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©2013 Navigant Consulting, Inc. ENERGY DISPUTES & INVESTIGATIONS ECONOMICS FINANCIAL ADVISORY MANAGEMENT CONSULTING May 14, 2013 CPUC Potentials, Goals.

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Presentation on theme: "©2013 Navigant Consulting, Inc. ENERGY DISPUTES & INVESTIGATIONS ECONOMICS FINANCIAL ADVISORY MANAGEMENT CONSULTING May 14, 2013 CPUC Potentials, Goals."— Presentation transcript:

1 ©2013 Navigant Consulting, Inc. ENERGY DISPUTES & INVESTIGATIONS ECONOMICS FINANCIAL ADVISORY MANAGEMENT CONSULTING May 14, 2013 CPUC Potentials, Goals and Targets (PGT) Study Update Presentation to the Demand Analysis Working Group (DAWG) of Preliminary Results Navigant Reference:

2 1 ©2013 Navigant Consulting, Inc. ENERGY Content of Report This presentation was prepared by Navigant Consulting, Inc. exclusively for the benefit and internal use of the California Public Utilities Commission (CPUC) and/or its affiliates or subsidiaries. No part of it may be circulated, quoted, or reproduced for distribution outside these organization(s) without prior written approval from Navigant Consulting, Inc. The work presented in this report represents our best efforts and judgments based on the information available at the time this report was prepared. Navigant Consulting, Inc. is not responsible for the readers use of, or reliance upon, the report, nor any decisions based on the report. NAVIGANT CONSULTING, INC. MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED. Readers of the report are advised that they assume all liabilities incurred by them, or third parties, as a result of their reliance on the report, or the data, information, findings and opinions contained in the report. May 14, 2013 ©2013 Navigant Consulting, Inc. All rights reserved. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. See for a complete listing of private investigator licenses. Investment banking, private placement, merger, acquisition and divestiture services offered through Navigant Capital Advisors, LLC., Member FINRA/SIPC.www.navigantconsulting.com/licensing

3 2 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps

4 3 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps

5 4 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps

6 5 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps

7 6 ©2013 Navigant Consulting, Inc. ENERGY Review of California Findings and Key Issues 2013 Preliminary Results - Do Not Cite Study Objectives To provide guidance for the utilities 2015 energy efficiency portfolios To update the forecast for energy procurement planning : To inform strategic contributions to Californias greenhouse gas reduction targets Key Points The 2013 Potential Forecasts Consistent Levels of Baseline Potential Going Forward Expanded Emerging Technologies Provide Additional Potential Potential in the AIMS Sectors Identifies New Sources of Savings Early Analysis Shows Financing as Alternate Driver of Savings Whole Building Efforts Represent Transformational Opportunities Lighting Technologies Still Drive Savings Codes and Standards and Behavioral Initiatives Remain Key Areas of Uncertainty

8 7 ©2013 Navigant Consulting, Inc. ENERGY Review of California Findings and Key Issues 2013 Preliminary Results - Do Not Cite Aggregate IOUs: Annual Incremental Market Potential by Sector, excluding Agriculture, with Emerging Technologies (GWh)

9 8 ©2013 Navigant Consulting, Inc. ENERGY Review of California Findings and Key Issues 2013 Preliminary Results - Do Not Cite Aggregate IOUs: Comparison of Annual Incremental Market Potential in the 2011 and 2013 Potential Studies (GWh)

10 9 ©2013 Navigant Consulting, Inc. ENERGY Review of California Findings and Key Issues 2013 Preliminary Results - Do Not Cite Comparison of Technical and Economic Potential Using the Methodologies in the 2011 and 2013 Potential Studies (GWh)

11 10 ©2013 Navigant Consulting, Inc. ENERGY 2013 Preliminary Results - Do Not Cite Review of California Findings and Key Issues Aggregate IOUs: Comparison of Technical, Economic, and Cumulative Market Potential in the 2011 and 2013 Potential Studies (GWh)

