Thursday, December 09, 2010

Michigan Energy Optimization Programs Will Save Customers a Third More Than Expected

Mostly over-looked in the 2008 energy legislation that brought us our renewable energy standard was a provision that utility companies implement energy optimization programs to increase efficiency. For residential customers, that could mean anything from housing weatherization initiatives, lighting with CFL bulbs, replacing inefficient heating and cooling systems and old appliances, along with various other forms of energy education. For business customers, about the same, but on a larger scale when it comes to replacing equipment. The goal was to reduce demand for fossil fuels and save energy, which of course in turn saves money.

It was wildly successful.

Energy programs implemented last year will save customers about a third more than projected, according to a report issued Tuesday by the Public Service Commission.

The report, required under the legislation that adopted renewable energy portfolio standards, showed the state's utilities implemented $89 million in energy optimization programs in 2009, but those programs were projected to save utility customers $404 million over the lifetime of the projects.

That savings exceeded targets for the programs by 37 percent, the report said.

Some other findings from the full report that are worth noting, the first being that these programs are available to everyone in Michigan. While the major utility companies are able to offer more variety in the way of optimization efforts, even the smaller companies that have joined co-ops or other alternative programs are offering various forms of energy efficiency options or education.

On November, 30, 2009, a major milestone in Michigan was achieved: all natural gas and electric utility customers in Michigan could participate in specific energy efficiency programs offered by their local utility. This milestone was achieved through the 2009 launch of utility-directed Energy Optimization programs and launch of the state-selected program, Efficiency United, which has continued throughout 2010. Importantly, this was the first time in over 14 years that utility energy-efficiency programs, funded via a public benefits fund approach, have been available to Michigan utility customers. There have been new programs available in 2010 and utilities will continue to phase-in the implementation of additional programs and expand existing programs over the next several years.

And that's not all. When the idea of energy efficiency was floated as part of the overall package of bills, it was said that the effort would create thousands of jobs. While the PSC didn't track specific numbers on job creation, they did offer evidence that this legislation brought businesses to Michigan - and that they are employing local people to do the work.

Because of the absence of energy efficiency programming in Michigan over the past decade and a half, Michigan lost its energy efficiency implementation contractor industry which migrated to other states that continued energy efficiency programs. The near vacuum of professional energy efficiency consulting businesses in Michigan has required utilities to obtain out of state design and implementation contractors. In 2009, most contractors were still located out of state, however over the past year these companies have opened businesses in Michigan.

For example, CLEAResult, a Texas-based organization, has opened an office in Okemos, Michigan to serve its Michigan clients. Also, most of the utility companies in Michigan have contracted with JACO Environmental for their refrigerator recycling program, which is a Washington-based company that now has recycling centers in Michigan. KEMA, which conducted the evaluation work for many Michigan utilities, is an international company that now has offices in Okemos, Detroit and Clark Lake, Michigan. Further, with respect to subcontractors, utilities have required recruitment of local labor for all field work.

A review of implementation contractors reveals that most implementation work in Michigan is being performed by a handful of businesses. Finally, it should be noted that many utility EO low-income programs in the state, including the Efficiency United program, will rely on the MCAAA to implement low-income programs. Several utilities are implementing low-income programs using local community action agencies, or other non-profits.

That means jobs, jobs, jobs created by this legislation - and it sounds like there will be future opportunities for more businesses to expand operations and take advantage of these efforts, as funding for the programs increase over the next few years. Here is the conclusion from the report:

The Commission views the state’s utility EO programs as a resounding success. During 2010, utilities in Michigan significantly ramped-up energy efficiency programming for their customers, expanding spending from $89 million to $137 million, an increase of 54 percent over 2009. All 66 utilities in the state are now implementing EO programs.

The report recommends that companies take "administrative actions to improve the effectiveness of the programs", basically to streamline operations and create uniform energy options that will be offered to all, but other than that, they couldn't find any major problems that they would change with further legislation.

So, pat the Legislature on the back as they go on their way - this is one piece of law that they got right.