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EXECUTIVE SUMMARY

The City of Philadelphia School System’s Save Energy Campaign is one of the most remarkable success stories of its kind. Begun in 1983-1984 with no money at all, the campaign has become a leading revolving fund and has saved over $77 million in the past 11 years. By figuring out a unique and highly effective means to motivate key players in the schools themselves, the program has not only provided dramatic dollar savings, but has allowed the school system to do its number one job better, namely teaching students. In fact, through the dollar savings the program has provided the funds to purchase a large number of the personal computers in the entire district.

The School District of Philadelphia is the fifth largest school district in the country, with 258 schools, 282 buildings, and an annual enrollment of over a fifth of a million students. On top of these numbers, the School District’s student population has grown by nearly 3% in the past decade, further stressing its facilities and its operating budget. Each year the School District consumes an enormous amount of energy in the forms of electricity, gas, oil, steam, and even coal, which combined account to nearly $32 million annually, taxing the School District and limiting the amount of money that can be better applied to education. These factors created the impetus for the Save Energy Campaign, one of the most exciting and successful revolving funds in the United States.

Perhaps the key lesson learned in Philadelphia is that energy can be saved in facilities when the proper incentives are put in place. While the School District has nearly 500 electric meters and over 200 gas meters, individual schools were never cognizant of their shares of energy use. In fact, a single electrical bill is sent to the School District by PECO Energy each month! What Jack Myers and others at the School District figured out was a clever way of providing an incentive for each school to save energy. By sharing the resulting energy savings between the School District overall and the individual schools that generated the savings, tremendous savings have accrued, and money has been redirected from wasted lighting and heat, to books, teachers, computers, and the like.

Remarkably, the Save Energy Campaign began with no money at all. Now after eleven years, the program has saved nearly a terawatt-hour of electricity, nearly ten billion cubic feet of natural gas, over 50 million gallons of oil, two billion pounds of steam, and over 100,000 tons of coal! These energy savings, in turn, have resulted in dollar savings that exceed $77 million, an inspiring achievement and a tribute to clever program design and the diligent efforts of the School District of Philadelphia’s administration and each of the schools involved, including their principals, staff, and students. Together these players are to be commended as they have proven that saving energy is possible without capital, without utility sponsored programs, and in dire conditions for the benefit of all.

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EXECUTIVE SUMMARY

The City of Ashland, Oregon has developed one of America’s premier resource conservation initiatives in a small community. Not only has Ashland implemented a range of energy efficiency programs, but the City’s approach with resource conservation has encompassed a broad array of activities including energy efficiency of electricity, gas, and firewood; regional air quality; recycling; composting; water saving initiatives; and an emphasis on land-use planning.

Electricity savings form the basis of the Conservation Division’s initiatives. Ashland’s programs have fortunately been supported by the Bonneville Power Administration, the region’s wholesale supplier. Since 1982, BPA has provided over $5 million in funding for energy efficiency programs in Ashland. As a result, the City has created nearly 10,000 MWh in total annual savings and 66,000 MWh in cumulative electricity savings. Over half of the savings have been generated in the residential sector, lowering customers’ bills and improving occupants’ comfort.

Ashland has also addressed the land-use implications of development and the interconnections between land, water, air, and energy resources. The City realizes that developments not only impact their immediate surroundings, but the community as a whole. Thus the City developed a comprehensive set of land-use ordinances to minimize negative aspects of development. Some of these are highly visionary: In 1980 Ashland pioneered solar access rights. The City rewards resource-efficiency in new developments by issuing "conservation bonuses" that allow developers to build more units than normal, easing travel, sprawl, and thus demands on gasoline and air quality. Site design requirements, such as those that address landscaping, encourage homeowners to plant shade trees, creating a win-win solution as trees not only are attractive amenities but can save on air conditioning and lawn watering.

Water conservation is another area where Ashland has excelled. Rather than building a new reservoir in an area marked by old-growth forest and fragile granule soil or building a 13-mile water supply pipeline to the City, after analyzing its options the City implemented a four-point water efficiency program addressing system leak detection and repair, realignment of its water rate structure, a showerhead replacement program, and toilet retrofits and replacement. These initiatives have resulted in daily savings of over a quarter million gallons of water, and have also saved energy used for heating hot water, reduced demands on the City’s waste water facility, and have significantly extended the date that the City will have to invest in additional supply capacity.

In essence, Ashland has employed a holistic approach to resource conservation, acknowledging that such an approach is critical for its quest to resource sustainability as well as enhancing the current quality of life. Thanks to a conservation ethic that has been developed and nurtured in Ashland, this small Oregon community serves as a model of comprehensive resource efficiency.