12 11 ©2013 Navigant Consulting, Inc. ENERGY Key Issues 1.Definition of Technical and Economic Potential E.g. Is technical potential based on all devices being converted with the highest efficiency achievable, or some representation of the range of high efficiency equipment. For example, is HVAC technical potential defined by gap between code and 22 SEER equipment or an average of the range of SEER above code? 2.Definition of Market Potential Navigant used the best current market knowledge and followed several guidelines in developing the recommended market potential; Avoid assumptions and model design decision that would establish goals and targets that are aspirational, but for which the technologies or market mechanism to attain these goals may not yet be clearly defined. Provide a view of market potential where data sources and calculation methods are transparent and clearly documented. Navigant considers that the market potential presented in this study to be a viable baseline target for energy efficiency to which load forecasters, system planners, and resource procurement specialists could agree. It is, however, not intended to define the upper bound on the total amount of energy efficiency that can be achieved. Review of California Findings and Key Issues

13 12 ©2013 Navigant Consulting, Inc. ENERGY Key Issues 1.Definition of Potential This model is based largely on DEER and the Froze Ex-Ante Database (FEA) Review of California Findings and Key Issues

14 13 ©2013 Navigant Consulting, Inc. ENERGY Key Issues Definition of Potential – Example of portfolio behavior components. Review of California Findings and Key Issues 16% of PG&E portfolio is Residential, and 55% of the Residential portfolio is home energy audits with an EUL of 0.92 years. No other utility has this measure at this scale. Questions How is this component to be modeled in a long term forecast. What is associated uncertainty for system planning, procurement, and load forecasting

15 14 ©2013 Navigant Consulting, Inc. ENERGY Key Issues: Calibration Why do we need calibration? Model uses bottom-up data which needs to be consistent with what weve witnessed in the past for it be anchored to something in reality. iDR could be different for different end-uses. Calibrating at end-use level allows us to account for that reality. How do we calibrate? Use past performance (EM&V and ex-ante savings) data as targets. The calibration multipliers are applied to the willingness & awareness calculations, which adjust measure adoption and annual savings. Emerging Technologies (ETs) are not calibrated down. Review of California Findings and Key Issues

16 15 ©2013 Navigant Consulting, Inc. ENERGY What are the side effects of calibration? The current approach holds 3 things constant Consumer attitudes Program efficacy and budget. Program priorities Calibrating up has different impacts than calibrating down Calibrating up increases market saturation in early years leaving less potential for the future Calibrating down brings down the equilibrium market share. What would an alternative calibration approach be? Relax constraints over time: assumes that the 3 constants can change over time. For multipliers less than 1, they would gradually approach 1 over time. Bring the iDR to the market interest rate as a way to allow for increased willigness and market adoption. Calibration Approach

17 16 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps

18 17 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps Commercial Residential Industrial Agriculture Mining Street Lights

19 18 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Technical, Economic and Cumulative Market Potential for (GWh)* *Cumulative market potential reflects measure installations starting in 2006.

20 19 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Incremental Market Potential for 2012 – 2024 (GWh)

21 20 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Incremental Market Potential by Measure Type Category 2012 – 2024 (GWh)

22 21 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Whole Building (Existing and N/C) Cumulative Market Potential (GWh)

23 22 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Whole Building New Construction vs. Retrofit (GWh) 2015: NC Level 2 becomes Code 2018: NC Level 3 becomes Code

24 23 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate Incremental IOU Savings by RET/ROB (GWh)

25 24 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Cumulative Market Potential with and without Financing (GWh)

26 25 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Incremental Market Potential Expressed as Equivalent Number of Average Commercial Buildings Removed from the Grid* *Number of average commercial buildings is calculated based on a 25,000 square foot building.

27 26 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric Aggregate IOU Incremental Market Potential in 2013 and 2014 Compared to Compliance Filings and 2011 Potential Study 2013 Preliminary Results - Do Not Cite

28 27 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Potential as a Percent of CEC Commercial Forecast for Aggregate IOUs (GWh)* *Based on IEPR Commercial Forecast for Excludes CEC forecast for energy efficiency. **Cumulative market potential reflects measure installations starting in 2006.

29 28 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Cumulative Market Potential as a Percent of CEC Commercial End Use Forecasts for Aggregate IOUs (GWh)* *Based on IEPR Commercial Forecast for Excludes CEC forecast for energy efficiency. **Cumulative market potential reflects measure installations starting in 2006.

30 29 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric Aggregate IOU Breakdown of Consumption and Savings Potential by End Use (Modeled Results for Program Year 2014) 2013 Preliminary Results - Do Not Cite Note: Model results shown for Program Year 2014; CEUS results from 2006.

