Posted by Charley Cormany, EFCA Executive Director
As a trade organization, there is a reasonable expectation that we will be involved in Advocacy efforts as a part of our commitment to our members. In our world, the things happening in Washington that affect the entire country are covered by Efficiency First National. Currently, these include Federal tax credits, the Clean Power Plan, and new OSHA regulations. For policies that are California specific we, Efficiency First California, are the responsible party.
Advocacy Takes a lot of Time
When I was a contractor I dedicated a fair amount of time to advocacy on a volunteer basis. As a busy business owner, with staff, crew, and clients it was challenging to find the time, to say the least. I tried to attend as many meetings and webinars as I could, but it was difficult to stay up to date. As the executive director of Efficiency First California, this is now a part of my regular workflow. One thing I can say is that staying abreast the changing landscape of our industry is a challenge, even when it is a part of your job description.
Often times I have to filter through volumes of official documents from the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC). As you might imagine this can be pretty dull reading. Trying to determine what is relevant and specific to our industry is quite a challenge. I definitely rely on feedback from others, who might be closer to the issues, as to what is important and what is surface noise, and believe me there is a lot of surface noise.
Rebate Program Advocacy
Another thing I pay attention to is the Energy Upgrade California Home Upgrade incentive program. We all recognize the program is a bit of a moving target. But there are ways to track its status. One way is the Home Upgrade “Working Group”. This is a collective effort that involves regular meetings to get feedback from “Stakeholders” and explore ways to improve the program. It also serves as a repository of all things related to the program. These regular meetings are often attended by Program Implementers and representatives from the Investor Owned Utilities (IOUs). You could easily spend several hours a week trying to keep up with the Working Group and its conversations.
Is the Home Upgrade Working Group Effective?
In the early days of the EUC program, several contractors participated in the Working Group on a regular basis, and EFCA was very active as well. After several years of being asked for input, and then having the program do nothing or exactly the opposite, most contractors have soured on it.
We too have chosen to limit our commitment. It’s difficult to determine what direct impact the Working Group has had in the years since the program was started. In our experience, it seems they are very good at conducting meetings to discuss change and options and less effective at actually inciting real change. I would love to see a list of deliverables that have resulted due to the actions of the Working Group.
I don’t mean to offend the number of folks who are involved in the effort, it’s no doubt they are sincere and many are quite committed, I just am not convinced this format has lead to real, measurable, positive changes to the program.
Another faction to pay attention to are the financial products and industry specific finance programs. Those of us who have been around awhile witnessed what a dramatic effect financing options can have on business.
For example, when the CHF program was in place the combination of a grant with low interest or no interest loans created a huge uptake in customers willingness to include energy efficiency measures into their projects. PACE is another financial tool that has the ability to create real and significant change.
So Where are We Today?
Here’s a brief summary of the three major areas mentioned above: Regulation, Programs, and Financial.
There is always something going on in our industry, here’s some recent activity.
In general, I would say that things have been pretty quiet at the CEC recently.
A Focus on New Construction
The CEC is the regulating body in California responsible for building Codes and Code enforcement. For the most part, the CEC has been pretty quiet lately as the target on the wall there is 2020. This is the time at which new construction will be faced with the challenge of Zero Net Energy. Most of the focus at the CEC is on new construction and other sectors such as commercial and multi-family.
The Challenges of Existing Buildings
There have been conversations about existing buildings, which is most closely related to what we do. I think they are aware, as are most folks, that existing buildings are the most challenging sector. There have been some conversations about ways to enforce code compliance, for example how to deal with the large numbers of HVAC Contractors not pulling permits and the challenges of the HERS rating system.
The CPUC, on the other hand, is a beehive of activity.
Requests for Program Funding
The Program Implementers need to submit their business plans to the CPUC by November (recently pushed from September.). This means the Program Administrators in charge of the incentive programs are busy preparing submittals on how their specific programs will work. This requires lots of meetings with endless whiteboards and everyone chiming in to propose what works best for their efforts.
The real significance is that the CPUC holds the funds needed for the various efforts and these business plans all include budget requests to the CPUC. Without the funding from the CPUC, your program goes nowhere. As you might imagine, this is where most of the current attention is focused on the Program Administration side of the equation.
Defining Baseline Energy Use
The recent combination of AB 802 and SB 350 are stirring things up as well. The current conversation is around measured performance and how to calculate what the baseline energy use is prior to the upgrades.
