1. business and industrial
2. energy
3. renewable energy

ML 162253
ORDER NO. 86785
IN THE MATTER OF POTOMAC EDISON
COMPANY D/B/A ALLEGHENY POWER’S
ENERGY EFFICIENCY, CONSERVATION AND
DEMAND RESPONSE PROGRAMS PURSUANT TO
THE EMPOWER MARYLAND ENERGY
EFFICIENCY ACT OF 2008
_______________________________________
IN THE MATTER OF BALTIMORE GAS AND
ELECTRIC COMPANY’S ENERGY EFFICIENCY,
CONSERVATION AND DEMAND RESPONSE
PROGRAMS PURSUANT TO THE EMPOWER
MARYLAND ENERGY EFFICIENCY ACT OF 2008
_______________________________________
IN THE MATTER OF POTOMAC ELECTRIC
POWER COMPANY’S ENERGY EFFICIENCY,
CONSERVATION AND DEMAND RESPONSE
PROGRAMS PURSUANT TO THE EMPOWER
MARYLAND ENERGY EFFICIENCY ACT OF 2008
_______________________________________
IN THE MATTER OF DELMARVA POWER &
LIGHT COMPANY’S ENERGY EFFICIENCY,
CONSERVATION AND DEMAND RESPONSE
PROGRAMS PURSUANT TO THE EMPOWER
MARYLAND ENERGY EFFICIENCY ACT OF 2008
_______________________________________
IN THE MATTER OF SOUTHERN MARYLAND
ELECTRIC COOPERATIVE, INC.’S ENERGY
EFFICIENCY, CONSERVATION AND DEMAND
RESPONSE PROGRAMS PURSUANT TO THE
EMPOWER MARYLAND ENERGY EFFICIENCY
ACT OF 2008
_______________________________________
IN THE MATTER OF WASHINGTON GAS LIGHT
COMPANY’S
ENERGY
EFFICIENCY,
CONSERVATION AND DEMAND RESPONSE
PROGRAMS PURSUANT TO THE EMPOWER
MARYLAND ENERGY EFFICIENCY ACT OF 2008
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BEFORE THE
PUBLIC SERVICE COMMISSION
OF MARYLAND
______________
CASE NO. 9153
______________
______________
CASE NO. 9154
______________
______________
CASE NO. 9155
______________
______________
CASE NO. 9156
______________
______________
CASE NO. 9157
______________
_____________
CASE NO. 9362
______________
Issue Date: December 23, 2014
1
For more than fifteen years, the Maryland Public Service Commission has been
tasked with a statutory duty to “require each gas company and electric company to
establish any program or service that the Commission deems appropriate and cost
effective to encourage and promote the efficient use and conservation of energy.”1 In
recognition that energy efficiency is among the least expensive ways to meet the growing
electricity demands of the State, the Maryland General Assembly passed legislation to
meet specific energy efficiency, conservation, and demand response targets by the end of
2015, culminating in the EmPOWER Maryland Energy Efficiency Act of 2008
(“EmPOWER”).2 In accordance with the EmPOWER Act, the affected Maryland electric
companies submitted proposals on or before September 2, 2014 designed to achieve
electricity and demand savings for the subsequent three calendar years.3
In this Order, the Public Service Commission of Maryland (the “Commission”)
authorizes Baltimore Gas and Electric Company (“BGE”), the Potomac Edison Company
(“PE”), Potomac Electric Power Company (“Pepco”), Delmarva Power & Light
Company (“DPL”), and Southern Maryland Electric Cooperative, Inc. (“SMECO” or the
“Cooperative”) to begin transitioning into the next three-year program cycle of the
EmPOWER Maryland Energy Efficiency Act of 2008. The Commission also authorizes
the Maryland Department of Housing and Community Development (“DHCD”) to
continue its implementation of the EmPOWER Maryland limited-income programs in
calendar year 2015, as modified herein. Furthermore, the Commission grants the
1
See Md. Laws of 1998, ch. 8 § 2, (re-codifying the quoted language as Public Utilities Article § 7211(B)(1)).
2
Public Utilities Article (“PUA”) §7-211.
3
PUA §7-211(h)(2).
2
application of Washington Gas Light Company (“WGL”) for approval of its natural gas
energy efficiency and conservation program as modified herein, as well as the
accompanying cost recovery mechanism.
On October 20 – 24, 2014, the Commission held a legislative-style hearing in the
above-captioned cases to review, among other matters, the 2015 – 2017 EmPOWER
Maryland proposals filed by BGE,4 PE,5 Pepco,6 DPL,7 SMECO,8 and WGL9
(collectively, the “Utilities”), as well as DHCD.10 The Commission also reviewed the
comments filed by its Technical Staff (“Staff”);11 the Office of People’s Counsel
4
ML#158042: Baltimore Gas and Electric Company EmPOWER Maryland Program Filing for 2015 2017 (“BGE Proposal”) (Aug. 28, 2014); ML#158521: Errata to BGE’s 2015 – 17 EmPOWER Maryland
Program Plan (“BGE Proposal Errata”) (Sept. 12, 2014).
5
ML#158100: The Potomac Edison Company – Energy Efficiency and Conservation Plan January 1, 2015
through December 31, 2017 (“PE Proposal”) (Sept. 2, 2014); ML#159205: Comments on EmPOWER
Maryland Filings (“PE Comments”) (Oct. 3, 2014).
6
ML# 158117: Potomac Electric Power Company EmPOWER Maryland 2015-2017 Plan (“Pepco
Proposal”) (Sept. 2, 2014); ML#158332: Potomac Electric Power Company 2015-2017 EmPOWER
Maryland Plan Errata (“Pepco Proposal Errata”) (Sept. 5, 2014).
7
ML#158119: Delmarva Power & Light Company EmPOWER Maryland 2015-2017 Plan (“DPL
Proposal”) (Sept. 2, 2014); ML#158333: Delmarva Power & Light Company EmPOWER Maryland 20152017 Plan Errata (“DPL Proposal Errata) (Sept. 5, 2014).
8
ML#158132: Southern Maryland Electric Cooperative, Inc.’s 2015 – 2017 EmPOWER Maryland Plan
(“SMECO Proposal”) (Sept. 2, 2014); ML#158441: Southern Maryland Electric Cooperative, Inc.’s 2015 –
2017 EmPOWER Maryland Plan Errata (“SMECO Proposal Errata”) (Sept. 9, 2014).
9
ML#158098: Application of Washington Gas Light Company for Approval of Energy Efficiency and
Conservation Programs (“WGL Proposal”) (Aug. 29, 2014); ML#159523: Washington Gas Light
Company’s Response to Comments (“WGL Comments”) (Oct. 15, 2014); ML#159952: Application of
Washington Gas Light Company for Approval of Energy Efficiency and Conservation Programs Addendum
(“WGL Proposal Addendum”) (Nov. 3, 2014).
10
ML#158140: Maryland Department of Housing and Community Development EmPOWER Low Income
Energy Efficiency Program 2015 – 2017 Proposal (“DHCD LIEEP Proposal”) (Sept. 2, 2014);
ML#158207: DHCD Plan for 2015 – 2017 EmPOWER Maryland Limited Income Energy Efficiency
Program Errata (“DHCD Sept. 2nd Errata”) (Sept. 2, 2014); ML#158679: DHCD’s EmPOWER 2015-17
Low Income Energy Efficiency Programs Proposal Errata (“DHCD Sept. 16th Errata”) (Sept. 16, 2014).
11
ML#159240: Staff Comments (Oct 3, 2014); ML#159573: Staff Errata Comments (Oct. 17, 2014);
ML#159232: Comments of the Public Service Commission Staff – Washington Gas Light Company 2015 –
2017 EmPOWER Maryland Plan (“Staff’s WGL Comments”) (Oct. 3, 2014); ML#159238: Comments of
the Public Service Commission Staff – Maryland Department of Housing and Community Development
2015 – 2017 Plan Proposal (“Staff’s DHCD Comments”) (Oct. 3, 2014).
3
(“OPC”);12 the Maryland Energy Administration (“MEA”);13 the Western Maryland
Municipals;14 the Coalition of Maryland Energy Efficiency Advocates;15 Aegis Energy
Services, Inc.;16 Bluestone Energy Services;17 EnSave, Inc.;18 Efficiency First;19 the
National Housing Trust, Natural Resources Defense Council, and National Consumer
Law Center (“NHT/NRDC/NCLC”);20 the Maryland Alliance for Fair Competition and
the Air Conditioning Contractors of America, Central Maryland Chapter (“the
Alliance”);21 Civic Works, Inc.;22 and the U.S. Department of Energy (“DOE”).23
In this Order, we address the requests made in filings and at the semi-annual
hearing related to the 2015 – 2017 program cycle proposals; future orders will follow, as
necessary. Today we approve many of the proposals pending before us, and accordingly,
12
ML#159246: Office of People’s Counsel Comments on EmPOWER Maryland (“OPC Comments”) (Oct.
