PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA

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1 STATE OF CALIFORNIA PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA Edmund G. Brown Jr., Governor Advice Letter: 3460-E-A (U 338-E) February 17, 2017 Russell G. Worden Managing Director, State Regulatory Operations c/o Eric Yamashita Southern California Edison Company 8631 Rush Street Rosemead, CA Subject: Disposition approving Advice Letter 3460-E-A (U 338-E), Southern California Edison Company s Submission of High Opportunity Projects and Programs Proposal: Public Sector Performance-Based Retrofit Program Mr. Worden: Commission Staff has determined that Southern California Edison Company s (SCE) Advice Letter 3460-E-A is approved as supplemented. The Tier 1 Advice Letter is effective on the date of the original submittal, August 22, Commission Staff performed a review of the original advice letter 3460-E, and made recommendations for improvements to the program design and to comply with the guidance in the High Opportunity Energy Efficiency Programs or Programs Ruling of December, 2015 (the HOPPs Ruling). Staff submitted comments and questions to SCE, advising the responsible personnel that a supplemental advice letter would be required for approval. SCE resubmitted its proposal as supplemental advice letter 3460-E-A on January 10, No comments or protests were submitted in response to either the original advice letter or the supplemental advice letter. Attachment 1 provides a summary of the requirements specified in the HOPPs Ruling and the Staff s response to SCE s proposal in the supplemental advice letter. Attachment 2 provides a detailed summary of the requirements specified in the HOPPs Ruling and verifies that Staff has determined that the resubmitted proposal meets each requirement. Please contact Robert Hansen of the Energy Division Commission Staff at or robert.hansen@cpuc.ca.gov if you have any questions. Sincerely, Edward Randolph Director, Energy Division California Public Utilities Commission Attachments: 2 Cc: Service list R Pete Skala, Energy Division Carmen Best, Energy Division Robert Hansen, Energy Division

2 ATTACHMENT 1 Background, Discussion, Additional, and Conclusions I. Background On August 22, 2016, Southern California Edison Company (SCE) filed Tier 1 advice letter 3460-E, consistent with the Commission s Assigned Commissioner and Administrative Law Judge s Ruling Regarding High Opportunity Energy Efficiency Programs Or Projects, dated December 30, 2015 (the HOPPs Ruling). In this original submission of the advice letter, SCE proposes a Public Performance-Based Retrofit (PBR) Program. The Public PBR Program targets California State University, University of California, and Community Colleges, as well as non-educational public buildings. Four pilot program sites have been selected: South Hall at UC Santa Barbara, the Social & Behavioral Sciences Building at CSU Dominguez Hills, the Social Science Building at Cerritos College, and the State Government Center Building for CalTrans. Each of these buildings meets the stated criteria for the program, and will begin project activities as additional program participants are considered. The program is designed to interface with Southern California Gas Company s (SoCalGas) High Opportunity Programs and Projects (HOPPs) Monitored Performance-Based Retrofits (MPBR) Program, and the three educational facilities listed as pilot projects in SCE s supplemental advice letter were also named as pilot projects in SoCalGas s supplemental advice letter 4956-G-A. Commission Staff and a team of reviewers were assigned to the advice letter on August 22, 2016, beginning the 21-day review period prescribed by the HOPPs Ruling. During the preliminary review, which followed the standard review checklist for HOPPs proposals, Staff determined several items were missing or insufficiently detailed, prompting staff to request a supplemental advice letter. The findings of the review were discussed with SCE staff during a conference call on September 9, 2016, and the review checklist was transmitted to SCE the same day. It was determined that the process of revising and reviewing the advice letter would extend beyond the originally allotted duration, thus Staff served SCE with a 120 day suspension of the advice letter. The new review period was scheduled to end on January 18, Staff and the review team reconvened with SCE in a second conference call on October 6, 2016, to discuss the review findings, then contacted SCE by regarding the status of their revisions and to offer further guidance on November 1, 2016, with no response, and again on January 3, 2017, noting the approaching January 18 expiration of the advice letter suspension period. SCE submitted a supplemental advice letter on January 10, Staff determined there was insufficient time to complete a thorough review, and served SCE with a second and final suspension, extending the review period up to 180 days. Staff and reviewers proceeded to review the supplemental advice letter, the results of which are reflected in this disposition letter. The review team was especially interested in ensuring seamless integration between SoCalGas s HOPPs MPBR program and SCE s HOPPs Public PBR Program at project sites where both programs are implemented. Reviewers were also concerned about how Non-Routine Events (NRE) will be identified and documented. The supplemental advice letter states that participants will be responsible for notifying SCE of NREs. As part of this disposition, Staff requires SCE to provide participants with guidance on how to report NREs and verify them soon after. SCE will maintain records for the pilot program which may be needed for ex post analysis. Commission Staff and reviewers found the supplemental advice letter acceptable pursuant to the requirements of the HOPPs Ruling, though 2 recommendations and 9 requirements are included in this disposition which SCE must observe during implementation of the program. The following 1

3 section lists the recommendations and requirements, citing the source checklist items for each, and the third section of this attachment contains an itemized summary of the review with the criteria by which each checklist item is found acceptable. II. Summary of Additional and Recommendations Recommendations 1. SCE should implement methods for disaggregation for whole-building projects. (Checklist item 2.1.) 2. Staff advises SCE to consider contingencies for calculating savings that fall below 10% in each project s M&V plan. (Checklist item 4.1.) 1. Continuous monitoring shall be considered for projects where SCE considers disaggregation beneficial to savings estimation. For each such project, the appropriate level of circuit isolation (e.g., building, or appliance) and frequency of readings (e.g., daily or quarterhourly) shall be assessed and documented. (Checklist item 1.3.) 2. Ex-ante EUL values must be updated based on post-implementation true-up. (Checklist item 3.1.) 3. SCE must provide customers with instruction on a method, either standardized or customized for the project, for identifying Non-Routine Events, and how to document them and notify SCE. The method must specify how much time, before or after, the customer may report a Non-Routine Event. SCE must also verify all reported Non-Routine events within a reasonable period following the notification, and maintain documentation of the reported events for potential ex post analysis. (Checklist item 9.3.) 4. SCE must require participants to produce a three-year maintenance plan for all maintenance activities pertaining to the project, specifying whether internal or contract maintenance personnel are deployed. When internal maintenance personnel are to be used, this plan must describe any additional training that will be necessary to perform the tasks required for which personnel are not already trained, and how the customer will accommodate potential turnover in personnel. (Checklist items 10.1., 10.3., and 10.4.d.) 5. SCE must establish criteria for project measures by which projects proposing only lowand/or no-cost interventions will be rejected in favor of more robust projects with diverse measures. (Checklist item 10.2.) 6. Participating sites where Behavioral, Retro-commissioning, and Operational (BRO) measures are employed must become ineligible for similar BRO measures in future SCE programs at the same site. SCE must inform the participants of their ineligibility and encourage adoption of an ongoing training plan to facilitate long-term persistence beyond the project timeline. (Checklist item 10.4.a.) 7. SCE must provide participants with as high frequency savings data as is practical and, at the specified 3, 12, and 24 month reporting activities, verify that participants understand and are applying the data in ongoing operational practices. (Checklist item 10.4.b.) 2 ATTACHMENT 1

4 III. Discussion and Conclusions of HOPP Proposal 1. General Program Description The HOPPs Ruling established a requirement that a proposal must include a program description. SCE s supplemental advice letter 3460-E-A, including an attached proposal document, contains a general description of the proposed Public PBR program. The original advice letter indicates that hard to reach buildings would be targeted. Commission Staff found this term to be inconsistent with The Commission s definition in the Energy Efficiency Policy Manual. SCE removed the term in the supplemental advice letter. Commission Staff sought clarification on audit costs. The original advice letter allows participants to claim audit costs in the project cost eligible for incentive, but also permits the use of data from previous audits. Because it is unclear in the original advice letter whether audit costs from previous audits could be included in the project costs for the HOPPs Public PBR Program, the supplemental advice letter clarifies that audits performed prior to this program will not be eligible for incentives. Reviewers requested SCE to include a discussion on spot-metering in the program proposal. In the supplemental advice letter, spot-metering is made available as a method for disaggregating BRO measures, but continuous metering is excluded as cost prohibitive. Staff believes no such exclusion is necessary and requires that continuous metering be considered wherever spot-metering is deemed appropriate. 2. Principles of HOPPs The HOPPs Ruling summarized that in principle high opportunity programs should focus on activities that are newly permissible as a result of AB 802, and strive to reach stranded potential to achieve energy savings. The HOPPs Public PBR Program focuses on opportunities afforded by AB 802 s savings calculation requirements for Normalized Metered Energy Consumption, which allows SCE to reach otherwise stranded savings potential through whole-building interventions in public sector. Reviewers noted the similarity of the program proposed in the original advice letter to SCE s existing Retro-Commissioning (RCx) program. In the supplemental advice letter, SCE claims they will interact with customers to reduce and/or eliminate market barriers and gaps, presumably more effectively than in previous programs, though how the interactions will be improved is unclear. Reviewers were concerned that in the original advice letter there was little indication that SCE and SoCalGas would be interacting with each other on joint projects, and that failure to do so could result in double counting and over-payment on project incentives. This is addressed in the supplemental advice letter. 3 ATTACHMENT 1