31 30 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite

32 31 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Electric and Gas 2013 Preliminary Results - Do Not Cite Sensitivity of Model Outputs to Changes in a Single Variable from Mid EE Penetration Scenario to High or Low EE Penetration Scenario * Sensitivity analysis completed for PG&E as an illustrative tool only. Other IOUs have similar sensitivities.

33 32 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Technical, Economic and Cumulative Market Potential for 2012 – 2024 (Therms)* *Cumulative market potential reflects measure installations starting in

34 33 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Incremental Market Potential for 2012 – 2024 (Therms)* *Negative interactive effects from lighting cause the graph to show values below zero in early years. However, gas savings from other end uses offset these negative impacts and result in net positive gas savings. **Ex Post Savings reported from 2006 to 2012 under the Process-Heating use category are accounted for by efficient boiler savings which is modeled under the HVAC use category. Accordingly, no savings are reported under Process-Heating.

35 34 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Gas Aggregate IOU Incremental Market Potential in 2013 and 2014 Compared to Compliance Filings and 2011 Potential Study* 2013 Preliminary Results - Do Not Cite * 2013 Study excludes Steam Traps. No plans to add per current program direction.

36 35 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Commercial Potential as a Percent of CEC Commercial Forecast for Aggregate IOUs (Gas)* *Based on IEPR Commercial Forecast for Excludes CEC forecast for energy efficiency. **Cumulative market potential reflects measure installations starting in 2006.

37 36 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Stakeholder Comments For the May 10 release, the Navigant team corrected a calculation error, updated the approach for process boilers, and recalibrated the results. Stakeholder Comments Approach to Addressing ThemeDescription Measure- Specific Requests Server efficiency (ET)ETs selected based on the largest energy-consuming sector end-use combinations in the state Results Gap between TE and M potential for gas and electric as a whole Fixed a calculation error in the model. Recalibrated, excluding ETs from calibration. Some gap still remains. Study results lower than compliance filings Fixed a calculation error in the model. Recalibrated, excluding ETs from calibration. Updated approach to process boilers. Financing has small impactMaintaining relatively conservative assumptions for key inputs until more robust data available. Electric results achieve <1% of sales on incremental basis Demonstrates the need to identify game-changing ETs to fill the pipeline. Approach to Addressing Stakeholder Comments on Draft Commercial Sector Results

38 37 ©2013 Navigant Consulting, Inc. ENERGY Commercial Results: Aggregate IOUs » Stakeholder Comments The model has limited capabilities to address two requests for specific outputs at this time. Stakeholder Comments Approach to Addressing ThemeDescription Requests for Specific Outputs Break out potential for whole building measures into constituent measures The Navigant team will provide a list of the measures that made up each whole building bundle, but the model is not set up to break out whole building potential into potential for each measure. Show some results for gas with similar graphics as shown for electric Not included at this time. Approach to Addressing Stakeholder Comments on Draft Commercial Sector Results

39 38 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps Commercial Residential Industrial Agriculture Mining Street Lights

40 39 ©2013 Navigant Consulting, Inc. ENERGY FK Placeholder. Residential Results: Aggregate IOUs Update

41 40 ©2013 Navigant Consulting, Inc. ENERGY Residential Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Residential Technical, Economic and Cumulative Market Potential for (GWh)* *Cumulative market potential reflects measure installations starting in 2006.

42 41 ©2013 Navigant Consulting, Inc. ENERGY 2013 Preliminary Results - Do Not Cite Aggregate IOU Residential Incremental Market Potential for 2012 – 2024 (GWh) Residential Results: Aggregate IOUs » Electric

43 42 ©2013 Navigant Consulting, Inc. ENERGY 2013 Preliminary Results - Do Not Cite Aggregate IOU Residential Incremental Market Potential by Measure Type Category 2012 – 2024 (GWh) Residential Results: Aggregate IOUs » Electric

44 43 ©2013 Navigant Consulting, Inc. ENERGY 2013 Preliminary Results - Do Not Cite Aggregate IOU Residential Whole Building (Existing and N/C) Cumulative Market Potential (GWh) Residential Results: Aggregate IOUs » Electric

