Eliminating Decision Paralysis on Long Island
In November of 2010, the regional chapter of Efficiency First Long Island was formed. To some of the Long Island contractors, the need was obvious—the programmatic landscape had become so cluttered that the various energy efficiency programs were making it harder for home performance contractors to do business, instead of making it easier. Not to mention all the confusing acronyms that homeowners interested in energy audits and retrofits had to navigate.
Take the case of a Long Island homeowner who heats her home with natural gas and cools it with central air conditioning. In 2010, this homeowner had the choice of three vehicles for a BPI audit. She could use the Green Jobs Green New York (GJGNY)-subsidized audit. She could sign up with the Long Island Power Authority (LIPA) for a no-cost Home Performance Direct audit. She would receive a BPI audit, lightbulbs, and two hours of duct and air sealing for free. She could pay $50 for the National Grid Enhanced Home Sealing Incentives Program (EHSIP) audit, which would provide her with a BPI audit, two hours of air and duct sealing, and access to rebates for insulation. These were just her options for audits; we’ve yet to discuss rebates and financing options.
Regarding rebates, the homeowner could get a generous 25% off insulation, duct sealing and air-sealing from LIPA. She could also get the insulation rebates from National Grid. Finally, New York State Energy Research Development Agency (NYSERDA) offered a High-Efficiency Measure Incentive rebate that she could receive for some measures in some cases. NYSERDA also provided good rates on financing options. So did the Long Island Green Homes (LIGH) program, but only for residents of the town of Babylon.
It was possible for this homeowner to receive three audits for a total cost of $50, and then access rebates for up to 75% off on certain project measures—while financing the difference. While this looks at first glance to be a great opportunity for homeowners and contractors alike, the reality was strikingly different and utterly confusing.
In 2010 a Long Island homeowner could potentially qualify for eight different programs in order to complete a home performance project. Each one of those programs had requirements that the contractor had to follow in order for the homeowner to get the rebate. Each program had various forms for each step in the process; these forms needed to be filled out and delivered to the program administrators by the contractor. Furthermore, each of the programs required its own set of audit data, completion forms, and at times quality assurance visits. The contractor was ultimately responsible for all of this.
This placed a heavy burden on contractors. Take the example of a multi-incentive project that Murtha Construction performed in early 2010. When a detailed profit and loss statement on the job was performed, administrative labor hours rivaled the hours it took to actually do the job. The net result was a loss of almost $500 on the project. Furthermore, when Murtha put together a binder of all the forms it had to fill out so that the homeowner could access all available programs, the binder was almost one-half inch thick!
On top of all of this, as programs have been modified over time it has become close to impossible for any contractor or homeowner to understand exactly which measures qualify for which programs they have access to, based on their energy consumption and their geographical location. It is extremely difficult to sell a home performance project where rebates are involved when you can’t tell the homeowner what the rebates will be. Most homeowners want to understand exactly what they’ll be getting in terms of work done on their house and the rebate amounts for that work before they decide to go ahead on a project.
This was the landscape we found ourselves in, and it clearly wasn’t working. It was time for us contractors to take control of our collective destinies and create an environment on Long Island where our industry could prosper.
The Long Island Power Authority (LIPA). This is the electric utility that serves all of Long Island. In 2008 it launched Efficiency Long Island, a ten-year, $924 million energy efficiency program that will make a wide array of incentives, rebates, and initiatives available to customers to help them to use less energy and thereby lower their bills. LIPA sponsors Home Performance Direct and Home Performance with Energy Star (HPwES). It won the Energy Star Partner of the Year award in 2009 and an Excellence award in 2010. In the period from January 2009 through December of 2011, LIPA Contractors have performed 4,529 HPD Audits and completed 2,847 HPwES projects. This has resulted in savings of 10,870,000 kWh of electricity, 161,848 gallons of oil, 17,953 Therms of gas, and 2,479 gallons of propane.
The Town of Babylon, Long Island, Green Homes program (LIGH). Former Town Supervisor (now Suffolk County Executive) Steve Bellone has always had a vision of stimulating the economy while taking care of the environment. In 2008 he launched the Long Island Green Homes program, one of the first Property Accessed Clean Energy loan programs in the country. He put Sammy Chu in charge of the program, and it has achieved more than 1% market penetration for home performance in the town of Babylon since its inception.
New York State Energy Research Development Agency (NYSERDA). NYSERDA’s mission is to help New York meet its energy goals: reducing energy consumption, promoting renewable-energy sources, and protecting the environment. NYSERDA has a broad portfolio of efficiency programs and has run HPwES in New York State for many years. Since the passage of the Green Jobs Green New York (GJGNY) legislation, NYSERDA has been able to introduce its incentives on Long Island and provide additional incentives for fossil fuel homes.