5 BRO disaggregation is not discussed in detail in either the original or the supplemental advice letter. Staff recommends that each project consider disaggregation methods for BRO measures, and reiterates the additional requirements regarding spot-monitoring above. 3. Measure Treatment Per the December Ruling, proposals must describe measures and end uses that will be addressed by the program. Staff noted that the original advice letter does not include a list of example measures. SCE provides a partial list in the supplemental advice letter, though the response to Energy Division s review directs to a more extensive, though not comprehensive, list in an Appendix 4 which is not included with the supplemental advice letter. Staff finds the omission trivial and the list presented to be sufficient for the purpose of review. 4. Savings Calculation Methods Proposals must describe savings calculation methods and provide access to models used for addressing normalized, metered energy consumption. The HOPPs Public PBR Program will calculate savings based on normalized metered energy consumption, using pre- and post-intervention metered data according to the International Performance Measurement and Verification Protocol (IPMVP) Option C. Reviewers noted that the proposed normalized metered energy consumption approaches are expected to succeed when savings of 10% or greater are achieved, but neither the original nor the supplemental advice letter provides a contingency methodology in the event that a project s realized energy savings falls below 10%. Staff, therefore, recommends such contingencies be developed in the M&V plans for each project. 5. Incentive Design Proposals must 1) provide the basis and rationale for payment structure including how the structure mitigates the risk that potential upfront payments do not overrun the value of the realized savings, 2) identify the estimated capital costs and what portions of costs are to be borne by ratepayer and by implementer, 3) describe the terms and schedule of the incentive including true up over time, and 4) describe the long term tracking and reporting strategy for sustained savings with ongoing feedback. The payment structure outlined in the supplemental advice letter is based on the normalized metered energy consumption savings calculations, with incentive payments at 3, 12, and 24 months after intervention. The total incentives from both SCE and SoCalGas are capped at 80% of the total project costs for both electric and gas interventions. In the event of severely under-realized savings after the initial payments, SCE has the ability to claw back incentives already paid. The ratepayer bears minimal liability in case a project fails to achieve its expected savings, while the implementer is motivated and empowered to achieve the expected savings through monitoring project savings achievement. Commissioning agents are identified in the original advice letter as playing a crucial role in project deployment. The program allows Commissioning Agents to be hired externally or 4 ATTACHMENT 1

6 selected among a customer s internal staff. The review team inquired about selection criteria, e.g., minimum qualifications, for a commissioning agent, but SCE did not incorporate such criteria in the supplemental advice letter. Therefore, Staff will require that commissioning agents for each project are subject to SCE approval. Thus, if a customer submits an unqualified individual for the role, SCE can either reject the submittal, recommending a third party, or require the submitted individual receive additional training in order to perform the duties of a commissioning agent. Reviewers found the original advice letter unclear on whether audit costs, which are generally permitted as part of project costs, could be claimed if performed prior to the program. The supplemental advice letter is clear that, though the program may use previous audit data, only audits performed during program participation could be claimed as eligible project costs. 6. Normalized Metered Energy Consumption Proposals must document the methods for normalizing data. The models to normalize the data should use recognized, transparent tools, and methods that are repeatable, and reviewable. Additionally, proposals for non-residential programs must explain the link between the meter or meters, and building that is acceptable for projects in the program. The supplemental advice letter proposes to use a normalized metered energy consumption approach using Short-Term Energy Monitoring data from both revenue-grade Smart Meters and non-revenue-grade sub-meters, to quantify savings according to IPMVP Option C. Normalization will use regression models to account for independent variables including scheduling and ambient conditions. Thus, projects are expected to collect: weather data from local weather stations; daily, weekly, and seasonal occupancy rates and schedules, where available; and any additional data deemed applicable at the project outset. The original advice letter allows less than 12 months of pre-intervention data be used for establishing a project baseline energy use, contrary to the HOPPs Ruling s requirements. The supplemental advice letter is modified to allow procurement to occur under certain conditions of observed data integrity prior to completing 12 months of collection. Staff finds the modified program acceptable, given that no incentives are dispensed until the project is fully approved by SCE following a full 12 months of baseline data capturing. The supplemental advice letter specifies eight characteristics by which potential projects will be selected, noting that a project need not exhibit all eight in order to be considered. Staff notes that the list does not include available pre-intervention data. Staff recommends this be a factor considered in assessing prospective projects, as sites which already have 12 months of pre-intervention data can move more quickly into the intervention phase. The supplemental advice letter also forbids projects at sites that have already been comprehensively retrofitted or commissioned. The supplemental advice letter does not explain the term, so Commission Staff interprets this to mean any IOU-supported retrofit, commissioning, or retro-commissioning projects. 5 ATTACHMENT 1

7 7. Type of Program Programs must include a minimum of 1 year of post-intervention data for retrofits, and a minimum of 2 years of post-intervention data for behavioral, retrofit, or operations projects. The HOPPs Public PBR Program implements a multi-measure whole-building approach, targeting HVAC end-use, applying normalized metered energy consumption for energy savings calculations with incremental incentive payments. 8. Threshold for Expected Savings Proposals must include a description of the expected saving from the proposed program or project intervention, and literature or data to support that demonstrate the expected impacts and certainty of the estimates. The supplemental advice letter states the program has no minimum requirements for expected savings, which will be applied to the three pilot facilities and all future projects. The program requires an independent EM&V contractor to verify savings. 9. Baseline Adjustments The proposal must 1) document the baseline assumptions and strategy for collecting necessary, 2) describe how normalization methods capture (or not) baseline assumptions, and 3) describe the methods that will be used to adjust the baseline for non-routine adjustments. Project may undergo both routine and non-routine baseline adjustments, as necessary. Routine adjustments will take place due to regular and expected changes in the independent variables used in normalization. Similarly, non-routine adjustments will take place based when Non-Routine Events (NRE) are reported. The supplemental advice letter indicates that participants are responsible for notifying SCE of NREs. Staff will require that the participating customers be provided guidance on documenting and reporting NREs. SCE must also verify NREs as soon as possible after the event, and maintain documentation of the reported NREs for possible ex post analysis. 10. Application to Behavioral Operational Retro-Commissioning If the program will include BROs, then the proposal must identify that there will be training and maintenance components included in the program. If the program will include behavior and operational activities, then the program must demonstrate multiyear savings. The supplemental advice letter lists several BRO measures as likely to be implemented as part of the program. The advice letter specifies that all staff responsible for maintaining the building or project site should be trained in the current (post-project) operating sequences. The proposal, however, doesn t require training or provide for assistance to the customers in obtaining training, which may present challenges in implementation. 6 ATTACHMENT 1

8 In the supplemental advice letter, SCE states that participating customers may use their own internal maintenance personnel for maintenance practices associated with the program, with associated costs eligible for inclusion in project costs. SCE does not attempt to reconcile the HOPPs requirement for a three year maintenance agreement, e.g., a contract with a third-party contractor, with the allowable use of internal maintenance personnel. The HOPPs Ruling requires all HOPPs programs that utilize BRO measures to include threeyear maintenance plans. Staff believes the intent of this requirement is that the Program Administrators have documentation that the maintenance practices persist for three years. Therefore, SCE must require participants which choose to use internal maintenance to produce an internal three-year maintenance plan, including any additional initial or ongoing training that maintenance personnel may need in order to perform the necessary maintenance activities to ensure persistent energy savings. The original and supplemental advice letters do not give adequate instruction on how projects are to go about selecting measures for implementation on their sites. Reviewers are concerned, especially, that customers may prioritize low- and no-cost interventions to the detriment of potentially more effective yet costlier interventions. The result of such a scenario is that a project would leave substantial savings on the table. Therefore, SCE must establish criteria by which projects proposing only low- and no-cost interventions would be rejected in favor of more robust projects with a breadth of intervention strategies. Reviewers noted in the original advice letter that there was no strategy for ensuring savings associated with project interventions persist beyond the project timeline. SCE s response was to indicate that SCE would track reported savings at 3, 12, and 24 months after the intervention, however Staff observes that this only encourages persistence through the end of the project. Therefore, in order to encourage participants to continue energy savings practices and retain institutional knowledge, project sites where BRO measures are utilized will become ineligible for future BRO interventions through SCE. 11. Financing The program proposal should describe any use of financing programs or external financing to support the program or proposed project. SCE will offer incentives based on the calculated savings up to 80% of the initial project cost. Incentives will be paid out at 3, 12, and 24 months, paying 40%, 40%, and 20% of the total incentive at each interval, respectively, though the amounts will be trued-up at each payment. Severely underperforming projects may see incentives clawed back. No external financing or financial programs were identified in the plan. IV. Conclusion For the reasons stated, and the additional requirements and recommendations outlined above, the proposal described in the supplemental advice letter is approved. Commission Staff expects to continue collaborating with SCE as projects are deployed. 7 ATTACHMENT 1

9 ATTACHMENT 2 PROPOSAL NAME: PROGRAM ADMINISTRATOR: REVIEW SHEET FOR 2016 HOPPs PROPOSALS Advice Letter 3460-E-A ORIGINAL SUBMISSION DATE: August 22, 2016 Public Sector Performance-Based Retrofit Program Southern California Edison RESUBMISSION DATE: January 10, 2017 PROPOSAL TYPE: HOPPs Retro-Commissioning Program ED DISPOSITION DATE: February 17, 2017 Compliance Area 1. General Program Description (p.24) PA Proposal 1.1. Description of the intervention strategy employed, with reference to the type of known existing business model being employed (e.g. Standard Performance Contracting, ESCO models, retro-commissioning, experimental design, financing) Full Proposal Review: Accept/ Need more Accept Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. ED: The proposal combines of retro-commissioning, retrofit, and behavioral/operational interventions. SCE has described the targeted public sector building segment as hard-to-reach, and intends to target buildings that are susceptible to delayed improvements and indefinite equipment repair. The proposal does not present a rationale for considering public sector buildings as hard-toreach as defined by the Commission in the Energy Efficiency Policy Manual, version 5, footnote 32. The proposal should substantiate SCE s decision to consider public sector buildings as hard-toreach and describe. Please also specify what evidence SCE will require and maintain to support participant eligibility based on histories of indefinite repair. SCE: The Policy Manual definition of Hard To Reach (HTR) is not consistent with the proposed program. The phrase HTR was removed from the program description Provides specifics on the terms of the program structure Accept ED: The program proposal no longer targets hard-to-reach buildings. Energy Division is satisfied with the description of the intervention strategies. ED: The proposal is not clear on the handling of audit costs, as customers can apparently include audit costs in project costs and use other resources to cover audits as applicable. Please clarify whether projects which use data from a prior audit through an earlier program can claim those costs under the proposed program? SCE: An audit to identify savings opportunities must be conducted. Participant-funded audit costs can be included in the total project cost. For some participants, audit resources may be available from other sources, such as Regional Energy Networks or the California Energy Commission (CEC), where applicable. Audits funded by other entities or conducted prior to the intervention shall not be considered as part of the overall project cost. Project expenses that are permissible for inclusion to total project costs include the following: Equipment Costs Labor and installation costs 1