45 44 ©2013 Navigant Consulting, Inc. ENERGY 2013 Preliminary Results - Do Not Cite Aggregate IOU Residential Cumulative Market Potential with and without Financing (GWh) Residential Results: Aggregate IOUs » Electric

46 45 ©2013 Navigant Consulting, Inc. ENERGY 2013 Preliminary Results - Do Not Cite Aggregate IOU Incremental Market Potential Expressed as Equivalent Number of Average Homes Removed from the Grid* *Number of average homes is calculated as an average of all households served by the aggregate IOUs; based on CEC forecast. Residential Results: Aggregate IOUs » Electric

47 46 ©2013 Navigant Consulting, Inc. ENERGY Aggregate IOU Incremental Market Potential in 2013 and 2014 Compared to Compliance Filings and 2011 Potential Study 2013 Preliminary Results - Do Not Cite Residential Results: Aggregate IOUs » Electric

48 47 ©2013 Navigant Consulting, Inc. ENERGY 2013 Preliminary Results - Do Not Cite Aggregate IOU Residential Potential as a Percent of CEC Residential Forecast for Aggregate IOUs (GWh)* *Based on IEPR Residential Forecast for Excludes CEC forecast for energy efficiency. **Cumulative market potential reflects measure installations starting in Residential Results: Aggregate IOUs » Electric

49 48 ©2013 Navigant Consulting, Inc. ENERGY 2013 Preliminary Results - Do Not Cite Aggregate IOU Residential Cumulative Market Potential as a Percent of CEC Residential End Use Forecasts for Aggregate IOUs (GWh)* *Based on IEPR Residential Forecast for Excludes CEC forecast for energy efficiency. **Cumulative market potential reflects measure installations starting in Residential Results: Aggregate IOUs » Electric

50 49 ©2013 Navigant Consulting, Inc. ENERGY Aggregate IOU Breakdown of Consumption and Savings Potential by End Use (Modeled Results for Program Year 2014) 2013 Preliminary Results - Do Not Cite Note: Model results shown for Program Year 2014; RASS results from Residential Results: Aggregate IOUs » Electric

51 50 ©2013 Navigant Consulting, Inc. ENERGY Aggregate IOU Breakdown of Consumption and Savings Potential Embedded in End Use Consumption (Modeled Results for Program Year 2014) 2013 Preliminary Results - Do Not Cite Note: Model results shown for Program Year 2014; RASS results from Residential Results: Aggregate IOUs » Electric

52 51 ©2013 Navigant Consulting, Inc. ENERGY Residential Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Note: Model results shown for Program Year 2014; CEUS results from 2006.

53 52 ©2013 Navigant Consulting, Inc. ENERGY 2013 Preliminary Results - Do Not Cite Aggregate IOU Residential Technical, Economic and Cumulative Market Potential for 2012 – 2024 (Therms)* *Cumulative market potential reflects measure installations starting in Residential Results: Aggregate IOUs » Gas

54 53 ©2013 Navigant Consulting, Inc. ENERGY Residential Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite California Residential Incremental Market Potential for 2012 – 2024 (Therms)* *Negative interactive effects from lighting cause the graph to show values below zero in early years. However, gas savings from other end uses offset these negative impacts and result in net positive gas savings.

55 54 ©2013 Navigant Consulting, Inc. ENERGY Residential Results: Aggregate IOUs » Gas Aggregate IOU Incremental Market Potential in 2013 and 2014 Compared to Compliance Filings and 2011 Potential Study 2013 Preliminary Results - Do Not Cite

56 55 ©2013 Navigant Consulting, Inc. ENERGY Residential Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Residential Potential as a Percent of CEC Residential Forecast for Aggregate IOUs (Gas)* *Based on IEPR Residential Forecast for Excludes CEC forecast for energy efficiency. **Cumulative market potential reflects measure installations starting in 2006.

