Tiny Vermont is the second smallest state in the US by population and the fifth smallest by area. Its idea of a city – the capital, Montpelier, has a population of just 7,760 – corresponds to most people’s idea of a village. However, you sense it’s different almost the moment you arrive – to get there, I drove through New Hampshire, which brashly advertises its ARRA (funds from the US Federal government’s American Recovery and Reinvestment Act) funded road construction programme at every opportunity, Vermont’s economic reconstruction efforts are understated. So too are its efforts to provide its homes and businesses with sustainable heat and power.
The challenges it faces are real. It has no coal, oil or gas of its own and has to spend $2bn a year on energy imports. Around a third of its power is derived from the Vermont Yankee nuclear plant which might or might not be relicensed depending on where the politics lands. Fuel poverty levels are amongst the worst in the country, as a result of high energy prices. This is because the state is quite literally at the end of the gas distribution line and it has a dispersed, rural population. In addition, its climate is a problem as Vermont winters are famously bitter. Between December and February, temperatures stay below freezing and can plunge as low as -37°C. The energy industry is highly fragmented. Its 600,000 population is served by twenty electric utilities, four of which are investor owned, fourteen owned by municipalities and two farmer owned co-operatives.
And then there is Efficiency Vermont (EVT), which has been awarded responsibility for delivering the state’s energy efficiency targets. Savings of electricity from energy efficiency were 1.8% in 2007, the highest rate of efficiency gain in any state – and Vermont was the only state to outperform the target set by the state utility commission. As a result of this aggressive action, the state forecasts there will be no growth in energy demand between now and 2015. Blair Hamilton, founder of Efficiency Vermont, explains there is a fundamental difference between a utility that is mandated to install energy efficiency and a free standing agency like his:
“A free-standing energy efficiency utility has a somewhat unspoken advantage – there is alignment between the organisation and the public interest. Efficiency Vermont wants to save carbon. So there is less need for the regulator to look over its shoulder.”
EVT is tasked with reducing electricity use and peak electricity demand in all of Vermont (except for Burlington) taking over a function performed by the electric utility in most states. It has to ensure that a third of savings are made in homes, commercial and industrial locations respectively reflecting the funding base. In the residential sector, EVT saves electricity through giving away CFLs, incentivising the purchase of energy star appliances and encouraging new homes to be built above building code standard in terms of air tightness, windows and heating systems. Commercial and industrial customers have similar opportunities.
Paying for EVT adds $35 to each Vermont customer’s bill – again the highest in the country. However, its results are impressive. The price of electricity in Vermont is $0.13/kWH, but the cost of investment for each unit of first year saving was $0.22/kWHr, suggesting a payback of less than two years and $0.02 per kWH across the lifetime of the technologies.
American Council for an Energy Efficient Economy (ACEEE) undertakes an annual comparison of different states energy efficiency policy. Last year, Vermont came top on the basis of five measures, including spending on energy efficiency, the quantity of energy saved. A more nuanced comparison on individual utilities was carried out for the Vermont utilities commission. It looked at 22 energy efficiency programmes by individual utilities across states, which had been in the energy efficiency business for at least seven years. Efficiency Vermont invested 4.8% of the electricity bill in efficiency more than any other state; savings in electrical demand were 2.8% also the highest of any utility. The costs for each kWh saved in the first year were higher than those of other utilities ($0.22/kWh instead of $0.18/kWh). Of course, savings persist for the life of the measure and the type of measures installed (most commonly low energy light bulbs) meant over the life time savings were just $0.02/kWh – much less than the cost of buying the power.
Navigant also performed a more sophisticated analysis adjusting its figures on costs per kWh saved taking account of the types of programme that Efficiency Vermont undertook. This meant removing utilities from California where the climate is much warmer and comparing only with nine other highly energy efficiency utilities, including other efficiency utilities like Efficiency Maine and Energy Trust of Oregon. Again, the two Vermont utilities performed atypically well. The main criticism made in the Navigant report is that both Vermont utilities relied too heavily on installing compact fluorescent light-bulbs for their savings, though this was largely true of other companies too.
The results have to be taken with a pinch of salt as it is hard to compare schemes from different states since the programs often have further state specific restrictions or objectives thrust upon them. Efficiency Vermont is required to install an agreed share of measures in domestic homes and small businesses, and target uptake in areas where the distribution network is near capacity (“geographically targeted” investments). This allows the electricity companies to avoid the cost of strengthening their networks, but it limits the types or location of its investment. Utilities in other states will also have additional conditions put on them.