10 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. Costs associated with external maintenance agreement or costs associated with internal maintenance program (so long as the internal expenses are directly related to the project). Metering expenses including installation. Audit costs associated with developing measures for project. Applicable Commissioning Agent costs. Other direct project expenses may be included into the total project costs and must be submitted and approved by the PA in the project application before they are incurred Explains how the project/proposal addresses past challenges that have arisen with the business model being employed? Accept with Additional ED: Section 3.5 of the supplemental advice letter clarifies that audits will be included in project cost when performed under this program. Data from previous audits and those performed outside this program may be used, but will not be reimbursed through this program. ED: The proposal addresses some issues with past MBCx programs identified and addressed, however Staff requests that the proposal discuss spot-metering (see item 3 under Application to Behavioral, Retro-commissioning, and Operational Measures) and BRO measure disaggregation. SCE: SCE does not see disaggregation as a requirement for BRO or retrofit measures. Spot-metering could be used to assist in disaggregating load into system or equipment levels. Any spot-metering would not include continuous metering as the associated expenses could become cost prohibitive. The meter data will be collected for the 36-month period following confirmation of measure installation and commissioning. The first 24 months is required to report savings. An additional 12 months of data will be collected and used in the EM&V process. 2. Principles of HOPPs (p. 6) 2.1. Proposal demonstrates how the program/project will focus on activities that are newly permissible under CPUC code (b), by a) Program/project will reach stranded potential by utilizing the new approaches to Accept ED: Section 3.4 of the supplemental advice letter states that spot-metering could be used, but further specifies that continuous metering will not be used. Staff finds this specification unnecessary and, given the dropping cost of data transmission and storage, sees no reason to exclude its use outright. Therefore, continuous monitoring shall be considered for projects where SCE considers disaggregation beneficial to savings estimation. For each such project, the appropriate level of circuit isolation (e.g., building, or appliance) and frequency of readings (e.g., daily or quarter-hourly) shall be assessed and documented. ED: The proposal primarily targets MBCx activities that the PA s partnership programs with UC and CSU already pursue. The program is similar to prior MBCx program for the UC system, with the notable difference of higher incentives and caps. The MBCx whole building meter regression approach does not allow disaggregation of Behavioral, Retro-commissioning, and Operational measures undertaken. Note also that the HOPPs Ruling also limits the impact s expected useful life. Staff recommends discussing alternative means for disaggregating BRO impacts. 2 ATTACHMENT 2

11 Compliance Area PA Proposal value and measure savings b) Focus on interventions that PAs could not previously do. Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. The proposal should discuss coordination with the SoCalGas MPBR HOPPs program (advice letter 4956-G) to eliminate the possibility that facilities participating in both programs receive combined incentives in excess of the cap at 80% total project costs. Staff recommends also discussing how incentives will be split between SCE and SoCalGas for combined projects. SCE: Through key interventions, the program will interact with the public sector to reduce and/or eliminate market barriers and gaps. SCE will coordinate a review process with Southern California Gas Company (SoCalGas) to track both gas and electric savings and incentives. Incentive payments will be monitored through the review process to ensure the incentive cap of 80 percent is not exceeded. Shared program forms will be developed to document savings, incentives, and project cost to demonstrate that the cap has not been exceed. If the cumulative incentive to be paid in a given performance period will exceed 80% of the project cost cap, the incentive for each fuel will be prorated based on the percent of the source savings from the verified fuel savings in the performance period. ED: SCE has not addressed Staff s inquiry regarding BRO disaggregation. This is not a requirement, but Staff reiterates its recommendation that SCE should implement methods for disaggregation for whole-building projects. See item 1.3 for additional requirements regarding disaggregation. 3. Measure Treatment (p.25) 3.1. Measures and end uses that will be addressed- describe what type of intervention activities will be applied to what measures. If implementers propose to use deemed savings values, then the DEER value applicable to the site s existing condition baseline treatment must be identified (or an alternative work paper offered per CalTF vetting process) Accept with Additional Section 2.2 of the supplemental advice letter outlines SCE s plan to coordinate with SoCalGas. Total incentives will not exceed 80% of combined project costs. ED: All savings will be based on normalized metered energy consumption (NMEC), though may need some disaggregation for EUL purposes. Staff anticipates that cost-effectiveness and lifecycle costs will be impacted by EUL and disaggregation methodology. Please include a list of expected or approved measures and interventions for the proposed program. Individual projects will vary, but at minimum, examples should be presented. SCE: The audit results will be used to identify the individual energy efficiency measures in the project with projected estimates of energy savings based on engineering calculations. These savings will be used to determine a weighted average of EULs to provide a NMEC level EUL on a project basis. Since the metering will be left in place, ex-post EM&V will use this as a foundation to determine an appropriate EUL for NMEC approaches. The program will include retrofits, behavioral, RCx, and optimization measures. Program participants will be required to install at least one retrofit measure for each project. Example measures are in Table 2 in Section A more extensive, though not comprehensive, list shown in Appendix 4. 3 ATTACHMENT 2

12 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. 4. Savings Calculation Methods (p.25) 4.1. For normalized metered energy consumption, detailed description of the savings calculation methods and provide access to models used for addressing normalized, metered and energy consumption, detailed in Attachment A. Accept ED: SCE has submitted list of exemplary measures, largely consisting of BRO interventions. Building EULs and projected savings will be calculated before intervention. Ex-ante EUL values must be updated based on post-implementation true-up. ED: Issues with buildings served by master campus meter need to be more fully explained. Building-level CHW and/or HW/Steam meters may need to be supplemented by kwh submetering to capture all the kwh savings. Please describe the calculation of chiller plant level efficiency to convert CHW ton-hour savings to kwh savings. Staff notes that NMEC-based approaches are likely to succeed if a reduction in energy use is likely to meet or exceed 10 percent. Projects expecting lesser savings risk savings not be detectable. Please include an energy reduction goal in its qualifying criteria. Please specify a preferred savings threshold to be applied as projects are selected, and clarify how first payment is calculated and screened in ex-ante phase to ensure that savings meets or exceeds threshold. SCE: The baseline models and process will be a component of the M&V plan. SCE will submit an M&V plan and specific statistical models including source code for each project to the CPUC for review. For campuses with central systems (e.g. central plants), M&V will follow ASHRAE RP-827 Methodology Development to Measure In-Situ Chiller, Fan and Pump Performance29. As part of the M&V plan, program participants will be required to list any additional energy efficiency measures that will be installed. Participants will take a comprehensive approach to EE by utilizing this single path to evaluate, calculate, and measure persistence of savings for retrofit, behavioral, RCx, and optimization measures with a focus on achieving a minimum of 10 percent energy reduction. According to American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Guideline 14, a standard baseline model shall have a minimum CV(RSME) of 20% for energy. 30 For the Program, we will initially use a CV(RSME) of 20 percent to determine whether a baseline is accurate. The incentive payment structure is discussed in detail in Section 3.8 Incentive Design. The section includes the detailed equations that are used to calculate incentives. Examples of how the incentives would adjust when savings decline are also provided. ED: Section 3.4 of the supplemental advice letter outlines how sites metered at the campus-level will be accommodated. SCE has not presented its contingency for measuring and evaluating sites that fail to achieve a 4 ATTACHMENT 2

13 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. minimum of 10% energy reduction. Staff advises SCE consider contingencies for calculating savings that fall below 10% in each project s M&V plan. The incentive payment structure outlined in Section 3.8 of the supplemental advice letter addresses Staff s concerns regarding threshold savings for project selection and the incremental incentive structure For deemed savings projects that are providing incentive payments based on ex ante values, standard custom project savings calculation methods apply. N/A 5. Incentive Design (p. 25 & 26) Customer incentives (Attachment A p ) 5.1. Basis and rationale for payment structure--explain the payment structure, including the basis for setting the upfront payment (if any) and how the structure mitigates the risk that potential upfront payments do not overrun the value of the realized savings. Accept ED: The proposed incentive structure does not fully implement a pay-for-performance structure and encourages expected savings to be over-estimated in order to maximize the initial payments. In the second to last paragraph on page 16 that reads that the allowed variance of incentive payment is 0-110%. Please clearly indicate that SCE intends to limit the trued-up performance incentive payments to not exceed 110% of the initial estimated Gross Impacts. Although SCE states that the incentive payments are trued-up and example 4 on page 16 shows a trued-up kwh value used, the formulas leave the trued-up impacts without formal definitions in the formulas shown on page 15 and therefore could be misinterpreted at program implementation. Also, please include a comparison to the total project costs, accounting for any SoCalGas incentives in the incentive payments determination, at each stage of incentives. Incentive structures for combined SCE and SoCalGas projects should be coordinated. Note the following recommended changes to section 3.7 Incentive Design: 1. SCE s Initial Payment = $0.12 x Estimated Gross kwh Savings + $200 x Estimated Gross kw Peak Reduction x 40% 2. Another 40% after 12 months after completion: 12 month savings true-up and new impact values shall be determined at this stage based on M&V data collection and analysis. However, it appears that the total incentive amount isn t re-estimated at this point based on the trued-up Impacts (kwh 2 and kw 2 left undefined in the submitted SCE formulas, their meanings are implied only). This requires clarification. CPUC staff should require the trued-up Gross Impacts be used at this point and the formula should read: SCE s First Persistence Payment = $0.12 x Trued-up Estimated Gross kwh Savings at 12- months + $200 x Trued-up Estimated Gross kw Peak Reduction at 12-months x 80% - SCE s Initial Incentive Payment 3. The final payment formula should read: SCE s Second Persistence Payment = $0.12 x Trued-up Estimated Gross kwh 5 ATTACHMENT 2

