Local Energy Efficiency Efforts Target Small Business
By Peter Asmus
Scott Hawgi, founder of Small Business Advocates of San Francisco, was
attending a fundraiser when he bumped into CPUC president Loretta Lynch
in May. Hawgi talked with Lynch about how the State needed to involve small
businesses in the push to reduce electricity consumption. Preoccupied with
threats of bankruptcy and controversial rate increases, Lynch was relieved
to hear somebody out there that had fresh ideas on energy efficiency — another
pressing concern at the CPUC.
Cal Broomhead, resource efficiency program manager for the City and County
of San Francisco, had worked with Hawgi to develop a proposal for Pacific
Gas & Electric (PG&E) to reach out to San Francisco’s small
business community. But that proposal had not gone anywhere. Hawgi forwarded
a revised and expanded proposal to Lynch. In less than a month, a $7.8
million program using a local government as the program administrator was
given the green light.
San Francisco probably has the largest small business population — 42,000-70,000
small firms — of any major urban center in the country, according
to Hawgi. Over 90% of the city’s companies have fewer than 10 employees. "We
are not only diverse, but the most organized small business community in
the country," Hawgi said.
Broomhead said he is trying to get an initial pilot program off the ground
before full implementation begins in January. "Quite frankly, it has
been difficult to get potential participants to focus on our program since
September 11th," he said. "It is hard to get businesses to plan
for the future when they haven’t quite dealt with the past."
San Francisco’s Local Government/Small Business Model
Small businesses have been under-served in traditional energy efficiency
efforts, where residents and large commercial customers have received the
bulk of attention and funding. Small firms account for more than half of
all commercial energy use, according to the Washington, D.C. based Center
for Small Business and the Environment (CSBE).
If California’s 73,000 restaurants reduced their electricity use
by 30% (the amount typically saved by taking advantage of the U.S. EPA’s "Energy
Star For Small Business Program"), the statewide power demand would
drop by 1,500 MW — the equivalent of three typical gas-fired power
plants.
"Energy efficiency upgrades for small businesses involve doing the
simple things over and over again in lots of places," said Byron Kennard,
CSBE executive director. "Small businesses can make a big dent in
energy demand just by improving lighting and by installing better thermostats
and occupancy sensors. Better insulation and weather stripping will make
a bigger dent, as will investing in new, highly efficient motors," he
said.
The San Francisco program is being marketed under the name "Power
Boosters" and focuses on lighting upgrades to reduce participants’ electricity
bills by 15 to 30% — perhaps more. The quickest way to accumulate
energy savings is by switching out old inefficient lighting systems with
new, improved high-efficiency ones.
Among the key financial incentives offered under "Power Boosters" are
low-cost financing loans and rebates that cover 20% of upfront retrofit
installation costs that generally run between $1,500 and $3,000. The upfront
investment in better lighting is typically recouped within a couple of
years. Among the non-energy benefits linked to lighting upgrades is that
employees are more productive in well-lit areas. Properly lit displays
for retail shops can also boost sales.
The first step for small businesses is to request a one-hour audit. During
this visit, participants develop a work plan and financing plan, identify
specific energy savings and costs, and a projected rate of payback. Once
a lighting contractor certified by the City reviews the work order, the
small business approves the final work authorization. The work is typically
completed in one day. Local government employees then supervise final inspections
and handle all quality control issues.
Only those businesses whose demand is less than 20 kW are eligible. The
prime eligible candidates are small retail shops, small restaurants, light
assembly centers, warehouses, convenience stores, small hotels/motels,
and small churches and schools.
Berkeley’s Community Energy Services Corporation
Berkeley’s Community Energy Services Corporation (CESC), a unique
nonprofit organization created in 1985, was also awarded a CPUC energy
efficiency contract of roughly $2 million last summer to administer a lighting
program targeting small businesses. Unlike most cities in California, Berkeley
has had a long running small business lighting program.
The new CPUC-funded program is still under development, according to CESC
executive director Nancy Hoeffer. The East Bay program, divided roughly
70% Berkeley and 30% Oakland, aims to perform approximately 1,000 lighting
upgrades in small businesses, with a total projected savings of 1.5 MW.
CESC will be offering larger financial incentives than San Francisco,
covering as much as one-third of a job’s total costs. Since CESC’s
goal is to maximize savings at each customer site, Hoeffer expects that
fewer than 1,000 customers will be needed to reach the 1.5 MW demand reduction
goal.
In addition to incentives for more efficient lighting, funding will be
made available to program participants to pay for turnkey services such
as project management, quality assurance, as well as lending and contracting
referrals.
"Since our financial incentives are based on actual kW savings, our
program will differ from the utility rebate program in that we can offer
incentives on other energy efficiency measures such as daylight controls,
occupancy sensors, de-lamping, the new third-generation premium T8 lamps,
and more," said Hoeffer.
Though fundamentally a lighting program, those going door-to-door will
also be identifying other energy savings possibilities for future implementation.
CESC’s has a good track record. The nonprofit is the ReEnergize East
Bay managing partner and a ReBuild America partner. Working in all but
non-multifamily residential sectors, a five-year lighting retrofit program
funded by ReBuild America affected 7,211,045 sq. ft. of floor space, saving
8,677,045 kWh of electricity. CESC also facilitated the LED traffic light
retrofits in Berkeley.
Opening the Door to Other Local Governments
The California Public Utilities Commission (CPUC) is currently conducting
a comprehensive review of the state’s energy efficiency programs in
light of the critical role conservation played in avoiding predicted this
year’s rolling blackouts. An Order Instituting Rulemaking (OIR) issued
in late August opens the door to new third-party non-utility proposals
to build upon the conservation successes of this past year.
When California restructured its electricity market with AB 1890 in 1996,
the long-term vision was for a variety of players, including local governments,
to administer energy efficiency programs. At present, the state’s
three investor-owned utilities continue to perform this function. But AB
1890 stated "interim utility administration of energy efficiency programs
should not continue past December 31, 2001."
The CPUC is asking private utilities, local governments and other third-party
providers to submit proposals that do the following:
- Use the new Consumer Power and Conservation Financing Authority multi-billion
dollar loan program.
- Have statewide reach and consistency which maximizes short- and long-term
energy and peak demand savings.
- Are cost-effective and easily understood by consumers.
- Are jointly sponsored by more than one utility or local government
or other non-utility provider.
- Include mechanisms for program evaluation and verification of energy
as well as cost savings.
The RFP should be out shortly. For more information about how local governments
can participate in this reexamination of future energy efficiency program
administration and management, contact Pat Stoner, LGC, at (916) 448-1198
or pstoner@lgc.org.
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