Transmittal Letter for the Program Assessments Study: Statewide Institutional IOU Energy Efficiency Partnership Programs

Transcription

1 Transmittal Letter for the Program Assessments Study: Statewide Institutional IOU Energy Efficiency Partnership Programs February, 2013

2 STATE OF CALIFORNIA PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA Edmund G. Brown Jr., Governor February 8, 2013 Transmittal Letter for Program Assessments Study: Statewide Institutional IOU Energy Efficiency Partnership Programs From Jean Lamming, Demand Side Evaluation, CPUC Energy Division Energy Division and the California Investor Owned Utilities (IOUs) jointly commissioned this study in late 2011 as part of a best practices assessment of IOU non-residential programs in the core, third-party and government sectors. Seven separate reports were completed as part of the overall assessment effort; some funded through contracts held with the IOUs and some funded by CPUC contracts. Due to the joint commissioning and shared management structure underlying these reports, there remain some issues not resolved to the full satisfaction of both commissioning parties. In particular, Energy Division would like to take this opportunity to point out that this is an independent report that does not necessarily reflect Energy Division outlook or opinion. In addition: This study relies on available data, self-reported statements, and the expertise and opinion of the contractor to analyze and synthesize information from these sources. This study, from Energy Division s perspective, would have been more informed and actionable had the contractor provided concrete examples to support and illustrate the exact nature of problems raised in interviews by conducting additional validation research that the contractor recognizes was not done. As it is, Energy Division hopes the voices from the field nature of this report can at least be a starting point for further research and conversation to drill down into issues raised, better understand the complexities faced by contractors, IOUs, and the partner agencies, and identify ways to reconcile them with regulatory and ratepayer needs. 2

3 Program Assessments Study: Statewide Institutional IOU Energy Efficiency Partnership Programs WO012 Prepared for: The California Public Utilities Commission, California Investor-Owned Utilities, and Itron Navigant Consulting, Inc North California Blvd. Suite 700 Walnut Creek, CA October 9, 2012 This document is confidential is confidential and proprietary and in proprietary its entirety. It may in its be copied entirety. and distributed It may solely be copied for the purpose and distributed of evaluation. solely 2012 Navigant Consulting, Inc. for the purpose of evaluation Navigant Consulting, Inc.

4 Table of Contents Overall Perceptions about the Statewide Partnership Programs... iv Coordinated Planning and Management, and Targeted Funding Improves Performance... v Effective Programs Display Three Management Attributes.... vii Observations about the Cyclical Nature of Program Funding... ix Considerations for the State of California Partnership... xi 1. Program Assessments Background Evaluation Project Program Description Research Topics Overall Perceptions Long-Term Energy Planning Management Structure Comparison Staff Resources and Organizational Capacity Financing Among Partnerships Interview Approach IOU Interviews Newcomb Anderson McCormick Interviews Partner Interviews Related Stakeholder Interviews California Department of Corrections and Rehabilitation (CDCR) Partnership Characterization Overall Perceptions Long-Term Energy Planning Management Structure Comparison Staff Resources and Organizational Capacity Financing Among IOUs/Partnerships University of California/California State University Partnership Characterization University of California System California State University System Overall Perceptions Long-Term Energy Planning Management Structure Comparison Staff Resources and Organizational Capacity Financing Among IOUs/Partnerships Case Study UC Davis California Community Colleges Confidential and Proprietary Page i

5 5.1 Partnership Characterization Overall Perceptions Long-Term Energy Planning Management Structure Comparison Staff Resources and Organizational Capacity Financing Among IOUs/Partnerships State of California Partnership Characterization Overall Perceptions Long-Term Energy Planning Management Structure Comparison Staff Resources and Organizational Capacity Financing Among IOUs/Partnerships Observations, Conclusions, and Recommendations Observations Observations about the Cyclical Nature of Program Funding Overarching Conclusions Coordinated Planning, Management, and Funding Improves Performance Specific Research Topic Conclusions Overall Perceptions of Program Performance and Barriers Long-Term Energy Planning Management Structure Comparison Staff Resources and Organizational Capacity Financing Among IOUs/Partnerships Recommendations Ideas for Consideration Overarching Recommendations Considerations for the State of California Partnership Confidential and Proprietary Page ii

6 List of Figures and Tables Figures Figure 1. Program Reported and Projected UC and CSU System Energy Savings for 2006 Through 2012vi Figure 2. Incremental Annual Market Potential Impacts by Measure Type Category Figure 3. UC Davis Energy Utilities Consumption Dashboard (Illustrative) Figure 4. Comparison of UC and CSU System Energy Savings for 2006 Through Figure 5. UC Program Campus Goal Tracking System Figure 6. State Facility Data from HMG Benchmarking Effort Figure 7. Example of Government Partnership Program Process Figure 8. Example of a Portfolio Assessment and Implementation Process Tables Table 1. Statewide Institutional Partnership Performance Metrics as of July iv Table 2. UC/CSU Partnership Savings Metrics for 2006 Through vii Table 3. CDCR Partnership: IOU Interview Grouping Table 4. UC/CSU Partnership: IOU Interview Grouping Table 5. CCC Partnership: IOU Interview Grouping Table 6. State of California Partnership: IOU Interview Grouping Table 7. Partnership: NAM Interview Grouping Table 8. Partnership: Partner Interview Grouping Table 9. Related Stakeholders Interviewed by Navigant Table 10. OBF Participation by Number of Loans and Dollars Loaned Table 11: IOU/State of CA Partnership Timeline Table 12. DGS Benchmarking of State Departments Table 13. Total Commitments as a Percent of all Savings in July Table 14. UC/CSU Partnership Savings Metrics for 2006 Through Table 15. Statewide Institutional Partnership Energy Savings Performance as of July Table 16. Statewide Institutional Partnership Budget Performance as of July Table 17. Statewide Institutional Partnership Cost per kwh Saved and Committed as of July Table 18. Partnership Funding Summary Table 19. Agency Concurrent Participation in ARRA Loan Fund and Statewide IOU Program Table 20. Budget Allocation Comparison ( ) Table 21. Preliminary Budget Allocation for Institutional Partnerships Confidential and Proprietary Page iii

7 Executive Summary This report provides the results of Navigant Consulting s (Navigant) program assessment of the investor-owned utilities (IOUs ) four Statewide Institutional IOU Energy Efficiency Partnership programs in operation between 2010 and 2012, including; California Department of Corrections and Rehabilitation (CDCR)/Investor-Owned Utility Institutional Energy Efficiency Partnership (CDCR partnership) University of California (UC)/California State University (CSU)/Investor-Owned Utility Institutional Energy Efficiency Partnership (UC/CSU partnership) California Community Colleges (CCCs)/Investor-Owned Utility Institutional Energy Efficiency Partnership (CCC partnership) State of California/Investor-Owned Utility Institutional Energy Efficiency Partnership (State of CA partnership) The following discussions present the team s overall perceptions of the programs, and specific findings and recommendations that are discussed in greater detail throughout the document. Overall Perceptions about the Statewide Partnership Programs With approximately five months remaining in the three year program cycle a significant amount of work in progress remains, and some projects will likely not be completed by the end of the program cycle in December As shown in Table 1 installed savings are at 58% of compliance filing, however when installed and committed savings are taken into account, each program is on track to deliver savings that are 114% of the adopted program goals. The figures in Table 1 indicate a large component of savings are committed, not yet installed. The cost per installed and committed kilowatthour (kwh) saved is estimated to be around $0.38, lower than the $0.43 originally planned. Table 1. Statewide Institutional Partnership Performance Metrics as of July 2012 Savings Performance Budget Performance Cost Performance Incentives Partnership Installed Savings % of Compliance Filing Goal Installed and Committed Savings % of Compliance Filing Goal Expenditures as a % of Program Revised Budget Commitments as a % of Program Revised Budget Planned Savings ($/kwh) Installed and Committed Savings ($/kwh) State of CA 57% 98% 55% 38% $0.52 $0.53 CCC 48% 85% 57% 45% $0.49 $0.57 UC/CSU 63% 129% 79% 46% $0.40 $0.31 CDCR 59% 125% 60% 73% $0.38 $0.30 Total 58% 114% 70% 48% $0.43 $0.38 The evaluation team has the following crosscutting and program specific perception of the partnerships: Confidential and Proprietary Page iv

8 The University of California (UC)/ California State University (CSU), California Community Colleges (CCC), and California Department of Corrections and Rehabilitation (CDCR) partnerships are continuing to develop longer term sustainability plans and strategies, and are refining a continuous improvement approach to energy efficiency (EE) while coordinating with the investorowned utilities (IOU) to define the role of the partnership within those long term plans. The State of California (SOC) Partnership will meet its cycle goals; however, as the program is currently structured and operated it is uncertain that it can effectively support the goals of California s Strategic Energy Plan or other applicable energy efficiency initiatives, such as the Governor s Green Building Executive Order. The program design may not be appropriate for the management challenges inherent in delivering deep and sustainable energy efficiency savings across more than 30 state government agencies. Further, the evaluation team found no clear connection between the goals of this partnership and the energy savings directives set forth in the Governor s Green Building Executive Order. Coordinated Planning and Management, and Targeted Funding Improves Performance Our research identified four characteristics of high-performing institutional partnerships, including: 1. A clear and accurate understanding of the potential for energy efficiency that is based on engineering analysis, covers the full scope of the institutions operations, and provides an assessment at the operating-unit level, such as campus or agency; 2. The ability to develop and use guidance documents, such as strategic energy plans, to organize and direct sustained efforts at achieving energy efficiency over a timeframe that typically exceeds a single portfolio funding cycle; 3. An effective management structure that involves broad organizational participation, tracks performance to plan, and makes effective use of both internal resources and support offered by the IOU partners, and 4. The ability to develop and employ funding that is targeted at energy efficiency improvements over a sustained period of time, while leveraging IOU partner incentives. The approach taken by the UC system during the UC/CSU IOU partnership serves as an example of how applying these four characteristics can enhance the performance of energy efficiency programs supporting institutions that operate large portfolios of buildings. Steps taken by the UC system over the past 10 years to achieve a high performing status include: 1. Beginning in 2002, the UC system and student body collectively developed and adopted a Green Building Policy and Clean Energy Standard. 2. Beginning in 2006, the UC system used the Green Building Policy and Clean Energy Standard to develop a Strategic Energy Plan that included an assessment of energy efficiency potential at each UC campus and provided a roadmap for achieving savings. This plan was presented to the IOUs in the second quarter of 2008 and helped define the collaboration with the IOUs during subsequent program cycles. Confidential and Proprietary Page v

9 Energy Saved (kwh) 3. In 2008, the UC system secured $178 million in 15-year revenue bond funding authorized by the University of California Office of the President to begin system-wide implementation of energy efficiency projects 1 identified in the Energy Plan. Although both the CSU and UC systems have been effective at implementing energy efficiency projects since the IOU partnership began in 2006, Figure 1 shows that savings achieved by the UC system have outpaced CSU beginning in Although there are differences in energy efficiency potential between the two systems, the evaluation team concludes that the sustained and strategic approach employed by the UC system is responsible for a large part of the disproportionate level of production at UC. Supporting this conclusion is the observation that during While the UC system has more square footage and a higher energy density, both the number of projects and the savings per square foot of space at the UC systems were disproportionately higher at UC when compared to CSU, as shown in Table 2. Figure 1. Program Reported and Projected UC and CSU System Energy Savings for 2006 Through ,000, ,000, ,000, ,000,000 Bond funding for EE projects authorized by UC regents 50,000,000 UC Strategic Energy Plan formally presented to IOUs - Date UC CSU 1 Confidential and Proprietary Page vi

10 Table 2. UC/CSU Partnership Savings Metrics for 2006 Through Portfolio kwh Saved / Sq. Ft Portfolio 2 Total Projects Verified or Committed kwh Saved / Sq. Ft. Total Projects Verified or Committed System kbtu / Projects Total kwh System Sq. Ft. Sq. Ft. Verified Saved UC 126,000, ,484, CSU 87,000, ,602, Total 213,000,000 NA ,086, kwh Saved / Sq. Ft. Effective Programs Display Three Management Attributes. The evaluation team discussed management structures with IOU and institutional partner staff and concluded that the most effective management structures meet the needs of both parties and can be defined from both the IOU and institutional partners perspectives, as follows; 1. From the institutional perspective, an effective partnership has the ability to establish energy management goals for all participating campuses or agencies and effectively leverage the IOU program design to achieve forecasted goals. 2. From the IOU perspective, an effective partnership allows the IOUs the ability to contribute their core program design and technical skills to help partners achieve their energy management goals. Partnerships that appeared to the evaluator to be most effective from both perspectives typically displayed three attributes; 1. The ability to develop a strategic plan approach to institution-wide energy efficiency potential. Attributes of successful strategic energy efficiency planning and implementation efforts that include: a) Institutional-level energy efficiency plans that are developed by combining individual agency or campus plans vs. top-down aspirational goals; b) Activities that cover all campuses and agencies in a consistent format, not a subset of agencies or a variety of inconsistent planning formats; 2 Including 2009 bridge achievements. 3 to author from Dirk VanUlden, Tuesday, August 21, :46 AM 4 to author from Len Pettis, Monday, August 20, :10 PM 5 CSU Report on Sustainability and Energy Efficiency Goals, August 22, 2005 Confidential and Proprietary Page vii