Efficiency First New York. This Efficiency First chapter represents 97 home performance contractors in New York State. Damian Hodkinson serves as co-chair while Courtney Moriarta is the chapter coordinator.
Efficiency First Long Island. This is a regional chapter of Efficiency First. Sammy Chu of the Long Island Green Homes program, Steve McKenna of Murtha Construction, and Dan Kartzman, president of Powersmith Home Energy Solutions, convened the chapter in August of 2009.
Building Performance Contractors Association. The BPCA is an established trade organization representing over 300 design professional and home performance businesses in New York State. The BPCA has been an integral partner with Efficiency First New York in myriad policy issues and was integral to the passage the Green Jobs Green New York legislation.
National Grid. National Grid is the investor-owned gas utility for Long Island. It re-entered the home performance market with the launch of its EHSIP (Enhanced Home Sealing Incentives Program).
The Long Island Town Consortium. This is a group of seven major municipalities—they encompass about 80% of the island. The consortium is led by the Community Development Corporation of Long Island. The consortium's primary role is to market home performance across Long Island.
Conservation Services Group (CSG). CSG administers a broad portfolio of efficiency programs across the United States. On Long Island, CSG serves as program administrator for the LIPA and NYSERDA HPwES programs as well as energy efficiency program delivery for National Grid.
Creating an Industry Working Group
During the first few months after forming Efficiency First Long Island, we got to know all of the stakeholders. (See “Stakeholders” for more on the various programs and players.) We realized that the one thing we could all agree on was that we wanted to see residential energy efficiency work in Long Island. We also learned that stakeholders had to follow different rules and procedures in order to execute their programs successfully. In some cases, those rules came from the public service commission, local state and regional government, or the leadership of their organizations. In other words, potential solutions that we felt made sense from a contractor perspective were in some cases nonstarters for the programs because the stakeholders’ hands were tied in those areas. A great example of this was the sharing of data across platforms. For the contractor, we were using the same exact software to model the same home multiple times. From our perspective, this seemed like a giant waste of time and effort. After engaging the stakeholders, we understood that each utility had rules to protect privacy that precluded any other way of doing things.
One of the fundamental problems on Long Island was that the various programs worked more or less in a black box. The program administrators rarely included the contractors at the program design phase, and they hardly ever spoke to each other regarding their programs. As contractors, we felt that we could be part of the solution to growing the home performance market on Long Island. In such a confusing landscape, it was easy for contractors to get frustrated, and that frustration was aimed primarily at the program administrators. That is not a strong basis for good communication, which is necessary for any kind of consensus-based improvement.
As a financing program that was gaining significant traction, LIGH found itself at the center of this mess when it began to provide financing for its homeowners and also began to navigate them through all of the available programs. LIGH’s Sammy Chu found himself brokering the various programs so they would work together more effectively. It was his vision to bring everyone around the same table to simplify the landscape for home performance on Long Island.
He approached Efficiency First Long Island with this idea. He felt that as contractors we were uniquely suited to bring everyone around the same table. We agreed with Sammy wholeheartedly and got to work.
In February of 2010 we held our first Creating an Industry Working Group (CIWG) meeting. We had about 20 people in the room, representing every group associated with home performance work in Long Island. The objective for the first meeting was to gain some shared understanding of the environments each program worked in. When money is involved, there are always big constraints, and understanding what constraints everyone is dealing with goes a long way toward building consensus in the group. Our goal for the first meeting was to get all of our positions out on the table. In three hours we got about halfway there. By the end of the second meeting the following month, every group had had a chance to explain where they had latitude, where they had limitations, and what the reasons for those limitations were.
In all honesty, the second meeting left us feeling a bit disappointed. We are all entrepreneurs, and entrepreneurs are used to seeing action happen quickly when something isn’t working. This was our second meeting of all these people, and we didn’t have anything tangible to show for it. However, the feedback we received was overwhelmingly positive. The stakeholders around the CIWG table held the keys to home performance in Long Island. We were excited to be having this conversation, which taught us a lot about every aspect of delivering home performance in our region.
Making Sure That the Tactics Fit the Strategy
While preparing for our third meeting, we agreed that it was important to develop an overall focus for delivering home performance in Long Island. We decided that the most important thing we could do in the long term was to make sure that no matter what the program—utility, state, or municipal—it would have to come across the CIWG table during the design phase. We wanted to be able to limit contractor costs before the programs were rolled out. From then on, the tactics (programs) would fit the strategy (successfully delivering home performance on the ground in Long Island).
Looking back on the process, the biggest hurdle that we had to overcome was making sure that members of the newly formed CIWG had a clear shared understanding of where one program ended and the next began. CSG stepped up to define each program, and to explain how each program did or did not interact with the other programs in every possible customer situation.