14 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. Savings at 24-months + $200 x Trued-up Estimated Gross kw Peak Reduction at 24-months SCE s Initial Incentive Payment SCE s First Persistence Payment 4. SCE states that if the incentive payments exceed the incentives determined through the trued-up impacts, the customer is responsible to refund excess payments. SCE has not indicated when this balance check will occur (appears implied to occur at the 24-month true-up) and when and how the demand of a refund of overpaid incentives will occur. Will SCE add the overpayment to the customer s electric bill? SCE: 1. Project incentives will be capped at 110% of 12 month savings estimate. 2. All payments are based upon NMEC. At each payment the savings are calculated and trued up based upon the most recent estimate of annual savings. The payment scheme generally pays 40% of incentives at 3 months, another 40% at 12 months, and the final 20% at 24 months Month Payment = $0.12 x Estimated Gross kwh Savings (at 3 Months) + $200 x Estimated Gross kw Peak Reduction (at 3 Month) x 40% Month Payment = $0.12 x Estimated Gross kwh Savings (at 12 Months) + $200 x Estimated Gross kw Peak Reduction (at 12 Month) x 80% - 3-Month Payment Month Payment = $0.12 x Estimated Gross kwh Savings (at 24 Months) + $200 x Estimated Gross kw Peak Reduction (at 24 Month) x 40% - 12-Month Payment 3- Month Payment 6. The customer will be solely responsible for paying the refund to SCE, even if the incentive has been released to an Authorized Third Party. The customer shall repay any incentive amounts due to SCE, following current procedures for clawing back incentives Measure costs and capital burden Identify the estimated capital costs and what portions of costs are to be borne by ratepayer and by implementer. Accept with Additional ED: SCE has responded to ED s recommendations and provided an expanded description of incentive structure in section 3.8 of the supplemental advice letter. ED: As proposed, it appears that the ratepayers will bear the majority of the project costs, both capital and labor, with the customer bearing 20% of the total project costs and the ratepayer as much as 80%. However, without direct and careful coordination with the SoCalGas MPBR HOPPs program, the ratepayer may bear more than the total project costs. Audit costs are included in project costs; however, if audits are covered by other entities, audit cost should not be included. Please clarify when audit costs are to be included The proposal does not include a breakout of what Direct Implementation costs include. Over the 4-year proposed program duration, this category represents 55% of the program costs. The Audit costs are included in the project costs. Please specify what this category includes, e.g. payments for 3 rd Parties, or SCE field and account representatives. Please explain eligible costs and selection criteria associated with the commissioning agent. 6 ATTACHMENT 2

15 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. Please explain how SCE will oversee project costs and ensure responsible spending. SCE: An audit to identify savings opportunities must be conducted. Participant-funded audit costs can be included in the total project cost. For some participants, audit resources may be available from other sources, such as Regional Energy Networks or the California Energy Commission (CEC), where applicable. Audits funded by other entities or conducted prior to the intervention shall not be considered as part of the overall project cost. This program is proposed to be a third party implemented pay for performance program. The estimated DI costs include associated third party costs, SCE field/account representatives, and program and contract management costs associated with Direct Implementation. The customer will be responsible for hiring a Commissioning Agent. SCE will review all paid invoices associated with the project to insure costs are reasonable and within industry accepted guidelines. Project expenses that are permissible for inclusion to total project costs include the following: Equipment Costs Labor and installation costs Costs associated with external maintenance agreement or costs associated with internal maintenance program (so long as the internal expenses are directly related to the project). Metering expenses including installation. Audit costs associated with developing measures for project. Applicable Commissioning Agent costs. Other direct project expenses may be included into the total project costs and must be submitted and approved by the PA in the project application before they are incurred. ED: In its response to Staff s review sheet, SCE elaborates on the costs associated with the customers hiring of a Commissioning Agent, they have not explained by what criteria the Commissioning Agents will be selected. Thus, along with SCE overseeing project costs, all project commissioning agents must be subject to SCE approval. In section of the supplemental advice letter, SCE specifies a short-list of permissible costs, and will permit additional project expenses through a review and approval process. 7 ATTACHMENT 2

16 Compliance Area PA Proposal 5.3. Partial or incremental payments with true up over time Describe the terms and schedule of the incentive Full Proposal Review: Accept/ Need more Accept Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. ED: See item 5.1 for comments regarding the incremental incentive structure. SCE: The incentive payment structure is discussed in detail in Section 3.8 Incentive Design. The section includes the detailed equations that are used to calculated incentives. Examples of how the incentives would adjust when savings drop are also provided Strategy for tracking persistence describe the long term tracking and reporting strategy for sustained savings with ongoing feedback. Accept ED: Section 3.8 of the supplemental advice letter addresses the pertinent concerns noted in Incentive Design, Item 1. ED: The submitted review sheet in Attachment C to the advice letter indicates that Section 3.7 of Attachment A addresses persistence. The cited section indicates how the incentives and partial payments will be calculated but does not describe any specific tracking and reporting of savings and ongoing feedback. Please revise the proposal to clearly describe how persistence will be tracked, especially with respect to BRO interventions. SCE: As a performance-based program, participants will be encouraged to track on-going savings to ensure that measure saving s persists. SCE will track and report savings at months 3, 12, 24, and at later points determined in ex-post EM&V plans. In addition, SCE may also track savings on a more frequent basis, as needed. 6. Normalized Metered Energy Consumption (Attachment A p. 1-4) 6.1. Programs and projects must document the method for normalization and list 6.1.a. the variables included in the normalization process and Accept ED: Section of the supplemental advice letter explains SCE s strategy for tracking energy savings and persistence. ED: Staff notes that it is impossible to exhaustively identify relevant normalization parameters ahead of time and across all territory; however CPUC requests to review the final M&V plans for each project, which will include the selection and frequency of normalization data, as well as the baseline model statistics. Please indicate that EM&V plans for each project will be submitted to CPUC for review. SCE: The baseline models and process will be a component of the M&V plan. It is likely that the regression models used to estimate savings will be public-domain models as they are more transparent than private models. SCE will submit an M&V plan and specific statistical models including source code for each project to the CPUC for review. 6.1.b. Documentation of specific program actions that are intended to drive savings. Accept ED: Section of the supplemental advice letter specifies that SCE will submit the M&V Plan and additional materials for review. ED: The proposal covers a wide range of retrofit measures affecting the HVAC end-use, along with retro-commissioning using an MBCx model and behavioral and operational measures. Please describe the expected behavioral and operational interventions. Also describe the types of HVAC and building shell retrofits anticipated. The list needs only to be exemplary and not limiting. SCE: The program will include retrofits, behavioral, RCx, and optimization measures. Program 8 ATTACHMENT 2

17 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. participants will be required to install at least one retrofit measure for each project. Example measures are provided in Section 3.5.1, Table 2, with a more extensive, though not comprehensive, list shown in Appendix Models, methods, and tools must use recognized engineering, economic or statistical approaches to normalization. Accept ED: Section of the supplemental Advice includes several exemplary retrofit and BRO measures. Note that Appendix 4, cite in several locations within the supplemental advice letter, is not included. ED: CPUC requests to review models, methods, and tools, including source code, prior to its use for this program. Please include a requirement that all tools and accompanying documentation will be submitted to the CTA prior to their use in this program. If code is written in Python or R, that source code must be uploaded as well. SCE: SCE will submit an M&V plan and specific statistical models including source code for each project to the CPUC for review 6.3 Models, methods and tools must be transparent, reviewable and replicable by peer reviewers. Accept ED: SCE will submit the requested materials with the M&V plan and project plans for CPUC review. ED: How will SCE verify that need for non-routine adjustments if whole building metering is within expected limits and the customer does not cooperate with appropriate tracking and disclosure? CPUC Ex Post evaluators have been encountering more customers that are reluctant to cooperate. What steps will SCE undertake to ensure proper tracking and report? What steps will SCE institute to track if the building participates in any other EE program, either upstream or downstream? NRAs are up to the customer. Upstream tracking is especially difficult. SCE: Program participants shall be responsible for notifying SCE of any non-routine event (NRE). Program participants are required to submit a detailed narrative describing the changes that have occurred and the duration of NRE. A revised baseline model will be developed to assess any major deviations from the postinstallation usage pattern. The NRE identification process and appropriate corrections will be assessed on a case by case basis for projects where an NRE occurs. Participants are prohibited from double dipping. The program will utilize SCE s internal process to prevent double dipping with Upstream Programs. A similar process is already in place for a cross check for Savings By Designs projects and will be utilized for program as follow: Step 1: The Upstream application Reviewer downloads a report containing HOPPs PBR projects from the SCE CRM database. Step 2: The Reviewer applies an automatic filter to isolate HOPPs PBR projects. Step 3: The Reviewer searches the filtered report for a match in the Upstream project service account numbers, service address, and/or customer name in the list of HOPPs 9 ATTACHMENT 2

18 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. PBR projects. Step 4: If a match is found in a HOPPs PBR project, the Reviewer reviews the corresponding Service Contract (which contains full detail of the installed measures) in the SCE database to verify if the Upstream measure was installed. Step 5: If the Upstream measure is found, the Reviewer rejects the Upstream project in the Upstream online application system to avoid double counting In addition to normalized savings as defined here, programs and projects shall also report absolute changes in consumption expressed with a common denominator Models must include pre and post-intervention data streams. Minimum 1 year post data for retrofits, and minimum 3 years for Behavior Retrofit or Operations. Accept Accept with Additional ED: Section 3.8 of the supplemental advice letter provides more on program models, methods, and tools. SCE will identify measures used in HOPPs projects and remove them from the corresponding Upstream Project in the Upstream online application system. In this way, upstream incentives are permitted for use in performance-based retrofits, while minimizing the possibility for double-counting savings. ED: The proposal allows projects to use baseline data of less than one-year duration. The CPUC s requirement to track savings from BRO measures for three years after installation has not been confirmed. Please confirm that this proposal will comply with the CPUC requirement of one-year of baseline data, a three-year maintenance contract, tracking BRO measure persistence over that time. SCE: Baseline models with 12 months of data will be required to have fit statistics of 20 percent or less. The program may approve the participant to order equipment prior to receiving the full 12 months of pretrending data if good correlation is demonstrated. Installation of equipment shall not occur until the participant receives notification from the program that the project is fully approved. Given that most public entities have internal maintenance programs, it is preferable to simply measure savings directly, and provide feedback to participants to help them manage their energy and ensure that savings persist. Participants that choose to rely upon their internal maintenance programs will be required to submit a full description of their program before approval. Any monitoring beyond year two will be determined through ex-post evaluation, monitoring and verification. ED: Section 3.4 of the supplemental advice letter argues that less than 12 months of preimplementation data are required to produce an accurate baseline when using metered interval, as opposed to monthly billing data with additional caveats on the particulars of the collected data. The program proposal allows that projects may begin procurement with less than 12 months of 10 ATTACHMENT 2

