2a
- What is a "Standard Offer"?
A
Standard Offer (S.O.) means the opportunity to save energy
in each customer category (for example, residential, small
business commercial/industrial, or non-profit institutions
like schools, hospitals and government buildings) is offered
under the same terms and conditions to all applicants
with proper licenses and a clean business record. Selection
is first-come, first-served. Payments for energy savings
in each customer class are based on "avoided costs"
of power plant construction and fuel over a certain period
of time (for example, 10 years). Since Energy Efficiency
(EE) is far less costly than building and running power
plants, EE payments can be approx. 20% of avoided costs
for commercial/industrial, 30%-small businesses, 40%-residential
and 50%-hard-to-reach.
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2b
- What are the major differences between the Standard Offer
process and the current selection procedure?
The
current California system already uses a Standard Offer
procedure for most large commercial/industrial programs.
For small commercial and residential programs however,
applicants must submit complex proposals that are selected
or rejected by CPUC staff in a secret process where subjective
judgments appear to carry more weight than stated criteria.
There is only one opportunity to apply every two years,
and the selection process takes several months.
The
CA Standard Offer provides a "rolling" selection,
where applicants may apply at any time, as long as there
is still money available, and there is a quick turnaround
of about two weeks between submitting an application and
getting a contract. Applicants may only hold one contract
at a time, and are allowed to reserve no more than 20%
of the funds in each category (such as residential, small
business, non-profit institutions or commercial) under
each administrator. The pot is replenished every year.
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2c
- What are the major differences between the administrative
framework of the California Standard Offer proposal vs.
the current framework or other proposals?
Currently,
the CPUC reviews proposals and selects programs, but the
utilities are day-to-day administrators of all programs,
including their own programs and those with which they
compete. The utilities hire measurement contractors and
oversee CALMAC (California Measurement Advisory Council).
The Joint Proposal by the utilities and NRDC keeps this
basic structure but also puts the utilities in charge
of the selection process and removes most CPUC oversight.
The TURN proposal would have one all-powerful Program
Administrator who would be in charge of selection, administration
and some aspects of energy-savings measurement. TURN has
signed on to an NRDC/utility proposal for a measurement
system controlled largely by utilities, along with a high-level
statewide Advisory Board that includes representatives
of State energy agencies and utilities along with a few
public interest representatives who would receive payment
for their participation. Both the NRDC/utility and TURN
proposals envision "shareholders incentives" that provide
extra profits for utility energy efficiency programs.
The
California Standard Offer (CSO) proposal eliminates conflicts
of interest in two ways: by requiring entities to choose
only one role: Administration, Implementation or Measurement;
and by using a Standard Offer process for almost all programs,
thus eliminating any possibility of favoritism. CSO guarantees
energy will be saved according to implementers' projections
or the money will be returned to the pot; with other proposals,
implementers still receive most of their funds even if
their programs do not meet their targets.
The
CSO features a single, independent System Director that:
-
conducts a yearly process to select Administrators and
review their performance
-
guarantees robust, independent energy savings measurement
by licensing and hiring energy-efficiency measurement
contractors for all programs. The System Director also
convenes a committee to oversee statewide energy efficiency
measurement studies and protocols, including updates
to the database of "deemed savings" that is used to
estimate energy savings from standard measures (for
example, different types of light bulbs installed in
residential or commercial settings)
- provides
for statewide "information/education" programs
and a small number of "pilot" or "market
transformation" programs selected by a Special
Administrator using methods similar to the current system.
The
California Standard Offer envisions several different
types of Administrators. By law, Community Choice Aggregators
(cities or counties) may apply to administer EE programs
in their territories. Similarly, Regional Energy Office
could apply to be Administrators. The System Director
may decide that one non-profit consultant should administer
all other programs in the rest of the State, or divide
them up in different ways. For example, there could be
a separate Administrator for each utility territory, or
a separate Administer for different programs in each customer
category. Alternatively, there could be more than one
Administrator in each territory or each category, so that
the System Director could evaluate the success of different
approaches.
