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Incentives for Utility Programs

Robert Balzar, Director

Seattle City Light Conservation

American Public Power Association

Webinar May 8, 2008

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Efficiency is a better energy choice Baltimore Sun (March 10, 2008)

Iowa needs to follow U.S. lead on energyDes Moines Register (March 11, 2008)

Thermal Power Heats Up NevadaTIME Magazine (March 3, 2008)

Corporate Social Responsibility: A Change in Climate The Economist (January 17, 2008)

Nationwide Vision on Conservation working with a public that “Gets It”

Seattle City Light CFL Campaign

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Seattle City Light providing energy efficient programs since 1977

One of the first in the nation to develop and promote conservation programs

Delivering a cost-effective energy resource

Reducing residential, commercial and industrial customer bills

Eliminating greenhouse gas emissions and other environmental impacts

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Seattle City Light conservation is Seattle’s energy resource of choice

Energy Efficiency Action Plan 2008 - 2012 Aggressive, accelerated conservation goals

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2004 2005 2006 2007 2008 2009 2010 2011 2012Year

Average MegaWatts

(aMW)

Load Growth

National Leadership Path

Current Capabilities

Recent Accomplishments

Low hanging fruit has been picked

Challenges of stringent codes and standards

Competition for customers and trade allies with neighboring utilities

What can you afford to pay?

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Seattle City Light a national leader in conservation

Incremental Conservation & Percent of Retail Sales

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10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

1977

1978

1979

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1987

1988

1989

1990

1991

1992

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1996

1997

1998

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2003

2004

2005

2006

Firs

t-yea

r Meg

awat

t-hou

r (M

Wh)

Ene

rgy

Savi

ngs

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

1.00%

Cons

erva

tion

MW

h as

% o

f Ret

ail S

ales

Commercial

Industrial & Gov't.

Residential

Conservation Pct of MWh Sold

Conservation Goals: Market

transformation to improve energy efficiency

More stringent energy codes and standards

Help customers install energy efficient products by offering financial and technical support

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2007 Energy Resources “Net Zero” Carbon Emissions

*From BPA Contract and Market Purchases. These and other operations-related GHG emissions are offset.

2007 Sources of Power

Boundary 26.9%

South Fork Tolt0.4%

State Line Wind2.9%

Skagit Projects20.5%

Cedar Falls0.5%

Irrigation3.9%

Other Hydro0.2%

BPA Block15.7%

BC Hydro & 7 Mile 2.4%

BPA Slice26.6%

0.1%Other*

0.9%Coal*

1.1%Natural Gas*

3.5%Wind

4.6%Nuclear*

89.8%Hydro

PercentageGeneration Type

0.1%Other*

0.9%Coal*

1.1%Natural Gas*

3.5%Wind

4.6%Nuclear*

89.8%Hydro

PercentageGeneration Type

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Overriding Policy: Conservation is the Utility’s resource of first choice to meet customer energy demands

Analytical Approach: Develop Conservation Potential Assessment (CPA) for

SCL’s service territory Construct alternative conservation resource paths from

CPA for assessment in the IRP Analyze conservation paths as part of overall IRP

resource portfolios for their effect on costs and risks Develop findings and recommendations for long term

conservation resource goals and policy

Seattle City Light analytical framework for conservation resources

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Achievable Conservation Potential Seattle City Light's Service TerritoryAll Sectors, Below 60 Mills per MWh

ResidentialCFLs10%

ResidentialAppliances

4%

CommercialLighting

19%

CommercialHVAC23%

CommercialRefrigeration

4%

CommercialSpace Heat

4%

Industrial Motors /Drives10%

Industrial Other8%

CommercialOther2%

Industrial Process Heat / Furnaces

12%

ResidentialSpace Heat

4%

Commercial Other33%

Seattle City Light achievable conservation potential

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Conservation in preferred portfolio acquired at a rate of 7 aMW per year or 140 aMW over 2007-2026

Portfolio with accelerated conservation path achieved greater economic benefits & lower revenue requirements than the preferred portfolio

Study the feasibility, costs and benefits of accelerating conservation acquisition beyond the preferred option in SCL’s 5 Year Conservation Action Plan

Conservation

Seattle City Light 2006 IRP preferred portfolio

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7.07.38.0

9.0

10.0 10.0 10.0

7.3

10.1

17.3

15.3

16.5

14.913.514.0

7.07.08.0 7.0

12.1

15.815.614.4

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2007 2008 2009 2010 2011 2012Year

aM

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Load Growth 2006 IRP 2006 IRP Accelerated 5 YR Plan ('08 IRP)

Seattle City Light alternative conservation paths vs load growth

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Utility Incentive Programs an important component of an energy efficiency program

Monetary Incentives Change Customer BehaviorTypes of Incentives Calculation per kilowatt hour of savings

Make consistent between similar measures and market segments Base in part on expected measure life Ex: All City Light Lighting Programs = $.20/kWh 1st year savings

Fixed amount payment or rebate per unit or fixture Simple to implement and understand Ex: City Light Refrigerator Recycling Program pays customer $30 per

refrigerator or freezer Payment as a percentage of job cost

Set cost caps to encourage customer stake in keeping costs down City Light MF Common Area Retrofit program pays 85% of qualifying

costs

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Utility Incentive Programs program design principles

Determine program cost effectiveness Service territory or Total Resource Cost

Includes financial incentive, program delivery, and customer share

What’s the value of savings? Previous focus on incentives centered around

cost of measures, now the shift to focus on value of savings

Pay as much as you need, but no more to meet conservation goals Pay more if the value of savings are worth more

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Utility Incentive Programs GOAL: capture energy savings and reduce overall costs

Guidelines for Effective Incentive Programs

Develop incentives specifically by sector and market Where are you trying to affect change?