Geographic targeting of energy efficiency is important because it means the system, as a whole, can work more efficiently. It can also be used to target areas where the climate is harsh and energy use for each person high. Trying to step up the penetration of energy efficiency in areas where the grid is near capacity was, as Blair puts it:
“... Difficult, expensive and great fun. We go about it by working through town energy committees and helping them organise an event. Can Poultney light the way for Vermont? was our slogan. We arranged an event to coincide with a holiday weekend. We worked with the local hardware store to ensure there were enough bulbs. The offer to entice customers was one free CFL and up to six extra for just 89c each. On average people took home four bulbs each. We got a list of all the people in the village with electricity meters and over the weekend and went door to door persuading everyone to take one. Even the mayor got involved.”
The approach taken by Vermont in reducing electricity demand is starkly different to many other programs. For them, Energy efficiency is a mindset – a set of skills, a consciousness as much as it is apparatuses and appliances. Contractors are an important sales mechanism for energy efficiency – all contractors undergo the five day Energy star training. The costs of the training are two thirds reimbursed if the contractor completes the course and completes two contracts in the field. The costs of specialist tools are also subsidised.
This approach has its critics. Efficiency Vermont’s way of operating is people intensive, employing 180 people in a state of 600,000. Staff go into architect’s offices to influence the design of new buildings to make maximum use of passive heating and cooling techniques such as shading and orientation. This reduces the cost of heating, ventilation and air conditioning, reducing the demand for gas as well as electricity. Energy used by new housing only makes up a tiny proportion of the total energy consumed in the state, but the penetration of low energy practices is significant. Savings from these programmes is modest. The background level of energy efficiency that would arise without EVT’s action is also high. Vermont builders are building homes to higher standards and so the baseline against which performance is compared is becoming tougher with very high penetrations of CFLs, double glazing, wall and roof insulation and the installation of low energy appliances.
Vermont isn’t the only state where energy efficiency is being undertaken by a free standing agency rather than by utilities: Maine, Wisconsin and Oregon have also appointed not-for-profit organisations, New Jersey and New York states have assumed responsibility for a part of their states themselves. In Blair’s view, there are some advantages to taking this role away from utilities:
“In California the utilities are doing a good job at rolling out energy efficiency – but it costs the rate payer more. The utilities ask for a 10% to 15% fee, while Efficiency Vermont only receives a two per cent fee and Oregon no fee. Utilities are also more prone to gaming the system or ignoring it altogether. The reason why Efficiency Vermont was given the role by Vermont’s Public Service Board was because several of the existing utilities didn’t see energy efficiency as their core business and they kept missing their targets.”
Efficiency Vermont also has the political mandate, but no resources, to reduce the gas and liquid fuels used by homes to keep warm.
As well as its electricity rate payer funded work, the organisation has also secured contracts to undertake deep retrofit from Vermont’s share of the proceeds from auctioning the carbon dioxide emissions right from the north east region’s emissions trading programme (RGGI). David Farnsworth from the not-for-profit RAPonline based in Montpelier explains:
“Most of the carbon saving from RGGI arise not from the carbon restriction themselves but from wisely spending the proceeds from the auction on energy efficiency investment. According to the modelling of the RGGI and Californian systems 80% of savings are from so-called complimentary measures and 20% from the price effect.”
So, rather than grandfathering the permits, we should be auctioning them and earmarking the proceeds for low-carbon purposes.
Low income weatherization programmes
The extreme cold weather in Vermont means that keeping warm presents a real challenge. Traditionally, federal funds from Department of Energy (weatherisation) and HUD (social homes) are used to improve the energy efficiency of low income home-owners. Federal funds are unstable, varying depending on the political mood of the appropriation committee in Washington. At present, households that earn less than 80% of the state median income qualify for the insulation, and those on 60%, for emergency payment of fuel bills. CV-CAC has to interview people to determine eligibility for grants:
“This is America – you have to pretty much strip naked to access services. Throw your pride out of the window. But we try not to make it a degrading exercise.”
