1. 1 Incentives for Utility Programs Robert Balzar, Director Seattle City Light Conservation American Public Power Association Webinar May 8, 2008

2. 2 Efficiency is a better energy choice Baltimore Sun (March 10, 2008) Iowa needs to follow U.S. lead on energy Des Moines Register (March 11, 2008) Thermal Power Heats Up Nevada TIME Magazine (March 3, 2008) Corporate Social Responsibility: A Change in Climate The Economist (January 17, 2008) Nationwide Vision on Conservation working with a public that “Gets It” Seattle City Light CFL Campaign

3. 3 Seattle City Light providing energy efficient programs since 1977 One of the first in the nation to develop and promote conservation programs Delivering a cost-effective energy resource Reducing residential, commercial and industrial customer bills Eliminating greenhouse gas emissions and other environmental impacts

4. 4 Seattle City Light conservation is Seattle’s energy resource of choice Energy Efficiency Action Plan 2008 - 2012 Aggressive, accelerated conservation goals Low hanging fruit has been picked Challenges of stringent codes and standards Competition for customers and trade allies with neighboring utilities What can you afford to pay?

5. 5 Seattle City Light a national leader in conservation Conservation Goals: Market transformation to improve energy efficiency More stringent energy codes and standards Help customers install energy efficient products by offering financial and technical support

6. 6 2007 Energy Resources “Net Zero” Carbon Emissions * From BPA Contract and Market Purchases. These and other operations-related GHG emissions are offset.

7. 7 Overriding Policy: C onservation is the Utility’s resource of first choice to meet customer energy demands Analytical Approach: Develop Conservation Potential Assessment (CPA) for SCL’s service territory Construct alternative conservation resource paths from CPA for assessment in the IRP Analyze conservation paths as part of overall IRP resource portfolios for their effect on costs and risks Develop findings and recommendations for long term conservation resource goals and policy Seattle City Light analytical framework for conservation resources

8. 8 Seattle City Light achievable conservation potential

9. 9 Conservation in preferred portfolio acquired at a rate of 7 aMW per year or 140 aMW over 2007-2026 Portfolio with accelerated conservation path achieved greater economic benefits & lower revenue requirements than the preferred portfolio Study the feasibility, costs and benefits of accelerating conservation acquisition beyond the preferred option in SCL’s 5 Year Conservation Action Plan Conservation Seattle City Light 2006 IRP preferred portfolio

10. 10 Seattle City Light alternative conservation paths vs load growth

11. 11 Utility Incentive Programs an important component of an energy efficiency program Monetary Incentives Change Customer Behavior Types of Incentives Calculation per kilowatt hour of savings Make consistent between similar measures and market segments Base in part on expected measure life Ex: All City Light Lighting Programs = $.20/kWh 1 st year savings Fixed amount payment or rebate per unit or fixture Simple to implement and understand Ex: City Light Refrigerator Recycling Program pays customer $30 per refrigerator or freezer Payment as a percentage of job cost Set cost caps to encourage customer stake in keeping costs down City Light MF Common Area Retrofit program pays 85% of qualifying costs

12. 12 Utility Incentive Programs program design principles Determine program cost effectiveness Service territory or Total Resource Cost Includes financial incentive, program delivery, and customer share What’s the value of savings? Previous focus on incentives centered around cost of measures, now the shift to focus on value of savings Pay as much as you need, but no more to meet conservation goals Pay more if the value of savings are worth more

13. 13 Utility Incentive Programs GOAL: capture energy savings and reduce overall costs Guidelines for Effective Incentive Programs Develop incentives specifically by sector and market Where are you trying to affect change? Start from existing base of incentives Set incentive at certain level and see what kind of participation it generates Split Incentive: Who’s getting the energy savings and the benefits of cost savings? The commercial developer who sells a completed project won’t see the long-term bill savings, so incentives can overcome these types of barriers by paying more

14. 14 Longer lived measures with long term benefits have greater benefits, more value Commercial and MF shell upgrades will last longer (30-45 years) than commercial lighting (10-15 years) Understand Customer Needs What will get them to use energy conservation measures? Targeted needs for residential customers and small business May need to pay more to get residents and small business owners to install EE measures Communicate Creatively Strategic Marketing, Communication and Outreach Plan Utility Incentive Programs Risk overpaying to capture maximum energy savings, but avoid paying more than what the measure costs