There are a few different ways to determine baseline energy use. For example, in an older home is the baseline how the house currently performs? Or how it relates to the code? Some believe the baseline should be for code and above code improvements and others feel the baseline should be the house in its current configuration.
Another related conversation is how do you create a baseline if the project is done in phases? If you return to a home to do more work should the baseline be from how the house performed originally? Or after the measures you have previously installed? If it’s for the original configuration how long of a period is that good for? 2 years? 3 years?
As you can see this is not as simple of a question as it might seem. The good news is this is one of the many fundamental questions that need to be answered in order to pave the way for Pay for Performance incentives. The mere fact that it is being discussed is a sign of progress.
In program land, the Energy Upgrade California Home Upgrade and Advanced Home Upgrade programs are being discussed. As you are likely aware, these programs are expensive to implement and are not providing the energy savings they predicted. This is not a new issue but is significant as it illustrates the need for a more sustainable long-term solution.
Simplifying Home Upgrade
There has been some discussion on whether the program should be simplified and have a common Statewide approach or whether it makes more sense to have regional efforts. In the last conversation I participated in, the regional efforts were winning out.
We proposed that they could make the entire program simpler by combining the two programs, Home Upgrade and Advanced Home Upgrade into a single effort. The discussion progressed and the conversation eventually shifted to making it appear as one program, to consumers at least. We feel a single program effort would alleviate confusion and reduce costs with a simplified message. Unfortunately, at the last meeting, it was decided that this was not a priority. (It’s this type of result that makes regular participation in the working group a challenge.)
Incentivizing for Deeper Retrofits
Meanwhile, there has been significant activity by the largest IOU in the state, Pacific Gas and Electric (PG&E). The recent restructuring of the points system used for Home Upgrade by PG&E has caused quite a stir at the CPUC. The motivation behind these changes is pretty simple, PG&E has an annual budget for incentives. The volume in Home Upgrade submissions is way up this year and PG&E is concerned about having enough in the bank to make it through the year.
In some ways, this is the product of doing a good job, more rebates mean more jobs are getting done and that is a good thing. But, the unfortunate reality is a small group of contractors is submitting the lion’s share of these jobs, and they are entry level projects with minimal measures.
What we really need is many more contractors entering the field and more homeowners committing to deeper retrofits. We feel the recent Home Upgrade project volume is a direct result of the program designers decision a couple of years ago. They chose to lower the bar in order to get more projects completed. The requirements for the program have been made significantly easier over the years and the increased volume is the consequence.
Quite frankly, we expressed our concern over this structure to the Working Group when they first rolled out Home Upgrade in place of the Basic path. We were concerned about the message they were sending by promoting volume over energy savings. We believe energy savings should always be the goal. These kind of things are hard to predict, and no-one has a crystal ball, but sometimes these issues are more obvious to the ones actually doing the work.
Regarding financing, there is no question that new privately managed PACE programs are getting traction statewide. The numbers are impressive and suggest that providing easy access to funding is a critical part of market transformation.
A Threat to PACE in California
As you might be aware there was recent legislation proposed by Assemblyman Dababneh that threatens to reclassify PACE liens. AB 2693 would effectively kill PACE financing in the state and is a real concern to both municipal and private PACE programs. We rallied the troops and sent out letters in opposition to this legislation. In part, due to our efforts, there was a special meeting with the author of the bill and it seems that this issue is now on the back burner. None the less we will be watching to see that this type of regulation does not slip by unnoticed.
We are Here for the Contractor
So as you can see there is always something going on that requires our attention. I think you can tell from this brief summary that this is too much for the average contractor to stay on top of. As I mentioned earlier it’s hard for me to keep a handle on it and I have support and dedicate a portion of my work week to do it. This is one of the many reasons you need to continue to support Efficiency First on a National and Regional level. We are here to pay attention to the things you don’t have the time, or the interest, to stay on top of. We believe it is critical to making sure the contractors voice is heard and represented in these conversations, as they are happening.
More Regular Updates Coming
Obviously, I have just touched the surface on many of the subjects mentioned above. If you would like more detailed information about a specific topic or have comments you would like to provide please don’t hesitate to share your opinions with us. One thing you might not be aware of is how important your perspective, as the boots on the ground, is to these conversations. We are doing the best we can to represent your position and we are always open to hearing from you, even if what you have is contrary to our current position.
To try and keep you up to date we are adding a regular Advocacy update section to our newsletter starting next month. Hopefully, this will help keep you more abreast of things in a timely manner. Again please provide your comments and feedback as this is your organization and we are here to help support your efforts.
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