Don’t miss EnergySavvy at the ACEEE Intelligent Efficiency Conference!

Austin Texas

Are you attending the ACEEE Intelligent Efficiency Conference? Curious to learn how utilities manage program data to reduce cost and time, and maximize efficiency? We’re excited to be a part of two panel discussions addressing challenges around disparate data, program optimization, and impactful technology adaptation.

How Good and Big is ICT-Enabled EM&V Going to Be?
Tim Guiterman, Director of Measurement & Optimization Solutions
Monday, Dec 5, 1:30-3:00pm

Integrating Electric, Gas and Water Utility Goals
Jamie Peters, Director of Client Solutions
Monday, Dec 5, 3:30-5:00pm

If you’re curious, here’s the full schedule. If you can’t attend and want to discuss more, contact us.

Fuzzy Math: Deemed Energy Savings Aren’t Sufficient

Fuzzy Math

By: Jake Oster, Sr. Director of Regulatory Affairs

Earlier this year, I sat on a panel with Tom Eckman, a long-time efficiency expert who helped establish the use of “deemed savings” in four Northwestern states.

The topic of the session was energy efficiency measurement — also known as EM&V (evaluation, measurement and verification).

Eckman’s presentation was focused on the history of EM&V and the emerging technologies that are transforming this important sector. Toward the end of his presentation, Eckman showed a slide with a powerful message. The slide asked: “Why deem it when you can measure it?”

This might seem like common sense. But it was a bold statement coming from an industry leader who played an important role in ushering in the widespread use of deemed savings.

What are deemed savings and why do they matter?

Deemed savings are a set of predetermined savings values for efficiency measures that are developed from commonly accepted data sources and analytical methods, and maintained by states or regional bodies.

These savings estimates are called “deemed savings values” and provide a savings estimate for each change made to a home or building. Deemed savings can also take the form of an algorithm, providing a formula of inputs for arriving at a savings estimate. Deemed savings have a multitude of benefits; they are fast, easy to calculate, constant and predictable. Because of those traits, deemed values are commonly used to estimate energy savings from efficiency programs.

But deemed savings values rely on multiple assumptions and can vary widely from the actual measured savings. In fact, a recent study stated that “static efficiency assumptions are inherently imprecise.”

The quality of deemed savings varies. While it’s important to update deemed savings values regularly with data from studies, those efforts are costly, time-consuming, and do not always happen. As a result, deemed savings provide questionable value when the primary research is conducted in another state, or if it becomes outdated or is not thoroughly vetted.

At a time when energy efficiency is being relied upon to replace aging power plants, reduce greenhouse gas emissions, and perform as a capacity resource on the grid, it is more important than ever that we apply sufficient rigor to how we measure energy-efficiency savings. This is also critical because savings measurement is a common metric for rewarding utilities and ensuring ratepayer dollars are spent prudently on energy efficiency.

Common flaws with deemed savings

Industry experts regularly critique deemed savings, and regulators experienced in energy-efficiency oversight are well aware of the issue.

“Deemed savings allow regulators and utilities to more easily measure and oversee energy efficiency programs but we need to be aware that using deemed savings trades accuracy and understanding the persistence of savings for ease,” said Dian Grueneich, a former California utilities commissioner.

Recently, the issue has been getting more attention.

As part of a Virginia State Corporation Commission (SCC) proceeding on standardizing EM&V, the SCC staff wrote a report on deemed savings values used in some Mid-Atlantic states. The investigation found the deemed savings used in the region were based on outdated information: “The vintage of the data supporting these assumptions dates from the early 2000s to as far in the past as 1986 in one case,” reads the report.

Staff also found that the deemed savings were based on studies conducted in places as far away as Illinois, California and Ontario, Canada — all states with questionable comparability to Virginia.

The commission staff dug into one particular deemed savings algorithm for a low-flow shower head. According to the report, the algorithm includes “a measurement of gallons per day per person for showering.” The gallons-per-day assumption is based on an EPA document that assumes 11.6 gallons per day per person for showering.

However, the commission staff reviewed the source document and reported that the report itself was based on pooled results, presented “for summary and comparative purposes alone.”

The SCC is not alone in noticing the issues with deemed savings. QuadROI, a business intelligence firm that aggregates public data on energy efficiency, recently presented a thorough study on the collection of deemed savings values and algorithms used in various states. The paper found that input values for similar savings estimates varied widely.

QuadROI analyzed faucet aerators with the hope that these devices were simple and consistent enough to provide the same result from state to state, regardless of weather, climate or other factors that might vary. However, it found that the expected lifespan of the faucet aerators varied from anywhere between five and 10 years.

In Pennsylvania, the expected life of a faucet aerator was 10 years. Just across the state border in Maryland, which uses Mid-Atlantic deemed savings values, the same faucet aerator is expected to burn out in five years.

These are not trivial differences. The lifespan of a device is an input that greatly impacts the expected savings, since the amount of years the aerator lasts will determine how many years the savings will persist. QuadROI’s paper concludes that without rigorous research into deemed savings values, there is a “risk that reported program results deviate from reality.”

Improving deemed savings and moving forward

Deemed savings were created to provide a savings estimation approach that was simple, cost-effective and replicable for regulatory compliance. Despite the flaws, deemed savings have value for planning purposes. Furthermore, certain types of energy efficiency programs, like point-of-sale rebates, would be impossible without using deemed savings as substitutes for actual measurement.

However, as an industry, we need to strive for precision in quantifying energy savings. Deemed savings should be used for EM&V only when necessary. We should employ more rigorous EM&V approaches wherever possible.

