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Episode #73 'Making Energy Work For America's Working Families' with Jim Madej, CEO Of Franklin Energy [an Energy Central Power Perspectives™ Podcast]

Utility companies are always positioned in a unique way compared with other companies, as the product they provide is essential for safe, healthy, and productive functioning of every family and every business. Having power bills rise too much can be a crisis for families who may be unable to pay or forced to choose between putting food on the table and keeping the lights on. The potential of inequity and crisis has only become even more apparent amid the pandemic and the recent economic struggles across the country.

With over 60% of Americans actively living paycheck to paycheck, this crisis of energy affordability needs leadership and ingenuity to ensure that energy systems are looked at holistically with affordability being a paramount consideration. These are the issues that drive Jim Madej, the CEO of Franklin Energy, as he and his team work to design and implement energy efficiency and renewable energy solutions for their utility partners. Jim is motivated by the idea of keeping energy affordable for all customers, and doing so in a way that aligns with the clean energy transition, and in this episode he joins podcast host Jason Price and producer Matt Chester to highlight what utility leaders should be doing to meet these necessary goals.

Prefer to Read vs. Listening? Scroll Down to Read Transcript.

Thanks to the sponsor of this episode of the Energy Central Power Perspectives Podcast: Franklin Energy

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TRANSCRIPT

Jason Price: 

Hello, and welcome to this week's episode of the Energy Central Power Perspectives Podcast, the show that brings leading minds to discuss the latest challenges and trends transforming and modernizing the energy systems and the utility industry of the future. And a quick thank you to Franklin Energy, our sponsor of today's show. Now, let's talk energy.

Jason Price: 
Matt, we're talking about the importance of energy affordability today and what working towards that goal looks like for the power sector. Can you share a bit of the background on this for us?

Matt Chester: 
You're right, Jason. Energy affordability, it's always been a critical topic, but it started shining even more in the spotlight amid the pandemic's impact to the economy, and more recently, the record levels of inflation. These factors, they combined to really highlight the energy burden many working families must deal with and how tenuous their energy budgets actually are. According to Bloomberg, it's 61% of Americans currently living paycheck to paycheck. That's been exasperated in disadvantaged communities as well. So too many households are realistically forced to make the impossible decision between paying their power bill and putting food on the table. And for that reason, looking holistically as a nation, at the state of energy affordability, it's really never been more important.

Jason Price: 
Thanks for that background, Matt. But we all recognize the inherent value of shifting to an equitable energy system defined as one with the economic health and social benefits of participation extend to all levels of society, regardless of ability, race or socioeconomic status. But achieving energy affordability won't simply happen. Rather, it requires intentionally designing systems, technology, procedures and policies that lead to the fair and just distribution of benefits in the energy system.

Jason Price: 
And to expand on these critical topics, we have with us today, Jim Madej, the CEO of Franklin Energy. Jim has loads of experience in the design and implementation of energy efficiency and renewable energy solutions working with utilities nationwide to make energy of affordable for all audiences. As a leader in this area, Jim has sought to bring about the clean energy transition, doing so in a way that would benefit all. And he brings with him a wealth of experience in this realm having previously served stints as the CEO of Vermont Energy Investment Corporation and Chief Customer Officer at National Grid. So with that, let's bring in our guest. Jim Madej, welcome to today's episode of Energy Central Power Perspectives Podcast.

Jim Madej: 
Thank you, Jason and thank you, Matt for having me on. Appreciate it.

Jason Price: 
It's our pleasure. Jim, before we dig into the questions, set the stage for us. Set the stage for those who may not be familiar with Franklin Energy and the work you do.

Jim Madej: 
Sure thing. Thank you for the question. So Franklin Energy's been around for about 25 years. Started out of the Midwest with a handful of utilities and an entrepreneur kind of out of his garage. And today we're over a thousand people serving 75 utility clients with multiple different kind of offerings to market. The primary business model is as a utility facing services companies. So what that means is, utilities bid out different program designs, whether it be residential, multifamily, commercial and industrial. And we win those programs, usually for multiple years. And then we execute on their game plan to help their clients achieve cost savings measures.

