For about 20 years, Massachusetts utilities have been the primary – some would say exclusive – implementer of the state’s energy efficiency programs. Throughout that time, there have been discussions about whether the utilities are the best vehicle to implement programs.
Other states have gone the route of what is referred to as the “third party administrator,” such as Vermont, Maine and New York (although New York has recently opened up opportunities for utility participation with the expansion of spending). After years of resisting such a change, I believe now is the time for Massachusetts to seriously consider it.
As a former utility executive and someone who delivered energy efficiency in the field, I have always been a strong advocate for maintaining the utility delivery model. The account managers in the field know the customers and their needs, often becoming the customers’ trusted advisor. Further, while starting a large scale statewide program from scratch with a third party administrator may work just as well as the utility model, I know that switching approaches after doing it one way for so long may hamper implementation during the transition. That may cause the state to lose valuable opportunities, not to mention increase costs with relatively little gain in improvement.
Recently, however, a growing group of energy efficiency advocates has raised the idea of opening up opportunities for other delivery approaches in addition to utilities rather than instead of utilities. This would involve carving out some portion of the funding which goes to utilities and possibly certain types of measures or programs for delivery by other entities which might have as good or better ability to deliver the programs. California has taken this path and it is worth exploring.
What has made me change my tune? For one thing, we are spending an enormous amount of money on energy efficiency in Massachusetts – much more than we’ve spent since the early 1990s, when the programs were ramping up. I question the ability of the utilities to efficiently (no pun intended) spend the money in such a short time frame.
For instance, the draft plan for the next three years calls for spending $520 million annually – a 67 percent increase from the $346 million budgeted in 2010 and more than four times what was spent every year before the Green Communities Act became law in 2008. The performance of the utilities during the first three year plan suggests this level of spending will be a challenge.
Perhaps most importantly, such a move could open up the opportunity for innovation in design of programs as well as delivery. Massive spending drives the effort toward what is referred to as “prescriptive” program design. The effect is as it sounds, where you install the measure the way it is designed in a big three-ring binder or you don’t get the subsidy. Yet, we know that, for a variety of reasons, the “custom” programs are more effective, at least at the commercial and industrial customer level.
Why not let others have the opportunity to make further inroads on delivery of cost effective energy efficiency? Now is the time to pursue this – and quickly.
The next three-year plans are now under review by the Energy Efficiency Advisory Council (EEAC) with an October deadline to be submitted to the Department of Public Utilities. The EEAC should look closely at what California is doing in this regard and open up the opportunity.
Massachusetts may have been first to California’s second in leading the country in energy efficiency this year. But that doesn’t mean we can’t learn from them and make sure they don’t catch up.