A problem arose that we did not anticipate in the working group. Energy efficiency programs typically employ an outside administrator for the program. In coming together to coordinate the various programs and to make them work well for contractors, we unintentionally created more work for the program administrators. In our case CSG was the program administrator for all three utility programs. Andrew Fisk, who led the three administrative teams for CSG, embraced the working group immediately and understood the long-term advantages of cross-program communication. It was going to take a major effort to clean up the programmatic landscape in Long Island, and the project was largely CSG’s to execute.
In our last meeting before the summer, CSG led a presentation making connections among all the program features and showing how each program interacted with the other programs, with contractors, and with homeowners. CSG created program matrices and CIWG members ensured their accuracy. This became the basis we used to grow our businesses and to provide Long Island with more-efficient, healthy, and affordable housing.
The good news is that early in 2012, we saw solutions to our three major on-the-ground challenges.
First, NYSERDA and LIPA have been working together to create dual-purpose forms that will work for each program. This will limit the number of forms we have to organize, submit, explain to customers, and get signatures for. In turn, that will limit contractor overhead. Second, the redundant data entry problem will be solved. CSG has recently started rolling out a software improvement that will allow data to be entered once by the contractor and then sent to the appropriate programs. CSG has also created a rebate calculator that will produce accurate rebate amounts from all applicable programs based on the input data. This takes the guesswork out of our customers’ rebates and allows us to be more confident in our sale.
While the CIWG has enjoyed a lot of success in its first year, it is important to note that we still face challenges. One of the biggest is getting full participation from all of the stakeholders. For example, National Grid had a representative at the table, but it was unable to use the CIWG as a vehicle to improve its energy efficiency program in Long Island due to regulatory constraints.
The National Grid EHSIP was the last program to enter our landscape. When it began, every homeowner in the state already had access to a no-charge energy audit through GJGNY. National Grid had good rebates for insulation, but our customers could only access those rebates if they paid $50 for an EHSIP direct-
install audit. The program cost contractors a lot of money in time and lost jobs, and frustrated many customers, who tend not to appreciate the subtleties of energy efficiency program rules.
In August 2011, the New York Public Service Commission (PSC) issued a directive recommending that the National Grid EHSIP be shut down. Efficiency First New York contacted the PSC about their recommendation. We requested that any redesigned program make rebates available for homeowners who take either the direct-install path or have the GJGNY BPI energy audit. We felt strongly that there was no good reason why we should ever have to audit a house twice just to give our customers access to rebates. We remain optimistic that future meetings with National Grid and staff from the Public Service Commission at the table will produce meaningful results. We believe that such collaboration will leverage National Grid's program and produce a program that benefits all the stakeholders and National Grid’s ratepayers in New York State.
Here’s what the CIWG experience has taught us:
Work hard to create a space where all participants can speak freely. Send an agenda out beforehand, so everyone can have a chance to prepare for the meeting. Maintain a professional atmosphere. It is possible to reach a consensus only if stakeholders feel that they are part of an open and productive conversation. This is about understanding the challenges the program directors and administrators face, so that together you can find solutions that work for everyone.
Quickly identify the pain the program directors and administrators are experiencing in their jobs. These folks are used to having contractors complain to them about contractor problems without understanding the greater dynamic. When we identify the challenges they face, we can shape our messaging in ways that support their program goals and address their concerns.
Have a meeting format. It is important to capture action items, to maintain accountability for those items to make sure that they are completed on time, and to give structure to your meetings. Getting this group of high-level people together is time consuming and expensive. It is important to make the most of that time. Limit the number of contractors you bring to the meeting, make sure that it doesn’t turn into a griping session, and bring your most intelligent and articulate contractors to the table.
Hold the meetings about six weeks apart. This gives everyone time to handle their action items, without letting so much time pass that they lose focus when they get back around the table.
When you run into challenges, handle them thoughtfully, but above all transparently. At the end of the day, we invite the stakeholders to come to meetings in order to create the best possible landscape for home performance to thrive. They and their organizations will still make their own choices. Our job is to ensure that we’ve transparently provided them with all perspectives. If future programs are implemented without engaging the stakeholders, or if specific aspects are implemented against our wishes, Efficiency First New York’s primary mission will be to advocate for change with our fellow stakeholders.
Creating an industry from the ground up is a formidable challenge. Efficiency First New York has seen great results happen when stakeholders roll up their sleeves and cooperatively work together and put forth commonsense solutions to the challenges we all face. The year 2011 was a whirlwind year. Now that the clock has struck twelve, we have to get busy helping this industry to live up to its awesome potential.
This article is part of a series sponsored by Home Performance with Energy Star, jointly managed by the U.S. Department of Energy and Environmental Protection Agency. The opinions, views, and ideas expressed within this article are those of the author and do not necessarily reflect the official policy or position of any agency of the U.S. government.
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