When the Ohio General Assembly began phasing out Ohio’s electric utility energy efficiency programs in 2020, the future of Ohio’s programs was uncertain. While there was hope that utilities would voluntarily bring programs back, most of the electric utilities’ programs have remained dormant for the last 15 months and counting. But all of that could change soon—if the Public Utilities Commission of Ohio follows the path that Enervee and others laid out at the Commission’s recent Energy Efficiency Workshops.
In early 2022, industry stakeholders provided written comments to the Commission on the potential for consumers to benefit from utility energy efficiency programs. Enervee joined a chorus of support for programs through its written comments, which highlighted the need for utility energy efficiency programs to overcome barriers that customers face when they rely solely on the market to be efficient.
The Public Utilities Commission then held a series of five workshops at its offices in Columbus, Ohio. These workshops featured presentations from electric and gas utilities, cleantech companies like Enervee, environmental advocates, consumer groups, and others. And while there were a few detractors (more on that below), the overriding message that presenters delivered to the Commission was clear: Ohioans need their utilities to offer energy efficiency programs for the good of consumers and the environment.
Support from Ohio’s utilities
The workshops started with five of Ohio’s largest electric and natural gas utilities—AEP Ohio, Duke Energy Ohio, Columbia Gas of Ohio, AES Ohio, and CenterPoint Energy—unanimously supporting a central role for utilities in offering energy efficiency programs to their customers. These utilities highlighted the success of their past programs (and in the case of gas utilities, current programs) and their unique ability to reach customers at scale.
- AEP Ohio’s Brian Billing stressed this point, explaining that “the electric distribution utility is the logical entity to provide energy efficiency at scale” because the utility can “offer programs to all customers in their service territory.”
- Duke Energy’s Tim Duff echoed this sentiment, explaining that utilities have “a longstanding, trusted relationship” with their customers, thus making them “uniquely positioned” to offer broad programs to all their customers.
Others, like DNV, shared their experience working with utility programs, agreeing that electric utilities “are established energy authorities” with “very deep and existing customer relationships,” thus making it “best practice inside of the demand side management industry to flex or leverage those relationships.”
Utility energy efficiency programs needed to eliminate barriers
Enervee's contribution focussed on consumer insights. In her remarks, Enervee's SVP of Market Development, Anne Arquit Niederberger, emphasized that "Barriers prevent consumers from adopting efficient technologies in the course of normal replacement cycles, and these barriers are not being addressed in the competitive market."
She offered up examples of market, cognitive/psychological and financial barriers. In written comments, several stakeholders pointed to the ENERGY STAR label as a reason why utility EE programs aren’t needed. But people can't easily choose products based on their efficiency, despite ENERGY STAR. Anne pointed out that two seemingly comparable ENERGY STAR-labelled products (in her example, washing machines)—same brand, same size, same price—can produce wildly different results with one using twice as much energy as the other. This shouldn't come as a surprise, with over half of the washer market carrying the ENERGY STAR label, based on the most recent shipment data. To eliminate this market barrier, Enervee introduced a daily-updated, zero to 100 Enervee Score to make efficiency actionable for consumers. This is where utilities come in, as Trusted Advisors, to make efficiency visible and actionable.
The concern about market failures was shared by other presenters. Tom Bullock, on behalf of consumer advocate the Citizens Utility Board, agreed that “the market alone doesn’t achieve savings of efficiency that programs can deliver to consumers.” Enervee helps overcome the market barrier by providing market transparency to consumers with its Enervee Score, helping them quickly and easily choose the more efficient product.
The second set of barriers Anne mentioned are cognitive and psychological in nature, and she pointed out that Enervee’s Commerce site is designed from the bottom up with behavioral insights in mind to overcome them. She gave the example of helping consumers narrow down and focus on efficient choices by providing personalized product recommendations, based on individual product preferences. This saves consumers time and money when faced with 277 million hits when searching for “energy efficient TV” on google. Other examples are provided in links below.
The third major barrier is financial. Some customers can’t afford the upfront cost of an efficient product, so they buy used or they buy the product with the lowest upfront cost—a product that typically will end up costing them more in the long run. Others, if their credit is good enough, might be able to finance a purchase using a credit card, often paying a 20% interest rate or higher.
Enervee’s marketplace breaks down this barrier with inclusive Eco Financing. Eco Financing allows customers to buy efficient products that cost as little as $200 with no upfront cost and affordable monthly payments. With a loan loss reserve, Eco Financing reaches customers with credit scores as low as 580—thus making it available to consumers who otherwise have little or no access to credit. Initial results for Eco Financing in California have been promising, with 86% of Eco Financing loans going to underserved borrowers (low- and middle-income and/or credit-challenged). And, crucially, customers cannot be disconnected from their utility service for failure to pay, cannot have the financed products repossessed, and are at no risk of foreclosure on their homes.
Detractors push a so-called “market” approach, without utility energy efficiency programs
The workshops did feature some dissenting views. Two commercial and industrial groups, the Ohio Manufacturers’ Association Energy Group and Industrial Energy Users-Ohio, oppose charges to their constituents for utility energy efficiency programs. They believe that large businesses are sophisticated enough to be energy efficient on their own, because it is a logical business decision to do so.
However, this logic does not apply when significant barriers are in play, which is particularly problematic for residential consumers.
Another detractor is the Ohio Consumers’ Counsel, a state agency representing residential consumers. In the Consumers’ Counsel’s view, ratepayer-funded utility programs should be exclusively for low-income and other at-risk customers, with other customers barred from participation. Enervee agrees with the Consumers’ Counsel that there remains a need for options focused on low-income and at-risk customers. But all types of customers face market barriers to energy efficiency, regardless of income, so it would be short-sighted for the Ohio Commission to heed the Consumers’ Counsel’s advice to unnecessarily limit the scope of programs.
In Enervee’s view, energy efficiency programs should tackle widespread non-financial barriers faced by all customer segments, while reserving scarce financial incentives for those with the greatest need, or to create demand for truly innovative technologies.
Urging a return to (new and improved) utility programs
Enervee applauds the Public Utilities Commission of Ohio for taking an important first step with its energy efficiency workshops. Ohio’s electric utilities are eager to offer programs that will save their consumers money. Companies like Enervee are ready to help Ohioans save money, reduce greenhouse gas emissions and build a better, cleaner future for all. Now it is up to the Commission to do the right thing by encouraging the return and continuation of utility energy efficiency programs in the great state of Ohio.