Already, according to figures released by DOA, the Focus on Energy program has saved ratepayers more than $26 million. That figure was arrived at by subtracting program costs from a figure estimating the cost of energy saved through cost-saving measures subsidized by the program.
But figures may not accurately reflect whether or not the energy-saving steps would have been made without the subsidies – and without the expenditure of just under $20 million in advertising and consulting fees. According to DOA administrative policy advisor Oscar Bloch, in arriving at the savings figure, attempts are made to factor out energy savings resulting from projects that would have happened without financial incentives from the state.
"We do try to account for free ridership," Bloch said. "Is there any reason to believe customers have installed [energy saving measures] anyway? To find that out, you survey the customers and ask them a triangulated battery of questions to get three different points of view. Sometimes people respond in a socially desirable way. By asking them a number of questions on the same topic, we can eliminate some of that uncertainty."
But while current numbers suggest that the program is a success even with free ridership, Bloch believes the sample size is still too small to deliver good data.
"We are close to having a large enough sample to know what the effect free ridership is having on the programs," he said. "I am going to argue that it is too small yet. You can calculate it, but it just doesn’t have any meaning."
"There are definitely market forces pushing us in the direction we need to go," Citizen’s Utility Board executive director Steve Hiniker said. "To the extent that someone is getting an award for something he or she would have done anyway, that is an inefficient use of money. It is very important that this program demonstrates clearly that it is saving energy."
According to Eric Schenker, professor emeritus at the University of Wisconsin-Milwaukee School of Business administration and energy consultant to the Metropolitan Milwaukee Association of Commerce, the goal of Focus on Energy is admirable but, perhaps, misguided.
"The greatest incentive is the market," Schenker said. "If the market has a pricing system, then there is incentive. If the price of energy goes up, you can see how fast people change. If you are going to pay a lot for energy, people will change the way they build buildings. When gasoline is expensive, you can see the different type of cars people buy."
Small Business Times contacted business owners and managers on the receiving end of the incentives, and all stated that they would have gone ahead with their lighting and HVAC projects without a subsidy.
Mutual Savings Bank, based in Brown Deer with 51 branches in Wisconsin and one in Woodbury, Minn., is receiving a rebate from Focus on Energy for installing energy-efficient lighting in 10 of its offices. The initial phase of the retrofit will include two offices in the Madison area and eight in the Milwaukee area.
"We are just getting started," said Michael Crowley III, Mutual Savings Bank’s vice president of branch office administration. "We have decided to improve the interior lighting of several of our bank offices in the Milwaukee and Madison area. We have not quite completed the project yet."
While Crowley said his company appreciates the state help, he didn’t think it was a key factor in deciding to go ahead with the new lighting. Even before the subsidy became available, the company was already involved in projects to increase its energy efficiency, including the installation of new, programmable thermostats. In fact, Crowley learned of the state subsidy from the contractor the bank chose to complete the lighting project.
"I consulted with our maintenance people, checking with their experiences with having to replace lights," Crowley said. "We came up with an initial list and dealt with several lighting suppliers. One we hit upon was the Staylight Lighting in Waukesha. They are actually the ones that pointed out the Wisconsin Focus on Energy Program."
Like other Focus on Energy beneficiaries, the bank’s project was market-driven. Aging equipment and a mandate from bank management to increase efficiency had more to do with the retrofit than the state subsidy.
"The subsidy – you can’t deny that it made it easier to budget for," Crowley said. "It was also the particular situation that we were at with our older, established bank offices. The lighting systems have never really been updated. We were having to replace shot fluorescent tubes and the ballasts that power them."
Pat Mueller, owner of Heritage West Properties, Milwaukee, will receive an incentive for installing a high-efficiency HVAC system in one of her Vliet Street properties.
"I used it on a commercial property on Vliet Street," Mueller said. She is converting the former Schmidt and Bartel funeral home at 5050 W. Vliet St. into an upscale salon and day spa. "I was planning on doing this repair, but I was doing a lot of other work, too. The incentive was a surprise I wasn’t expecting. A lot of these older buildings in the commercial storefronts have very outdated equipment that nobody replaced. It is helpful to get a rebate for putting in a new energy-efficient heating and cooling system. I didn’t do the lighting. I pretty much had already planned my lighting."
Mueller said incentive money from her contractor, KC Services of Mequon.
"He has taken some of the classes; that is how he got tuned into the program," Mueller said. "He told me about it."
Mueller said the availability of incentive money may make her more apt to replace the lighting in her buildings.
"It would make it more likely for me to plan a project," Mueller said. "But in this case, I knew I was doing the project and I had to bite the bullet."
Commercial building owner Robert Heinric received a Focus on Energy subsidy to install energy-efficient lighting in a portion of his Mequon property – 910 Professional Centre. Heinric said the primary benefit he received from his interaction with Focus on Energy – apart from the subsidy – was the referral to a reputable contractor.
"In the past, I have had (lighting) work done," Heinric said. "I have had to be sort of leery. Sometimes it doesn’t cost you all that much, and they would replace a bunch of lights – but with products that are inferior. I didn’t want to get involved in it anymore. This Energy Consultants of Wisconsin was pretty good. They replaced incandescent lights with fluorescents. I got a little bit of a rebate."
Heinric said there might be lower-cost ways for the state to connect building owners with contractors.
"They referred me to this one contractor and then (the contractor) came out," Heinric said. "But the electric company could send out a list of contractors. The state could come up with a list. And then if the guy puts some crap off on you, the state should be able to get after them."
Sept. 27, 2002 Small Business Times, Milwaukee