11 c) Planning activities that are integrated with other institutional planning efforts, such as a system-wide capital plan or long-term campus master plan; d) Planning efforts are developed in collaboration with deferred maintenance initiatives and include estimates of additional savings such as reduced maintenance labor where present; e) Implementation activities that include specific management metrics that can be tracked at the constituent campus/agency level and system-wide level over time, such as kwh/sq. ft. of space; f) Planning efforts that provide IOU partnership energy efficiency goals that are based on estimates of technical and economic EE savings potential that can be used to establish appropriate program funding levels; g) Planning efforts that provide the partnership with the support and justification for energy efficiency dedicated funding initiatives, such as bond issues that specifically addresses projects identified through system wide investment grade audits; h) A management platform that survives staff/administration turnover, and i) A process that embeds energy efficiency planning in other institutional initiatives, such as cross-planning with deferred maintenance initiatives. 2. An effective management structure capable of sustained focus on strategic energy goals. Attributes of successful management structures that includes: a) An Executive Committee that focuses on institution-wide strategic planning initiatives and oversees and actively adjusts the program planning efforts; b) A Management Committee focused on installing projects and tracking performance to goal. This management committee typically will have a relationship with operations and a communication structure whereby functional knowledge at the campus or agency level can be aggregated and disseminated across the all participating constituents to help develop informed reporting, forward planning, and budgeting; c) The commitment to meet regularly to review program tracking metrics and resolve production issues quickly; d) The ability to engage broad cooperation for constituents when authority is limited e) The ability to engage institutional stakeholders, such as students or agency employees, in a collaborative process to identify and achieve broad sustainability and efficiency initiatives 3. An effective project management and delivery capability that shows continuous improvement. Attributes of effective delivery capability that includes: a) The ability to continuously improve and deliver increasingly complex projects over time so that the institution is not reliant on more evident projects, such as lighting retrofits, that will saturate and unnecessarily limit savings production; Confidential and Proprietary Page viii

12 b) The capability to effectively work within IOU and California Public Utilities Commission restrictions to ensure that program constraints, such as filing and funding deadlines, do not limit production; c) The flexibility to access multiple funding sources such that the most appropriate financing option is available and selected for each project; d) Access to a variety of qualified contractors or energy service companies where a competitive environment is maintained through multiple and redundant service providers that are identified and prequalified in advance; e) The ability to provide continual feedback to management on performance tracking metrics on project production, and sources of new potential identified during the implementation process. Observations about the Cyclical Nature of Program Funding Consistent with most other resource programs operating during recent portfolio cycles, the institutional partnerships operate within a framework that limits the flexibility of approved projects to span multiple energy efficiency program funding cycles. This framework allows for up to a 20% funding commitment carryover cycle-to-cycle. It is designed to provide protection to all stakeholders from risks of long term fund commitments. Real and inherent risks associated with the long term funding commitments include insufficient funding, reduced cost effectiveness, and an imbalance of decision making power over time. Moreover, there is a loss of agility in policy, and the options available through policy to adapt to changing economic, political, technological and legislative environments. Policy must ensure the portfolio retains a level of agility consistent with parties agreed-upon planning horizon; this protects the rights of all stakeholders. At the same time, there are real associated costs associated with this agility which present in the form of lost EE opportunities. Institutions in particular often rely on their own carefully designed protocol and framework to govern investment decision making processes; a framework designed first and foremost to protect their own constituents and secondarily, if at all, to conform to EE policy planning horizons. Institutions may also be more likely to have large scale projects that take longer to roll out. Limits to the carry-over allowance translates to risk that some multi-cycle projects will have to forfeit incentives. During the interviews conducted for this study, partners consistently mentioned that planning and implementing projects consistent with EE program cycles is challenging. Project installation schedules and program operating cycles often do not align and many projects remain in process at the end of a funding cycle, resulting in uncertainty about unpaid incentives. This observation is not unique to institutional partnerships. The misalignment between program funding cycles and project timelines might become more problematic for institutions over time for several reasons, including: 1. In general, partners are getting better at pursuing more complex projects with design, build, and verification requirements that are more rigorous than the types of low-hanging fruit projects, such as lighting, packaged HVAC, and building shell measures. As complexity and rigor increase, there is a commensurate risk that these projects will not be completed within a single portfolio cycle. Confidential and Proprietary Page ix

13 2. The duration of portfolio cycles is a function of many factors and will vary over time. Consider that the most recent four portfolio cycles have had three different durations, including one-, two-, and three-year terms. 6 Compounding this concern is that the calendar by which funding is actually available for each cycle also varies. 3. As conservation and efficiency become increasingly important to state agencies and institutions, issues associated with trying to align and integrate institutional planning cycles with uncertain demand-side management (DSM) funding cycles could become a barrier to long-term sustainability efforts. Examples of planning activities that would benefit from alignment with EE incentive funding include system-wide and campus-level master plans and unique initiatives, such as the Governor s Green Building initiative requiring specific EE actions by It appears that the number of EE financing opportunities available to partners will continue to grow and many financing vehicles are contingent upon EE incentives. Uncertainty about incentives can have adverse effects on financing availability and terms. The Navigant team did not undertake research to establish whether or not projects had been cancelled, delayed, or suffered financially from this issue. However, the topic was mentioned during multiple partner interviews and Navigant concluded that the problems inherent in aligning institutional planning cycles with DSM portfolio cycles might be more nuanced than simply whether or not projects are cancelled because of timing issues. With that perspective in mind Navigant provides the following observations and questions that may help inform future research; 1. The operating objectives and planning horizon for Government agencies is fundamentally different from commercial operations, yet they are subject to many of the same program planning rules and timeframes. For example; a. Government agencies have longer lifespans than most commercial enterprises. Most of the California institutions represented by the partnership where created between 1920 and 1970, with an average age of well over 40 years. Some agencies that constitute a large percentage of state agency energy use have been in continuous operation for over 140 years, such as the California State University and University of California, founded in 1857 and 1868 respectively. By contrast 40 percent of all newly created companies last less than 10 years. Indications are that the average life expectancy of all firms, regardless of size, is about 12.5 years. b. Government agencies have different priorities than do commercial enterprises. Agencies have a political mandate to provide a service, versus a commercial enterprise that operates, by and large, on economic opportunities. As such, capital projects, including energy efficiency implementation, are prioritized and budgeted differently. Given these differences, is the DSM planning horizon used for the commercial sector the optimal planning environment for the government sector? 6 The portfolio (a three-year duration) was followed by a one-year 2009 cycle duration (and was not established until late 2008 as simply a continuation of the previous cycle). The portfolio (initially the portfolio) had a three-year duration, whereas the portfolio currently being planned has a two-year duration. Confidential and Proprietary Page x

14 2. The issue may not be that projects are cancelled or delayed because of the short term nature of the DSM portfolio cycle, but rather the question might be is this the environment where the planning and implementation of deep and comprehensive energy savings is optimal for government agencies? 3. How can institutions and EE policy work best together to promote energy efficiency while mitigating risk and preserving the rights of each bodies stakeholders? 4. Can a DSM program cycle that is unique for government agencies with a high certainty of ongoing operation be designed that provides a more stable planning platform while affording regulators the agility to effectively adapt the portfolio to the evolving needs of stakeholders and limits of program funding. 5. The California energy efficiency policy manual 7 defines the conditions that allow funds to be committed for projects with lead times beyond three years, and also the process whereby advice letters can be used to secure funds for activities that extend beyond a portfolio end date. The research for this report did not identify how well institutional partners understand the policy manual or their ability to work with the IOUs to use the policy manual to resolve end of cycle issues. It is recommended that this research be undertaken in future process evaluations of institutional partnerships. Considerations for the State of California Partnership The State of California (SOC) program has a mission and constituency that is different from the other institutional partners reviewed in this assessment. For example; The SOC program supports more than 30 separate agencies, adding considerable administrative and coordination overhead to the program. The UC/CSU, CDCR, and CCC institutions are single agency programs with facility portfolios where energy efficiency can be clearly defined and where management structures provide clear lines of authority. The SOC partnership has no line of authority to drive energy efficiency within the agencies it serves, and there is no defined portfolio of facilities or clear understanding of the potential for energy efficiency across the constituent agencies. The UC/CSU, CDCR, and CCC systems have developed or are developing long term policies and plans supporting sustainability and energy efficiency implementation strategies. The evaluation team concluded that program planning and implementation efforts at the SOC appear to be nascent. Specific recommendations that might help refine the structure and operations of the SOC partnership include: Clearly define the scope and goals of the State partnership Define the potential for energy efficiency at the agency level 7 Energy Efficiency Policy Manual, version 4.0. (August 2008), Applicable to post-2005 Energy Efficiency Programs. California Public Utilities Commission Confidential and Proprietary Page xi

15 Implement an effective program management structure that reflects the previous discussion on effective program management attributes Consider options for leased buildings Assess potential collaboration with the CCC DEEP program that would allow lower cost student resources to perform audit and data recording tasks necessary to catalog the potential for energy efficiency in state buildings. Reassess IOU program funding levels and allocation of budget within the program to fund the development of the an energy information system that would inform potential estimates and project prioritization. Consider including the following principles in a future program designs; Provide an incentive structure that promotes progress by offering an incentives structure that rewards performance. An example of this could be an incentive structure where incentive levels increase as tiered goals are achieved. Provide the IOU and agency partners with a program structure and operating process that helps establish energy efficiency goals and implementation plans, including a feedback loop such that barriers can be addressed and goals can be adjusted over time such that the goals of EO B can be achieved at the agency level. Provide a facility portfolio assessment and implementation process that defines a methodology to audit facilities for multiple EE/RE opportunities, aggregate these opportunities and schedule, implement, and track portfolio activity at the agency level. Confidential and Proprietary Page xii

16 1. Program Assessments Background 1.1 Evaluation Project The Navigant Consulting, Inc. (Navigant) evaluation team researched the investor-owned utilities (IOUs ) four partnerships in the Statewide Institutional IOU Energy Efficiency (EE) Partnership (Statewide Institutional Partnership [SIP]) program. This research is part of the Nonresidential Program Assessments project, a joint effort of the California Public Utilities Commission (CPUC) and the IOUs to assess the performance of a large portion of the state s nonresidential portfolio of programs. The reviews analyze lessons learned and barriers for each of the institutions currently being implemented. 1.2 Program Description The following are the Statewide Institutional Partnerships between the IOUs and state institutions: 1. California Department of Corrections and Rehabilitation (CDCR)/Investor-Owned Utility Institutional Energy Efficiency Partnership (CDCR partnership) 2. University of California (UC)/California State University (CSU)/Investor-Owned Utility Institutional Energy Efficiency Partnership (UC/CSU partnership) 3. California Community Colleges (CCCs)/Investor-Owned Utility Institutional Energy Efficiency Partnership (CCC partnership) 4. State of California/Investor-Owned Utility Institutional Energy Efficiency Partnership (State of CA partnership) All partnerships have three similar core program elements: 1. Government/Institutional Facilities, which include incentives for retrofits of lighting, heating, ventilation, and air conditioning (HVAC) equipment, and motors, as well as Monitoring Based Commissioning (MBCx) and/or retro-commissioning (RCx) of existing buildings; assistance and incentives for new building design and construction; and On-Bill Financing and other financing options for energy-efficient projects 2. Strategic Plan Support, which includes helping institutions comply with existing code; creating and achieving reach codes; and integrating EE goals into guiding policies of these institutions, as prescribed by the goals of the California Energy Efficiency Strategic Plan (CEESP) 3. Core Program Coordination, which includes creating one resource as a portal to all other IOU programs; outreach and training; finding ways to integrate demand response into energy efficiency projects; and helping improve emerging technology adoption (especially through the resources in higher education institutions). 1.3 Research Topics Navigant reported on the following five topics presented in the research plan submitted on May 25, Confidential and Proprietary Page 1-1

17 1. Overall Perceptions - Highlight the key barriers or obstacles to each institution s successful program participation. 2. Long-Term Energy Planning - Investigate how prepared the Statewide Institutional Partners are to adapt and stay current with their long-term energy planning. 3. Management Structure Comparison - Compare current management structures to ensure they are meeting the needs of the IOUs and program managers. 4. Staff Resources and Organizational Capacity - Evaluate differences in institutional structures and policies that enable some institutions to achieve energy savings and implement innovative policies. 5. Financing Among IOUs/Partnerships - Compare the differences in financing mechanisms available to the partnerships to determine barriers and best practices. These five research topics create the structure of our findings for each institutional partnership. Details regarding the topics and actions completed during the research period that are associated with the research topics are presented in the following sections Overall Perceptions Navigant interviewed the Statewide Institutional Partners to determine what lessons from the most successful Statewide Institutional efforts can be applied so that others can try to emulate these and enable California to achieve additional energy savings. Navigant highlighted the key barriers or obstacles to each institution s successful program participation Long-Term Energy Planning According to Navigant s 2011 draft analysis of California s IOU Energy Efficiency Potential, 8 there will be significant changes in savings potential over the next few years due to various factors. As shown in Figure 2, the effect is a significant reduction in market potential between 2010 and 2013, followed by a more gradual decrease through Fluctuations in savings will occur due to the influences of codes and standards that come into effect periodically, as well as new technologies that become viable at different times in the next decade. 8 Navigant. Analysis to Update Energy Efficiency Potential, Goals and Targets for 2013 and Beyond. Prepared for the California Public Utilities Commission. The draft report was issued on November 4, The final report will be issued in March Confidential and Proprietary Page 1-2

18 GWh Figure 2. Incremental Annual Market Potential Impacts by Measure Type Category 4,000 3,500 3,000 2,500 2,000 1,500 1, Year C&S - IOU Attributable Savings IOU Measures (Usage-Based Behavior) IOU Measures (ET) IOU Measures (HIM, MOI, Secondary, LI) The largest reduction in potential will be the result of changes in lamp efficiency standards. The lighting standard 9 will affect the commercial and residential sectors alike, with the manufacturers phasing out high-wattage incandescent bulbs and linear flourescents. The commercial sector will have additional motors standards, 10 changing the types of new motors sold in the market. California s local government and SIPs, which focus their resource activities primarily on municipal and institutional building retrofits and retro-commissioning, can expect to be impacted by the codes and standards that have been and will be adopted. Partnerships cannot only take advantage of the standards coming into effect by enforcing them; they can also find greater opportunity for deeper building systems changes from the technologies emerging in the market. 9 California Energy Commission Appliance Efficiency Regulations. December Accessed March 1, The California lighting standard came into effect January 1, 2011, one year prior to the national standard. 10 California Energy Commission Appliance Efficiency Regulations. December Accessed March 1, Confidential and Proprietary Page 1-3

