The Third Party Administrator Model: Right for Puerto Rico?

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2 The Third Party Administrator Model: Right for Puerto Rico? Scudder Parker Senior Policy Advisor Vermont Energy Investment Corporation (VEIC)

3 About VEIC Nonprofit founded in 1986 Designs, delivers, and evaluates energy efficiency, transportation, and renewable energy programs nationwide 300+ employees Locations: VT, DC, OH, NJ We build local capacity where we implement

4 Our Collaborators and Customers Government Foundations Environmental & Consumer Groups Utilities

5 Examples of TPA Models Delivering all EE programs statewide since 2001 Providing EE & RE programs to all Res & C&I electric & gas customers Serving municipal utilities in mid-west

6 Framework, Guiding Principles, & Key Components for Success Structure Guidance Incentives Responsiveness

7 Framework: Stable Foundation Policy Regulation Implementation

8 Critical Requirements for TPA Function Funding Diverse and stable Accountability Documentation and performance Customer Data Secure and available to TPA Infrastructure Public good/ Partnerships Continuity Reasonable planning horizon

9 Serving All Customers Equally Highest quality services to all Learning from customers Empowering customers System benefits: The heart of the work

10 Long-Term Relationships Make Sense

11 Critical Tools For the Job In-depth market knowledge Characterization of savings opportunities (TRM) Cost-Effectiveness screening Customer relationship management Local partnerships Codes and standards Financing strategies Performance measurement and documentation Innovation and flexibility

12 Access to Customer Data Essential to impactful program design and implementation Opportunity for feedback loop with utility for planning and supply procurement

13 Broad Societal Impact Job creation Build expertise and institutional capability in PR Local business growth Improved health/safety/productivity Reduced costs for those most in need low- and fixedincome populations Collaboration opportunities (water efficiency) Innovations in energy use (transportation efficiency)

14 Performance Based Targets Fast changing markets and technologies Clearly defined desired outcomes/clear metrics Administrator flexibility to achieve goals based on current market conditions and customer needs Incentives for success; disincentives for failure

15 Well-Defined Structure State Regulatory Commission Advisory Committee Contract Administrator State Energy Office & Consumer Advocate Planning Savings Verification Third Party Administrator Utilities Energy Product and Service Provider Partners Business and Residential Customers

16 Vermont Results: Example of What can be Achieved Efficiency is now over 13% of Vermont s Electric Portfolio

17 Significant Residential Customer Savings Total Bill Savings Residential $885 C&I $3,900 Average Annual Savings: $115 $597 Average Annual Savings: $87 $395 Average Annual Savings: $59 $260 Note the increase in the rate of savings.

18 Ongoing Account Management with a Large Manufacturing Customer: 38% savings

19 Cumulative Impact of Efficiency Vermont MWh Savings on Growth of Annual Electric Supply Requirements (less BED) 7,000 GWh 6,000 5,000 4,000 3,000 2,000 Electricity needs filled by efficiency (cumulative savings) Electricity needs filled by power generation 1,000 0

20 Cumulative Impact of Efficiency on Growth in Annual Electrical Supply Requirements, ,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000

21 Efficiency vs. Comparable Electric Supply Efficiency Supply cents per kwh

22 Benefits for Puerto Rico No need to Start from Scratch

23 Not a Traditional Utility Business First and Foremost This is about Serving Customers and Moving Markets 1. Focus on total energy reduction 2. Create broader customer and market choices 3. Achieve other utility and societal goals 4. Significant environmental benefits 5. Understand and learn from each market sector

24 Partnership: New opportunities and Benefits Customer side: Enhance customer engagement and support Lower customer bills Build trust Grid side: Delay or offset T&D investments Reduce Supply costs over time Build resiliency into the system Integrate customer resources as they mature

25 A Great Economic Growth Opportunity

26 Thank you! Questions?

27 For More Information: Scudder Parker Senior Policy Advisor

28 Additional Materials

29 Additional Examples of Third Party Structures

30 Vermont Contract Model Vermont Public Service Board CONTRACT CONTRACT EEU Advisory Committee CONTRACT Contract Administrator EEU Fiscal Agent Dept. of Public Service Planning Savings Verification Efficiency Vermont Contractor $ $ Efficiency Vermont Partners: Energy Product and Service Providers Business and Residential Customers

31 Vermont s TPA: Now a Franchised Energy Efficiency Utility

32 Vermont Franchise Model Vermont Public Service Board (quasi-judicial, answers to the Legislature) $ EEU Fiscal Agent Dept. of Public Service (Consumer Advocate, answers to the Governor) Planning Savings Verification Efficiency Vermont Implementer $ Efficiency Vermont Partners: Energy Product and Service Providers Business and Residential Customers

33 Clear and Long Term Guidance 12-year appointment allows participation in longterm transmission planning, customer planning, utility IRP Includes demand resources plan, a 20-year plan for DSM spending and savings, including unconstrained Was based on 3% savings scenario we found that better alignment between the EEU's role in long-term planning and forecasting by Vermont utilities is one of the benefits provided by the new EEU structure. Vermont Public Service Board August 2011

34 Washington DC Municipal Model District Department of the Environment (City Department answers to Mayor & City Council) E M & V Contractor Public Service Commission (rule making, answers to City Council) Planning Savings Verification $ DC SEU Implementer Office of the Peoples Council (consumer advocate) $ DC SEU Partners: Energy Product and Service Providers Business and Residential Customers

35 The TPA may help with new opportunities in the future Energy Markets are changing: New opportunities are emerging

36 Other Structural Involvement Active Partner and Participant in Roll-Out of AMI Developed Data Platform with Opower Geo-Targeting (Distribution and Transmission) Active engagement in Codes and Standards Advocate for and lead in deploying PACE Strategic Electrification Public Purpose Energy Service Company

37 Commons Energy: Public Purpose Energy Service Company

38 Vermont Energy Efficiency Utility Statutory Framework State Energy Policy - 30 V.S.A. 202a Least Cost Integrated Planning - 30 V.S.A. 218c PSB Authority to Appoint EEUs - 30 V.S.A. 209(d)(2)

39 Energy Efficiency Utility Regulatory Framework Order of Appointment (Order entered December 20, 2010 in Docket No. 7466) Process and Administration Document Program Implementation Plans Detailed technical implementation plans for each program

40 Active DU/PGU Partnership Strong/ Innovative Markets Clean, Affordable, Reliable Energy for All Dynamic Public Policy Performance -based Regulation

41 Affordability and Low Risk for the Long Term Cost low Incentives performance Investment in customers Assets intelligence

42 Sustained Upstream Lighting Work

43 Transmission, Distribution & Planning Traditional peak Emergent peak constraints Micro-grids Valley filling Ancillary services Where is the utility headed next?

44 Geographic Targeted Areas in Northwestern Vermont the continuing investment in energy efficiency in Vermont has deferred the need to construct an additional $157 million in regional transmission upgrades.