Elements of Ratepayer-Funded Low-Income Programs

1
Elements of Ratepayer-FundedLow-Income Programs

• Affordable Comfort
• May 2005
• Jacqueline Berger, APPRISE Incorporated
• Suzanne Harmelink, WI Energy Conservation Corp.

2
Program Elements

1. Goals what the program attempting to achieve
2. Program Manager the organization that is
   responsible for managing the program
3. Eligibility who can participate in the program
4. Targeting what are the characteristics of the
   customers who the program is trying to reach

3
Program Elements

1. Expenditure per home how are expenditure levels
   set and reached
2. Measures what are the energy-saving measures
   that are selected
3. Customer education how are customers involved in
   the process of reducing energy usage

4
Program Elements

• Service delivery contractors number and type of
  organization(s) used to provide service delivery
• Service delivery procedures system for
  delivering education and measures
• Data manager organization responsible for
  developing and maintaining database

5
Program Elements

1. Data management systems system for collection
   and managing customer and program data
2. Quality control procedures for assessing the
   quality and consistency of services delivered
3. Evaluation analysis of how efficiently/
   effectively the program is working and the
   impacts that the program achieved

6
Program GoalsOptions

• Energy savings - of pre-treatment use
• Reduce ratepayer subsidy
• Number of homes served
• Amount spent per home or in the program year
• Targeting high need customers (elderly, disabled,
  young children, high energy burden)
• Innovative usage reduction measures
• Innovative program delivery systems

7
Program GoalsAdvantages and Disadvantages

• Energy Savings
• Advantages sets concrete standards of
  measurement for program and contractor
• Disadvantages particular level of savings may be
  difficult reach depending on condition of
  customer homes and budget constraints

8
Program GoalsAdvantages and Disadvantages

• Ratepayer subsidy types
• Percentage of income
• Example customer pays 8 of income
• Ratepayers bear all the risk because when bill
  changes, customer payment is fixed
• If bill declines due to usage reduction program,
  all benefits go to the ratepayers

9
Program GoalsAdvantages and Disadvantages

• Ratepayer subsidy types
• Fixed credit
• Example customer receives a credit of 100 on
  the energy bill each month
• Customer bears all of the risk, because when bill
  changes the subsidy is fixed
• If bill declines due to usage reduction program,
  all benefits go to the customers

10
Program GoalsAdvantages and Disadvantages

• Ratepayer subsidy types
• Discounted bill
• Example customer receives a 50 discount on the
  first 500 kWh used each month
• Ratepayers and customers share the risk because
  when bills increase both the subsidy and the
  customer bill increase
• If bill declines due to usage reduction program,
  benefits go to ratepayers and customers

11
Program GoalsAdvantages and Disadvantages

• Reduce ratepayer subsidy
• Advantages if achieved, the program will result
  in cost-effective savings for the ratepayers
• Disadvantages if all benefits go to the
  ratepayers, there may be less motivation for
  customers to participate in energy reduction
  strategies

12
Program GoalsAdvantages and Disadvantages

• Number of homes served
• Advantages ensure that benefits are distributed
  to a minimum number of customers
• Disadvantages with a set budget, places limits
  on the level of services that a household can
  receive

13
Program GoalsAdvantages and Disadvantages

• Amount spent per home
• Advantages ensure that a certain number of homes
  can be served within the allocated budget
• Disadvantages may not allow enough flexibility
  to address homes with severe problems

14
Program GoalsAdvantages and Disadvantages

• Targeting high need customers
• Advantages provides benefits to those who may
  suffer most from unaffordable energy bills
• Disadvantages may not provide the most
  cost-effective program if these are not the
  highest energy users

15
Program GoalsAdvantages and Disadvantages

• Innovative usage reduction measures
• Innovative program delivery systems
• Advantages allows for testing of these new
  measures and systems that may prove to be
  cost-effective in the long-run
• Disadvantages due the to learning curve, program
  may not be as cost-effective

16
Program GoalsExamples

• NJ Comfort Partners Program
• 10 average electric savings for electric space
  heaters
• 15 average gas savings for gas heaters
• Ohio Electric Partnership Program
• Reduce the costs of PIPP for the Ohio ratepayers

17
Program GoalsExamples

• WI - Targeted Home Performance with ENERGY STAR
• Number of homes served
• Savings of 28 heating 11 electric
• WI - Enhanced Targeted Home Performance with
  ENERGY STAR
• Number of homes served

