June 20, 2017 Michael Goldman, Eversource Overview Background on - - PowerPoint PPT Presentation

June 20, 2017 Michael Goldman, Eversource

Overview

 Background on Non‐Energy Impacts (NEIs)  Common state approaches for valuing NEIs  NEI evaluation findings—what’s the evidence?  2018‐2020 Plan NEI proposal

Background

 NEIs are positive and negative effects attributable to

energy efficiency programs, distinct from energy savings.

• Utility NEIs – e.g., reduced arrearages and debt collection, e.g.

from low income customers

• Participant NEIs – e.g., reduced (or increased) O&M; impacts on
• ccupant health and productivity; increased property values
• Societal NEIs – e.g., economic development and environmental

impacts

Background

 NEIs can represent a significant benefit

• Over 300 studies to date, with monetized NEIs ranging

from 50 percent to over 300 percent of annual energy bill savings.1

 NH’s cost effectiveness screening to date includes all costs, but

not all benefits—NEIs other than water savings are excluded

 Excluding NEIs can result in inaccurate valuation of programs

due to substantially underestimating their benefits

1Non‐Energy Benefits / Non‐Energy Impacts (NEBs/NEIs) and Their Role & Values in Cost‐Effectiveness Tests: State of Maryland,

Final Report. Lisa Scumatz, Ph.D. March 31, 2014.

 Symmetrical treatment of costs and benefits is a core principle

for developing and applying cost‐effectiveness tests

 “Cost‐effectiveness practices should be symmetrical, where both

costs and benefits are included for each relevant type of impact.” 1

 For example, the Maryland Public Service Commission adopted

the use of non‐energy impacts in a July 2015 ruling,2 stating:

 “cost‐effectiveness testing must be symmetrical in how it considers

both costs and benefits, and thus an inclusion of all participant costs in a test requires the inclusion of all participant benefits – including NEBs…Because the TRC test includes all participant costs, we concur that quantified NEBs accruing to program participants must be included in the TRC.”

Background

1 The National Efficiency Screening Project, National Standard Practice Manual for Assessing Cost‐Effectiveness of Energy

Efficiency Resources (May 2017).

2 Maryland Public Service Commission, Order No. 87082 (July 16, 2015)

Common approaches: NEI adders

 Adders are proxy values (e.g., fixed percent of energy

benefits) used to account for NEIs in cost effectiveness screening

 Adders allow states to account for NEI value, given limited

resources for precisely quantifying NEIs

 Some states have adopted adders as conservative proxies,

with subsequent measurement of specific NEI values

 Thirteen states and Washington D.C. use some type of

adderin cost effectiveness screening1

• Eight of these states also allow some readily measured NEIs

 Adders were subject to adjudicatory processes and review

by PUCs/DPUs prior to approval

 Percent adders: Generally between 10% and 15%, with an

additional 10% to 25% for low‐income programs in several states

Common approaches: NEI adders

1Modified from NEEP, Non‐Energy Impacts Approaches and Values: an Examination of the Northeast, Mid‐Atlantic, and Beyond, June 2017

 Nineteen states allow a range of “readily‐measured” NEIs

in cost effectiveness screening1

 Measured NEI values are typically derived from

independent evaluations of specific efficiency measures or programs

 NEI allowances were subject to adjudicatory processes and

review by PUCs/DPUs prior to approval

1Modified from NEEP, Non‐Energy Impacts Approaches and Values: an Examination of the Northeast, Mid‐Atlantic, and Beyond, June 2017

Common approaches: measured NEIs

 Measuring NEI values requires rigorous methodologies

• direct analysis of utility data (e.g., arrearages,

shutoffs/reconnects)

• models (e.g., economic or environmental NEIs)
• surveys and interviews (e.g., participant benefits such as

health or O&M impacts)

 Evaluations to develop precise and reliable NEI estimates

require time and money

Common approaches: measured NEIs

 NEI evaluation methods are robust and have been continually

refined to ensure results are reliable and valid1

• Use of engineering studies to supplement self‐reported surveys
• Avoiding double counting of overlapping NEIs
• Ensuring evaluations include non‐energy costs to maintain objectivity

 Large body of research on engineering models, survey valuation

methods, costs and benefits (e.g., health and economic impacts)

NEI evaluations: what’s the evidence?