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3
- Does the Standard Offer lower administrative costs?
Texas
administrative costs are capped at 10% of the total budget.
(The original plan was to drop that to 5% after two years,
but IOU administrators got that changed to 10% forever.)
In Texas there are just two categories - administration
and implementation. Administration includes EM&V (including
verification inspections), Marketing & Outreach, and
rebate processing.
In
California, there are four categories of expenses - administration,
implementation, EM&V and Marketing & Outreach. “Implementation
costs include a large number of things that are really
admin costs - such as, rebate processing and verification
inspections.
Currently
CA admin costs are capped at 7%. However, to compare apples
to apples with admin in Texas you have to add EM&V (currently
3%), statewide marketing, information-only programs, education
and training centers (e.g. Pacific Energy Center, Stockton
training & Food Service Technology Research Center), and
rebate processing, etc. Longtime EE consultant Steve Schiller
stated to WEM 5/24/04: I'd like to know someday what admin
costs are in CA. The polite way to say it - IOUs should
use a sharper pencil.
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4a
- Does the Standard Offer maximize EE investments?
Dollar
for dollar, California IOU programs are saving 40% less
energy capacity (kW) and 17% less kilowatt-hours than
current Texas programs, because of CA's high admin costs,
and because many IOU programs are not cost-effective.
Applying the results of the Texas program to California,
without even considering potential economies of scale
of CA's much larger budget, and even excluding the gas
savings benefits, we are looking at electricity savings
of 1,337 MW and 4,543 Gigawatt/hrs per year, and bill
reductions of almost $2.3 billion, with half going to
Hard-to-Reach, Residential and Small Commercial customers.
The
Standard Offer model intrinsically lowers administrative
costs and provides more money for energy-saving activities,
because there is no need to micromanage programs. This
creates a tremendous advantage in maximizing energy efficiency
investments.
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4b
- Does the Standard Offer facilitate Integrated Resources
Planning?
IOUs
and their allies NRDC et al. tout IOU administration because
of its ability to provide for integrated resource planning
and portfolio management. However, ICF recognizes that
it is also a strength of the Standard Offer because of
the high correlation and predictability of savings and
budgets to allow for the accurate projections of energy
savings that are needed for procurement planning.
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4c
- Do other models of EE administrative structure eliminate
conflicts of interest?
Utilities
have a conflict of interest when they get to choose between
their own resources and those of potential competitors.
They have the additional conflict that a truly effective
EE program is counter to the financial and cultural interests
of the utility.
This
issue has long been recognized. The Commission tried a
number of ways to mitigate the problem, before it saw
the option of third party programs. These included very
large shareholder incentives, (very small) penalties,
lost revenue recoveries, stricter oversight, Commission
control of EM&V, etc. However, the Commission, beginning
in 1997 (D.97-02-014) started to reject such devices as
cumbersome and undesirable. D.99-03-056 stated that continuing
evaluation of the incentive levels and performance basis
require "an enormous commitment of time and resources".
In the meantime, to reduce the potential conflicts between
the utilities' role in the newly competitive energy services
industry and their continued role as interim program administrators,
the Commission directed utilities to transfer program
implementation activities away from themselves in a competitive
bidding process.
The
Yesterday group (including IOUs) who support a return
to utility administration, do recognize some conflicts.
They have devised all sorts of band-aids in the hope of
overcoming them, for example reviving shareholder incentives
and penalties, having a "non-financially interested
parties" committee, having an "Independent Observer",
etc.
These
are unlikely to be any more effective than the Commission's
past efforts. They may be much less effective if utility
administration is placed even more firmly in the hands
of utilities than it has been in the past few years.