57 56 ©2013 Navigant Consulting, Inc. ENERGY Residential Results: Aggregate IOUs » Stakeholder Comments The Navigant team re-calibrated the model and added pool pumps to the measure list to address stakeholder comments. Stakeholder Comments Approach to Addressing ThemeDescription Measure- Specific Requests Electric pool pumpsAdded measure using work paper data. Gap between TE and M potential: HVAC (GWh), water heating (gas), overall (gas) Recalibrated, excluding ETs from calibration. Some gap still remains. Calibrate at measure level rather than end use May consider during Q4 update; does not affect top- line results. Behavior has more potential than shown Approach remains consistent with May consider during Q4 update. Server efficiency (ET)ETs selected based on the largest energy-consuming sector end-use combinations in the state Approach to Addressing Stakeholder Comments on Draft Residential Sector Results

58 57 ©2013 Navigant Consulting, Inc. ENERGY Residential Results: Aggregate IOUs » Stakeholder Comments Other stakeholder comments address functionality already available in the model or refer to inputs that are based on previous research. Stakeholder Comments Approach to Addressing ThemeDescription Measure Groups ET: small savingsRecalibrated, excluding ETs from calibration. C&S: compliance ratesNo changes made. Compliance rates based on CPUC evaluation of C&S programs. Whole building definitionWhole building refers to design and construction practices that fully integrate building performance objectives to reduce cooling and heating loads. Scenarios/Stress Tests Benefit cost test: Add scenario with PAC Still assessing options. TRC Screen: Increase beyond 0.85 The user interface allows users to change this. Base scenario continues to use 0.85 per ED guidance. Use a fixed incentive level in High EE Penetration Scenario High scenario continues to use a variably incentive structure per CPUC guidance. Requests for Specific Outputs Several different cuts at the data This functionality already available in the model. View results by measure. Approach to Addressing Stakeholder Comments on Draft Residential Sector Results

59 58 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps Commercial Residential Industrial Agriculture Mining Street Lights

60 59 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Supply Curve Example Industrial Methodology - Recap of Supply Curve Example Supply Curve Analysis of the Industrial Sector used a supply curve approach rather than Bass diffusion. See the appendices included with this release for details.

61 60 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Industrial Technical, Economic and Cumulative Market Potential for (GWh)* *Cumulative market potential reflects measure installations starting in 2006.

62 61 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Industrial Incremental Market Potential by Sub-Sector for 2012 – 2024 (GWh)

63 62 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Industrial Incremental Market Potential by End-Use for 2012 – 2024 (GWh)

64 63 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Electric Comparative Metrics Savings Distribution by IOU Across End-Uses for Electric Measures in % of savings come from Equipment and 40% from O&M savings across all IOUs.

65 64 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Electric Comparative Metrics Aggregate IOU Industrial Incremental Market Potential in 2013 and 2014 Compared to Compliance Filings and 2011 Potential Study

66 65 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Comparative Metrics 2013 Preliminary Results - Do Not Cite – Comparative Metrics

67 66 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Comparative Metrics KEMA Source: KEMA Industrial Sectors Market Characterizations, Released January to February 2012, Calmac.org 2013 Preliminary Results - Do Not Cite – Comparative Metrics

68 67 ©2013 Navigant Consulting, Inc. ENERGY Source: Energy Savings Potential of Solid-State Lighting in General Illumination Applications, January 2012 Industrial Results: Aggregate IOUs » Electric Comparative Metrics Industrial Lighting Service Forecast (Teralumen-Hours Served by Each Technology), 2010 to 2030 Source: Navigant 2010, Energy Savings Potential of Solid-State Lighting in General Illumination Applications 2010 to 2030 Note: The scale in the image above starts at 6.0 Quad rather than 0. Other secondary sources indicate that energy consumption by lighting is anticipated to decrease by about 40% in a scenario with heavy LED adoption. National Energy Consumption for Lighting through 2030 for Each Scenario (Quads)

69 68 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Industrial Technical, Economic and Cumulative Market Potential for (Therms)* *Cumulative market potential reflects measure installations starting in 2006.

70 69 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Industrial Incremental Market Potential by Sub-Sector for 2012 – 2024 (Therms)

71 70 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Industrial Incremental Market Potential by End-Use for 2012 – 2024 (Therms)

72 71 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Gas Comparative Metrics Aggregate IOU Industrial Incremental Market Potential in 2013 and 2014 Compared to Compliance Filings and 2011 Potential Study

73 72 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Gas Comparative Metrics Savings Distribution Across End-Uses for Electric Measures in 2013