1See Non‐Energy Benefits / NEBs – Winning at Cost‐Effectiveness Dominos: State Progress and TRMs, 2016 ACEEE Summer Study

• n Energy Efficiency in Buildings, Skumatz L.; EM&V Roadmap to Quantifying Challenging Non‐Energy Impacts, paper and

presentation before the 2016 International Energy Program Evaluation Conference, Abdou M. et al; Measuring Participant Perspective Non‐Energy Impacts (NEIs) 2012 ACEEE Summer Study on Energy Efficiency in Buildings, Clendenning, G. et al.

NEI evaluations: what’s the evidence?

 Evaluation quality and reliability is reinforced in several ways.

NEI evaluations:

• undergo regulatory and stakeholder review before results are

applied

• are conducted by trained, independent third‐party evaluators
• are often peer‐reviewed and presented at national and

international conferences

“Examining Non‐Energy Benefits (NEBs) at the Measure Level and by Type of Program Participant,” presented at the 2011 International Energy Program Evaluation Conference (Boston, MA). “Measuring participant perspective non‐ energy impacts (NEIs),” presented to 2012 ACEEE Summer Study on Energy Efficiency in Buildings (Pacific Grove, CA). “Saving Lives through Energy Efficiency: Valuing the Health‐ and Safety‐Related Benefits of Weatherization in Low‐Income Homes,” to be presented at the 2017 International Energy Program Evaluation Conference (Baltimore, MD) “The (r)Evolution of Non‐ Energy Benefits in Energy Efficiency” presented at the 2017 Society for Benefit‐Cost Analysis (Washington, D.C.)

NEI evaluations: what’s the evidence?

 Key NEI evaluations from neighboring states, across multiple

sectors:

• C&I New Construction: MA Commercial and Industrial New Construction

Non‐Energy Impacts Study, DNV‐GL (Mar 2016)

• C&I Retrofit: MA Commercial and Industrial Non‐Energy Impacts Study, Tetra

Tech (Jun 2012)

• Residential and Residential Low‐Income:
• CT Project R4 HES/HES‐IE Process Evaluation and R31 Real‐time Research,

NMR (Apr 2016)

• MA Low‐Income Single‐Family Health‐ and Safety‐Related Non‐Energy

Impacts (NEIs) Study, Three3 (Aug 2016)

• Portfolio‐wide:
• RI Analysis of Job Creation from 2015 Expenditures for Energy Efficiency in

Rhode Island by National Grid (Apr 2016)

 Scope: O&M NEIs (labor and non‐labor) for 2013 commercial and

industrial new construction program participants

 Methodology: engineering cost‐estimating approach, based on:

• Manufacturer O&M manuals
• CostLab cost‐estimation software (used by institutions/large businesses

to set O&M budgets)

• In‐depth interviews with building owners/managers, equipment

engineering and design firms

• DNV GL engineers experienced in high‐performance building design

 Underwent rigorous peer review for acceptance to 2016 ACEEE

Summer Study on Energy Efficiency in Buildings

Evaluations: MA C&I New Construction, 2016

 Findings: total annual NEIs of roughly $488,000 per

year, across 957 measures installed in 2013

 Key measures with NEIs included lighting, air

compressors, commercial kitchen fryers, and others

Evaluations: MA C&I New Construction, 2016

 Baseline (T8 fixtures): lamp changes every 3 years, and replacement

fixtures every 5 years

 Efficient (LED fixtures): replacement every 10 years. In addition, LEDs

are brighter than T8s, so require fewer fixtures per square foot, reducing labor and equipment costs for lamp replacements.