3, 2014); ML#159546: Errata to OPC Comments (“OPC Errata Comments”) (Oct. 16, 2014); ML#158137:
Comments and Recommendations of the Office of People’s Counsel Regarding EmPOWER Maryland LowIncome Programs (“OPC LIEEP Comments”) (Sept. 2, 2014).
13
ML#159239: Maryland Energy Administration Comments on the Utilities’ EmPOWER Maryland 201517 Plans (“MEA 2015-2017 Proposal Comments”) (Oct. 3, 2014); ML#158129: Maryland Energy
Administration Policy and Program Recommendations (“MEA Recommendations”) (Sept. 2, 2014);
ML#159403: Maryland Energy Administration Comments on Washington Gas Light Company (“MEA’s
WGL Comments”) (Oct. 14, 2014).
14
ML#159222: Response to EmPOWER Program Proposed Policy Change (“Western MD Municipals
Comments”) (Oct. 3, 2014).
15
ML#159282: Comments of the Coalition of Maryland Energy Efficiency Advocates—Correction Color
Version (“Coalition Comments”) (Oct. 8, 2014).
16
ML#159084: Comments on 1st 2014 Semi-Annual Reports and 2015 Plans for EmPOWER Maryland
(“Aegis Comments”) (Oct. 1, 2014).
17
ML#159207: Comments (“Bluestone Comments”) (Oct. 3, 2014).
18
ML#159209: Comments (“EnSave Comments”) (Oct. 3, 2014).
19
ML#159076: Efficiency First Maryland Comments in support of the residential retrofit industry in
Maryland (“Efficiency First Comments”) (Oct. 1, 2014).
20
ML#159215: National Housing Trust, Natural Resources Defense Council, and National Consumer Law
Center Comments on EmPOWER Maryland Programs (“NHT/NRDC/NCLC Comments”) (Oct. 3, 2014).
21
ML#159247: Maryland Alliance for Fair Competition and the Air Conditioning Contractors of America,
Central Maryland Chapter Comments (“Alliance 2015-2017 Proposal Comments”) (Oct. 3, 2014);
ML#158754: Maryland Alliance for Fair Competition Petition to Change Rebate Criteria for Whole Home
Duct Sealing (“Alliance Petition”) (Sept. 19, 2014); ML#158139: Maryland Alliance for Fair Competition
Letter regarding the Commission’s Order No. 86366 relating to natural gas boiler rebate program
(“Alliance Natural Gas Boiler Rebate Comments”) (Sept. 2, 2014); ML#158443: Maryland Alliance for
Fair Competition Comments on Staff Summary Report (“Alliance Comments on Staff Report”) (Sept. 9,
2014).
22
ML#159206: Comments (“Civic Works Comments”) (Oct. 3, 2014).
23
ML#159202: Comments (“DOE Comments”) (Oct. 3, 2014).
4
we direct the Utilities and DHCD to continue effectively and aggressively executing their
programs. We also direct the Utilities and DHCD to make related compliance filings,
including tariff pages and surcharge provisions, consistent with this Order.
2015 – 2017 Program Cycle Proposals
Subject to the modifications and terms discussed in this Order, we approve the
Utilities’ proposals to continue the core EmPOWER programs into the next program
cycle.24 We also approve several new programs, pilots, and enhancements to the suite of
EmPOWER Maryland portfolios, including the approval, with certain modifications, of
WGL’s application to implement natural gas energy efficiency and conservation
(“EE&C”) programs throughout its service territory. Moving into this next program
cycle, we look forward to and encourage additional innovation in EmPOWER program
offerings, and expect the Utilities to take full advantage of the new program
investigation, design, and development (“PIDD”) budgets earmarked in the 2015 – 2017
proposals.
Electric Energy Efficiency and Conservation Programs
Residential Lighting Program
Across the Utilities, the 2015 – 2017 program cycle Total Resource Cost (“TRC”)
of the Residential Lighting Program is projected to average 4.37, demonstrating the
continued cost effectiveness of this Program.25
While we approve the Residential
Lighting Program for all Utilities as proposed, we acknowledge the recommendation by
24
As these core programs are both well-established and well-documented, we focus the discussion in this
Order largely on new programs, pilots, or modifications to existing programs.
25
Staff Comments at 47.
5
Staff that as the lighting efficiency baseline increases, it will be necessary to evaluate
whether it is appropriate to continue incentivizing compact fluorescent light bulbs
(“CFLs”), and if so, at what funding level. To prepare for this review, we direct the
Utilities to begin including information in their quarterly reports to Staff indicating the
price differential between specialty CFLs and light-emitting diode light bulbs (“LEDs”)
across their service territories. We also direct the EmPOWER Work Group to consider
the current incentive structure for standard and specialized CFLs, and to submit their
findings and any recommended modifications in a report filed with the Commission no
later than April 15, 2015.
Residential Appliance Rebate Program
While the Residential Appliance Rebate Program exceeded participation forecasts
during the previous program cycle across the Utilities, the Program struggled with energy
savings and effectiveness. In response, the Utilities presented proposals for the upcoming
program cycle focused on higher-tiered appliances, albeit with varying ideas about which
measures to incentivize.26 Based on our established policy to standardize EmPOWER
programs statewide when possible, we approve the following appliance rebate offerings
and corresponding incentive amounts for the Appliance Rebate Program implemented by
BGE, DPL, Pepco, PE, and SMECO.
Measure
Heat Pump Water Heater
Refrigerator - CEE Tier 2
Refrigerator - CEE Tier 3
Clothes Washer - CEE Tier 2
Clothers Washer - CEE Tier 3
26
Incentive Amount
Measure
$
500 Clothes Dryer
$
100 Room A/C Unit - CEE Tier 2
$
150 Pool Pump (2 speed)
$
75 Pool Pump (variable speed)
$
100
Id. at 49.
6
Incentive Amount
$
50
$
30
$
150
$
400
As an additional means by which to realize deeper energy savings for the
Program, BGE, DPL, Pepco, and SMECO proposed a limited-time 10% increase in the
heat pump water heater rebate, to be offered during 3 annual promotional periods of
approximately 6 weeks each. We approve this inventive approach and direct all of the
Utilities to implement this promotional incentive of $550 for heat pump water heaters as
described in the Utilities’ filings.27 The Utilities should communicate with stakeholders
and coordinate the appropriate timing of the 3 annual promotional periods, and consider
designing the Program to overlap with statewide tax-free holidays. Depending on the
success of this promotional incentive offering, we encourage the Utilities to investigate
comparable opportunities for all eligible appliance measures.
In addition to the large measure appliance rebates offered by all Utilities, SMECO
proposed to supplement its Residential Appliance Rebate Program by introducing an
online appliance rebate application (consistent with the other Utilities). SMECO also
proposed to establish an online store to facilitate the purchase of smaller energy
efficiency products.28 We approve both program modifications proposed by SMECO,
and will look to the Cooperative and Staff for comments on lessons learned regarding the
online store, before we consider this modification for other service territories.
Residential Appliance Recycling Program
The Residential Appliance Recycling Program achieved higher energy savings
than projected, which contributed to the Program outpacing the Appliance Rebate
27
As noted by Staff, PE did not include the promotional incentive for heat pump water heater rebates in its
proposal. See Staff Comments at 48. In keeping with our principle of standardization, we direct PE to
participate in the promotional incentive offering described by the other Utilities.
28
Staff Comments at 49.
7
Program during the 2012 – 2014 program cycle.29 Due to this demonstrated success, we
approve the continuation of the Appliance Recycling Program through the 2015 – 2017
program cycle for all Utilities. We also approve expansion of the Program across all
Utilities to include a $25 rebate for the recycling of inefficient dehumidifiers that are
picked up by the Utility in conjunction with a larger unit, or are collected during a special
event.30
While SMECO participated in the program expansion proposal approved above,
the Cooperative also proposed an alternative to the cash recycling rebate in the form of a
voucher for use in its online store initiative.
We also approve this initiative and
commend SMECO’s innovation. In order to evaluate whether this approach should be
expanded to other service territories, we direct SMECO to track participation in its
voucher program according to measure, date of issuance, and rate of redemption.
Residential Quick Home Energy Check-up Program
As discussed above, the lighting efficiency baseline is increasing, which will
ultimately reach a level at which EmPOWER dollars are no longer appropriate to fund
the current lighting programs - particularly those concentrated on CFL offerings. Due to
the success of the Residential Quick Home Energy Check-up (“QHEC”) Program in
achieving impressive participation metrics,31 we note that this Program presents a unique
opportunity to accelerate the lighting market transition by introducing households to
29
Id. at 51. Given the potential interdependency of these two programs and the historic success of the
recycling program compared to the rebate program, we encourage the stakeholders to investigate
companion marketing, especially in the context of special events.
30
See, e.g. BGE Proposal at 40. The Utilities and Staff should alert us if the administrative costs associated
with maintaining an appliance recycling rebate for dehumidifiers or room air conditioners outweighs the
benefits of the measures’ inclusion.