74 73 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Stakeholder Comments Many of the stakeholder comments on the Industrial sector concerned clarifications about the data sources and scope of the work in this sector. Stakeholder Comments Summary of Response ThemeDescription Data Geographic scope of dataUsed national data. Most manufacturers use standard practices regardless of location. Size of facilities included in IAC Small and large facilities have the same sets of equipment. Alternative data: Audits and applications/Aspen results IAC most representative and current. Can use Aspen to cross-check results. Concerns about alignment with current programs (e.g., measures, EULs, O&M) Reviewing measure list to identify overlap. The Navigant team believes that all measures included in the study reflect eligible measures for IOUs. Scope Petroleum and natural gas segment not included Results available in the Mining sector deck/model. CHP as a competing source of savings for EE CHP was out of the scope of this study. Responses to Stakeholder Comments on Draft Industrial Sector Results

75 74 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Stakeholder Comments Two key stakeholder concerns addressed methodological questions. Stakeholder Comments Approach to Addressing ThemeDescription Methodology Refresh/saturate assumptionsRevised the refresh/saturate assumptions at the sub- sector and end use level to better reflect understanding of the markets. Willingness methodologyFollow up with inquiring stakeholder. Approach to Addressing Stakeholder Comments on Draft Residential Sector Results The Navigant team updated the refresh/saturate approach, as outlined on the next slide.

76 75 ©2013 Navigant Consulting, Inc. ENERGY Industrial Results: Aggregate IOUs » Stakeholder Comments Refresh =1 Saturate = 0 Refresh/Saturate Assumptions by End Use and Sub-Sector

77 76 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps Commercial Residential Industrial Agriculture Mining Street Lights

78 77 ©2013 Navigant Consulting, Inc. ENERGY 2011 Electric Consumption, PG&E, SCE, & SDGE Totals, by Sub-Sector and End-Use. Agricultural Results: PG&E, SCE, SDGE Totals » Electricity Proposed Navigant Segment Identifier --> Dairies Irrigated Agriculture Greenhouses & Nurseries Vineyards & Wineries CAFOs Refrigerated Warehouses Post-Harvest Processing CEC Segment Identifier / NAICS Code --> Dairy Cattle and Milk Production Field Crops; Fruit, Tree and Vine Crops Greenhouse, Nursery, and Floriculture Production Wineries (Wine- Making Vineyards) Animal Production except Dairy Cattle/Milk Production Refrigerated Warehousing and Storage (Under Commercial Building) Postharvest Crop Activities (including Cotton Ginning); Cotton Ginning , 1119, 1112, , HVAC 64, , , , , Lighting 80, , , , , , Motors 8, ,730, , , , , , Refrigeration 330, , , , , , Water Heating and Cooling 48, , , , , Process 177, , , , , Miscellaneous 96, , , , , , Total, MWh* 806,403 1,821, , , , , ,908 MWh Consumption Heat Map created using CEC QFER data from Dairies Irrigated Agriculture Greenhouses & Nurseries Vineyards & Wineries CAFOs Refrigerated Warehouses Post-Harvest Processing HVAC 1%0%2%1%3%0%1% Lighting 2%0%1%2%0%1% Motors 0%33%0%1%0% Refrigeration 6%0% 4%0%11%5% Water Heating and Cooling 1%0% 1%0% Process 3%0% 2%0% 11% Miscellaneous 2% 0% 15%35%4%11%4%13%18% Denotes Industrial MICS used in Analysis Distribution of Electric Consumption across Sub-Sectors and End-Uses.

79 78 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Agricultural Technical/Economic and Cumulative Market Potential for (% GWh)* *Cumulative market potential reflects measure installations starting in 2006.

80 79 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Electric 2013 Preliminary Results - Do Not Cite IOU Specific Agricultural Incremental Market Potential by Sub- Sector, 2013 (Percent of Total Market Potential)

81 80 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Electric 2013 Preliminary Results - Do Not Cite IOU Specific Agricultural Incremental Market Potential by End- Use, 2013 (Percent of Total Market Potential) Process (electric): E.g., motors driving equipment, conveyors, etc. Motors: E.g., motors driving pumps for irrigation, etc.