Evaluations: MA C&I New Construction, 2016

 Compressed air systems are “workhorse” tools for

many processes (e.g., manufacturing, auto repair)

 Baseline (reciprocating compressors): require

rebuilding or replacement every 10,000 hours;

• il changes & related maintenance every ~4 months

 Efficient (rotary screw compressors): require rebuilding or replacement

every 20‐25,000 hours; oil changes & related maintenance every 3‐4 years

Evaluations: MA C&I New Construction, 2016

 Commercial fryers—widespread in commercial kitchens  Baseline fryers require more fryer oil replacement, filter

pads, filter powder, kitchen staff maintenance time and annual contractor maintenance time.

 Efficient fryers

 no filters – reduced costs for oil filtering  self‐cleaning – reduced maintenance costs and fryer oil replacement  reduced external contractor maintenance time

Evaluations: MA C&I New Construction, 2016

Evaluations: MA C&I Retrofit NEIs, 2012

 Scope: NEIs attributable to 2010 C&I retrofit programs in MA,

including O&M, non‐O&M labor, supplies and materials, water usage, waste disposal, fees, sales and other revenues

 Methodology: semi‐structured, in‐depth interviews with 258

respondents, a sufficient sample for statistically significant NEI estimates of prescriptive and custom electric and gas measures

Evaluations: MA C&I Retrofit NEIs, 2012

Evaluations: MA C&I Retrofit NEIs, 2012

Evaluations: MA C&I Retrofit NEIs, 2012

 Findings

Evaluations: MA C&I Retrofit NEIs, 2012

Evaluations: MA C&I Retrofit NEIs, 2012

 Findings: Participants reported positive NEIs for 58% of measures

studied

Evaluations: MA C&I Retrofit NEIs, 2012

 Findings: example electric measure NEIs

 Statistically significant results at the measure level

Evaluations: CT Home Energy Services (HES) and HES Income Eligible (IE), 2016

 Scope: NEIs associated with HES/HES‐IE programs, including:

O&M; illnesses and missed days from work or school; comfort, equipment durability; and occupants’ ability to pay bills (e.g., rent, electric).

 Methodology: surveys and in‐depth interviews, using relative

valuation approach (i.e., value NEIs relative to energy savings), consistent with best practices

 832 end‐user participants surveyed, for an estimated response rate of 15%  30 in‐depth interviews with HES‐IE landlord and property managers

Evaluations: CT Home Energy Services (HES) and HES Income Eligible (IE), 2016

 Findings: total NEI values, as a percentage of bill savings

 0.87 for HES end‐users (i.e., occupants)  0.90 for HES‐IE end‐users  0.73 for HES‐IE landlords and property manager

 For example, on average, for every $100 worth of energy bill

savings, HES‐IE landlords and property managers consider NEIs to be worth an additional $73.

Evaluations: MA Low‐Income Single‐Family Non‐Energy Impacts, 2016

 Scope: NEIs specific to energy efficiency program recipients residing in

income‐eligible households in MA, including health and financial impacts due to reduced thermal stress and asthma.

 Methodology: based in part on U.S. DOE’s study of the Weatherization

Assistance Program (WAP), which used the pre‐tested, national Occupant Survey of a representative sample of weatherized single‐family homes pre‐ and post‐weatherization, along with a comparison group of homes

 Underwent rigorous peer review for acceptance to 2016 ACEEE Summer Study

• n Energy Efficiency in Buildings

 Methodology (cont.): survey results were supplemented with secondary data

from the U.S. Department of Health and Human Services and other sources

 incidence rate of types of medical attention due to thermal stress  average costs for such medical treatments  rates of death following hospitalization and treatment for thermal stress  data on insurance coverage and out‐of‐pocket medical costs.

Evaluations: MA Low‐Income Single‐Family Non‐Energy Impacts, 2016

 NEI estimates were presented with and without savings due to avoided

deaths.

 The U.S. Centers for Disease Control has reported an estimated 2,000

weather related deaths per year in the US from 2006 to 2010. About 31%

• f these deaths are attributed to heat‐related causes and 63% are

attributed to exposure to excessive cold. 1

 The report estimated 307 heat and cold related deaths per year in the

northeast region.