19 Some of the emerging technologies cited in this study that will enter the market in the next decade or so include light-emitting diode (LED) street lighting, indoor LED lighting (that replaces T8 and T5 linear fluorescents), automatic steam-trap monitors for large spaces that use boilers for space and process heating, and fault detection and diagnostics monitors for HVAC systems. Additionally, it is expected that programs that save energy by influencing consumer behavior such as how they operate equipment will begin to contribute to portfolio savings starting in Behavioral-type initiatives are very dependent on outreach and education activities, which might become increasingly important components of the SIP program Management Structure Comparison Preliminary interviews with IOU staff indicated that the management structures for each of the partnerships generally mirrored the structures outlined in the program implementation plans, with the following two distinct types of management teams: 1. Executive Team: The executive team consists of representatives from the partners, IOUs, and the partnerships administrator (i.e., Newcomb Anderson McCormick [NAM]). NAM tracks project progress and provides general administrative support for programs.. The Executive Team sets overall program policy and ensures high-level program progress. 2. Management Team: The management team is made up of members of the IOU-level representatives (including program managers from the IOU and partner facilities that fall under that IOU s service territory) and is responsible for performing detailed program work and making recommendations for action to the executive team. Included in the management team are partner representatives, which vary by number, based on the needs of each partnership. The team provides a more coordinated and integrated approach, with the goals of increasing the penetration of energy efficiency measures and avoiding lost opportunities for energy savings. This management structure holds true for the majority of IOUs and partnerships. There are, however, instances of varying management structures among partnerships among the individual IOUs. For instance, Pacific Gas and Electric Company (PG&E) reported that its current SOC Partnership program has no one agency that represents the partner, as well as no contract under which this program can be administered. Currently, the Department of General Services (DGS) handles most projects. Agencies such as Caltrans, Administrative Offices of the Court, and the National Guard have some contracting authority (outside of the DGS) and may contract with an energy service company (ESCO) in order to implement energy efficiency projects. Navigant investigated the impacts of different administrative models to identify best practices that will guide program managers in future program cycles Staff Resources and Organizational Capacity From preliminary interviews with IOU staff members, Navigant found that there is an inconsistency in staff resources within partnerships. For example, each campus in the UC system has a dedicated energy manager, whose sole responsibility is to manage and implement energy efficiency activities. This is not necessarily the case with the CSU system, whose campuses might have facility managers who do not have the time to focus on energy-saving projects, as well as CDCR, whose prisons reportedly depend on ESCOs and utilities to provide project proposals. Confidential and Proprietary Page 1-4

20 Navigant evaluated the minimum organizational resources required for institutions to progress beyond projects involving low-hanging fruit, to more innovative projects and partnerships Financing Among Partnerships As stated in the program implementation plans, 11 financing/funding was a primary barrier to project implementation. Preliminary interviews with IOU staff have also found that funding constraints and mechanisms continue to be a barrier to efficient project implementation. Navigant investigated the different financing mechanisms, including the American Recovery and Reinvestment Act of 2009 (ARRA) funding which will no longer be available in the upcoming program cycles. Partners had used ARRA funding to finance their energy efficiency projects during the program cycle. 11 SCE-L-005_I&G PIPs_feb 2011_clean final. Confidential and Proprietary Page 1-5

21 2. Interview Approach Navigant conducted approximately five interviews per institutional partnership, for a total of approximately 20 interviews with program staff. The following five groups of staff were interviewed for each institution: IOU program managers NAM Executive- and management-level partners that work specifically in the Southern California Edison (SCE) service territory Executive- and management-level partners that work in the PG&E service territory Executive- and management-level partners that work in the Southern California Gas Company (SCG) and San Diego Gas and Electric Company (SDG&E) (Sempra Utilities) service territories 2.1 IOU Interviews The IOU group of interviews included program managers on the executive and management levels. There is no executive-level management team for the SOC partnership. Table 3 through Table 6 describes all IOU interviews by partnership. Table 3. CDCR Partnership: IOU Interview Grouping Partnership Name IOU IOU Contact Name Management Level CDCR PG&E Leif Christiansen Executive Team Jessica Belcher Management Team SCE Nancy Jenkins Executive Team George Coronel Management Team SCG Frank Spasaro Executive Team Jason Lewis Management Team SDG&E Greg Lawless Executive Team Jeff Alexander Management Team Table 4. UC/CSU Partnership: IOU Interview Grouping Partnership Name IOU IOU Contact Name Management Level Confidential and Proprietary Page 2-1

22 UC/CSU PG&E Leif Christiansen Executive Team Dave Hather Management Team SCE Nancy Jenkins Executive Team Robert Brunn Management Team SCG Frank Spasaro Executive Team Jason Lewis Management Team SDG&E Greg Lawless Executive Team Linh-Chi Hua Management Team Table 5. CCC Partnership: IOU Interview Grouping Partnership Name IOU IOU Contact Name Management Level CCC PG&E Leif Christiansen Executive Team Dave Hather Management Team SCE Nancy Jenkins Executive Team Michael Schwonke Management Team SCG Frank Spasaro Executive Team Carlo Gavina Management Team SDG&E Greg Lawless Executive Team Linh-Chi Hua Management Team Table 6. State of California Partnership: IOU Interview Grouping Partnership Name IOU IOU Contact Name Management Level CA PG&E Leif Christiansen Executive Team Jessica Belcher Management Team SCE Nancy Jenkins Executive Team George Coronel Management Team SCG Frank Spasaro Executive Team Jason Lewis Management Team SDG&E Greg Lawless Executive Team Jeff Alexander 2.2 Newcomb Anderson McCormick Interviews Management Team Since NAM is the program administrative manager for most partnerships and is present at the executiveand management-level meetings, Navigant found it appropriate to interview NAM regarding practices of both levels of management and issues faced at the IOU and partner levels. These interviews not only provided a different perspective of the program models of implementation, but also allow Navigant to Confidential and Proprietary Page 2-2

23 analyze whether there are gaps in understanding program objectives. Table 7 breaks out NAM interview groups by institutional partnership. Because there is currently no program administrator for the SOC, there was one less interview conducted for that partnership. Table 7. Partnership: NAM Interview Grouping Partnership Name CCC CDCR UC/CSU NAM Contact Name Matt Sullivan Curtis P. Schmitt Andrew D. Meiman 2.3 Partner Interviews By interviewing partners for each institutional partnership, practices and issues can be examined from the perspective of the partner. A partner might be able to describe the differences and intricacies of IOUspecific activities as they are experienced by a customer, not an implementer. In many cases, the partner contact is the same at the executive level as at the management level for all utilities. Table 8 shows interview groups by partnership. Table 8. Partnership: Partner Interview Grouping Partnership Name IOU Contact Name Management Level CCC Fred Harris Executive Team Fred Harris Management Team CDCR Mark Hardcastle Executive Team Maria Martinez Management Team State of CA Howard Sacks Executive Team Howard Sacks Management Team UC/CSU George Getgen (UC); Len Pettis (CSU) Executive Team Dirk A. van Ulden (UC); Len Pettis (CSU) Management Team 2.4 Related Stakeholder Interviews In addition to interviews with program managers at the partner and IOU levels, Navigant conducted interviews with the stakeholders listed in Table 9. Confidential and Proprietary Page 2-3

24 Table 9. Related Stakeholders Interviewed by Navigant Partner Campus Related Stakeholder UC / CSU State of CA UC Irvine Matt Gudorf Campus Energy Manager Management Level UC Berkeley Patrick Energy Efficiency Program Manager MacArdle UC Santa Cruz Patrick Testoni Energy Efficiency Program Manager UC Davis Allen Tollefson Assistant Vice Chancellor/Energy Manager CSU Long Beach Paul Wingco Energy & Sustainability Manager CSU Fullerton Doug Kind Manager of Engineering and Sustainability N/A Cliff Senior Advisor to the Governor Rechtschaffen N/A Sandy Senior Counsel, Office of Planning and Research Goldberg N/A John Blue Climate Change Advisor, CA/EPA N/A Daniel Sustainability Manager DGS Burgoyne N/A Lynne Galal Manager of Green Communities and Innovator Pilots programs N/A John Joseph Senior Program Manager - Green Communities and Innovator Pilots at Pacific Gas & Electric CCC N/A Dan Estrada Specialist, System Advancement/Resource Development San Mateo Community Jose Nunez Vice Chancellor, Facilities Planning, Maintenance & College District Operations Confidential and Proprietary Page 2-4

25 3. California Department of Corrections and Rehabilitation (CDCR) 3.1 Partnership Characterization The CDCR is an agency of the executive branch of the California State Government that operates all state prisons, juvenile facilities, and other correctional facilities. CDCR, with an estimated 48 million square feet of occupied space, 12 has been partnered with the IOUs since the program cycle. With over 30 facilities, CDCR is an institutional partnership with high energy savings goals for the program cycle. Unlike other state agencies, CDCR s Division of Facility Planning, Construction, and Management has independent contracting authority; this means that not only does CDCR have its own authority for facility projects, but also, all agency-level goals are managed and held accountable by this division at the state level. Normally, the IOUs would have to go through the DGS, many agencies procurement arm, to identify and implement projects regionally, thus increasing required time and effort. The IOUs have taken advantage of this authority and set individual goals for this one agency. In 2006, the IOUs completed a comprehensive audit of the energy efficiency potential of each of the CDCR s facilities and provided a breakdown of the results. These results were incorporated into CDCR s five-year energy efficiency and energy management plan, which is updated annually. In addition, the CDCR s Division of Facility Planning, Construction, and Management drives all projects at the state level. As such, CDCR s Division staff members have a clear idea of what can be achieved based on a variety of tracked variables, including age of facility, age of equipment at each facility, and the latest upgrades made at each facility. The CDCR has a variety of opportunities to implement projects. First, the IOU management team has developed a cost-sharing model to help fund a Project Administrator dedicated to CDCR energy efficiency activities, to manage relationships and track progress for the IOUs and CDCR for the partnership. 13 Second, CDCR has a preapproved pool of ESCOs that are permitted to bid to help implement projects. Third, CDCR has taken advantage of the Energy $Mart financing program available through the Department of Finance (DOF) and administrated by DGS to finance their energy efficiency projects, as well as On-Bill Financing (OBF) funding provided through the IOUs. Other financing options that CDCR has taken advantage of are additional California Energy Commission (CEC) Energy Efficiency and Conservation Authority (EECA) and ARRA funding. 3.2 Overall Perceptions Through interviews with partner contacts and IOU program managers, Navigant believes that CDCR understands how much energy consumption can be reduced in its facilities. Also, Navigant believes that CDCR has the appropriate management structure to implement projects effectively and efficiently, and 12 SCE PIP. 13 SCE PIP. Confidential and Proprietary Page 3-1

26 that there are many channels through which CDCR can implement its projects. Specifically, CDCR utilizes IOU technical expertise, in-house facilities management tracking, and its five-year plan to develop and implement potential energy efficiency projects. Since CDCR s Division of Facility Planning, Construction, and Management has its own contracting authority and manages all facilities at the state level, intended projects are implemented effectively and efficiently. CDCR has taken advantage of ARRA funding, IOU OBF, and ESCO structures to cost-effectively implement projects. According to CDCR, approximately 70% of all facilities fall within the four IOU service territories and qualify for the CDCR/IOU partnership Long-Term Energy Planning The following three observations were made through interviews with program managers at the partnerships and IOUs, and with the program administrators in regard to the long-term energy planning efforts undertaken at CDCR. 1. In 2006, the CDCR entered into partnership with California s IOUs. As part of the partnership, the IOUs provided technical and financial support (in the form of incentives) to the partnership for the implementation of energy efficiency projects. Under the technical support part of the agreement, the IOUs completed a comprehensive audit of CDCR s facilities. The audit results provided a breakdown of potential energy efficiency projects for each of the CDCR s facilities, and were used to develop a five-year plan that is updated annually. 2. In addition to the five-year plan, the Division of Facility Planning, Construction, and Management understands achievements and potential projects based on a variety of tracked variables, including age of facility, age of equipment at each facility, and the latest upgrades made at each facility. 3. As only main meters for gas and electric are available, CDCR benchmarks entire facilities. CDCR does not currently benchmark by individual buildings or through the use of third-party software, such as U.S. Department of Energy (DOE) Portfolio Manager. Benchmarking is conducted through the review of IOU monthly billing data, allowing CDCR to compare energy consumption by facility. 3.4 Management Structure Comparison Because CDCR s Division of Facility Planning, Construction, and Management has its own contracting authority and manages all facilities at the state level, projects are implemented effectively. Overall, all IOU program managers are satisfied with the projects to which CDCR commits, CDCR s administration, and the structure of the partnership. 3.5 Staff Resources and Organizational Capacity As noted above, CDCR manages all facilities at the state level through the Division of Facility Planning, Construction, and Management. Projects identified through the five-year plan are implemented under direction of this Division Confidential and Proprietary Page 3-2