Jim Madej: 
So a simple example of that is a program out of Chicago that targets multifamily weatherization initiatives. And we go into, whatever, 2,000 homes over the course of a year and help people weatherize their homes and save money on leaking energy and, ultimately, save cost on their bills. So we do that at scale across the country. Like I said, across 75 different partnerships.

Jason Price: 
Terrific. We're going to talk about energy affordability and that's why we brought you in to talk further about this. So we know that federal energy programs targeting low-income communities have existed for decades. But are those not sufficient? What would need to change? And why is energy affordability still such a relevant topic today?

Jim Madej:
It's a really good question and a really well-structured question. I think Matt said 61% of Americans are living paycheck to paycheck and I am absolutely positive, as Matt mentioned, that was before the inflation and crazy cost pressures we're seeing on every aspect of our life, so food cost increases, transportation cost increases, et cetera. And while federal programs like LIHEAP and the Weatherization Assistance Program have been around, ultimately, they only help a very small percentage of households and have not been able to substantially reduce the energy burden disparity between low-income houses and higher-income houses. Low-income households in the U.S. continue to deal with an average energy burden more than twice the national average, more than three times greater than the average for high-income households.

Jim Madej: 
Also, the market has changed. Federal programs use an income scale for qualifying utility customers into these programs. And the reality is, it's just not how it works. And there are many families below the poverty line that are just struggling to cover their energy bills. Finally, with recent legislation, states and utilities now face an even greater imperative to reduce greenhouse gas emissions, which will ultimately go to higher-income homes, bigger households, et cetera. What we're seeing is historical underperformance in this sector. And I personally don't see the regulatory community acting consistently to ensure we have flexible solutions that meet these customers where they are.

Jason Price: 
Right. And so Franklin, you're the boots on the ground. So you're interacting with customers on a daily basis and people who are being impacted by this. So when you're having these kinds of conversations around energy affordability, are you seeing it evolve into conversations around energy equity? Are we talking about more than just bringing the monthly bills down? Or do you see the conversation extending beyond cost savings into other areas?

Jim Madej: 
Yeah, I mean, it's a really good question. We used the term, in one of my prior management training things, that's kind of a blinking word. What that means is, if you tell it to 10 people, you're going to hear 10 different answers. My response is energy affordability and energy equity are basically the same thing. They may have different nuances. But at the end of the day, they're the same thing. What I would say is low income, even moderate income consumers, so with the pressure of inflation, the line is going up, meaning middle class are struggling even more with energy equity. And with policy changes like de-carbonization and advanced energy efficiency program design, what you're seeing is more complexity in helping serve these customers and a grid design and a grid structure that will continue to push the burden down to them.

Jim Madej:
And I'll just give you an example. If a high-income zip code northeast of Lowell, Mass that's on the same feeder as Lowell, goes EV with storage, where do you think the burden from that cost of that grid is going to fall? It's going to fall to all the other clients on that grid. Now, rate making isn't that simple. But at the end of the day, the utility gets paid to cover the cost structure of operating a system. And if certain consumers go off that system, it pushes the cost structure to other consumers. When people talk about energy equity, I think what the fear is, is that over time, that problem is going to get exacerbated and multiplied and compounded to the detriment of those people who can least afford to deal with it.

Jason Price:
I want our audience to be aware here that Jim and I have never had this conversation before, but I was actually born in Lowell, Massachusetts. And of all the cities in the country that he could pick out to talk about as a case study, he chose the one that I was born in. Very interesting.

Jim Madej:
Lowell has, for years, struggled with, and I was part of the design of the National Grid energy efficiency programs, or at least implementation of them, and Lowell has said for years that they've been working to ensure that they get their own fair share. I know National Grid has restructured some things to support them. So this isn't about National Grid. It's also about regulators and other people in program design. And it's not an isolated incident to Lowell. It's an example that I'm a little bit familiar with.

Jason Price:
Yeah. Yeah. Understood. All right. So you have a national practice, so you see things 20,000 foot what's going across at sort of every corner of the country. But we're not a homogenous power system. We operate differently from state to state from utility to utility. So can you share with the audience some examples that you would say was doing better or may be a bit more progressive? Are you seeing those and are they clustering in certain parts of the country or is it across the board? Can we talk about that?