19 Compliance Area PA Proposal 6.6. Models, methods, tools must be transparent, reviewable and repeatable Full Proposal Review: Accept/ Need more Accept Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. data under certain conditions, but installation of equipment shall not occur until the participant receives notification from the program that the project is fully approved. ED will allow this structure, with the understanding that incentives will not be dispensed until the project is fully approved, and no incentives will be paid out to unapproved projects. Thus, an anticipated project site which undertakes procurement prior to compiling 12 months of pre-intervention data, takes on a risk that the project will not be approved, and that risk will in no way be transferred onto the ratepayers Meter does not necessarily equal whole building, so proposals must make clear the link between meter and building Accept ED: The HOPPs Ruling requires at minimum one year of pre-implementation data. Please reflect the Ruling s requirement in the program proposal. The use of deemed hours in current programs has been cited as a limitation which will be addressed in the HOPPs MPBR program. It is not clear whether SCE intends to monitor lighting operating hours as well for a period of one year to establish actual operating hours. Please clarify whether this is the case. SCE: Baseline models with 12 months of data will be required to have fit statistics of 20 percent or less. The program may approve the participant to order equipment prior to receiving the full 12 months of pretrending data if good correlation is demonstrated. Installation of equipment shall not occur until the participant receives notification from the program that the project is fully approved Proposals for programs or projects must document the market barriers they are designed to address and the interventions planned to achieve reductions in energy consumption Accept ED: The supplemental advice letter states that projects must have 12 months of baseline data prior to approval. In Normalized Metered Energy Consumption, item 5, ED clarifies that, though SCE may authorize procurement activities in advance of project approval, no incentives will be dispensed prior to approval. ED: The proposal selected four buildings and established selection criteria for projects, but does not describe how the selected buildings meet the criteria. Additionally, projects are likely to overlap with SoCalGas s HOPPS projects. Please include the qualifications of the proposed projects according to the established selection criteria, and describe SCE s plan to coordinate with SoCalGas, assign an identifier as an inter-iou coordinated project, and submit applications through the CMPA process for further evaluation. SCE: SCE will coordinate a review process with Southern California Gas Company (SoCalGas) to track both gas and electric savings and incentives. Incentive payments will be monitored through the review process to ensure the incentive cap of 80 percent is not exceeded. Shared program forms will be developed to document savings, incentives, and project cost to demonstrate that the 11 ATTACHMENT 2

20 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. cap has not been exceed. If the cumulative incentive to be paid in a given performance period will exceed the 80% of project cost cap, the incentive for each fuel will be prorated based on the percent of the source savings from the verified fuel savings in the performance period. Based on customer interviews and site walks, four buildings have been identified as potential fits at the Program outset: 1) the South Hall at UC Santa Barbara (1970s vintage, 131,688 ft2); 2) the Social & Behavioral Sciences Building at CSU Dominguez Hills (1971 vintage, 81,000 ft2); 3) the State Government Center Building for CalTrans (1980s vintage, 364,000 ft2); and 4) the Social Science Building at Cerritos College (1960 vintage, 112,144 ft2). These buildings were identified as they have the following characteristics: Buildings that are thirty years or older. Buildings larger than 40,000 square feet. System-level control (for example, HVAC level controls). The majority of the space is air conditioned. More than 2,500 operating hours. Not designated for major re-design or re-use. Buildings in which some equipment may be beyond its useful life. In addition, SCE will conduct outreach to other public-sector customers to explain the Program and to identify the next set of buildings that fit the Program. ED: Section 2.2 of the supplemental advice letter lists the provisions for coordinating incentives with SoCalGas for combined projects. A review process, through the combined effort of both utilities, will track incentives and ensure the incentive cap of 80 percent is not exceeded If proposal deviates from Attachment A, PA must provide clear rationale. Accept Section 3.1 of the supplemental advice letter lists eight characteristics that will be used in the selection of target buildings for projects. The comments above indicate that the four pilot project sites each bear all eight characteristics. ED recommends that, in addition to these eight characteristics, SCE consider prioritizing buildings that have at least 12 months baseline data available. Additionally, Section 3.1 explicitly forbids projects at sites that have already been comprehensively retrofitted or commissioned. However, the proposal does not define comprehensive retrofits or commissioning. Thus, for the purpose of screening projects for this program, comprehensive retrofits and commissioning will include any previous IOU-supported retrofit, commissioning, or retro-commissioning projects. ED: The proposal does not conform to the HOPPs ruling requirement of a minimum of one-year of baseline data, and has not confirmed that it will require participating entities to enter into a three-year maintenance and training requirement. Measure-level feedback to the participant on BRO measure performance will not be feasible without long-term monitoring and tracking of savings. SCE: Baseline models with 12 months of data will be required to have fit statistics of 20 percent or less. 12 ATTACHMENT 2

21 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. The program may approve the participant to order equipment prior to receiving the full 12 months of pretrending data if good correlation is demonstrated. Installation of equipment shall not occur until the participants receives notification from the program that the project is fully approved. Given that most public entities have internal maintenance programs, it is preferable to simply measure savings directly, and provide feedback to participants to help them manage their energy and ensure that savings persist. Participants that choose to rely upon their internal maintenance programs will be required to submit a full description of their program before approval. Any monitoring beyond year two will be determined through ex-post evaluation, monitoring and verification. 7. Type of Program or Project (Attachment A p. 5-6) 7.1. Description of the nature of the proposed program or project intervention with respect to whole building or single measures 7.2. Site level results will be discernable at building level for verification purposes. Accept Accept ED: As noted in Normalized Metered Energy Consumption, item 5, ED will allow projects to begin procurement in advance of project approval, however no risk of project rejection will be transmitted onto the ratepayers. ED: The HOPPs Public PBR Program implements a multi-measure whole-building approach, targeting HVAC end-use, applying NMEC for energy savings calculations with incremental incentive payments. ED: The program will target a package of measures expected to deliver enough savings for the NMEC approach to work. The program administrator, customers, or contractors will need to document installation verification; but the requirements for documentation are not clear (except for RCx measures). Please explain what will be documented and provide some description of any formatting requirements. SCE: Installation Review: Upon receipt of Installation Report and final invoices (SCE and SoCalGas), the Reviewer will evaluate the submittal package and conduct a postinstallation inspection to verify project installation and ensure the scope of work has not altered from the agreed-upon project. Program participants are required to submit a detailed narrative describing the changes that have occurred and the duration of NRE. A revised baseline model will be developed to assess any major deviations from the postinstallation usage pattern. The NRE identification process and appropriate corrections will be assessed on a case by case basis for projects where an NRE occurs. Any NRE adjustments, and related calculations, will be made available for review by CPUC staff. ED: Sections and of the supplemental advice letter outline project documentation that will allow for building-level savings calculations. 13 ATTACHMENT 2

22 Compliance Area 8. Threshold for Expected Savings (Attachment A p. 6-7) and Principles of HOPPs (p. 6) 9. Baseline Adjustments (Attachment A p. 8-9, and under Normalized, p. 2) PA Proposal 8.1. Description of the expected saving from the proposed program or project intervention 8.2. Literature or field performance data demonstrating the expected impact and expected certainty of estimates Documentation of the baseline assumptions and strategy for collecting necessary Full Proposal Review: Accept/ Need more Accept Accept Accept Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. ED: No Comment ED: No Comment ED: Normalization parameters beyond weather and occupancy schedule will be identified on a project by project basis. Note that CPUC will request to review M&V plan for each project, including the selection of normalization parameters. SCE: SCE will submit an M&V plan and specific statistical models including source code for each project to the CPUC for review Description of how normalization methods capture (or not) baseline assumptions 9.3. Description of the methods that will be used to adjust the baseline for nonroutine adjustments, when applicable for the type of proposal. Accept Accept with Additional ED: SCE has agreed to submit project M&V plans as requested. ED: The program will pre-screen projects to identify buildings without major interruptions requiring non-routine adjustments. Note that CPUC will request to review final building selections and site specific M&V plans as in the previous item. ED: The Program will pre-screen buildings to reduce or eliminate the need for NRAs to baseline model. Adjustments during the post-implementation phase will be introduced as necessary on a site by site basis when savings increase by 20% over previous period. The 20% threshold seems arbitrary; should be a function of achieved uncertainty in the model. Please explain the rationale for the 20% threshold. Note that CPUC will request to review the methods used to identify and adjust savings during the post-implementation period. SCE: Program participants shall be responsible for notifying SCE of any non-routine event (NRE). Program participants are required to submit a detailed narrative describing the changes that have occurred and the duration of NRE. A revised baseline model will be developed to assess any major deviations from the postinstallation usage pattern. The NRE identification process and appropriate corrections will be assessed on a case by case basis for projects where an NRE occurs. Any NRE adjustments, and related calculations, will be made available for review by CPUC staff. ED: Section of the supplemental advice letter indicates that SCE will rely on customers notifying SCE of any Non-Routine Events, but does not provide instruction on how the customer is expected to assess Non-Routine Events, or how the events will be verified by SCE. Therefore, SCE must provide customers with instruction on a method, either standardized or customized for the project, for identifying Non-Routine Events, and how to document them and notify SCE. The method must specify how much time, before or after, the customer may report a Non-Routine Event. SCE must also verify all reported Non-Routine events within a reasonable period following 14 ATTACHMENT 2

23 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. the notification, and maintain documentation of the reported events for potential ex post analysis. 10. Application to Behavioral, Operational, Retrocommissioning (B.R.Os) (Attachment A p. 9-10) Program/project proposals shall: Include requirement that participant sign up for a maintenance plan for at least three years. Accept with Additional ED: The proposal states in Attachment A, Section 2.1 that many public entities have internal maintenance programs and ignores the HOPPs requirement for a three-year maintenance plan. Please address this requirement directly. The entities regular maintenance programs must be documented to identify what routine items and procedures are undertaken and their frequency. Include a description of how the program plans to identify weakness in existing maintenance practices and motivate customers to correct them. SCE: Given that most public entities have internal maintenance programs, it is preferable to simply measure savings directly, and provide feedback to participants to help them manage their energy and ensure that savings persist. Participants that choose to rely upon their internal maintenance programs will be required to submit a full description of their program before approval. Any monitoring beyond year two will be determined through ex-post evaluation, monitoring and verification Program/project proposal shall: Include requirement that participants commit to install a minimum set of measures according to PA pre-defined criteria. Accept with Additional ED: Section 2.1 of the supplemental advice letter states that Participants that choose to rely upon their internal maintenance programs will be required to submit a full description of their program before approval. Any monitoring beyond year two will be determined through ex-post evaluation, monitoring, beyond year two will be determined through ex-post evaluation, monitoring, and verification. This response is unsatisfactory. The HOPPs ruling requires that any programs that utilize BRO measures include three-year maintenance plan, and ED is particularly concerned about savings persistence and continuity in institutional knowledge. Thus, SCE must require participants to produce a three-year maintenance plan for all maintenance activities pertaining to the project, specifying whether internal or contract maintenance personnel are deployed. When internal maintenance personnel are to be used, this plan must describe any additional training that will be necessary to perform the tasks required for which personnel are not already trained, and how the customer will accommodate potential turnover in personnel. ED: The review sheet included as Attachment C indicates that Attachement A, Section 3, Scope of Work, addresses the HOPPs Ruling requirement that participants commit to a minimum set of measures, but no such requirement is present in the proposal, nor is the minimum set of measures provided. Instead, the Background section of the transmittal letter states that that there is no minimum requirement for expected savings for HOPPs. Staff notes that one ongoing problem with existing MBCx and other retro-commissioning program efforts is that customers tend to implement low- to no- cost measures with simple paybacks of less than one year with PA programs paying incentives for those measures in addition to paying for the retro-commissioning audits conducted by third parties. The HOPPs Ruling is to intended to achieve deeper retrofits with persistent long-term impacts. By neglecting this HOPPs requirement, SCE proposal will perpetuate the present problems with MBCx and other retro-commissioning programs. 15 ATTACHMENT 2