27 CDCR utilizes an effective and competitive process to facilitate the implementation of its energy efficiency projects. CDCR releases a request for qualifications (RFQ) once every three years to ESCOs that wish to participate in the partnership. It should be noted that ESCOs do not sign a partnership agreement with the CDCR and IOUs. They are contractors of the State but are not direct participants of the partnership in a sense that they are not part of the management team meetings. Once all RFQs have been submitted, the CDCR reviews the proposals and creates a list of approved ESCOs. The approved ESCOs are then permitted to participate in facility bid walks for potential energy projects. The ESCOs then submit bids for a particular project. The ESCO that is deemed (by the CDCR) to have the best value is chosen for the contract. CDCR noted that developing the pool of ESCOs every three years significantly shortens the administrative process. However, despite having a preapproved pool of ESCOs that shortens project timelines, CDCR believes that the IOU program cycle timelines are still too short and would be ideal if they matched ESCO project timelines of five years. 3.6 Financing Among IOUs/Partnerships In general, CDCR has taken advantage of the Energy $Mart financing program available through the DOF and administrated by the DGS to finance their energy efficiency projects, as well as OBF funding provided through the IOUs. Previous cycles funding sources came from two ARRA loans 15 in the amounts of $4,108,988 and $1,512,401 issued by DGS. Other financing options that CDCR has taken advantage of are additional CEC EECA and ARRA funding. Throughout the 2012 program year, approximately eighty percent of financing for CDCR came in the form of OBF (according to interview respondents). Whether ARRA funding will be available for future energy efficiency initiatives remains unclear to CDCR program managers. OBF provides much-needed capital to CDCR to continue to implement energy efficiency projects. While acknowledging the benefits of OBF, CDCR also indicated that current OBF caps limit the size of projects that can be implemented. On average, projects cost $1.5 to $3 million, primarily due to increased security measures such as requiring additional guards for every contractor and requiring a twice-daily inventory of tools. Current OBF policy limits the available funds to $1 million per meter per facility until funds are paid back. In addition to the loan cap, internal policy among the IOUs for OBF is that CDCR can only owe each utility $1 million per site; however, if $100,000 of the loan is repaid, then CDCR can apply for an additional $100,000 of OBF again, which is insufficient for most CDCR projects. While Navigant acknowledges that the current loan cap of $1 million is not ideal for CDCR, it does recognize that the loan funds available through the IOUs must be distributed amongst multiple energy efficiency programs and partnerships. Table 10 summarizes total OBF participation as of fall , 17 Table 10. OBF Participation by Number of Loans and Dollars Loaned IOU Number of Loans Dollars Loaned 15 Master Plan Annual Report For Calendar Year 2010, Submitted January 2011, California Department of Corrections and Rehabilitation. 16 Transmittal Letter for the On-Bill Financing Process Evaluation and Market Assessment, May 1, Confidential and Proprietary Page 3-3

28 SDG&E 506 $13,541,298 SoCalGas 15 $459,301 SCE 78 $2,012,717 PG&E 4 $210,140 Statewide 603 $16,223,456 If the loan cap were to be increased, it might allow for the potential for one project to consume a larger than reasonable portion of the available funds, which could limit the overall breadth and diversity of those participating in OBF. Therefore, it may be unreasonable at this time to increase the project cap on OBF loans. Confidential and Proprietary Page 3-4

29 4. University of California/California State University 4.1 Partnership Characterization The UC/CSU partnership is comprised of the University of California and the California State University systems that began during the program cycle. While these two institutions of higher education are part of a joint partnership with the IOUs, they can be characterized individually to highlight partnership differences University of California System The UC system includes 230,000 undergraduate and graduate students and about 200,000 faculty and staff. 18 The University of California is comprised of ten campuses that are headed by chancellors at the campus level and the University of California Office of the President (UCOP) at the state level. All UC campuses except for Los Angeles and Riverside are part of an IOU service territory and are eligible to participate in this partnership. There are eight campuses that fall under the IOU service territories; however, UC Merced is not included in this partnership since it is a new campus. The University of California is headed at the state level by the regents of the University of California, which includes the president. Each campus is governed by a chancellor, who reports directly to the Office of the President. The IOU partnership works directly at the state level with staff members of the UCOP. The UC system works under Executive Governance from the UCOP/regents; policies set at the university level are generally standardized throughout the 12 campuses. In 2008, the University of California created a Strategic Energy Plan (SEP) 19 for each campus. According to the UC partners, this strategic plan was an effort from the campuses as well as the Office of the President to understand the system s energy efficiency and renewable energy potential. This plan identified thousands of projects, including lighting replacements, MBCx, HVAC retrofits, and motor retrofits on all campuses, except UC Merced. 20 Campuses then prioritized projects in the SEP to implement through the IOU partnership for the next program cycle. Projects prioritized, identified, and implemented are managed at the campus level by each campus Energy Manager. Because of the SEP and its high credit rating, the University of California was able to generate centralized bond funding 21 that individual campuses can take advantage of to finance projects. One hundred percent of all IOU-incented projects took advantage of the SEP bond funding. Furthermore, project implementation and progress are tracked through a system-wide software program called Primavera P Confidential and Proprietary Page 4-1

30 4.1.2 California State University System The California State University system is the largest four-year university system in the United States, hosting more than 400,000 students in 23 campuses across California. 22 The CSU system is headed by the Chancellor s Office at the state level, with campus presidents directing activities at each campus. The California State University system is headed at the state level by the Board of Trustees, which includes the chancellor. Each campus is governed by a campus president, who reports directly to the Chancellor s Office. The IOU partnership works directly at the state level with staff members of the Chancellor s Office. The CSU system works under Legislative Governance; although policies set at the state level are generally standardized throughout, a legislative process must occur before the Chancellor s Office can instate a policy. The CSU Chancellor s Office currently uses its deferred maintenance plan, which is updated on an ongoing basis, to identify energy efficiency projects. CSU decided against an SEP similar to that created by the UC system in 2008, as they believe that their capital plan includes enough detail to help identify potential and implement projects. The Chancellor s Office maintains system-level energy efficiency goals with some input from campuses. However, campuses are not mandated to participate in the IOU goal development process. Like the UC system, project implementation and progress are tracked through a system-wide software program called Primavera P Overall Perceptions Through interviews with partner contacts and IOU program managers, Navigant concludes that the UC/CSU/IOU partnership is operating effectively and exceeding program goals. Navigant found that both institutions have a well-developed understanding of their energy efficiency potential (either through specific energy plans or updated deferred maintenance plans). With support across the organization, from the UC Board of Regents and CSU Board of Trustees through campus-level operations management, both institutions have the structure and resource options to effectively implement projects. Sometimes, however, the institutions take different strategic and tactical approaches to achieving energy management goals. Details regarding the universities capacity to develop and implement energy efficiency projects are provided in the following sections. 4.3 Long-Term Energy Planning The following details the universities ability to identify energy efficiency projects and continually improve energy consumption on their campuses. 1. Attitudes Toward Sustainability and Campus-level Engagement: Both institutions have a history of campus-level engagement that has driven commitments to sustainability and energy reduction: a) CSU has been committed to sustainability through its Sustainability Advisory Committee, which develops partnerships and funding to support sustainability efforts in education and building design and operations. With regard to energy efficiency, the university system has over 35 Leadership in Energy and Environmental Design (LEED)-certified buildings, and also requires all new construction or major renovation projects to exceed the provisions of Title 24 (2008 California Energy Code). It also partners with the IOUs and the Alliance to Save Energy to 22 Confidential and Proprietary Page 4-2

31 enable students at individual campuses to research and implement energy efficiency best practices and facilitation of retrofits. 23 b) Much of the early success of the UC partnership can be attributed to a student-led campaign that started in early 2002, in which students requested that the regents ask the president to undertake a feasibility study for the adoption of a Green Building 24 Policy and Clean Energy Standard 25 for all future new construction and renovated buildings. The details of the campaign are chronicled in Matthew St. Clair s paper, The University of California Goes Solar How Students Convinced One of the Largest University Systems to Adopt an Ambitious Sustainability Policy. Based on the feasibility study, in July of 2003, the Board of Regents issued the Sustainability Policy Principles, 26 which recommended steps to further the adoption energy efficiency and sustainability principles for all capital projects. In mid-2004, a formal Presidential Policy on Green Building Design and Clean Energy Standards, now known as the Sustainable Practices Policy, was issued. 27 The University of California s Sustainability Practices Policy provides guidelines and goals for Clean Energy, Sustainable Operations and Maintenance, Sustainable Transportation, and Green Building (among others areas). 2. Energy Savings/Goals: Both the UC and CSU systems have the tools in place to understand the potential for energy efficiency gains: a) Currently, goals for each program cycle are set through a bottom-up approach for the UC system, in which each school provides a list of potential activities and funding required; CSU goals are set by the Chancellor s Office, with some input from individual campuses. However, each CSU campus is not mandated to provide energy-saving projects for the next program cycle. b) In 2008, the University of California Office of the President developed a SEP 28 that identified over 1,000 potential projects for the UC system, as well as each individual campus. CSU decided against creating a formal SEP; contacts at CSU relayed to Navigant that CSU s deferred maintenance plan/capital plan includes enough detail to help identify potential and implement projects. c) Some, if not all, campuses at both institutions meter and track building usage through a type of McKinstry Enterprise Energy Management Information System (EEMIS) system, which provides a useful tool for tracking and implementing new energy efficiency projects. CSU contact, Len Pettis, noted that effective programs should be based on metering or, in other words, there must be data-driven energy efficiency. Tools that provide real-time energy usage at each facility or building are the best to identify energy efficiency opportunities continuously and in the longer term Confidential and Proprietary Page 4-3

32 d) The UC system employs dedicated Energy Managers at each campus that make it possible for campus-level energy efficiency projects to receive priority. While the CSU system does not always have dedicated Energy Managers at each campus, Navigant understands that the size and numbers of its campuses make it difficult to do so. However, Navigant has verified that CSU s capital plan and the staff members at the Chancellor s Office work closely with facility managers at campuses during program implementation. e) Both universities use a program tracking software package referred to as Primavera P6, Enterprise Project Portfolio Management. This tracking software gives program managers a continuous rundown of the projects that have been approved and are currently being implemented, provides campus-level goal statuses, and helps to better forecast savings potential. The interview respondents indicated that this tool was made possible by support from the IOUs and the partnerships. 3. Implementing/Approving Projects: There are various barriers to the efficient and sometimes successful approval and implementation of proposed projects: a) The contacts at the University of California and NAM indicated that three years is not a long enough program cycle to accomplish goals and plan for projects. Discussions with UC and CSU staff indicated that they are reluctant to plan long-term energy efficiency projects due to the short program cycle. UC and CSU staff indicated that program planners are uncertain of the incentive structure for projects that fall outside of the planning cycle, and as a result, hesitate to implement longer term, higher savings projects such as MBCx. b) Partner and IOU contacts perceived the ED reviews of baseline as an impediment to the UC/CSU system developing innovative programs/processes. For example, one interviewee noted that due to no definition in the process, IOUs were waiting on every project to see if it was going to be selected as a sample. There was a two week waiting period to see if the project would be on the list, and then another two weeks of waiting to see if the project would be selected as part of the sample. The delay was at least a month. It isn t a deal killer by any means but it does cause delays and the [involved partners] complain about it. c) Interview respondents indicated that the incentive structure for lighting was found to be insufficient for innovative lighting systems, such as LED lighting systems. Currently, incentives only cover 50% of the cost for lighting projects, with the incentive cap set to 80% for other technologies. Respondents indicated that incentives could be based on a technology adoption curve, which would allow newer (and more costly) technologies to be cost effective. 4.4 Management Structure Comparison As mentioned previously, the UC system is headed at the state level by the regents of the University of California, which includes the president. The California State University system is headed at the state level by the Board of Trustees, which includes the chancellor. The IOUs work with various members at the Office of the President and the Chancellor s Office at the state level. Depending on the institution and the project, IOU program managers work with Energy Managers or facilities managers at the individual campuses. Navigant s interviews with all parties revealed no direct issue regarding the management structure at the institutions or the partnership. Confidential and Proprietary Page 4-4

33 4.5 Staff Resources and Organizational Capacity As mentioned previously, the Office of the President and CSU s Chancellor s Office can dictate what happens at individual campuses. Each university in the UC system has an Energy Manager that is dedicated to sustainability and energy efficiency; not all CSUs have a dedicated Energy Manager. University of California contacts noted that the presence of a dedicated energy manager is key to the success of the UC component of the partnership. Identified projects are managed at the state level as well as through personnel at the individual campuses. The institutions allow for the flexibility of campuses to suggest and develop energy efficiency ideas. See Section 4.7 for the case study of a UC campus that built its own energy information infrastructure through partnership funds. Overall, both systems are great incubators for innovative projects because of the unique blend of skill and research, as well as the variety of end uses (e.g., laboratories, classrooms, and generation centers). 4.6 Financing Among IOUs/Partnerships The major difference between the funding sources of the UC and CSU system is the $178 million in 15- year revenue bond funding 29 that UCOP authorized the UC system to secure in 2008 after projects were selected through the SEP. As a result, UCOP has a centrally sourced capital provision system by drawing on bonds (ARRA funding). UCOP pays the upfront capital cost required for the project, IOUs provide UCOP with the incentive, and campuses repay their loan generated through a long-term financial plan. 4.7 Case Study UC Davis Navigant also conducted interviews at the campus level in order to determine what activities higher performing campuses were undertaking. Navigant defines a higher performing campus as a program participant that is among the top UC campuses in terms of projects being implemented. UC Davis was one such campus that provided their perspective and methods for sustaining energy reduction over the years. UC Davis started implementing energy efficiency projects by first borrowing $30 million in Through UC Davis strong borrowing power, they were able to fund their energy efficiency retrofit projects through the UCOP funding. UC Davis Energy Manager indicated three reasons for engaging with the IOU partnership program: 1) Save operating dollars 2) Reduce overall energy consumption 3) Reduce number of items on the Deferred Maintenance list UC Davis uses three software programs to track and manage their energy efficiency projects: OSISoft s Pi, 30 IBM s Maximo, 31 and Siemens APOGEE. 32 By cataloguing all buildings, understanding and Confidential and Proprietary Page 4-5

34 observing energy consumption trends in each of those buildings, and also analyzing utility bills, UC Davis is able to identify the highest impact projects to attend to or include on the Deferred Maintenance plan. UC Davis claims that of all funding received, only about 3-5% was spent to develop this energy information management system infrastructure. UC Davis believes there is a 10% behavioral savings potential within energy savings, referred to as The People Factor a savings potential that works by influencing people s behavior (e.g., turning off the coffee pot, turning off the lights when not in use). In order to address this behavioral potential, UC Davis is developing a web-based Utilities Consumption Dashboard that will allow occupants (i.e., students, staff, and faculty) and building managers to view their buildings peak performance and allow them to change their behavior to have real impacts. Figure 3 provides an example of the dashboard output. 33 The dashboard is capable of showing campuswide and building-specific electricity use and cost for the campus. It leverages the same monitoring system that the facilities management utility technicians use to provide real-time data, with the goal to provide the campus community (e.g., teachers, students, staff, and visiting adjuncts) a better connection to energy conservation issues. It is intended to empower collective and individual action to eliminate unnecessary energy use. Figure 3. UC Davis Energy Utilities Consumption Dashboard (Illustrative) Confidential and Proprietary Page 4-6