18
Program ManagerOptions

• Public Utility Commission
• State
• Utility
• 3rd Party Administrator

19
Program ManagerAdvantages and Disadvantages

• Centralized program PUC or State
• Advantages
• Customers across the state receive equivalent
  benefits
• Utilities may work together to develop best
  practices for combined approach
• Disadvantages
• Utilities may not have the same program
  commitment and involvement
• May lose utility-specific customer knowledge

20
Program ManagerExamples

• Pennsylvania Each utility manages its own usage
  reduction program
• New Jersey The Board of Public Utilities manages
  a statewide usage reduction program
• Wisconsin Public Benefits State Dept of
  Administration oversees statewide program

21
Program EligibilityOptions

• Income level
• Usually 0 150 of Federal Poverty Level
• Housing Types
• Usage
• Participation in bill payment assistance programs

22
Program EligibilityAdvantages and Disadvantages

• Income level
• Advantages more restrictive income limits mean
  that those with the least ability to pay their
  bills receive services
• Disadvantages more restrictive income limits may
  mean that the highest use customers are not served

23
Program EligibilityAdvantages and Disadvantages

• Housing types
• Advantages more restrictive housing type
  selection may allow for more households to
  receive service
• Disadvantages more restrictive housing type
  selection may mean that the highest use customers
  are not served

24
Program EligibilityAdvantages and Disadvantages

• Usage
• Advantages targeting of highest use customers
  usually results in greatest energy savings
• Disadvantages exclusive focus on usage does not
  allow for serving those most in need, i.e. lowest
  income, highest energy burden, elderly, disabled,
  young children

25
Program EligibilityAdvantages and Disadvantages

• Participation in bill payment assistance programs
• Advantages reductions in usage result in
  reduction in subsidies that burden the ratepayers
• Disadvantages customers who do not participate
  in bill assistance will not receive usage
  reduction benefits

26
Program EligibilityExamples

• Ohio Electric Partnership Program must be a
  PIPP participant and have specified electric
  usage
• Baseload services baseload usage gt 6,000 kWh
• Weatherization services heating or cooling usage
  gt 6,000 kWh
• Moderate use services baseload usage of 4,000 to
  6,000 kWh

27
Program EligibilityExamples

• WI - Targeted Home Performance with ENERGY STAR
• Income Guidelines of 150-200
• Single to 4-unit Buildings (owner rental)

28
Customer TargetingOptions

• Highest use customers
• Highest subsidy customers
• Payment troubled customers
• Vulnerable households (young children, elderly,
  disabled)

29
Customer TargetingAdvantages and Disadvantages

• Highest use customers
• Advantages usually results in highest energy
  savings
• Disadvantages may not focus on lower usage
  customers with high needs due to income, energy
  burden, other characteristics

30
Customer TargetingAdvantages and Disadvantages

• Highest subsidy customers
• Advantages benefits of the program go to the
  ratepayers
• Disadvantages other needy customers may not be
  served

31
Customer TargetingAdvantages and Disadvantages

• Payment troubled customers
• Advantages may increase bill payment coverage
  rates
• Disadvantages may not result in greatest usage
  reduction

32
Customer TargetingAdvantages and Disadvantages

• Vulnerable households (young children, elderly,
  disabled)
• Advantages reduce energy usage for those who may
  suffer most from unaffordable bills
• Disadvantages may not result in greatest usage
  reduction

33
Customer TargetingExamples

• NJ Comfort Partners Program
• USF participant
• Highest use customers
• WI - Enhanced Targeted Home Performance with
  ENERGY STAR
• Arrearage requirement

34
Expenditure Per HomeOptions

• Comprehensive maximize savings per home
• Cost threshold / Limit per household
• Minimal increase number of households served

35
Expenditure Per HomeAdvantages and Disadvantages

• Comprehensive
• Advantages
• Maximize usage reduction for homes served
• Minimize administrative expenses as a percentage
  of total costs
• Achieve most cost-effective program
• Disadvantages
• Fewer homes may be served

36
Expenditure Per HomeAdvantages and Disadvantages

• Cost threshold
• Advantages
• Serve a greater number of households
• Ensure that a minimum number of households are
  served
• Disadvantages
• Does not take individual household circumstances
  into account
• May spend more than what is cost-effective in
  some homes

37
Expenditure Per HomeAdvantages and Disadvantages

• Minimal
• Advantages
• Increase number of households served
• Disadvantages
• Customers may not receive significant savings
• Administrative costs are duplicated when other
  programs return to serve the household

38
Expenditure Per HomeExamples

• Ohio Electric Partnership Program
• Any cost-effective measure can be installed
• NJ Comfort Partners
• Expenditure guidelines are provided, based on
  energy usage
• WI Targeted Home Performance
• Any cost effective measure may be installed