Jim Madej:
What I would say is in economies in the Midwest that don't have large business tax bases, what you see is program design that meet more of the needs of more constituents. Where I think it gets complex is where there are multiple constituents, multiple rate classes, different standards of living. I have not personally seen an example of where that's being done as well as it could be. I think everybody's trying. I think we need to double down on this effort. I think the regulators, the utilities, and the program administrators, and implementation companies all need to come together. Frankly, we need to engage more in the minority community as implementation entities for this work, which I know some utilities are trying to. And what that does, Jason, is it creates different outreach methods, different education programs than are typical or additional.

Jim Madej:
And I personally just think using MBEs as a part of this solution is a great move. I would compliment ConEd out of the Midwest. They put a part of their requirements to be 40% of spend going through minority-owned enterprises. And that, I think, helps get better jobs. And like I said, get better marketing, better outreach and better implementation solutions. So I see pockets of it, but I just feel very strongly that we're underperforming what we're capable of in this particular area.

Jason Price:
All right. Well, that's a good segue into my next question, because basically COVID has rewritten the rules, in some respects, of what's going on. So if you were to basically put together the guidebook or the playbook, if you will, on how to put together the right program for disadvantaged communities in a certain service area, could you describe that to us? What would it look like?

Jim Madej:
Yeah, I mean, the first thing I would say is tackling energy affordability offers immense benefits to these communities, beyond cost savings on their household energy bills. Investing in energy efficiency, investing in renewables and other climate programs provide them with improved air quality, healthier homes. Like I said in my answer to the MBEs, they create job creation. Frankly, it's an education offering. If you remember how energy efficiency started, it was an engagement mechanism and it was an education mechanism, because there's no real sexy way to talk about power bills. I also think disadvantaged communities face greater exposure to pollution and other factors.

Jim Madej:
For example, pollution sources tend to be located near disadvantaged communities, increasing exposure to these harmful pollutants. They also see more traffic, which has localized greater concentration of greenhouse gas emissions than other neighborhoods. So programs dedicated to energy efficiency and clean energy go to great length in reducing these pollutants. And energy efficiency and clean energy programs in non residential buildings in disadvantaged communities, such as schools, healthcare facilities also offer tremendous benefits to these communities. It can reduce capital maintenance costs and other just basic costs of running these facilities and, ultimately, reduce bills and put more money into patient care. So I just feel strongly that these buildings can spend a lot more of their money and time benefiting the communities that they serve.

Jim Madej:
Lastly, I think energy efficiency and clean energy increases job creation in these low-to-moderate income communities. Utilities can use this benefit to create workforce development programs. I've seen this working in upstate New York. These newly-trained workers will then use these skills to benefit their communities, potentially rent another apartment building, increase occupancy, whatever different factors that creates. Utilities, the success of these newly-trained workers is perfectly aligned with their goal of creating a labor pool into new sources of talent, which was previously unavailable to them, to continue the work to advance critical climate goals.

Jason Price:
That's a pretty detailed framework. Thank you for sharing that. So what role does the regulatory landscape play in all of this?

Jim Madej:
To be candid? I think the intention is there at all levels of the system, meaning I think the regulators want to solve this problem and understand the problem. I think the utilities want to continue to work towards these solutions. And I think the implementation companies, as you can hear from me, are well aware of the problem and have a ton of passion in trying to solve it. I think the regulatory frameworks that exist today have been somewhat narrowly defined, meaning go into this many houses and fix the lighting. Go into this many houses and fix the air leakage, weatherization, the blower door test type of activities. What I think in this community, this set of communities, when you think about it differently, the education is much harder. The outreach and marketing is much more costly. The efficacy, because of the building stock, is difficult. So it's more costly.

Jim Madej:
But let's just say, just to give you a different example, I find a client that understands it and is interested in doing multiple things. I would like to see the regulatory community very specifically allow implementation companies and hence, utilities, to mix and match measures so that we can do as much work as possible to help any client that is interested in getting the help. And then we'll figure out a way to measure it correctly and EM&V it so that it meets the program design criteria. So in short, I'd like to see more flexibility on implementation and, specifically, cross program implementation.

Jason Price:
All right. Well, we're looking to keep these energy affordability topics top of mind while simultaneously spending immense capital to build out the clean energy economy. So are these divergent goals? And how does the nation's transition to a clean energy economy affect energy affordability?

