In part 1, James told us how energy coaching to cut energy bills is free in California because state laws actually pay utility companies more to save energy use. This is part 2 of our interview with James. He goes into further details his time at PG&E and how the utility companies came to pay for all these programs available to Californian residents. The hardest part is that most people are too busy and don’t bother figuring out which programs can help them cut bills.

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JAMES TULEYA:  The utilities are very interested to get more energy savings. The profits of the utilities are what they call “de-coupled” from the sale of energy. They don’t make more by trying to sell you more energy. In fact, they make more money by helping you save. So, we’re part of getting paid to help people save energy.

TRAVIS:  Wow, that’s really interesting. Let me get this straight one more time. The utility companies in California, e.g. PG&E or SCE down in Southern California, actually get paid if people use less energy? That’s counter-intuitive for most businesses.

JAMES TULEYA:  That’s right. About 40 years ago, the state government wanted to encourage people to save energy, but the challenge is that when you have utility companies at that time like PG&E, Southern California Edison, and San Diego Gas & Electric making more money the more they sold gas and electricity. They changed the rules in the way big investor-owned utilities make money, and that was called “de-coupling.” It de-coupled the profits from the sale of the energy.

JAMES TULEYA:  Instead of making a profit on the sale of energy, the state government in the legislation changed it such that they’re making profit from earning a great return on all of their assets–all the capital assets–the buildings, the gas lines, the electricity lines, towers, the trucks. Everything that they owned, that’s the total amount of assets that they have, and they’re authorized through this now decades-old law to earn roughly 12% on those assets every year. That’s the authorized profit that the state allows the utilities to earn above and beyond the cost that they have to show that are reasonable. They’re able to recover in rates in what people pay for the electricity and gas.

JAMES TULEYA:  The cost of serving the customers plus this roughly 12% profit and that’s what generates or requires or determines what everybody’s paying for their energy. But it has nothing to do anymore with how much energy is being sold or used. So, now utility companies can encourage people to save energy through energy efficiency programs which actually is a way for, as I mentioned before, the utilities to earn extra profits. It’s a bonus program, essentially.

TRAVIS:  Ah, I see. The energy coaching is beneficial to utility companies because they actually get credit, they get paid better that way. They offer this for free to its customers and they hire people like you to help them figure things out to save energy easily, so then, everybody wins. That’s kind of how it works.

JAMES TULEYA:  That’s right.

TRAVIS:  I also see here that you used to work for PG&E, and you worked for their customer energy solutions. Can you tell us a little bit about your experience there, and what you guys did?

JAMES TULEYA:  Yes. I was in the Energy Efficiency Department within the broader organization called Customer Energy Solutions. The energy efficiency programs were administered and designed out of that group that I used to be in as well as programs that are called demand response programs as well as solar programs. It’s a set of customer-oriented energy-related programs, so what in the industry is called demand side. It’s customer demand in the energy demand side management. Managing the energy used through energy efficiency or what’s called Demand Response, that’s when the grid, the electrical grid has got a really strenuous day because everybody in the Central Valley in California had to turn their air-conditioners on because it’s really hot. It’s pushing, it’s requiring a lot of electricity.

JAMES TULEYA:  Another example is some power plant goes down for some reason, and so, the rest of them are not keeping up. The Demand Response programs are the ways to encourage businesses and residential homes to reduce their energy use just during a certain period of time to reduce the strain on the grid. That’s another type of program that’s different than energy efficiency. Demand Response is a short period of time to reduce energy, but it then goes back to the way it was. Energy efficiency really lowers the overall use on an ongoing basis. That’s the elemental difference in those kinds of programs. But both of those types of programs, energy efficiency and Demand Response, are within the customer energy solutions groups at PG&E along with the ones that the people that run the solar programs or helping people to go solar.  Both electric solar and solar thermal as well as electric vehicle incentive programs are out of that same team.

JAMES TULEYA:  I specifically had been involved with designing, running, and administering energy efficiency programs mostly in the HVAC area; heating, ventilation, and air-conditioning type of energy efficiency programs both commercial businesses and/or residential. Then, probably most of my time then I extended into dealing with all of the energy efficiency programs, both in terms of program design and administration of the program to working in companies that I work with now, to the people who implement the programs.

JAMES TULEYA:  I also dealt with regulatory affairs. Some of what I did over the last few years when I was at PG&E was working with our internal folks as we’re planning and running these programs, and how we needed to report and collaborate with the Public Utility Commission to make sure that we were doing things the right way and that when we design a new program or change a program, that we get feedback from them as well as other stakeholders. I was sort of in the middle of dealing with the regulatory affairs and stakeholder relations. So, stakeholder’s meetings, other entities like contractors and their industry organizations, and other groups that were interested in how we ran the programs.

TRAVIS:  Oh, okay.

JAMES TULEYA:  So, I’m the person in the middle of all that sort of thing.

TRAVIS:  The customer energy solutions at PG&E provided services like energy efficiency to its customers. You also mentioned Demand Response, solar and electric vehicles.

JAMES TULEYA:  Mm-hmm (affirmative).

TRAVIS:  They’re all quite beneficial to the customer because they’re helping them either … pretty much cut down their bills or get credit for doing something to cut down your bills. When you were part of this at PG&E, what did you find to be the biggest challenge to get people to do these things?

JAMES TULEYA:  I think the biggest challenge is in the residential side as opposed to the commercial side. In the commercial businesses, they usually have someone that whose job, well now I’m speaking actually mostly about medium and large businesses, they usually have someone whose job either full-time or part-time is managing the energy use for their business. But the harder challenge was with residential customers as well as small business customers because they’ve got busy lives, they’re not professionally trained in understanding energy. It turns out, the simple turning on and off of a light switch, you kind of think that energy is simple, but energy is actually quite complex. There’s lots of things going on at people’s houses and small businesses with how they use energy, gas, and electric.

JAMES TULEYA:  The challenge is to get people to understand enough about what’s going on in their home with their energy use and then, helping them understand that they actually can do something about it, and then to do something about it. It starts with just the awareness and paying attention. There’s some study I recall where most people or the average person, residential homeowner or renter, things about their energy use, only about five minutes a month and that’s usually when they’re just looking at and paying their bill. Usually, what they’re thinking about is, “Why is my bill so high?“

TRAVIS:  Yeah, that …

JAMES TULEYA:  That’s as far as they get.

TRAVIS:  That describes me before I got involved in learning all these things.

JAMES TULEYA:  Mm-hmm (affirmative). Yeah, the hard part is just to get people to realize that programs exist to help them, and that some of these programs can be easily used, and it’s not a giant mystery. It’s just they got to engage a little bit and pay some attention to it. People’s energy use and their bills for a long time was just like the following: “Okay, this is just the way it is.” But, as people get more and more larger homes, more and more stuff in the home and depending on the time of year, your bill might go up. But, the long term trend is that electricity rates had gone up, so people’s bills are getting bigger and bigger. It’s starting to be painful to some people, and not only because of that, but also because just people’s rent is high.

JAMES TULEYA:  People need to find some way… One of their bills need to go down. They need to figure out how to reduce one of them, and energy efficiency programs including the HomeIntel program are ways that people can reduce energy waste and not spend money on things that actually aren’t providing anything to them. A lot of what we do is and what I do as an energy coach is help people do things that doesn’t even affect the way that they live. They can make changes–simple, easy changes–that don’t cost much of anything, and they don’t even have to make sacrifices. They just have to change some things or install little smart strips or unplug something, and it doesn’t require a whole lot of a challenge.

Continue to part 3 where James shares few big myths and tips he learned over the years to immediately help people reduce energy bills.