By
making the selection process more open and placing it
into the hands of the CPUC itself, the Commission removed
many of the conflicts of interest inherent in utility
administration and in having the same party responsible
for both implementation and administration. The Commission's
Energy Division has also been providing a vital level
of oversight in many administrative functions, including
producing the ground-breaking EE Policy Manual which the
Commission has used since 2001 to guide its selection
process. The Manual removed the automatic presumption
of utility preferences. Unfortunately, what we see as
an excessive and unwarranted concern over possible program
disruptions has prevented full implementation of the EE
Policy Manual procedures. Now the IOU/NRDC gang states
its intention to completely overhaul the manual if IOUs
take over as administrators.
The
TURN group's proposal for independent administration goes
a long way to controlling utility conflicts of interest.
However, that proposal leaves control of EM&V largely
with the utilities. The EM&V component needs to be securely
in neutral hands, including the Committee overseeing statewide
studies and EM&V contractors (the role of CALMAC).
There
are serious conflicts of interest currently in EM&V.
Contractors are paid by utilities to measure utility programs
and also hired by utilities to perform statewide studies
on which those measurements are based. These conflicts
have been less visible than IOU conflicts, but they are
very serious matters, because they threaten the reliability
of EE as a resource.
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5
- Does the California Standard Offer program eliminate
conflicts of interest?
The
California Coalition's Standard Offer Program is the only
model that eliminates conflicts of interest in both the
utilities and EM&V contractors, even though it does not
necessarily ban IOUs from administration.
The
program has an overall System Director, either the CPUC
or a neutral (non-utility) entity under contract to the
Commission, that handles many of the high-level goal-setting
and supervision tasks. Next, participants are required
to select only one role: administration/ implementation/
or EM&V. An EM&V Committee is placed directly
under the System Director, and charged with managing all
program measurement and statewide studies, as well as
licensing measurement contractors.
Most
importantly, the S.O. is a way of truly ending IOU monopoly
control over EE without having to eliminate them from
the business. The magic elements are:
- Standard
Offer programs only pay for saving energy. With one
stroke, this eliminates the utilities' incentive to
overspend on administrative costs, and to minimize the
energy-savings they achieve so as not to reduce their
revenues and stock prices.
- The
California Standard Offer program doesn't replace the
IOUs' monopoly over EE with another monopoly -
†an all-powerful central administrator
or multiple administrators who may or may not be utility
surrogates or highly susceptible to IOU pressure. Instead,
it places program selection in the hands of the Market,
and levels the playing field for all participants. This
is why it is possible to eliminate the impacts of IOU
conflicts of interest while not necessarily banning
them as administrators.
- The
California Standard Offer program features multiple
administrators. This is the only model that complies
with the Community Choice law, which provides that "any
party may apply [to the CPUC] to administer cost-effective
energy efficiency programs". This enables Community
Choice cities to bypass utilities in both procurement
and energy efficiency, allowing customers to design
a completely integrated resource portfolio. Customers
are the only entities who have no conflicts of interest,
and who have the most incentive to eliminate conflicts
of interest because they are the ones who suffer the
impacts of those conflicts.
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6a
- Is S.O. effective with Hard-to-Reach and other pockets
of untapped savings?
American
Synergy and NAESCO express concern about the need to
locate and capture "pockets of untapped cost-effective
savings" and the need for advisory committees to "prioritize"
and "identify [areas] needing innovation". They would
then conduct competitive solicitations to determine
which implementers the IOUs believe would offer the
best program that might reach these targets.
With
a Standard Offer program, anyone
who identifies a "pocket of untapped cost-effective
savings" could immediately design and implement
a Standard Offer program that would capture those savings.
If they are correct, they will receive the proper incentives.
And if there are lesser savings or their efforts are
unsuccessful, they will receive incentives in proportion
to their success.
The
RFP process recommended by NAESCO/American Synergy/IOUs
would have the ratepayers pay for the "innovative programs"
believed to be effective, regardless of their ultimate
success. Under the Standard Offer program ratepayers
pay only to the extent that programs deliver the promised
savings. This transfers the risk to those parties that
can best control it - the implementers. And it transfers
the risk from the parties that can least control it
- the ratepayers.
