1. Non-Energy Benefits from Residential Energy Efficiency Programs David Carroll and Jackie Berger APPRISE ACI National Conference - April 2016

2. NON-ENERGY BENEFITS FRAMEWORK 2

3. Important Concepts 3 Types of Non-Energy Benefits –Household Level with benefits to Household –Household Level with benefits to Ratepayer/Taxpayer –Societal with benefits to general population Measurement Framework –Baseline Conditions –Gross Impacts –Net Impacts

4. Direct Benefits to Households 4 Our primary concern is how these program directly affect the households served by the programs. Examples of Benefits Delivered to Households –Equipment replacement results in reduced need for equipment maintenance –Improvements in indoor air quality lead to reduction in health problems –Reductions in energy costs lead to more affordable bills and reduced bill payment transactions costs

5. Benefits to Ratepayers and/or Taxpayers 5 However, sometimes household level benefits also result in benefits to ratepayers and/or taxpayers. Examples of Ratepayer/Taxpayer Benefits –Sometimes improvements in health of program participants leads to reductions in Medicaid or Medicare costs that accrue to taxpayers –Sometimes improvements in household payment patterns lead to reductions in the cost of bill payment subsidy programs and/or collections write-offs

6. Benefits to Society 6 And, it is important to consider program non-energy benefits that accrue to ALL members of society. Examples of Societal Benefits –Reductions in emissions of GHG and criteria air pollutants have broad-based impacts for society. –Moving from resource extraction and power generation to improvement of the housing stock and energy using equipment can yield net economic benefits, particularly at the state or local level.

7. Measurement Framework 7 Measurement of household non-energy benefits must be part of program design, implementation, and data tracking. Program Target – Define what non-energy benefits this program will deliver to households. Baseline Conditions – Document the status of the household/housing unit prior to service delivery. Gross Impacts – Measure the extent to which the program actually changes the household/housing unit status. Net Impacts – Compare changes for program participants to comparison group to measure net impacts.

8. NATIONAL WAP EVALUATION – MEASUREMENT AND MONETIZATION OF HEALTH BENEFITS 8

9. Measurement Framework 9 The National WAP Evaluation conducted pre/post surveys that measured housing unit and health status for program participants and a comparison group prior to and at least one year after weatherization. Treatment Group – Households scheduled for a WAP audit. Comparison Group –Treated by WAP one year prior to survey. Baseline Survey – Conducted in the summer of 2011 and collected client self-reports of housing unit conditions and health status. Follow-Up Survey – Conducted in the summer of 2013 and used the same survey questions on housing unit conditions and health status. Analysis – Restricted to homes that were weatherized and still occupying weatherized home in 2013. Compared changes for Treatment Group to changes for Comparison Group.

10. How Does WX Affect Health Status? 10 It is important to consider the specific mechanism through which the program is likely to improve health in order to effectively document program impacts. Common Health Problem – NHIS shows 8% of low-income households have an adult with asthma and 13% have a child with asthma. Weatherization Impact – By reducing infiltration, WX can reduce the level of pollen, dust, and insects in the home. By increasing ventilation, WX can reduce the amount of mold and mildew in the home. These are all asthma triggers. Occupant Survey Measurement – The Occupant Survey measured both client perceptions of housing unit status and client self-reports of health status.

11. Sample Results – Housing Unit Conditions 11 Pre- Treatment Post- Treatment Gross Change Comparison Group Change Net Change Observed Standing Water in Home 33%27%-6%0%-6% Frequent Mildew Odor or Musty Smell 31%22%-9%+1%-10% Home Somewhat or Very Infested with Insects 24%14%-10%+3%-13% Findings Client self-reports of housing unit status suggest that WX resulted in a reduction in potential asthma triggers. [Note: N is about 400 for Treatment Group and for Comparison Group. Differences are statistically significant at the 95% level.]

12. Sample Results – Status of Household Members 12 Pre- Treatment Post- Treatment Gross Change Comparison Group Change Net Change Asthma Symptoms in the Last Year 74% 0%+3%-3% Overnight Stay in Past 12 Months 15%11%-4%-1%-3% Emergency Room Visit in Past 12 Months 11%6%-5%-1%-4% Findings Client self-reports of health status suggest that there were net impacts on asthma symptoms and need for medical attention. [Note: N is about 70 for Treatment Group and for Comparison Group. Differences are not statistically significant at the 90% level.]

