Utility companies are not created equal. Some innovate and continually improve their programs, while others remain stuck in the past. One key indicator of how a utility company stacks up is its energy efficiency performance.
To help compare utilities’ energy efficiency efforts, the American Council for an Energy-Efficient Economy recently released a first-of-its-kind scorecard analyzing the 51 top utility companies’ performance in this area. The scorecard is useful for a variety of reasons, but its groundbreaking contribution is a set of standards that can be applied for continued analysis of utility companies’ efforts towards an energy efficient future.
The scorecard categorizes utility companies’ efforts so that their program successes can be replicated and their challenges can be learned from. Best practices can then be scaled to any utility company as the movement towards improving energy efficiency gains greater momentum nationwide.
ACEEE’s 3 Main Categories for Analysis
- Quantitative Savings and Spending Performance
- Net energy savings
- Program spending
- Peak demand reductions
- Lifetime savings
- Achievement of energy savings goals
- Program Diversity and Emerging Areas
- Diversity of programs
- Emerging programs
- Pilot programs
- Low-income offerings
- Advanced metering penetration
- Utility data access
- Electric vehicles
- Efficiency-Related Regulatory Services
- Energy savings targets
- Residential rate design
- Utility business model approaches
- Program evaluation practices
Clearly there are a lot of variables that go into ACEEE’s evaluation. Factor in inconsistencies related to geographic region (think local and state government support, customer-base demographics and value systems, and climate challenges) and you start to get the picture of what a monumental task it was to compile these data and analyze them effectively. The report is an essential first step for strategic planning in a rapidly evolving utility industry.
What are the best performers doing right?
- Strong regulatory support from local governments for strategic policy planning: The top utility companies operate in an atmosphere of cooperation with local and state officials. Although policies are ultimately approved by regulators, utilities have strong influence based on what they propose and support.The strongest utility companies are in states with supportive regulatory influences on energy efficiency, whereas the weakest utility companies tended to be in states who do not prioritize energy efficiency efforts in regulatory policy.
- Leaders in cutting edge technology: Examples of technology centered around energy efficiency are home automation systems such as smart thermostats, Whole Building Energy Modeling and software tools for energy use tracking.
- Provide customers with real time energy savings data to help them manage their costs: From a Demand-Side Management standpoint utility companies can implement utility programs that will influence the customers use of energy to change the utility’s load shape. An example of this is offering different time-of-use rates to support peak demand reductions.
- Diversity in programs: The top ranked utility companies offered 20 or more programs with heavy emphasis on the emerging programs. Programs for small businesses, residential HVAC, and custom industrial programs are among the most commonly used.
Where is there room for improvement?
The first area for improvement identified by the ACEEE report is reforming utility company business models by prioritizing financial performance incentives and utility revenue decoupling. In many current utility business models, pushing towards energy efficiency is disincentivized because profits are directly linked to power sold.
Decoupling is a mechanism that tweaks business models to link profits to number of customers served rather than units of power sold. The most effective utility companies are tweaking business models to take advantage of financial performance incentives AND revenue decoupling efforts.
ACEEE also sees great opportunity in utility companies becoming the primary source of education for customers on energy efficiency practices and potential savings. Utility companies should take steps to educate customers on energy efficient technology in addition to making personalized energy efficiency data available to them.
Another area of continued importance is cooperative partnering with local and state regulatory entities to improve systems to track and analyze trends for more effective strategic planning and push energy efficiency policies forward. Lastly, utility companies should position themselves to act as community leaders in the advancement of knowledge and efficiency best practices.