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Report: Texas TDUs Should Consider Offering Mandated Energy Efficiency Programs Through Retail Electric Providers

October 20, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Citing the success of a REP-provided program at CenterPoint Energy Houston Electric, a report from the Evaluation, Measurement, and Verification collaborative on Texas' energy efficiency programs funded by the state's investor-owned electric utilities said that ERCOT utilities should consider the feasibility of programs where retail electric providers interface with the customer to offer the TDU-funded efficiency services

16 TAC § 25.181 provides guidance regarding unbundled electric utilities' engagement of REPs in energy efficiency programs: Each utility in an area in which customer choice is offered shall conduct outreach and information programs and otherwise use its best efforts to encourage and facilitate the involvement of retail electric providers as energy efficiency service companies in the delivery of energy efficiency and demand response programs.

In program year 2014, CenterPoint Energy Houston Electric offered the only program specifically designed to engage REPs. Under CenterPoint-TDU's market transformation program (MTP), predicating REPs (of which there were 12) could choose to offer the following services:

• CoolSaver A/C Tune-ups

• CoolSaver A/C Install (installation of higher efficiency units)

• LED Electronic Marketplace (REPs offer LED light bulbs online)

• Residential Energy Efficiency and Demand Response (REPs or other third party entities may also propose their own services or programs; currently, several third party entities have proposed methodologies to implement a residential demand response program utilizing Wi-Fi enabled programmable communicating thermostats.

As of the end of planning year 2014, 4,732 residential A/C tune-ups and 1,961 commercial A/C tune-ups had been completed and invoiced at the CenterPoint-TDU

The collaborative found that the REP program at CenterPoint-TDU is being implemented effectively from the perspective of both participating REPs and contractors. Both REPs and contractors gave the program implementer high satisfaction ratings overall and reported high satisfaction with various aspects of the program.

According to the collaborative review, most participating REPs are offering the efficiency program services free to their customers as either a loyalty bonus for existing customers or as an acquisition incentive for new customers. Most participating REPs want to be able to help their customers become more energy efficient and provide customers an opportunity to lower their utility bills.

Comments from participating REPs regarding the programs includes, "Almost too good to be true. Very impressed," and "There shouldn't be a reason a REP would not want to participate."

Because REPs cover service territories in addition to CenterPoint-TDU's, all mentioned they have to be sure to only offer the tune-up service to those that are in CenterPoint-TDU's service territory. For this reason, many of the REPs leverage the tune-up service as a customer "bonus" -- either as a customer retention bonus or as a customer acquisition "thank you." One REP is more selective, and offers the tune-ups to their highly valued customers. Another REP mentioned they use the tune-up service, at least in part, for customer escalation issues.

Another key component to the REP marketing strategy is the number of tune-ups they are allocated each year. If the allocation is on the smaller side, REPs mentioned that to do any kind of marketing campaign or “push” of information is not feasible. They do not want to run the risk of over-subscription that would then lead to customer dissatisfaction with them. In a couple of cases, where it looked as though goals may not get met, REPs did directly market via email to select customers.

The two REPs that the collaborative team spoke with who do not participate in the program mentioned concerns about the scalability and longevity of the program. In addition, they had concerns regarding brand recognition and wanting to maintain the direct relationship with their customers. The non-participating REPs felt the current REP program design does not allow the REP to have the direct customer relationship. Finally they also reported challenges with competing activities that they already offer to their customers.

One of the non-participating REPs mentioned concern about the "first come, first serve model" -- specifically that energy service companies (ESCOs) tend to get involved fast in the program and then it is fully subscribed.

Additionally, one of the non-participating REPs said that energy efficiency program implementation is "better suited" for the regulated utilities rather than the competitive REP market. This REP said that, "utilities are in a better place to promote energy efficiency programs due to the nature of the Texas market."

"The process evaluation results indicate it is most likely feasible to offer similar services working with REPs to customers beyond CenterPoint's service territory. However, at the same time, the results also indicate that while participating in an energy efficiency program may be attractive to some REPs, other REPs may not be interested in participating in a program," the collaborative reported.

The collaborative recommended that, "ERCOT utilities should consider the feasibility of a REP program for their service territory."

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