Evaluation of Orange and Rockland Utilities, Inc.`s competitive bidding program for demand-side resources. Final report

Abstract

Background: This report describes the results of a process evaluation of Orange and Rockland Utilities' (O&R) demand-side bidding program in New York State in 1991 and 1992. The bidding program, scheduled to operate until January 1, 1995, is implemented by two energy service companies (ESCos) in O&R's New York State service territory. The process evaluation methodology included interviews with utility staff, ESCo staff, and participating and nonparticipating utility customers. Objectives: The project's goals were to evaluate the delivery mechanisms and program administration's effectiveness; analyze customer participation and nonparticipation; develop an impact evaluation plan for the State bidding program; and identify program stren_hs and weaknesses, and recommend ways to improve DSM bidding programs in the future. This report is the final product of the evaluation. Results: The two ESCos had enrolled 14 customers in the program by summer 1992. One company had achieved 90 percent of its 2.75 MW bid and the other had achieved less than 90 percent of its 6.9 MW bid. The ESCos' contracts required them to achieve 90 percent of their targeted goals by April 1992 and, if the goals were not achieved, O&R could terminate the agreements or levy penalties against the ESCos while they continued to work towards their goals. In the unsuccessful ESCo's case, O&R has levied a penalty, while allowing the ESCo to continue to operate in its New York State territory. Critical factors in the successful ESCo's case were bidding a reasonable amount of capacity for the market and targeting marketing efforts to appropriate customers. Customers most interested in the program included those with limited access to capital and medium-sized firms with limited cash flow, particularly schools and hospitals. An unexpected result of O&R's DSM bidding program was that it promoted energy conservation among customers who chose not to participate in an ESCo program. Six of the seven nonparticipants interviewed chose to proceed on their own or to use the O&R rebate to install measures recommended by the ESCos.

Handbook of evaluation of utility DSM programs. [Demand-Side Management (DSM)]

“…Process evaluations can address program-design issues before the program is in the field, Evaluations conducted during this stage can lead to early program enhancement and more effective long-term implementation (Peters, Gustafson, and Vowles 1987;Peters, Barry, Horowitz, and Gordon 1990). The most critical issue for investigation during this period is to determine whett_er the goals of the program are explicit and whether they are being met.…”