 

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EXECUTIVE SUMMARY

Boston Edison’s Large C/I Retrofit program for customers that have an average monthly demand greater than 150 kW is an example of a highly sophisticated, but "conventional" incentive-based DSM program. While its generous direct incentives may soon be a thing of the past, many of its program design elements -- such as market segmentation, financing options, and verification guidelines -- will likely be highly applicable to future programs that will serve both customers’ needs and shareholder profitability in the future.

The Large C/I program exemplifies a refined approach to market segmentation and customer financing options. For instance, a customer can elect one of three program tracks depending on the complexity of his or her retrofit. The program is further subdivided based on whether or not the customer is an institutional or non-institutional customer, since institutional customers tend to have even more restricted access to capital than their private-sector counterparts. Furthermore, while the utility has been increasing the required customer contribution over time -- and BECo plans to require a 100% customer contribution by the year 1998 -- customers have had two basic fundamental options: They can either utilize the program’s 100% financing option and receive smaller incentive rebates, or they can finance the retrofits independently and collect a commensurately larger incentive. In fact, staff consider three important parameters for incentive payments: who pays for audit costs, the timing of payments, and incentive levels. Institutional customers, for example, can finance audit costs. Non-institutional customers, on the other hand, receive incentive payments based on quarterly verification of program savings.

The Large C/I program also has had a heavy emphasis on metered savings using BECo’s Verification Guidelines, a protocol for establishing confidence in program savings. BECo, like many utilities, is moving away from engineering estimates of savings and now demands greater accuracy and consistency from savings. (A BECo evaluation of school retrofit savings suggested that the utility expected nearly twice the level of savings than it actually achieved.) Thus BECo has placed a great deal of attention on determining "net savings" using rigorous in-house and external evaluations and "true-ups" in subsequent years. Free ridership, for example, has been backed out of program impacts. Through the true-ups BECo has squarely addressed persistence of installed measures. Furthermore, the utility has maintained a keen interest in programs’ load shape impacts.

Despite the program’s basic transition, it has nevertheless racked up impressive impacts. During 1992 and 1993 alone, the program resulted in annual energy savings of 32 GWh and nearly 8 MW of capacity from a total, two-year expenditure of just $28 million. Lighting accounted for 79% of the savings. The commercial sector contributed nearly 80% of the total savings; within the commercial sector, colleges provided the majority of the savings followed by offices.

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EXECUTIVE SUMMARY

The Philippines Residential Air Conditioner ("AirCon") Standards and Labeling program represents an important avenue for energy efficiency in developing countries while providing insights well worthy of examination by utilities and energy ministries throughout the world. In the developing world, as national economies gain strength and residents seek higher standards of living, addressing the energy use of air conditioning will be essential to keep energy consumption in check. For more developed countries, given the transition to more competitive power industries, standards and labeling may become more important since many utilities are reducing their efficiency program expenditures. By creating standards, efficiency can be increased through advanced technologies; through labeling, incentives can be created that will cause manufacturers to continue to accelerate their efforts, both factors creating means to transform markets for efficient appliances.

The Philippines, not unlike many other developing countries located in hot and humid climates, has been experiencing a dramatic growth in the number and use of air conditioners. While the number of households with "aircon" units is now low, as the economy grows, more and more consumers will be able to afford air conditioning, underscoring the importance of aircon efficiency. This is also exacerbated by the dearth of insulation and advanced window glazings, thus greater aircon capacity is required to achieve desired comfort levels. Furthermore, the program serves as a platform for subsequent initiatives for other end-uses such as refrigerators, motors, and fans to minimize power plant construction and imported fuels, two situations which strain the country’s financial resources and economic development.

For other countries in Southeast Asia, the Philippines AirCon model is encouraging and appropriate. Faced with rates of electric load growth of 5-10% annually and similar demands for greater comfort, standards and labeling initiatives can serve as relatively low-cost, government-sponsored programs. By working in cooperation with manufacturers both domestically and abroad, governments in Southeast Asia can seek to accomplish both increased living standards and the most efficient use of energy, two key factors in their overall development.

For countries around the world, standards and labeling may well become increasingly important. Utilities that need to keep their rates as low as possible to maintain market share are reluctant to provide efficiency incentives. Thus government-initiated programs may become that much more important, creating means of leveraging change and providing appropriate signals to manufacturers and consumers that foster efficiency in the short term and sustain it over time, a model for efficiency that may well be broadly applicable.

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