31
Staff Comments at 53-56.
8
higher energy-saving, albeit more costly, LED bulbs. We therefore direct the Utilities to
include LEDs as an eligible QHEC measure as soon as practicable. In recognition of the
higher cost of LEDs, we find that customers should be eligible to receive 1 LED bulb in
addition to up to 12 total CFLs as part of the QHEC Program. We note, however, that the
Utilities should investigate the feasibility and cost effectiveness of offering a greater
number of LEDs in lieu of CFLs as an eligible QHEC measure and report back to us no
later than April 15, 2015 with their findings.
Subject to the modification that LEDs are to be offered as an eligible QHEC
measure, we approve the Residential QHEC Program as proposed by BGE, DPL, Pepco,
and SMECO for the 2015 – 2017 program cycle. We also approve the Residential QHEC
Program proposed by PE, with the caveat that PE is directed to offer the full complement
of QHEC measures envisioned by the other four Utilities in addition to the LEDs.32
Residential Home Performance with Energy Star Program
In recent quarters, the Residential Home Performance with Energy Star
(“HPwES”) Program has gained some momentum across the Utilities’ service territories,
although we suspect the Program has yet to realize its full potential. While we appreciate
the Utilities’ attempt to address cost-effectiveness concerns associated with this Program
through a proposed increase in the required savings-to-investment (“SIR”) ratio, we deny
this proposal given the likely unintended consequences cited by Staff in regard to the
accessibility of the Program.33
We do, however, authorize the continuation of the
HPwES Program across all of the Utilities through the 2015 – 2017 program cycle and
32
33
See Staff Comments at 53, Table 37: QHEC Measures.
Id. at 57.
9
remain optimistic about the Program’s holistic approach to energy savings.34
We acknowledge that one issue likely preventing the HPwES Program from more
effective performance is the conversion rates between audits and completed jobs,
especially in the SMECO service territory.35 To this end, we received a thoughtful
proposal by Civic Works suggesting that the Utilities pursue formal marketing
partnerships with community-based organizations as a means to cost effectively grow
program participation and to maximize conversion rates.36
We found this proposal
intriguing and innovative, but find it could benefit from further consideration by the
EmPOWER Work Group and through direct discussions with the Utilities. We therefore
deny, without prejudice, the Civic Works proposed program in which the utilities would
establish partnerships through a request for proposals and ultimately award performancebased contracts to community-based organizations to conduct HPwES marketing for the
Utilities. We look forward to hearing a more fully vetted version of this proposal, as
appropriate.
As for other proposed changes to the HPwES Program, we deny the request made
by some parties to reverse our prior decision directing the Utilities to immediately shift
the duct sealing measure into their HPwES Programs.37 We concur with the Alliance that
the Utilities inappropriately applied a SIR requirement to this individual measure within
34
Given that we deny the proposed SIR increase, the Utilities should revisit the appropriateness of their
filed HPwES program forecasts for the 2015 – 2017 program cycle and consider whether to provide
updated forecasts aligning savings per project and number of projects in conjunction with their next semiannual filing. In the absence of such a re-filing, the Utilities are bound by the budgets and metrics included
in the 2015 – 2017 proposals cited herein.
35
Staff Comments at 144.
36
Civic Works Comments. Commissioner Anne E. Hoskins abstains from the determination related to the
Civic Works proposal.
37
See Order No. 86366 (May 28, 2014) at 15.
10
the whole house HPwES Program. The Beacon software used by the Utilities cannot
properly account for the energy savings associated with whole house duct sealing.38
Therefore, we affirm our earlier decision to define duct sealing as an eligible HPwES
measure and direct the Utilities to exempt whole house duct sealing from the SIR
requirement. Additionally, we find that it is appropriate to increase the HPwES incentive
cap to $2,500 in the event that a customer elects to perform whole house duct sealing,
given the cost of this measure and the Program’s objective to drive deeper savings per
home.
In an effort to extend the HPwES opportunity to new household profiles, DPL,
Pepco, and SMECO proposed to implement an Assisted Home Performance with Energy
Star (“AHPwES”) Program in the upcoming program cycle. While SMECO proposed a
full-fledged Program for our consideration, the other two utilities did not include
necessary metrics or cost-effectiveness data.39
We find that the expansion of this
Program to an additional market segment is an appropriate objective, and therefore
approve the SMECO AHPwES proposal, subject to the filing of a full description of its
financing component prior to awarding any RFP to a lender. We do not at this time,
however, approve the proposal by DPL and Pepco to operate AHPwES pilots. Instead we
instruct the Utilities to re-file their proposals in advance of the next semi-annual hearing
with complete programmatic information, should they choose to pursue a full-scale
AHPwES Program as part of their respective portfolios.
38
39
Alliance Petition at 2.
Staff Comments at 61.
11
Residential HVAC Program
The Residential HVAC Program is designed to complement the markettransformative nature of the Residential HPwES Program and is intended to incentivize
the purchase of higher efficiency models of HVAC equipment beyond the baseline of
what is commercially available.
While the Utilities did not suggest increasing the
minimum criteria of a 16 Seasonal Energy Efficiency Ratio (“SEER”) used to establish
the rebate level, the Utilities did propose to increase the baseline used to calculate energy
savings and rebate value from a 13 SEER to a 14 SEER. While we appreciate this
attempt to align the Program with upcoming changes to the national standards effective
January 1, 2015, we find that the Program modification is premature given that
contractors are permitted to take advantage of an 18 month lag period to deploy any
remaining 13 SEER equipment inventory.40 We therefore deny, without prejudice, the
Utilities’ proposal to increase the savings baseline to a 14 SEER, and also deny the
corresponding proposed decreases in incentives.41 We do, however, accept the Utilities’
proposal to remove certain measures that are no longer cost effective, as well as to add
one new measure – the multi-zone ductless mini-split heat pump – due to the projected
energy efficiency gains associated with this equipment. With these modifications, we
approve the statewide deployment of the Residential HVAC Program for the 2015 – 2017
program cycle, subject to the following measure and incentive offerings.
40
Staff Comments at 68.
This proposal is denied without prejudice and may be reconsidered as part of the spring 2016 semiannual hearing.
41
12
Measure
Central Air Conditioner, ≥ 16
SEER and ≥ 13 EER
Central Air Conditioner, ≥ 18
SEER and ≥ 13 EER
Air Source Heat Pump, ≥ 16 SEER
and ≥ 13 EER and ≥ 9 HSPF
Air Source Heat Pump, ≥ 18 SEER
and ≥ 13 EER and ≥ 9.5 HSPF
Geothermal Heat Pump (closed
loop), ≥ 17.1 EER and ≥ 3.6 COP
Gas Furnace, ≥ 92% AFUE (w/ ECM)
Incentive Amount
Measure
$
500 Tier 1 Ductless Mini-split Heat
Pump, ≥ 14.5 SEER and ≥ 12 EER
$
1,000 and ≥ 8.2 HSPF
Tier 2 Ductless Mini-split Heat
$
750 Pump, ≥ 18 SEER and ≥ 12.5 EER
and ≥ 9 HSPF
$
1,250 Multi Zone Ductless Minisplit
Heat Pump, ≥ 15.5
$
1,800 SEER and ≥ 12.5 EER and ≥
8.6 HSPF
$
300
Incentive Amount
$
200
$
400
$
600
Other HVAC Program modifications proposed by the Utilities include the
provision of a seasonal bonus to drive additional sales during slower times of the year,
the removal of HVAC tune-ups from the BGE and PE Programs, and the qualification of
non-Energy Star homes for geothermal rebates in the Pepco and DPL service territories.
We approve each of these proposed Program modifications, and direct all of the Utilities
to offer a 10% seasonal bonus for HVAC equipment, similar to the conditions of the heat
pump water heater seasonal rebate, and in keeping with our principle of standardization
for core EmPOWER programs.
Residential Behavior-Based Program
We approve without modification the Residential Behavior-Based Program as
proposed by DPL, Pepco, PE, and SMECO for the 2015 – 2017 program cycle.42
Through the Behavior-Based Program, customers are encouraged to make and sustain
behavioral changes that yield energy savings, and we look forward to the stimulation of
additional savings through the Utilities’ planned efforts to leverage the behavior reports
to support cross-market participation.43 To further our understanding of the multi-faceted
42
43
BGE implements its behavior-based program under its Smart Grid initiative.
Staff Comments at 62.
13
capabilities and potential of Behavior-Based Programs to drive deeper and sustained
energy savings, we will schedule a technical conference in the coming months, which
will be separately noticed.