82 81 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Incremental Market Potential in 2013 and 2014 Compared to Compliance Filings and 2011 Potential Study

83 82 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Electric 2013 Preliminary Results - Do Not Cite IOU Incremental Market Potential in 2013 and 2014 as a Percent of Consumption Agricultural Sector Savings Comparison, Electric IOU IOU Filings (GWh)Navigant Model (GWh) Consumption Forecast (GWh) All ,646 PG&E ,296 SCE35819,798 SDG&E85553

84 83 ©2013 Navigant Consulting, Inc. ENERGY 2011 Gas Consumption, PG&E, SCG, & SDGE Totals, by Sub-Sector and End-Use. Agricultural Results: PG&E, SCG, SDGE Totals » Gas Therm Consumption Heat Map created using CEC QFER data from Distribution of Gas Consumption across Sub-Sectors and End-Uses. Proposed Navigant Segment Identifier --> Dairies Irrigated Agriculture Greenhouses & Nurseries Vineyards & Wineries CAFOs Refrigerated Warehouses Post-Harvest Processing CEC Segment Identifier / NAICS Code --> Dairy Cattle and Milk Production Field Crops; Fruit, Tree and Vine Crops Greenhouse, Nursery, and Floriculture Production Wineries (Wine- Making Vineyards) Animal Production except Dairy Cattle/Milk Production Refrigerated Warehousing and Storage (Under Commercial Building) Postharvest Crop Activities (including Cotton Ginning) , 1119, 1112, , HVAC 216, ,692, ,183, ,279, ,042, ,115, , Lighting Motors Refrigeration Water Heating and Cooling 1,946, ,349, ,379, Process ,034, ,148, Miscellaneous - 9,692, , ,034, ,115, Total, Therms* 2,162, ,927, ,372, ,073, ,421, ,230, ,482, Dairies Irrigated Agriculture Greenhouses & Nurseries Vineyards & Wineries CAFOs Refrigerated Warehouses Post-Harvest Processing HVAC0%8%29%6%1% 0% Lighting0% Motors0% Refrigeration0% Water Heating and Cooling 2%0% 8% 0% Process0% 1%0% 27% Miscellaneous0%8%0%1%0%1%0% 2%16%29%16%8%2%27% Denotes Industrial MICS used in Analysis Lit. Review and SME Interviews Denotes Commercial MICS used in Analysis

85 84 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Agricultural Technical/Economic and Cumulative Market Potential for (% MM Therms)* *Cumulative market potential reflects measure installations starting in 2006.

86 85 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Gas 2013 Preliminary Results - Do Not Cite IOU Specific Agricultural Incremental Market Potential by Sub- Sector, 2013 (Percent of Total Market Potential)

87 86 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Gas 2013 Preliminary Results - Do Not Cite IOU Specific Agricultural Incremental Market Potential by End- Use, 2013 (Percent of Total Market Potential)

88 87 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Incremental Market Potential in 2013 and 2014 Compared to Compliance Filings and 2011 Potential Study

89 88 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector Gas 2013 Preliminary Results - Do Not Cite IOU Incremental Market Potential in 2013 and 2014 as a Percent of Consumption Agricultural Sector Savings Comparison, Gas IOU IOU Filings (MM Therms) Navigant Model (MM Therms) Consumption Forecast (MM Therms) All PG&E9171 SDG&E008 SCG23160

90 89 ©2013 Navigant Consulting, Inc. ENERGY Agricultural Results: Aggregate IOUs » Agricultural Sector 2013 Preliminary Results - Do Not Cite Agricultural Sector IOU Filings (Combined Fuels, Electric and Gas) IOU Ex-ante Savings, Combined Fuel (MMBTU) Budget (Millions $)$/MMBTU PG&E1,607,799$28.82$17.93 SCE119,280$1.44$12.11 SCG242,126$1.44$5.96 SDG&E47,294$2.22$ Agricultural Sector IOU Savings Comparison, Electric, $/kWh IOUFilingNavigant PG&E$0.14 SCE$0.04$0.14 SCGN/A SDG&E$0.27$0.14 Aggregate$0.13$ Agricultural Sector IOU Savings Comparison, Electric, $/Therm IOUFilingNavigant PG&E$3.18$2.07 SCEN/A SCG$0.60$4.66 SDG&E$11.72$6.87 Aggregate$2.78$4.38

91 90 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps Commercial Residential Industrial Agriculture Mining Street Lights

92 91 ©2013 Navigant Consulting, Inc. ENERGY Mining Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite *Cumulative market potential reflects measure installations starting in Aggregate IOU Mining Technical, Economic and Cumulative Market Potential for (GWh)*

