BC Hydro e.points

Situation
BC Hydro generates about 50,000 gigawatt-hours of electricity annually, most of which it distributes to 1.6 million customers in the Canadian province of British Columbia, with some export within Western Canada and the Western United States. Domestic and trade revenues for the year ending March 31/01 were approximately CND$7.9 billion.

In December 2000, BC Hydro’s Board of Directors formally ratified sustainability as a driver for their future business direction. Under this directive, and the pressures of current supply restrictions in British Columbia and on the West Coast of North America, BC Hydro have been re-examining and expanding their successful Power Smart initiative, which promotes eco-efficiency within their customer groups. From this emerged the program e.points (energy points).

e.points was launched on 03 July 2001 to encourage BC Hydro’s largest 366 customers to achieve significant electricity savings within their commercial accounts. These customers represent more than 75% of BC Hydro’s commercial revenue.

This marketing approach both rewards an up-front commitment to energy efficiency and ensures the long-term sustainability of electricity savings through the redemption of e.points for hard-wired efficiency upgrades.

Targets
BC Hydro’s primary objective is to achieve 1,475 GWh in total electricity savings over the 5-year duration of the e.points program. This objective supports the company’s sustainability commitment of providing financial, environmental and social value by:

• Targeting a reduction in electricity consumption and greenhouse gas emissions. (A total of approximately 780,000 tonnes of GHG emissions will be avoided over the 5-year duration of the e.points program. These savings have a value between $8.0 and $40.1 million. Reductions in local air pollutants [Nox, SO2, particulates] will also occur. The value of these savings will range from CND$1.4 million to CND$2.4 million.)
• Offsetting the need to generate new electricity.
• Decreasing BC Hydro’s reliance on imported energy.
• Enhancing export opportunities in the energy market. (BC Hydro has the unique ability to store electricity in the reservoirs that power their hydroelectric facilities. This creates an opportunity for BC Hydro to purchase [import] low-cost electricity during low-demand periods for domestic use. Coupled with sustainability programs like e.points that encourage customers to use less electricity, BC Hydro can maximize the sale [export] of “stored” electricity in their reservoir system during periods of high demand.)
• Increasing loyalty to the BC Hydro and Power Smart brands.

Actions
The e.points program is founded on a “loyalty marketing” concept, whereby BC Hydro will reward customers for fast-tracking energy efficiency projects that capture electricity savings.

Energy efficiency projects can be “behavioral” or “hard-wired”. Behavioral energy efficiency relates to education and training that promotes employee awareness and behavioral change (e.g., turning off lights and equipment), coupled with operations and maintenance changes by facility management personnel (e.g., instructions for setting the heating and cooling system). Hard-wired energy efficiency relates to capital investment in upgrades – products or technology (e.g., compact fluorescent lighting) that become a permanent fixture of the facility and deliver sustainable electricity savings.

A key element of the e.points program is timing – immediate action is a critical success factor to ensure that the value of achieved electricity savings is optimized. An aggressive marketing and communications campaign was developed to support an 11-week customer enrollment period, defined from 03 July to 15 September 2001. Customer communication materials included:

• A direct mail piece letter and brochure in the BC Hydro Power Smart program folder, which was sent from BC Hydro’s Vice President of Marketing and Sales and was targeted to the customer’s senior executives (e.g., VP, Engineering).
• A direct mail piece (letter and brochure in Power Smart folder), targeted to the customer’s facility management staff, and sent from the customer’s BC Hydro Account Manager.
• This communication was immediately followed by email and phone contact to the customer’s facility management staff.
• Customers were invited to attend one of six breakfast information sessions held in the Lower Mainland, Victoria, Nanaimo and Courtenay.
• Personal customer visits by a BC Hydro Key Account Manager were scheduled for all delegates and qualified customers unable to attend the information sessions.
• Follow-up contact was conducted via phone, email and fax to encourage customers to enroll in the program.

Additional support for the program is provided through an exclusive web site solution, which is being launched in two stages. The first stage, which focuses on information about e.points, summarizes the e.points program, including eligibility conditions, frequently asked questions and the ability to register for e.points breakfast presentations.

The second stage, scheduled for launch at the end of October, will be a “dynamic” account tracking solution that will provide enrolled customers with secure access to view their e.points accounts on-line. Customer billing data will be pulled from the BC Hydro account mainframe by the web site to provide real-time viewing of account information by billing cycle.

Results
Business case projections supported a Year 1 enrollment of 355 customers. The electricity savings target is 1,475 GWh over five years. The overall cost of the program is $18.1 million. The projected cumulative discounted shareholder value-added (SVA) for the program is $42.5 million.

In actual fact, forecasts for Year 1 have already been exceeded. As of October 29, 2001, 447 customers with an electricity base load of 3,778 GWh are enrolled. As a result of the excellent response to the program, potential savings for Year 1 look to be approximately 185 GWh, which represents CND$8.5 million in electricity savings, equivalent to 97,500 tonnes in avoided greenhouse gas (GHG) emissions.

A key objective of the e.points program is to mitigate the financial risk of shortfalls in electricity supply by encouraging customers to conserve electricity. The flow-on benefits of this conservation effort for BC Hydro include:

• A reduction in GHG emissions
• Deferral of new sources of electricity generation
• Revenue enhancement through electricity export sales
• The creation of customer loyalty

In rewarding customers for driving electricity savings in their key facilities e-points provides a number of beneficial outcomes to customers, such as:

• Accelerated electricity savings
• Reduced operating costs
• Funded investment in approved Power Smart solutions
• Increased competitiveness

Future of the program
The e.points program is a highly structured, low-risk, customer-focused energy efficiency marketing campaign that is “shelf-ready.” If the e.points program is successful, there will be a compelling argument to drive energy conservation by offering the program to other commercial, industrial and residential customers; for instance, re-branding e.points as “e.points at home” for residential customers. Also if it is successful, BC Hydro will look at ways to offer a similar program, cost-effectively, to a larger group of commercial class customers.