Residential New Construction Program
We approve without modification the Residential New Construction Program as
proposed by the Utilities for the 2015 – 2017 program cycle. The Program generally
achieved forecasted metrics during the 2012 – 2014 program cycle across the service
territories, and the Utilities submitted forecasts that indicate comparable or enhanced
program savings in the upcoming cycle despite the State’s adoption of the 2012
International Energy Conservation Code, which increased the energy efficiency
baseline.44 We commend the Utilities’ proposal to diversify the Program by adding a
multi-family component, and approve the standardized Residential New Construction
rebate offerings proposed by all of the Utilities.45
Schools Program
The inclusion of a School-focused Program is a best practice found in many
energy efficiency programs nationwide. While we acknowledge this best practice and
encourage the engagement of future generations in the energy efficiency conversation, we
find that the energy efficiency kit approach proposed by DPL, Pepco, PE, and SMECO is
inappropriate given the directly targeted student audience, verification and saturation
concerns that persist from PE’s previous distribution of energy efficiency kits. To be
clear, we encourage the future adoption of a School-focused Energy Efficiency Program,
44
45
Staff Comments at 70.
Id. at 70, Table 47: Residential New Construction Rebate Offerings.
14
but we instruct the Utilities to pursue an alternative approach with a more formally
constructed curriculum through educators, and look forward to a structure that may
emerge in collaboration with the Maryland Department of Education.
Commercial and Industrial Programs
The Utilities proposed to generally continue the commercial and industrial
(“C&I”) EE&C portfolios offered during the previous program cycle into the next phase
of EmPOWER Maryland. The potential of the C&I sector to realize deep energy savings
remains largely untapped, and we are encouraged by the Utilities’ efforts to propose
certain program modifications and enhancements that could uncover additional savings
opportunities. We note, however, the less ambitious forecasts associated with some
individual program offerings, and while we do not direct the resubmission of any such
forecasts at this time, we look forward to a discussion with the Utilities in the context of
cost effectiveness and whether supplemental programs will be necessary in order to
achieve post-2015 energy savings goals.
Given this backdrop, we approve for the 2015 – 2017 program cycle the
deployment of the following proposed C&I programs, without modification. First, we
authorize DPL and Pepco to continue their C&I New Construction Programs, and
approve their request to change reporting of custom new construction projects as part of
this Program. Second, we approve the proposal by BGE to implement several new C&I
programs and pilots, including: (1) the Building Operator Certification Program; (2) the
Benchmarking and Energy Analytics and Customer Engagement Tools Program;46 and
46
While we do not modify the proposal for either the Benchmarking or the Building Operator Certification
Programs, we accept the recommendation by Staff that BGE should track and report on spillover
attributable to these new Programs. See Staff Comments at 98-99.
15
(3) the Small Business Behavior Report Pilot.47 Third, we approve the new Commercial
Upstream Lighting Program as proposed by BGE and SMECO, and direct the Utilities to
discuss with the Work Group any mechanism designed to protect realization rates and
prevent free ridership as part of this Program.48 Fourth, we approve continuation of the
Prescriptive Program as proposed by BGE, DPL, PE, Pepco, and SMECO into the next
program cycle. Fifth, we approve the revamped Master-Metered, Multi-Family Program
as proposed by BGE, DPL, Pepco, and SMECO.
Sixth, we approve the Retro-
commissioning Program as proposed by BGE, DPL, and Pepco, including BGE’s
proposal to re-brand their Program as a “Building Tune-up.”
We also approve the revised incentive structure of the Combined Heat and Power
Program as proposed by the Utilities.49 We agree with Staff in support of the increased
installation incentives for smaller CHP projects; however, we acknowledge comments by
other interested stakeholders that the incentive structure can be somewhat limiting in the
total available incentive costs. Therefore, in addition to the proposed modifications
offered by the Utilities, we also direct that the incentive cap for all CHP projects should
be increased to $2.5 million, evenly split between the cap on the capacity and production
incentives. Furthermore, we direct SMECO and PE to file separate CHP forecasts for our
consideration in conjunction with the next semi-annual hearing, as we find that this
initiative warrants its own stand-alone program and marketing efforts, rather than being
offered as a component of the C&I Custom Program.
47
While Pepco and DPL also submitted proposals to operate a small commercial behavior program in the
upcoming program cycle, neither utility provided forecasted information in their proposals. We therefore
defer consideration of the DPL and Pepco proposal and direct them instead to file the required forecasted
metrics for consideration in conjunction with the spring 2015 semi-annual hearing.
48
Id. at 97.
49
See Staff Comments at 102, Table 73: CHP Revised Incentive Structure.
16
Subject to certain modifications, including the separation of the CHP offerings by
SMECO and PE as discussed above, we also approve the C&I Custom Program proposed
by BGE, DPL, Pepco, PE, and SMECO. We also condition our approval of PE’s
incentive structure upon standardization to align with that offered by BGE, DPL, Pepco,
and SMECO under the Custom Program. Furthermore, we decline at this time to adopt
the Whole Building Bonus proposed by DPL and Pepco. Next, we note that PE may
choose to offer its Energy Solutions for Business – Audits program as a sub-component
of either its Custom or Prescriptive Program during the 2015 – 2017 program cycle, but
we decline to approve PE’s proposal to establish the audits as a stand-alone program.
As a final component of the Utilities’ C&I portfolios, we approve the Small
Business Programs proposed by BGE, DPL, Pepco, PE, and SMECO, subject to certain
modifications. We appreciate the majority’s efforts to standardize the Program across the
service territories, and to this end we approve the target market demand structure as
proposed, with the exception of PE.50 Instead, we direct PE to align its small business
target market to an equivalent demand structure of 60 kW or less. To further this
standardization guideline, we also decline to approve PE’s proposed cap on incentives
available to small businesses under this Program, and deny the proposal by DPL and
Pepco to provide a Whole Building Bonus incentive.
We invite comment on several aspects of the Small Business Program moving
forward. The current definition of “small business” for purposes of this C&I EmPOWER
Program reflects criteria based on demand alone, and we invite comment on whether to
modify this definition moving forward to reflect additional criteria such as (but not
50
See Staff Comments at 80, Table 55: Small Business Target Market Comparison.
17
limited to) company size by revenues or by facility size. Moving into the next program
cycle, we also intend to review the incentive structure of the Small Business Program,
especially as we consider whether to expand the on-bill financing mechanism to all
service territories. To maximize the impact of our limited EmPOWER funds, we will
look to strike an appropriate balance between the incentive structure and any approved
financing mechanism, such as low-interest loans.
Electric Demand Response Programs
Residential Demand Response Programs
Since the inception of the EmPOWER Maryland programs, four of the Utilities
have operated Residential Demand Response (“DR”) Programs. BGE, DPL, and Pepco
offer incentives on air conditioning and heat pumps at three cycling levels of 50%, 75%,
and 100%, and SMECO is proposing to more closely align with this structure by
changing from a 3 degree setback to a 50% or 75% cycling option.51 We approve the
request to standardize the combined Residential and Small Commercial DR Program
implemented by SMECO.
SMECO is proposing two other program enhancements associated with its
combined DR Program, the first of which is a Water Heater DR Pilot that will incent
customer participation through a $25 bill credit. Although Staff advocated that we delay
the implementation of SMECO’s Water Heater DR Pilot,52 we find that SMECO’s
51
Staff Comments at 107.
Staff noted that SMECO may need time to resolve county permitting issues, and may also want to delay
implementation pending a decision in the legal proceedings associated with FERC Order 745. See Staff
Comments at 109. We find, however, that the county permitting issues may be resolved in the ensuing
months without detriment to our approval decision, and we also decline to speculate as to the ultimate
resolution of the possibly protracted legal proceedings involving the vacating of FERC Order 745.
52
18
proposal presents new potential to increase demand savings in a controlled manner, and
therefore authorize the deployment of this Pilot through the 2015 – 2017 program cycle.
The second DR Program enhancement proposed by SMECO – a Smart
Thermostat pilot – is also suggested by BGE, DPL, and Pepco, although each Utility has
its own interpretation of how to administer the Program in its service territory. While
SMECO and BGE proposed to pilot the technology, Pepco and DPL proposed to offer
customers with certain older models of thermostats or outdoor cycling switches to
upgrade to the two-way or AMI-compatible thermostats. We approve each of these
proposals, and direct Staff in consultation with the parties to develop a template to
facilitate the comparison of these technologies and Programs as implemented across the
service territories so that we may better judge whether to authorize full-scale
deployments at a later time.
Commercial Demand Response Program
As discussed and approved above, SMECO operates its Small Commercial
Demand Response Program in conjunction with its Residential DR offering. DPL and
Pepco also offer a Small Commercial Program to customers with peak demand of less
than 25 kW, and the two Utilities propose to extend this Program into the 2015 – 2017
program cycle. As recommended by Staff, we approve the continuation of this Program
by DPL and Pepco, without modification.53
We also approve, without modification, the proposal by SMECO to continue its
Large Commercial Demand Response Program in its current form through the 2015 –
53
We note that Staff recommended DPL and Pepco re-file forecasts based on past performance. See Staff
Comments at 112. While we do not require DPL and Pepco to do so herein, we remind the Utilities of our
expectation that they provide reasonably accurate forecasts by which their performance will be evaluated.
