When should you update the baseline year?

Cost Avoidance reports and charts show avoided cost and use for the performance period versus the wasteful baseline year. 

Performance period information

  • Is set by configuring the Savings Start date on the Baseline tab.
  • Consists of months and years following the implementation of energy (and perhaps water) conservation measures.
  • Is calculated by Cost Avoidance and reports the performance of the conservation plan, initiative, contract, retrofit project or management directive.
  • Commonly called ECM (energy conservation measures) or EPIA  (energy performance improvement actions); UtilityManagement uses the ECM terminology.

ECM facts

ECM typically defines a contract period, project life, or amortization period. 

For example, a contractor may be hired for a five-year conservation program, a lighting retrofit may be installed that has a seven-year amortization, and a governor’s executive order may mandate a 2% reduction over 10 years. 

The “wasteful” baseline year would normally be set to the 12-month period immediately preceding the initiative go-live date or the Savings Start date. The performance period is defined as the five, seven or ten years following the savings start date.

When to advance the baseline year

What happens at the end of the performance period? 

You would certainly run final cost avoidance reports to document the total ECM cost and use avoidance over the entire performance period, but now what? 

Continue forward as is, using the same baseline period, or advance the baseline to a more recent year?  Here are the considerations for each case:

Yes – Advance the Baseline

  • The baseline year was 6, 8 or even 10+ years ago. A lot has changed in the buildings since then – HVAC equipment, occupancy, hours, plug loads.  A baseline update gives you a better idea going forward of how well you are maintaining your current level of efficiency and hopefully even gaining deeper savings.
  • By advancing the baseline to a recent year, many of the Special Adjustments you've created to adjust the old baseline to current conditions can be deleted because they no longer apply.  Calculations are simplified and easier to validate.
  • Cost avoidance reports are more relevant because they answer the question “what have you done for me lately?”

No – Retain the Original Baseline

  • Cost Avoidance reports and charts have no mechanism to add the avoidance from a prior “closed” performance period to a new current performance period, so the savings from the original performance period are not shown. 

Example
The school board or state energy office or sustainability council is used to seeing cumulative cost avoidance reports of $5 million. When you advance the baseline, this drops to zero initially and may take the focus off of our long-term energy conservation successes. You can get around that in a few ways (adding an ancillary slide or report to our presentations that shows prior period savings, or adding text in an dashboard that shows prior period savings) but each approach has some drawbacks.

  • Because the ECMs are now stable, you say your're in a maintenance mode, maintaining the current level of performance but without a lot of opportunities to go deeper.
    • That means that today versus a recent baseline shows small additional savings at best, maybe even slight losses. 
    • It’s useful to spot losses and address any slip ups, but as mentioned above, management is used to seeing savings of 20% or more.  Now they’ll see savings of maybe 2%, and perhaps less or even negative, which you’ll have to constantly explain and justify.
  • The meter-by-meter weather model (Baseline) tuning was done by an experienced M&V practitioner.
    • Tuning a meter involves selecting the most appropriate degree day balance point temperature, manually deleting non-representative data points, sometimes adding one or two prior years for a better statistical model.
    • If you advance the base year to a different year, each meter’s weather model changes and, for best results, should be re-tuned.  You may lack the expertise to complete this accurately.
  • The Special Adjustments in UtilityManagement were created by a highly experienced mechanical engineer consultant using sophisticated building analysis and simulation tools.  That’s way above your skill level and capability, so you have no way to know which Special Adjustments should be left as is, which need modified and which can be deleted, all issues that a baseline advancement requires. You may prefer not to touch these.

The bottom line–you have to decide which case above most closely fits your particular situation.  As a general recommendation, advancing the baseline is recommended after eight to ten years when:

  • An experienced M&V practitioner* is available to perform the high skill tasks of tuning meter weather models and resetting all Special Adjustments for every meter
  • Both upper management and the entire cost avoidance report “audience” understand that prior performance period use and cost avoidance have been captured as a snapshot and now all reports are reset to a new baseline, resulting in starting over again from zero for the new performance period.

*Routine technical support services do not include M&V practitioner services.