Chiller & Cooling Best Practices interviewed Mr. Rod Vickers, Account Manager, Business Customer Division, Southern California Edison (SCE).
Please describe the Business Customer Division and its role at SCE.
The primary role of Southern California Edison’s (SCE) Business Customer Division is to deliver SCE’s portfolio of energy efficiency programs to our business customers. It is our objective to use these energy incentives to help our customers put money straight to their bottom lines. The industrial sector, which I represent, spends more than $15 billion in energy costs annually in California to operate manufacturing systems and equipment such as motors and pumps, compressed air systems, steam and process heating and cooling. Our energy efficiency programs help our clients flourish and stay here in California.
We have over 100 representatives on our team at SCE. I am one of nine (9) Account Managers dedicated to our largest industrial accounts. These companies are involved in mining, aerospace, oil production, refining, and manufacturing activities. They are located in our 50,000-square-mile service territory across California.
Our mission, as Account Managers, is to become the Trusted Energy Advisor for our clients. While we also support our customers with power quality and delivery issues, our primary focus is to promote energy efficiency. SCE is in a unique and unbiased position, as the utility, to help customers reduce their energy costs. As Account Managers, we have also developed expertise in market segments. For example, my personal focus includes the refineries and oil producers.
|Rod Vickers CEM, an Account Manager for Southern California Edison (SCE), has been responsible for managing the electricity accounts of some of the larges Oil & Gas producers in SCE’s service territory.|
What funding for energy incentives will SCE have available in 2010?
The California Public Utilities Commission (CPUC), which regulates California’s investor-owned utility companies, follows the energy policies of the State of California. The state’s energy policies have been significantly influenced by the passage of Assembly Bill 32, the California Global Warming Solutions Act of 2006. Energy efficiency is defined as the top priority of this legislation and this is reflected in the CPUC’s Energy Action Plan and California Long-term Energy Efficiency Strategic Plan (CLTEESP).
During the past five years, SCE’s energy efficiency programs have saved more than five billion kilowatt-hours – enough energy to power 725,000 homes for an entire year. The programs have reduced greenhouse gas emissions by more than two (2) million metric tons – the equivalent of removing 350,000 cars from the road.
SCE recently received approval for its proposed 2010-2012 energy efficiency portfolio, and has been authorized for $1.2 billion of funding for its programs during this period. This represents a significant increase in funding from the previous cycle in order to achieve the aggressive energy efficiency goals set by the State. During the next two years, SCE will help customers save an additional two (2) billion kilowatt hours (kWh), decreasing greenhouse gases by another one million tons.
Please describe the Industrial Energy Efficiency Program (IEEP).
For the industrial segment, SCE has three programs. The first is the Industrial Energy Efficiency Program (IEEP). During the design of this program, we solicited feedback from our industrial customers. We asked their opinion on how to create a program which would motivate them to participate in energy efficiency projects. We also asked how to get a production engineer to spend time working on efficiency projects when his/her focus is to increase production. Their response identified the need for engineering and financial assistance to make energy efficiency projects a priority.
The new 2010-2012 IEEP Program is a win for both the customer and the contractors by paying the IEEP Contractor, while reserving 100% of the incentive for the customer. The customer, in essence, gets a free extension to their engineering staff.
Incentive payments are based upon performance and are determined by the amount of annual kilowatt-hour savings achieved through process improvements or equipment retrofits. Incentive rates are shown below but average 9.0 cents per kWh. On-peak demand savings are $100 per kW reduced.
Please describe the Standard Performance Contract (SPC).
The SPC program offers financial incentives to offset the capital cost of installing new high efficiency equipment or systems. Project examples may include common retrofits like lighting, HVAC and refrigeration upgrades, or more specialized process improvements, like compressed air systems, as well as customized equipment replacements. Retrofit and new equipment installations are eligible.
Incentives are based on the type of measure installed and the kWh saved and the kilowatts (kW) reduced over a 12-month period. Applicants are eligible to receive up to 50% of the total project cost. The incentive limitation is $2,400,000 annually, per project site.
