STATE OF MARYLAND OFFICE OF PEOPLE S COUNSEL. October 19, 2011

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1 PAULA M. CARMODY PEOPLE S COUNSEL THERESA V. CZARSKI DEPUTY PEOPLE S COUNSEL STATE OF MARYLAND OFFICE OF PEOPLE S COUNSEL 6 Saint Paul Street, Suite 2102 Baltimore, Maryland (410) (800) FAX (410) October 19, 2011 ASSISTANT PEOPLE S COUNSEL CYNTHIA GREEN-WARREN WILLIAM F. FIELDS PETER SAAR GARY L. ALEXANDER RONALD HERZFELD ANNE JOHNSON RICHARD S. GRATZ DONNIECE GOODEN Mr. David J. Collins Executive Secretary Maryland Public Service Commission 6 St. Paul Street, 16 th Floor Baltimore, Maryland Dear Mr. Collins: Re: Presentation of the Office of People s Counsel on EmPOWER Maryland Plans Case Nos. 9153, 9154, 9155, 9156 and 9157 Enclosed for filing are an original and seventeen (17) copies of the presentation distributed by the Office of People s Counsel ( OPC ) at the October 19, 2011 hearing in the above referenced dockets. OPC s presentation has been prepared by the Vermont Energy Investment Corporation ( VEIC ) in consultation with and subject to the approval of the OPC. A copy of this letter and the presentation has been provided to each party of record. Should you have any questions, please do not hesitate to contact me. Sincerely, /electronic signature/ RSG:eom Enclosure cc: All Parties of Record Richard S. Gratz Assistant People s Counsel

2 Case Nos. 9153,9154,9155,9165,9157 Utility Specific Comments on the EmPOWER Maryland Program Plans On Behalf of State of Maryland Office of People s Counsel October 19, 2011 David G. Hill Vermont Energy Investment Corporation

3 Presentation Overview Review Market Initiative Comments Utility Specific Comments & Recommendations: - Potomac Edison - BGE - DPL - PEPCO - SMECO 2

4 EmPOWER Maryland Initiative Recommendations 3

5 Comprehensive Retrofit Recommendations Direct the Utilities to: - Emphasize retrofits not audits - Adopt PHEC element - Adopt a unified brand - Standardize incentives - Provide marketing and sales support - Provide Financing 4

6 Limited Income Recommendations Direct the Utilities to: - Work with Department of Housing and Community Development (DHCD) to implement coordinated statewide services for the limited income market - Transition to new services by March 2012 VEIC Recommends the Commission: - Establish a working group with specific time frame and deliverables to address range of important structural and detailed questions - Work group report and detailed transition plan due by December,

7 Efficient Product Recommendations VEIC Recommends the Commission: - Establish technical working group to report by December, Adopt consistent statewide product eligibility and incentives by January,

8 HVAC Recommendations VEIC Recommends the Commission: - Establish technical working group to report by December, Adopt consistent statewide product eligibility and incentives by January,

9 Other Residential Initiatives New Construction - Build off success from BGE and SMECO - Establish technical working group to report by December, Adopt consistent statewide initiative by January, 2012 Financing - Direct the Utilities to adopt MHELP initiative for comprehensive retrofit and HVAC markets - Establish technical working group to report by December, Adopt consistent statewide initiative by January, 2012 Behavior - Recommend the Commission clarify if these are EE/DR or AMI initiatives - Direct all utilities to adopt as part of portfolios 8

10 Other Residential Recommendations General Awareness - Should be used to condition the market to be receptive to taking specific actions and awareness of efficiency as a resource - Should not be used to build utility brand awareness - Can be customized to customer demographics - Currently ranges from 8% to 16% of budgets recommend be no more than 10%. - Recommend GA be included in TRC calculations 9

11 Other Residential Recommendations EM&V - Third party verification of savings is critical to design and delivery of cost effective initiatives - Recommend EM&V investment of no more than 5% of overall portfolio Demand Response - DR provides valuable system benefits - Consumer messaging should be clear - Should complement not supplant efficiency initiatives 10

12 Other Residential Recommendations Joint Solicitations - As initiatives become consistent statewide joint solicitations can reduce administrative costs and enhance performance - VEIC Recommends the Commission: Direct the utilities to issue a joint solicitation(s) for implementation services 11

13 Other Residential Recommendations Demand Response - DR provides valuable system benefits - Consumer messaging should be clear - Should complement not supplant efficiency initiatives - VEIC recommends the Commission direct the utilities that do not currently include water heating in their DR programs to examine this option - VEIC recommends the Commission direct the utilities to file the level of EE/DR they propose to submit to PJM as qualified resources prior to bidding 12

14 Other Residential Recommendations Reporting and Hearings - VEIC agrees with staff s recommendations: - To continue seeking improvements to standardized reporting including greater use of graphics to indicate trends and progress towards goals - VEIC recommends quarterly reports with data and graphics and semi-annual updates with narratives - VEIC recommends working groups meet regularly (at least once a quarter) to discuss initiative specific market conditions and issues 13

