Building Operating Management

Utilities Offer a Range of Incentives for Improving Energy Performance

Energy Efficiency

OTHER PARTS OF THIS ARTICLEPt. 1: This PagePt. 2: How to Get Going on Energy Efficiency Programs

Few businesses actually want their customers to purchase less — rather than more — of whatever it is they're selling. Electric utilities, on the other hand, often do. Many have a range of programs that help their customers make more efficient use of the energy they buy.

For most facility managers, energy efficiency can have a substantial impact on the bottom line. Energy costs per square foot average $1.51 for the typical office building, according to the U.S. Energy Information Administration (EIA). Heating, lighting and cooling account for more than 60 percent of this energy consumption, EIA reports.

While the specific features of the energy-efficiency programs vary from one utility to another, many work something like this: Energy experts from the utility work with the facility manager to identify the energy-saving measures that make the most sense for the building. These can include steps that are no- or relatively low-cost, as well as actions that require a larger investment, such as installing a new, high-efficiency chiller. For some investments, the utilities help to offset costs. For instance, they may offer a rebate based on the number of kilowatt-hours to be saved with the new equipment.

It's important to note that the utility programs don't aim to cover the entire cost of an investment. Instead, their goal is to offer enough of a financial incentive that an upgrade becomes financially feasible for the facility. In addition, the equipment purchased must meet the utility's standards for energy efficiency to be considered for an incentive.

While the financial incentives are key, particularly given the tight budgets with which many facility managers are working, the advice and insight provided through the energy evaluations can be just as important, says Ann Camperson, strategic account manager with Pacific Gas and Electric Company (PG&E), which serves customers in northern and central California. They can conduct energy audits, identify savings opportunities, work through financial calculations and help facility managers present information effectively to the executive team who will need to sign off on any investments.

Powerful Motivators

Why are utilities helping their customers save energy? For starters, "the programs are targeted at helping us avoid building costly new power plants," says Dan Haywood, program manager with Florida Power & Light Company (FP&L). "That saves money for everyone."

"Energy efficiency and demand reductions are the least-cost alternative to adding supply-side resources," or new power plants, says Lee Gabler, director of demand side management and renewable operations with Xcel Energy, which has regulated operations in eight Midwestern and Western states.

Legislation and regulation also come into play. Many utilities are charged by their public service commissions with administering funds dedicated to energy efficiency programs. These programs implicitly recognize that conservation is the least expensive way to stretch energy resources, says Campbell Hawkins, manager of business portfolio programs with Southern California Edison (SCE). "It's more cost-effective for our customers to invest in energy efficiency, versus new sources of supply."

A concern for the environment is another factor. The programs offered by Con Edison Company (ConEd) of New York are part of a statewide effort to reduce carbon emissions, says David Pospisil, manager of commercial and industrial energy-efficiency programs.

A similar situation holds in Massachusetts. "With the passage of the Green Communities Act (in 2008), we're mandated to pursue all options for energy efficiency," says Penelope Connor, vice president of customer care and energy efficiency with Massachusetts-based NSTAR. Conserving energy "is one of the fastest and lowest-cost ways to essentially create new generation that's carbon free."

Institute for Electric Efficiency

Created in 2008 by the Edison Foundation, the Institute for Electric Efficiency (IEE) recognizes the role of energy efficiency in addressing climate change and moderating the anticipated growth in demand for electricity. The Institute was created to accelerate electric utility industry energy-efficiency and demand response initiatives and to boost the industry's associated investments.

IEE has several goals: to advance the application of energy-efficiency practices and demand response among electric utilities; to promote the sharing of information, ideas and experiences in energy efficiency and demand response in the power sector; and to act as a resource of effective business models, practices and processes.

Its website ( contains numerous reports and articles on topics ranging from state energy regulations to smart meters to dynamic pricing. For instance, in 2010, IEE, in collaboration with the Consortium for Energy Efficiency and the American Gas Association, collected data on the impact of ratepayer-funded energy efficiency projects. They found that electric efficiency projects saved enough energy in 2009 to power about 8 million homes for one year.

The investor-owned utilities — responsible for 70 percent of all energy generation in the United States — are IEE's primary members. However, membership in IEE is open to all electric utilities. The Institute serves electric utilities, regulators and other stakeholders.

Continue Reading: Energy: When Less is More

Utilities Offer a Range of Incentives for Improving Energy Performance

How to Get Going on Energy Efficiency Programs

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  posted on 4/27/2011   Article Use Policy