and we went
21 ahead and went through with it, and the customers
22 still showed up to deliver their appliances for us
23 to recycle even in the midst of some pretty heavy
236
1 rains.
2 Home Performance with Energy Star.
3 Again, a lot talked about this today, and it's
4 been talked a bit about from The Alliance, it's
5 been talked about from Efficiency First. This is
6 part of that market transformation.
7 Again, I started with EmPOWER back in
8 2008-2009, so I've seen it from its infancy up to
9 what it is today. A lot of these programs are
10 market transformative, this being one. We
11 struggled with it. We struggled over the years to
12 deliver it.
13 One of the good things we like to
14 report against this is for the first time ever,
15 SMECO delivered a TRC above 1 for the Home
16 Performance with Energy Star program, which we're
17 pretty proud of. We may not deliver a lot of
18 savings, but what savings we are delivering are
19 being done in a cost effective manner, so we're
20 pretty proud of that.
21 Assisted Home Performance, that was a
22 program -- did you have a question?
23 CHAIRMAN HUGHES: I did, actually. On
237
1 Home Performance, so you heard our discussions
2 about the performance-based proposal, and now that
3 I think even with SMECO, we're seeing some
4 positive trends with our program; do you have any
5 concerns that, similar to what we've heard about
6 implementation? I mean, can we -- can we flip a
7 switch in December on this and start January 1
8 with performance-based incentives, or is this
9 going to take some time to ramp up at the
10 Commission?
11 MR. SHAW: I think it's going to take
12 some time, and I believe the gentleman from
13 GreeNEWit talked about it, his name escapes me
14 right now, from Efficiency First, he was talking
15 about that 90-day swing period. I don't know if
16 it's necessarily going to take 90 days but there
17 will be a period of transition for us necessary to
18 do that.
19 But what we have done in the past, and
20 maybe it's not as drastic as what we're asking you
21 to do today, but in the past, we have made changes
22 to this program for that prioritized list of
23 measures, and a couple of other changes that
238
1 you've allowed us to do and I think we have done
2 pretty seamlessly. So we'll do our best effort.
3 I can't give you an exact day count what it would
4 take us to get there, but I can inquire.
5 CHAIRMAN HUGHES: Would it be better to
6 allow utilities to permit companies to take
7 advantage of either/or, you know, either the
8 performance or the normal benefit incentive for a
9 short period of time, or just delay the whole
10 implementation by a period?
11 MR. SHAW: I would like to offer, and
12 maybe the other utilities coming tomorrow will
13 disagree with me, but from my experience with it,
14 perhaps a delay of the implementation, but we do
15 notify the contractors that this is the way we're
16 going forward, and you have up until day X to take
17 care of what you need to take care of under the
18 old system, and from day X going forward, whatever
19 that day may be, if that is sometime in late
20 January, then we're going forward with the new
21 performance mechanism.
22 CHAIRMAN HUGHES: Okay. Well, since I
23 got you here, what should your -- in your view,
239
1 what should day X be? Should it be a three-month
2 period, one-month period? We don't want to be
3 too -- too conservative and then --
4 MR. SHAW: I don't, and I'll say a lot
5 of that also depends on when the order could come
6 out --
7 CHAIRMAN HUGHES: Okay.
8 MR. SHAW: -- relative to this.
9 Because sometimes, if you guys are very quick with
10 this order, and we can carry some of this momentum
11 we've got going forward and a lot of good works,
12 you know, depending on that, I could commit to --
13 for it to happen in the first quarter of 2017 and
14 possibly towards the end of January. I don't hear
15 any groans and moans behind me, so --
16 CHAIRMAN HUGHES: I appreciate your
17 input, it's just one company, but that's helpful.
18 MR. SHAW: Yep.
19 CHAIRMAN HUGHES: I'll ask the other
20 utilities to give us their insights when they come
21 up with their presentations.
22 COMMISSIONER O'DONNELL: Can I follow
23 up.
240
1 CHAIRMAN HUGHES: Yes, sir.
2 COMMISSIONER O'DONNELL: Mr. Shaw,
3 thank you for being here. I wanted to follow up
4 on how performance, the performance-based program
5 may affect the appliance segment of EmPOWER and
6 then I have a specific question.