13. How Can Health Status be Tracked and Monetized? 13 Preferred Methodology – Integration of health records allows for tracking of treatments and health care costs. However, there are significant barriers to overcome to use those data. WAP Evaluation Methodology – Used national medical expenditure data to develop estimates for the average cost of emergency room visits and hospital stays.

14. Successes from National WAP Evaluation Occupant Survey Analysis 14 Measurement of Housing Unit Changes – The survey documented that some low-income housing units have problems related to high infiltration rates and improper moisture control, and that post- weatherization some of those clients perceived that there were improvements in the housing units with respect to these problems. Measurement of Household Health Status Changes – The survey documented that some low-income households had the rate of respiratory problems reduced as a result of weatherization. Monetization of Household Health Benefits – Using medical expenditure data, the evaluation was able to develop a reasonable quantitative measurement of the value of health impacts.

15. Limitations of National WAP Evaluation Occupant Survey Analysis 15 Sample Size – Survey was a comprehensive study of all client benefits from weatherization. A study focused on households with respiratory problems would have larger sample sizes and better measurements. Measurement Procedures – The survey relied on client self-reports. Other measurement procedures, including access to medical records would likely improve the quality of data. Linkage to Weatherization Outcomes – The study was not able to link housing unit service delivery records to individual cases and was not able to compare WX outcomes to health impacts. Monetization – The monetization procedure had to rely on average expenditure data when actual health data would be more compelling.

16. Lessons from National WAP Evaluation Occupant Survey Analysis 16 Feasibility – It is possible to measure and monetize household level non-energy benefits. These procedures are not necessarily any more complex or expensive than energy measurement and verification procedures. However, measurement procedures generally require up front planning rather than retrospective evaluation. Targeting – It is important to focus measurement on those benefits with the greatest value relative to the cost of measurement. A program that targets renters might focus on reductions in mobility costs. A program that targets homeowners might focus on reductions in equipment maintenance costs. A program like WAP that includes indoor air quality concerns might focus on documenting those benefits.

17. NATIONAL WAP EVALUATION – MEASUREMENT AND MONETIZATION OF SOCIETAL BENEFITS 17

18. Measurement Framework: Reductions in Emissions 18 The WAP Evaluation transformed state-level energy savings into state- level reductions in emissions and then monetized those reductions. Energy Saving – The WAP Evaluation estimated the energy savings for each type of energy (e.g. natural gas, electricity) for each state. Emissions Reductions – It used EPA procedures to estimate the reductions in GHG and criteria air pollutants. GHG Monetization – It monetized GHG reductions using OMB specified values for GHG and GHG equivalents. Criteria Air Pollutant Monetization – It monetized criteria air pollutant reductions using the APEEP model. [This method was recommended by the National Research Council in it s 2010 report.]

19. Measurement Framework: Economic Benefits 19 The WAP Evaluation conducted a REMI analysis to assess program economic impacts. REMI Model – The REMI model was implemented to assess whether the WAP program had dynamic economic impacts. The analysis did not find significant net impacts. The analyst suggested that the size of the program relative to the size of the economy is likely to limit measurement of such impacts. REMI Model vs. Regional I/O Models – More traditional impact analysis uses I/O models. Generally, those models tend to show a net economic benefit because WX/Home Performance is more labor intensive than energy resource extraction and electric power generation. This is particularly true for those jurisdictions that import most of their energy resources.

20. NEW JERSEY NATURAL GAS SAVEGREEN PROGRAMS 20

21. SAVEGREEN Programs Goals 21 Increase energy efficiency opportunities for customers Promote and enhance the use of the NJCEP offerings Raise awareness of the whole house approach to energy efficiency Increase customer awareness of energy efficient appliances and weatherization measures Increase NJ employment in energy efficiency and conservation