93 92 ©2013 Navigant Consulting, Inc. ENERGY Mining Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite *Cumulative market potential reflects measure installations starting in Aggregate IOU Mining Potential as a Percent of CEC Mining Forecast (QFER) (GWh)*

94 93 ©2013 Navigant Consulting, Inc. ENERGY Mining Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Mining Incremental Market Potential by Sub-Sector for 2012 – 2024 (GWh)

95 94 ©2013 Navigant Consulting, Inc. ENERGY Mining Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite *Cumulative market potential reflects measure installations starting in Aggregate IOU Mining Technical, Economic and Cumulative Market Potential for (Therms)*

96 95 ©2013 Navigant Consulting, Inc. ENERGY Mining Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite *Cumulative market potential reflects measure installations starting in Aggregate IOU Mining Potential as a Percent of CEC Mining Forecast (QFER) (Therms)*

97 96 ©2013 Navigant Consulting, Inc. ENERGY Mining Results: Aggregate IOUs » Gas 2013 Preliminary Results - Do Not Cite Aggregate IOU Mining Incremental Market Potential by Sub-Sector for 2012 – 2024 (Therms)

98 97 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps Commercial Residential Industrial Agriculture Mining Street Lights

99 98 ©2013 Navigant Consulting, Inc. ENERGY Street Lighting Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Street Lighting Technical, Economic and Cumulative Market Potential for (GWh)* *Cumulative market potential reflects measure installations starting in 2006.

100 99 ©2013 Navigant Consulting, Inc. ENERGY Street Lighting Results: Aggregate IOUs » Electric Aggregate IOU Street Lighting Potential as a Percent of CEC Street Lighting Forecast (QFER) (GWh)* *Cumulative market potential reflects measure installations starting in Preliminary Results - Do Not Cite

101 100 ©2013 Navigant Consulting, Inc. ENERGY Street Lighting Results: Aggregate IOUs » Electric 2013 Preliminary Results - Do Not Cite Aggregate IOU Street Lighting Incremental Market Potential by Sub-Sector for 2012 – 2024 (GWh)

102 101 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps

103 102 ©2013 Navigant Consulting, Inc. ENERGY 10:00Introductions 10:15Update on EUC and Financing 11:00Review of California Findings and Key Issues 11:30Break/Lunch 12:30Sector Results and Revisions 2:15Additional Stakeholder Input Agenda 3:45Next Steps

104 Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2013 Navigant Consulting, Inc. 103 ENERGY Floyd Keneipp, Director in Charge Managing Director Walnut Creek, CA (925) Jane Pater Salmon, Project Manager Associate Director Boulder, CO (303) Brad Rogers, Lead Modeler Managing Consultant Boulder, CO (303) Amul Sathe, ET, C&S, SP, MICS Managing Consultant San Francisco, CA (415) Floyd Keneipp, Director in Charge Managing Director Walnut Creek, CA (925) Jane Pater Salmon, Project Manager Associate Director Boulder, CO (303) Brad Rogers, Lead Modeler Managing Consultant Boulder, CO (303) Amul Sathe, ET, C&S, SP, MICS Managing Consultant San Francisco, CA (415) Surya Swamy, Analytica Managing Consultant Walnut Creek, CA (925) Matt OHare, IMS Sector Lead Managing Consultant Washington, DC (202) Please copy all comments or questions to Sam Piell, Workflow Coordinator Senior Consultant Walnut Creek, CA (925) Surya Swamy, Analytica Managing Consultant Walnut Creek, CA (925) Matt OHare, IMS Sector Lead Managing Consultant Washington, DC (202) Please copy all comments or questions to Sam Piell, Workflow Coordinator Senior Consultant Walnut Creek, CA (925)

105 104 ©2013 Navigant Consulting, Inc. ENERGY Additional Support Slides Appendix

106 105 ©2013 Navigant Consulting, Inc. ENERGY Illustration of Calibration Issues Calibration Approach Uncalibrated forecasts have no historic basis. Creates a discontinuity in overall trend Calibration is consistent with historic data Calibration can suppress future potential Note: These charts are for illustrative purposes only and do not include real data.

107 106 ©2013 Navigant Consulting, Inc. ENERGY Illustration of Calibration Issues Calibration Approach True potential may fall in between calibrated and uncalibrated. Uncalibrated serves as the floor for potential. Note: This chart is for illustrative purposes only and do not include real data.


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