Friday, October 21, 2011

Post # 82 - New ACEEE "Scorecard" Ranks States' Pursuit of Energy Efficiency

Last year, the American Council for an Energy-Efficient Economy, a non-profit organization promoting energy efficiency, released a study analyzing the results of residential feedback programs spanning over 30 years. ACEEE concluded that smart meters, in and of themselves, cannot be expected to significantly reduce either residential power use or consumer electric bills. Among other aspects, increased energy efficiency is a necessary adjunct.

In a more recent development, ACEEE this month issued its “2011 State Energy Efficiency Scorecard,” a comprehensive ranking of the states based on an array of metrics intended to capture best practices and recognize leadership in energy efficiency policy and program implementation. The focus of the Scorecard is not on smart grid issues, but rather the broader issued of energy efficiency.

States were evaluated in six energy efficiency policy areas: utility and public benefits programs and policies, transportation policies, building energy codes, combined heat and power, state government initiatives and appliance efficiency standards. Among the 2011 Scorecard's key findings:

»Because of continuing economic uncertainty, states are continuing to use energy efficiency as a key strategy to generate cost savings, promote technoligical innovation, and stimulate growth.

»Massachusets has overtaken California in ACEEE's rankings as the leader. Following in ACEEE's "top ten" are New York, Vermont, Oregon, Washington, Connecticut, Minnesota, Rhode Island and Maryland.

»Michigan, Illinois, Nebraska, Tennessee, Alabama and Maryland are the most improved states, with Michigan, Illinois and Maryland significantly increasing utility-sector energy efforts n order to meet energy savings targets established in Energy Efficiency Resource Standards (EERS).

»A total of 24 states have now adopted EERS, which set long-term energy savings targes and drive utility-sector investments in energy efficiency programs. States that adopted EERS policies in 2007 and 2008 are realizing signifigant energy savings and moving ahead in the Scorecard's ranking.

»Total budgets for electricity efficiency programs increased to $4.5 billion in 2010, up from $3.4 billion in the prior year.

»States continue to improve policies to reduce financial, technical and regulatory barriers to adoption of combined heat and power systems, which generate electriciy and thermal energy in an integrated system.

»Twenty-nine states have either adopted or have made significant progress towards the adoption of the latest energy-savings residential and commercial building codes.

»Some states "remain ahead of the curve" in adopting policies to reduce vehicle miles travelled and to promote the purchase and manufacture of energy-efficient vehicles. On the flip side, however, ACEEE finds that over half the states have "minimal or no" policies to encourage energy efficiency in the transportation sector.

Overall, ACEEE concludes that energy efficiency policies and programs continued to advance in 2011. In particular, a group of "leading states remains steadfast in their commitment to the efficient use of energy in transportation, buildings, and industry. . . ." And a "growing number" of states have made progress in the area of energy efficiency -- "some rapidly."

At the same time, ACEEE finds that a wide gap remains between states near the top and near the botton of the Scorecard's rankings.

Sunday, October 2, 2011

Post # 81 - Can Prepaid Services Foster Smart Grid Acceptance by Low Income Consumers?

Unlike most transactions, public utility services are usually paid for only after consumption, measurement, and billing. While prepaid meters long have been available in the United States, they are seen in just a handful of jurisdictions. But as smart meters are deployed across the country, prepayment has been added to the growing list of potential smart meter applications. But, according to the Distributed Energy Financial Group (DEFG), a management consulting firm in the energy sector, that doesn’t necessarily make it an idea whose time has come.

A new DEFG white paper “Low Income Consumer Issues and Voluntary Prepaid Energy Offerings: Perspectives from Three Industry Thought Leaders.”, identifies a number of "core questions":

Is providing a prepayment “option” to payment‐challenged customers contrary to the spirit (and perhaps the letter) of laws prohibiting discrimination in provision of utility services? Do potential negative consequences for some customers appear to outweigh the benefits of prepayment programs? Most consumer advocates answer “yes” to these questions and believe that the introduction of prepayment programs would create more problems than it solves.

At the same time, DEFG states that extensive research in 2010 and 2011 reveals that prepaid energy could be transformational as it is the first customer-facing application of the smart grid. DEFG launched the 2011 Utility Prepay Working Group to further explore leading regulatory and consumer opportunities and challenges presented by prepaid energy. Regulatory issues include disconnect and reconnect policies, weather moratoriums, forms of account notification, cost and benefit allocation, fees and rates.

The white paper addresses two key questions. First, how can a balance be struck between allowing consumers to exercise their preferences and ensuring that adequate consumer protections are in place? Second, how can regulatory rules and practices, including for low income consumers, be revised or updated to allow for innovation and new offerings such as prepaid energy or other new services enabled by smart grid yet maintain the intent of the original regulatory rationale?

The study authors assert that while these issues need to be addressed to implement a prepaid offering for all customers, they present greater concerns when dealing with low-income customers. Consumer advocates argue that prepaid energy invites low-income customers to make tough choices, potentially opting to disconnect electric service to keep money available for other necessities such as food, clothes and gasoline. Yet, existing prepaid customers provide positive feedback, primarily the convenience, flexibility and control that goes with paying any amount at any time. Consumers find that prepayment allows them to budget in a manner most compatible with their lifestyle and income (e.g., make payments weekly or every other week). The authors recognize that there is a tension between the possibilities enabled by new technologies and consumer protections.

The DFEG paper finds certain “broad areas of consensus,” including:

• Prepay offerings should be voluntary and not directed specifically to low income customers but offered to all customers served by utilities.

• Consumer protections do and will exist for a prepaid service offering as they have been in place for post-paid consumers for decades.

• Prepaid service touches the body of bill pay and consumer protection rules and highlights the need to update the regulatory rulebook.

• There is a need to analyze regulatory principles as distinct and separate from the rules and practices that implement those principles, for example, limiting the form of communication for disconnect notifications to letters and/ or a knock on the door may not only be impractical but counterproductive when considering consumer credit issues.

The paper concludes that "a lack of trust among stakeholders has been palpable during the course of DEFG’s research and conference calls around the potential of utility prepaid offerings." While some stakeholders consider prepaid service a positive innovation for consumers, others view it as potentially predatory or discriminatory against low‐income consumers. A particular consumer concern, in this regard, is the possibility using smart meters to facilitate automatic service shut-offs. The paper finds that stakeholders, including utilities, recognize the importance of ensuring that low‐income consumers pay fair rates for electricity and are supported safely during dangerous weather periods. "[T]he biggest barrier to policy solutions. . .[is] trust among [utilities] and consumers."