24 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. SCE: Participants will take a comprehensive approach to EE by utilizing this single path to evaluate, calculate, and measure persistence of savings for retrofit, behavioral, RCx, and optimization measures with a focus on achieving a minimum of 10 percent energy reduction. Participants are required to include at least one retrofit measure in conjunction with BRO measures. Normalized Metered Energy Consumption has the ability to greatly reduce participant transactions costs and allows the customer to take an integrated design approach to maximize building performance and energy savings PA is encouraged to include a training component to program/project offerings. Accept with Additional ED: Section 2 of the supplemental advice letter explains that participants are required to include at least one retrofit measure in conjunction with BRO measures. This serves loosely as a minimum set of measures. However, SCE has not responded to Staff s concerns that customers will be inclined to select low- and no-cost interventions, thereby leaving substantial savings potential unutilized. Therefore, in reviewing projects, SCE must establish criteria for project measures by which projects proposing only low- and/or no-cost interventions will be rejected in favor of more robust projects with diverse measures. ED: The review sheet included as Attachment C indicates that Appendix 2, Addressing Work Order 33 Appendix G Evaluation Issues, addressed the HOPPs training requirements, but no mention of a training component that will be part of the program offering was found. Please address this requirement directly. Issue 10, Reliability of Energy Meters and Flawed Metered Data on page 35 indicates that the projects will collect and provide six months of EMS trend data to support evaluation efforts. CPUC notes that part of the verification efforts is to determine the accuracy of the data collected, therefore, spot metering is necessary to verify the accuracy of the EMS data as well. SCE: Meter data diagnostics can provide visibility to real time energy savings. All staff responsible for maintaining the building or project site should be trained in the current (post-project) operating sequences. Staff should also be trained to utilize the EMS and EIS to recognize equipment and system failures and be able to diagnose the cause of the problem. Spot-metering could be used to assist in disaggregating load into system or equipment levels. Any spotmetering would not include continuous metering as the associated expenses could become cost prohibitive. EMS system level data can be compared to utility meters to verify total energy consumption. ED: Section 3.7 of the supplemental advice letter states that responsible maintenance staff should be trained in the current (post-project) operating sequences. Staff recommends less permissive language, as savings persistence is dependent upon adequate training and retention of institutional knowledge. Additionally, as noted in Application to item 10.1, participating customers who will rely on internal maintenance must submit maintenance plans, including plans for initial and on-going training. 16 ATTACHMENT 2

25 Compliance Area PA Proposal Performance postintervention: 10.4.a. Must ensure persistence of savings that ensures multiyear savings for measures that are based in changes in behavior or operational practices. Full Proposal Review: Accept/ Need more Accept with Additional Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. ED: Please clearly describe the program s plan to ensure multiyear savings persistence for BRO measures. SCE: As a performance based program, participants will be encouraged to track on-going savings to ensure that measured savings persists. SCE will track and report savings at 3, 12, 24, and at later points determined in expost EM&V plans. In addition, SCE may also track savings on a more frequent basis, as needed b.During the claimable expected useful life (EUL) period of one year, continuous feedback should be in place. Accept with Additional ED: Section of the supplemental advice letter incorporates an incremental incentive structure that allows adjustments as appropriate to ensure savings persistence through the project life. However, there is no apparent structure for encouraging persistence of BRO measures beyond project completion. Staff is concerned that customers may cease energy efficiency practices after the project, and possibly participate in future projects including the same or similar BRO measures. Therefore, participants must become ineligible for similar BRO measures in future SCE programs at the same site. SCE must inform the participants of their ineligibility and encourage adoption of an ongoing training plan to facilitate long-term persistence beyond the project timeline. ED: Please explain which parties are responsible for tracking savings and monitoring for persistence. SCE: As a performance based program, participants will be encouraged to track on-going savings to ensure that measured savings persists. SCE will track and report savings at 3, 12, 24, and at later points determined in expost EM&V plans. In addition, SCE may also track savings on a more frequent basis, as needed c. PAs shall consider incentive structures that encourage long term savings Accept ED: SCE s response in Section of the supplemental advice letter explains the mechanism through which a customer may track savings; however, the continuous feedback requires greater involvement than SCE indicates. Therefore, SCE must provide participants with as high frequency savings data as is practical and, at the specified 3, 12, and 24 month reporting activities, verify that participants understand and are applying the data in ongoing operational practices. ED: No comment 10.4.d.Incentives shall only be paid once participant commits to a maintenance plan for a minimum of three years (evidence should be made available to Commission staff upon request). Accept with Additional ED: Ensure that the proposal reflects the HOPPs Ruling s requirement that a three-year maintenance contract is a precondition for payment of incentives. SCE: Given that most public entities have internal maintenance programs, it is preferable to simply measure savings directly, and provide feedback to participants to help them manage their energy and ensure that savings persist. Participants that choose to rely upon their internal maintenance programs will be required to submit a full description of their program before 17 ATTACHMENT 2

26 Compliance Area PA Proposal Full Proposal Review: Accept/ Need more Comments: If you indicated no, need more or don t accept, provide a summary of what is missing, what is needed, and/or why the proposal can t be accepted. approval. Any monitoring beyond year two will be determined through ex-post evaluation, monitoring and verification. 11. Financing (Attachment A p. 12) Description of any use of financing programs or external financing to support the program or proposed project. Not applicable ED: Section 2.1 of the supplemental advice letter indicates that participants need only describe their existing internal maintenance practices. This is insufficient, as the program necessitates implementation of additional or improved maintenance practices. Customers seeking to use internal maintenance must submit a maintenance plan as discussed in item ED: No comment. 12. Additional Comments from Review Team ED: No comment. 18 ATTACHMENT 2

27 Russell G. Worden Managing Director, State Regulatory Operations January 10, 2017 ADVICE 3460-E-A (U 338-E) PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION SUBJECT: Supplemental Filing to Advice 3460-E: Submission of High Opportunity Projects and Programs Proposal: Public Sector Performance-Based Retrofit Program PURPOSE The purpose of this supplemental Advice Letter (AL) is to modify SCE's program proposal in AL 3460-E, based on recommendations and questions from Energy Division Staff as a result of the Staff's initial review of SCE's proposal contained in AL E, originally submitted on August 22, This advice filing supplements in part and will not change the substance of the original Advice 3460-E. BACKGROUND On October 8, 2015, the legislature enacted Assembly Bill (AB) 802, which amended Section of the California Public Utilities Code. New subsection (b) requires the Commission to authorize, by September 2016, electrical corporations or gas corporations to provide financial incentives, among other things, to increase the energy efficiency (EE) of existing buildings based on the reduction of metered energy consumption as a measure of energy savings. New subsection (c) states that [e]ffective January 1, 2016, electrical corporations and gas corporations are authorized to implement the provisions of subdivision (b) for high opportunity projects or programs. The high opportunity projects or programs (HOPPs) efforts is intended to identify high opportunity EE interventions in line with the legislative direction before the Commission adopts a comprehensive program to provide incentives to improve the EE of existing buildings. P.O. Box Rush Street Rosemead, California (626) Fax (626)

28 ADVICE 3460-E-A (U 338-E) January 10, 2017 On October 30, 2015, the assigned Commissioner and Administrative Law Judge (ALJ) issued a scoping memorandum regarding EE Rolling Portfolios and established a process specifically for addressing HOPPs, along with other aspects of AB The December 30, 2015 ACR provides the following minimum standards for the development and implementation of HOPPs. 2 HOPPs may be funded from unspent funds in existing programs. There are no minimum requirement for expected savings for HOPPs. HOPPs may feature a variety of incentive structures, so long as the payment strategy reflects an accurate valuation of the savings. All HOPPs must incorporate a measurement and verification (M&V) plan, including the M&V protocols set out in the ACR. A key feature is that HOPPs proposals should emphasize measurement of the effects of interventions as detailed in Attachment A of the ACR. The ACR allows PAs to submit HOPPs proposals with the documentation and specifications listed in the ACR. HOPPs are to be submitted through the CPUC Energy Division s existing Custom Measure and Project Archive (CMPA) system. On August 22, 2016, SCE filed AL 3460-E proposing the Public Sector Performance- Based Retrofit Program as a HOPP. The Commission's Energy Division staff provided SCE with questions and recommendations for program changes, which are addressed in this supplemental filing. MODIFICATIONS TO AL 3460-E SCE s modified Public Sector Performance-Based Retrofit Program HOPP proposal is included in the Revised Attachment A of this AL. Among other changes, SCE made the following modifications to SCE s Public Sector Performance Based Retrofit HOPP proposal as a result of Energy Division staff s feedback: 1. Revised the approach on building measurement expected useful life (EUL) to be the weighted average of EUL associated with installed measured based on the engineering projection of savings from the audit; 2. Clarified that costs such as audits and metering expenses will be included in the total project cost; 3. Clarified that SCE will coordinate a review process with Southern California Gas Company; and 4. Clarified other issues such as collection and monitoring of data and participation in other upstream or downstream programs 1 Assigned Commissioner and Administrative Law Judge's Ruling and Amended Scoping Memorandum Regarding Implementation of Energy Efficiency Rolling Portfolios (Phases IIB and IIIA of R ) (Phase IIB/IIIA scoping memo). 2 ACR, Paragraph 5.