15 Utility Specific Comments & Recommendations 14

16 Potomac Edison PE forecasts saving 82% of the 2015 EmPOWER Maryland target by x increase over the annual savings rate achieved to date Potomac Proposed Savings Compared to EmPOWER MD Targets Planned Savings (MWh) 2015 EmPOWER Savings Target (MWh) Average Annual Savings Planned Average Annual Savings Required to meet EmPOWER Target , , % 1.14% Proposed 53% increase in expenditure per annualized electric savings, and increasing investment per capita by over three times. Historic under spending and under performance can t continue if targets are to be reached 15

17 Potomac Edison Remedy on paper must be matched by performance and management improvements Commendable Elements: - Adoption of a residential new construction program; - Adoption of Premium Home Energy Check and increasing incentive to 40% (harmonized with other utilities) and including direct install with HPwES audits - An increase in the total portion of program spending that is dedicated to incentives (current plan is 60%); and - Consolidating lighting and appliances into a products program that should facilitate enhanced retail chain participation and promotion 16

18 Recommendations - Potomac Edison Retrofit: - Direct PE to work with other utilities to develop standardized statewide brand that is clear and consistent for homeowners - Should include services currently under QHEC, PHEC, HPwES as well as incentives financing and marketing Limited Income: - Commission should direct PE to work with the DHCD and other stakeholders to develop a statewide initiative to serve low income markets - Detailed work plan and transition plan due by December, 2011 transition by March,

19 Recommendations - Potomac Edison Efficient Products: - Adopt consistent statewide eligibility and incentives as base - Adopt upstream and mid-stream incentives for <$50. - Plan for higher specialty and SSL incentives - Increase non-incentive $ share going to support appliances HVAC: - Adopt consistent statewide eligibility and incentives as base 18

20 Recommendations - Potomac Edison New Construction: - Coordinate with other utilities to develop statewide initiative - Build off success of BGE and SMECO Financing: - Support MHELP for residential financing CVR - Support implementation recommend examining opportunity to coordinate with other utilities 19

21 BGE BGE forecasts saving 61% of the 2015 EmPOWER Maryland target by x increase over the annual savings rate achieved to date BGE Proposed Savings Compared to EmPOWER MD Targets Planned Savings (MWh) 2015 EmPOWER Savings Target (MWh) Average Annual Savings Planned Average Annual Savings Required to meet EmPOWER Target ,181,438 3,593, % 2.15% Proposed 89% increase in expenditure per annualized electric savings, and increasing investment per capita by over 1.5 times. 20

22 BGE Significant accomplishments and savings to date but the road ahead is steeper Commendable Elements: - Adoption of Premium Home Energy Check, increasing incentive to 40% (harmonized with other utilities) and including direct install with HPwES audits; - Enhanced incentives and products for consumer electronics and LED lighting; - Consolidating lighting and appliances into a products program that should facilitate enhanced retail chain participation and promotion; - Shifting to higher incentive tiers for the residential HVAC program, encouraging ancillary and quality installations services, and adding ductless mini-splits and heat pump water heaters. 21

23 Recommendations - BGE Retrofit: - Direct BGE to work with other utilities to develop standardized statewide brand that is clear and consistent for homeowners - Should include services currently under QHEC, PHEC, HPwES as well as incentives financing and marketing Limited Income: - Commission should direct BGE to work with the DHCD and other stakeholders to develop a statewide initiative to serve low income markets - Detailed work plan and transition plan due by December, 2011 transition by March,

24 Recommendations - BGE Efficient Products: - Adopt consistent statewide eligibility and incentives as base - Support CEE Tiers for clothes washers and refrigerators - Coordinate HPWH initiative statewide HVAC: - Adopt consistent statewide eligibility and incentives as base - Coordinate tune up, duct sealing and QIV messaging and protocols with other utilities 23

25 Recommendations - BGE New Construction: - Coordinate with other utilities to develop statewide initiative - Consider enhanced training and/or incentives as standards increase Financing: - Support MHELP for residential financing DR - As participation increases look for opportunities to enhance consumer value beyond cycling data for targeted efficiency and behavior coordination 24

26 DPL DPL forecasts saving 186% of the 2015 EmPOWER Maryland target by x increase over the annual savings rate achieved to date Delmarva Proposed Savings Compared to EmPOWER MD Targets Planned Savings (MWh) 2015 EmPOWER Savings Target (MWh) Average Annual Savings Planned Average Annual Savings Required to meet EmPOWER Target , , % 0.61% Proposed 228% increase in expenditure per annualized electric savings, and increasing investment per capita by over six times Historic under spending and under performance can t continue if targets are to be reached 25

27 DPL Aggressive plans on paper must be matched by performance and management improvements Commendable Elements: - Adoption of a residential new construction program; - Adoption of the MHELP financing program for residential retrofit market; - Adding appliance recycling and consumer electronics to the products program - Adding a customer behavior element to residential portfolio and: - Consolidating lighting and appliances into a products program that should facilitate enhanced retail chain participation and promotion 26

