Proponents of energy efficiency programs and utility company workers wince when they hear arguments like this: Residents and business owners don’t need incentives to weatherize their home or upgrade their equipment because it makes economic sense even without a rebate, low-interest loan or competitive grant.
It’s correct that installing insulation or buying more efficient heat pumps, air conditioners, appliances or furnaces typically save owners money over time. But studies show that, even if it’s good for them, owners usually need a push to make changes. Incentives help them change. The real debate should not be about whether incentives work, but which incentives work most effectively and stand to maximize benefits for every dollar spent.
On Wednesday the board of trustees for the quasi-state agency Efficiency Maine Trust is scheduled to vote on a three-year strategic plan, covering fiscal years 2014 through 2016. Though the governor-appointed board members do not have power to set funding levels — the Maine Public Utilities Commission must next approve the plan — they can outline priorities and explain the best possible energy-saving initiatives.
If they want to make a difference in customers’ energy use, they can focus on substantial incentives that will motivate sales in a way that alters the larger market. They can set and stick to medium and long-term goals that assure manufacturers it’s worth the effort to invest. They also can make sure their plan has some flexibility, to allow them to adjust programs if they need improvement or expand them if new funding sources become available.
The ultimate goal is, and should be, to reduce upfront costs for customers, so they change their habits and, with their more energy-efficient lifestyle, recoup their initial investment and much more. This is also a good time for Maine residents, business owners and political leaders to understand how Efficiency Maine operates, so they can better utilize programs.
Most of Efficiency Maine’s funding comes from what’s called the “systems benefit charge,” which is applied to everyone who pays an electricity bill. For an average Maine home, the charge totals about $8.50 per year. Because electricity users are paying into the fund, Efficiency Maine must only use the money to save those users electricity. The agency should continue to build off this practice — that people who pay also benefit — so all users eventually gain back more than what they contributed — whether through avoided transmission costs, reduced electricity costs or incentives.
When determining how to apply incentives, it’s important to devise ways to reach customers who otherwise would not have installed energy efficiency measures without a rebate or discount — to prevent free riders. Sneaking in discounts has worked with Efficiency Maine’s compact fluorescent lamp rebate program, for instance. The agency discontinued all marketing expenses for the project in order to drive up the total amount of its rebates, which were paid directly to participating retail stores and made the price of a CFL the same or cheaper than incandescent bulbs.
When customers bought a CFL (which can use 75 percent less energy and last up to 10 times longer than incandescent bulbs), the deduction was marked automatically at the checkout counter, and the store got reimbursed for making the discount; the customer never knew a rebate was involved. With the incentive, the number of fluorescent bulbs that Mainers purchased at participating stores doubled in fiscal year 2011. The retailers who chose not to participate in the program sold hardly any, according to Efficiency Maine Executive Director Michael Stoddard.
Reaching more residential customers will require similar innovative thinking — as will increasing participation among business and commercial electricity users. One of Efficiency Maine’s tactics has been to partner with contractors, like electricians and ventilation specialists, who then inform store and building owners about the more than 100 available rebates. The rebates may be small, but they motivate owners to upgrade from their standard lights, freezers and air compressors to high-efficiency models. The agency also has offered competitive grants to commercial users, like paper mills, that propose ways to save a great amount of electricity with as little of Efficiency Maine’s money as possible.
Efficiency Maine only pursues projects that bring a greater than 1-to-1 return. (And it’s written into law that the agency must save residential and commercial heating consumers no less than $3 for every $1 of program funds invested by 2020). So the question then becomes about the best practices to pursue. Where will its money have the greatest impact? The board of trustees and the PUC have the responsibility to outline energy policies over the long-term. May they be fair, realistic and broad-minded in their approach.