A Different Kind of Utility

August 3, 2012 | David Leipziger

The District of Columbia has some of the nation’s highest energy prices. While this may contribute to the fact that it leads the nation in LEED- and ENERGY STAR-certified building space per capita (because owners want to reduce their steep utility bills), it also means that the city’s low-income populations spend almost half of their income on utilities.  Similarly, although DC has installed more than 1.3 million square feet of green roofs and almost 500 solar installations, it still has one of the highest state unemployment rates.

In short, the city could do much better in linking its environmental development to its socio-economic development. In 2008, the city created the DC Sustainable Energy Utility (DC SEU) through the Clean and Affordable Energy Act legislation to better synthesize those efforts.

The DC SEU is a type of utility: It uses ratepayer funds to provide services that reduce energy consumption for commercial and residential buildings across the District.  It also acts as an economic development agent. Its goals are to simultaneously save energy, create local jobs, and support professional development in the city.

After a competitive bidding process in early 2011, the District Department of the Environment, which oversees the DC SEU, selected a non-profit called the Vermont Energy Investment Corporation (VEIC) to run the project. VEIC created and still operates Efficiency Vermont, the first and perhaps most effective efficiency utility in the nation. To acclimate to and succeed in the unique DC market, VEIC brought on six local firms as partners to benefit from homegrown expertise and talent.

As one of those partners, IMT is responsible for designing and implementing a portfolio of programs that focus on improving market conditions for energy efficiency on DC’s home turf. We have turned our national best practice expertise into local initiatives that create jobs and enable energy savings, focusing on three core areas: ENERGY STAR benchmarking, green leasing, and energy codes.

IMT is helping the DC SEU to support ENERGY STAR benchmarking because establishing a baseline for building energy performance is the most fundamental step to improving it, and because the practice is required by law for large buildings. We coordinate outreach and education to building owners to bring them up to speed on what benchmarking is and why it’s important; we are also engaging local energy services firms to promote the business opportunity exposed by DC’s benchmarking law.

Our second DC SEU initiative seeks to locally promote green leases, addressing the split incentive problem between landlord and tenant, wherein neither party is motivated to substantially reduce energy use because only one of them pays the utility bills. This effort involves landlord education and outreach, but also training courses specifically geared toward commercial brokers, to build capacity in the local leasing market. A building with landlord and tenants all financially motivated to save energy will be much more likely to pursue efficiency investments.

Thirdly, we are helping the DC SEU to promote maximum compliance with the best possible energy codes. Complying with the energy code is more than meeting a compliance standard: it is critical to saving money throughout the lifetime of a building. We advocate for stringent energy codes application, provide resources to the private sector about energy code benefits, and offer training courses to code enforcement officials. This capacity-building effort is important because stronger enforcement will yield substantial energy savings and more local green jobs.

Although IMT gathers best practices from around the country (and the world), we have the opportunity to practice what we preach in our local environment. For the DC SEU, we are leveraging our areas of expertise to satisfy local needs for energy use reductions and economic development. And those goals can be self-reinforcing. We understand the primacy of saving money, creating jobs, and building capacity in both the public and private sectors. And with the DCSEU, we have a chance to demonstrate that overcoming market barriers to energy efficiency can be both economically and environmentally beneficial.

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David Leipziger

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