7 MR. SHAW: The performance under the
8 Home Performance?
9 COMMISSIONER O'DONNELL: Yeah.
10 MR. SHAW: That would have zero impact
11 under the appliance program.
12 COMMISSIONER O'DONNELL: You don't
13 think it will help incent additional appliance
14 sales and incentives?
15 MR. SHAW: There could be the
16 opportunity during the discussion with the Home
17 Performance audit that they could note older
18 appliances and then drive participation into that
19 appliance program. I mean, you would see it in
20 that manner, yes, but as a measurable effect, I
21 would --
22 COMMISSIONER O'DONNELL: So, I noticed
23 you offered heat pump water heaters under a
241
1 limited time offer additional incentive programs.
2 You have three tranches of that. In your first
3 tranche, based on your submittal report, you have
4 15 additional sales but zero came from
5 contractors' reported sales and 15 came from
6 self-help homeowners. I'm wondering why the
7 disconnect with contractor sales. What do you
8 think is going on there?
9 MR. SHAW: I think you caught a little
10 glimpse of that earlier today when Mr. Giangrandi
11 was up here and he is in the business and doesn't
12 promote it heavily. We as utilities and
13 specifically SMECO has struggled mightily in
14 finding that delivery mechanism that is
15 appropriate for the heat pump hot water heater.
16 Just the name of it alone, heat pump
17 hot water heater, is it HVAC, is it a plumber's
18 job, is it fish or fowl. We are still struggling
19 with that as well, so we're trying to find how
20 best to deliver that and haven't found it yet.
21 We have been through HVAC world, we
22 have been with the plumbing contractors, and we've
23 even reached over to the warehouse distribution
242
1 company, the Thomas Somervilles, to see if that's
2 the proper, the Northeasterns, whichever, the
3 Fergusons, how best to furnish it that way. They
4 are supplying the plumbers so maybe that will work
5 for us.
6 COMMISSIONER O'DONNELL: Thank you.
7 MR. SHAW: Then the last one on this
8 one is the Assisted Home Performance. This again
9 is another unique program to SMECO where we were
10 trying our best to find those customers that are
11 not the low income that could be served by the
12 DHCD, but yet those people that are just above
13 that level, and not a lot of great success with
14 this program. We still are keeping after it. We
15 do lots of marketing around this, and I wish I had
16 an answer for you as why because I see some raised
17 eyebrows. I just don't have it at this time as to
18 why people aren't coming into this program to
19 participate.
20 This is one program that we even offer
21 financing underneath of, and we have yet for
22 people to take advantage -- full advantage of this
23 program.
243
1 Energy Star for new homes has been
2 wildly successful for us. This is one program
3 that's been successful for us since the inception
4 of EmPOWER. This is one program that SMECO kept
5 through the '90s when EmPOWER was not around but
6 it's important to the co-op and what we need to
7 deliver to our customer members who were asking
8 for these types of programs.
9 So we've had this program in our suite
10 of programs for the better part of 20-plus years.
11 It's an easy one for us to manage.
12 HVAC, you've heard a lot of discussion
13 around. You've heard we're in for a budget
14 reallocation. We're seeking some additional funds
15 to help cover what we've exhausted to this date.
16 We've reduced budgets, and it speaks for itself,
17 we'll be requesting monies out of our multifamily
18 program to help us continue this going forward.
19 Home energy reports. A little bit of
20 surprise to us coming through the first half of
21 this year. We are slightly behind. I'm going to
22 put a lot of that on the kind of the warm winter
23 we had and the very seasonal spring. Not taking
244
1 into account the rather hot July and August that
2 we've had, and I've seen preliminary results
3 coming out of those months and they're looking
4 quite good coming from this program.
5 Today you've heard a lot of
6 conversation and the Office of People's Counsel
7 talked about this, smart thermostat, this is one
8 program we are piloting under our PIDD budget. We
9 have had great success with what we've been doing
10 with it. We have big plans coming for it in our
11 '18 to '19 plans. A lot more around that. But
12 we're very excited with what that program has to
13 offer, and you heard some of the discussion today
14 in that and OPC was making reference I believe to
15 BGE when they were talking about it.
16 But we have one, too. We think we're
17 going to be able to deliver that smart thermostat
18 through many different delivery channels going
19 forward.
