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There’s $ to be saved, if we can tap it.

Overcoming Market Barriers to Water DSM: Leapfrogging to Excellence a presentation to the NARUC Water Staff Subcommittee by Nancy Brockway, Director, Multi-Utility Research and Analysis NRRI NARUC Summer Meetings Portland, Oregon July 2008. Water Supply (& Wastewater) Costs are Rising. $.

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There’s $ to be saved, if we can tap it.

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  1. Overcoming Market Barriers to Water DSM:Leapfrogging to Excellencea presentation tothe NARUC Water Staff SubcommitteebyNancy Brockway, Director,Multi-Utility Research and AnalysisNRRINARUC Summer MeetingsPortland, Oregon July 2008

  2. Water Supply (& Wastewater) Costs are Rising $ Cash flow tappable for efficiency $ $ $ $ $ $ Water Efficiency Costs are Falling There’s $ to be saved, if we can tap it.

  3. Technology marches forward…

  4. Potential GPD savings from package of residential water efficiency measures

  5. Don’t forget the energy savings!

  6. If efficiency is such a good deal, then why utility DSM? • Residents and businesses don’t install most efficient end uses • System costs go up, everyone pays, reliability at risk • BUT why don’t customers install efficiency? • Prices don’t signal true costs • Even where they do, customers face market barriers

  7. What are the market barriers? • High first costs, and competition for capital • Customer can’t/won’t incur more debt • Concerned lifetime savings won’t materialize • Transaction hassles exceed expected benefit • Uncertainty about duration of occupancy • Split incentives • E.g., builders, developers, landlords control plumbing and toilet choices - want cheapest units with fewest call backs - but tenant pays water bills

  8. How to overcome the market barriers? • Lower/eliminate first cost • Eliminate debt obligation • Remove efficiency choice hassles • Marry obligation to benefits, not to individual • Only require payment if end use works as promised • Have independent certification of measure quality • Allow tenant/purchasing manager to reap benefits, without committing to pay beyond time of benefit

  9. To address all market barriers, include these elements: • Tariff assigned to meter location, not individual • Bill & pay on the utility bill with DNP • Customer pays only if measure can work so that savings exceed payments • Independent certification that products are appropriate & savings estimates exceed payments • Program guarantees payment to capital provider to obtain unlimited, low cost capital

  10. Does anyone offer this? Full package available with Pay As You Save® • Electric/multi-resource savings in New Hampshire • Residential solar hot water installation in Hawaii • PAYS® trademarked like Energy Star® • to preserve program integrity • www.paysamerica.org • Nancy Brockway is immediate past Board Chair • Similar offerings (w/out all elements) • for CFLs in Burlington VT • Midwest Gas customers in Kansas • approved in Michigan for DTE and Consumers • renewables in MA legislation

  11. Close, and yet pretty far • Performance-based contracting • “Water Service Company” identifies and installs all measures • May or may not require money down. • Customer shares savings per contract with WSCo • If customer leaves premises, brings WSCo obligation with him/her. • On the Bill Financing • Utility or approved vendor identifies/installs measures • May or may not require money down. • Repay with interest over time on utility bill. • If customer leaves premises, brings OBF obligation with him/her.

  12. Vendors pay for marketing Measure cost includes all admin (after start-up) All customers can participate No budget limit to savings Uses rebates to expand program reach, not as limit Taps locked-in savings Independent measure certification Major admin/outreach costs Up to 75% of value of measure in rebates Still, many customers cannot take advantage Limit on public tolerance of rate increases for rebates limits participation Resources left on table PAYS® v. Rebates Alone

  13. Market Barriers Addressed?

  14. Main Message: Be open to new ways of getting efficiency for customers • Natural to imitate electricity/gas programs • But these programs have limits • No need to limit water/wastewater DSM to old models • Good time to experiment with new models

  15. References/Resources • Edwin Orrett, P.E., Resource Performance Partners, Inc., MMWD Water Efficiency, a presentation tothe Marin Municipal Water District, 2006 (Mr. Orrett’s graphics copied here with permission). More information available at http://www.resourceperform.com/index.html • Edwin Orrett, P.E. , Pay As You Save® - High Performance Resource Efficiency System, Resource Performance Partners, Inc., July 2006. • Paul A Cillo & Harlan Lachman, Energy Efficiency Institute, Pay-As-You-Save Energy Efficiency Products: Restructuring Energy Efficiency, A Report to NARUC, December 1, 1999, available at http://www.paysamerica.org/EEI_Pays_1st_paper.pdf. • Direct Testimony of Thomas S. Stanton, In the Matter of the Application of Consumers Energy, Case No. 14347, before the Michigan PSC (outlining Staff recommendation for development of a Consumers Energy PAYS® Tariff), June 3, 2005. Available at http://www.paysamerica.org/Stanton_testimony.pdf

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