American
Synergy (p. 2) uses the "HTR tenant market" as a primary
example of current methodologies having left EE savings
"on the table". The Texas HTR Standard Offer program
secured more than 60% of its savings from this very
"pocket of untapped cost-effective savings". Since prior
EE programs had so clearly missed this group, contractors
flocked to serve this market where they knew the opportunities
to be significant. Given the freedom to choose, we expect
the lure of untapped markets will encourage contractors
and sponsors in California to seek out and serve exactly
those areas which have the least competition and been
historically underserved, including rural customers
and urban tenants of multifamily buildings.
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6b
- Does the Standard Offer work better than an RFP process
for a small startup?
- RFP
process requires a large time commitment just in order
to make the proposal. Proposals must be very detailed
- currently, applications are dozens of pages, with
spreadsheets. Hardly makes sense to go to all that trouble
for a $10,000 contract. With Standard Offer, you
have a simple 3-4 page application. You don't have to
figure everything out ahead of time.
- RFP
- †Laborious selection
process happens only once per 2 or 3 year cycle.
Projects have to be designed for the whole cycle. You
have to wait a long time just to apply. Standard
Offer is a rolling process - †implementers
can apply when it's convenient for them, start with
a small, quick project to see if it works, then take
out another contract to work on a larger scale - all
in less time than one RFP cycle.
- RFP
- Very hard to convince the administrator your idea
is a good one and you have what it takes to make it
work.Standard Offer -you don't have to convince
the administrator it's a good idea. If you're willing
to take the risk, you can go forward. You just have
to show basic credentials - e.g. proper licenses, no
record of financial fraud, multiple bankruptcies or
environmental crimes.
- RFP
- You have to describe in detail what you're going
to do and figure out exactly what it will cost.
It hardly ever turns out quite the way you thought -
if you're not experienced you're likely to be way off,
but you're required to stick to the plan and budget,
or get each change approved by the administrator. That
takes a lot of time for both the admin and the implementer.
Standard offer - you can make the changes you need
without asking for permission.
- RFP
- Administrators have to keep close track of implementers
throughout the project because the concept of how to
protect the ratepayer is that you have to follow the
plan that was approved. The risk is on the ratepayer
if you fail to save energy or the administrator fails
to enforce the plan. There is little recourse. The CPUC
had a 15% hold-back if implementers didn't meet targets
in the first round - but the bulk of the money is gone
- paid out in quarterly payments. Standard Offer
only pays for results. How you got there is not something
the Administrator needs to watch, because you're the
one who loses out if you didn't think it through - the
money goes back into the pot if you only get part-way
to the goal.
- RFP
- †Admin costs
balloon if there are a lot of projects, therefore it's
unlikely that many small projects would be approved.
It takes almost as much time for an administrator to
work with a small project as a larger one - maybe more
if they are inexperienced. Administrators simply won't
have the funds to manage many implementers - so they
won't be able to approve many small contracts. Standard
Offer - there's no need to micromanage, so there can
be lots of small contracts.
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7
- What are the financing options for a small startup - Standard
Offer vs. RFP?
Currently
in 2004-5 programs in CA, there's no up-front money. (This
is different from the first round, 2002-3 programs when
implementers got 20-30% up front.) The payment schedule
in CA is now basically the same as in Texas. Currently
in CA, you do some work, then submit invoice in month
1, they review it in month 2, they pay month 3 - so you're
always 3 months behind. In TX you do the work, submit
it, get paid w/in 1-3 months depending on measurement
procedure. The way most ESCOs operate is to get a line
of credit on receivables There are funds available for
that in financing companies.
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8a
- Would a startup be more able to secure a loan with RFP
system vs. S.O.?
True,
the S.O. is designed to remove risk to ratepayer for below-standard
performance by putting all the risk on service provider.
If you're not assured you'll get paid, there is a different
risk for the lender.
However,
a startup is very unlikely to win an RFP. RFP is supposed
to weed out people who are not competent - unfortunately
it weeds out people who can't PROVE they're competent.
