Lisa Schwartz

Electricity End Uses, Energy Efficiency, and Distributed Energy Resources Baseline

Author(s): Schwartz, Lisa; Wei, Max; Morrow, William; Deason, Jeff; Schiller, Steven R.; Leventis, Greg; Smith, Sarah; Leow, Woei Ling; Levin, Todd; Plotkin, Steven; Zhou, Yan

Recovery of Utility Fixed Costs: Utility, Consumer, Environmental and Economist Perspectives:

Author(s): Wood, Lisa; Hemphill, Ross; Howat, John; Cavanagh, Ralph; Borenstein, Severin; Deason, Jeff; Schwartz, Lisa | Editor(s): Schwartz, Lisa

Evaluation of U.S. Building Energy Benchmarking and Transparency Programs: Attributes, Impacts, and Best Practices

Author(s): Mims, N; Schiller, S; Stuart, E; Schwartz, L; Kramer, C; Faesy, R | Abstract: In the last decade, a new policy area has emerged to boost energy efficiency in buildings that focuses on the simple action of measuring energy use as compared to buildings of similar type and size, and making that data publicly available. These efforts, referred to as benchmarking and transparency (BaT) policies, seek to unlock new energy efficiency opportunities in the country’s existing buildings by promoting data-driven decision-making and creating stronger market signals. This report focuses on the 24 state and local jurisdictions that (as of December 31, 2016) require owners of privately owned commercial buildings, multifamily buildings, or both to comply with a BaT policy. The report provides a summary of U.S. BaT policy design and implementation characteristics, reports results and impacts for jurisdictions with BaT policies, and discusses opportunities for increasing the efficacy of BaT policies, as well as suggested areas for further research. Among the findings, all but one of the BaT policy evaluation studies reviewed indicate some reduction (from 1.6% to 14%) in energy use, energy costs, or energy intensity over the two- to four-year period of the analyses. More specifically, most of the studies reviewed indicate 3% to 8% reductions in gross energy consumption or energy use intensity over a two- to four-year period of BaT policy implementation. Two additional evaluation studies indicate that there is a causal relationship between BaT policies and energy savings or energy cost savings. These documented impacts should be reviewed with some caution. While consistently showing energy savings benefits associated with BaT policies, these savings estimates should be considered preliminary because of the limited period of analyses and inconsistencies in analysis methods for the various studies. A nationally standardized method for data collection, reporting, and evaluation of BaT policies—developed with an advisory group of state and local jurisdictions, energy efficiency and evaluation experts, building owner and real estate associations, and other stakeholders—could improve the consistency and quality of BaT impact studies, providing policymakers and others with a more complete understanding of the present and future impacts of these policies.

Energy Savings Lifetimes and Persistence

This technical brief explains the concepts of energy savings lifetimes and savings persistence and discusses how program administrators use these factors to calculate savings for efficiency measures, programs and portfolios. Savings lifetime is the length of time that one or more energy efficiency measures or activities save energy, and savings persistence is the change in savings throughout the functional life of a given efficiency measure or activity. Savings lifetimes are essential for assessing the lifecycle benefits and cost effectiveness of efficiency activities and for forecasting loads in resource planning. The brief also provides estimates of savings lifetimes derived from a national collection of costs and savings for electric efficiency programs and portfolios.

A Framework for Organizing Current and Future Electric Utility Regulatory and Business Models

Many regulators, utilities, customer groups, and other stakeholders are reevaluating existing regulatory models and the roles and financial implications for electric utilities in the context of today’s environment of increasing distributed energy resource (DER) penetrations, forecasts of significant T&D investment, and relatively flat or negative utility sales growth. When this is coupled with predictions about fewer grid-connected customers (i.e., customer defection), there is growing concern about the potential for serious negative impacts on the regulated utility business model. Among states engaged in these issues, the range of topics under consideration is broad. Most of these states are considering whether approaches that have been applied historically to mitigate the impacts of previous “disruptions” to the regulated utility business model (e.g., energy efficiency) as well as to align utility financial interests with increased adoption of such “disruptive technologies” (e.g., shareholder incentive mechanisms, lost revenue mechanisms) are appropriate and effective in the present context. A handful of states are presently considering more fundamental changes to regulatory models and the role of regulated utilities in the ownership, management, and operation of electric delivery systems (e.g., New York “Reforming the Energy Vision” proceeding).

