Utilities Debate Value of Energy Efficiency
Providers Believe Rebates and Reward Programs Have Become Too Expensive
Energy efficiency is a hot-button issue that is the source of many debates across the U.S. Among the most commonly asked questions are: What kind of energy-efficiency goals are realistic? What types of rebates and reward programs should energy providers have in place for consumers? And, how great is the demand for these conservation programs?
Perhaps nowhere are these questions being raised more often and louder than in the state of Florida, where a group of energy providers recently asked state regulators to reduce energy-efficiency benchmarks they say are too expensive and don’t benefit enough customers.
Conversely, conservationists believe the exact opposite is true, declaring reduced energy-efficiency programs will result in higher monthly bills from electric providers and a heavier reliance on natural gas and nuclear energy.
The Sunshine State Debate
Florida Power & Light (FPL), Duke Energy Florida, Tampa Electric Co. (TECO), and Gulf Power Co. are the utilities that have submitted testimony in an attempt to shrink the state’s conservation programs. They did not return requests for comment on the issue, but Duke spokesman Sterling Ivey did have this to say, per The News Service of Florida:
“We think it’s in the best interest of our 1.7 million customers to reduce that energy conservation goal and let us look at programs that could benefit the entire customer base. It could be a community solar offering versus a rebate to an individual to put a solar panel on a roof; perhaps we can build a community solar array that all our customers pay into it and all would benefit.”
What, exactly, those replacement programs could consist of has not been detailed to this point. However, opposition to the interests set forth by the utility companies has been quite detailed. “Florida should continue to pursue cost-effective energy-efficiency programs,” said Martin Kushler, senior fellow with the American Council for an Energy-Efficient Economy (ACEEE). “The state needs to do more.”
“The utilities’ proposed goals effectively eliminate efficiency offerings to Florida customers, including those for lower income customers who have the greatest need for access to the cheapest energy resource we have — energy efficiency,” said Natalie Mims, energy-efficiency director of the Southern Alliance for Clean Energy, in a blog post on the organization’s website.
“The utilities claim they are hindered from capturing more efficiency due to their implementation of energy efficiency for over 30 years, increases in energy-efficiency building codes and appliance standards, and low natural gas prices. However, these factors — building codes and low natural gas prices — have not eliminated efficiency potential in other areas of the country that have had long-standing energy-efficiency programs. For example, the Pacific Northwest, like Florida, has been implementing energy efficiency for over 30 years. In fact, the Pacific Northwest has been meeting half of its electricity growth with energy efficiency. Additionally, federal building energy codes, appliance standards, and low natural gas prices affect utilities across the country; however, the Pacific Northwest has continued to find efficiency opportunities.”
Indeed, the Pacific Northwest in particular provides a great blueprint for energy-efficiency goals executed properly. The ACEEE each year releases an energy-efficiency scorecard for each state. Per the organization’s website, “ACEEE ranks states on their energy-efficiency policy and program efforts and provides recommendations for ways that states can improve their performance in a variety of policy areas.”
Florida ranked in a tie for just 27th in the 2013 edition of this list while Oregon placed fourth and Washington was eighth. (Massachusetts, California, and New York earned the top three spots, respectively.)
“Twenty-seventh is not a ranking to be particularly proud of,” said Kushler. “There is plenty of room for improvement.”
A Contracting Perspective
While energy efficiency is an issue spanning several different industries, HVAC contractors in Florida were quick to share their thoughts on the current debate.
“I believe energy-efficiency incentives were introduced to help save the environment and reduce the need for new power plants,” said Bill Blaze, owner, Advanced Air, Fort Myers, Florida. “In fact, I remember those very words uttered in several utility company presentations 18 years ago. The savings in energy efficiency have diminished over time as older homes are retrofitted and new building codes raise the overall efficiency of new construction. The utility companies argue the rebates cause artificially high energy costs as everyone subsidizes the increased efficiency through their monthly utility bills. The concerned citizens and conservation groups argue that terminating the rebates will require the need for more power and power plants due to reduced efficiencies. In a nutshell: the utility companies just want to build more plants to sell more power to make more money.”
Blaze continued: “As an HVAC contractor, I appreciate both sides of the argument. I believe the energy rebates have done a tremendous job raising awareness and increasing overall home efficiencies in Florida. I don’t believe removing or reducing rebates will eliminate awareness. There is value in purchasing higher-SEER equipment and increasing the home’s energy efficiency. This won’t go away with reduced rebates, nor will our responsibility to do the right thing for the environment.”
“Higher-efficiency HVAC systems have not become much more expensive over the past few years; maybe other products like solar have,” said Dave Hutchins, owner, Bay Area Air Conditioning, Crystal River, Florida. “Benefiting a few customers makes sense, as those are the customers willing to spend the extra initial dollars to conserve and get long-term savings on their power bills. If demand has declined for conservation, it is due to the utility companies promoting ‘other’ programs, like insurance for your home’s wiring, power surge protectors, etc., instead of energy conservation programs, like they used to.”
Within the HVAC industry, focusing on and being aware of efforts towards energy efficiency is something most contractors have become accustomed to, including both Blaze and Hutchins.
“Reduced energy cost for the consumer is part of every replacement estimate that we do,” said Hutchins.