They want to know what's your experience, credit-worthiness,
and infrastructure. In order to convince you I would have
the infrastructure for the program - I have to already
have the infrastructure. Have to have hired 4 people and
2 trucks, then submit the RFP and wait six months for
approval. Meanwhile I have to pay people while waiting
for program approval. The biggest barrier is the time
involved. It's like a bank loan - they only loan money
to people who don't need it.
The
key difference between S.O. and RFP in terms of startup
money is that the amounts are different. In order to get
program approved in CA - most are a significant size $100,000
to $1 m. The ramp-up for larger programs in CA can be
slow. In TX, there many smaller size contracts, some as
little as $5-10,000. You could finance startup with a
credit card, and only carry the charges for a few months.
A mom & pop operation can go in for small amount and get
a quick turnaround if dealing with measures that have
been approved by PUC and are in deemed savings (i.e. we
accept it will save x kW - and x kWh- and last for y years
- then as soon as measure is installed and verified, you
submit the invoice and get paid.)
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8b
- Is there anything inherent about RFP that requires only
large projects?
Admin
costs balloon if there are a lot of projects, because
it takes almost as much time for the administrator to
work with a small project as a larger one - maybe more
if they are inexperienced. Administrators simply won't
have the funds to manage many implementers - so they won't
be able to approve many small contracts.
Almost
all current CA programs are 1/2 million and above. With
the Standard Offer there's no need to micromanage, so
there can be lots of small contracts. In Texas there are
many $5,000 and $10,000 contracts. None are more than
$2 m (and no party is allowed to tie up more than 20%
of total funds). The experience in Texas and New Jersey
has been that small projects tend to get people comfy
and get a track record that enables them to get more financing
- and then they expand.
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The
Standard Offer approach fosters comprehensive treatment.
In the residential sector, a large portion of the cost
of any EE project is getting into the home with permission
to install measures. With S.O. paying for measured energy
savings, the contractor has a large incentive to install
a comprehensive package of measures, because the incremental
or additional measures will cost very little to install.
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The
perception is that there more likelihood of cream skimming
with S.O., especially in Single Family residential programs,
because you can't mandate what they do. The perception
is that it may be less of a problem in Texas because there's
less market penetration, but in CA, the budget is bigger,
so the assumption is that much more has already been done
and there is less overall potential, making cream skimming
more important.
Curiously,
everyone assumes that there is much more potential in
commercial/ industrial programs than in residential -
because the IOUs say so. However, IOUs have focused for
years on Commercial/Industrial programs (see below, "Are
Current IOU programs comprehensive?".
IOUs
have strong incentives to do as little energy efficiency
as they can get away with in residential programs. Residential
rates are higher, therefore, saving energy in this sector
is more costly to utilities. IOUs utilized EE to keep
commercial customers from leaving the system and going
to direct access; residential customers were unlikely
to leave the system.
Large
amount of cost-effective energy savings remain on the
table in residential programs. For example, for the IOUs'
most cost-effective program, refrigerator recycling (mostly
performed by ARCA, an outside contractor) many people
assume that the most inefficient refrigerators have already
been picked up, but in reality, ARCA reports that only
a fraction of the ancient refrigerators have been recycled,
and there is a vast and ever-increasing potential in newer
(but still old) refrigerators that were efficient when
new but are now seriously degraded. In air conditioning,
the IOUs have concentrated until very recently on installing
central heat/air, rather than replacing room air conditioners
with more efficient models. There have been no IOU efforts
to plant trees or install solar water heaters, two very
effective methods of saving energy.
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9
- Does RFP ensure comprehensiveness?
Neither
the IOUs nor the CPUC have rectified the oversights described
above, in spite of the Commission's current opportunity
to select more comprehensive programs or its past efforts
to micromanage IOU programs. Instead, the Commission has
often allowed IOUs to shift funds to programs or measures
that they found more desirable. The Commission recently
granted IOUs the authority to fund-shift 100% of their
procurement funds without needing to ask the CPUC for
permission.