20 Our commercial and industrial programs.
21 They're doing okay. I mean, there is a big zero
22 there for the multifamily. I can't hide that. We
23 have not been able to deliver. SMECO's service
245
1 territory is not inundated with the multifamily
2 arena. We do have some. What we do have, we have
3 delivered the Quick Home Energy Checkup previous
4 to the multifamily programs being in existence.
5 So we've kind of serviced that
6 multifamily piece, that entry suite to the
7 multifamily with the Quick Home. We have gotten a
8 few here recently to take advantage. And I just
9 want to step you back a little bit in our
10 multifamily. We had certain tierings that went
11 through our multifamily program. So we do have
12 some coming through our tier 4 and some of the
13 energy audits that we'll be able to claim savings
14 going forward but not wildly successful for us.
15 COMMISSIONER O'DONNELL: Quick
16 question.
17 MR. SHAW: Yes.
18 COMMISSIONER O'DONNELL: Did SMECO ever
19 request a kind of a recognition in that goal area,
20 that the region -- the service territory has a
21 dearth of multifamily housing and doesn't have a
22 lot of it?
23 MR. SHAW: We could have done a better
246
1 job with that. When the plans were being filed
2 for our current three-year set of programs, there
3 was a lot of conversation around consistency and
4 how the delivery mechanism of the contractors need
5 to have consistency across the state.
6 We probably should have set our goals
7 differently, more so than saying we're going to
8 stay out of the multifamily arena. We should have
9 had a much lower goal than we did and dealt with
10 it in that manner, so a lot of that is on us.
11 COMMISSIONER O'DONNELL: What you say
12 is certainly true. There's not a lot there, so it
13 doesn't give you a lot to work with.
14 MR. SHAW: It does not.
15 COMMISSIONER O'DONNELL: I appreciate
16 that. Thank you.
17 MR. SHAW: Summing up, some of our
18 commercial and industrial, our business solutions
19 or our prescriptive program has been successful.
20 We have been before you for budget amendments that
21 you have allowed for us. Our budget reallocations
22 for our prescriptive. Thank you for those because
23 that's kept this program up and running and we've
247
1 been able to deliver.
2 Small business is the same. Doing
3 okay. Could be better, but we're doing okay with
4 that one. And again, that was a program a while
5 ago where you allowed us to have a budget
6 reallocation.
7 And then the multifamily, we just spoke
8 about, and then the midstream lighting is the
9 program that we had high aspirations for. We have
10 been unable to deliver that because it's retail
11 applications that we thought were going to come
12 through for us, haven't been able to deliver, so
13 we were able to fund those budget reallocations
14 for the business solutions and small business by
15 borrowing those monies from the midstream and
16 taking those over to the business solutions and
17 small business programs.
18 As we talked a little bit ago, before
19 you in our filings for a budget reallocation and
20 our budget request to repurpose monies coming out
21 of the residential multifamily, and taking those
22 over into the HVAC and the Quick Home Energy
23 Checkup to allow us to continue with those
248
1 programs and deliver the savings necessary.
2 CHAIRMAN HUGHES: Mr. Shaw, what's your
3 time frame on that? Are these programs ready to
4 spend the money today?
5 MR. SHAW: The HVAC is very close to
6 running out of money today. The Quick Home Energy
7 Checkup, we do have some wiggle room there, and we
8 do have time. But the HVAC, and I don't like to
9 go before you and say I need that ordered today or
10 tomorrow, but since you asked, it is out of time.
11 CHAIRMAN HUGHES: All right. Thank
12 you.
13 COMMISSIONER MILLS: With these
14 changes, do you expect to be able to meet your
15 goals of -- going back to my earlier question.
16 MR. SHAW: That's a great question. I
17 knew you were going to ask that one.
18 Probably the answer to that is not
19 completely. We did have some aspirational goals
20 in certain programs that we will not meet, and by
21 not meeting those, we probably will fall short.
