SB 7 Energy Efficiency Programs

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SB 7 Energy Efficiency Programs

• September 22-23, 2004

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Outline

• Introductions
• General overview of SB 7 energy efficiency
  programs
• Standard offer programs
• Market transformation programs
• Sources of information for utility programs
• Frequently-asked questions

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AMERICAN ELECTRIC POWER
Billy Berny Russell Bego
AMERICAN ELECTRIC POWER
AEP SWEPCO
AEP TEXAS CENTRAL
AEP TEXAS NORTH
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CenterPoint Energy
Cheryl Bowman
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Entergy - Gulf States, Inc.
Karen Radosevich
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Texas-New Mexico Power
Tony Thompson
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TXU Electric Delivery
Mike Stockard
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Xcel Energy
Doug Maxey
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SB 7s Energy Efficiency Provisions

• To provide all customer classes, particularly
  hard-to-reach residential customers, with access
  to energy efficiency services and an opportunity
  to reduce their electricity bills
• To establish a partnership between the IOUs and
  the PUCT to work together to design and implement
  programs. The goals
• Meet SB 7s energy efficiency goal
• Reduce the need for new power plants and related
  infrastructure
• Help develop the energy efficiency services market

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Background and Introduction

• Under SB 7, distribution utilities can no longer
  provide any energy service directly to customers.
  This includes rebate programs, technical advice,
  information programs, and energy audits. Very
  little direct customer contact is allowed.
• SB 7 requires utilities in Texas to achieve an
  annual energy efficiency goal equal to 10 of
  their load growth by offering and administering
  energy efficiency programs.
• To achieve this goal, utilities administer
  standard offer programs and market
  transformation programs. These programs are
  implemented by third-party project sponsors.

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Program Templates

• PUCT staff, utilities, and interested
  third-parties have been engaged in a
  collaborative process to develop a set of
  standardized programs or templates
• Standard Offer Programs
• Residential / Small Commercial
• Hard-to-Reach Residential
• Large Commercial and Industrial
• Load Management
• Market Transformation
• ENERGY STAR Homes, AC Distributor, AC Installer,
  plus several targeted at other specific end-uses

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What is a Standard Offer Program?

• Program administrator (the distribution utility)
  provides a set incentive payment to Project
  Sponsors for each kilowatt (kW) of peak demand
  savings and each kilowatt-hour (kWh) of annual
  energy savings derived through the installation
  of energy efficiency measures.
• All payments are based solely upon kW and annual
  kWh savings.
• Higher incentive rates for residential and
  hard-to-reach customers than for CI customers.
• Payments are not tied to the installation costs
  of the measures.

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Standard Offer Program

• Applications from project sponsors considered on
  a first-come, first-served basis. Not a bid
  process.
• Project Sponsor and customer determines
  efficiency measures to be installedprogram
  measure / technology neutral.
• Payments to project sponsors are based on kW and
  kWh savings, as determined by actual measurement
  of energy savings, or by deemed savings.
• In some instances, the incentive payment covers a
  small percentage of the cost of the measure. In
  other cases, the incentive payment can cover the
  entire cost.

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Incentive Payments

• Under a standard offer program, all incentives
  are paid directly to the project sponsor, not the
  customer.
• The project sponsor is not required to pass any
  incentive payment to customer.
• PUCT requires that the project sponsor disclose
  that incentives are being made available to the
  Project Sponsor through a ratepayer-funded
  program, manufacturers, or other entities.

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Typical Project Sponsors

• National energy efficiency services providers
• A/C dealers
• Insulation contractors
• Not-for-profit housing agencies
• Lighting contractors
• Retail energy companies
• No project sponsor can receive more than 20 of
  any programs incentive budget. Most utilities
  have lower limits to allow more project sponsors
  to participate. Utilities also set aside a
  percentage of incentives for small projects.

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Project Sponsor Requirements

• Adequate insurance
• All appropriate licenses
• Licenses are not required to provide many of the
  common energy efficiency measures
• References
• Evidence of technical and managerial capabilities
  and experience

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Program Administrator Responsibilities

• Performs outreach to energy services community.
• Reviews project applications on a first-come,
  first-served basis. Project sponsors that meet
  the programs threshold requirements are
  accepted. Not a bid process.
• Executes a standard contract with project
  sponsor.
• Performs pre- and post-installation verifications
  or inspections.
• Makes incentive payments to project sponsors.
• Reports results to PUCT.

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Project Sponsor Responsibilities

• Execute Standard Agreement with utility
• Market services to utility customers
• May not use utility name or logo in
  advertisements
• May not represent themselves, or any product or
  service as being endorsed by the utility
• Individual utilities may have other restrictions
• Execute host customer agreement with customer
• Install energy efficiency measures at customer
  sites
• Provide installation and energy savings reports
  to utility, as well as required customer
  acknowledgements

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Customer Eligibility

• Any electric distribution customer of IOU
  offering the program
• Customers may purchase electricity from any
  supplier
• Multi-Family
• Individually metered units are residential.
  Master-metered are commercial
• Small Commercial
• Aggregate demand of all facilities under common
  ownership does not exceed 250 kW

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Eligible Measures

• Must produce measurable demand and energy savings
• Useful life must be greater than ten years
• Must exceed minimum efficiency standards
• Typical residential measures
• High-efficiency air conditioners and appliances
• Insulation, ENERGY STAR windows, air infiltration
  control, duct sealing
• CFLs, low-flow showerheads (HTR Program only)
• Typical commercial measures
• Lighting, HVAC, motors

