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Niagara
Mohawk Power Corporation’s (NMPC) Subscriptive Service represents an intriguing,
albeit highly controversial, model for customer energy efficiency programs.
Responding to large customers’ needs for choice and rate relief while maintaining
an emphasis on achieving prescribed energy savings goals, NMPC designed
a new energy services concept by unbundling its services. The Subscriptive
Service provides an option for large customers that are committed to efficiency
but elect to cover the costs of such upgrades on their own. Concurrently,
NMPC continued to provide rebates to customers that determined that the
Subscriptive Service was not economically feasible or who were pleased
with prior DSM offerings.
The Subscriptive Service pilot program tested a new means of giving
customers the incentive to invest in energy efficiency. Those that agreed
to complete comprehensive energy audits which recommended energy conservation
measures (ECMs) for their facilities were given a rate discount. The discount
represented the costs they would have paid to be eligible for the utility’s
traditional DSM incentives. Through this program mechanism the Subscriptive
Service provided increased flexibility for customers to mine and pay for
efficiency upgrades.
As with any test, measuring the effect of the program has been a major
program emphasis and challenge. What was the direct program affect? Which
recommended measures were installed? And most importantly, how effective
was this program design compared to more traditional models? Unfortunately,
there was no clear control group with which to measure savings, determining
the quality of the audits was complex, as was ascertaining the effect of
the program within a changing regulatory context. Nevertheless, by tieing
NMPC’s shareholder incentives to the program’s energy savings goals, the
Subscriptive Service earned requisite utility attention and resulted in
nearly 50 GWh of energy savings.
While many efficiency advocates have been alarmed by the Subscriptive
Service, claiming that it is simply a means for industrials to "opt-out"
of paying their fair share of system efficiency costs, the model may have
greater transferability and applicability than first meets the eye. The
Subscriptive Service not only provides for customer choice but is an exciting
model of how a utility can form a bond or contract with customers to be
efficient. Rather than offering rebates and other direct incentives to
garner utilities’ least-cost resource, the Subscriptive Service represents
a new construct in which customers pledge to consider certain efficiency
steps in the absence of incentives. The model, rather than the "death
of DSM," may actually provide for a new, perhaps very resilient and
logical means for the capture of energy efficiency.
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