Citizen Communications: Susan Lippman's analysis of proposals regarding energy efficiency and weatherization goals for low, moderate income — original pdf

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6-23 2014 To: Austin Generation Resource Planning Task Force From: Susan Lippman An Analysis of the Low- and Moderate-Income Weatherization goals, as a Percentage of a Megawatt Goal, Compared to Percentage of a Budget—a Mostly Mathematical Discussion I have been studying and analyzing Austin Energy data a great deal since the June 12 meeting of Austin Interfaith’s Green Team (energy subcommittee). I hope to contribute some perspective from what I’ve been learning, with most emphasis on the mathematics and trying to see the numbers in their proportional contexts, and I hope this will be helpful to everyone interested in the discussion. Nothing here has been reviewed by members of any group I’m in. I’m focusing on the proposal for 10% of the demand reduction goal of 429 megawatts to be designated for low-income and moderate-income weatherization over 10 years. At the time we met I didn’t have the background to gauge whether this is an “incredibly high” target, or not, and I still want to mostly avoid value judgments, and focus on the math. (I will just say for myself that I place a very high value on both the climate protection and the equity goals of the task force.) Carol B., I appreciate what you are saying about a setting a goal that will be a challenge. I have a copy of Lanetta Cooper’s Memorandum to the Gen Plan Task Force, which recommends 10% of the demand savings as above, or “alternatively, 20% of AE’s Energy Efficiency budget should be spent on low and moderate income customer households with at least 10% prioritized for a low income weatherization program.” I will return to this alternative later. To summarize the results that will be reached at the end of these three pages, the percent of the annual EE budget that could be needed (under the assumptions employed) to meet the megawatt target could range from 40% to 80% of the current EE budget. These 3 results hinge on whether the MW savings of the Low- and moderate-income program is 1.0 MW, 0.75 MW, or 0.5 MW: Low estimate: $6,020,000 / $15,000,000 = 40% of EE budget Medium estimate: $7,980,000 / $15,000,000 = 53% of EE budget High estimate: $12,040,000 / $15,000,000 = 80% of EE budget Expansive changes in the assumptions used here could change everything of course, and are to be hoped for. My intent is to explain the math under current conditions; especially note the assumption that all funding comes from the EE budget. And for comparison, note that the percent-of-budget alternative calculation results in: 20% = $3 million with 10% ($1.5) million prioritized for a low-income program, so the two approaches create markedly different results. One point I will show here is that a goal expressed in megawatts makes for rather more variable comparisons than a percentage-of-budget goal. It may be that the Task Force is limited, or maybe only generally limited, to setting goals in terms of megawatts. In any case it may be useful at least for discussion purposes to also look at percent-of-budget numbers within the megawatt goals for Energy Efficiency. In support of the figures below I have used the FY2013 Demand Side Management Performance Measures Summaryi, a 6/20 email from Debbie Kimberly (VP, Customer Energy Solutions) iiwhich answers some questions I put to her, and copy of an earlier email, 5/30, from Debbie Kimberly to Carol Biedrzycki. As an exaggerated example of how distorting the megawatt goal can be, consider the 2013 megawatt savings of 0.1 watt (this was anomalous): If the 10% of Demand Savings is applied to AE’s 2014 goal of 62 megawatts, the 2014 goal for weatherization would be about 6 megawatts (1/10 of 62), which would be 60 times higher than the 2013 achievement of 0.1 watts. The free weatherization budget in 2013 was $993,373 (incentives and rebates). 60 times that amount would be $59, 602,380, or 9.7 times larger than the entire residential energy efficiency budget, or 5 times larger than the entire weatherization budget (residential plus commercial incentives and rebates). This illustrates that the size of the megawatts-saved number is rather like the tail that wags the dog in terms of how it influences the amount of budget it needs to hit a megawatt target. Megawatts saved usually runs between about 0.5 and 1.0 megawatts, but still, 1.0 megawatt is 100% more than 0.5 megawatts. Here are some numbers for the megawatts and weatherization budgets of recent years, found on Austin Energy’s reports section of their website. I’m using the “rebates and incentives” budget numbers, which excludes the O+M (operations and maintenance), because that’s what I could find most consistently. 