35 UC Davis believes that projects must be planned with a holistic approach. The campus believes that energy projects fail because management did not invest in the energy infrastructure to sustain the energy efficiency projects. Confidential and Proprietary Page 4-7

36 5. California Community Colleges 5.1 Partnership Characterization The CCC system is a two-year public institution comprised of 112 campuses within 72 autonomous districts that serve over 2 million students annually. As a system that has over 5,000 buildings with classrooms and offices, this partnership that formed during the program cycle has saved over 75 million kwh in energy annually. 34 The California Community Colleges system is headed at the state level by the Board of Governors and the Chancellor s Office (CCCCO). Currently, the Chancellor s Office does not have direct governing authority over its campuses; instead, the governing authority lies at the district level. Therefore, attitudes and actions towards energy efficiency differ based on the district, as well as the IOU outreach capacity. There is, however, leadership at the Chancellor s Office and the Board of Governors that is influencing actions in energy efficiency. The Board of Governors has set a goal that all building design must exceed Title 24 standards (California Energy Code) (i.e., all major capital projects starting design in FY need, at a minimum, to outperform by at least 15% of the current Title 24 standards for new construction, and all major renovation projects should, at a minimum, outperform the current Title 24 Standards by at least 10%). 35 The Chancellor s Office provides a 2-3% incentive on the construction costs of all new construction and major renovation projects. In January 2008, the Board of Governors adopted an Energy and Sustainability policy to recommend energy efficiency and sustainability goals. 36 There is also a great deal of action from individual districts including creating sustainability templates (Citrus College), internship programs such as SCE s Developing Energy Efficiency Professionals (DEEP), 37 revolving energy efficiency funding policies at two campuses (Mt. San Antonio and San Mateo), and collaborating with other agencies such as the California Institute for Energy and the Environment (CIEE), CEC, and the California Lighting Technology Center (CLTC). The growing movement toward energy sustainability is detailed in later sections in this chapter. During and this current program cycle, colleges and districts identified projects through their deferred maintenance logs. Although there is currently no formal college-level or state-level energy efficiency potential project list, CCC uses a system-wide database called FUSION (Facility Utilization Space Inventory Option Net) to integrate space inventory, conduct facilities assessments and fiscal planning, and implement projects. 38 Savings budgets for the IOU partnerships are compiled at the CCC Chancellor s Office, with some input from districts. Due to the autonomous nature of the districts, not all college campuses necessarily have a facilities manager that is dedicated to understanding the energy efficiency potential of the campus and as such, do not necessarily provide input to the Chancellor s Office. 34 Dan Estrada, correspondence. 35 Dan Estrada, correspondence Confidential and Proprietary Page 5-1

37 5.2 Overall Perceptions Navigant has found that the CCC is a unique institutional partner and as such, cannot necessarily be viewed in the same light as the four-year universities or CDCR. First, the organizational structure provides autonomy for each of the 72 CCC districts, which does not allow for centralized management. However, there is a push for energy efficiency and sustainability through the Board of Governors as well as from individual districts and campuses. Districts are encouraged to contribute program goals, although there is no formal requirement to do so. The Chancellor s Office primarily develops program goals through its system-wide tracking software, FUSION. Engineers and facilities experts identify and implement projects at individual campuses, with support from the Chancellor s Office or district as required. 5.3 Long-Term Energy Planning Navigant has found that the CCC system is well on its way to achieving long-term sustainability and energy efficiency through the following comprehensive and innovative ways: 1. Attitudes toward Sustainability and Campus-Level Engagement: There are many indicators at the state/board of Governors levels, as well as the individual district levels, of a growing awareness of energy efficiency and a push for sustainability. a) The Board of Governors has set a goal that all building designs must exceed Title 24 standards (California Energy Code). All major capital projects starting design in the fiscal year (FY) need, at a minimum, to outperform by at least 15% of the current Title 24 standards for new construction. In addition, all major renovation projects should, at a minimum, outperform the current Title 24 standards by at least 10%. 39 The Chancellor s Office provides a 2-3% incentive on the construction costs of all new construction and major renovation projects. b) In January 2008, the Board of Governors adopted an energy and sustainability policy to recommend energy efficiency and sustainability goals. 40 c) Citrus College and the Chancellor s Office used $250,000 of CEC funding to create a Sustainability Template 41 in 2011, which the Chancellor s Office contact says will create a structure that helps districts and colleges implement energy efficiency projects. d) The Chancellor s Office is participating in the emerging field of green jobs through its partnership with SCE s DEEP 42 program. According to Dan Estrada, through the DEEP program, student interns hired at three community colleges (Citrus, El Camino, and Mt. San Antonio) helped to create the Sustainability Template, trained with the Energy Manager on campus to implement energy efficiency projects, or acquired marketable skills for the green jobs field. e) Two campuses have continued implementing energy efficiency projects by setting up revolving energy efficiency funding policies (Mt. San Antonio and San Mateo). 39 Dan Estrada, correspondence. 40 Dan Estrada, correspondence Confidential and Proprietary Page 5-2

38 f) Various campuses and the Chancellor s Office often collaborate with other state energy agencies such as CIEE, CEC, and CLTC to implement pilot programs or conduct research in energy efficiency and sustainability. 2. Data-Driven Energy Information Infrastructure: CCC is changing the way it understands its energy efficiency potential. Currently, the Chancellor s Office makes use of FUSION, a database that works as a scheduled maintenance list as well as a tracker for equipment and project progress. 43 According to Dan Estrada, districts are required to input details of their five-year deferred maintenance plans into the database. The Chancellor s Office then uses data mining and outreach to districts that have not submitted enough information, to come up with a potential list of energy efficiency projects for the colleges system. While this method of identifying potential projects has worked since 2006, the Chancellor s Office is currently developing the SMART Energy Information project, a collaboration between MelRok, Onuma, FUSION, and the IOUs, as an automated way of identifying all potential projects. In its pilot stages, the project will take IOU-provided interval data and provide real-time energy information through FUSION (based on an Onuma platform) in MelRok s EnergiScore 44 software methodology and format. MelRok s analysis of meter data, weather data, and DOE-approved benchmarking data will yield energy usage data in a way that projects can easily be identified and prioritized by facility and building. With the dissemination of this project to all districts and campuses, and the widespread use of the Sustainability Template piloted at Citrus College, campuses and districts will have the tools to clearly identify energy efficiency projects and plan for long-term energy sustainability. 5.4 Management Structure Comparison As previously noted, the independent nature of the districts that are not directly governed by the Chancellor s Office creates certain participation barriers. However, the Chancellor s Office s statewide presence encourages districts and campuses consistently to take action. Furthermore, information is disseminated quickly through Fred Harris mailing lists of facility managers of campuses and districts. The Chancellor s Office also hosts two annual conferences (known as Green California Community Colleges Summits) for facility managers, energy managers, students, trade associations, and anyone involved in green and sustainability activities for community colleges. These summits provide an additional opportunity for the Chancellor s Office to encourage IOU partnership participation. 5.5 Staff Resources and Organizational Capacity Although not every campus has a dedicated energy manager, very few IOU program managers have noted difficulty in finding the right people to discuss potential projects. All IOU program managers have found that Fred Harris is a strong lobbyist on behalf of the campuses, as he is always pushing for comprehensive sustainability efforts Confidential and Proprietary Page 5-3

39 5.6 Financing Among IOUs/Partnerships All CCC campuses have access to $23.5 billion in state bonds (leveraged through the Chancellor s Office, in addition to any utility financing [such as OBF]). Individual districts can also procure local bond funding. However, local bond funding success depends on the economic status of the district s location. Confidential and Proprietary Page 5-4

40 6. State of California 6.1 Partnership Characterization The SOC partnership is new under the program cycle. Through this partnership, the IOUs work with DGS to identify and complete projects for many agencies under the executive branch of the state government of California. DGS is a department under the State and Consumers Services Agency, one of approximately 40 main agencies, boards, departments, commissions, and offices (hereafter referred to as agencies ) in the executive branch that report directly to the governor of California. 45 DGS has oversight and manages purchasing authority over many agencies, offices, and commissions in the executive branch, as well as a few agencies that are not a part of the executive branch. This authority does not extend to making purchasing and management decisions; DGS is the procurement arm for these agencies. The DGS provides the official delegation list, which includes approximately 200 offices, agencies, commissions, branches, and departments (collectively referred to hereafter as departments ) for which DGS manages purchasing authority. Many of these departments are located in the Sacramento area (not IOU service territory). The current design of the statewide institutional/government partnership reflects the history of the IOUs working with the SOC s energy efficiency and sustainability goals since 2004, as presented in Table 11. According to interviews with senior staff at the Governor s Office and IOU program managers, IOU funding of around $17 million was initially set aside in 2006 to help state agencies meet the goals of the Executive Order, with DGS acting as the contracting authority. Progress was not made between 2006 and 2009 because IOUs and various state agencies (e.g., DGS and DOF) were attempting to agree on indemnification language in their contract. By 2008, the memorandum of understanding (MOU) had expired and not much work had been done with DGS. However, between 2009 and 2010, the IOUs and the SOC were able to establish a Small Building and Large Building program, which provides energy efficiency retrofits for a few departments with which DGS was able to partner. ARRA funding helped finance the projects 46. All ARRA funded projects also participated in the IOU partnerships when the projects were completed in an IOU services territory and met the program qualification criteria. More recently, Governor Jerry Brown s administration has pushed for sustained efforts by rescinding S and signing B-18-12, which uses a 2010 baseline to mandate all executive branch state agencies to reduce their greenhouse gas (GHG) emissions. 47 This Executive Order also gives DGS the main role of working with other state agencies to create plans and implement projects. IOU program managers believe that this administration has a renewed interest in the benefits of the IOU partnership, and are hopeful that there will be more participation in coming years Confidential and Proprietary Page 6-1

41 Year Action Table 11: IOU/State of CA Partnership Timeline 2004 Governor Arnold Schwarzenegger signs California Executive Order S-20-04, which set a goal of reducing energy use in state-owned buildings by 20 percent by 2015 (from a 2003 baseline) Heschong Mahone Group, Inc. (HMG) is contracted by the State of California to help all state agencies benchmark their facilities; the primary goal was for all departments and agencies to establish accounts with the U.S. Environmental Protection Agency (EPA) Portfolio Manager Secretary Rosario Marin (of State and Consumer Services Agency) creates a Green Action Team and sponsors an MOU between the state and IOUs that would support the green building initiative. IOUs set aside $17 million to help with the initiative. DGS was appointed the procurement/contracting authority. The Green Action Team would be charged with fulfilling goals Due to IOU indemnification language that DGS and, later, DOF could not accept: No activity was noted between IOUs and state agencies. IOUs do not meet regularly with DGS. During the two years that conversations and meetings to rectify indemnification issues took place, the MOU expires and the Green Action Team has published various studies regarding implementation feasibility of the Executive Order IOU/State of CA partnership is instated for the IOU program cycle, with DGS identified as the main state agency/partner for the IOUs. Small and Large Building program start with ARRA funding 2012 Governor Jerry Brown signs Executive Order B that mandates all executive branch state agencies to reduce entity-wide greenhouse gas emissions by at least 10% by 2015 and 20% by 2020, as measured against a 2010 baseline. 50 This Executive Order rescinds EO S A Green Building Action Plan guides the implementation of this Order. 51 Currently, IOU program managers report that additional projects are identified primarily by approaching state agencies and departments directly after analyzing facilities billing trends. DGS spokesmen relayed through interviews that they continue to identify potential IOU energy efficiency projects through their relationships with state agencies. DGS has identified 32 departments, including its own, whose facilities DGS owns and can potentially affect through its current benchmarking and energy consumption tracking. As seen in Table 12, taking into account the 41 facilities under the CDCR that are part of the CDCR/IOU partnership, there are over 1,650 facilities and roughly 72 million square feet that Confidential and Proprietary Page 6-2

42 IOUs can potentially work with to identify projects. Even if over 50% of the facilities are not in IOU service territories, IOUs still have over 700 facilities for which, working with DGS, they can characterize and prioritize energy efficiency projects. Table 12. DGS Benchmarking of State Departments 52 Department Name Agency Name or Designatio # of Facilities 2010 Total Bldg. Area Sq. Ft. Air Resources Board CA EPA 1 65,000 California African American Museum SCSA 1 45,000 Capitol Area Development Authority SCSA ,632 California Conservation Corps Natural Resources Agency 5 198,471 Department of Corrections & Rehabilitation CDCR 41 38,390,928 California Department of Education CDE 139 1,041,273 California Department of Forestry and Fire Protection Natural Resources Agency 227 2,098,261 Department of Public Health Health and Human Services 3 675,390 California Highway Patrol BT&H 172 1,135,068 California Lottery Commission CLC 2 256,897 Department of Conservation Natural Resources Agency 1 2,000 California Science Center SCSA 10 1,340,512 District Agricultural Associations Food and Agriculture 49 8,800,884 Department of Consumer Affairs SCSA 1 30,893 Department of Developmental Services Health and Human Services 6 5,510,071 Department of Food and Agriculture CDFA ,426 Department of Fish and Game Natural Resources Agency 113 1,299,863 Department of General Services SCSA 59 17,559,906 Department of Mental Health Health and Human Services 5 6,599,989 Department of Motor Vehicles BT&H 98 1,601,185 Department of Justice Attorney General 6 145,057 Department of Rehabilitation Health and Human Services 1 42, Confidential and Proprietary Page 6-3