29 ADVICE 3460-E-A (U 338-E) January 10, 2017 Appendix A of Attachment A includes a summary table listing Energy Division Staff s questions and recommendations, with the corresponding response from SCE and/or a reference to where the recommendations were addressed in the proposal. TIER DESIGNATION Pursuant to GO 96-B, Energy Industry Rule 5.1, this advice letter is submitted with a Tier 1 designation, which is the same Tier designation as the original filing, Advice 3460-E. EFFECTIVE DATE This supplemental advice filing will become effective on the same day as the original filing, Advice 3460-E, which is September 21, PROTESTS SCE asks that the Commission, pursuant to GO 96-B, General Rules 7.5.1, maintain the original protest and comment period designated in Advice 3460-E and not reopen the protest period. The modifications included in this supplemental advice filing do not make substantive changes that would affect the overall evaluation of the filing. NOTICE In accordance with General Rule 4 of GO 96-B, SCE is serving copies of this advice filing to the interested parties shown on the attached GO 96-B and R service lists. Address change requests to the GO 96-B service list should be directed by electronic mail to AdviceTariffManager@sce.com or at (626) For changes to all other service lists, please contact the Commission s Process Office at (415) or by electronic mail at Process_Office@cpuc.ca.gov. Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by filing and keeping the advice filing at SCE s corporate headquarters. To view other SCE advice letters filed with the Commission, log on to SCE s web site at

30 ADVICE 3460-E-A (U 338-E) January 10, 2017 For questions, please contact Eric Yamashita at (626) or by electronic mail at eric.yamashita@sce.com Southern California Edison Company RGW:ey:jm Enclosure /s/ Russell G. Worden Russell G. Worden

31 CALIFORNIA PUBLIC UTILITIES COMMISSION ADVICE LETTER FILING SUMMARY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/cpuc Utility No.: Southern California Edison Company (U 338-E) Utility type: Contact Person: Darrah Morgan ELC GAS Phone #: (626) PLC HEAT WATER Disposition Notice to: EXPLANATION OF UTILITY TYPE ELC = Electric GAS = Gas PLC = Pipeline HEAT = Heat WATER = Water (Date Filed/ Received Stamp by CPUC) Advice Letter (AL) #: 3460-E-A Tier Designation: 1 Subject of AL: Supplemental Filing to Advice 3460-E: Submission of High Opportunity Projects and Programs Proposal- Public Sector Performance-Based Retrofit Program Keywords (choose from CPUC listing): Compliance AL filing type: Monthly Quarterly Annual One-Time Other If AL filed in compliance with a Commission order, indicate relevant Decision/Resolution #: Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: Summarize differences between the AL and the prior withdrawn or rejected AL: Confidential treatment requested? Yes No If yes, specification of confidential : Confidential will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact to request nondisclosure agreement/access to confidential : Resolution Required? Yes No Requested effective date: 9/21/16 No. of tariff sheets: -0- Estimated system annual revenue effect: (%): Estimated system average rate effect (%): When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting). Tariff schedules affected: None Service affected and changes proposed 1 : Pending advice letters that revise the same tariff sheets: None 1 Discuss in AL if more space is needed.

32 All other correspondence regarding this AL shall be sent to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California Russell G. Worden Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California Telephone: (626) Facsimile: (626) Laura Genao Managing Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California Facsimile: (415)

33 Southern California Edison (SCE) Advice Letter 3460-E-A High-Opportunity Program Proposal Public Sector Performance-Based Retrofit 1

34 Table of Contents: Attachment A: General Program Description Overview HOPPs Principles and Rationale Market Barriers and Program Interventions Coordination with Southern California Gas Company HOPPs Program Scope of Work Screening and Project Identification HOPPS Savings Opportunities Marketing and Outreach Baselines M&V Plans and Non-Routine Events Audits Example Measures Savings Estimation Required Energy Data Training Incentive Design Costs Allowable for Incentives Installation Review Persistence of Measured Savings Program Savings Potential and Program Objectives Attachment B Measurement & Verification (M&V) Plan Savings Calculation Method Data Collection Strategy Required Energy Data Data Quality Independent Variables Calculations, Regression Models, and Description of Normalization Program Savings

35 3.2 Absolute Changes Expressed with a Common Denominator Threshold for Expected Savings Baseline Adjustments Baseline Assumptions Non-Routine Adjustments Appendix 1 - Description of the LBNL Temperature and Time-of-Week Model Appendix 2 - Addressing Work Order 33 Appendix G Evaluation Issues Appendix 3 - Acceptance Criteria for Baseline Models Attachment C Review Sheet for 2016 HOPPs Proposals Attachment D Draft Program Screening Tool

36 Attachment A: General Program Description 1. Overview Southern California Edison s (SCE) proposed Public Sector Performance-Based Retrofit High Opportunity Program is designed to leverage smart meter investments and bring the benefits of Normalized Metered Energy Consumption (NMEC) to public sector buildings. The program will support the requirements provided in the December 30, 2015, Ruling regarding HOPPs; and the wider climate objectives outlined by the Legislature and Governor s Office in bills such as AB 32, SB350, and AB802. AB802 and HOPPs offer new opportunities in California to capture Energy Efficiency (EE) utilizing NMEC for measuring, tracking, and incentivizing savings, primarily at a whole-building level, outside of traditional deemed and calculated energy savings offerings. The Public Sector s Performance-Based Retrofit Program is designed to leverage the ability of NMEC to measure stranded energy savings within public sector facilities. As a part of the program s intervention, SCE seeks to help address market barriers unique to the public sector and encourage persistent energy savings through ongoing feedback and measured performance. SCE will target buildings in the public sector that are susceptible to delayed improvements and indefinately repaired equipment. This program complements the targeted customers additional goals by allowing participants to track savings to ensure the performance of their long-term EE investments, while supporting their economic goals and Climate Action Plans (CAPs). Performance-based Measurement and Verification (M&V) of savings through NMEC will help focus activity on deeper energy savings, while incentivizing only those that materialize. As energy performance is monitored and provided to contractors and customers, it will empower their decision making, and enable their ability to take corrective action. 2. HOPPs Principles and Rationale The public sector consists of government services provided by national, state, provincial, or local government entities. The sector is unique in that participants are in a position to influence their communities, must adhere to a public decision-making process, possess a vast amount of institutional knowledge, and are considered part of permanent entities. Table 1 outlines the public sector segments and sub-segments that are consistent across all Program Administrators (PAs). 4

37 Table 1 - Public Sector Overview The public sector possesses unique characteristics that provide savings opportunities that can be measured through the NMEC approach proposed in AB 802. These opportunities include: Alignment of savings persistence with long payback investments. The public sector invests in facilities and infrastructure over a long-term basis. The ability to track savings from these investments can help the public sector meet its economic objectives. The monitoring component of the program will provide regular feedback that will quickly shed light on whether projects meet or exceed their financial performance requirements. Increased energy management. For the public sector, energy bills are usually centralized, meaning that building staff may not have visibility to utility bills. Feedback through existing or new metering can provide the needed visibility to help public sector building staff strategically manage energy on a continual basis. The metering feedback is also consistent with a strategic energy management focus on measuring savings. Consistency with CAPs. Many public sector entities including the University of California, California State University, State of California and majority of the state s cities and counties 1 have adopted, or are adopting, CAPs. Tracking and managing energy reduction at the meter is a consistent approach for the public sector to gauge or benchmark itself against energyrelated climate action goals. Reduced complexity for multi-measure projects in existing buildings. Participants will take a comprehensive approach to EE by utilizing this single path to evaluate, calculate, and measure persistence of savings for retrofit, behavioral, RCx, and optimization measures with a focus on achieving a minimum of 10 percent energy reduction. Normalized Metered Energy Consumption has the ability to greatly reduce participant transactions costs and allows the customer to take an integrated design approach to maximize building 1 5

38 performance and energy savings. A single point of entry and program process will greatly reduce administrative, implementation, and M&V costs. Improved delivery timelines. Separate applications, separate approvals, and separate processes would be eliminated through a single, metered-focused energy savings measurement approach for all aspects of building use. This would include retrofits, tuning, and any behavioral measures identified through the meter-based performance approach. Pre-installation engineering analyses could be reduced, since savings would be derived through NMEC, rather than through pre- and post- install calculations. Leveraging a holistic approach to increase total installed savings: By looking at all savings and costs, lower-cost, high-savings measures could help offset more capital-intensive measures. SCE has developed its Public Sector Performance-Based Retrofit Program ( Program ) with the intention of eliminating barriers, improving transparency, verifying persistence, and increasing overall energy savings. The proposed program design utilizes the success of existing public sector partnership offerings, and incorporates them together with metering and feedback, to produce a more comprehensive approach focused on savings persistence. The University of California (UC) and California State University (CSU) systems have found success with submetering building and system use, to both optimize building performance and verify persistence of energy savings. The UC/CSU Monitoring-based Commissioning (MBCx) program showed the benefits of metering to verify savings persistence, making the principles found in past projects foundational to this new program. 2 Additional details on how the Program will meet the public sector s needs, while delivering cost-effective and persistent energy savings, are described below. 2.1 Market Barriers and Program Interventions The public sector faces barriers (both market and structural) to the further adoption of EE. One of the major challenges is a lack of technical resources or knowledge about EE measures, and how to effectively implement them to reduce energy usage and save money. Limited resources in the public sector are further stressed when determining which program(s) are a best fit when trying to take a comprehensive approach to EE. On the implementation side, the entire public sector faces limited capital budgets, along with unique procurement and vendor selection challenges. From an energy savings measurement perspective, individual building-level feedback is often unavailable, due to the use of master meters. Public buildings are also often classified as having attributes to structures in the commercial sector. Table 2 highlights the differing attributes of each sector

39 Table 2 - Sector Attributes Through key interventions, the program will interact with the public sector to reduce and/or eliminate market barriers and gaps. Key interventions include: Provide technical support to assist resource constrained customers to identify savings opportunities. Metering or sub-metering, combined with monitoring, to potentially drive greater EE by showing the direct ongoing economic impact of measures in existing buildings. Limited visibility of individual building energy costs can be improved by providing meter-based feedback that helps determine whether energy savings goals are being achieved in a persistent fashion. Merging multiple program offerings (retrofit and BRO measures) into a single, unified program, thereby simplifying and streamlining the customer application process. Additional interventions to ensure that the program remains cost-effective include: Incentives that are paid at 3, 12, and 24 months, with each payment truing up to the estimated savings at each interval, assisting in addressing cost-related barriers. Participant audit costs for the program are captured in total project costs. Ongoing monitoring of program related savings will continue for two years for all measures including retrofit and BRO. Given that most public entities have internal maintenance programs, it is preferable to simply measure savings directly, and provide feedback to participants to help them manage their energy and ensure that savings persist. Participants that choose to rely upon their internal maintenance programs will be required to submit a full description of their program before approval. Any monitoring beyond year two will be determined through ex-post evaluation, monitoring and verification. 7