22 That doesn't mean we're going to stop.
23 We have been before the Commission -- the
249
1 Commission before, 2009, 2010, where SMECO
2 struggled mightily in the initial onset of EmPOWER
3 to meet goals. But the good story out of that is
4 we met those goals, and exceeded those goals. So
5 we do have a history. We'll try our best. I know
6 you want to hear more than we'll try our best, but
7 that's what I've got to offer right now.
8 COMMISSIONER MILLS: But these shifts
9 in budgets should help your ultimate outcome given
10 that --
11 MR. SHAW: It will help with the HVAC
12 because if we don't get those reallocated monies,
13 we will have to stop the program.
14 COMMISSIONER MILLS: Okay.
15 MR. SHAW: Then lastly, we've had a lot
16 of talk today around the work groups and what the
17 work groups have brought before you. SMECO has
18 been a participant in the work groups. We're part
19 of the consensus in all of these.
20 I also wanted to mention cost
21 effectiveness which has been talked a lot about
22 today. Early on, SMECO was operating cost
23 effective residential, cost effective commercial
250
1 programs and overall programs, so we're very proud
2 of that.
3 A couple other notes before I turn
4 myself back over to you for some more questions.
5 I want to applaud the Office of People's Counsel
6 for today bringing up the need for a discussion as
7 it relates to demand response. There have been
8 changes in the PJM market and the utilities, and
9 we need to sit down as a group and the
10 stakeholders to address those changes in the PJM
11 markets and how we are as utilities going to value
12 our current demand response programs going
13 forward, because that landscape has changed, and
14 we will need to address those. So thank you for
15 the Office of People's Counsel bringing that up.
16 Washington Gas, and Mr. Skulley brought
17 up, and, you know, when I first heard what they
18 had done and filed for some programmatic changes
19 out into 2020, I was like, wow, that's pretty
20 bold. But as I sit here and listen to him explain
21 it and went through the rationale behind it, I
22 applaud them for that, because it will help the
23 electric utilities where Washington Gas is a part
251
1 of us, and SMECO was there, even though they're
2 small pockets. Because it will help us develop
3 those budgets ourselves going forward in those '18
4 plans. Maybe some monies that we don't have to
5 then look for for some gas product that we
6 currently utilize, and maybe Washington Gas is
7 able to help us offset some of those budgets that
8 we're thinking we may need to look at going
9 forward. So, I applaud them for that.
10 Commissioner Richard, you've been
11 asking a lot today about the surcharge and how we
12 look at the surcharge and amortizing that. That's
13 something we can look at. I can go back to my
14 rates group who is currently developing our
15 surcharge filing that's due by the end of the
16 month that we need to get before the Commission
17 ahead of 2017 to get that in place and I can ask
18 them to give you that.
19 I will preface, there will be some
20 sticker shock involved in that because we're
21 taking plans that were amortized and putting them
22 into a single year. But that's not new to us
23 because that's how we currently handle our demand
252
1 response program. For us, that is not amortizing
2 that's done on a year-to-year true-up basis. So
3 we do have history with it. We could get it done
4 for you but it will be a little different than it
5 exists today.
6 COMMISSIONER RICHARD: According to the
7 financials that I have, you don't take any return.
8 You don't -- from your customers.
9 MR. SHAW: We do not.
10 COMMISSIONER RICHARD: So there's not
11 that part of the sticker shock.
12 MR. SHAW: Yeah. With that, I'm good,
13 and here for any questions that you may have.
14 CHAIRMAN HUGHES: All right, thank you,
15 Mr. Shaw, for answering our questions as we have
16 gone along. Any additional questions for SMECO?
17 If not, thank you for your
18 presentation. Look forward to hearing your
19 results for the next two quarters. Good luck for
20 the rest of the year. Mr. Mosier, anything you
21 would like to add.
22 MR. MOSIER: No additional comments.
23 Just here to answer your questions on Staff's
253
1 SMECO comments.
2 CHAIRMAN HUGHES: Just to confirm.
3 Staff is supportive of SMECO's proposed budget for
4 adjustments.
5 MR. MOSIER: We are.
6 CHAIRMAN HUGHES: Any questions for
7 Staff?
8 COMMISSIONER O'DONNELL: Budget
9 reallocation.
10 CHAIRMAN HUGHES: Budget reallocation
11 adjustments. Thank you for that.