Jim Madej:
A lot of research has been done on this topic. According to the EPA, the transition to a cleaner energy future will help low-to-moderate and fixed-income Americans lower their electric bills by an average of 8%. Beyond that, transitioning to clean energy will create a more resilient power grid, making energy safer and reliable for all communities. As a result, that brings even more benefits to disadvantaged communities. We're familiar with how record-breaking weather seen more and more frequently across this country is creating citywide blackouts, hurricane, wildfire and other related catastrophes. In Texas, we saw households that didn't lose power with energy bills as high as $6,000 due to the peak in energy demand.

Jim Madej:
To me, doing nothing isn't sustainable. Transitioning to a clean energy future is the key to a more sustainable future and reducing the energy disparity between low and high-income households. I think clean energy is a job creation mechanism. It lowers cost and improves pollution in these communities. In my mind, I don't think they're divergent. I don't understand how you don't focus on this as a mechanism to solve the problem.

Jason Price:
Right. I think a lot of people would agree with that. I know your answers to a lot of the questions we've discussed come from firsthand experience and how Franklin Energy has designed and implemented low-income programs. So can you share with the audience, what's the process look like when a utility approaches you about helping achieve energy affordability in the communities that they serve?

Jim Madej:
Yeah, obviously, it differs by utility. It differs by the different types of utilities. So you have an IOU. A large IOU is going to be different than a municipal utility. But generically speaking, the first thing we do is look at the programs currently offered and the target client base of those offerings. We then look at the regulatory landscape and the goals of the regulators for the communities and the states that we're talking about. We look at the budget. We look at the historical cost to achieve metrics. They're pretty well documented across this sector. And then we look at unique factors within these communities, geographic reach, density, those kind of things. And then we custom build programs from there that are as cost effective as possible, yet that meet the goals of the utility and the communities that they serve.

Jim Madej:
We also look to the timeline of those goals. And oftentimes, utilities have pretty tight deadlines to accomplish these goals. And in that case, we do an advanced program startup or kind of an accelerated startup program with implementation strategies that generate savings quickly. And then create branch out or extensions of the programs that bring additional savings to harder-to-reach parts of the program design. Each utility has unique circumstances, as I said at the beginning. But ultimately, energy affordability comes down to hitting every customer one by one and coming to them with a solution that meets their needs based on the dynamics of the local area that we're doing business in.

Jason Price:
Got it. All right, Jim, I'm going to give you the last word, but before we do, we always ask our guests to go through what's called the lightning round, where it's an opportunity to get to learn a little bit more about Jim Madej outside of the role of CEO. So Jim, we've got a few fun questions we want to ask you. Are you ready?

Jim Madej:
Absolutely. Can I inject some comedy? Because this has been way too serious.

Jason Price:
You're in control of what the response phrase will be. So question number one, if you could have one superpower, what would it be?


Jim Madej:
If I could have one superpower, I think it would be convincing people to do things quicker.

Jason Price:
What is your dream trip or vacation?

Jim Madej:
I'm about to go to Telluride skiing with my partner, with my fiance. So I would say I have to put that on top of the list, because if she's listening to this and I don't say that, I think I'd be in trouble.

Jason Price:
Okay. Well, what's your go-to late night snack?

Jim Madej:
I go to bed at 9 o'clock, Jason. I'm old now. So I'm a 9 to 9:30 at night, 5:00 AM person. So I don't think I even qualify for late night snack status.

Jason Price:
Got it. All right. Well, putting skiing aside, what's your favorite way to spend your time off?

Jim Madej:
I have two college aged kids. We spend time boating and golfing. So either taking them surfing or water skiing, or taking them out to play a round of golf. And fortunately, my parents are alive. And so we get to spend time where my parents, and my kids, and me, and my brother all go play golf together, which is kind of cool.

Jason Price:
Very nice. And lastly, what are you most optimistic about?

Jim Madej:
The passion that everybody in this sector has to make all the things we talked about a reality. The people of Franklin Energy come to work every day with such a passion, energy and confidence that we can make a difference. I'm just thankful that I get to be a part of representing that team and super thankful that I get a chance to do what I do every day. It's an exciting time. And there's a ton of passion. And if we all keep working, I know we can accomplish what we've all set out to accomplish.

