Executive Summary

Electric motors operating in the U.S. consume more than half of the nation's electricity. Electric utilities were among the first groups to begin offering programs to promote efficiency in electric motors. The most common programs have been prescriptive rebates for the purchase of efficiency motors. While many of these programs have been popular and successful, their cost is an issue of contention between industrial consumer groups and within utilities attempting to reduce program costs.

To assess current and emerging trends in utility motor-systems programs, the American Council for an Energy-Efficient Economy (ACEEE) surveyed individual regulated utilities' traditional programs, as well as some multi-utility collaborations and select program offerings by non-regulated utility energy service businesses (ESBs). The survey was designed to ascertain types of programs/services that utilities are offering (past, present, and future programs) for motor systems and various motor-related equipment. ACEEE contacted more than 50 utilities and energy efficiency organizations to discuss current trends, and 22 completed surveys, representing more than 26 utilities that offer some sort of efficient-motors-related customer service. These utilities represent about 23 percent of industrial electricity sales in the U.S.

Many utility staffs interviewed equated "motor-systems programs" with "efficient-motor rebates." However, interviews revealed that motor-systems technical assistance and incentives are an aspect of many utilities' industrial programs. Motors are frequently not dealt with discretely, but as part of an integrated program activity. The survey showed the most popular type of program/service to be providing basic technical assistance (e.g., audits), followed by publication/software tools, customer/vendor training, incentives, in-depth engineering assistance, and customer financing. Survey results indicate that utilities are providing the most services for efficient motors, adjustable-speed drives (ASDs), pumps, fans, blowers, air compressors, and systems operations and maintenance. Equipment-specific programs, along with systems optimization assistance, are frequently included as part of customized programs. Few utilities offer services addressing motor repair; belts, gears and lubricants; or system design. Financial incentives are becoming less common, although 80 percent of those utilities that offered incentives in the past are still offering financial incentives.

Discussion about restructuring the U.S. electric utility industry has created uncertainty about the future of electric utility demand-side management (DSM) programs. However, ACEEE's survey indicates that most utilities that offer motor-systems programs are planning to continue or expand these programs, and some utilities are planning to offer new programs. These programs provide extra services to key customers, and can contribute to customer loyalty when customers are allowed to select their electricity provider.

The most common motivation for offering motor-systems programs mentioned in interviews with utilities was customer satisfaction, reflecting the changing dynamics of the utility industry. Several of the utilities that are establishing non-regulated ESBs indicated that motor-systems technical assistance is an important customer service. None, however, indicated that they are currently pursuing motor-systems efficiency services as a profit opportunity.

Utilities have played a critical role in creating the market for efficient motors, and are now poised to pull the market toward even higher motor/motor-systems efficiency by expanding beyond new motors programs to address the efficiency of existing motors and the systems they operate. Opportunities will continue to exist for the promotion of efficient motors, since this can serve as an important awareness-building role in a broader motor-systems program. As examples in this report show, models for the next generation of motor-systems programs already exist. Their widespread implementation will require a greater level of technical resources from utilities and greater flexibility in the design and implementation of the programs.

These utility motor-systems programs will likely fall into two categories: public-benefit activities and for-profit business opportunities. Activities in the first category are intended to permanently change market behavior. While they may start with efficient motors as their focus, they will of a necessity move to broader issues as has been seen with the most mature of these programs. Public-benefit initiatives will most likely be formed more and more on a regional basis so they can leverage market power, costs, and expertise in a multi-utility region, while still being able to respond to the unique needs of a regional marketplace. National efforts such as Motor Challenge and the Consortium for Energy Efficiency will support these initiatives, providing products and tools, and common program frameworks, respectively.

Some aspects of motor systems offer for-profit energy services business opportunities for utilities. Motors are ubiquitous among industrial customers, and technical expertise is in short supply, so utilities can continue their role of energy technology broker and fill this market need. These programs can take the form of value-added, customer-retention activities or as a new unregulated business. In the unregulated case the venture may take the form of a targeted motor service (e.g., motor management or compressed air), or may include motors as part of a comprehensive energy services offering.

In any case, several roles exist for utilities in the future of efficient motor systems. All that remains is for each utility to identify what roles best suit their future vision under restructuring, and begin building the motor-systems programs to take them into the next century. Time will tell whether these new efforts to promote motor-systems efficiency will be as successful as past efforts to promote energy-efficient motors, but with the size of industrial motor use and the proven efficient potential, it is a challenge worth pursuing.

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48 pps., 1997,  $15.00, U971

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