28 Recommendations - DPL Retrofit: - Direct DPL to work with other utilities to develop standardized statewide brand that is clear and consistent for homeowners - Should include services currently under QHEC, PHEC, HPwES as well as incentives financing and marketing Limited Income: - Commission should direct DPL to work with the DHCD and other stakeholders to develop a statewide initiative to serve low income markets - Detailed work plan and transition plan due by December, 2011 transition by March,

29 Recommendations - DPL Efficient Products: - Adopt consistent statewide eligibility and incentives as base - Seek opportunities to coordinate service procurement and partner recruitment with other utilities HVAC: - Adopt consistent statewide eligibility and incentives as base - Coordinate tune up, duct sealing and QIV messaging and protocols with other utilities - Direct the utility to review and revise participation targets. These appear too aggressive particularly given past performance 28

30 Recommendations - DPL New Construction: - Coordinate with other utilities to develop statewide initiative - Build off success from BGE and SMECO Financing: - Support MHELP for residential financing DR - Do not substitute for cost effective and well run efficiency programs 29

31 PEPCO PEPCO forecasts saving 83% of the 2015 EmPOWER Maryland target by ~5x increase over the annual savings rate achieved to date PEPCO Proposed Savings Compared to EmPOWER MD Targets Planned Savings (MWh) 2015 EmPOWER Savings Target (MWh) Average Annual Savings Planned Average Annual Savings Required to meet EmPOWER Target ,030,133 1,239, % 1.67% Proposed 96% increase in expenditure per annualized electric savings, and increasing investment per capita by over five times Historic under spending and under performance can t continue if targets are to be reached 30

32 PEPCO Aggressive plans on paper must be matched by performance and management improvements Commendable Elements: - Adoption of a residential new construction program; - Adoption of the MHELP financing program for residential retrofit market; - Adding appliance recycling and consumer electronics to the products program - Adding a customer behavior element to residential portfolio and: - Consolidating lighting and appliances into a products program that should facilitate enhanced retail chain participation and promotion 31

33 Recommendations - PEPCO Retrofit: - Direct PEPCO to work with other utilities to develop standardized statewide brand that is clear and consistent for homeowners - Should include services currently under QHEC, PHEC, HPwES as well as incentives financing and marketing Limited Income: - Commission should direct PEPCO to work with the DHCD and other stakeholders to develop a statewide initiative to serve low income markets - Detailed work plan and transition plan due by December, 2011 transition by March,

34 Recommendations - PEPCO Efficient Products: - Adopt consistent statewide eligibility and incentives as base - Seek opportunities to coordinate service procurement and partner recruitment with other utilities - Direct the utility to review the AERP participation which stays flat over the proposed 3 year plan HVAC: - Adopt consistent statewide eligibility and incentives as base - Coordinate tune up, duct sealing and QIV messaging and protocols with other utilities 33

35 Recommendations - PEPCO New Construction: - Coordinate with other utilities to develop statewide initiative - Build off success from BGE and SMECO Financing: - Support MHELP for residential financing DR - Do not substitute for cost effective and well run efficiency programs 34

36 SMECO SMECO forecasts saving 176% of the 2015 EmPOWER Maryland target by times increase over the annual savings rate achieved to date SMECO Proposed Savings Compared to EmPOWER MD Targets Planned Savings (MWh) 2015 EmPOWER Savings Target (MWh) Average Annual Savings Planned Average Annual Savings Required to meet EmPOWER Target ,667 83, % 0.38% Proposed 119% increase in expenditure per annualized electric savings, and increasing investment per capita by over two times 35

37 SMECO Based on past performance and plans most likely to meet EmPOWER Maryland targets Commendable Elements: - Adoption of Premium Home Energy Check and increasing incentive to 40% (harmonized with other utilities) and including direct install with HPwES audits; - Enhanced incentives and products for consumer electronics and LED lighting; - Consolidating lighting and appliances into a products program that should facilitate enhanced retail chain participation and promotion - Shifting to higher incentive tiers for the residential HVAC program, encouraging ancillary and quality installations services, and adding ductless mini-splits. 36

38 Recommendations - SMECO Retrofit: - Direct SMECO to work with other utilities to develop standardized statewide brand that is clear and consistent for homeowners - Should include services currently under QHEC, PHEC, HPwES as well as incentives financing and marketing Limited Income: - Commission should direct PEPCO to work with the DHCD and other stakeholders to develop a statewide initiative to serve low income markets - Detailed work plan and transition plan due by December, 2011 transition by March,

39 Recommendations - SMECO Efficient Products: - Adopt consistent statewide eligibility and incentives as base - Seek opportunities to coordinate service procurement and partner recruitment with other utilities - Seek to reduce non incentive costs through coordination and greater use of mid-stream and up-stream incentives - Coordinate statewide HPWH support HVAC: - Adopt consistent statewide eligibility and incentives as base - Coordinate tune up, duct sealing and QIV messaging and protocols with other utilities 38

40 Recommendations - SMECO New Construction: - Coordinate with other utilities to develop statewide initiative - Consider enhanced training and/or incentives as standards increase Financing: - Support MHELP for residential financing DR - Do not substitute for cost effective and well run efficiency programs 39