How can utilities meet energy efficiency goals despite the damaged economy?

How can utilities meet energy efficiency goals despite the damaged economy?
By Gene Rodrigues and Michael Mernick
Jun 21, 2021
2 MIN. READ
Over a year into the pandemic, a large and still growing number of customers are struggling to pay their utility bills due to the economic downturn. One of the most effective ways to help impacted customers? Energy efficiency programs.

Pre-COVID, EE programs were designed with resource acquisition metrics primarily in mind. To better meet the needs of affected customers, you must make changes to the way your EE programs serve them now and in the future. This is not merely an altruistic exercise. EE programs need to address multiple customer needs and stakeholder perspectives as well as regulatory mandates.

For an investor-owned utility, cost-effectiveness of your EE program is key. Failing to deliver on promised savings may subject your utility to reasonableness reviews, disallowed program expenses, or even financial penalties. The same is largely true for municipal utilities, except that the price to be paid for failure may be reductions in future budgets or even changes in leadership.

Either way, the stakes are high for meeting your program/portfolio goals and targets. Not surprisingly, EE program performance declined in 2020 as lockdowns and the need for new safety protocols disrupted some program delivery channels. During this same period, other seismic shifts in regulatory and societal norms are redefining the yardstick for measuring whether utility EE programs will be deemed successful by regulators and the public.

Going forward, utilities need to better align their EE efforts with the current economic, regulatory, and societal reality while also meeting their regulatory obligations. Simply put, now is the time to rethink your customer programs and services.

That’s a tall order. Since honoring the regulatory compact is not optional, utilities will be expected to show that they’ve made reasonable efforts to achieve the forecast savings and demand reduction levels—even if those targets were set pre-COVID.

Our new paper lays out a practical three-phase EE program strategy to help utilities meet their goals during this time of profound disruption. First, implement effective adaptation strategies to protect your programs and portfolio. Second, target your services to help customers who are having difficulty paying their utility bills. Third, undertake a formal re-evaluation of your programs in light of changing circumstances.

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As this three-phase approach underscores, everything we knew about traditional energy consumption patterns has been turned inside out by the societal and economic disarray of the COVID-19 pandemic. EE programs should be considered a resource that can help utilities meet current and future energy demand, even if patterns of demand are changing.

Our ability to meet and overcome challenges in uncertain times depends on the actions we take in response to a crisis. The most successful EE programs include clear, well-communicated goals that are tied to a supportive regulatory framework. Now is the time to remind utility leaders, policymakers, regulators, and other stakeholders that energy efficiency can and should be employed to help vulnerable customers reduce their energy consumption and manage their bills.

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Meet the authors
  1. Gene Rodrigues, Vice President, Market Development

    Gene brings over 30 years of experience in demand-side management policy and programs to bear for ICF’s clients. View bio

  2. Michael Mernick, Senior Vice President, Energy, Environment, and Infrastructure

    Mike Mernick is a senior vice president at ICF with over 30 years of experience in the energy industry. He leads ICF’s market development and strategic partnerships for utilities and is an expert in energy efficiency. View bio