1Berko, Jeffrey, Deborah D. Ingram, Shubhayu Saha, and Jennifer D. Parker. 2014. Deaths Attributed to Heat, Cold, and

Other Weather Events in the United States, 2006–2010. National Health Statistics Reports. Number 76 (July 30, 2014).

Evaluations: MA Low‐Income Single‐Family Non‐Energy Impacts, 2016

Evaluations: MA Low‐Income Single‐Family Non‐Energy Impacts, 2016

 Findings: annual NEI benefits to household and society of nearly

$1400 per weatherized home

 The main contributors to these benefits are

• avoided hospitalizations and emergency department (ED) visits related to

thermal stress, CO poisoning, home fires and asthma‐related symptoms;

• avoided deaths related to these same factors
• disposable income gains from fewer missed days at work

 Thermal stress NEIs are primarily due to improved air sealing,

heating systems, and insulation

 The value of these NEIs is driven in part by avoided deaths from

reducing exposure to dangerously cold or hot temperatures.

Evaluations: MA Low‐Income Single‐Family Non‐Energy Impacts, 2016

Evaluations: RI Job Creation from Energy Efficiency Expenditures by National Grid, 2016

 Scope: examined the job impacts of National Grid’s energy

efficiency programs and services delivered to Rhode Island electricity and natural gas customers in 2015

• Identified 1,009 companies and agencies, 79% of which were located in

Rhode Island

• Included companies that installed energy efficiency measures and those

that assisted customers to secure rebates (e.g., new construction, upstream lighting).

Evaluations: RI Job Creation from Energy Efficiency Expenditures by National Grid, 2016

 Methodology:

• interviewed managers at energy services companies,

equipment vendors, and contractors

• reviewed company information on staffing, payroll, FTEs
• reviewed National Grid’s records of all energy efficiency

measures installed throughout Rhode Island in 2015

 calculated labor hours and FTEs for measure installation, based on

industry standards and interviews with contractors and experts

Evaluations: RI Job Creation from Energy Efficiency Expenditures by National Grid, 2016

 Findings: 695.8 full‐time equivalent (FTE) workers were

employed in 2015 as a result of National Grid energy efficiency spending on RI electricity and gas customers

 Most of the jobs created were local because they were tied to

installation of equipment and other materials.

Total Resource Benefits (millions)1 NEIs (millions)2 NEIs as percent of Total Resource Benefits MA Electric (2016 actual) $1,927 $334 17.3 % MA Gas (2016 actual) $399 $159 40.0 % CT Electric (2017 planned) $338 $59 17.4 % CT Gas (2017 planned) $26 $14 55.1 % RI Electric (2017 planned) $206 $42 20.2 % RI Gas (2017 planned) $49 $18 36.2 % VT Electric and Gas 15 % NEI adder applied to total energy benefits, plus an additional 15% adder for low‐income benefits

1Total resource benefits include electric capacity, electric energy, natural gas, oil and propane benefits (and water savings in MA and RI). 2NEI values for all states reflect participant NEIs, such as O&M, labor, health, safety, and property values. MA NEI values also include

utility benefits, particularly for low income customers, such as reduced arrearages.

NEI values in New England

 NH utilities currently claim avoided water and sewer

costs in the TRC test, but do not claim other NEIs

 NH utilities propose a 10% adder, applied to total

electric and gas benefits

• Not applied to water savings, thereby avoiding double

counting NEIs

2018‐2020 Plan NEI proposal

 In the absence of NH‐specific studies, the adder

allows for recognition of NEIs in benefit/cost testing

 Based on evidence from neighboring states’

evaluations, 10% is a conservative proxy for the multitude of known NEIs

2018‐2020 Plan NEI proposal

 Issues surrounding future NEI evaluation and research

will be discussed in the EM&V working group

 “The NH Utilities recommend the EM&V Working

Group, as described in the EM&V section of this Plan, be tasked with the ongoing review and quantification of NEIs for incorporation in future plans” – 2018‐2020 Plan

2018‐2020 Plan NEI proposal

Thank you Michael Goldman michael.goldman@eversource.com