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Measure - Options

• Refrigerator/freezer replacement
• Compact fluorescent light bulbs
• Aerators/ showerheads
• Insulation
• Air sealing
• Fuel switching clothes dryer, hot water heater
• Equipment (Heating System, Water Heater, Central
  A/C)
• Custom measures

40
MeasuresAdvantages and Disadvantages

• Advantages
• Any measure that provides cost-effective savings
  provides benefits to the customer and/or the
  ratepayer
• Disadvantages
• Installing all cost effective measures will
  increase program cost
• Emphasis on specific measures may neglect other
  high uses in the home

41
Customer EducationOptions

• Partnership between program/educator and customer
• Understanding the energy bills
• Energy use and costs around the home
• Customer goals for usage reduction
• Customer action plan
• Follow-up

42
Customer EducationAdvantages and Disadvantages

• Partnership between program /educator and
  customer
• Advantages if successful, customer has more
  motivation to take steps to reduce energy usage
• Disadvantages takes skilled and dedicated
  auditor to make it work

43
Customer EducationAdvantages and Disadvantages

• Understanding the energy bills
• Energy use and costs around the home
• Advantages
• If the customer understands how to read the bill
  and determine when usage is decreasing, it
  provides positive re-enforcement for
  energy-saving actions
• Allows customer to make decisions about energy
  usage based on the costs of those uses
• Disadvantages
• Requires auditor with good communication skills
• Increases length of audit

44
Customer EducationAdvantages and Disadvantages

• Customer goals for usage reduction
• Customer action plan
• Advantages
• Provides motivation for customer to reduce energy
  usage
• Provides direction for customer
• Disadvantages
• Some customers will not be interested
• Auditors must be skillful and willing to take the
  time required

45
Customer EducationExamples

• New Jersey Comfort Partners Program
• Education training provided to all auditors
• Education notebook and cards
• Partnering process
• Bill and energy usage education
• Customer action plan

46
Customer EducationExamples

• WI - Targeted Home Performance with ENERGY STAR
• Partnering process
• Customer action plan
• Voluntary participation by providers
• WI Home Energy Plus Weatherization
• Planning phase for comprehensive plan

47
Service Delivery ContractorsOptions

• Private contractors
• Weatherization agencies
• Community Action Agencies
• Other nonprofit
• Mix of the above groups

48
Service Delivery ContractorsAdvantages and
Disadvantages

• Private contractors
• Advantages
• Cash flow management
• Data management capabilities
• Ability to hire additional staff
• Disadvantages
• May have less knowledge/experience with other
  public programs

49
Service Delivery ContractorsAdvantages and
Disadvantages

• Weatherization agencies
• Community Action Agencies
• Other nonprofit
• Advantages ability to provide joint service
  delivery with other programs such as WAP
• Disadvantages may not have experience with
  contract work

50
Service Delivery ContractorsExamples

• Ohio Electric Partnership Program
• Allowed private contractors and agencies to bid
  on program
• First year 18 authorized providers were selected
  (1 private contractor)
• Second through fourth years 9 authorized
  providers were selected (1 private contractor)

51
Service Delivery ContractorsExamples

• WI - Targeted Home Performance ENERGY STAR
• Allowed weatherization providers first right of
  refusal (18 of 21 agencies participate)
• Invited Home Performance with ENERGY STAR
  consultants to fill gaps (currently working with
  three)

52
Service Delivery ProceduresOptions

• One visit approach
• Two visit approach
• Visit 1 audit/minor measures
• Visit 2 insulation/air sealing
• Multiple visit approach
• Visit 1 audit/minor measures
• Visit 2 insulation/air sealing
• Visit 3 equipment/appliance subcontractors

53
Service Delivery ProceduresAdvantages and
Disadvantages

• Fewer visits
• Advantages
• May be lower cost
• Lower time investment for customer
• Reduced opportunity for communication problems
• Disadvantages
• Greater number of providers in the home at one
  time
• Requires provider to be skilled in more areas

54
Service Delivery ProceduresExamples

• NJ Comfort Partners Program
• Contractor specific
• One contractor did all possible in one visit
• Primary contractor used 2 visits
• Visit 1 audit and minor measures
• Visit 2 air sealing and insulation

55
Service Delivery ProceduresExamples

• WI - Targeted Home Performance with ENERGY STAR
• Multiple visits norm
• Program provider specific

