A Guest Contribution By Robin LeBaron, Managing Director of the National Home Performance Council Good regulation, and ensuring that efficiency dollars are well-spent, is in everyone’s interest – from ratepayers to the small contractors that help bring efficiency projects to life. The problem is that in most states, the current application of cost-effectiveness tests are actually impeding the success of energy efficiency programs as well as broader public policy goals aimed at saving energy, reducing emissions, and growing jobs clean energy sector. To make certain that ratepayer dollars are well-spent on energy efficiency programs, program administrators (utilities or third-party administrators) are required to conduct cost-effectiveness screening, the Total Resource Cost Test (TRC) most common among them. They’ve been doing this since they began offering rebates and other programs to help customers save energy and reduce their costs. But the reality is that times have changed greatly since those early days, and in many cases, the regulatory structures have yet to catch up. Evolving the ways that individual measures, or programs, or even whole portfolios are screened could support strong energy efficiency and other demand-side programs to meet utilities’ energy needs at a lower cost than supply side resources. The problems with our current system of determining cost-effectiveness were brought home to me at the March 2011 national conference of Affordable Comfort Inc., where practitioners from across the U.S. gather to assess the state of the residential energy efficiency field and chart paths to move the industry forward. I was particularly struck by how small business owners such as contractors and software vendors – not necessarily the people I would have expected to be concerned with the minutiae of techniques for measuring spillover – were asking public questions about the cost-effectiveness tests, and expressing real concern that the tests were strangling the industry. “The TRC can put you to sleep – and put you out of business,” one contractor lamented. On the last day of the conference, the bubbling discontent appeared to hit the boiling point, and a number of stakeholders convened at an impromptu meeting, headlined “whiteboard with beers” to discuss the issue. Despite (or perhaps because of) the fact that the beer failed to materialize, the participants – including program administrators, utility representatives, former commission staff, U.S. Department of Energy staff, program implementers, consultants, contractors, businesses, and even a labor representative – seemed to agree. In their experience, the tests were constraining high-quality energy efficiency programs. And so they resolved to continue meeting as a national stakeholder group to solve the problem. My organization, the National Home Performance Council, a national non-profit organization that works to support whole-house energy efficiency retrofits, assumed responsibility for convening the group. The stakeholders began by working to detail the problems that the tests were causing. It was clear from group members’ reports that the consequences of illogical and inconsistent test implementation design were not trivial.
- In some states, fear that an energy efficiency program “couldn’t pass the TRC” was enough to ensure that the program never moved past the early design phase;
- For some programs, the tests imposed severe restrictions on program design, for example by constraining the measures that could be incorporated into a comprehensive whole-house or new construction program, even if the passed-over measures represented a one-time chance to achieve energy savings;
- Field-level testing of specific jobs caused tremendous problems for one whole-house program by forcing contractors from closing the deal until the job had been screened and by dictating what could be in a job scope, sometimes excluding measures even if a customer wanted and was willing to pay for them;
- For some programs, changes in the way the test was conducted required significant, mid-stream modifications in programs; and,
- In extreme cases, program administrators were concerned that changes in the TRC might actually result in a program’s downsizing or elimination.