22. SAVEGREEN Programs Overview 22 2013 Programs NJ Clean Energy ProgramSAVEGREEN Project Jan-June July-DecJan-JuneJuly-Dec Furnace/Boiler Enhanced Rebate Furnace $400 $250$900$500 Boiler $300 NJNG Audit Required Furnace and Water Heater $6500 OBRP $900 Up to $6,500 OBRP 0% interest over 5 years NJNG Audit Required HPwES TierSavingsRebate Up to $10,000 OBRP 0% interest over 10 years SAVEGREEN pays NJCEP rebate when OBRP is used II10%-19.99%$2,000 III 20%-24.99%$4,000 >25%$5,000 C&I Direct Install70% of retrofit costs up to $125,000 Up to $53,571 OBRP 0% interest over 2 years

23. ENERGY IMPACTS 23

24. 24 Rebate Impact Natural Gas Savings TreatmentMatched ComparisonNet Savings # ThermsSavings # ThermsSavings Therms% PrePostTherms%PrePostTherms% Raw3,168 1,0281,099 -71 ** -6.9%3,168 1,0361,178 -143 ** -13.8%72 ** 7.0% Degree Day3,168 1,1021,026 75 ** 6.8%3,168 1,098 >-1>-0.1%76 ** 6.9% PRISM2,697 1,1101,008 101 ** 9.1%2,697 1,1031,089 14 ** 1.3%88 ** 7.9%

25. 25 HPwES Impact Natural Gas Savings TreatmentMatched ComparisonNet Savings # ThermsSavings # ThermsSavings Therms% PrePostTherms%PrePostTherms% Raw1,156 1,023899 125 * 12.2%1,156 1,0271,144 -117 ** -11.4%242 ** 23.6% Degree Day1,156 1,048849 199 ** 19.0%1,156 1,0501,072 -22 ** -2.1%221 ** 21.1% PRISM1,068 1,039814 225 ** 21.6%1,068 1,0371,048 -11 ** -1.0%235 ** 22.6% ** Denotes significance at the 99 percent level.

26. NON-ENERGY BENEFITS 26

27. Non-Energy Benefits Environmental Benefits Economic Benefits Health & Safety Benefits 27

28. Environmental Benefits Methodology 28 Energy Savings Reduction in Natural Gas Usage Avoided Emissions Tons of CO2, SO2, Nox, PM 2.5, and VOC Value Avoided Emissions $ value using APEEP Model

29. Environmental Benefits Avoided Emissions 29 Rebate HPwES OBRP 2013 Participants 6,7001,720 Natural Gas Savings Per Participant (Therms) 76221 Total Natural Gas Savings (Therms) 506,631380,316 Total Natural Gas Savings (MMBtu) 50,66338,032 Natural Gas Emission Rate (Tons CO2-eq/1,000 MMBtu) Marginal Value of Avoided Emissions (2015 dollars /Ton) 1 CO2-eq 2 62$41.4 SO2 3 0.000293$111,573 NOx 3 0.046$23,023 PM 2.5 3 0.000927$468,563 VOC 3 0.00268$44,180

30. Environmental Benefits Value of Avoided Emissions 30 RebateHPwES OBRP Total Savings Avoided Emissions (tons) Marginal Value of Avoided Emissions ($ per ton) Savings Avoided Emissions (tons) Marginal Value of Avoided Emissions ($ per ton) Savings CO2-eq 3,139$41.4$129,9452,356$41.4$97,547$227,492 SO2 0.015$111,573$1,6540.011$111,573$1,242$2,896 NOx 2.32$23,023$53,4851.74$23,023$40,150$93,634 PM 2.5 0.047$468,563$22,0020.035$468,563$16,516$38,518 VOC 0.136$44,180$6,0050.102$44,180$4,508$10,513 Total $213,091 $159,963$373,054 Monetary values are given in 2015 dollars Avoided emissions for CO2-eq are in metric tons. Avoided emissions for all other air pollutants are in short tons

31. Environmental Benefits Value of Avoided Emissions 31 Monetary values in 2015 dollars. Lifetime benefits measured over 15-year measure life. Avoided emissions for CO2-eq are in metric tons. Avoided emissions for all other air pollutants are in short tons Time PeriodRebate HPwES OBRP Total Benefit 2014$213,091$159,963$373,054 Lifetime$1,909,622$2,543,862$4,453,491

32. Economic Benefits Theory SAVEGREEN spending replaces retail spending Charge on energy bill would have been spent on retail goods Retail spending replaces natural gas spending Energy savings from program spent on retail goods Increase in economic activity because replacement spending has Higher labor intensity Greater percentage spent in NJ 32