19
2017 program cycle. While SMECO is currently the only Utility to offer a DR program
for larger commercial customers, we encourage the other Utilities to monitor the
Program’s progress and to consider whether it is appropriate to target the large
commercial market segment within their service territories.
Master-Metered Account Demand Response Program
Pepco is the only Utility to offer the Master-Metered Account (“MMA”) Demand
Response Program, which has proven to be very challenging to implement. Despite
numerous programmatic modifications approved throughout the 2012 – 2014 program
cycle, including the approval of a $10 building manger administrative fee, the MMA DR
Program continues to drastically underperform. While we acknowledge the importance
of extending EmPOWER programs to all market segments, we find that the effectiveness
of this Program - in all its forms - has not been successful. Therefore, Pepco is directed
to discontinue its MMA DR Program moving into the 2015 – 2017 program cycle. We
encourage Pepco to pursue other ways to serve the master-metered sector.
Other Programs with Savings Attributable to EmPOWER
The Utilities implement various programs for which the energy efficiency and
peak demand reductions are reported as part of EmPOWER, but the costs associated with
these measures are not recovered through the EmPOWER surcharge. These energy
management tools, the majority of which are existing programs, are approved insofar as
we authorize the Utilities to continue reporting the savings attributable to these other
programs in conjunction with the EmPOWER templates; we do not alter, nor have the
Utilities requested changes to, any existing cost recovery mechanisms with this decision.
20
We therefore approve without modification the Utilities’ proposals to report the energy
efficiency and demand savings impacts attributable to the following programs during the
2015 – 2017 program cycle:
BGE
DPL
Pepco
PE
SMECO
HighConservation
Efficiency
Dynamic
Voltage
Transformer
Pricing
Reduction
Replacement
Program
Program
x
x
x
x
x
x
x
x
x
x
x
x
Utility
Energy
Outdoor
LED Street
Distribution/
Management
Street
Lighting
Transmission
Tools
Lighting
Replacement
Improvements
Enabled by Replacement
Program
Program
Smart Grid
Program
x
x
x
x
x
x
x
x
Limited-Income Programs
Improving the energy efficiency of limited-income households is a crucial
component of the State’s continuing EE&C goal, and is thus a critical area of focus under
the EmPOWER umbrella. To this end, we continue to find that DHCD remains wellpositioned to leverage outside funds and resources to expand the reach of the EmPOWER
programs. While we acknowledge that DHCD has improved its realized energy savings
in relation to forecasts, we find that certain accountability measures will further enhance
this progress and increase the likelihood that the EmPOWER limited-income programs
will reach as many eligible participants as possible. The accountability measures and
program modifications discussed below reflect the importance and seriousness of the
need across our State to deliver cost-effective energy efficiency programs to all sectors
— especially within the limited-income communities.
First, we acknowledge the recommendation of the Limited-Income Work Group
to subject the implementation of the limited-income programs to certain spending
21
guidelines to more evenly distribute funding among participants in the amount of
EmPOWER ratepayer funding received per home.54 While the Work Group supported
the concept of a tiered structure for average expenditures per home,55 we also recognize
that individual circumstances may require exceptions to this principle of standardization.
Thus, we find that spending guidelines are more appropriately administered at this time
using an alternative framework.56 Specifically, we find that, as a general guideline,
EmPOWER-funded expenditures per limited-income household should not exceed
$7,500 – inclusive of all measures.57
While this general spending guideline will apply to the majority of situations, we
note two specific exceptions to this expenditure cap. In the first instance, we affirm that
the existing health and safety spending limit, which we herein increase to $1,000 per
eligible household due to the adoption of higher code requirements,58 is incremental to
the spending parameters. Furthermore, we find that certain circumstances may justify
expenditures up to $12,000 per limited-income household.59 We therefore authorize
spending to exceed the guideline of $7,500, up to $12,000. In these cases, the program
54
ML#158134: Summary Report on the Directives from Commission Order No. 86366 (“Work Group
Report”) (Sept. 2, 2014) at Appx. C-9.
55
Id. at Appx. C-10. Other stakeholders expressed alternative views on whether a tiered incentive structure
should be adopted, with OPC supportive of the tiers as a per unit average rather than as a cost cap. See Oct.
24, 2014 Tr. at 1099. The Coalition of Maryland Energy Efficiency Advocates did not object to the
proposed tiers as targets, but did not endorse their use as hard or soft caps. See Coalition Comments at 1718.
56
We note that the Work Group supported tiered incentive structures as a way to more evenly distribute
funding among different energy usage classes. See Work Group Report at Appx. C-10. We find, however,
that this objective may be satisfied through properly managed participation metrics.
57
By this directive we address the question posed by the Work Group as to whether HVAC
repairs/replacements should be included in the proposed cap. See Work Group Report at Appx. C-12.
58
The increase of the health and safety spending limit was recommended by both OPC and the overall
Limited-Income Work Group. See OPC Comments at VEIC-70; Work Group Report at Appx. C-11. We
note that “health and safety” expenditures allow audits to proceed following the correction of factors such
as bathroom ventilation, smoke detectors, and electrical issues.
59
The $12,000 per limited-income household described herein constitutes a “hard cap” on EmPOWERfunded expenditures and must be accompanied by the documentation described above.
22
implementer must submit documentation of the best efforts to leverage outside funds.60
This documentation shall include a report detailing specific efforts to leverage outside
funds and resources, and shall be filed as an appendix to the semi-annual report submitted
by the program implementer.61
We take this opportunity to remind DHCD of our
expectation that the Agency attempt to leverage outside funds in all circumstances – not
just for the instances in which DHCD seeks to justify a higher spending level per
household.
Second, we recognize that the spending guidelines detailed above will be more
consistently applied by expanding the limited-income program framework to include
components such as a prescribed list of measures for weatherizing a home using
EmPOWER funds as well as the inclusion of price lists for these measures. We therefore
accept the recommendation of the Limited-Income Work Group to collaboratively
develop a cost-effective prescribed list of measures by studying completed jobs and best
practices in other jurisdictions.62 We direct Staff to file a report on behalf of the Work
Group no later than April 15, 2015 detailing the recommended prescribed list of measures
broken down by service territory. As for the accompanying price list for these measures,
we note that the Work Group recommended that a price list could be provided as an
addendum to the Request for Proposals issued by DHCD to retain its approved
contractors.63 We therefore direct DHCD to adopt this practice prospectively. To the
extent that the Work Group develops recommendations for price lists that define
60
The program implementer is reminded that other metrics, such as participation and energy savings, will
still be reviewed as part of the semi-annual hearing.
61
As recommended by OPC, the semi-annual report appendix should detail the sources of leveraged
funding and the types of measures funded with leverage resources. OPC Comments at VEIC-44.
62
Work Group Report at Appx. C-14.
63
Id.
23
acceptable price ranges for measures installed in each service territory, these
recommendations may also be included in the April 15, 2015 report for our consideration.
Third, we concur with the recommendation by the Limited-Income Work Group
that more costly measures offered to eligible households should be subject to energy
usage, equipment, and ownership guidelines.64 Larger, more costly equipment should
meet certain age and efficiency specifications to first determine whether a replacement is
warranted, so that relatively newer and functioning equipment is not replaced while it is
still in good operating condition. To effectuate this directive, we task the LimitedIncome Work Group with quantifying the energy usage and equipment criteria as
described in its September 2, 2014 report; Staff is directed to file a report on behalf of the
Work Group no later than April 15, 2015 detailing these efforts. As for the ownership
guidelines, we accept for immediate implementation the recommendation of the Work
Group that landlords must invest at least 50% of the total cost of large measures funded
by the EmPOWER surcharge, such as for HVAC unit replacements.65 While we are
conscious that a landlord may refuse to pay for 50% of large measure costs, the rental
household will remain eligible for other EmPOWER-funded weatherization measures and
DHCD may seek to leverage another funding source to cover the unit replacement.
Fourth, we are in general agreement with the Work Group that we should look to
best practices, such as those compiled in the September 2, 2014 Work Group report, to
bolster the evaluation, measurement, and verification (“EM&V”) practices associated
64
Id. at Appx. C-12.
Id. at Appx. C-13; OPC Comments at VEIC-73. As recommended by OPC, the Limited-Income Work
Group should convene to draft written policies and procedures for implementing the landlord contribution
requirement. Id.
65
24
with limited-income programs offered under the EmPOWER umbrella.66 Itron, Inc., the
Commission’s EM&V contractor, offered specific recommendations to increase the
accuracy and effectiveness of future limited-income program evaluations.67 We find that
the twelve recommendations outlined by Itron will improve the quality and usefulness of
future limited-income program evaluations, and we therefore adopt the recommendations
in full for all prospective evaluation periods.68,69
With the establishment of the above guiding principles and accompanying
directives, we authorize DHCD to proceed at this time as the program implementer of
EmPOWER Maryland Limited-Income programs for calendar year 2015. We note that
because DHCD is at this time only authorized as the program implementer through
calendar year 2015, DHCD is bound by the calendar year 2015 budget included in its
proposal.70 While our Staff has expressed reservations regarding the continuation of
DHCD in a program implementer role,71 the framework for accountability outlined in this
Order will allow us to reassess over the next year the effectiveness of today’s decision.
