Using Energy Performance Rating to Link Business Actions to Environmental Priorities

1. Bill WhiteU.S. EPA – Region 1National Symposium on Environmental InformationLas Vegas, NVNovember 30, 2005 Using Energy Performance Rating to Link Business Actions to Environmental Priorities

2. Southwestern Connecticut - Fairfield County • High value economic climate • Ten Fortune 500 companies • Numerous other corporate headquarters • Global financial services center

3. Southwestern Connecticut has big environmental challenges • Non-attainment for ozone National Ambient Air Quality Standard • High fine particle levels • Summertime exceedances of standard are driven by: • High electricity demand from air conditioning loads • Electricity transmission and distribution systems are old and low capacity – can’t import enough power to meet high demand • Dirty local power plants must be dispatched to meet demand on peak days • State has adopted greenhouse gas emissions targets

4. SW Connecticut’s old electricity infrastructure causes other problems • Electric reliability is shaky • Annual threats of brownouts and blackouts undermine high-value business climate • Raises prices – local generation is both dirty and expensive • Congestion pricing places cost burden on local business customers • Proposed solutions face barriers • New transmission lines are expensive and face significant local opposition • Additional generation cannot add to local air quality problems

5. Energy Efficiency appeals to many players in SW Connecticut • State Environmental regulators prefer zero emissions solutions to energy infrastructure and reliability problems. • Business community thinks that the grid operator ISO-New England and electric distribution utilities have been overly focused on transmission upgrades - they want to take action – and get credit for it. • Utility regulators need to shore up reliability of local power grid and ameliorate impacts of congestion pricing.

6. Despite EE’s advantages, key players were skeptical • Company facility managers doubted that any energy efficiency opportunities remained in their buildings: “We’re doing a good job.” • Utility energy efficiency program administrators: • had already spent millions upgrading buildings in the region • believed they already know how to improve energy performance - new approaches were unlikely to add value

7. What did EPA bring to the table? Performance Measurement • Businesses • Constantly measuring performance across their operations • Want to know how they compare to the competition • Senior corporate officers must report performance to boards and shareholders • Environmental regulators • Need to show environmental results to the public • Utility regulators • Need to show energy savings and peak energy savings • Utility efficiency programs • Need to show that public benefit energy efficiency funds are achieving results

8. Millions were spent on energy efficiency: Why spend more? • Traditional utility energy efficiency programs are prescriptive and focused on equipment replacement – not performance • Savings calculations were engineering estimates based on component efficiencies – not actual performance • Modern building systems are complex and require ongoing maintenance and tune-ups to achieve optimal performance

9. EPA had extensively studied the status quo in building energy performance 400% variation in energy use intensity of buildings (Source: Commercial Buildings Energy Consumption Survey) Variation that is not explained by age, technology, hours, size, climate

10. New technologies alone do not guarantee performance California Office Buildings Buildings 20% better than code can have an energy performance score ranging from 1-100. Not sending right market signal. Source: NBI, California Board for Energy Efficiency, EPA

11. Did CT companies and utilities really know well their facilities performed? • EPA was skeptical of utility and company claims that they knew how well their buildings were performing - meetings suggested they were not using performance measurement tools. • Until recently, a standardized, comparable metric of whole building energy performance did not exist! • EPA’s Energy PerformanceRating System was developed to meet this need. • You can’t manage what you don’t measure!

12. U.S. EPA Energy Performance Rating Is 10 MPG high or low for an automobile? Is 90 kBtu/SF/YR high or low for a hotel? Answer: Even some facility experts don’t know Answer: Common Knowledge Fuel Efficiency MPG Energy Efficiency 1 - 100

13. Energy Intensity of Office Buildings Number of Buildings 25 50 75 100 1 29.9 86.0 165.7 121.1 339.4 EPA Rating & Energy Intensity (kBtu/ft2-year) Worst Performers Best Performers * Normalized EUI varies widely * 30 kbtu/ft2 to 340 kBtu/ft2 *Age and equipment not significant drivers of EUI

14. The ENERGY STAR Approach Commit to continuous improvement Make benchmarking a regular part of organizational practices

15. How Does the Energy Performance Rating System Work? • Uses actual energy consumption data • Easy-to-use, secure, web-based, simple data requirements • Easy-to-understand 1-100 performance score • Normalizes for Building Variables • Weather, size, occupancy, hours of operation, number of computers • Use it to: Benchmark, Compare, Inform, Track and Measure, and Reward Success

16. 0 25 50 75 100 • Recognition: Earn the ENERGY STAR Buildings that score 75 or better can now apply for the ENERGY STAR. Qualifying buildings must also meet standards for indoor air quality, lighting, ventilation, and thermal comfort (ASHRAE)

17. Good information is not necessarily good news • Initial benchmarking results for 12 million square feet of prime office space revealed an average score of 23 out of 100 • Several company facility managers did not believe the results, and were concerned about their jobs • Utilities did not like poor performance reports for buildings they upgraded • Many participants questioned the benchmarking tool – and EPA

18. Performance information must persuade decision makers • EPA’s business partner - The Business Council of Southwest Connecticut (SACIA) - had access to senior corporate decision makers. • EPA and SACIA worked with other major players, CT DEP, CT DPUC, CT ECMB, and electric utilities. • Benchmarking results got everyone’s attention: • Bringing just four of the benchmarked buildings up to average performance would save 27-41%, equivalent to almost 150 million kBTU per year, $2 million in annual savings, and thousands of pounds of greenhouse gas emissions and other pollutants

19. OK, we believe you, now what? • EPA proposed whole building energy performance pilot program called “retro-commissioning.” • Partnered with national experts to design program. • Comprehensive approach to building energy performance looking at operations, maintenance, and equipment upgrades. • Utilities, companies, and regulators ultimately supported the program due to potential revealed by benchmarking performance measurement. • CT DPUC approved $950,000 for the pilot project.

20. Pilot Program is delivering results • Five buildings were selected to participate. • One building has already documented energy savings of over 30%. • Others expect savings of 10-20% or higher • Initially skeptical electric utilities are proposing to more than double funding for the program this year to over $2 million. • Many other companies in SW CT are already expressing interest. • Regulators are supporting expansion of performance-based energy efficiency programs throughout the state.

21. Conclusion: Performance Metrics are powerful tools, but: • They must be credible. • They must be easy to understand across many different groups. • They must be easy to use. • When using them, EPA must be honest and open about their proper use and limitations: • Don’t overstate the capabilities of your tools and information. • Take all questions seriously -the customer is always right.

22. Closing observations - so far • EPA has tremendous credibility with the public and state regulators - use it wisely! • Recognition from EPA is a strong motivator, especially for senior corporate officials. • Voluntary programs like Energy Star rely on information to motivate partners to take action. • Think about which decision makers - state regulators, businesses, utilities - need to take action, and make sure they get the information. • Be aware of the potential impact of the information you are providing.

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