Why is the Community Engagement Approach so new and unfamiliar to Utility Bureaucracies?

The Minneapolis Clean Energy Partnership is trying to turn the tide of history against past utility incentives which explain why community engagement is not yet their standard practice for energy efficiency. Energy utilities have historically had financial incentive not to make it too easy for too many people to achieve significant energy savings because utility profits continue to be dependent upon their raw sale of Kilowatt Hours. This financial dependency became very apparent when Xcel requested to the PUC to raise rates specifically in response to their customer base as a whole consuming less electricity than previous years.

While energy utilities might lack an internal financial incentive to assist their customers in using a lesser amount of the product they sell, it is widely known that they have been required to do so by state laws. Because of the need to meet conservation improvement mandates, utilities are have an incentive to gather the lowest-cost energy savings regardless of any other non-mandated social benefits. As a result, many utilities have created laudable energy efficiency programs that are accessible to people with who have home ownership and a high credit score. That is the target market segment which offers utilities the lowest-hanging fruit energy savings- meaning the greatest amount of conservation improvement mandate credits per dollar invested into programming. 

 The combination of the above mentioned incentives has translated into utilities being inclined to take a one-size-fits-all marketing- based approach to recruiting and retaining participation in their home energy saving programs (as described in this blogpost). While this more passive method of soliciting participation might be the least costly approach up front, it does not have high effectiveness for energy savings in situations where the main barriers to significant energy saving gains are social in nature as opposed to purely financial (as described in this blogpost).

Utilities have not had enough incentive to compel them to pay significant staff time toward advancing a community engagement approach, until they are moved to do so by political pressure. The Minneapolis Clean Energy Partnership is the result of that needed political pressure, as both utility companies now proclaim to be serious partners with helping Minneapolis meet its ambitious climate & energy saving goals. 

Low-income energy efficiency programs may show up on the low end of a strict cost-effectiveness scale in utilities conservation improvement reports . However, utility companies do have some internal financial motivation to assist the lower to middle income in saving energy to the extent that it enables them to pay their bills more consistently and on time. In order to make the case for utilities to adopt the community engagement approach, we need to have a strong case that it will actually be more successful in reaching energy saving goals than the familiar strategies limited to marketing, as the Next Blogpost explains why.   

 A Companion Solution: Change Utility Incentives

In order to target deeper and less accessible energy savings, we will need to somehow incentivize utilities to invest time into the needed relationship building. Minneapolis provides fertile ground necessary for community engagement to take place because utility management is already in partnership with local government. However, what can we do about places that do not have city-utility partnerships or situations where groups are unable to fund community engagement projects? We  could quantify social benefits and incorporate them into the cost-effectiveness calculations that utilities utilize. We could also add a bonus multiplier to energy savings that result from serving low-income and disadvantaged communities. If we do not make modifications to utilities' incentives or politically compel them to adopt a community engagement approach, then the companies will be pressured by more narrowly defined cost-effectiveness requirements to only target low-hanging fruit in their quest for energy savings. That will leave the "hard-to-reach" communities behind and vulnerable to fuel price spikes. 


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