40 that participants include at least one retrofit or measure with a payback greater than two years, and that the portfolio of installed measures exceed 10 percent in savings. Where applicable, educate maintenance staff to understand and track performance through building level-metered data. Participants will compile and document data to determine if savings persist. In cases where savings are not being realized, participants will document corrective action in a building activity log. 2.2 Coordination with Southern California Gas Company HOPPs Program SCE will coordinate a review process with Southern California Gas Company (SCG) to track both gas and electric savings and incentives. Incentive payments will be monitored through the review process to ensure the incentive cap of 80 percent is not exceeded. Shared program forms will be developed to document savings, incentives, and project cost to demonstrate that the cap has not been exceed. If the cumulative incentive to be paid in a given performance period will exceed the 80% of project cost cap, the incentive for each fuel will be prorated based on the percent of the source savings from the verified fuel savings in the performance period. Greater detail on program design elements, such as project screening, measure identification, savings calculations, and incentive payments, are provided below. 3. Scope of Work The Program Scope of Work includes components from existing programs, such as MBCx and retrofit activity, with newer components, such as behavioral and optimization programs, measuring aggregate savings at the meter or sub-meter level. The NMEC approach to measuring savings necessitates changes to program processes, including guidelines for savings calculations, non-utility meter installations and calibrations, and screening for participants when standard metrics, such as energy intensity (kwh/ft 2 or kbtu/ft 2 ), are unavailable. 3.1 Screening and Project Identification The Program will identify buildings that have not previously been comprehensively retrofitted or commissioned. Screening projects and buildings is critical, especially in public buildings without interval energy metering. Building screening will take two paths, based on whether a building has an existing interval meter or not. For buildings with existing interval meters, benchmarking tools (such as Portfolio Manager and Commercial End-Use Survey [CEUS]) will determine how efficient the building is as compared to similar building types and use. For buildings without interval metering, participants will need some confidence that the cost of building-level metering installation, in addition to the time spent collecting baseline data, will generate sufficient return on their metering investment. While the metering will add value by increasing the visibility of their energy usage, the value may not be sufficient for the customer 8

41 to invest on its own, without the benefit of energy savings. Target buildings will include those with some (but likely not all) of the following characteristics: Buildings that are thirty years or older; Buildings larger than 40,000 square feet; System-level control (for example, HVAC level controls); The majority of the space is air conditioned; Presence of lab space; More than 2,500 operating hours; Not designated for major re-design or re-use; Buildings in which some equipment may be beyond its useful life. Building screening is done for new implementation candidates, as well as for previously visited sites that are a fit for the program. A Program Screening Tool, provided as a draft in Attachment D, will be used to gather facility characteristics that will help identify the best candidates. The screening tool will be used to provide a relative ranking to help participants allocate EE resources more effectively. For example, buildings that have erratic operating schedules and are designated for major remodels will not likely make good candidates for the program. In contrast, buildings that are not designated for major redesign and have relatively consistent operating schedules and energy-intensive lab space will be better candidates. 3.2 HOPPS Savings Opportunities The Program is designed to offer comprehensive building optimizations, in an effort to maximize savings generated at the meter. Program measures will be open to retrofit, RCx, behavioral, and optimization activity, along with previously-stranded opportunities that open as a result of the HOPPS ruling, including: RCx/MBCx measures that are considered routine maintenance. These include measures that have been removed because they are considered part of typical maintenance, (for example, economizer repair in RCx/MBCx programs). 3 Large differences between actual and Database for Energy-Efficient Resources (DEER) operating hours. This occurs with measures in which there is a large difference between actual operating hours and DEER operating hours, which reduces both the incentive and claimable savings for projects such that they are not considered for installation. One example is the UCSB Corridor Dimmable Lighting Retrofit Study, which showed that actual vacancy rates were between 9 and 12 percent, as compared to the DEER vacancy rates of 86 percent. 4 3 CPUC Correspondence from Katie Wu to California Program Administrators, Commission Staff Response to IOU Comments on Draft Updates to Retrofit Add on Guidance Document, April 20, SPEED Program UCSB Corridor Occupancy/Vacancy Field Monitoring Study, March

42 Baselines that are difficult to identify or measure. This occurs with measures in which it is difficult to develop baselines (e.g., military facilities and hospitals, which are not subject to Title 24 and may not have standard practices ). Developing measure baselines is difficult and costly. Some measures are difficult to calculate and/or laden with assumptions, making it problematic and expensive to calculate and claim savings. Examples include Constant Air Volume (CAV) to Variable Air Volume (VAV) and pneumatic to Direct Digital Control (DDC) conversions, which are driven by assumptions and often difficult to agree on baseline calculations. Behavioral and Optimization measures. These measures will be difficult to quantify, and are best measured at the meter as a bundle, rather than separated measure by measure. Through the proposed Program, SCE intends to achieve comprehensive savings through the use of combined activities, while also reducing project development and administration costs. 3.3 Marketing and Outreach Based on customer interviews and site walks, four buildings have been identified as potential fits at the Program outset: 1) the South Hall at UC Santa Barbara (1970s vintage, 131,688 ft 2 ); 2) the Social & Behavioral Sciences Building at CSU Dominguez Hills (1971 vintage, 81,000 ft 2 ); 3) the State Government Center Building for CalTrans (1980s vintage, 364,000 ft 2 ); and 4) the Social Science Building at Cerritos College (1960 vintage, 112,144 ft 2 ). In addition, SCE will conduct outreach to other public-sector customers to explain the Program and to identify the next set of buildings that fit the Program. Marketing and outreach will take place through the existing Institutional and Local Government Partnership program channels. These programs serve SCE s institutional customers, including municipal, state, and federal governments, along with public schools spanning K-12, colleges, and universities. A key part of the outreach and marketing message will focus on explaining the difference between NMEC-supported offerings versus traditional deemed and calculated programs. Account managers will work with their existing customer relationships to identify the necessary resources and most appropriate buildings. Program fit is important, because HOPPS represents a departure for participants in that incentives are tied to the persistence of savings over time. 5 The Program should be a valued resource for customers who are committed to persistent and measurable energy savings. 5 Also see screening section above. 10

43 3.4 Baselines Pre-implementation baseline of building energy consumption will be developed for each site. Figure 1 provides an example of the energy baseline and its use in predicting energy usage in the post-installation period, without the EE measures. In the baseline period, a model is developed using hourly data, as well as other parameters to predict energy usage. 6 The regression model in Figure 1 is accurate at predicting energy usage, as the baseline model follows metered data well, and statistical metrics prove the baseline model is accurate. The Date Break represents the installation period of approximately four months. The baseline model was then used to estimate what the energy usage would have been without the installed EE measures. The Post-Installation Period shows the difference between the baseline model and the metered data is the savings. Figure 1- Example Modeled Baseline and Post-Installation Projection The participant baseline will be derived from either utility revenue meter data or non-revenue grade sub-meters. 7 Baseline energy use models characterize building load or consumption according to key explanatory variables, such as time of day and weather. The HOPPS requirements states that 12 months of data will be used to develop baselines. Using baseline model accuracy criteria, such as Normalized Mean Biased Error (NMBE), Coefficient of Variation Root Mean Square Error CV(RMSE), and Mean Absolute Biased Error (MAPE), it has been shown that 12 months of data can produce accurate baselines. It has also been shown that less data 6 Figure 1 shows hourly data for four days. The graph was truncated to fit on a single page. The actual model was based on 12 months of data. 7 Accuracy and calibration requirements for non-utility meters are addressed in Attachment A. 11

44 (e.g., three, six, or nine months of data) can also produce accurate baselines, given the granularity of metered interval data compared to monthly energy data, for example Whether 12 months of data can create an accurate baseline depends more upon the statistical criteria chosen than the length of data collection. Based upon recent research (referenced above) the CV(RMSE) will be used to evaluate goodness of fit. According to American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Guideline 14, a standard baseline model shall have a minimum CV(RSME) of 20% for energy. 11 For the Program, we will initially use a CV(RSME) of 20 percent to determine whether a baseline is accurate. Buildings in which the baseline CV(RSME) value is greater than 20 percent may need to adjust their models, install more direct metering, such as end-use metering or consider another EE program (Figure 2 and Figure 3). For participants who are required to install sub-metering, pre-trending data will be continually monitored. The program may approve the participant to order equipment prior to receiving the full 12 months of pre-trending data if good correlation is demonstrated. Installation of equipment shall not occur until the participants receives notification from the program that the project is fully approved. Any program application with less than 12 months of data will be required to show: The model has a good statistical fit and CV(RMSE) of less than 20 percent, and Temperature ranges cover 80 percent of the heating and cooling values for the year. Baseline models with 12 months of data will be required to have fit statistics of 20 percent or less. Buildings with baselines that have higher values will need to be adjusted. 12 As shown in Figure 2, the model does not follow the actual data very well, and is often too low or too high, relative to the actual data. Figure 3 shows an example of good model fit, where the model follows the actual data. 8 Granderson, J. et. al. Accuracy of Automated Measurement and Verification (M&V) Techniques for Energy Savings in Commercial Buildings. Applied Energy 173 (2016) Price, P. et al. Commercial Building Energy Baseline Modeling Software: Performance Metrics and Method Testing with Open Source Models and Implications for Proprietary Software Testing. PG&E s Emerging Technologies Program. March Granderson, J. et al. M&V Shootout: Setting the Stage for Testing the Performance of New Energy Baseline Models International Energy Program Evaluation Conference. 11 American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Guideline Attachment A describes the model adjustment process. 12

45 Figure 2 - Example of Poor Model Fit Figure 3 - Example of Good Model Fit Spot-metering could be used to assist in disaggregating load into system or equipment levels. Any spot-metering would not include continuous metering as the associated expenses could become cost prohibitive. 13