Time-Varying Value of Energy Efficiency in Michigan

Quantifying the time-varying value of energy efficiency is necessary to properly account for all of its benefits and costs and to identify and implement efficiency resources that contribute to a low-cost, reliable electric system. Historically, most quantification of the benefits of efficiency has focused largely on the economic value of annual energy reduction. Due to the lack of statistically representative metered end-use load shape data in Michigan (i.e., the hourly or seasonal timing of electricity savings), the ability to confidently characterize the time-varying value of energy efficiency savings in the state, especially for weather-sensitive measures such as central air conditioning, is limited. Still, electric utilities in Michigan can take advantage of opportunities to incorporate the time-varying value of efficiency into their planning. For example, end-use load research and hourly valuation of efficiency savings can be used for a variety of electricity planning functions, including load forecasting, demand-side management and evaluation, capacity planning, long-term resource planning, renewable energy integration, assessing potential grid modernization investments, establishing rates and pricing, and customer service (KEMA 2012). In addition, accurately calculating the time-varying value of efficiency may help energy efficiency program administrators prioritize existing offerings, set incentive or rebate levels that reflect the full value of efficiency, and design new programs.

Lessons in Commercial PACE Leadership: The Path from Legislation to Launch

Author(s): Leventis, G; Schwartz, LC; Kramer, C; Deason, J | Abstract: Nonresidential buildings are responsible for over a quarter of primary energy consumption in the United States. Efficiency improvements in these buildings could result in significant energy and utility bill savings. To unlock those potential savings, a number of market barriers to energy efficiency must be addressed. Commercial Property Assessed Clean Energy (C-PACE) financing programs can help overcome several of these barriers with minimal investment from state and local governments. With programs established or under development in 22 states, and at least

State Performance-Based Regulation Using Multiyear Rate Plans for U.S. Electric Utilities

521 million in investments so far, other state and local governments are interested in bringing the benefits of C-PACE to their jurisdictions. Lessons in Commercial PACE Leadership: The Path from Legislation to Launch, aims to fast track the set-up of C-PACE programs for state and local governments by capturing the lessons learned from leaders. The report examines the list of potential program design options and important decision points in setting up a C-PACE program, tradeoffs for available options, and experiences of stakeholders that have gone through (or are going through) the process. C-PACE uses a voluntary special property assessment to facilitate energy and other improvements in commercial buildings. For example: ~Long financing terms under C-PACE can produce cash flow-positive --projects to help overcome a focus on short paybacks. ~Payment obligations can transfer to subsequent owners, mitigating concern about investing in improvements for a building that may be sold before the return on the investment is fully realized. ~100% of both hard and soft costs can be financed. To capture the benefits of C-PACE financing, state and local governments must navigate numerous decision points and engage with stakeholders to set-up or join a program. Researchers interviewed experts (including state and local sponsors, program administrators, capital providers and industry experts) on their lessons learned and arrived at the following key takeaways for state and local leaders: Enabling legislation: Carefully developed enabling legislation (which includes certain key provisions) and early stakeholder input can greatly improve the chances of program success. Options for program administrative structure: At least four program administrative structures are in use; certain administrative structures inherently result in more standardized product offerings and, potentially, economies of scale. Approaches to program and project capitalization: Two approaches to capitalization have been used. Bonding (project capital is raised through a bond sale) and direct funding (capital providers fund projects directly); programs can rely on one capital provider (a closed market) or allow multiple capital providers to participate (an open market). What and who qualifies for the program: Some programs require a minimum project savings-to-investment ratio; other programs encourage it or are indifferent. Estimating and documenting project energy cost saving: Estimating and documenting energy and cost savings can add costs to projects but also demonstrate C-PACE program value. Stakeholder engagement: Key stakeholder groups to engage include community leaders, local governments, building owners, contractors, utilities, capital providers and mortgage holders; stakeholder engagement should be tailored to each particular group. Start-up and ongoing costs: Understanding set-up and ongoing costs can help program sponsors plan for funding C-PACE programs and projects. The U.S. Department of Energys Office of Weatherization and Intergovernmental Programs funded the report.

