As discussed in an earlier post, Market Transformation is a tall order. One of the best ways to rise and meet the challenge is to scaffold your efforts with regional gas and electric utilities. For the uninitiated, the notion of a utility that makes money selling energy would seem an odd bedfellow among people who are interested in reducing the amount of energy the utility sells, but in many parts of the country the relationship is a healthy way to meet each partner’s needs.

Several states have separated utility energy sales fluctuations from utility revenues to “decouple” from an energy provider’s financials the reduced consumption that results following efficiency improvements. This is most frequently achieved through a mechanism that recognizes and returns “lost revenue” through either a detailed accounting of efficiency activity, or through a financial reward for meeting demand-side reduction goals.

Decoupling is one of the most potent ingredients in successful efficiency programs because it opens the door to sustained and meaningful utility support. It can take time for utilities to get used to the idea, but several states have succeeded in creating partnerships that work together on market characterization, customer outreach, and other shared interests.  

While it’s easy to see how community efforts might benefit from utility-provided data and other resources, it may seem less clear what utilities gain from working with smaller, disparate groups and organizations. Customer relations are important to utilities, and partnerships with local nonprofits and business groups bolster the utility’s credibility and public interest in the utility’s messaging. Many customers have a high level of dissatisfaction and low level of trust for utilities, an issue that the utility can effectively bridge through affiliation with recognizable local groups. At the same time, smaller local alliances can gain more widespread legitimacy as well. 

In addition to enhanced marketing and energy awareness work, utility and community relationships also result in practical and effective products, such as:

• Paying-for-performance: compensating customers for reduced energy consumption based upon utility usage times and locations.
• On-Bill Financing: repaying upgrade costs on utility bills where the realized savings can reduce or eliminate a first-cost barrier to broader efficiency upgrades.
• Portfolio standards: meeting minimum requirements on renewable and energy efficient benchmarks through community efforts.
• Public benefit funds: funding efficiency programs with utility-raised money generated by an administrative surcharge that covers avoided costs of generation and system upgrades.

For more discussion of these and other best practices, please refer to: “Best Practices in Community Energy Efficiency Programs: Local Energy Alliance Utility Interaction.”

Content for this Blog post courtesy of Nick Lange, Vermont Energy Investment Corporation