Utility company's energy efficiency program; Good intentions - antiquated methods
Watson: I know that you started your business in Indiana and worked primarily in Indiana, Ohio and Kentucky for more than 20 years. After you moved to Colorado I understand you found a town where the municipal-owned utility company along with their wholesale electrical supplier was offering a Building Tune-Up (BTU) program to large buildings and industrial customers.
Holmes: I was so excited. It was what I had been doing my entire career. I applied and was accepted as a service provider. The people running the program were enthusiastic and dedicated to what they were doing.
Watson: Were you able to use the same techniques that you had been so successful with in the past.
Holmes: I was initially hopeful. The manual for providers said that the objective of the BTU program was to identify no-cost, low-cost measures to tune-up building energy systems rather than replacing older equipment with new equipment which is what many utility and government programs do. The program would pay 100% of the cost of engineering studies to identify the tune-up measures. To participate in the program, a building owner had to agree to pay a percentage of the implementation costs.
Watson: How were the no-cost, low-cost measures identified?
Holmes: Great question Watson; that’s where things started to get more complicated. When I went to my first meeting to learn more about the specifics, one of the other engineers asked if there was a $50,000 limit on engineering fees. The utility rep said no, they had a lot of money available for the program and fees could go up to $100,000 per project depending on the size of the building. I believe she said they had about $2 million a year to spend on energy efficiency programs. It was mandated by the State to be a percentage of their revenues.
Watson: I’m confused; up to $100,000 for no-cost, low-cost changes?
Holmes: So was I, so I said to the presenter, “I’m confused. I thought this was a no-cost, low-cost tune-up program. What are these huge fees you are talking about?”
Her answer was that I was correct, the changes would be no-cost, low-cost but the fee required by the engineer to identify those changes could be as high as $100,000.
Watson: Doesn’t sound like no-cost, low-cost to me. I know you always look at the incentive of all involved to see if they are focused on actually reducing utility costs. Were the engineering fees tied to the actual savings?
Holmes: Unfortunately not. The engineering companies’ incentive was to study the facility for as many hours as they could in order to make their recommendations and then spend a lot of hours writing them up in the mandatory utility company forms. As my attorney business partner has always said about attorneys who charge by the hour, “The less competent they are and the longer it takes them, the more money they make.”
The incentive of the people running the utility company’s program was to spend all of money they were allocated each year, comply with all of the regulations and not make waves.
The owner’s incentive to participate in the program was the expectation that the all of the efforts would result in lower utility costs. As in most energy projects, the owner was the only one with the incentive of reducing, documenting and maintaining lower utility costs.
Watson: Knowing you, I doubt you were very excited about what you had learned.
Holmes: You’re right. I was discouraged so I made an appointment to meet with two of the top people running the program. I took a portable monitoring system along and sat it on the table in the conference room. I turned it on and showed them the data on the Cloud with the real-time values and graphs updating every 3 seconds. Also, the historical reports and graphs.
I told them that they were spending most of their money paying engineers to manually gather snapshot data using data loggers, download the data to spreadsheets, analyze it, fill out forms and write reports. They were using antiquated methods. Our system has all of that built in. If you required that it be used, you could pay the engineers to actually save energy instead of gather data and fill out forms.
I offered to install it in a couple of projects to demonstrate how much more efficient and less expensive our methods were.
Watson: What was their response?
Holmes: The first thing they said was not only had they never seen anything like it, they had never even heard of it. Unfortunately their hands were tied. They couldn’t change the standard procedures or required forms. Requiring the use of our monitoring system would be unfair to others.
When I asked if I could meet with the people in charge of the program, they said they were the ones in charge.
Watson: Sounds like they had an approved and funded program and were more concerned with managing what they already had than improving it's effectiveness. Filling out forms doesn't save much money does it? Plus they had a lot of money they had to spend. I guess that's the nature of large organizations and beauracracies.
What was the next step?
Holmes: I was required to attend an official training session put on by a nationwide company that is involved with similar programs all over the country.
They explained the mandatory program requirements; study the buildings using data from the energy management systems when available, snapshot data from data loggers along with data gathered on-site, and identify opportunities for no-cost, low-cost changes to save energy. Then work with the temperature controls contractor who would actually implement the changes and provide data to document the savings.
I was so upset and disappointed by what they were teaching, I didn’t sleep at all the following night. They were teaching methods we had abandoned in the 70’s for their inefficiency and lack of effectiveness.
Watson: You have told me and written pretty extensively about the controls systems being the cause of many of the problems you have found. Trying to use the people and systems causing many of the problems to fix them doesn’t sound very practical.
Holmes: It wasn’t a real world solution. Somebody sitting in an office somewhere with their friendly temperature controls salesperson looking over their shoulder had come up with that.
Luckily I didn’t have to say anything as another engineer who had been involved with the program for a while brought up all of the problems that he had experienced including the fact that the temperature controls people weren’t very interested in working with him, certainly not for the fees allocated by the program. He suggested that the utility raise the amount of money that could be paid to the controls contractors.
He said that depending on the controls company to both make the recommended changes and then provide the data required to verify them didn’t work. They weren’t interested in cooperating and he had no other way to prove that his recommendations had actually worked.
Watson: So instead of suggesting that the program be improved and modified to not be dependent on temperature controls companies, he suggested paying them more money. Just keep trying the same thing over and over and hope for different results.
Most people can't really think out of the pen, can they?
Holmes: That's been my experience.
Watson: Correct me if I am wrong but because the utility company was mandated by the State of Colorado to spend a certain percentage of their revenue on conservation, they had reached out to a nationwide company to help them set up a standardized program that would spend most of the money on audits, studies, filling out forms and complying with bureaucratic requirements. What about actually saving energy?
Holmes: As I have said so many times, it appears to me that the process has become more important than the results. People seem to have forgotten about the primary goal, reducing energy consumption, demand and costs, the primary reason the profession even exists. They are satisfied with paperwork. When they have done an audit or a model they somehow think they have accomplished something that will magically save energy. How many people in the energy efficiency profession does it take to do audits, studies, reports, designs, etc. for every KWH or Btu saved?
Watson: How were you able to continue in the program; to switch from installing instrumentation and using the resulting data to produce immediate no-cost, low-cost savings?
Holmes: Unfortunately, I wasn’t. After my sleepless night, I resigned from the program. I refused to waste all of my training and experience gathering data, filling out forms and depending on a technician for a temperature controls company to produce results.
Tell us about your experiences, both good and bad with energy professionals, what has worked and what hasn’t. Send us your comments, thoughts and suggestions on how to improve our profession so we can all continue to learn from each other. Thanks – Holmes & Watson.