Put simply, Eckman’s statement — “Why deem it when we can measure it?” — should be an important guiding approach to EM&V. It is well timed with modern analytics solutions emerging in the industry that are reducing the cost, time and effort associated with measuring actual savings from the meter.

Modern measurement solutions are arriving just in time. Energy efficiency is being increasingly deployed to deliver reliable demand-side reductions. If efficiency is going to be considered a resource truly on par with other sources of generation, we will need the savings estimates to be factual and reflective of what is happening at the meter.

Originally published in Greentech Media

Energy Regulators Take the First Step to Recognize Cloud Software Solutions

Cloud softwareBy: Jake Oster, Sr. Director, Regulatory Affairs

This week the National Association of Regulatory Utility Commissioners (NARUC) passed an important resolution that signals a recognition of the value of cloud-software for utilities.

Across the world, major industries, such as healthcare, financial services and government are adopting cloud-based software solutions to run their businesses and operations. According to RightScale, 93% of businesses are using some form of cloud technology. Almost 20 years ago, cloud-based software came into existence. Today, it is a critical part of how businesses, big and small, buy and deploy software. In 2016 Gartner expects the SaaS category to grow 20.3% to 37.7 billion.

But the utility sector has been slow to make the transition into the cloud, still relying on on-premise technology solutions. SaaS has tremendous advantages with the ability to upgrade faster, increased security and scalability, decreased time to ramp up, lower cost to maintain and serve, and more. A major hurdle for utilities is the regulatory accounting rules for cloud-software products. In most jurisdictions, utilities are permitted to earn a rate of return for hardware purchases, but the same rate of return is typically not allowed for operations expenses.

This accounting rule makes sense when considering the difference expensing practices for building a power plant vs. paying staff. However, these rules have created a lopsided incentive structure for utilities considering new software procurements. Under these accounting rules, on-premise systems (e.g. servers installed in the building) is considered a capital expense that earns a rate of return. But purchasing cloud-based software systems (e.g. a subscription for software that is hosted off-site) is treated as an operating expense that cannot earn the same rate of return.

Thankfully, regulators are starting to recognize the issue and update accounting rules to reflect the value that cloud-based software tools can provide to utilities and their customers. Two states have been leading the way on this effort. In New York, the Reforming the Energy Vision proceeding recently made clear that utilities can capitalize cloud-based software products in an order released in May. While in Illinois, the Illinois State Commerce Commission has begun a process to explore this issue and develop modern rules that recognize the changing landscape of software products for utilities.

Now the issue has moved to the national stage. At the recent NARUC annual meeting, regulators from across the country passed a resolution calling on state utility commissions “…to consider whether cloud computing and on-premise solutions should receive similar regulatory accounting treatment, in that both would be eligible to earn a rate of return and would be paid for out of a utility’s capital budget.”

The passage of this resolution marks the first important step towards modernizing utility accounting rules across all 50 states. By using cloud software, utilities don’t have to be burdened with maintaining in-house systems and can rely on trusted technology companies to manage their infrastructure while freeing up resources to improve the customer experience and operations. While the utility industry may have fallen behind in applying cloud-based software tools, regulators are starting to clear the hurdles that will allow utilities to quickly catch up.

Webinar: Learn how APS spent less time in attics

Program Optimization WebinarHarnessing the power of data, utilities like Arizona Public Service can now get feedback into program performance in near real-time where it used to take months or even years.

Join Chris Baker, Home Performance with ENERGY STAR Program Manager at APS, and Tim Guiterman, Director of Measurement and Optimization Solutions at EnergySavvy, in a webinar on Thursday, November 10. We’ll discuss how continuous measurement can improve contractor performance, reduce inspection costs, and enhance customer experience.

Missed it? Watch the webinar on demand today!

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EnergySavvy Launches Fifth Gen Cloud Platform and Announces Funding

Customer experience transformationThe utility industry is going through an exciting transformation, bringing new challenges and opportunities. Some of the challenges that utilities face include: siloed data, out-dated systems, increased customer expectations, and escalated pressures to reduce cost-to-serve. In response, EnergySavvy is excited to release our fifth generation of products, which helps utilities respond to the customer era with solutions that improve customer engagement, support new revenue streams, modernize DSM program delivery, and reduce operational costs.

On top of that, we’re announcing $14 million in equity financing, enabling us to accelerate growth and develop breakthrough solutions for utilities. GXP Investments, the investment affiliate of Great Plains Energy and parent company of Kansas City Power & Light, is the lead investor for this round. Other investors include the Inherent Group and existing investors Prelude Ventures and EnerTech Capital.

Highlights of our new solutions include:

  • Customer Insights enables utilities to create a unique and personalized experience for all their customers, not just those already actively engaged. New products Next Best Action and Targeting put the right message in front of every customer in every interaction.
  • Customer Engagement now includes a new customer self-service online enrollment center, an upgraded online assessment with multi-program engagement, and a refreshed format for the direct mail assessment that boasts a response rate 10 times higher than industry average.
  • Customer Operations, has been expanded to continuously monitor trade-ally performance, optimize onsite inspections, predict program performance, and support evaluation and planning professionals.
  • Customer Cloud, which powers all EnergySavvy products, enables flexible and rapid integration with a myriad of systems and provides a holistic view of all customer data.

Recognizing that technology is only part of the answer, we’re also launching a Customer Experience Transformation (CXT) consulting practice, led by EnergySavvy Advisor Jim Madej, former Chief Customer Officer of National Grid. Customer Experience Transformation helps clients develop their roadmap, manage businesses cases and deliver new customer experience solutions.

It’s an exciting time to be working with utilities as we help transform their customer experience and operations. Check out our updated website for more information on our new products and services.