Few
of the current non-utility programs are comprehensive
because they are not allowed to compete with IOUs in the
major "statewide" program categories. Most are
restricted to "niche" programs providing only a few specific
measures.
There
was a market transformation program (basically an RFP)
for high-efficiency air conditioners in Texas. After the
first year, many of the contractors used S.O. rather than
the market transformation program. One reason was that
the paperwork is easier - but also they were able to offer
a lot else with it, not just the air conditioner. They
also do duct work - duct sealing - as a package. Market
transformation increased, rather than decreased, with
the S.O.
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97%
of the net benefits of current IOU programs are in the
commercial/ industrial sector.
82%
of the IOU program budgets collectively produce only 3%
of the net benefits. (Total residential programs - including
Single Family programs - are just a fraction of 3%.)
Even
this tiny portion of CA benefits in residential programs
might be overstated, since since large portions of IOU
costs for energy-savings programs are currently off-budget,
either as IOU information-only programs (largely involving
marketing for residential energy-savings programs) and
Statewide Marketing (mostly for IOU residential programs)
run by "independent entities".
2003
Multifamily programs were originally designed to be comprehensive,
but they were changed mid-year to focus on one or two
measures: lighting or programmable thermostats. 83% of
the benefits came from these two measures. (In some recent
years, IOUs simply did not spend Multifamily budgets,
and at the end of the year got permission to transfer
the money to other programs.)
Express
Efficiency programs were also changed mid-year to focus
on one or two measures: 92% of PG&E savings and 97%
of SCE savings came from lighting and programmable thermostats.
78% of SCG savings came from programmable thermostats
and greenhouse curtains; and SDG&E secured 68% of
its savings from lighting alone. (It would be of value
to determine how much of the IOUs program savings overall
are due to lighting alone.)
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10b
- Are current IOU savings claims in California real or phantom?
According
to IOUs May 1, 2004 report on 2003 programs, 51% of SCE
savings and 42% of PG&E's savings are "committed" - i.e.
have not yet been installed or have not yet been inspected
or approved. (SCG and SDG&E apparently did not count "commitments"
in their reported savings - or did not differentiate them.)
Unfortunately, as almost every program implementer or
administrator knows, many of these "commitments" fail
to materialize; and the longer the delays, the less likely
they are to be achieved. It is not clear that the CPUC
has rigorously followed up to see what portion of these
savings were ever realized.
So.
Calif. Gas presents a different problem. It only uses
gas EE funds, since it only sells gas, however 40% of
SCG's claimed benefits overall (as high as 96% in its
Non-Residential New Construction program) come from saving
electricity - mostly in LADWP territory. If restricted
to claiming gas savings only, most of its programs are
not cost-effective.
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In
the California Standard Offer proposal, as in current
TX programs, there is no payment until a measure has been
installed, verified and measured.
The key questions are whether measurement is rigorous
and unbiased, whether reports are real, and whether administrators
and the System director provide adequate oversight. This
depends first of all on eliminating conflicts of interest.
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11a
- How are Energy Savings measured in TX Standard Offer?
They
use two processes in Texas to measure savings:
One
is a savings assumption determined before the work starts
- either by "deemed savings" or "simplified savings".
-
Deemed savings - These are taken from a list provided
by the PUC of savings assumptions for specific measures
installed in certain types of facilities (similar to
the DEER database in CA, developed by the CEC). The
measure installations were studied in the past and determined
to save such and such, based on various assumptions.
Example is a showerhead installed in multifamily residential.
We know it saves x kWh and x kw - and we know it lasts
10 yrs.
-
Simplified savings is a measurement plan. For example
we know that in office buildings on average their lights
are on 4000 hrs. a year, and if they have air conditioning
they'll save this much more in air conditioning because
of the reduced heat. Then we can go in and look at wattage
- delta etc. Though it's not deemed, we can calculate
the savings at the beginning of the process. Deemed
or simplified savings are paid in full when verified
that they're actually installed.