Energy Upgrades at City-Owned Facilities: Understanding Accounting for Energy Efficiency Financing Options. City of Dubuque Case Study

Author(s): Lowry, M; Makos, M; Deason, J; Schwartz, L | Abstract: Electric utilities today must contain costs at a time when many need to modernize aging systems and all face major changes in technologies, customer preferences and competitive pressures.Most U.S. electric utility facilities are investor-owned, subject to rate and service regulation by state public utility commissions. Regulatory systems under which these utilities operate affect their performance and ability to meet these challenges. In this business environment, multiyear rate plans have some advantages over traditional rate regulation.The report focuses on key design issues and provides case studies of the multiyear rate plan approach, applicable to both vertically integrated and restructured states. Mark Newton Lowry and Matt Makos of Pacific Energy Group Research and Jeff Deason of Berkeley Lab authored the report; Lisa Schwartz, Berkeley Lab, was project manager and technical editor.The report is aimed primarily at state utility regulators and stakeholders in the state regulatory process. The multiyear rate approach also provides ideas on how to streamline oversight of public power utilities and rural electric cooperatives for their governing boards.Two key provisions of multiyear rate plans strengthen cost containment incentives and streamline regulation: 1. Reducing frequency of rate cases, typically to every four or five years 2. Using an attrition relief mechanism to escalate rates or revenue between rate cases to address cost pressures such as inflation and growth in number of customers, independently of the utility’s own cost Better utility performance can be achieved under well-designed multiyear rate plans while achieving lower regulatory costs. Benefits can be shared between utilities and their customers. But plans can be complex and involve significant changes in the regulatory system. Designing plans that stimulate utility performance without undue risk and share benefits fairly can be challenging.This report discusses the rationale for multiyear rate plans and their usefulness under modern business conditions. It then explains critical plan design issues and challenges and presents results from numerical research that considers the extra incentive power achieved under different plan provisions. Next, the report presents several case studies of utilities that have operated under formal multiyear rate plans or, for various reasons, have stayed out of rate cases for more than a decade. These studies consider the effect of multiyear rate plans and rate case frequency on utility cost, reliability and other performance dimensions.

Energy Efficiency Financing for Low- and Moderate-Income Households: Current State of the Market, Issues, and Opportunities

Author(s): Leventis, G; Schiller, S; Kramer, C; Schwartz, L | Abstract: The city of Dubuque, Iowa, aimed for a twofer — lower energy costs for public facilities and reduced air emissions. To achieve that goal, the city partnered with the Iowa Economic Development Authority to establish a revolving loan fund to finance energy efficiency and other energy projects at city facilities. But the city needed to understand approaches for financing energy projects to achieve both of their goals in a manner that would not be considered debt — in this case, obligations booked as a liability on the city’s balance sheet. With funding from the U.S. Department of Energy’s Climate Action Champions Initiative, Lawrence Berkeley National Laboratory (Berkeley Lab) provided technical assistance to the city to identify strategies to achieve these goals. Revolving loans use a source of money to fund initial cost-saving projects, such as energy efficiency investments, then use the repayments and interest from these loans to support subsequent projects. Berkeley Lab and the city examined two approaches to explore whether revolving loans could potentially be treated as non-debt: 1) financing arrangements containing a non-appropriation clause and 2) shared savings agreements. This fact sheet discusses both, including considerations that may factor into their treatment as debt from an accounting perspective.