Please describe the Express Efficiency Program.
The third program (used by smaller businesses) is the Express Efficiency Program. This program provides pre-calculated incentives for lighting, air conditioning, food service equipment, refrigeration, agricultural equipment, and premium efficiency motors.
To qualify, new equipment must replace existing equipment. Certain retrofits and upgrades also qualify for rebates. All equipment must be new, whether used to replace, retrofit or upgrade existing equipment. Incentives are offered on a per-item basis and limited to 100% of total measure cost. To learn the rebate value of each item, customers can access our published lists of qualified itemized measures at www.sce.com/rebates.
Rebates are paid on leased equipment if the equipment is acquired through either a lease-purchase agreement or a standard lease with a term of five or more years. Mandatory inspection of installed equipment is required for incentive rebates totaling $7,000 or more. Random inspections are at the discretion of SCE. Below is our itemized list of rebates for new premium efficiency motors.
How does SCE work with the IEEP Contractors?
The contractors are divided into segment-specific markets so that they can develop market expertise with regard to energy efficiency projects. These segments include food processing, warehousing, fresh water/wastewater, oil and gas, and manufacturing to other IEEP contractors.
We are currently in negotiations and preparing to announce our IEEP Contractors for the 2010-2012 period. All of our contracts are based on pay-for-performance contracts.
Where are the opportunities to save energy?
There are always opportunities to be found in industrial processes. Compressed air systems are always high on our radar screen. Currently, we have a customer working with an IEEP contractor on a refinery’s compressed air system. We believe there is a 10 MkWh opportunity, using state-of-the-art controls. Compressed air has always been a strong measure for both IEEP and SPC. It is a huge energy cost for our industrial customers and controlling it properly is usually the main thing we look at. Identifying and fixing inappropriate uses is also an opportunity for savings.
Taking load measurements and matching the right air compressor at the right pressure and standard cubic feet per minute (SCFM) is also a high priority. Going from standard rotary screw air compressor with a dc motor to a Variable Frequency Drive (VFD) air compressor is very simple and saves money in the right applications. It is just a matter of matching up the right technology with the right application.
It is surprising how compressed air systems can be neglected. I had a client with a 150 horsepower air compressor, supplying control and instrument air that had a compressed air receiver tank completely disconnected from the system. The client felt he had enough capacity in the distribution piping. After sharing some quick calculations from our field engineer, we began using the receiver and achieved good savings from it, while also increasing reliability. This is a great example of a low/no cost opportunity for fully utilizing compressed air systems.
What advice do you give your clients regarding managing business rates from SCE?
In addition to striving for continuous energy improvement, I tell all my customers to think about flexibility and being able to respond to price signals. It is well worth learning how to become price responsive and to be able to shut down or reduce demand during peak pricing periods.
Our Technical Assistance and Technical Incentives Program can help our business customers to be price/demand responsive. We can complete a technical assistance audit to quantify loads which can be reduced and/or shed during high rate periods. If a customer installs controls, SCE will provide incentives to help them.
I was part of a team at SCE that helped a lead-acid battery manufacturer become more price/demand responsive. They would charge newly-manufactured batteries, to the tune of 3 MW during peak periods. We contributed $580,000 in technical incentives toward the development of software and control systems allowing them to more easily respond to price signals. This, coupled with other energy efficiency projects related to compressed air, dust collection systems, and lighting resulted in significantly lower energy costs and ultimately, kept this customer from moving out of state and saved 350 jobs for Southern California.
What advice would you give to other utilities designing industrial energy efficiency programs for the first time?
Don’t reinvent the wheel. I’d encourage them to investigate what‘s available on the web for starters. A note, starting in 2010, some of theses programs discussed will undergo name changes.
SCE has always been cooperative and open about talking with other utilities to share best practices and our account representatives are happy to talk about what we have to offer. We’ve been doing this for 20 years and are leading the charge. The California Energy Commission Site at www.energy.ca.gov is also a great site and resource.
Thank you for your insights.