For an article I’m writing for the August issue of tED Magazine, I recently had the opportunity to interview Lee Levitt, National Utility Manager, Current Lighting Solutions, LLC, on the topic of midstream utility product rebates.
For this article, “midstream rebates” are defined as utility or energy efficiency organization incentives paid/directed to the distributor level—typically, distributors, retailers, and other vendors between the manufacturer and end-user. Impacts are passed on to the contractor and end-user. While relatively rare, these programs are continuing to grow in prevalence.
DiLouie: How does a typical midstream rebate program work from the distributor perspective?
Levitt: Midstream Programs, also known as Upstream Programs, allow an electric utility customer to purchase energy efficiency lighting from an authorized sales distributor channel partner. Following a distributor’s enrollment and acceptance in a Midstream Program the distributor submits a qualified products list (QPL). This QPL traditionally includes items like eligible product SKU, Product ID # from Energy Star (ES) and/or Design Lights Consortium (DLC), and pricing. The utility program and distributor reconcile eligible Midstream Program qualified product sales monthly without the customer completing any of the traditional rebate paperwork.
At their core Midstream Programs allow utility customers to purchase energy efficiency lighting products right at the point of sale (distributor sales counters) without the complexity of completing a rebate application, waiting for utility program pre-approval and inspections, and then waiting up to 4-6 weeks after installation confirmation to receive a rebate award.
Out of the approximate 1,000+ utility rebate programs throughout North America, Midstream Programs continue to grow in popularity but currently are available in only around 100 utility geographies.
Midstream Programs are available within both the Residential customer and Commercial customer utility program structure.
DiLouie: Programs vary, but what are typical requirements most programs have in common?
Levitt: While Midstream Program enrollment requirements do vary, the most common theme required by utility programs is for a distributor to have a brick and mortar facility within the utility geography. This requirement can present distributor challenges in more rural utility geographies and for ecommerce-only businesses. In addition, Midstream Programs want their customer to have some skin in the game, so they typically require a minimum purchase amount (i.e., $1 minimum customer contribution per product quantity).
DiLouie: What are the advantages of midstream utility rebates of energy-efficiency lighting products for electrical distributors? What are potential benefits for manufacturers?
Levitt: The greatest advantage for an electrical distributor to participate in a Midstream Program are dollars and cents or profit. Midstream Programs reduce a customer’s expense when purchasing a qualified energy efficient lighting product.
Benefits may also include:
1. Qualified distributors receive business exposure by being a registered utility’s Midstream Program vendor partner.
2. Midstream Programs have specific (and limited) products that are eligible to sell. Accordingly, if a distributor is not enrolled within a Midstream Program they will not be eligible to “mark down” pricing on eligible products (reducing a customer’s return on investment [ROI]) by leveraging the Midstream Program discount ($$).
3. The lighting industry is a competitive space and Midstream Program participation traditionally offers benefits when lighting products are listed within Energy Star (ES) and/or Design Lights Consortium (DLC). Having a QPL listed product like Current by GE offers, vets out lighting manufacturers competition that develop lower standard products. For example, Current by GE produces products that go through rigorous testing requirements and when a product can be listed as DLC Premium versus DLC Standard, utility rebate programs consider offering greater dollar awards for the premium product.
DiLouie: What are disadvantages of these rebates for distributors and manufacturers? How can distributors mitigate them?
Levitt: The monthly reconciliation management between distributor and utility can demand additional resource assignment which is sometimes a challenge for distributor partners with limited resources.
For a customer, the complexity of multiple rebate program entry points dependent on their final Scope of Work/Bill of Materials can mean some of their products go through a Midstream Program and some of their products go through the more traditional application/pre-approval process (also known as a Downstream Program).
Distributors and lighting manufacturers can reduce the complexity and anxiety of a utility rebate experience through transparent communication, understanding and training customers on award programs opportunities and strong customer relations.
DiLouie: Can you point to an example of a midstream rebate program this working very well for moving lighting products? Or any examples of distributors getting behind them?
Levitt: Current by GE collaborates closely with our sales channel partners like Graybar, Grainger, WESCO, Crescent Electric and others throughout the country to leverage Midstream Program enrollment/participation for their contractor partners and facility owners. For example, some distributor partners have seen immediate success in major utility markets like Consolidated Edison in New York or Commonwealth Edison Company in Chicago. Upon enrollment/acceptance into these Midstream Program distributors have experienced sales activity driving themselves into one of the top volume sales positions and utility rebate award recognitions from their Midstream Program provider. This recognition only bolsters their market position, outreach opportunities and, of course, sales.
DiLouie: Where do you see midstream rebates headed as an overall trend? Do you see more utilities adopting them?
Levitt: Midstream Programs continue to gain in popularity because of their participation simplicity for a participant. The responsibilities of tracking, reporting, and reconciling rebate award sales is charged to the distributor and not the facility owner.
While Midstream Programs have mostly focused on lamp and tube energy efficient product solutions, program evolution is beginning to see adoption of fixtures.
DiLouie: What is the typical process involved in a distributor becoming a midstream rebate provider?
Levitt: Many electric utilities welcome Midstream Program open enrollment year long, while others focus on a limited enrollment window. Each utility offers their own protocols of eligibility requirements (i.e., brick and mortar facility within the utility geography), monthly reporting/reconciliation training, minimum participation requirements to stay enrolled as an eligible vendor. When a distributor aligns with the utility requirements a simple application is completed and training ensues fairly quickly. The distributor also prepares their qualified product list (QPL) for submission to the utility for pre-authorization of approved products that fit within the utilities Midstream Program.
DiLouie: What advice would you give to distributors interested in becoming midstream rebate providers?
Levitt: Midstream Programs will continue to grow in popularity. Participating in a Midstream Program does not have to be overwhelming or demand an abundance of internal resources. In fact, if managed properly I believe the benefit of participating in a Midstream Program will deliver financial advantages for the everyone involved – lighting manufacturer, distributor, contractor, facility owner, and utility.