2009 - Free weatherization budget, $752,122 Megawatts saved, 0.51 (Cost per megawatt, $1,472,000) 2010 - Free weatherization budget, $512,909 Megawatts saved, 0.43 (Cost per megawatt, $1,195,137) 2011 - Megawatts saved, 0.99 [not sure of 2011 budget] “ FY 2010 – 2011: Free weatherization budget = $6291; operating=$46,248; total, 52,539” [not sure of 2011 budget] 2012 - Free weatherization budget, $598,003 Megawatts saved, 0.99 (Cost per megawatt, $1,195,137) 2013 - Free weatherization budget, $993,373 Megawatts saved, 0.1 (Cost per megawatt, “$9,933,730” = not really applicable) So to get a handle on the budget impact of the 10% megawatt goal, we need some typical numbers, hopefully looking forward a little way into the future. Debbie Kimberly’s 6-20 email says that the weatherization program was delayed in implementation in 2014 because the program started up late (reasons were offered in her 5/30 email), and they are intending to spend the rest of the 2-year budget in 2014, and I see a MW target of 1.0 for free weatherization in 2014 in the C.E.S. 2013-14 progress report. Debbie suggests that annually they budget about $1.4 million for free weatherization, that the Energy Efficiency rebate budget is about $15 million, that the annual MW savings generally range from .5 to 1.0, and that over 32 years the average savings has been 0.70 MW. I’ll use Debbie’s assumptions in the calculations which follow. (There is also a cap weatherization program.) This would probably be a good place to note that the MW savings represents a “reduction in peak demand,” so it is a capacity measure, not to be confused with MWH or KWH (Megawatt- or Kilowatt-hours), a measure of energy used over time. That also means that there is no straight mathematical formula for translating any number of KWH’s or MWH’s into Megawatts. Carol’s proposal is for 10% of 429 MW of demand savings to be designated for Low- and Moderate-income weatherization programs. AE’s current 2007 to 2020 goal is 800 MW of demand savings, with 371 already met and 429 to go. The proposal is for 5% or 21.45 MW to be met with the low-income weatherization program by 2024, and 5% or 21.45 MW to be met with a weatherization program for the moderate-income group, which will partially pay on a sliding scale. (Also, a 5-MW goal for distributed solar for low-income, which I’m not discussing now.) That is 42.9 MW, spread over (I think) 10 years from 2015 through 2024. (If it is 11 years, 2014 to 2015, all the figures will need a little adjustment.) The annual MW goal for free and moderate-income weatherization would be about 4.3 MW, or about 2.15 each for low- and moderate-income groups. How big an increase is this of the weatherization budget? It is highly a function of the MW number for weatherization. Ranging from 0.5 to 1.0, the 4.3MW target is 4.3 to 8.6 times higher. If you take the average, 0.75 (which is close to the 0.70 historical average), the increase is 5.7 times higher. These ranges would be reduced somewhat according to the participation in costs by the moderate-income group, but I do not know if that would be very much. Taking $1.4 million as a typical cost of the weatherization program: $1,400,000 x 4.3 (low estimate, based on high-range of MW savings) = $6,020,000 for low-moderate weatherization $1,400,000 x 5.7 (medium estimate, based on average-range of MW savings) = $7,980,000 for low-moderate weatherization $1,400,000 x 8.6 (High estimate, based on low-range of MW savings) = $12,040,000 for low-moderate weatherization The annual Energy Efficiency rebate budget is roughly $15,000,000; about half residential and half commercial customers. The current $1.4 million is about 10.7% of it. It’s total MW goal is 62 for 2014 (past numbers often in upper 50’s). The 3 estimates above would result in the following percentages of the Energy Efficiency budget: Low estimate: $6,020,000 / $15,000,000 = 40% of EE budget Medium estimate: $7,980,000 / $15,000,000 = 53% of EE budget High estimate: $12,040,000 / $15,000,000 = 80% of EE budget Of course, any outside sources of funding, or great increase in efficiency either to the MW goals or to the efficiency of benefit to the customers, would be exactly what we want. Many good suggestions about oversight, etc., have been made. Here’s the comparison to the budget-percentage alternative mentioned earlier: “alternatively, 20% of AE’s Energy Efficiency budget should be spent on low and moderate income customer households with at least 10% prioritized for a low income weatherization program.” $15,000,000 budget x 20% = $3,000,000 with 10% ($1,150,000) for low-income weatherization. Susan Lippman 512-291-9838 (home) / 512-810-0236 (cell) 8901 Chisholm Ln., Austin, TX. 78748 ENDNOTES: i  ii From: Kimberly, Debbie [Debbie.Kimberly@austinenergy.com] Sent: Friday, June 20, 2014 5:33 PM To: 'Susan Lippman' Cc: Guerrero, Joe; Chamberlain, Thomas; Kuehn, Denise; Jambor, Elizabeth Subject: RE: Regarding Gen Plan task force, clarification of low income efforts? Follow Up Flag: Follow up Flag Status: Flagged Ms. Lippman: Thank you for your very thoughtful questions and detailed email. I will endeavor to address your concerns at a high level, given the short time frame you’re working under. I’ve copied others on this, and would invite them to add detail as appropriate. 1. Stimulus monies were exhausted in April 2012 2. Relative to the magnitude of the goal, you are correct in your observation that a 21.5 MW low income goal out of the remaining 429 MW, by 2024 is extraordinarily challenging. Consider that for the 32 year period dating from 1982 AE has achieved 22.5 MW in low income weatherization savings. (Table 3 2013-2014 Progress Report). 