During 2015, DHCD is directed to effectively and aggressively implement the
EmPOWER limited-income programs and strive to achieve the programmatic metrics set
forth in its proposal.
66
See Work Group Report at Appx. D.
ML#159226: Low Income Energy Efficiency Program: Summary of Verified Program Savings and
Recommendations – Itron, Inc. (Oct. 3, 2014).
68
Id. at 1-13 – 1-19.
69
To the extent that the adoption of these EM&V best practices and recommendations exceeds the scope of
work envisioned by DHCD’s 2015 – 2017 proposal, DHCD may seek a budget adjustment subject to the
normal EmPOWER construct and template requirements by which all program implementers are bound.
70
See DHCD Proposal at 39, Table ES-4.
71
Staff’s DHCD Comments at 11.
67
25
Gas Energy Efficiency and Conservation Programs
The EmPOWER Act states that, “[s]ubject to review and approval by the
Commission, each gas company and electric company shall develop and implement
programs and services to encourage and promote the efficient use and conservation of
energy by consumers, gas companies, and electric companies.”72 (emphasis added).
Although the current 2015 EmPOWER goals measure progress on the basis of electricity
energy savings and demand reductions, several stakeholders have identified the
possibility of cost-effective savings resulting from natural gas efficiency programs and
subsequently recommended that the Commission formalize EmPOWER goals for natural
gas utilities.73 MEA also advocated that the Commission should exercise its existing
authority to expand EmPOWER programs to all natural gas customers.74
While there is not yet a formal proposal regarding natural gas efficiency goals for
us to consider, Washington Gas Light Company proposed to formalize EmPOWER
participation for a natural gas utility through its own set of programs for the 2015 – 2017
cycle.75 Staff posed as a threshold question whether it is premature to consider WGL’s
proposal in the absence of Commission-established natural gas efficiency goals, before
ultimately concluding that such a review is indeed appropriate, especially given that
existing EmPOWER programs contain natural gas measures.76 We also find that the
WGL proposal warrants immediate consideration, noting that the establishment of energy
72
PUA § 7-211(d).
MEA Recommendations at 1; OPC Comments at VEIC-8,
74
MEA Recommendations at 9.
75
WGL Proposal at 2.
76
Staff’s WGL Comments at 1.
73
26
savings goals is not a prerequisite defined by the underlying statute.77
As an additional threshold inquiry, Staff questioned whether the authorization of
WGL’s Program would impede the Commission’s goal of program standardization across
the State.78 Specifically, Staff noted its concern that some of WGL’s proposed programs
may be redundant to current electric utility program offerings that overlap with the WGL
service territory.79 While this concern led Staff to recommend denial of certain aspects of
the WGL proposal, we find that the identified issues can be mitigated by certain program
modifications discussed below.
With the exception of WGL’s proposed Energy Star New Homes Program,80 we
find that all other proposed natural gas efficiency offerings are both appropriate and
projected by the Company to be cost effective, and therefore we approve their residential
and commercial program proposals.81,82 We direct WGL, however, to modify certain
components of its individual program offerings to preserve standardization where there is
overlap with existing EmPOWER programs. Specifically, we direct WGL to align its
residential gas furnace incentives with the statewide HVAC incentives approved herein
for the other Utilities.83 To the extent that WGL wishes to propose any future adoption of
77
See PUA § 7-211(f)(1), which states that the Commission shall require each gas company and electric
company to establish any energy efficiency program that the Commission deems appropriate and cost
effective.
78
Staff’s WGL Comments at 1.
79
Id.
80
As noted by Staff, the Maryland standard code for new construction is the 2012 IECC; therefore, WGL’s
Energy Star New Homes Program, which proposed to incent homes to be at least 15% more efficient than
the 2003 IECC, is inadequate. Id. at 5.
81
This approval is bound by the forecasted budget and metrics contained in Company’s supplemental
filing. See WGL Proposal Addendum.
82
OPC noted that a high-level review indicates that WGL’s proposed portfolio of programs is “very costeffective.” See OPC Comments at VEIC-85.
83
While WGL proposed three tiers of furnace incentives in its filing, the other Utilities recommended only
one tier of incentives for a gas furnace, ≥ 92% AFUE at $300.
27
additional tiers or incentive levels for gas furnaces, it may do so within the context of the
EmPOWER Maryland Work Group or in future filings.
While we approve WGL’s proposal, subject to certain modifications, we also
acknowledge the need for continued coordination across electric and natural gas utilities
when administering EmPOWER programs. We therefore endorse the recommendation of
Staff, OPC, and MEA to establish a Natural Gas – Electric Efficiency Coordination Work
Group. This Work Group may appropriately consider the co-branding and co-marketing
of certain programs recommended by the stakeholders;84 the resulting recommendations
may spur additional program offerings for us to consider later in this program cycle.
In addition to developing program coordination strategies, we specifically direct
the Natural Gas – Electric Efficiency Coordination Work Group to initiate a review
process to determine the natural gas savings resulting from current electric EmPOWER
Maryland programs. As part of this review process, the Work Group should consider the
appropriate level of funding that could be allocated to natural gas customers on the basis
of these savings, especially in the context of limited-income programs offered within a
service territory whose efficiency programs are administered by separate natural gas and
electric utilities. The Work Group is directed to file a status report on the attribution of
these savings and the resulting proposed funding allocation scheme no later than April
15, 2015 so that the Commission may provide further guidance as necessary.
Lastly, we note that both OPC and MEA filed comments suggesting that
additional cost-effective opportunities may exist for WGL to expand the program
offerings approved herein. MEA opined that WGL’s budget and participation forecasts
84
See, e.g. MEA’s WGL Comments at 31.
28
may be conservative,85 while OPC recommended that WGL pursue cost-effective
solutions for other market segments.86 We take this opportunity to commend WGL for
its self-initiated natural gas efficiency program proposal, and suggest that the Company
work with Staff to familiarize itself with the EmPOWER reporting, budget and
programmatic adjustment procedures by which WGL is now bound and consider future
program expansion through the Work Group process.
Other EmPOWER Matters
Energy Efficiency Financing
We have previously identified the availability of affordable financing as a
potential barrier to participation in many of the Utilities’ EmPOWER Maryland
programs.87 While we are encouraged to now have two on-bill financing programs
underway for small business customers in the BGE and Pepco service territories, there
continues to be a need for expanded access to affordable financing — including for
residential customers. Financing can serve as a catalyst to higher participation and
deeper realized savings,88 and creative solutions are needed to expand energy efficiency
financing opportunities across all service territories and customer classes. To this end,
we delegate the matter of residential energy efficiency financing to the Public Utility Law
Judge (“PULJ”) Division for further investigation so that appropriate consideration may
85
MEA’s WGL Comments at 30.
OPC Comments at VEIC-84.
87
See, e.g. Order No. 84569 (Dec. 22, 2011) at 13.
88
MEA Recommendations at 2.
86
29
be given to all stakeholder ideas, concerns, and proposals.89 We specifically direct the
PULJ Division to facilitate the development of innovative and affordable residential
energy efficiency financing programs that could be deployed across one or more service
territories and in conjunction with current program offerings. This effort should also
evaluate whether legal or regulatory barriers exist, and what changes may be necessary to
facilitate the implementation of affordable energy efficiency financing programs. A
status report detailing these findings shall be filed no later than April 15, 2015.
MEA Policy Recommendations
In accordance with the EmPOWER Act, we have given due consideration to the
written findings provided by the Maryland Energy Administration regarding the design
and adequacy of the Utilities’ proposals.90 As part of these findings, MEA offered a suite
of policy and program recommendations to modify the EmPOWER program. While this
Order has separately addressed several of these recommendations already relating to the
expansion of EmPOWER programs to natural gas customers, as well as to the expansion
of access to affordable financing for residential customers, we take this opportunity to
address other suggestions offered by MEA.
One such policy recommendation advocated for by MEA is the implementation of
performance-based shareholder incentives for the utilities to meet or exceed established
energy efficiency goals.91 Without prejudging the efficacy of such a proposal, we find
89
We note that prior Commission orders address the topic of energy efficiency financing, including but not
limited to: Order No. 84569 (Dec. 22, 2011); Order No. 85589 (May 14, 2013); and ML#149455 (Sept. 6,
2013).
90
PUA § 7-211(h)(3).
91
MEA Recommendations at 12.
30
that the recommendation is not yet ready for our full consideration. While the concept
and design parameters of an incentive-based approach were outlined in MEA’s
comments, the Commission would benefit from review and analysis by the larger
EmPOWER Planning Work Group of MEA’s proposal. We direct the Work Group to
review the proposal and submit comments for Commission consideration prior to the next
semi-annual hearings.
