Tucson Electric rolling out new rebates for energy-saving steps

Customers of Tucson Electric Power can take advantage of enhanced and new energy-efficiency incentives, after state regulators approved the company’s latest plan to meet a state mandate for energy savings.

The Arizona Corporation Commission approved TEP’s latest plan Nov. 10, about three months after rejecting the company’s request to refund more than $12 million in unspent funds from a customer surcharge supporting energy-efficiency programs.

Instead, the commission ordered TEP to come back with a plan to use the money for expanded programs.

TEP had been operating under an energy-efficiency plan approved in 2019, to meet the commission’s mandate that state-regulated power companies achieve energy savings totaling 22% by 2020.

“Updating, and I dare say, modernizing our programs will be very beneficial to our customers, as we will be adding 21 new measures and increase our portfolio to have a greater impact in reducing (energy demand) peaks,” TEP Vice President Dallas Dukes told the commission before it approved the plan.

Under TEP’s new Demand Side Management Implementation Plan, proposed by TEP and amended by the commission’s utilities staff, TEP has a program budget of about $23.8 million for 2022 and 2023, after a previous annual budget of $22.9 million. The company also is in line for a “performance incentive” of about $988,000 for complying with the rules.

But the surcharge TEP customers pay to support the energy-efficiency programs will not change from the current rate of about 0.3 cents per kilowatt hour, which works out to about $2.30 per month for the typical home customer.

TEP had proposed an increase in that surcharge, but the Corporation Commission at its Nov. 10 open meeting adopted an amendment from Commissioner Jim O’Connor to use about $800,000 of the unspent earlier funding to keep the surcharge unchanged.

TEP’s plan passed as amended on a 4-1 vote, with Commissioner Justin Olson voting against it on grounds the current measures of program performance fail to gauge the true cost impact on ratepayers.

Consumer and environmental nonprofit groups that had pushed for more energy-efficiency programs applauded the commission’s approval of TEP’s plan, as well as a similar plan approved for Arizona Public Service Co.

“The Commission’s vote to extend and expand energy efficiency offerings demonstrates that they recognize the programs are a smart investment,” said Diane Brown, executive director of the Arizona Public Interest Research Group Education Fund.

Brown said that over the last decade, for every $1 of ratepayer money invested in energy efficiency programs, about $3.69 in total benefits was returned to ratepayers.

“Energy efficiency programs provide certainty to businesses and financial benefits to ratepayers,” Brown said in a joint statement of support with the Southwest Energy Efficiency Project and Wildfire, an antipoverty group.

Adding and subtracting

Under the approved plan, TEP will enhance many of its residential and commercial energy-efficiency incentive programs — some of which have been offered since 2008 — and add several new programs and drop several programs not deemed cost-effective.

TEP’s commission-approved plan includes an enhanced program for schools and upped rebate amounts for many programs, while giving the utility some flexibility to adjust incentive levels on some programs and move up to 50% of funding between programs or customer segments as needed to leverage unused funds.

All of the energy-efficiency rebate programs undergo a benefits-to-cost analysis based on potential savings, and the commission staff rejected several programs that were not deemed cost-effective.

Those included a program offering rebates for “advanced power strips,” which make it easier to turn off standby power consumed by devices like TVs, which TEP had sought permission to drop because they are not cost effective.

Among residential programs, proposed rebates for induction cooktops were rejected by the commission staff on grounds they wouldn’t provide net cost benefits.

TEP also is reorganizing some programs, formalizing and enhancing a pilot energy-efficiency program for schools, and adding pilots for “advanced rooftop controls,” which boost building efficiency, and enhanced pilot load-management programs that include things like thermal storage using customers’ water heaters and connected thermostats that TEP can control to help reduce demand peaks.

The company is also boosting incentives for new construction and multi-family housing.

Here’s a look at some of the program modifications and new measures:

Residential

TEP already offers rebates of up to $900 to replace an older home HVAC unit with an Energy Star-rated heat pump, as well as rebates for things including duct sealing, air-conditioner tuneups, efficient pool pumps, smart thermostats, shade trees and water heaters.

Under the plan approved by regulators:

In 2022, all smart thermostats offered under TEP’s rebate program will be “demand-response enabled,” allowing customers to voluntarily participate in a “load management” program allowing the utility to adjust customers’ thermostats as needed to lessen demand peaks, in exchange for a $40 annual incentive that could be raised to $80.