12 I want to thank all of our participants
13 today. It's been -- seems like it's been a long
14 day but we're getting out at 4:30. That's a good
15 thing. We'll be back tomorrow at 1:00. We'll
16 begin with the Department of Housing and Community
17 Development. Our Staff will be here. Then after
18 that, we will go to Delmarva Power & Light and
19 PEPCO followed by Potomac Edison, and last will be
20 Baltimore Gas & Electric, and we'll see, I think
21 we'll be able to finish tomorrow. Thanks everyone
22 for a good day's work. See you tomorrow.
23 (Proceedings adjourned at 4:30 p.m.)
254
1 REPORTER'S CERTIFICATE
2 - - - - - - - - - - - - - - - - - :
IN THE MATTER OF THE POTOMAC :
3 EDISON COMPANY D/B/A ALLEGHENY :
POWER'S ENERGY EFFICIENCY, : CASE NO. 9153
4 CONSERVATION AND DEMAND RESPONSE :
PROGRAMS PURSUANT TO THE :
5 EMPOWER MARYLAND ENERGY :
EFFICIENCY ACT OF 2008 :
6 - - - - - - - - - - - - - - - - - :
IN THE MATTER OF BALTIMORE GAS :
7 AND ELECTRIC COMPANY'S ENERGY :
EFFICIENCY, CONSERVATION AND : CASE NO. 9154
8 DEMAND RESPONSE PROGRAMS :
PURSUANT TO THE EMPOWER MARYLAND :
9 ENERGY EFFICIENCY ACT OF 2008 :
- - - - - - - - - - - - - - - - - :
10 IN THE MATTER OF POTOMAC ELECTRIC :
POWER COMPANY'S ENERGY EFFICIENCY,:
11 CONSERVATION AND DEMAND RESPONSE : CASE NO. 9155
PROGRAMS PURSUANT TO THE EMPOWER :
12 MARYLAND ENERGY EFFICIENCY ACT :
OF 2008 :
13 - - - - - - - - - - - - - - - - - :
IN THE MATTER OF DELMARVA POWER & :
14 LIGHT COMPANY'S ENERGY EFFICIENCY,:
CONSERVATION AND DEMAND RESPONSE : CASE NO. 9156
15 PROGRAMS PURSUANT TO THE EMPOWER :
MARYLAND ENERGY EFFICIENCY ACT :
16 OF 2008 :
- - - - - - - - - - - - - - - - - :
17 IN THE MATTER OF SOUTHERN MARYLAND:
ELECTRIC COOPERATIVE'S ENERGY :
18 EFFICIENCY, CONSERVATION AND :
DEMAND RESPONSE PROGRAMS PURSUANT : CASE NO. 9157
19 TO THE EMPOWER MARYLAND ENERGY :
EFFICIENCY ACT OF 2008 :
20 - - - - - - - - - - - - - - - - - :
IN THE MATTER OF WASHINGTON GAS :
21 LIGHT COMPANY'S ENERGY EFFICIENCY,:
CONSERVATION AND DEMAND RESPONSE : CASE NO. 9362
22 PROGRAMS PURSUANT TO THE EMPOWER :
MARYLAND ENERGY EFFICIENCY ACT OF :
23 2008 :
- - - - - - - - - - - - - - - - - :
255
1 LOCATION OF HEARING: Baltimore, Maryland
2
3 DATE OF HEARING: Tuesday, October 25, 2016
4
5 I hereby certify that the foregoing
6 proceeding was reported by me, and that the
7 transcript is true, accurate and complete, to
8 the best of my knowledge and belief.
9
10
11 ______________________
12 Court Reporter
13
14
15
16
17
18
19
20
21
22
23
256
1 INDEX OF PRESENTATIONS
2 STAFF 11
3 THE ALLIANCE 30
4 MR. MCGEE 30
5 MR. GIANGRANDI 38
6 MR. SCHMIDT 46
7 EFFICIENCY FIRST 52
8 MONTGOMERY COUNTY 61
9 OPC 66
10 MARYLAND ENERGY EFFICIENCY ADVOCATES 129
11 WGL 151
12 STAFF COMMENTS ON WGL's PROPOSALS 210
13 MEA 213
14 SMECO 229
15
16
17
18
19
20
21
22
23
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