3. The 2013 savings of .1 were an anomaly due to various factors that contributed to the late start of the program. Generally, annual savings range for .5-1.0 MW. Annually, we budget about $1.4 MM for our free weatherization program and $1 MM for our cap weatherization program ($2.4 MM) with targeted savings ranging from 1 - 1.5 MW per year. 4. We have also launched a multi-family rebate program that aims to reach customers at or below 400% of the federal poverty guidelines. The incentive budget for this program ranges from $2-2.5 MM/year and yields 4-% MW in annual savings, reaches more dwellings and has positive economics as measured by the total resource cost test. 5. Renewable programs, including solar are premium offerings and as such, generally are not a good match for the population referenced – unless the cost is subsidized by other customers. 6. The annual rebate budget for residential and commercial customers is roughly $15 MM, divided almost evenly between commercial and residential. 7. The MWH to MW conversion is a function of many factors, depending on the type of measure, the manner in which and when energy is consumed. So, recycling a refrigerator results in relatively low demand savings, but a whole house, home performance with energy star incentive will generate much higher demand savings (a function of air conditioning and other measures that contribute to reductions in peak demand).  Ms. Lippman, I hope this helps and I thank you for your engagement in this process. Debbie Kimberly | VP, Customer Energy Solutions | Austin Energy 721 Barton Springs Rd.|Austin, TX 78704 | 512.322.6327 From: Susan Lippman [mailto:gogreen@austin.rr.com] Sent: Friday, June 20, 2014 2:38 PM To: Kimberly, Debbie Cc: Guerrero, Joe Subject: Regarding Gen Plan task force, clarification of low income efforts? Dear Ms. Kimberly, (or if not available, perhaps Joe Guerrero?) I am a participant in (at least) two groups that are following the Gen Plan Task Force, and I have perceived concern over the targets that are being suggested for the free weatherization program of the Energy Efficiency part of your portfolio. I’m hoping to understand the math better because there are voices, far more experienced than I am in following city affairs, differing rather strongly about the consequences of certain asks. I’m thinking the gulf between them may not be as large as seems if the math or better data is understood. I do have a copy of the “Clarification on Low Income Efforts” that you sent to Carol Biedrzycki, and a copy of the FY2013 DSM Performance measures summary, among other sources I have looked at. I noted that not much of 2013 was available for actual execution of weatherizations. There is a concern that Carol B.’s 2024 proposed goals of “10% of demand savings [in megawatts?]” would be equal to 30 to 45 MW of demand reduction. In her draft presentation at City Hall given on 5/29, she proposed 5% of the remaining 429 MW goal [of the 800MW goal for 2020, as I think I understand it], or 21.45 MW for low-income weatherization, and the same amount for moderate-income weatherization, or 42.9 MW. (And 5 MW for solar.) I don’t know if this goal would be spread over There is a concern that Carol B.’s 2024 proposed goals of 10% (5% for low-income and 5% for moderate-income) of the remaining 429 MW goal [of the 800MW goal for 2020, as I think I understand it], or 42.9 MW is extremely high. Assuming that is spread over 2014 to 2024, 11 years, that is 3.9 MW per year. Or if it is spread to the 2020 goal, 7 years, it is 6 MW per year, or if it is taken as 10% of the demand savings target (as has been expressed by Lanetta Cooper), it is also 6 MW per year.  I think the alarm goes like this: 2013’s MW savings under free weatherization was 0.1 MW. If increased to 6, it means a 60-fold increase (0.1 x 60 =6) of the weatherization budget, or $1,104,636 x 60 = $67 million, or 3 times the whole EE budget; an absurd result. Alternately, some information I have says that AE has yet to meet 1 MW of reduction using low-income programs; even then the result is $6.7 million, so I think the concern is about draining resources that are more effective at demand reduction. It might be helpful to know if you can project 2014’s cost and MW savings projections. 2013 plus 2014 might be meaningful together; since I see that you are trying to spend a 2-year budget by 2014. I also see in “Customer Energy Solutions” 2013-14 progress report, the graph looks like a 1-MW savings by 3/13/14. Could this imply a 4-MW savings in 2014? Other numbers that would help me: What is the total Energy Efficiency budget? The cost per house? And one question really bedevils me: how to convert from KWH (or MW hours, whatever) to Megawatts saved? One more question—is there any more ARRA (stimulus) money for HVAC’s? Or other funding? Thanks for your help. I really support both the carbon-saving and the low-income-helping sides of this issue, and I hope they are not as much in conflict as it might seem. If I can get more clear on these things by this weekend, I’ll work with some of the factions over the weekend, and MAYBE have something useful to contribute to the Task Force deliberations. The Task Force meets again Monday at 2:30 and are seriously trying to concatenate their recommendations now. Their last meeting before their report goes to council will be 6/2. Now I must go off to my late lunch. I welcome your help, if you can provide it; and if not on short notice then it will still be useful after the Task Force sends its initial reco’s to Council. Thank you! Susan Lippman512-291-9838 (home)512-810-0236 (cell)