NB Power lacks 'coherent strategy' for energy efficiency: consultant

NB Power's cancellation of a popular and effective heat pump rebate program in 2016 in favour of funding an unpopular and ineffective home retrofit program instead is part of an incoherent approach to energy reduction initiatives at the utility, the Energy and Utilities Board was told on Thursday.

"There's not a particularly coherent strategy for the residential programs," said Angela Vitulli, a Boston area energy consultant participating for the annual rate hearings in Saint John.

Vitulli was hired by public intervener Heather Black to evaluate the "cost effectiveness and reasonableness" of NB Power's energy efficiency and consumption reduction initiatives, or the so-called "demand side management" (DSM) programs.

The utility is seeking permission to spend $23.2 million beginning in April to reduce electricity demand by customers — especially at winter peak times. NB Power executives have testified that encouraging efficiency is cheaper for it than building new generating plants or buying new supplies of power to cope with rising demand.

But a checkered history of success with previous DSM programs has come under intense scrutiny at its ongoing rate hearing.

Scrapped heat pump program

Vitulli was especially critical of the abrupt ending of a highly popular $500 heat pump rebate program that NB Power launched in September 2015 and cancelled one year later. The utility expected to finance 3,000 units, but consumers used the rebate to buy and install 14,000 instead.

That put the program well over budget and led NB Power to concentrate resources on a second program that was much less popular. 

It required homeowners to pay for an energy audit and complete any recommended insulation upgrades before qualifying for a heat pump rebate. 

NB Power subsidized the cost of insulation, but interest among homeowners was low. 

In the first two years, 4,000 homes were projected for upgrades, but only 457 owners came forward. For those who did, audits showed the utility spent more than double for every kilowatt hour of electricity reduced than the rebate program achieved.

"Its (the heat pump rebate) numbers were much better than the other (program)," Vitulli said under questioning by J.D. Irving lawyer Christopher Stewart. 

"It was a successful program and it seems odd that NB Power chose to discontinue it — their reasoning being it was too successful and it was taking up too much of their budget. NB Power should be directing its DSM resources to programs that are successful and are cost effective and that have demand for them from their customer base."

Ted Leopkey of NB Power defended the switch, claiming the heat pump rebate was so successful it caused a "transformation" in the market and rebates were no longer needed for high efficiency heat pump installations to continue in the province.   

Vitulli also criticized NB Power's product rebate programs, including a point of sale LED light bulb rebate program financed by NB Power that subsidized the purchase of 432,000 bulbs in 2015 and 2016.   

A follow-up study showed "free riders" — people who intended to buy the bulbs without a rebate — made up 40 per cent of the purchases pushing the cost of the program far beyond its benefit.

"I take it you are suggesting a failure or inconsistency (by NB Power) to choose these programs based on cost effectiveness or feasibility," asked Stewart.

"Yes," replied Vitulli, who was forced to call into the hearing from the United States because of scheduling problems.

EUB lawyer Ellen Desmond also questioned NB Power's track record of executing its plans, noting it had asked for more money than it spent on DSM programs at two rate hearings in a row — $6.9 million too much in total.

"There are dollars being left not developing the program," said Desmond.

"Isn't it an alternative that perhaps you budget a little more conservatively, and if you are successful, well then go forward and develop the program in the future? But the result would be to keep rates a little bit lower?"   

Leopky said the utility has programs better organized this year and the requested budget is reasonable.

"I am not sure it's appropriate to use the past performance of the 15-16 and 16-17 years, which were ramp-up periods, to forecast future targets," he said.