A rebate program for high-efficiency Energy Star rated heat-pump water heaters was suspended as a standalone program and will be offered as part of a load-management program.

TEP plans to offer a free “virtual checkup” home-energy auditing service that provides similar benefits to an in-person audit, using a mobile app with interactive video.

Under a new measure, custom HVAC installations including space heating and cooling technologies that make economic sense will be considered and possibly eligible for rebates of up to $5,000 per home (up to 75% of the cost or 85% for qualifying lower-income customers).

TEP will offer new rebates for attic insulation and air sealing to encourage homeowners to upgrade to R43-rated insulation (75%/85%).

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Multi-family housing

TEP will offer a new, comprehensive whole-building measure for multifamily properties, bundling previously approved measures with other efficiency improvements into a single energy saving combination to be paid on a per-kilowatt-hour basis, rebating up to 75% of costs or 85% for buildings housing low- to moderate-income customers.

New-home construction

TEP will for the first time include manufactured homes that meet federal Energy Star efficiency standards in its new-home construction rebate program.

The utility also will add a 75% rebate for each connected smart thermostat and will offer a “prescriptive path,” providing rebates of $200 per dwelling unit as well as rebates for electric water heaters.

Shade trees

TEP limits its discount shade-tree program to three five-gallon trees per year, and wants the ability to limit that to fewer than three to serve more customers (home customers pay $5 per five-gallon tree; non-residential customers pay $10 per five-gallon tree or $25 for each 15-gallon tree).

Commercial rebate programs

TEP plans to continue its commercial and industrial energy-efficiency rebate program, which is called EasySave Plus, but with a current cap of $600,000 per project, the utility has also capped any individual customer’s rebate at 25% of overall program budget.

The company also won approval of a streamlined rebate process for commercial projects worth less than $10,000 that follow a prescribed qualification process.

Three new commercial rebate programs were approved, comprising new rebates for ductless mini-split heat pumps, indoor agricultural dehumidifiers and projects to replace existing T8 fluorescent tube and ballast lighting with more efficient LED panels, which are already eligible for discounts under TEP’s direct product subsidies.

Meanwhile, TEP dropped an array of commercial energy-efficiency measures, including rebates for commercial kitchen exhaust fans, energy-efficient exit signs, evaporative cooler fan controls, energy-efficient motors and window films.

Schools upgrade

TEP won approval to make its Schools Energy Efficiency Pilot Program, which covers 100% of the cost of efficiency improvements such as new HVAC systems or LED lighting, a formal program going forward.

A per-district maximum incentive of $150,000 was dropped for a $100,000 per-school limit.

TEP plans to spend $1 million on the schools program in 2022, and regulators gave the company the ability to increase that budget as needed.

Demand response

TEP sought changes to its commercial demand-response program, which helps the utility manage demand peaks by allowing it to curtail power delivery to participating customers when needed in exchange for bill credits.

The company won approval to require participating customers to provide at least 100 kilowatt-hours of peak demand reduction when called upon, and proposed several new demand-response programs.

TEP also won approval for a new Load Management Pilot Program, including previously approved demand-response elements such as battery storage at the “feeder” power distribution level, thermal storage through smart water-heating systems, and connected smart thermostats.

New load-management measures include “rate optimized” smart thermostats that work with time-of-use electric rates; connected pool-pump controls, and customer-sited battery storage for commercial ratepayers.

But the commission rejected TEP proposed incentives for HVAC thermal storage, residential battery storage, and connected water heaters, after the staff found no net cost benefits.

Electrification

TEP had proposed incentives for a “Beneficial Electrification Pilot Program,” offering incentives for converting certain vehicles and equipment to electric power.

The commission approved measures offering rebates for standby truck refrigeration, which keeps trucks refrigerated while loading and unloading without running their engines; and electric cargo tug vehicles used for baggage and packages.

But the commission rejected proposed incentives for the purchase of electric forklifts and electric cargo belt loaders, deeming them uneconomical.

‘Micro-pilots’

TEP also won approval to work with stakeholders on “micro-pilots” to explore the value of other potential energy-efficiency measures, including mobile-home weatherization, community network connectivity for energy management and shared community energy storage.

For more information on TEP’s residential and commercial energy-efficiency rebate programs, go to tep.com.