Gauging Success of the Nation’s First Efficiency Utility: Efficiency Vermont’s First Two Years

Blair Hamilton, Efficiency Vermont
John Plunkett, Optimal Energy, Inc.
Michael Wickenden, Efficiency Utility Contract Administrator

Keywords

Abstract

In March of 2000, Efficiency Vermont opened its doors as the nation’s first statewide energy efficiency utility. Less than two years later, its results have exceeded the state’s expectations. By the end of 2001, one of every seven electric customers in Vermont had installed energy saving measures with help from Efficiency Vermont. Annualized savings totaled 60 GWh and lifetime savings totaled 860 GWh, accomplished with an Efficiency Vermont investment of $13.9 million. That’s 2.5 cents per kWh over a period when Vermont’s electric utilities paid approximately 4 cents per kWh for comparable electric supply.

The efficiency utility is funded by a small “energy efficiency charge” on all ratepayer bills (ramping up to an average of 2.6 mills per kWh in 2002). Services are delivered by a non-utility entity operating under a three-year, performance-based contract with the Public Service Board. This performance contract has a fixed budget and 35 specified measures of performance. How well the contractor performs in meeting these measures determines how much it earns of the performance award set aside as an incentive for superior performance, payable at the end of the contract period. The definitions of performance indicators, their targets and their individual award values were all set through negotiations between the contractor and the Public Service Board.

This paper discusses how the Vermont energy efficiency utility model has been designed, and what has been achieved and learned thus far, both with respect to the delivery model itself and the use of this type of performance contract to successfully administer and deliver public-benefits energy efficiency.