Duke Energy expands energy efficiency programs for apartments
North Carolina’s electric utilities are breaking new ground in the state by offering energy-efficiency programs designed exclusively for landlords of apartment buildings and other multifamily housing.
The efficiency programs from Duke Energy Progress and Duke Energy Carolinas will supply free equipment to apartment owners and managers: lighting, faucet aerators and low-flow shower heads.
But the beneficiaries won’t be the people sitting in the management office. Instead, they will be the renters who will see lower monthly bills for power and water. The landlords would benefit but only indirectly, in the sense that they could market their rental units as high-efficiency.
The programs are designed to attract one of the most elusive sectors for energy efficiency – renters – and remedy what some see as inequitable treatment of apartment dwellers.
For years apartments dwellers have been subsidizing financial incentives for more affluent homeowners who use North Carolina’s energy efficiency programs, noted Ken Szymanski, executive director of the Apartment Association of North Carolina. That’s because all customers pay the cost of energy efficiency programs – incentives, marketing and administration – even though not all customers have access to these programs.
Duke Carolinas’ multifamily housing program went into effect a year ago, while Duke Progress’s is awaiting approval from the N.C. Utilities Commission and is expected to become available next year. The Public Staff, the state agency that represents the public in utility rate matters before the N.C. Utilities Commission, endorsed Duke Progress’s proposal a week ago and the Utilities Commission is expected to approve it soon.
“Rental and multifamily housing is one of the toughest markets to reach for energy efficiency programs because of several barriers,” said Jack Floyd, an engineer with the Public Staff. “The typical apartment dweller with a one-year lease would not have any incentive to pay for improvements to the building owned by the landlord.”
The new Duke efficiency programs are highly unusual in that they involve savings in water usage, which is only tangentially related to electricity and will result in some lost sales to water utilities.
“What’s happening is that you’re saving electricity on water heating,” Floyd explained.
About 20 percent of Duke’s 2.7 million North Carolina residential customers live in multifamily housing. The two Duke efficiency programs are expected to result in about 1.3 million bulbs, aerators and shower heads installed in the next few years.
Residential energy-efficiency programs, which are designed for homeowners, have long been open to renters and landlords, but these programs would typically hold little appeal for multifamily housing. In these traditional programs, homeowners qualify for a financial incentive if they install duct sealing and insulation or buy high-efficiency appliances. Renters are not likely to make those big ticket expenditures in buildings they don’t own.
One feature of traditional efficiency programs that has made sense for renters is free or discounted lighting, such as LED or CFL bulbs, because the renters would directly benefit from those small investments.
Szymanski also said that apartments tend to be less efficient than private homes, in part because no one has the incentive to fix leaky ducts and upgrade aging appliances. “There’s an awful lot of product out there built in the 1970s, 80s and 90s that’s so-so in efficiency,” he said.
The cost of efficiency programs, like the cost of renewable energy and the cost of power plants, is ultimately paid by customers in their monthly bills. With efficiency programs, customers pay not only program costs but also compensate the utility for lost sales caused by reduced energy use.
Duke Carolinas residential customers are paying $4.11 a month for all energy efficiency and demand-side management programs for every 1,000 kilowatt hours of electricity they buy. That charge will increase to $5.99 a month in January. Duke Progress residential customers are paying $2.87 a month, set to increase to $4.26 a month in December.
These programs offset the need to build new power plants and, on a kilowatt hour basis, are considered to be cheaper than building new generation.
The multifamily program in North Carolina is expected to cost Duke Progress about $17 million in lost electricity sales and cut Duke Carolinas power sales by about $17.7 million over three to five years. Those figures indicate the programs would be effective in reducing energy waste, one of the criteria for approval by the Utilities Commission.
This story was originally published November 26, 2014 at 3:19 PM.