Start from existing base of incentives Set incentive at certain level and see what kind of participation it

generates

Split Incentive: Who’s getting the energy savings and the benefits of cost savings? The commercial developer who sells a completed project won’t

see the long-term bill savings, so incentives can overcome these types of barriers by paying more

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Longer lived measures with long term benefits have greater benefits, more value Commercial and MF shell upgrades will last longer (30-45

years) than commercial lighting (10-15 years)

Understand Customer Needs What will get them to use energy conservation measures?

Targeted needs for residential customers and small business May need to pay more to get residents and small business

owners to install EE measures

Communicate Creatively Strategic Marketing, Communication and Outreach Plan

Utility Incentive Programs Risk overpaying to capture maximum energy savings, but avoid paying more than what the measure costs

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Energy Smart Services financial incentives and technical assistance for existing facilities and new construction projects

Commercial and Industrial Customers

Family of Measure Incentives Include:

Lighting HVAC

Water Heating / Cooling & Treatment

Compressed Air

Building Envelope Plug Loads

Data Management Industrial Process Lamps

Food Service Equipment Elevators & Escalators

Power Supply Measures

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Incentives & Simple Rebates

Standard Measures Funded Incentive Amounts(applied to first-year savings)

LIGHTING UPGRADEST-12 to T-8 or T-5 Replaced Incandescent, Exit Signs, Instant Motion Sensors, others20¢ per kWh saved

20¢ per kWh savings

HVACEfficient chillers, heat pumps, variable speed drives for fans.

Up to 29¢ kWh savings

High Efficiency Industrial Equipment Expected 15-year service life 23¢ per kWh savings

NEW: PC Power Management $8/pcEstimated savings up

to 375 kWh/PC

NEW: Hot Food Holding Cabinets Up to $500 per cabinet

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Built Smart Programbuildings designed and built to conserve resources while providing a tranquil living environment

Program Incentives: Building materials, windows, walls, ceilings Insulation and HVAC Interior and exterior common area lighting Energy efficient fans, controls, in-unit appliances,

thermostats, elevators

certified BUILT SMARTBUILT SMART standards exceed the highest recommendations of the

State Building Code for energy efficiency and comfort. Every BUILT SMART apartment and condominium building

undergoes rigorous inspection during construction. When the building is successfully completed, it is awarded a BUILT

SMART certification plaque that can be displayed in the lobby.

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Built Smart Incentive Schedule & Simple Rebates

Standard Measures Funded Incentive Amounts(applied to first-year savings)

Multifamily New Construction Common Area Lighting

Requirements:New construction residential building, gas or electrically heated

5 units or more, no limits on number of stories

$0.20/kWh saved over code in common area lighting

$25/fixture for energy efficient in-unit lights

Built SmartFull Measure Program(Market Rate and Affordable

Housing components)

Requirements:New construction

residential building

5 units or more, no more than 7 stories

Electrically heated

$0.75/kWh saved over code in wall, window, ceiling & floor insulation

$0.20/kWh saved over code in common area lighting

$25/fixture for energy efficient in-unit lights

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Refrigerator Recycling Program we pick up your old fridge...and you pick up 30 bucks

Old second appliances use three times as much energy as newer ones, significantly running up the electric bill and contributing to global warming.

Fixed rebate program: $30 per refrigerator or freezer Partnership with leading appliance recycling company

JACO Environmental Picks up the appliance from resident homes Uses a state-of-the-art process to recycle 95% of the

materials that make up the old refrigerators and freezers

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Twist & Save Program compact fluorescent bulbs to transform the lighting market

Inexpensive: Energy Star® Compact Fluorescent bulbs for less than $1 at participating retailers

Easy: No coupons or rebates forms Opportunities:

CFL Saturation Almost 3 out of 10 homes do not have at least one CFL

installed Challenges in reaching these homes include cultural and

language barriers that will require creative communication techniques to reach and persuade these customers

CFL Bulb Recycling and Mercury Concerns Take it Back Network Program City Light Recycling Bins at Service Centers

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Utility Incentives for a world-class conservation power plant

Seattle City LightConservation Resources

Click on screen to play video

conservation is Seattle’s energy resource of choicewww.seattle.gov/light/conserve

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Robert Balzar 30 years experience in engineering, marketing and utility management

Past experience: Director of Marketing and Product Development for Pinnacle Homes in Las

Vegas 21 years at Sierra Pacific Power and Nevada Power Companies, including five

years leading a team that developed and expanded the Energy Efficiency and Conservation Department

Member of: Board Member, Northwest Energy Efficiency Alliance Served on the State of Nevada Task Force on Renewable Energy and Energy

Conservation Served as a Board member of Southwest Energy Efficiency Program in

Boulder, Colorado

Education: B.S. in Electrical Engineering from the U of NV, Reno