“Energy efficiency plays a large role in our residential replacement business,” said Blaze. “The majority of equipment sold (90 percent) takes advantage of utility rebates. On average, homeowners save 7.5 percent on replacement costs. In addition, savings are realized in energy bills over the life of the new, high-efficiency equipment.”
Still, it is Florida regulators who will make the ultimate decision on whether or not utility providers have made a strong enough case to reduce energy-efficiency programs. A ruling is expected this fall.
SIDEBAR: Efficiency in Florida
The state of Florida offers numerous energy-efficiency rebates. Here’s a sampling of Florida’s offerings, including details of the residential rebate programs that four Florida utility companies — Florida Power & Light (FPL), Duke Energy Florida, Tampa Electric Co. (TECO), and Gulf Power Co. — are currently offering.
Property Tax Exclusion for Residential Renewable Energy Property
Florida provides a property tax exemption for residential photovoltaic systems, wind energy systems, solar water heaters, and geothermal heat pumps installed on or after Jan. 1, 2013. For the purpose of assessing property taxes for a home, an increase in the just value of the property attributable to the installation of this equipment should be ignored. This exemption applies to assessments beginning Jan. 1, 2014, and for equipment installed on or after Jan. 1, 2013. The exemption applies to the following types of equipment used as part of a solar, wind, or geothermal system:
• Solar energy collectors, photovoltaic modules, and inverters;
• Storage tanks and other storage systems, excluding swimming pools used as storage tanks;
• Thermostats and other control devices;
• Heat exchange devices;
• Pumps and fans;
• Roof ponds;
• Freestanding thermal containers;
• Pipes, ducts, refrigerant handling systems, and other equipment used to interconnect such systems; however, such equipment does not include conventional backup systems of any type;
• Windmills and wind turbines;
• Wind-driven generators;
• Power conditioning and storage devices that use wind energy to generate electricity or mechanical forms of energy; and
• Pipes and other equipment used to transmit hot geothermal water to a dwelling or structure from a geothermal deposit.
Florida Power and Light — Residential Energy-efficiency Program
Florida Power and Light (FPL) offers rebates to residential customers who implement certain energy-efficiency improvements in eligible homes. HVAC rebates are available for the replacement of air conditioning or heat pump systems as well as for the completion of a duct system repair. The FPL Building Envelope Program offers incentives for upgrading ceiling or roof insulation or installing a reflective roof. In order to qualify for this incentive, residential customers must first request a free energy survey from FPL. Upon completion of the survey, the energy expert determines whether the home qualifies for the insulation upgrade. If it does, the customer then redeems an incentive from any FPL participating independent contractor. The residential home energy survey is issued for free. Rebates depend on the size and efficiency rating of the system, but range $140-$1,930 for a/c systems and heat pumps; $325, reflective roofs; up to $154 for single-family duct system repairs; up to $60 per account for multifamily and manufactured home duct system repairs; and various amounts for ceiling and roof insulation repairs.
Gulf Power — Residential Energy-efficiency EarthCents Program
Gulf Power, owned by Southern Company, offers programs to make customers’ homes more energy efficient through do-it-yourself or professionally installed efficiency measures. First, the utility conducts a free analysis of the home’s energy efficiency and identifies ways to use less energy and save money. Gulf Power provides a free pre-construction analysis that includes heating and cooling system sizing and building envelope recommendations. Gulf Power also provides eligible homes with free Energy Select systems, which include a programmable thermostat that allows central heating and cooling system, electric water heater, and pool pump to automatically respond to varying prices of electricity.
The energy audit is provided free of charge. Rebates are available in the following amounts: HVAC maintenance, $215; duct repair and air sealing, $150-$300; fan motor retrofit, $150; heat pump, $100-$1,000; geothermal heat pump, $300-$500 per ton; heat pump water heaters, $700; insulation, 15 cents per square foot; variable-speed pool pumps, $300; room air conditioning, $75; and more.
Tampa Electric — Residential Energy-efficiency Rebate Program
Tampa Electric provides a variety of financial incentives to promote energy efficiency in the residential sector. The Ductwork Rebate Program gives Tampa Electric customers the opportunity to have a trained professional appraise a home’s duct system for accessibility and repair needs, seal any leaks, and help minimize future leaks for only $50.
Customers can also have insulation inspected through the Building Envelope Improvement Program. If the technician finds areas for improvement, the customer may be awarded rebates to replace or add ceiling insulation, replace windows, or install window film. Customers should schedule an appointment with a Tampa Electric energy analyst before installing ceiling insulation. The other measures do not require pre-inspection, but must meet minimum requirements to qualify for incentives.
Tampa Electric also provides a rebate for high-efficiency heat pumps (15-plus SEER) through the Heating and Cooling Rebate Program. With this program, customers can be credited $275-$400 for replacing an existing heat pump with a high-efficiency heat pump or for replacing an electric resistance, natural gas, or oil heating system with a qualified heat pump. Rebates are also offered for HVAC maintenance and ECM replacements.
Homeowners and contractors building new homes can receive incentives to incorporate energy-efficient design through the Residential New Construction Program. Finally, the Neighborhood Weatherization program, offered by Tampa Electric in conjunction with Tampa Hillsborough Action Plan, provides energy-saving kits to income-qualified customers.
Publication date: 9/8/2014