Health and Safety Investments to Increase Energy-Saving Opportunities

A version of this article appears in the Winter 2018 issue of Home Energy Magazine.

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Many low-income energy use reduction programs are facing increasing challenges serving customers, due to the prevalence of health and safety problems that prevent major measures from being installed. Because there are serious problems in the home, customers must be deferred or are treated with only minor services, and high-use customers with good potential for savings do not participate or achieve only low energy savings. We conducted research to assess the circumstances under which additional cost-effective health and safety spending can be made to achieve greater savings for low-income customers and for the program as a whole.

Our research, conducted for Columbia Gas of Pennsylvania, assesses the extent of the health and safety issues that prevented energy efficiency services. We describe the current approach to the remediation of health and safety issues, analyze the results of energy efficiency program savings; and provide a decision framework to assess when, and how much should be spent on health and safety issue remediation. This article describes that decision framework. To download the full study, see “learn more.”

We found that, depending on the job, the natural-gas utility may be able to spend significantly more on health and safety and still achieve cost-effective savings, given the many opportunities for savings found in the home. We recommended that the utility pilot additional health and safety spending on high-usage homes with significant health and safety barriers and assess the level of savings that are achieved.

Decision Framework

Based on our research, we developed a decision framework for determining how much to spend on health and safety work. Table 1 shows model scenarios for inputs and outputs. The table shows a range of pretreatment energy use, home age, home size, and measure investments. Based on the inputted fields, the model calculates predicted annual savings and percent savings; the present discounted value (PDV) of savings assuming a 5% discount rate; and the maximum allowable spending on health and safety given the projected savings. The maximum spending was based upon the then-current price of $1.04723 per therm of natural gas.

In addition to showing the discounted present value of savings, the table shows 12 years of savings without discounting, which leads to higher total savings and a greater amount allocated for health and safety spending. Under Scenario 5, a large old home with high pretreatment energy use, and a large investment in air sealing and other measures, the model shows that up to $8,805 can be spent on health and safety (with no discounting) and the job will still be cost-effective.

Table 1. Model Scenarios

This model is an alternative to the utility’s method of projecting job savings and an initial spending allocation. The utility’s current method applies a specific savings factor to pretreatment energy use for each contractor based on historical savings. A regression that controls only for pretreatment use and the installation contractor accounts for 25% of the variation in savings. However, the model used in the analysis above, explains 43% of the variation of savings. Therefore, this model, which takes account of additional factors, does a better job of predicting savings. This model includes only those contractors who have statistically significant differences in savings after controlling for the other factors. Some contractors may have higher or lower savings than average, but those differences are better explained by differences in factors included in the model. Given those factors, these contractors do not have savings that are statistically different from those of other contractors.

The utility’s current method of determining the initial spending allocation allows for an adjustment if contractors feel that they can obtain greater savings than their historical percentage, given the opportunities in the home. For example, if the contractor has historical savings of 20%, but feels that he or she can achieve 25% on the home, the utility may raise the spending cap. Under the approach described above, the utility could provide that same flexibility. However, it would use this alternative model estimate as the starting point for the spending cap, rather than the simple percentage based on the contractor’s historical savings.

Takeaway from Our Research

Our research showed that when there are good opportunities for saving energy, a significant amount can be spent on health and safety remediation. Because high savings can be achieved, the job will still be cost-effective. Given the increasing prevalence of health and safety barriers in low-income weatherization jobs, it is important for program managers to assess where such additional spending is warranted, and to be prepared to spend more when significant cost-effective savings can be realized.

Jacqueline Berger is president of APPRISE, a nonprofit research institute that does public policy research and evaluation. Deb Davis is manager of Universal Services at Columbia Gas of Pennsylvania, Incorporated.

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