The
second process is after the fact measurement of savings
from the installation - This is used by most large
commercial/industrial work. An engineering estimate is
made at the beginning by the contractor and approved by
admin. They receive roughly half the payment when the
installation is in and verified. The other payment comes
after measurement, which must include one summer peak
period. At the end of roughly a year they would get second
half of payment - based on true-up (not to exceed their
original savings estimate).
You
can use this method too if you're a residential or small
commercial contractor and you think your installation
will save more than deemed or simplified savings. You
have the option of not taking deemed number if you're
willing to pay for more extensive measurement. A very
small number of small commercial contractors have done
that - I don't know of any residential who have opted
for measurement.
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In
Texas you get paid right away, as soon as the installation
is verified for jobs using deemed savings, or after the
first year's savings have been measured, for larger installations.
In some other states payments are parceled out over a
two, four or ten-year period.
CA
installations in 94-97 (governed by CADMAC) were essentially
only one-year measurement studies. They do 4th and 9th
yr retention studies, but retention is only whether the
measure is still installed and still working. It doesn't
pick up on whether savings have degraded. They only measured
reduction in usage in that first year.
New
Jersey measures every month for 15 yrs, however it presents
great difficulty for contractors to maintain those measurements.
That keeps them from participating.
In
Texas all sort of things were suggested to account for
degradation over time or for the possibility that people
removed the measures. One suggestion was to assume only
80% of deemed savings number instead of 100%. That's not
what they did, but you could do it that way.
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12a
- Do Standard Offer programs prevent free ridership?
A
contractor outreach program (typical in S.O.) might have
a lower free ridership level than upstream/downstream
point-of-purchase (POP) incentives or rebate programs.
If someone goes to the store to buy a piece of equipment,
they're already committed to making some fraction of the
payment, whereas if a contractor is out there marketing
- not necessarily going door to door, but doing retail
specific marketing and outreach - they're more likely
to be dealing with customers who are not planning on upgrading.
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12b
- Can a Standard Offer program achieve market transformation?
The
California Coalition for Energy Efficiency supports the
continuation of statewide marketing efforts and of selected
information and market transformation programs. The Texas
EE program also allows for a certain amount of funding
for RFP-based market transformation programs outside of
the Standard Offer program.
However,
the Standard Offer has been shown to work even better
than RFPs to increase acceptance of high-efficiency measures.
The key is that the Standard Offer procedure is intrinsically
ideal for most market transformation efforts. A new or
innovative Widget normally has years' worth of trouble
getting known and accepted even to the level of securing
support for a separate or pilot market transformation
effort. But with the Standard Offer, assuming the Widget
is cost-effective, any Widget developer or advocate can
implement a Widget program and receive incentives based
upon the savings delivered. This will greatly accelerate
the development and commercialization of new measures
and savings techniques.
This
is already happening with the Texas High Efficiency A/C
Market Transformation program, which was undersubscribed
in 2003, at least partly because so many A/C dealers and
contractors instead used the less restrictive Standard
Offer programs to implement their high efficiency A/C
efforts. See above, "Does RFP Ensure Comprehensiveness?"
Information
programs that result in measure installations (such as
audits or consultations) can also receive Standard Offer
incentives for the resulting savings (assuming there is
no "double dipping" on the savings claims).
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†QCS
Comments on Administrative Structure, April 26, 2004,
p. 14. Based on actual savings for 2003 Texas programs,
filed May 1, 2003 compared to California's projected savings
for 2004-5 programs (including both PGC funds and procurement),
listed in attachments to CPUC Decisions, D. 03-12-060,
12/18/2003 and . Note that most IOU statements re EE potential
are based on biased studies performed by sweetheart consultants.
Independent measurement experts, such as Robert Mowris
& Assocs., dispute these studies.
†According
to IOU 5/1/2004 reports on 2003 programs, see
analysis in SESCO Reply Comments 5/5/04.
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