Transcript Pay As You Save™

Tearing Down Barriers
To Energy Efficiency
Kansas Wind & Renewable Energy
Conference, 2008
September 24, 2008
Michael Volker
Agenda
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Midwest Energy, Inc.
SM
What is How$mart ?
How the Program Works.
The Conservation Plan (Products).
Results to Date.
Pictures, Challenges, Thanks.
Can a Small Utility Provide HighQuality Energy Efficiency Services?
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Vertically integrated, customer-owned utility.
89,000 gas and elec. customers, 41 counties.
Average age of home: 34 years old.
Only RESNET certified Energy Raters in
western Kansas.
Provide wide variety of EE Services
Energy Efficiency Programs
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Air infiltration tests (blower door - $50).
Infrared scans (heat loss/gain - $75).
Duct leakage tests (duct blaster - $50).
HVAC sizing ($0)
Walk-thru audits ($0).
Many more Res and C&I services.
SM
How$mart and Efficiency
Objective:
Stop market failure.
1. Landlord/Tenant split incentives.
2. First-Cost barrier.
3. Builder/Buyer education.
What is How$martSM ?
“A program that ties investments in energy
efficiency to basic utility service.”
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No upfront capital required by building owner.
Efficiency improvements paid for through a
surcharge on the utility bill.
The surcharge is less than the amount of savings.
The surcharge is tied (by tariff) to the location, not
to the customer.
How$martSM is patterned after the PAYSTM (Pay-As-You-SaveTM) concept marketed by PAYS
America. See www.PAYSAmerica.org.
1. Efficiency With No Upfront Capital
• MWE pays for efficiency improvements.
• Building Owners can buy down cost of
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efficiency improvements.
Partnership with KHRC (KEEP program) –
lowers cost of capital.
2. Efficiency Paid for on Utility Bill
• Fixed surcharge on monthly bill.
• Surcharge covers Company investment, cost
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of capital, and program costs.
Maximum term: 180 months or 75% of the
expected life of the measure.
3. Surcharge is LESS than 90% of Savings
• MWE performs audit.
• MWE models energy and cost savings.
• MWE determines required surcharge (based on
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the cost of completing measures).
Surcharge can be no more than 90% of
savings.
4. Surcharge is Tied to a Location
• Energy savings are tied to a physical structure
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– surcharge is as well.
Surcharge continues at premise – even if
occupant changes.
Requires disclosure.
Disconnection for non-payment – subject to
same terms and conditions of utility service.
Products
• Thermal Shell – Insulation, Caulking, Sealing,
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etc. (half of participants + those that install on their own)
HVAC Equipment – High Efficiency Furnaces,
AC, etc. (Avg. AFUE = 92.4%, SEER= 14.3)
Others? Must be a “permanent” part of
structure – not “portable” (No CFLs,
Washer/Dryers, etc.)
Midwest Energy Efficiency Analysis
• Heat loss/gain calculations
• Air leakage test
• IR scan (optional)
• Furnace combustion check
• Duct leakage test (optional)
• Establish and validate a baseline (using
sales history)
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Example: Preliminary Conservation Plan
Base House: 2400 sq ft, R-7 Attic, 0 Wall Insulation, High Air Leakage, 64% Furnace, 6 SEER A/C
Option 1: New 92% Furnace/14 SEER AC at $7,200
Option 4: All Measures at $11,000
Option 2: R-38 Attic Insulation at $1,700
Option 5: Option 1 with $1k contribution from owner
Option 3: R-38 Attic, Air Sealing at $2,700
Term: 15 years at 4.0% + 5% program fee
How$mart - Base House #3 Investment Options
$90
$84
$80
$76
$70
$65
$65
Dollars
$60
$55
$50
$45
$40
$33
$30
$19
$20
$21
$13
$10
$0
$0
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Base
Monthly Savings
$0
Monthly Surcharge
$0
$0
Option #1
Option #2
Option #3
Option #4
Option #5
$65
$19
$33
$84
$65
$13
$21
$76
$45
$55
7/18/2015
Results of Pilot Program
as of 9-22-2008
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290 Conservation Plans.
60 completed How$martSM projects.
130 pending projects.
Invested $268,000 in efficiency improvements,
average = $4,546.
Average How$martSM charge = $39.41/mo.
Average estimated savings = $49.12/mo.
(24.6% more than How$martSM charge).
Results of Pilot Program
Energy Savings Results
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Eight How$martSM projects with two winters
of comparative data. The average gas
consumption change: -17% despite 17%
more Heating Degree Days in 2008 vs. 2007.
Average SEER of installed AC’s: 14.3.
Average AFUE of installed furnaces: 92.4%.
Half the projects include thermal shell
improvements through the program.
Additional Benefits: Safety
What were they thinking?
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Efficiency – Feeling Disconnected
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Comfort – Another Benefit
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Challenges
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Shortage of contractors.
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Free riders (audits are expensive).
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Screen customers better.
$200 audit fee for non-participants.
41 Counties: A lot of miles to cover.
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Projects in the pipeline for 5 months.
“Premium” contractor program?
Energy Analysts located in Great Bend, Hays, and Colby.
Spread the workload.
Industry Attention
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KCC, Staff, and CURB intervention made the
program better.
How$martSM is the first voluntary PAYS® type
program.
Chartwell’s Best Practice Award (April 2008).
AESP Annual Meeting white paper selection.
ACEEE Summer Program on Energy
Efficiency Programs white paper selection.
Questions, Comments, Concerns?
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The End
Michael Volker
Midwest Energy, Inc.
785-625-1476
[email protected]
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Program Steps
1.
Customer requests How$martSM audit.
(NOTE: Almost no marketing effort to date)
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Customer pre-screened, audit scheduled.
Audit completed, Preliminary Conservation
Plan Developed – measures identified.
Contractors bid to complete efficiency
measures.
Program Steps (cont.)
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All forms signed.
Contractor(s) complete work.
Upon completion, contractor is paid.
How$martSM charges added to monthly bill.
Evaluations.
Backup Information
Participant Requirements
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Customer in good standing.
Owner must sign a How$martSM OwnedProperty Agreement or Landlord and Tenant
must sign a How$martSM Rented/Leased
Property Agreement.
Sign the Conservation Plan.
What is How$martSM (besides a best
practice award winner*)?
“A program that ties investments in energy
efficiency to basic utility service.”
1.
2.
3.
4.
No upfront capital required by building owner.
Efficiency improvements paid for through a
surcharge on the utility bill.
The surcharge is less than the amount of savings.
The surcharge is tied (by tariff) to the location, not
to the customer.
How$martSM is patterned after the PAYSTM (Pay-As-You-SaveTM) concept marketed by PAYS
America. See www.PAYSAmerica.org.
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* Chartwell’s Best Practices for Utilities and Energy CompaniesTM, April 2008.
Why Do This?
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Market failure in energy efficiency.
Emphasis on energy efficiency by policymakers.
Lower bills for program participants.
Helps minimize expensive capacity additions.
May help reach market that has been unable to
invest in energy efficiency.
Customers have asked for something like this.
Midwest Energy and the Kansas
Housing Resource Corporation
Kansas Energy Efficiency Program (KEEP)
• Strategic partnership.
• KHRC loans 50% at 0%.
• Lowers effective interest rate to 4%.
• Expanding reach of KEEP.
• How$martSM/KEEP partnership overcomes
market barriers better.
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