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Tearing Down Barriers To Energy Efficiency Kansas Wind & Renewable Energy Conference, 2008 September 24, 2008 Michae

Tearing Down Barriers To Energy Efficiency Kansas Wind & Renewable Energy Conference, 2008 September 24, 2008 Michael Volker . Agenda. Midwest Energy, Inc. What is How$mart SM ? How the Program Works. The Conservation Plan (Products). Results to Date. Pictures, Challenges, Thanks.

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Tearing Down Barriers To Energy Efficiency Kansas Wind & Renewable Energy Conference, 2008 September 24, 2008 Michae

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  1. Tearing Down Barriers To Energy Efficiency Kansas Wind & Renewable Energy Conference, 2008 September 24, 2008 Michael Volker

  2. Agenda • Midwest Energy, Inc. • What is How$martSM? • How the Program Works. • The Conservation Plan (Products). • Results to Date. • Pictures, Challenges, Thanks.

  3. Can a Small Utility Provide High-Quality Energy Efficiency Services? • 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

  4. Energy Efficiency Programs • 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. 4

  5. How$martSM and Efficiency • Objective: • Stop market failure. • Landlord/Tenant split incentives. • First-Cost barrier. • Builder/Buyer education.

  6. What is How$martSM ? “A program that ties investments in energy efficiency to basic utility service.” • No upfront capital required by building owner. • Efficiency improvements paid for through a surcharge on the utility bill. • The surcharge is less than the amount of savings. • The surcharge is tied (by tariff) to the location, not to the customer. How$martSM is patterned after the PAYSTM (Pay-As-You-SaveTM) concept marketed by PAYS America. See www.PAYSAmerica.org.

  7. 1. Efficiency With No Upfront Capital MWE pays for efficiency improvements. Building Owners can buy down cost of efficiency improvements. Partnership with KHRC (KEEP program) – lowers cost of capital. 7

  8. 2. Efficiency Paid for on Utility Bill Fixed surcharge on monthly bill. Surcharge covers Company investment, cost of capital, and program costs. Maximum term: 180 months or 75% of the expected life of the measure. 8

  9. 3. Surcharge is LESS than 90% of Savings MWE performs audit. MWE models energy and cost savings. MWE determines required surcharge (based on the cost of completing measures). Surcharge can be no more than 90% of savings. 9

  10. 4. Surcharge is Tied to a Location Energy savings are tied to a physical structure – 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. 10

  11. Products • Thermal Shell – Insulation, Caulking, Sealing, 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.)

  12. 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)

  13. 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

  14. Results of Pilot Programas of 9-22-2008 • 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).

  15. Results of Pilot ProgramEnergy Savings Results • 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. 15

  16. Additional Benefits: SafetyWhat were they thinking? 16

  17. Efficiency – Feeling Disconnected 17

  18. Comfort – Another Benefit 18

  19. Challenges • Shortage of contractors. • Projects in the pipeline for 5 months. • “Premium” contractor program? • Free riders (audits are expensive). • Screen customers better. • $200 audit fee for non-participants. • 41 Counties: A lot of miles to cover. • Energy Analysts located in Great Bend, Hays, and Colby. • Spread the workload. 19

  20. Industry Attention • 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. 20

  21. Questions, Comments, Concerns? • ? The End Michael Volker Midwest Energy, Inc. 785-625-1476 mvolker@mwenergy.com

  22. Program Steps • Customer requests How$martSM audit. (NOTE: Almost no marketing effort to date) • Customer pre-screened, audit scheduled. • Audit completed, Preliminary Conservation Plan Developed – measures identified. • Contractors bid to complete efficiency measures.

  23. Program Steps (cont.) • All forms signed. • Contractor(s) complete work. • Upon completion, contractor is paid. • How$martSM charges added to monthly bill. • Evaluations.

  24. Backup InformationParticipant Requirements • Customer in good standing. • Owner must sign a How$martSM Owned-Property Agreement or Landlord and Tenant must sign a How$martSM Rented/Leased Property Agreement. • Sign the Conservation Plan.

  25. What is How$martSM (besides a best practice award winner*)? “A program that ties investments in energy efficiency to basic utility service.” No upfront capital required by building owner. Efficiency improvements paid for through a surcharge on the utility bill. The surcharge is less than the amount of savings. The surcharge is tied (by tariff) to the location, not to the customer. How$martSM is patterned after the PAYSTM (Pay-As-You-SaveTM) concept marketed by PAYS America. See www.PAYSAmerica.org. * Chartwell’s Best Practices for Utilities and Energy CompaniesTM, April 2008. 25

  26. Why Do This? 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. 26

  27. 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. 27

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