43 Department of Transportation BT&H 310 6,534,248 Department of Parks and Recreation Natural Resources Agency 189 6,718,224 Office of Technology Services California Technology Agency 1 154,250 Department of Veterans Affairs DVA 5 1,602,562 Department of Water Resources Natural Resources Agency ,439 Employment Development Department Development Agency ,298 Cal Expo CDFA 1 1,500,000 Housing and Community Development BT&H 24 1,598,496 Department of the Military MIL 140 3,475,929 State Lands Commission Natural Resources Agency 1 3,325 Santa Monica Mountains Conserv. Natural Resources Agency 1 20,429 TOTAL 1, , 129, Overall Perceptions Navigant has found that the SOC partnership is not as effective in achieving participation as it could be, mainly due to the organizational structure of the partnership. Currently, IOU program managers work with DGS, the procurement arm for over 100 state departments. However, because DGS cannot mandate project initiation or completion over these departments, IOU program managers and DGS staff members have to expend additional effort to promote the program and approve projects. Furthermore, due to the large number of facilities under DGS jurisdiction throughout the state of California, it is not easy for the DGS to characterize and identify all potential projects. However, according to DGS staff, there are some departments, such as the California Highway Patrol and Department of Motor Vehicles, which understand their energy efficiency potential well through benchmarking and energy consumption tracking of all facilities. In addition, DGS benchmarks and has a relationship with approximately 32 agencies and its facilities around California. Navigant finds that, in lieu of a centralized structure and 100% understanding of the energy efficiency potential of all stateowned buildings, this practice is sound. IOUs can work closely with DGS to provide resources and tools to develop a stronger infrastructure for tracking energy consumption and identifying projects for the 32 departmental relationships that DGS currently has. 6.3 Long-Term Energy Planning The partner does not currently have a formal energy efficiency plan that lists all potential retrofit projects. This is understandable, considering that 32 departments alone have around 1,500 facilities; it would be a considerable task to identify projects for over 30 agencies within the executive branch of California s government, not to mention those within the judicial and legislative branches. Interviews with IOU program managers and DGS staff members revealed the following ways that projects are identified within and without the IOU partnership, along with the shortcomings which that entails: Confidential and Proprietary Page 6-4

44 1. A DGS spokesperson reported that the facilities managers at agency headquarters definitely have an idea of their [energy efficiency] potential ; however, there are wide differences in the depth of this knowledge. For example, some departments and agencies facility managers track facility energy consumption and plan for retrofit projects, while others focus less on energy efficiency and more on maintenance. 2. Heschong Mahone Group (HMG) was contracted in 2004 to help all state-owned buildings establish EPA Portfolio Manager benchmarking accounts. While 100% of occupied state-owned buildings currently have benchmarking accounts, 53 HMG program managers reported that they are unsure whether agencies are currently utilizing this tool to understand energy efficiency opportunities. 3. DGS periodically tracks energy consumption patterns for approximately 32 departments (including its own facilities). Through the analysis of and relationships with these departments, DGS has been able to identify certain projects that received IOU rebates. 4. IOU program managers have developed methodologies to identify projects. One IOU seeks out individual agencies in the IOU service territory, and narrows down agencies with the staffing and funding levels appropriate enough to implement projects before approaching the agencies with proposals. Another IOU uses in-house open-source software to capture energy intensity of facilities (through utility bills) and strategize which buildings and agencies to target. In April 2012, Governor Jerry Brown signed Executive Order B-18-12, which uses a 2010 baseline to mandate all executive branch state agencies to reduce their GHG emissions. 54 An implementation plan, known as the Green Building Action Plan 55 accompanies this order and provides specific goals regarding retrofits of existing buildings, new construction, and building commissioning, among other items. Examples of goals include new and existing buildings shall incorporate building commissioning to facilitate improved and efficient building operation and all existing state buildings over 50,000 square feet shall complete LEED-EB certification by December 31, Navigant believes that this implementation plan can be used as a starting point to plan for long- term energy conservation. 6.4 Management Structure Comparison Currently, this partnership has no Executive Team to direct partnership goals and move high-level strategies to action; the Management Team, consisting of IOU program managers and DGS representatives, meets as needed on a one-off basis. The original Executive Team stopped meeting early in the program cycle, according to IOU program managers, because of elections and busy political schedules; as such, the Management Team drives the majority of the actions, participation, and successes in this partnership. According to IOU program managers, an Executive Team needs to be established with people that are consistently available, are familiar with DGS funding structure, and have authority to approve projects. One IOU program manager believes that having at least one staff member from the Governor s Office Confidential and Proprietary Page 6-5

45 who bolsters partnership activities and helps spread awareness of the program and DGS role to agencies will bring the consistency and leadership required. IOU program managers and DGS partner contacts believe that the Sustainable Building Task Force and the Sustainable Building Working Group, as mandated to be developed through Executive Order B s Green Building Action Plan, will provide an avenue for projects to be approved and implemented more frequently. 56 The task force will provide executive-level oversight on progress made, while the working group will include representatives from executive branch agencies to oversee implementation of projects. Task force and the working group awareness of the IOU partnership should increase participation, as the IOUs provide technical and financial resources to implement projects more smoothly to meet the goals of the Executive Order. 6.5 Staff Resources and Organizational Capacity DGS is a department under the State and Consumers Services Agency, one of approximately 40 main agencies in the executive branch that report directly to the governor of California. 57 DGS has oversight over and manages purchasing authority for many agencies, offices, and commissions in the executive branch, as well as a few that are not a part of the executive branch. However, the following are a few of the organizational impediments to this partnership s success. 1. DGS, the face of this partnership, does not have authority over any of the 40 state agencies; it is a contracting/procurement arm for approximately 200 departments under some of those agencies. As a result, a contract or relationship with DGS does not necessarily ensure project participation or representation from any California state agencies and departments. 2. Each department has its own central authority, which ultimately reports to the California Governor s Office. Each agency has a Chair that can be approached for project approval first before the Governor s Office s approval is requested. Only after both approvals have been cleared does DGS get involved in the project. 3. DGS also is not the procurement agency for all agencies in the state there are at least ten agencies that have their own contracting authority, including CDCR and California Administrative Office of the Courts. Because the IOU partnership is directed through DGS, there are potentially significant energy savings opportunities being missed. 6.6 Financing Among IOUs/Partnerships DGS does not have the scale of facilities or projects like CDCR or UC/CSU to receive ARRA funding easily: 1. The ARRA Revolving loan funds being used for the Small Building program are still under review when they comes back to the agency, and they have a lot of reporting requirements. This creates additional administrative burden on the agencies. 2. Although OBF has been approved for PG&E, DOF has still not approved OBF for Sempra or SCE service territories after over a year of meetings and discussions Confidential and Proprietary Page 6-6

46 7. Observations, Conclusions, and Recommendations This section presents a summary of conclusions and detailed recommendations for the four partnerships. 7.1 Observations The following discussion provides observations relevant to the programs or program operating environment, based on partner interviews. These observations are intended to highlight topics that cannot be fully verified in the context of this report, but indicate about based on Navigant s Observations about the Cyclical Nature of Program Funding Consistent with most other resource programs operating during recent portfolio cycles, the institutional partnerships operate on a schedule where projects receiving incentives need to be completed by the end of the program funding cycle in order to receive full payment. Incentives for projects not completed during this time are subject to limitations and can go at risk. Partners consistently mentioned that this is a problem because project installation schedules and program operating cycles often do not align and many projects remain in process at the end of a funding cycle, resulting in uncertainty about unpaid incentives 58. This observation is not unique to institutional partnerships. To emphasize the scope of the potential problem, a review of Energy Efficiency Groupware Application (EEGA) program tracking data for the portfolio through July 2012 indicates that more than 48% of all institutional partnership projects are designated as committed with five months remaining in a three-year program cycle. This implies these projects are somewhere in the installation cycle, and uncertainty about the rebates calls into question the financial performance of some of these projects. It is also likely that the misalignment between program funding cycles and project timelines will become more problematic over time for a number of reasons: 1. The duration of portfolio cycles has historically been inconsistent. The most recent four portfolio cycles 59 have had three different durations, including one-, two-, and three-year terms. Compounding this concern is that the calendar by which funding is actually available for each cycle also varies. 2. In general, partners are getting better at pursuing more complex projects with design, build, and verification requirements that are more rigorous than the types of low-hanging fruit projects, such as lighting retrofits, that may have been more prevalent in past program cycles. As complexity and rigor increase, there is a commensurate risk that these projects will not be completed within a strictly defined portfolio cycle. 58 A project is defined as completed when it is fully operational at the design specification stated in the program application. 59 The portfolio had a three-year duration and the 2009 portfolio had a one-year duration (and was not established until late 2008 as simply a continuation of the previous cycle). The (initially the ) portfolio had a three-year duration, while the portfolio currently being planned has a two-year duration. Confidential and Proprietary Page 7-1

47 3. Partners are fairly unique among customers because they manage large and diverse portfolios of buildings and are usually mandated to provide services that require various long-term planning efforts. 60 As conservation and efficiency become increasingly important, issues associated with trying to align and integrate institutional planning cycles with uncertain demand-side management (DSM) funding cycles could become a barrier to long-term sustainability efforts. Examples of planning activities that would benefit from alignment with EE incentive funding include the following:» System-wide and campus-level master plans that are typically defined by three-, five-, and tenyear planning horizons (e.g., Sustainability Plans, Strategic Energy Plans, New Construction Forecasts)» Bond initiatives not subject to any regular calendar» Unique initiatives such as the Governor s Green Building initiative requiring specific EE actions by It appears that reliance on financing, and the number of energy efficiency financing opportunities available to partners, will continue to grow. Many financing vehicles are contingent upon incentives. For example, in the UC case, UCOP bond financing is explicitly tied to IOU-issued project agreements (i.e., the Campus Payment Form ), and it is a prerequisite for bond funding. For CDCR, there is also an explicit link in that when loans are used, they are made only for the balance of project cost after the incentive. Under the SOC revolving loan fund and the past ARRA funds that lead to the creation of the revolving loan fund, leveraging EE incentives is a requirement for ESCOs in order for their proposals to be considered. Therefore, the certainty of rebates plays a critical role in the development of projects. As noted above with 48% of all institutional partnership projects designated as committed with five months remaining in the portfolio, it could be a problem that the Energy Efficiency Policy Manual 61 allows that Encumbered funds may not exceed 20% of the value of the current program cycle budget to come from the subsequent program cycle, except by approval in an advice letter process, as noted in the following discussion from Decision : "Funding of Program Cycle Extensions. IOUs may spend up to 15% of next-cycle funds within the final year of the program cycle after the next-cycle portfolio to avoid interruptions of those programs continuing into the next cycle, per The IOUs may continue the average monthly level of expenditures for the final year of a budget cycle to continue on a month-to month basis until the next portfolio budget is approved (or as specified in the Commission decision for the next portfolio budget cycle).[1] Utilities should tap into the next-cycle funds only when no other energy efficiency funds (i.e. unspent uncommitted funds from previous programs years) are available to devote to this purpose. 60 It is true that some commercial customers operate building portfolios of similar scope to those of institutions; however, they are generally not mandated to provide a service and often have different planning horizons based more on immediate economic concerns and market opportunities. It is likely they also have timeline issues, but these may not be the same institutional issues because of their unique business drivers. 61 Energy Efficiency Policy Manual, Version 4.0 (August 2008), Section 2 II. Energy Efficiency Policy Objectives and Program Funding Guidelines item 13 Confidential and Proprietary Page 7-2

48 Funds for Projects with Long Lead Times. Funds may be committed for projects with lead times beyond three years under the following conditions:[2] Long-term projects that require funding beyond the three-year program cycle shall be specifically identified in the utility portfolio plans and shall include an estimate of the total costs broken down by year and associated energy savings; Funds for long-term projects must be actually encumbered in the current program cycle; Contracts with all types of implementing agencies and businesses must explicitly allow completion of work beyond the end of a program cycle; Encumbered funds may not exceed 20% of the value of the current program cycle budget to come from the subsequent program cycle, except by approval in an advice letter process; Long-term obligations must be reported and tracked separately and include information regarding funds encumbered and estimated date of project completion; and Energy savings for projects with long lead times will be calculated by defining the baseline as the applicable codes and standards at the time of the issuance of the building permit. Committed funds are defined as those that are associated with individual customer projects and/or are contained within contracts signed during a previous program cycle and associated with specific activities under the contract. All activities carried out under a contract and/or customer obligation during a specific program cycle need not be completed and funds need not be spent during that particular program cycle so long as there is an expectation that the activities will be completed. However, those funds are considered "committed" and/or "encumbered" and thus are not considered "unspent" funds. Only funds that are both uncommitted and unspent during 2012 and prior are eligible for being rolled into program budgets. [3]" Navigant offers the following observations on this decision: Item 3 from D states the Contracts with all types of implementing agencies and businesses must explicitly allow completion of work beyond the end of a program cycle. This statement is in conflict with the observation that the utilities cannot enter into agreements that commit funds beyond the end of a program cycle; therefore, the revised/reissued agreements cannot be issued until the new program cycle officially begins. Each project has a project agreement that is a contract with an end date. Within a program cycle, the incentive is reserved by that agreement. Across program cycles, there is no contractual mechanism to guarantee the incentive in the next program cycle without revising or reissuing a project agreement. Historically, projects that have slipped between cycles have had agreements revised and the original terms honored. The exception to this case is new construction projects, where due to long project timelines, agreements often span program cycles. Item 4 from D states that, Encumbered funds may not exceed 20% of the value of the current program cycle budget to come from the subsequent program cycle, except by approval in an advice letter process. This implies that if current program budgets are not be sufficient to address work in process, that future portfolio budgets will need to be debited to accommodate encumbered funds, 62 Encumbered funds may not exceed 20% of the value of the current program cycle budget to come from the subsequent program cycle, except by approval in an advice letter process. Confidential and Proprietary Page 7-3