In Vermont, Federal funds are supplemented with revenue from a 0.5% tax on non-transportation fuel and income from auctioning carbon emissions permits into the RGGI market. In 2009/2010, there has been an infusion of new stimulus (ARRA) money too. This mishmash of funds means there is less volatility of work loads between years, but each of the different sponsors have slightly different objectives: ARRA money is primarily to create new jobs, DOE money to provide warmth to poor people, which makes the programs confusing to recipients. RGGI money is used for stimulating the maximum carbon saving, which means CV-CAC are allowed to work outside of Vermont and target affluent people and also large multi-occupancy buildings. It is also running a program, Weatherisation skill-shop, to increase skills of homeowners to undertake basic insulation measures themselves, and develop a better appreciation for building science. There’s a great video on their website teaching basic skills to people (see Central Vermont Community Action Council: Button-Up Vermont).
The crews typically air-seal a home, install insulation in the attic and basement, dense packing the roof with insulation, drilling and pumping insulation into the wall cavities, and servicing boilers. They pressure test all homes before and after their work to ensure adequate air tightness is achieved and also make use of heat imaging where feasible. As well as insulation, they replace fridges and tungsten bulbs with CFLs and service the boilers. Spend is presently limited to $6,500 a home, and the average is $4,700. Measures like double-glazing are too expensive and not cost-effective enough to qualify. There current benefit to cost ration is 1.5:1 and more like 5:1, if non-energy benefits like health and school attendance are included. CV-CAC, one of Vermont’s weatherisation organisations, offers a similar service to the able-to-pay market. The RGGI money is being used specifically to target more complex projects, such as multifamily apartment blocks, which need more upfront co-ordination, but yield greater carbon savings.
The ARRA has increased the volume of work by 40%. This has been a manageable growth in work – but other CAC, with less diversified funding sources, have much greater proportionate increases, which they have had difficulty in disbursing effectively. The organisations are often not as entrepreneurial as they might be.
Staff retention in CVCAC is good. Weatherisation workers operate in gangs of two to three. They well paid well for Vermont – $17/hr. The work is difficult as it involves handling hazardous chemicals in cramped locations and uncomfortable temperatures. Innovation is bottom-up and incremental – discovering a more effective pair of gloves, or knee pads, replacing the batteries in the power tools with the latest Li ion technology, using new two part foam which is expensive but sets quickly thereby saving time. Managers visit trade shows to assess new materials and equipment. Good pay is important to ensure they hold onto reliable, conscientious staff:
“Weatherisation is all about skilled people continuing to do unpleasant work well when nobody is looking. For this you need people you can trust. Access to the majority of attics is in the main bedroom – this is the most intimate space in someone’s home.”
The RGGI contract means CV-CAC has a broader, more affluent group of customers. This means they can spend more money on each home and improve windows, external cladding and heating systems. However, it presents new challenges in terms of heritage concerns, and the weaknesses of the building heating software models. The current suite of Department of Energy tools are not sophisticated enough to capture the gains made from retrofit and need to be calibrated with the building’s actual energy use and measured air infiltration rates, and so on.
Vermont Electric Co-op (VEC)
Vermont has 20 electric distribution companies with examples of all three types of ownership: investor owned, co-ops (chiefly serving rural areas) and municipal. VEC is an electric co-op providing distribution and supply services to 34,000 customers in northern Vermont and includes a mixture of residential, industrial and commercial customers. It sources its power with power purchase agreements with a number of Vermont and out of state generators.
Its tariffs to residential customers are higher than average for Vermont because of the sparsity of its customers. Industrial and commercial tariffs are more competitive. It has 14 customers/mile of wire, compared to 40 customers/mi for the investor owned companies. Across the US as a whole, the 930 electric co-ops provide power to three quarters of the land mass, but only have 39 million customers.
VEC decided to invest in smart meters in 2005. Over the past five years, smart meters have been fitted in 80% of its customers. Only 4% of US utilities have switching to smart meters. VEC considered various different types of meter, but settled on an Advanced Meter Infrastructure based system, which uses the power line as the medium for two-way communication. The meters cost less than $200 each to install, including the cost of the control centre. The smart meters reduce the operating costs, reducing the number of staff employed reading meters and speeding up the detection of faults. The investment broke even within five years.
Customers enrolled to the wattWatchers program (see Vermont Electrical Cooperative: VEC wattWATCHERS) can remotely monitor and manage information on their electricity consumption over the web. This gives graphical information on customers daily or even hourly energy use for a specified period of time, and alerts customers, if their consumption exceeds the threshold they set.