MEA also advocated as part of this proceeding for the creation of a commercial
and industrial ombudsman at the Commission.
As envisioned by MEA, the C&I
ombudsman would serve as a single, statewide point-of-contact and as an engaged
advocate for C&I contractors and customers in EmPOWER matters.92 We concur that
such a position would stimulate a business-friendly perspective across all utility programs
and would also serve as an important voice in stakeholder meetings and Commission
proceedings.
While MEA advocates that this position should be established at the
Commission, we find that such a position would serve just as effectively within the
Maryland Energy Administration, especially for the purposes of recommending policy or
programmatic changes for us to consider. We therefore encourage MEA to pursue this
endeavor and note our willingness to consider the role and input of a C&I ombudsman as
a stakeholder in future proceedings.
As an additional recommendation, MEA suggests that the Commission expand
the EmPOWER EM&V process beyond its current scope. MEA notes that in Maryland,
EM&V is primarily viewed as a tool to verify energy savings, to identify necessary
adjustments to program results, to calculate cost effectiveness, and to evaluate process
92
MEA Recommendations at 18-20.
31
issues.93 While recognizing the importance of EM&V to fulfill these objectives, MEA
asserts that a wider array of research is needed to support program expansion. In support
of this recommendation, MEA detailed several goals of an expanded EM&V effort,
including added transparency. The goals outlined in MEA’s proposal are commendable
and we appreciate the efforts to increase the transparency of EM&V protocols. We do
share the view of Staff, however, that the third-party evaluator model has been a hallmark
of our EM&V efforts, and we therefore would not endorse any recommendation that
would undercut an independent and impartial EM&V process.94 To the extent that MEA,
Staff, and other stakeholders collaborate on next steps, such as the creation of an EM&V
reporting mechanism,95 we support such efforts within the confines of the EM&V
budgets approved herein.
Future Cost-Effectiveness Screening and Goal Allocation Methodologies
The Commission has a statutory duty to direct the implementation of EE&C
programs that we deem appropriate and cost effective.96 Our standard to date has focused
on ensuring a real return on the ratepayers’ investment, and we have noted our intent to
further address the scope and balance of factors bearing on cost effectiveness in future
proceedings.97 As documented in an August 18, 2014 filing made by MEA on behalf of
the EmPOWER Planning Work Group, stakeholders have engaged in an extensive
93
Id. at 21.
See Staff Comments at 118-119. Staff expressed strong disapproval of a recommended process change
in which stakeholders would be afforded the opportunity to redline EM&V documents prior to submission.
95
Staff conveyed its support of MEA’s proposal to track evaluation and verification recommendations and
the resulting implementation efforts. As noted by Staff, MEA may submit a template for consideration by
the EM&V work group. See Staff Comments at 119.
96
PUA § 7-211(f)(1).
97
Order No. 84569 at 17-18.
94
32
process to strengthen the analytical and methodological groundwork for avoided costs
and cost effectiveness testing in conjunction with the 2015 – 2017 EmPOWER Maryland
program cycle.98 Therefore, we find that the issue of future cost-effectiveness screening
is ripe for consideration, especially in light of the corresponding outstanding topic
regarding post-2015 goal allocation methodologies.
To this end, we direct any interested party to file with the Commission proposed
goal allocation methodologies for electric efficiency, natural gas efficiency, or both
electric and natural gas efficiency no later than January 30, 2015.99 The topic of post2015 goal allocation methodologies, as well as future cost-effectiveness screening
methodologies, will be the subject of a Commission hearing on February 12 and 13,
2015.100
IT IS THEREFORE, this 23rd day of December, in the year Two Thousand
Fourteen, by the Maryland Public Service Commission,
ORDERED: (1)
That the Residential Lighting Program as proposed by
BGE, DPL, Pepco, PE, and SMECO is approved for the 2015 – 2017 program cycle,
subject to the metrics and budgets included in the respective Utilities’ filings;
(2)
That BGE, DPL, Pepco, PE, and SMECO are directed to include
information pertaining to the incremental cost of LEDs compared to CFLs in their
98
ML#157744: EmPOWER Planning Group Documentation for Case 9153, 9154, 9155, 9156, and 9157
(Aug. 18, 2014).
99
Recognizing that January 30, 2015 would also be the filing deadline for the third and fourth quarter 2014
semi-annual report, we hereby extend that filing deadline for the Utilities and DHCD to February 13, 2015.
100
Additional information will follow in a Commission-issued notice of hearing and request for comment.
33
respective service territories in the quarterly filings submitted to Staff and in the semiannual reports filed with the Commission;
(3)
That Staff is directed to file on behalf of the EmPOWER Work Group a
report detailing findings and any recommended modifications to the incentive structure
for standard and specialized CFLs no later than April 15, 2015;
(4)
That the Residential Appliance Rebate Program as proposed by BGE,
DPL, Pepco, PE, and SMECO, and as modified by this Order with respect to the eligible
appliance measures and incentive offerings, is approved for the 2015 – 2017 program
cycle, subject to the metrics and budgets included in the respective Utilities’ filings;
(5)
That BGE, DPL, Pepco, PE, and SMECO are directed to offer a 10%
increase in the heat pump water heater rebate during 3 annual promotional periods of
approximately 6 weeks each;
(6)
That the proposal by SMECO to introduce an online appliance rebate
application and to implement an online store as part of its Residential Appliance Rebate
Program is approved;
(7)
That the Residential Appliance Recycling Program as proposed by BGE,
DPL, Pepco, PE, and SMECO is approved for the 2015 – 2017 program cycle, subject to
the metrics and budgets included in the respective Utilities’ filings;
(8)
That the online voucher component of the Residential Appliance
Recycling Program proposed by SMECO is approved, and that SMECO is directed to
report in conjunction with its semi-annual filing on the additional participation metrics
for the voucher program as outlined herein;
34
(9)
That the Residential Quick Home Energy Check-up Program as proposed
by BGE, DPL, Pepco, PE, and SMECO is approved for the 2015 – 2017 program cycle,
subject to the metrics and budgets included in the respective Utilities’ filings, and as
modified herein;
(10)
That PE is directed to offer the full complement of Quick Home Energy
Check-up measures, standardized to the measure offerings of the other Utilities;
(11)
That BGE, DPL, Pepco, PE, and SMECO are directed to offer LEDs as an
eligible measure in the Residential Quick Home Energy Check-up Program;
(12)
That Staff, on behalf of the EmPOWER Work Group, is directed to file a
report discussing the cost effectiveness and feasibility of offering LEDs in lieu of CFLs
as part of the QHEC Program no later than April 15, 2015;
(13)
That the Residential Home Performance with Energy Star Program as
proposed by BGE, DPL, Pepco, PE, and SMECO is approved for the 2015 – 2017
program cycle, subject to the metrics and budgets included in the respective Utilities’
filings, and as modified herein;
(14)
That the proposal to increase the savings-to-investment ratio requirement
within the Residential Home Performance with Energy Star Program is denied;
(15)
That the proposal submitted by Civic Works to implement a program in
which the Utilities award performance-based contracts to community-based organizations
to conduct marketing for the Home Performance with Energy Star Program on behalf of
the Utilities is denied, without prejudice;
(16)
That whole home duct sealing is to remain as an eligible measure offered
as part of the Residential Home Performance with Energy Star Program, and that the
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Utilities are directed to exempt whole house duct sealing from the savings-to-investment
ratio requirement;
(17)
That the Residential Home Performance with Energy Star Program
incentive cap is increased for all Utilities to $2,500 in the event that a residential
customer elects to perform whole home duct sealing;
(18)
That the Assisted Home Performance with Energy Star Program proposed
by SMECO is approved, pending the submission of a full description of the financing
portion of the program, including the interest rate, prior to awarding an RFP to a lender;
(19)
That the Assisted Home Performance with Energy Star Program proposed
by Pepco and DPL is denied, without prejudice;
(20)
That the Residential HVAC Program as proposed by BGE, DPL, Pepco,
PE, and SMECO is approved for the 2015 – 2017 program cycle, subject to the metrics
and budgets included in the respective Utilities’ filings, and as modified herein;
(21)
That with respect to the Residential HVAC Program, the Utilities are
directed to maintain the 13 SEER baseline and the HVAC incentive structure outlined
herein until April 1, 2016;
(22)
That the proposal to adjust the Residential HVAC Program baseline to a
14 SEER and to modify the HVAC incentive structure as outlined in the Utilities’ 2015 –
2017 proposals is denied, without prejudice, and may be re-filed for consideration during
the spring 2016 semi-annual hearing;
(23)
That the proposal by BGE and PE to remove HVAC tune-ups from the
Residential HVAC Program is approved;
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(24)
That the proposal by Pepco and DPL to allow non-Energy Star new
construction to qualify for geothermal rebates is approved;
(25)
That BGE, DPL, Pepco, PE, and SMECO are directed to offer a 10%
seasonal bonus as part of the Residential HVAC Program;
(26)
That the Residential Behavior-Based Program as proposed by BGE, DPL,