49 and that a cap on this encumbrance applies. However, the majority of project funds likely to be encumbered past the cycle are covered in the current program budget. Specifically total commitments for all institutions at present are 49% of savings, as shown in and 33% of budget. The planned spend (including spent to date and committed) is 103% of budget. Table 13. Total Commitments as a Percent of all Savings in July 2012 Partnership Total Commitments as a Percent of all kwh Savings State of California 42% CCC 43% UC/CSU 51% CDCR 53% Total 49% These decisions are portfolio specific in that they can and often do change with each portfolio decision, and are largely inconsistent with the observations that institutional planning horizons frequently exceed one, two, or three portfolio plans cycles. This process simply results in a rolling uncertainty. The evaluation contractor reviewed the Program Implementation Plans (PIPs) for the institutional partner portfolio and did not find a reference to this process. Based on comments from the institutional partners during interviews, it does not appear that communication between the IOUs and partners has been sufficient to communicate the language in D in a way that would accommodate committed projects within the transition portfolio. The definitions and conditions set forth in the Energy Efficiency Policy Manual and D must address the following two project status types: 1. Programs with surplus funds remaining at the end of the project cycle where projects are uninstalled but committed. This should define the process whereby current surplus funds are encumbered for a future program cycle or, if surplus funds are not carried forward, it should state that future program funding will be debited for current commitments. 2. Programs with no funds remaining at the end of the project cycle where projects are uninstalled but committed. The policy manual most closely applies where no remaining current cycle funds and available, and future program funds must be encumbered for committed projects. The Navigant team did not undertake research to establish whether or not projects had been cancelled, delayed, or suffered financially from this issue. However, because the issue was mentioned during by multiple partner interviews, Navigant provides the following question that may help inform future research; 1. The operating objectives and planning horizon for Government agencies is fundamentally different from commercial operations, yet they are subject to the same program planning rules and timeframes. For example; Confidential and Proprietary Page 7-4

50 a. Government agencies have longer lifespans than most commercial enterprises. Most of the California institutions represented by the partnership where created between 1920 and 1970, with an average age of well over 40 years. Some agencies that constitute a large percentage of state agency energy use have been in continuous operation for over 140 years old, such as the California State University and University of California, founded in 1857 and 1868 respectively. By contrast 40 percent of all newly created companies last less than 10 years. Indications are that the average life expectancy of all firms, regardless of size, is about 12.5 years. b. Government agencies have different priorities than do commercial enterprises. Agencies have a political mandate to provide a service, versus a commercial enterprise that operates by and large on economic opportunities. As such, capital projects, including energy efficiency implementation, are prioritized and budgeted differently. Given these difference s, is the DSM planning horizon used for the commercial sector the optimal planning environment for the government sector? 2. The issue may not be that projects are cancelled or delayed because of the short term nature of the DSM portfolio cycle, but rather the question might be is this the environment where the planning and implementation of deep and comprehensive energy savings is optimal for government agencies? 3. State budgets must be developed annually and would a longer term energy planning environment that shows positive financial results for institutions provide a degree of protection as funding decisions are made? 4. Can a DSM program cycle that is unique for government agencies with a high certainty of ongoing operation be designed that provides a more stable planning platform while affording regulators the flexibility to deal with portfolio design and budgeting cycles that are 2 to 3 years in length? 5. The California energy efficiency policy manual 63 defines the conditions that allow funds to be committed for projects with lead times beyond three years, and also the process whereby advice letters can be used to secure funds for activities that extend beyond a portfolio end date. The research for this report did not identify how well institutional partners understand the policy manual or their ability to work with the IOUs to use the policy manual to resolve end of cycle issues. It is recommended that this research be undertaken in future process evaluations of institutional partnerships. 7.2 Overarching Conclusions The following subsections present Navigant s overall conclusions for this evaluation Coordinated Planning, Management, and Funding Improves Performance Our research identified several characteristics of high-performing institutional partnerships, including the following: 63 Energy Efficiency Policy Manual, version 4.0. (August 2008), Applicable to post-2005 Energy Efficiency Programs. California Public Utilities Commission Confidential and Proprietary Page 7-5

51 1. A clear and accurate understanding of the potential for energy efficiency that is based on engineering analysis, covers the full scope of the institutions operations, and provides an assessment at the operating-unit level, such as campus or agency; 2. The ability to develop and use guidance documents, such as strategic energy plans, to organize and direct sustained efforts at achieving energy efficiency over a timeframe that typically exceeds a single portfolio funding cycle; 3. An effective management structure that involves broad organizational participation, tracks performance to plan, and makes effective use of both internal resources and support offered by the IOU partners, and 4. The ability to develop and employ funding that is targeted at energy efficiency improvements over a sustained period of time, while leveraging IOU partner incentives. The approach taken by the UC system during the UC/CSU IOU partnership serves as an example of how these four characteristics can results in a high performing of energy efficiency programs designed to support institutions that operate large portfolios of buildings. The UC/CSU partnership is a high- performing program that has been operating continuously since Although these institutions have a similar mission and have demonstrated the ability to aggressively pursue energy efficiency, the UC system undertook several unique initiatives beginning during the program cycle that were not pursued by the CSU system. These include the following: 1. Beginning in 2002, the UC system and student body collectively developed and adopted a Green Building Policy and Clean Energy Standard. 2. Beginning in 2006, the UC system used the Green Building Policy and Clean Energy Standard to develop a Strategic Energy Plan that included an assessment of energy efficiency potential at each UC campus and provided a roadmap for achieving savings. This plan was presented to the IOUs in the second quarter of 2008 and helped define the collaboration with the IOUs during subsequent program cycles. 3. In 2008, the UC system secured $178 million in 15-year revenue bond funding authorized by the University of California Office of the President to begin system-wide implementation of projects identified through the Clean Energy Standard and Strategic Energy Plan. Although both the CSU and UC systems have been effective at implementing energy efficiency projects since the IOU partnership began in 2006, Figure 4 shows that savings achieved by the UC system have outpaced the CSU beginning in Navigant concludes that the approach used by the UC system to assess, plan, and manage a portfolio approach to energy efficiency is responsible for some portion of the difference in performance. Supporting this conclusion is the observation that during , the number of projects and the savings per square foot of space at the UC campuses were considerably higher than those at CSU, as shown in Table Based on program tracking data supplied by Newcomb Anderson McCormick for the and program cycles. Confidential and Proprietary Page 7-6

52 Energy Saved (kwh) Figure 4. Comparison of UC and CSU System Energy Savings for 2006 Through ,000, ,000, ,000,000 Bond funding for EE projects authorized by UC regents 100,000,000 UC Strategic Energy Plan formally presented to IOUs 50,000,000 - Date UC CSU Table 14. UC/CSU Partnership Savings Metrics for 2006 Through Portfolio kwh Saved / Sq. Ft Portfolio 65 Total Projects Verified or Committed kwh Saved / Sq. Ft. Total Projects Verified or Committed kwh Saved / Sq. Ft. System kbtu / Projects Total kwh System Sq. Ft. Sq. Ft. Verified Saved UC 126,000, ,484, CSU 87,000, ,602, Total 213,000,000 NA ,086, Including 2009 bridge achievements. 66 to author from Dirk VanUlden, Tuesday, August 21, :46 AM 67 to author from Len Pettis, Monday, August 20, :10 PM 68 CSU Report on Sustainability and Energy Efficiency Goals, August 22, 2005 Confidential and Proprietary Page 7-7

53 7.3 Specific Research Topic Conclusions The following subsections summarize Navigant s findings for this evaluation by research topic Overall Perceptions of Program Performance and Barriers The objective of this research topic is to highlight the key barriers or obstacles to each institution s successful program participation. Navigant s general perceptions include the following: The UC/CSU, CCC, and CDCR partnerships are continuing to develop longer term sustainability plans and strategies, and are refining their approach to identifying and implementing energy efficiency, and the roll of the IOU partnership within those plans. The SOC program has achieved its energy savings goals, but only four out of 29 agencies participated. It is possible that program goals are not consistent with the 20% savings goal established by the Executive Order. and the number of agencies participating in the program will need to increase. The most significant barriers to success are: o o The disposition of committed incentives on work in progress is a concern for all partners, especially given the high percentage of committed savings, as discussed previously. The SOC Partnership will meet its goals; however, the relationship between program goals and actual energy savings potential or savings mandated by Executive Order B (EO) is uncertain. Additionally, the program design may not be appropriate for the management challenges inherent in delivering deep and sustainable energy efficiency strategies across more than 30 state government agencies. When committed and installed savings are considered, each program is on track to deliver savings that are consistent with adopted program goals, as shown in Table 15. Table 16 shows that the programs have spent 70% of funds with approximately five months remaining in the portfolio cycle. Incentive commitments account for 48% of the program budget. Table 17 shows that the adopted program goals would result in a cost of $0.49 per kwh, though production costs for installed kwh are higher, at $0.57. When committed savings are taken into account, the cost per reported kwh is estimated to be around $0.38, lower than originally planned. Table 15. Statewide Institutional Partnership Energy Savings Performance as of July Partnership Program Projected (Compliance Filing) (kwh) Installed Savings (Inception To Date) (kwh) %of Compliance Filing Goal Installed and Committed Savings (kwh) %of Compliance Filing Goal State of California 16,762,607 9,572,059 57% 16,452,257 98% CCC 50,218,232 24,348,842 48% 42,627,544 85% UC/CSU 102,841,663 65,231,206 63% 132,578, % CDCR 24,668,527 14,531,710 59% 30,905, % Confidential and Proprietary Page 7-8

54 Total 194,491, ,683,817 58% 222,563, % Partnership Table 16. Statewide Institutional Partnership Budget Performance as of July Program Revised Budget Program Expenditures (Inception to Date) Expenditures as a % of Program Revised Budget Total Incentive Commitments (Inception to Date) Incentives Commitments as a % of Program Revised Budget State of California $8,735,785 $4,769,856 55% $1,818,993 38% CCC $21,329,006 $12,208,839 57% $5,441,070 45% UC/CSU $52,112,784 $41,326,306 79% $19,190,396 46% CDCR $11,085,466 $6,639,891 60% $4,871,352 73% Total $93,263,040 $64,944,893 70% $31,321,812 48% Table 17. Statewide Institutional Partnership Cost per kwh Saved and Committed as of July 2012 Partnership Planned Savings $/kwh Installed Savings $/kwh (Inception to Date) Installed and Committed Savings $/kwh State of California $0.52 $0.50 $0.53 CCC $0.49 $0.50 $0.57 UC/CSU $0.40 $0.63 $0.31 CDCR $0.38 $0.46 $0.30 Average $0.43 $0.57 $ Long-Term Energy Planning The objective of this research topic is to investigate the preparedness of the institutions in their ability to adapt and stay current with their long-term energy planning. Navigant believes that understanding the potential for energy efficiency in the system (in terms of projects, technologies, and concepts implementable to lower energy consumption) is critical for long-term planning and execution. As such, Navigant attempted to understand what initiatives had been undertaken by each partnership/institution to understand energy efficiency potential: CDCR utilizes IOU technical expertise, in-house facilities management tracking, and its five-year plan. In 2008, the University of California Office of the President developed a SEP that identified over 1,000 potential projects for the UC system, as well as each individual campus. CSU s deferred maintenance plan/capital plan helps identify potential and implement projects. The CCC Chancellor s Office makes use of data mining through FUSION, a database that works as a scheduled maintenance list as well as a tracker for equipment and project progress, and direct Confidential and Proprietary Page 7-9

55 outreach to campus facility managers, to come up with a potential list of energy efficiency projects for the colleges system. The Chancellor s Office is currently developing the SMART Energy Information project, which will use real-time energy information to identify projects by campus and building. The agencies in the SOC Partnership do not currently have a formal energy efficiency project plan that lists all potential retrofit projects. DGS spokespersons reported that the facilities managers at some agency headquarters understand building energy efficiency potential; 100% of occupied stateowned buildings currently have benchmarking accounts; 69 while 32 departments periodically track and benchmark energy consumption Management Structure Comparison The objective of this research topic is to compare current management structures to ensure they are meeting the needs of the IOUs and program managers. Navigant discussed management structures with IOU and institutional partner staff and concluded that the most effective management structures meet the needs of all stakeholders and can be defined from both the IOU and institutional partners perspectives, as follows: 1. From the institutional perspective, an effective partnership has the ability to establish energy management goals for all participating campuses or agencies and effectively leverage the IOU program design to achieve forecasted goals. 2. From the IOU perspective, an effective partnership allows the IOUs the ability to contribute their core program design and technical skills to help partners achieve their energy management goals. Partnerships that appeared to Navigant to be the most effective programs from both perspectives typically displayed three critical attributes: 1. The ability to develop a strategic plan approach to institution-wide energy efficiency potential. Attributes of successful strategic energy efficiency planning and implementation efforts that include: a) Institutional-level energy efficiency plans that are developed by combining individual agency or campus plans vs. top-down aspirational goals, similar to the savings targets established in Executive Order B-18-12; b) Activities that cover all campuses and agencies in a consistent format, not a subset of agencies or a variety of inconsistent planning formats; c) Planning activities that are integrated with other institutional planning efforts, such as a system-wide capital plan or long-term campus master plan; d) Planning efforts are developed in collaboration with deferred maintenance initiatives and include estimates of additional savings such as reduced maintenance labor where present; e) Implementation activities that include specific management metrics that can be tracked at the constituent campus/agency level and system-wide level over time, such as kwh/sq. ft. of space; 69 Confidential and Proprietary Page 7-10

56 f) Planning efforts that provide IOU partnership energy efficiency goals that are based on a technical and economic needs assessment that provide the basis to establish an appropriate funding level; g) Planning efforts that provide the partnership with the support and justification for energy efficiency dedicated funding initiatives, such as bond issues that specifically addresses projects identified through system wide investment grade audits; h) A management platform that survives staff/administration turnover, and i) A process that embeds energy efficiency planning in other institutional initiatives, such as cross-planning with deferred maintenance initiatives. 2. An effective management structure capable of sustained focus on strategic energy goals. Attributes of successful management structures that includes: a) An Executive Committee that focuses on institution-wide strategic planning initiatives and oversees and actively adjusts the program planning efforts; b) A Management Committee focused on installing projects and tracking performance to goal. This management committee typically will have a relationship with operations and a communication structure whereby functional knowledge at the campus or agency level can be aggregated and disseminated across the all participating constituents to help develop informed reporting, forward planning, and budgeting; c) The commitment to meet regularly to review program tracking metrics and resolve production issues quickly; d) The ability to engage broad cooperation for constituents when authority is limited e) The ability to engage institutional stakeholders, such as students or agency employees, in a collaborative process to identify and achieve broad sustainability and efficiency initiatives 3. An effective project management and delivery capability that shows continuous improvement. Attributes of effective delivery capability that includes: a) The ability to continuously improve and deliver increasingly complex projects over time so that the institution is not reliant on more evident projects, such as lighting retrofits, that will saturate and unnecessarily limit savings production; b) The capability to effectively work within IOU and California Public Utilities Commission restrictions to ensure that program constraints, such as filing and funding deadlines, do not limit production; c) The flexibility to access multiple funding sources such that the most appropriate financing option is available and selected for each project; d) Access to a variety of qualified contractors or energy service companies where a competitive environment is maintained through multiple and redundant service providers that are identified and prequalified in advance; Confidential and Proprietary Page 7-11