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Ineligible Measures

• Measures with life less than 10 years
• Removable measures (generally includes plug
  loads)
• Exterior lighting
• Cogeneration or self generation (except
  renewables)
• Fuel switching to electric
• Measures that require no capital investment
• Measures that receive incentives from other
  utility programs

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Required Forms

• Host Customer Agreement
• This is a standard agreement executed by the
  project sponsor and host customer. Contains all
  the customer protection provisions specified in
  PUCT Subst. Rule 25.181(o). Utilities typically
  provide template agreement forms for project
  sponsors to use.
• Customer Acknowledgement
• This is a form which is signed by the customer
  and submitted to the utility by the project
  sponsor. With this form, the customer
  acknowledges that the measures have been
  installed to his/her satisfaction, and provide
  the utility with permission to inspect the
  installation. The host customer agreement and
  customer acknowledgement forms may be combined.

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Hard-to-Reach Standard Offer Program

• Savings achieved through programs for
  hard-to-reach (HTR) customers shall be no less
  than 5 of the utilitys peak demand reduction
  goal.
• HTR customers are customers with an annual
  household income at or below 200 of the federal
  poverty guidelines.
• HTR Incentive rates are approximately twice as
  high as for other residential customers.
• HTR SOP is designed to encourage comprehensive
  energy efficiency retrofits.
• Some measures, such as compact fluorescent lamps
  and showerheads, are only eligible under this
  program.

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Market Transformation Programs

• Strategic efforts to induce lasting structural or
  behavioral changes in the market that result in
  increased adoption of energy efficient
  technologies, services, and practices.
• ENERGY STAR New Home Program is being implemented
  by TXU ED, CNP, Entergy, and TNMP. This program
  is designed to increase the market share of
  energy-efficient residential new construction.
• AC Distributor Program is being implemented by
  Entergy, CNP, Xcel, and TXU ED. An upstream
  incentive program for distributors of high
  efficiency HVAC products.
• Additional highly-targeted technologies.

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Market Transformation Programs

• MT programs can include advertising, training,
  incentives, and other mechanisms to overcome the
  various barriers to the implementation of more
  efficient technologies. SOP can only provide
  incentives.
• Utilities hire third-parties to implement these
  programs.
• No incentives provided directly to customers.
• End-use customer advertising and web sites can be
  used to create customer demand.
• This advertising usually promotes ENERGY
  STAR-labeled homes and HVAC products.

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Utility Web Sites

• Program Web sites have
• pages for customers and project sponsors
• FAQs
• Program contacts and links
• Most have lists of participating project sponsor
• www.texasefficiency.com
• links to all utility energy efficiency web pages
• links to PUCT web site

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Frequently-Asked Questions?

• How can I find out if ltltblankgtgt has a contract
  with ltltutilitygtgt?
• The best resource is the utility program web
  site. Contractor lists can be mailed to
  customers without internet access. However,
  being list on the utility web site is no
  guarantee that the project sponsor has access to
  incentive funds. Being on the list implies no
  endorsement of the project sponsor. In providing
  the list, the utility may not endorse or favor
  any project sponsor.

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Frequently-Asked Questions?

• Who is paying for this program?
• The funds to implement these programs come from
  the transmission and distribution rates of the
  participating utilities. Ninety percent of the
  total program budget is paid out as incentives to
  project sponsors. Utilities retain a maximum of
  ten percent for administration.

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Frequently-Asked Questions?

• How can a contractor install measures for free?
• It depends on your home and where you live. Some
  measures can save a significant amount of energy,
  especially if you have electric heat, or very
  little insulation. In some cases, the incentive
  payment can cover the cost of the measure.

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Frequently-Asked Questions?

• Do I have to be a homeowner to participate?
• No. You can rent your home, with the approval of
  the homeowner.
• Do I have to buy my electricity from ltltretail
  co.gtgt to be able to participate?
• No. Customers may purchase electricity from any
  supplier.

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Frequently-Asked Questions?

• Can I apply for a rebate directly from the
  utility?
• No. All incentives are paid directly to the
  project sponsor. Any arrangements made between
  the project sponsor and you regarding pricing and
  incentive payments are solely between the project
  sponsor and you.

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Frequently-Asked Questions?

• My contractor says this program will expire soon.
  Is this true?
• Individual project sponsor agreements with the
  utility may expire, but these programs are
  offered each year.
• My contractor says his product is endorsed by
  ltltutilitygtgt. Is this true?
• Utilities cannot endorse products or project
  sponsors, and project sponsors cannot claim any
  utility endorsement in their advertising. Such
  claims should be reported to the utility contact
  person.

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Frequently-Asked Questions?

• My retail electric company is also offering
  rebates. Can they do this?
• Affiliated and non-affiliated retail electric
  companies are allowed to participate in the
  standard offer programs as project sponsors,
  subject to the same requirements as others. They
  may provide rebates, financing, or other
  incentives. The retail company may pay these
  incentives directly, or may offer a bill credit.

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In Summary

• Utility contacts are available to help the PUCT
  staff.
• Individual program web sites may be the best
  source of information.
• www.texasefficiency.com has links to all the
  utility web sties.