Pepco, PE, and SMECO is approved for the 2015 – 2017 program cycle, subject to the
metrics and budgets included in the respective Utilities’ filings;
(27)
That the Residential New Construction Program as proposed by BGE,
DPL, Pepco, PE, and SMECO is approved for the 2015 – 2017 program cycle, subject to
the metrics and budgets included in the respective Utilities’ filings;
(28)
That the Schools Program as proposed by DPL, Pepco, PE, and SMECO is
hereby denied;
(29)
That the Commercial and Industrial New Construction Program as
proposed by DPL and Pepco is approved for the 2015 – 2017 program cycle, subject to
the metrics and budgets included in the respective Utilities’ filings;
(30)
That the proposal by BGE to establish a new Building Operator
Certification Program is approved for the 2015 – 2017 program cycle, subject to the
metrics and budgets included in the BGE filing;
(31)
That the proposal by BGE to establish a new Benchmarking and Energy
Analytics and Customer Engagement Tools Program is approved for the 2015 – 2017
program cycle, subject to the metrics and budgets included in the BGE filing;
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(32)
That the proposal by BGE to establish a new Small Business Behavior
Pilot is approved for the 2015 – 2017 program cycle, subject to the metrics and budgets
included in the BGE filing;
(33)
That consideration of the proposal by DPL and Pepco to establish a new
Small Business Behavior Pilot is deferred, and that DPL and Pepco are directed to
supplement this proposal with forecasted metrics for consideration at the spring 2015
semi-annual hearing;
(34)
That the proposal by BGE and SMECO to establish a new Commercial
Upstream Lighting Program is approved for the 2015 – 2017 program cycle, subject to
the metrics and budgets included in the respective Utilities’ filings;
(35)
That the Commercial and Industrial Prescriptive Program as proposed by
BGE, DPL, Pepco, PE, and SMECO is approved for the 2015 – 2017 program cycle,
subject to the metrics and budgets included in the respective Utilities’ filings;
(36)
That the Master-Metered Multi-Family Program as proposed by BGE,
DPL, Pepco, and SMECO is approved for the 2015 – 2017 program cycle, subject to the
metrics and budgets included in the respective Utilities’ filings;
(37)
That the Retro-commissioning Program as proposed by BGE, DPL, and
Pepco, is approved for the 2015 – 2017 program cycle, subject to the metrics and budgets
included in the respective Utilities’ filings;
(38)
That the Combined Heat and Power Program as proposed by BGE, DPL,
Pepco, PE, and SMECO is approved for the 2015 – 2017 program cycle, subject to the
metrics and budgets included in the respective Utilities’ filings, and as modified herein;
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(39)
That the Utilities are directed to increase the incentive cap for the
Combined Heat and Power Program to $2,500,000, evenly split between the capacity and
production incentive offerings;
(40)
That SMECO and PE are directed to file individual forecasts for the 2015
– 2017 program cycle for the Combined Heat and Power Program in conjunction with the
next semi-annual reporting deadline;
(41)
That the Commercial and Industrial Custom Program as proposed by
BGE, DPL, Pepco, PE, and SMECO is approved for the 2015 – 2017 program cycle,
subject to the metrics and budgets included in the respective Utilities’ filings, and as
modified herein;
(42)
That PE is directed to align its Commercial and Industrial Custom
Program incentives with those offered by BGE, DPL, Pepco, and SMECO;
(43)
That the proposal by DPL and Pepco to offer a Whole Building Bonus as
part of its Commercial and Industrial Custom Program is denied;
(44)
That the proposal by PE to establish a stand-alone Energy Solutions for
Business – Audits Program is denied, although PE may offer the audits as a sub-program
component of its Prescriptive and Custom Programs during the 2015 – 2017 program
cycle;
(45)
That the Commercial and Industrial Small Business Program as proposed
by BGE, DPL, Pepco, PE, and SMECO is approved for the 2015 – 2017 program cycle,
subject to the metrics and budgets included in the respective Utilities’ filings, and as
modified herein;
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(46)
That PE is directed to align its target market definition for its Small
Business Program with that of the other Utilities;
(47)
That the proposal by PE to cap the incentives available to each participant
as part of its Small Business Program is denied;
(48)
That the proposal by DPL and Pepco to offer a Whole Building Bonus as
part of its Commercial and Industrial Small Business Program is denied;
(49)
That the Residential Demand Response Program as proposed by BGE,
DPL, and Pepco is approved for the 2015 – 2017 program cycle, subject to the metrics
and budgets included in the respective Utilities’ filings;
(50)
That the Residential and Small Commercial Demand Response Program
as proposed by SMECO is approved for the 2015 – 2017 program cycle, subject to the
metrics and budgets included in its filing;
(51)
That the proposal by SMECO to operate a water heater demand response
pilot is approved for the 2015 – 2017 program cycle;
(52)
That the proposal by BGE and SMECO to operate a two-way thermostat
pilot is approved for the 2015 – 2017 program cycle;
(53)
That the proposal by DPL and Pepco to offer customers with certain older
models of thermostats or outdoor cycling switches the opportunity to upgrade to two-way
or AMI-compatible thermostats as part of the Residential Demand Response Program is
approved for the 2015 – 2017 program cycle;
(54)
That Staff, in consultation with the parties, is directed to develop a
template to facilitate a comparison of the different technologies in the two-way
thermostat pilots deployed across the service territories;
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(55)
That the Small Commercial Demand Response Program as proposed by
DPL and Pepco is approved for the 2015 – 2017 program cycle, subject to the metrics
and budgets included in the respective Utilities’ filings;
(56)
That the Large Commercial Demand Response Program as proposed by
SMECO is approved for the 2015 – 2017 program cycle, subject to the metrics and
budgets included in its filing;
(57)
That the Master-Metered Account Demand Response Program operated by
Pepco is hereby discontinued;
(58)
That the proposal by BGE, DPL, Pepco, PE, and SMECO to report energy
efficiency and demand savings attributable to certain other programs as described herein
is approved for the 2015 – 2017 program cycle, subject to the metrics included in the
respective Utilities’ filings;
(59)
That the spending guideline per eligible limited-income household is set at
$7,500, although DHCD may spend up to $12,000 per limited-income household subject
to the documentation requirements outlined herein;
(60)
That DHCD is directed to detail its efforts to leverage outside funds and
resources in conjunction with its semi-annual report, subject to the guidelines outlined
herein;
(61)
That the health and safety spending limit is increased to $1,000 per
eligible limited-income household;
(62)
That Staff is directed to file a report on behalf of the Limited-Income
Work Group no later than April 15, 2015 detailing the recommended prescribed list of
measures by service territory;
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(63)
That on a prospective basis, DHCD is directed to solicit a price list
defining acceptable ranges of measure prices by service territory as an addendum to any
Request for Proposal issued for the purpose of securing contractors authorized to
implement EmPOWER limited-income programs;
(64)
That Staff is directed to file a report on behalf of the Limited-Income
Work Group no later than April 15, 2015 outlining certain specifications, such as age and
efficiency, that must be met prior to the replacement of larger, more costly equipment
that is otherwise in good operating condition;
(65)
That DHCD is directed to require an up-front investment by a landlord of
at least 50% of the total equipment cost for large, costly measures such as HVAC units
intended for installation in eligible limited-income rental properties;
(66)
That DHCD is directed to implement the twelve evaluation improvement
recommendations proffered by Itron, Inc. and referenced herein for all prospective
limited-income program evaluations;
(67)
That the application of Washington Gas Light Company for approval of
natural gas energy efficiency and conservation programs for the 2015 – 2017 program
cycle and an accompanying cost recovery mechanism is approved, subject to the
modifications described herein;
(68)
That a Natural Gas – Electric Efficiency Coordination Work Group is
hereby convened and that Staff is directed to file a status report on behalf of the Work
Group regarding the assigned tasks described in this Order no later than April 15, 2015;
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(69)
That Staff, on behalf of the EmPOWER Planning Work Group, is directed
to file a report and any associated recommendations related to the proposal to implement
performance-based shareholder incentives no later than April 15, 2015;
(70)
That a docket concerning the matter of investigating and developing
additional energy efficiency financing proposals shall be opened and delegated to the
Public Utility Law Judge Division, and that a status report shall be filed no later than
April 15, 2015;
(71)
That any interested party is directed to file proposed goal allocation
methodologies for electric efficiency, natural gas efficiency, or both electric and natural
gas efficiency no later than January 30, 2015; AND
(72)
That the Utilities and DHCD are directed to file their third and fourth
quarter 2014 semi-annual reports on or before February 13, 2015.
/s/ W. Kevin Hughes
/s/ Lawrence Brenner
/s/ Kelly Speakes-Backman
/s/ Anne E. Hoskins
Commissioners*
*Commissioner Harold D. Williams did not participate in this decision
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