15. 15 Energy Smart Services financial incentives and technical assistance for existing facilities and new construction projects Commercial and Industrial Customers Family of Measure Incentives Include: LightingHVAC Water Heating / Cooling & Treatment Compressed Air Building EnvelopePlug Loads Data ManagementIndustrial Process Lamps Food Service EquipmentElevators & Escalators Power Supply Measures

16. 16 Incentives & Simple Rebates Standard Measures FundedIncentive Amounts (applied to first-year savings) LIGHTING UPGRADES T-12 to T-8 or T-5 Replaced Incandescent, Exit Signs, Instant Motion Sensors, others 20¢ per kWh saved 20¢ per kWh savings HVAC Efficient chillers, heat pumps, variable speed drives for fans. Up to 29¢ kWh savings High Efficiency Industrial Equipment Expected 15-year service life 23¢ per kWh savings NEW: PC Power Management$8/pc Estimated savings up to 375 kWh/PC NEW: Hot Food Holding CabinetsUp to $500 per cabinet

17. 17 Built Smart Program buildings designed and built to conserve resources while providing a tranquil living environment Program Incentives: Building materials, windows, walls, ceilings Insulation and HVAC Interior and exterior common area lighting Energy efficient fans, controls, in-unit appliances, thermostats, elevators certified BUILT SMART BUILT SMART standards exceed the highest recommendations of the State Building Code for energy efficiency and comfort. Every BUILT SMART apartment and condominium building undergoes rigorous inspection during construction. When the building is successfully completed, it is awarded a BUILT SMART certification plaque that can be displayed in the lobby.

18. 18 Built Smart Incentive Schedule & Simple Rebates Standard Measures FundedIncentive Amounts (applied to first-year savings) Multifamily New Construction Common Area Lighting Requirements: New construction residential building, gas or electrically heated 5 units or more, no limits on number of stories $0.20/kWh saved over code in common area lighting $25/fixture for energy efficient in-unit lights Built Smart Full Measure Program (Market Rate and Affordable Housing components) Requirements: New construction residential building 5 units or more, no more than 7 stories Electrically heated $0.75/kWh saved over code in wall, window, ceiling & floor insulation $0.20/kWh saved over code in common area lighting $25/fixture for energy efficient in-unit lights

19. 19 Refrigerator Recycling Program we pick up your old fridge...and you pick up 30 bucks Old second appliances use three times as much energy as newer ones, significantly running up the electric bill and contributing to global warming. Fixed rebate program: $30 per refrigerator or freezer Partnership with leading appliance recycling company JACO Environmental Picks up the appliance from resident homes Uses a state-of-the-art process to recycle 95% of the materials that make up the old refrigerators and freezers

20. 20 Twist & Save Program compact fluorescent bulbs to transform the lighting market Inexpensive: Energy Star® Compact Fluorescent bulbs for less than $1 at participating retailers Easy: No coupons or rebates forms Opportunities: CFL Saturation Almost 3 out of 10 homes do not have at least one CFL installed Challenges in reaching these homes include cultural and language barriers that will require creative communication techniques to reach and persuade these customers CFL Bulb Recycling and Mercury Concerns Take it Back Network Program City Light Recycling Bins at Service Centers

21. 21 Utility Incentives for a world-class conservation power plant Seattle City Light Conservation Resources Click on screen to play video conservation is Seattle’s energy resource of choice www.seattle.gov/light/conserve

22. 22 Robert Balzar 30 years experience in engineering, marketing and utility management Past experience: Director of Marketing and Product Development for Pinnacle Homes in Las Vegas 21 years at Sierra Pacific Power and Nevada Power Companies, including five years leading a team that developed and expanded the Energy Efficiency and Conservation Department Member of: Board Member, Northwest Energy Efficiency Alliance Served on the State of Nevada Task Force on Renewable Energy and Energy Conservation Served as a Board member of Southwest Energy Efficiency Program in Boulder, Colorado Education: B.S. in Electrical Engineering from the U of NV, Reno