2012 NC Energy Efficiency Summit Presented by James McLawhorn, Director – Electric Division Jack Floyd, Engineer – Electric Division Public Staff – N.C. Utilities Commission February 22, 2012
DISCLAIMER • The views and comments are ours alone and do not represent, nor are they to be interpreted to represent, the views comments, positions, or policies of the North Carolina Utilities Commission or the Public Staff.
History of North Carolina Utilities Commission (NCUC) • 1891: Founded as Railway Commission • 1899: Railway Commission became North Carolina Corporation Commission • 1913: Electricity, Light, Power, Water, and Gas became regulated • 1933: Corporation Commission abolished and North Carolina Utilities Commission established with three members • Current Composition of Commission: seven commissioners; commission staff: chief counsel and legal staff, fiscal management section, accounting staff, support personnel • Role: hears cases and rulemakings, makes policy, serves as decision maker
Regulatory Roles of NCUC • Purpose: protect interests of the public by ensuring adequate service at reasonable rates. • “Regulatory Compact”: utilities exchange benefit of monopoly franchised service territory for obligation to provide adequate service at reasonable rates. • Commission’s regulatory obligation: to be fair and reasonable to public utilities and their customers. • Commission’s regulatory tools: – certification of new facilities – rate establishment or review – service quality oversight
History of Public Staff - NCUC • Came into existence July 1, 1977 – G.S. 62-15 – Independent Agency • Headed by Executive Director – appointed by the Governor – six year term • Statutory duty to represent the using and consuming public in rate applications, investigations, complaints, certificate applications, transfers, mergers, and review of affiliate contracts • Divisions: Legal, Electric, Communications, Natural Gas, Water and Sewer, Transportation, Accounting, Economic Research, and Consumer Services • Role: serves as consumer advocate in all Commission proceedings affecting rates or services
Session Law 2007-397 aka “Senate Bill 3” • Requires utilities to meet a portion of energy needs through renewables and energy efficiency • Requires DSM/EE programs to be cost effective • Provides for the recovery of DSM/EE program costs, net lost revenues, and an incentive to encourage development of DSM/EE programs
What does cost effective mean? • DSM/EE programs sponsored by utilities are cost effective when program costs are less than the costs the utility would otherwise incur to meet demand and energy requirements with conventional generation resources • No cost recovery unless DSM/EE programs are shown to be cost effective • Program options must exceed building code or other minimum efficiency requirements
Cost Effectiveness is Calculated Using Four Standard Tests Test Key Question Answered Summary Approach Participant Cost Will the participants benefit Comparison of costs and over the measure life? benefits to customer of installing the measure. Will utility bills increase? Comparison of costs to Program Administrator or Utility Cost program administrator with costs of supply-side generation options Will utility rates increase? Comparison of administrator Ratepayer Impact Measure costs and utility bill reductions to supply-side resource costs Total Resource Cost Will the total costs of energy Comparison of program in the utility service territory administrator and customer decrease? costs to utility resource savings Source: Table 2-2, NAPEE - Understanding Cost-Effectiveness of Energy Efficiency Programs
Test Benefits Costs • • Participant Cost Incentive Payments Incremental equipment • Bill Savings costs • • Tax Credits Incremental installation costs Program Administrator • • Energy related costs Program overhead costs • avoided by utility Participant incentive costs • • Capacity related costs Program installation costs avoided by utility • • Energy related costs Program overhead costs Ratepayer Impact • Measure avoided by utility Participant incentive costs • • Capacity related costs Program installation costs • avoided by utility Lost revenue due to reduced energy sales • • Total Resource Cost Energy related costs Program overhead costs • avoided by utility Program installation costs • • Capacity related costs Incremental measure costs avoided by utility (whether paid by utility or • Tax credits customer) Source: Table 3-1, NAPEE - Understanding Cost-Effectiveness of Energy Efficiency Programs
Why is cost-effectiveness important? • Ratepayers are only asked to pay for DSM/EE that produces net benefits to the utility system • Customer incentives should not be needed to do what is already required • DSM/EE should assist in otherwise delaying or offsetting the need for future supply-side generation resources
PEC – Home Energy Improvement Program • Monetary Incentives for: – 50% of cost up to $190 for air duct repairs – 37.5 ¢/ft 2 up to $500 for attic insulation (R30 or >) and sealing – $300 per unit for high efficiency central AC, heat pumps, (Min. SEER of 15) and geothermal heat pumps (Min. EER of 19)
PEC – Home Energy Improvement Program • Monetary Incentives for: – $100 for HVAC audit (coil cleaning, refrigerant charge, and air flow adjustment) – $350 for heat pump water heaters (Min EE factor of 2.0) – $25 per unit for a high efficiency room air conditioners (Energy Star)
PEC – Home Advantage Program (for building permits issued prior to March 1, 2012) • Monetary Incentives for: – Building Construction (E-Star certified; AC or HP Min SEER of 14) – Heat Pump upgrade (Min SEER of 15) – Central AC upgrade (Min SEER of 15) – Geothermal Heat Pump (Min EER of 17) – Cooperative Advertising (promote E-Star construction)
PEC – Neighborhood Energy Saver Program (low income) • Company-selected vendor provides: – One-on-one energy education – On-site energy assessment – Installation of comprehensive package of energy conservation measures (no cost to customer) • CFLs; water heater wrap and pipe insulation, temp. check and adjustment; low-flow faucet aerators and showerheads; refrigerator coil brush; HVAC winterization kit; HVAC filters; air sealing materials; etc.
Duke Energy Residential Incentive Programs • Smart Saver Program for AC – Incentive payments for central AC or electric HP in new or existing residences (Min. SEER of 14); geothermal HP (Min. EER of 11.5) - $300 per unit for new homes. Incentive is split between customer and HVAC dealer for existing homes. • Smart Saver Program for EE Products – Distribution of Free CFLs – Future incentives may include other household Energy Star appliances
Duke Energy Residential Incentive Programs • Residential Retrofit Pilot Program – Incentives for up to 300 customers to test delivery options (Consultant option recommends improvements, with someone else installing. Contractor option recommends and installs improvements.) – Energy assessments of existing homes concentrating on building envelope improvements to reduce energy losses. – Incentive payments based on percentage of costs of recommended improvements, up to $800.
How can industry professionals engage the process and become involved with utility sponsored EE programs? • Participate in cooperative marketing strategies with utilities, including understanding of rates and tariffs. • Participate in vendor selection process. • Invite utilities to participate / sponsor activities designed to promote energy efficiency. • Participate in NCUC proceedings by offering comments and/or expert testimony
Questions? james.mclawhorn@psncuc.nc.gov (919) 733-1519 jack.floyd@psncuc.nc.gov (919) 715-9018
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