57 e) The ability to provide continual feedback to management on performance tracking metrics on project production, and sources of new potential identified during the implementation process Staff Resources and Organizational Capacity The objective of this research topic is to evaluate differences in institutional structures and policies that enable some institutions to achieve energy savings and implement innovative ideas. Each of the four institutional partnerships is uniquely structured to achieve energy savings. CDCR manages all its facilities at the state level and utilizes a preapproved pool of ESCOs (updated every three years) to implement projects cost-effectively and in a timely manner. Since the state-level divisions keep track of all facilities, understand each facility s needs, and can authorize projects at all facilities when needed, this organizational structure enables CDCR to achieve energy savings effectively. The UC/CSU and CCC institutions also work with a similar state-level leadership structure; however, campuses have more autonomy (especially for CCC) and flexibility in identifying and implementing projects. More importantly, one unique element of the higher education partnerships is the student involvement that has helped to implement innovative policies. The UC partnership can essentially be attributed to the student-led campaign beginning January UC students led a grassroots campaign with the help of Greenpeace that ultimately led to a university-wide feasibility study and a presidential policy on building design and energy standards that guides decisions in transportation, clean energy, and building operations and maintenance (O&M). At the California State University system, its Sustainability Advisory Committee has allowed a studentled initiative to promote energy efficiency to develop into a formal internship program. This internship program not only includes educational energy efficiency outreach, but also allows students to work with CSU facilities staff to identify and implement energy efficiency projects through lighting equipment and usage surveys, laboratory energy assessments and student housing energy conservation competitions. 70 The California Community Colleges DEEP program has also benefited the partnership greatly. With SCE sponsorship, CCC was able to hire student interns (at three community colleges to date) to train with campus facilities/energy managers to create and implement energy efficiency projects as well as develop outreach campaigns. Citrus Community College in Glendora, California, was able to pioneer and develop the Sustainability Plan Template for all community colleges looking to develop a plan for the future of their campus. 71 The SOC Partnership does not have as much involvement from its constituents (e.g. state agencies) as the higher education partnerships do. While there have been agencies and departments that have participated in the program, many have done so due to the relationships that DGS has built with them. Navigant believes that the lack of grassroots activism or, at the very least, formal constituent involvement in programs or events, has impeded the partnership from achieving its potential for participation Confidential and Proprietary Page 7-12

58 7.3.5 Financing Among IOUs/Partnerships The intent of this research topic is to compare the differences in financing mechanisms available to the partnerships to determine barriers and best practices. Partners are participating in an increasing number of energy efficiency financing options. An increase in the availability of financing targeted at energy efficiency activities has yielded a commensurate increase in energy efficiency activities. The ability to combine financing and rebates likely has a positive leverage effect on each partner s ability to complete projects. However, the relationship between financing and rebate incentives suffers from uncertainties related to work in progress at the end of each program cycle, as discussed previously. Table 18 provides a summary of the sources of funding for each of the partnerships. As stated in the PIPs, 72 the lack of financing/funding was a primary barrier to the implementation of projects. Partnership Federal Grants Table 18. Partnership Funding Summary 73 State Financing IOU Incentives Comprehensive Technical Assistance On-Bill Financing CDCR X X X X State of California Local Bonds X X X X X X UC/CSU X X X X X X CCC X X X X X X Funding sources not only vary among partnerships, but also among partnership elements. For example, for SCE s UC/CSU partnership, preliminary interviews indicated that projects initiated through the UC element of the partnership are funded through a bond mechanism by the Office of the President. This bond is able to offset much of the upfront capital cost, which results in a quick and easy implementation of projects. Table 19 summarizes the DGS agency participation within the ARRA Loan Fund and IOU Partnership Program. The table shows that only four of 28 state agencies participate. Further, it shows that only a fraction of the total square footage, and number of total facilities, across all state agencies is addressed. Also from the table, it can be seen that those agencies that did participate in the Loan Fund and IOU Partnership program had a greater reduction in overall energy usage from 2003 through Table 19. Agency Concurrent Participation in ARRA Loan Fund and Statewide IOU Program Agency Disposition # of Agencies # of Facilities 2010 Total Bldg. Area Sq. Ft. % Change Overall Energy Use Participating ,435, % -6.7% % Change in Energy Use Intensity SCE Program Implementation Plan. 73 Information obtained from the 2013/14 SCE Program Implementation Plan: Exhibit No.: SCE-4A,SCE-4B,SCE-4C, SCE-4D Confidential and Proprietary Page 7-13

59 Not Participating 24 1,354 75,871, % -4.6% Totals ,306, % -4.9% 7.4 Recommendations Navigant s recommendations are detailed in three subsections: 1) ideas for consideration, 2) overarching recommendation applicable to all partnerships, and 3) recommendations the State of California partnership Ideas for Consideration Sempra Should Report Accomplishments Consistent with SCE and PG&E During the portfolio cycle, PG&E and SCE reported resource acquisition goals and tracked program performance through regular reporting on EEGA. SDG&E and SCG (Sempra utilities) track budget expenditures, except for incentives, in this same EEGA report. Since these are statewide programs with commensurate energy efficiency goals, it makes no sense that Sempra utilities do not report savings in a format consistent with SCE and PG&E. During our interviews with Sempra staff, they indicated that statewide partnership programs are non-resource programs. Spending is reported, achievements are not. This is not transparent accounting and it is uncertain what benefits are being received from program expenditures. These are statewide programs and should be reported in a format that is easy to aggregate across IOUs. The institutions do not distinguish between resource and non-resource savings. Programs such as the State of California Partnership that do not have an implementation contractor will find it difficult to track activity statewide when one utility does not provide tracking consistent with other partner utilities Overarching Recommendations Develop Constituent Level Energy Efficiency Goals According to Navigant s analysis, only the UC system has developed campus-level energy efficiency goals. Navigant understands that the number of facilities and agencies involved in the other institutional partnerships (including the CSU system) is much larger. However, developing goals by campus or facility not only helps to track performance but can also be a way of motivating campuses to implement more projects by engaging in friendly competition. Figure 5Figure 5 illustrates each UC campus completed and in-progress projects, along with the goals that each campus had pledged to fulfill during the program cycle. (Campus names are removed for confidentiality.) Monthly or even bi-annual status updates for each campus can foster the type of competition that can drive participation in the program through additional projects implemented. Confidential and Proprietary Page 7-14

60 Figure 5. UC Program Campus Goal Tracking System Campus Support the Development of an Energy Management Infrastructure Navigant recommends that there should be investment in developing energy management infrastructure. UC Davis use of its tracking software and Energy Dashboard and CCC Chancellor s Office s development of its Smart Energy Information project are two examples of what Navigant believes is an ideal energy management infrastructure. These examples provide real-time energy information and analyze energy usage data in a way that energy efficiency potential can be easily identified and prioritized. This infrastructure not only has the ability to understand energy consumption at a facility but also at a building level. Although these efforts require a significant portion (3-5%) 74 of energy efficiency budgeting, implementing such an energy management infrastructure will allow partners to more easily reach their demand and energy goals. For example, UC Davis believes there is a 10% behavioral savings potential within energy savings, referred to as The People Factor a savings potential that works by influencing people s behavior (e.g., turning off the coffee pot, turning off the lights when not in use). In order to address this behavioral potential, UC Davis is developing a webbased Utilities Consumption Dashboard that will allow occupants (i.e., students, staff, and faculty) and building managers to view their buildings peak performance and allow them to change their behavior to have real impacts. Assess the Role of Marketing, Education, and Outreach (ME&O) programs The California Community Colleges DEEP program was developed in 2011 for three community colleges (as a pilot) through SCE s sponsorship. CCC was able to hire student interns (at three community colleges to date) to train with campus facilities/energy managers to create and implement 74 UC Davis case. Confidential and Proprietary Page 7-15

61 energy efficiency projects as well as develop outreach campaigns. For example, Citrus Community College was able to pioneer and develop the Sustainability Plan Template, which is now available for all community colleges looking to develop a plan for their campus energy and sustainability future. 75 In addition, students are being trained with facilities and buildings managers to develop real-world skills in building operations, with an emphasis on energy efficiency project identification and implementation. The DEEP program can easily be implemented statewide (to other IOU territories and institutions) to not only help involve partnership constituents but also help improve program participation. As such, Navigant recommends that ME&O funding be channeled into constituent-involving programs such as the DEEP program to improve participation Considerations for the State of California Partnership The DGS, the face of this partnership, does not have authority over any of the 40 state agencies; it is a contracting/procurement arm for approximately 200 departments under some of those agencies. As a result, a contract or relationship with DGS does not necessarily ensure project participation or representation from any California state agencies and departments. The SOC Partnership has a mission and constituency that are very different from all other institutional partners. Because of the diverse nature of the constituent agencies and the matrix management structure, it is difficult for the program to develop the characteristics of high-performing institutional partnerships discussed previously, including the following: The program management does not have an understanding of the potential for energy efficiency that is based on analysis, covers the full portfolio of facilities, and provides an assessment at a granular operating-unit level, such as campus or agency. The full scope of agencies, facilities, and consumption that the program is targeting is uncertain. There are no encompassing guidance documents, such as Strategic Energy Plans, to organize and direct sustained efforts at achieving energy efficiency across the scope of the program. The management structure does not include broad organizational participation, track performance to plan, and strategize to make effective use of both internal resources and the support offered by the IOU partners. The State program has done a good job at developing and employing funding that is targeted at energy efficiency improvements while leveraging IOU partner incentives, but is unlikely to achieve a scale similar to the UC system without a sustained and structured approach. A sustainable and structured approach would include the ability to understand the potential for EE within each of the state agencies, and continue to track that potential. In addition to understanding the potential, top down involvement from each agency would be required in order to act on that potential. The following recommendations are intended to improve the program performance across the span of agencies served by addressing several structural and operational challenges. Clearly Define the Scope and Goals of the Partnership As discussed previously, Navigant did not find much documentation that defined the scope of the program in terms of the agencies that can participate, or any associated metrics such as annual energy 75 Confidential and Proprietary Page 7-16

62 consumption, or total number of facilities, distribution, and resulting area of qualifying facility. It is possible to set at least a partial program goal for facilities operating under the executive branch that are covered by Executive Order B (EO) however, Navigant was not provided with any analysis indicating such a goal exists. Furthermore, staff members outside of DGS most closely associated with the Executive Order were largely unaware of the IOU partnership program. Understanding the Executive Order goals in the context of the IOU partnership opportunity could also help in establishing program savings targets and funding levels. For example, it is possible to establish that program goals based on data submitted by the State 76. In this example, the 20% reduction goal stated in the EO is based on a 2010 baseline annual consumption of approximately 1,333 GWh. Data was not available indicating what percentage of this is provided by the partner IOUs, so an exact partnership goal for the EO is not available. However, a conservative assumption that 30% of consumption occurs in IOU territory results in an implied IOU service territory EO savings goal of roughly 80 GWh. Data provided to the evaluation team indicated that end-use intensities for agencies covered by the EO have decreased by 6.7% between 2003 and 2010, so in this example, a goal on 60 GWh might still remain. If the partnership program goal of about 5 GWh annually remains an ongoing target, it is possible that only 40 GWh of the 60 GWh hypothetical goal could be achieved by Recommendations: 1. IOUs should clearly define the scope of agencies to which the partnership applies 2. Define the scope of these agencies within the IOU service territories, such as the number, type, and distribution of facilities, energy consumption, and densities 3. Set clear energy savings targets for executive branch (the branch of the state government charged with enforcement and completing of laws and policies) facilities based on the requirements of the Executive Order 4. Engage non-executive branch agencies that might qualify for the partnership to define applicable goals based on their energy management objectives Define the Potential for Energy Efficiency at the Agency Level As mentioned previously, understanding the potential for energy efficiency within a partnership is essential for achieving energy savings goals. During the Schwarzenegger administration, the Green Building Executive Order S required that state agencies, departments, and other entities under the direct executive authority of the Governor cooperate in taking measures to reduce grid-based energy purchases for state-owned buildings by 20% by 2015, through cost-effective efficiency measures and distributed generation technologies. 77 As part of this Executive Order, HMG was tasked with leading the Energy Benchmarking Advisory Work Group. One task of the work group was to develop or employ a tool that could be used to benchmark and track the progress of all occupied state buildings in achieving their energy-related goals. In 2005, EPA s Portfolio Manager 78 was selected as the software package that would facilitate the Confidential and Proprietary Page 7-17

63 benchmarking process. Over the next two years, 90 to 95% of states agencies completed benchmarking of their facilities and later, as shown in Figure 6, 100% of all facility data was collected. Once HMG established the foundation of the benchmarking effort, executive branch departments were placed in charge of assessing, maintaining, and updating their Portfolio Manager accounts. Figure 6. State Facility Data from HMG Benchmarking Effort 79 Considerable effort went into the development and maintenance of the benchmarking effort. Unfortunately, during the administrative change when Governor Schwarzenegger left office, many agencies may have viewed this effort as an unfunded mandate that was not enforced; as such, it is unclear if all agencies continued to maintain their individual databases. Recommendations: 1. Revisiting the previous benchmarking effort undertaken by HMG may prove to be an effective tool used in determining the EE potential among state agencies. Benchmarking alone does not determine EE potential, it is simply one tool used in conjunction with other means of understanding a partnerships potential. 2. It is essential that a central plan be created that can survive across changes in administration. 3. Although executive order B addresses the ability for the State of California to enforce such directives, enforcement of any statewide benchmarking efforts will be paramount to its successful implementation. Enforcement (monitoring and EO oversight) will be multifold. State agencies will carry a large portion of the responsibility through the development of annual GHG inventories, 79 Confidential and Proprietary Page 7-18