THE energy efficiency model every utility should be following

by Jul 27, 2017

If you’ve been reading this blog for a while, or if you’ve seen me speak at an energy efficiency-related conference, you’ve heard my plea to simplify the home performance process.

I’ve shared our data about the barriers that exist for most Americans to making energy efficiency improvements, and I’ve shared my own story about getting conflicting recommendations from my utility’s energy auditor vs. two contractors on the utility’s list – all at a price point that’s waaaaay higher than I imagined with no promise of a specific benefit or a return on my investment. I’ve begged anyone who would listen in the residential energy efficiency arena to do this differently.

I’ve found someone who is. And I hope the whole industry learns from them.

The company on the leading edge is Fort Collins Utilities. That’s right, a utility. And a small, municipally owned one at that.

The Department of Energy recently created a comprehensive case study on what Fort Collins did, and you can read it here. I want to hit the high points of their approach, point out why it works, share the results they shared with me and then do a little compare-and-contrast to a recent statement from a former CEO of an investor-owned utility.

The impetus for the program was two-fold:

Fort Collins worked with the Rocky Mountain Institute to set aggressive climate goals (culminating in a 100% reduction of their environmental impact vs. a 2005 baseline by 2050). They realized they wouldn’t get there if they stayed on their current pace of upgrading the energy efficiency of 1% of their city’s homes per year – which happens to also be the number we’re stuck at nationally.

They recognized that while they had a “pretty good” home energy efficiency program, it was really complicated, with many steps where customers could fall off and do nothing. They also recognized that the customer experience in most cases was similar to the one I’ve bellyached about: every contractor recommends a different approach at a different price point, and the homeowner has no idea what to do … so they do nothing.

What they’re doing differently

In a stroke of brilliance, the folks at Fort Collins figured out that they could streamline the process using standardized pricing to eliminate the time and complexity of the original program approach. They identified neighborhoods populated by folks with a higher propensity to participate in energy efficiency – and with homes of a certain age, ripe with opportunities to save energy and improve comfort, health and safety.

Once Fort Collins Utilities gets a customer interested, based on that targeted marketing approach, an independent third-party assessor (not a contractor) analyzes each home to understand both the opportunities and the customer expectations. That assessor then offers up good/better/best package options that can be customized to meet the specific customer’s goals. The assessor is able to be specific about the cost, energy savings and comfort gain with each option. From a homeowner perspective, this experience is quite different from the usual – and quite reassuring. She knows what she’s buying, and she knows what she’ll get for her investment.

The other brilliant thing about this approach

Fort Collins maximized its marketing spend by starting on the neighborhoods and homes with the most bang for the energy buck – the neighborhoods and homes that, when fixed, would help Fort Collins make major progress toward their climate reduction goals.

Over 50% of homeowners, when presented with the good/better/best options, chose the best option. This has resulted thus far in 50% more electric savings, 70% more gas savings and 60% more carbon reduction than they were seeing with the former approach – and their former approach is the way most utilities do their programs. So, quite literally, if every utility in America wanted to increase their savings and drastically reduce their carbon output, they’d simply follow the Fort Collins model. It’s well documented and ready to go … turnkey for the utility and for the utility’s customers.

Now, let’s compare and contrast this with an excellent, insightful, behind-the-scenes article published recently by former NRG CEO, David Crane.

You can read the article here, but the key quote I want to call attention to is this:

​”​Let’s face it: Absolutely no positive indicators suggest that conventional energy company CEOs should hazard the perilous journey from brown to green on their own. For the climate movement, it reinforces the essential truth of the criticality of corporate procurement: the energy industry will decarbonize only if and when big energy buyers give producers a deadline and tell them, thereafter, they no longer will buy power from any company that combusts fossil fuels.”​

If you’re not familiar, David Crane championed and pursued a goal of turning one of the nation’s largest utilities from brown to green. Wall Street didn’t like it, the share price fell, and he was ousted. I’d enhance the quote above by saying, yes, the energy industry will shift from brown to green when the largest energy consumers demand it (and this is starting to happen, as noted in my post here). It will also start to happen when fearless leaders from energy companies prove out the benefits to their organization, their customers and the world at large. Fearless leaders like those at Fort Collins Utilities.

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About the Author

Suzanne Shelton

Where Suzanne sees opportunity, you can bet results will follow. Drawing on her extensive knowledge of both the advertising world and the energy and environment arena, Suzanne provides unparalleled strategic insights to our clients and to audiences around North America. Suzanne is a guest columnist in multiple publications and websites, such as GreenBiz, and she speaks at around 20 conferences a year, including Sustainable Brands, Fortune Brainstorm E and Green Build.

4 Comments

  1. Rick Bain

    Suzzane

    Great post and a shot in the arm of what can be done in Energy Efficiency !!
    Thank you for sharing and keep up with all of your great work!!

  2. Erik Blair

    Awesome post Suzanne, thank you. This is a great CBSM success story. The detail in the case study is very helpful, and the results on the HELP financing model align with similar results from local attempts here in British Columbia, Canada.

  3. Dale Sherman

    Great article, all utilities should heed this advice. Good/better/best is how the more successful auditors/contractors market the options for their customers. They charge appropriately for a very thorough audit and hand three work scopes to the customer and tell them they can use these to get quotes from their competitors if they’d like. Sometimes they do, but often the auditor has successfully cultivated a trusting relationship with the customer during the audit by patiently explaining how their house is currently working and how it could be improved. Unfortunately, only a minority of EE contractors operate this way.

  4. Jacob Corvidae

    Thanks for the great blog (as usual), Suzanne. Rocky Mountain Institute is excited to have worked with Fort Collins to develop that model and it’s been great to see the results.

    The ongoing issue that utilities have to grapple with is creating a viable business model for delivering energy efficiency, whether through de-coupling, realizing the benefits of avoiding major capital expenditures, models like our Integrated Utility Services model (developed for Fort Collins), or others. Utilities are well-poised to drive even greater efficiency improvements, but only when they have the right business model to do so.

    Meanwhile, I completely agree that they can improve the performance of their existing programs by integrating the best practices highlighted in the Fort Collins case study.

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