56
Data ManagerOptions

• State managed
• Collect data from contractors and store in a
  common database for the program
• Contractor managed
• Data stored and managed by contractor
• Data sent to state/utility or evaluator as needed
• Utility managed
• Collect data from contractors and store at utility

57
Data ManagerAdvantages and Disadvantages

• State managed
• Advantages
• Data stored in a central location, not at
  separate utilities or agencies
• Data readily available for management, reporting,
  and evaluation
• Disadvantages
• May be delay in obtaining data from utilities or
  agencies
• May be problems with data that state cannot
  interpret

58
Data ManagerAdvantages and Disadvantages

• Contractor managed
• Advantages
• May have a database that has been tested that can
  be adapted for the program
• May have expertise and resources for data
  management
• Can design and provide detailed reports to
  program manager
• Disadvantages
• State or utility may not have data readily
  available for management and reporting
• Difficult to move program to new or additional
  contractors

59
Data ManagerExamples

• New Jersey Comfort Partners
• Primary contractor maintained data for 7 gas and
  electric utilities
• First Energy had their own data system and also
  managed data independently
• Moving to system where utilities will manage the
  data

60
Data ManagerExamples

• WI - Targeted Home Performance with ENERGY STAR
• Administrator coordinates data collection and
  management centrally
• Data sent upon request to utilities
• Data sent to state monthly for evaluation purposes

61
Data Management SystemsOptions

• Paper data collection
• Data collected on paper at the customers home
• Data entered by contractor after the visit
• Computerized data collection
• Customer data loaded into software
• Data entered in laptop or PDA while in the
  customers home
• Data uploaded to data management system

62
Data Management SystemsAdvantages and
Disadvantages

• Computerized data collection
• Advantages
• Auditor can have customer data (including usage)
  available on site
• Data entry is not necessary
• Software can calculate cost-effectiveness based
  on customer usage and other characteristics
• Disadvantages
• Computer can interview with customer relationship
• Data can be lost

63
Data Management SystemsExamples

• Ohio Electric Partnership Program
• Data from utilities are screened
• Targeted customers are sent to providers
• Customers are loaded onto PDAs or laptops
• Data is entered directly into computer during the
  audit
• Data is uploaded to state
• Data used for invoicing and program evaluation

64
Data Management SystemsExamples

• WI - Targeted Home Performance with ENERGY STAR
• State provides target list of potential customer
  electronically
• Providers submit paper invoices and information
  for reports
• Measure Data is uploaded to state for savings
• Data used for invoicing and program evaluation

65
Quality ControlOptions

• Internal/External
• State or utility personnel
• Third party inspectors
• Sampling
• What percent of jobs should be inspected?
• Targeting
• Equal/random inspection of each contractor
• Focus on contractors who have shown problems in
  the past

66
Quality ControlAdvantages and Disadvantages

• External quality control
• Advantages
• More time may be devoted to quality control
• May have more systematic procedures for quality
  control
• May be more objective
• Disadvantages
• May be more expensive
• Inspectors may not have good understanding of
  program design and procedures

67
Quality ControlExamples

• NJ Comfort Partners
• Utilities hire private contractors to conduct
  third party inspection
• Each utility specifies procedures for inspections
• Each utility specifies the number or percent of
  jobs to be inspected

68
Quality ControlExamples

• WI Targeted Home Performance with ENERGY STAR
• Program providers expected to perform post
  installation final inspection
• Program administrator completes quality
  assurance site visits
• WI Home Energy Plus Weatherization
• Program providers expected to perform post
  installation final inspection
• State subcontracts quality assurance site visits
  to third party

69
EvaluationOptions

• Internal/External
• Conducted by state/utility
• Conducted by third party evaluator
• Impact
• Energy usage
• Bill payment
• Environmental
• Economic
• Process
• Efficiency/effectiveness of program
• Why is the program achieving the outcomes

70
EvaluationAdvantages and Disadvantages

• External
• Advantages
• More time may be devoted to evaluation
• Evaluation expertise
• May have more systematic procedures for
  evaluation
• May be more objective / less biased
• Disadvantages
• More expensive
• May not have an understanding of the program and
  components

71
EvaluationExamples

• Pennsylvania LIURP Programs
• Each utility must submit a usage impact
  evaluation each year
• Most utilities use internal staff to provide
  evaluation report
• One utility uses a private contractor
• Process evaluation not currently done

72

• Contact us
• Jacqueline Berger APPRISE Incorporated609-252-8
  009
• jackie-berger_at_appriseinc.org
• Suzanne Harmelink
• WI Energy Conservation Corporation
• 608-249-9322 x210
• suzanne_at_weccusa.org