Jason Price:
Nicely done. All right, Jim, you've tackled the lightning round with flying colors. So we're going to grant you the final word. So what's the last message you hope the utility audience listening in today takes away from this energy affordability conversation?

Jim Madej:
I think there are many market participants here that want to find a way to help. And I think bringing us all together, large utility service implementation companies, minority-owned businesses, the utility experts, maybe with the regulators to try to target how to modify these programs and make some meaningful change in the short term would be something I would love to participate in, if anybody was interested.

Jason Price:
Well, Jim, I want to thank you for this incredibly important and informative conversation. And as we continue to look forward in our industry towards the major topics that are often taking in utility board rooms, like clean energy, grid modernization, big electrification, and more, hopefully, we can take your lessons to ensure that energy affordability remains a central tenet of all action. So thanks again for your insight. And we look forward to you and our community members keeping these important conversations going at EnergyCentral.com.

Jim Madej:
Thank you, Jason. Thank you, Matt.

Jason Price:
You can always reach Jim through the Energy Central platform, where he welcomes your questions and comments. And on behalf of the entire Energy Central team, thanks to everyone for listening today. Further, we want to thank Franklin Energy for making today's episode possible. Franklin Energy is leading the clean energy transition by delivering innovative energy management resources to utilities, municipalities, businesses and customers across the nation. Franklin Energy delivers turnkey energy efficiency programs to more than 60 utility and government partners across the United States and Canada. Their integrated in-house services provide deep personalization and insights, helping energy partners achieve carbon reduction and energy productivity goals. Franklin Energy believes in a brighter future where cities are electrified, energy and water affordability for everyone, and career opportunities abound.

Jason Price:
Once again, I'm your host, Jason Price. Plug in and stay fully charged in the discussion, popping into the community at EnergyCentral.com. And we'll see you next time at the Energy Central Power Perspectives Podcast.

 

About Energy Central Podcasts

The ‘Energy Central Power Perspectives™ Podcast’ features conversations with thought leaders in the utility sector. At least twice monthly, we connect with an Energy Central Power Industry Network community member to discuss compelling topics that impact professionals who work in the power industry. Some podcasts may be a continuation of thought-provoking posts or discussions started in the community or with an industry leader that is interested in sharing their expertise and doing a deeper dive into hot topics or issues relevant to the industry.

The ‘Energy Central Power Perspectives™ Podcast’ is the premiere podcast series from Energy Central, a Power Industry Network of Communities built specifically for professionals in the electric power industry and a place where professionals can share, learn, and connect in a collaborative environment. Supported by leading industry organizations, our mission is to help global power industry professionals work better. Since 1995, we’ve been a trusted news and information source for professionals working in the power industry, and today our managed communities are a place for lively discussions, debates, and analysis to take place. If you’re not yet a member, visit www.EnergyCentral.com to register for free and join over 200,000 of your peers working in the power industry.

The Energy Central Power Perspectives™ Podcast is hosted by Jason Price, Community Ambassador of Energy Central. Jason is a Business Development Executive at West Monroe, working in the East Coast Energy and Utilities Group. Jason is joined in the podcast booth by the producer of the podcast, Matt Chester, who is also the Community Manager of Energy Central and energy analyst/independent consultant in energy policy, markets, and technology.  

If you want to be a guest on a future episode of the Energy Central Power Perspectives™ Podcast, let us know! We’ll be pulling guests from our community members who submit engaging content that gets our community talking, and perhaps that next guest will be you! Likewise, if you see an article submitted by a fellow Energy Central community member that you’d like to see broken down in more detail in a conversation, feel free to send us a note to nominate them.  For more information, contact us at [email protected]. Podcast interviews are free for Expert Members and professionals who work for a utility.  We have package offers available for solution providers and vendors. 

Happy listening, and stay tuned for our next episode! Like what you hear, have a suggestion for future episodes, or a question for our guest? Leave a note in the comments below.

All new episodes of the Energy Central Power Perspectives™ Podcast will be posted to the relevant Energy Central community group, but you can also subscribe to the podcast at all the major podcast outlets, including:

Thanks once again to the sponsor of this episode of the Energy Central Power Perspectives Podcast: Franklin Energy.