33. Economic Benefits Methodology 33 Regional Input-Output Modeling System (RIMS) Produced by Bureau of Economic Analysis (BEA) Output Change = Expenditures * (Output Multiplier with Program – Output Multiplier Without Program) Employment Change = (1/$1,000,000) * Expenditures * (Employment Multiplier with Program – Employment Multiplier Without Program) Output Change = Expenditures * (Output Multiplier with Program – Output Multiplier Without Program) Employment Change = (1/$1,000,000) * Expenditures * (Employment Multiplier with Program – Employment Multiplier Without Program)

34. Economic Benefits Sources of Economic Impact 34 NJNG Administrative Spending NJNG and NJCEP Incentives Customer Net Costs Customer Total Savings Estimates based on 2013 expenditures and participants’ savings.

35. Economic Benefits Output Multipliers 35 Source of Economic Impact Output Multiplier With Program Output Multiplier Without Program Output Multiplier Increase SectorMultiplierSectorMultiplier NJNG Admin Spending Labor: Admin, Prog Dev.Office admin1.9212 Retail trade 1.71120.2100 General: Sales, MarketingBusiness supply1.76611.71120.0549 Labor: Rebates, Inspect, QCProf, scientific, tech1.92411.71120.2129 NJNG & NJCEP Incentives NJNG HPwES Incentives Services to buildings/dwellings 1.7845 Retail trade 1.71120.0733 NJNG Enhanced Rebates1.78451.71120.0733 NJCEP Rebates1.78451.71120.0733 Customer Net Costs HPwES Net Costs Services to buildings/dwellings 1.7845 Retail trade 1.71120.0733 Rebate Net Costs1.78451.71120.0733 Customer Total Savings Natural Gas SavingsRetail trade1.7112Natural gas1.26380.4474

36. Economic Benefits Employment Multipliers 36 Source of Economic Impact Employment Multiplier With Program Employ Multiplier Without Program Employ Multiplier Increase SectorMultiplierSectorMultiplier NJNG Admin Spending Labor: Admin, Prog Dev.Office admin14.0136 Retail trade 16.7121-2.6985 General: Sales, MarketingBusiness supply16.315216.7121-0.3969 Labor: Rebates, Inspect, QCProf, scientific, tech13.657816.7121-3.0543 NJNG & NJCEP Incentives NJNG HPwES Incentives Services to buildings/dwellings 22.062 Retail trade 16.71215.3499 NJNG Enhanced Rebates22.06216.71215.3499 NJCEP Rebates22.06216.71215.3499 Customer Net Costs HPwES Net Costs Services to buildings/dwellings 22.062 Retail trade 16.71215.3499 Rebate Net Costs22.06216.71215.3499 Customer Total Savings Natural Gas SavingsRetail trade16.7121Natural gas2.769313.9428

37. Economic Benefits Output Impact 37 Source of Economic Impact Base Amount Output Multiplier Economic Impact ($) With Program Without Program Change NJNG Admin Spending Labor: Admin, Prog Dev.$251,3461.92121.71120.2100$52,783 General: Sales, Marketing$1,941,0291.76611.71120.0549$106,562 Labor: Rebates, Inspect, QC$1,224,0561.92411.71120.2129$260,602 NJNG & NJCEP Incentives NJNG HPwES Incentives$23,694,7201.78451.71120.0733$1,736,823 NJNG Enhanced Rebates$4,804,5001.78451.71120.0733$352,170 NJCEP Rebates$2,178,4601.78451.71120.0733$159,681 Customer Net Costs HPwES Net Costs$1,568,6401.78451.71120.0733$114,981 Rebate Net Costs$35,030,9701.78451.71120.0733$2,567,770 Customer Total Savings Natural Gas Savings$10,086,7131.71121.26380.4474$4,512,795 Total Economic Impact $9,864,167

38. Economic Benefits Employment Impact 38 Source of Employment Impact Base Amount Employment MultiplierEconomic Impact (Job-Years) With Program Without Program Change NJNG Admin Spending Labor: Admin, Prog Dev.$251,34614.013616.7121-2.6985 General: Sales, Marketing$1,941,02916.315216.7121-0.3969 Labor: Rebates, Inspect, QC$1,224,05613.657816.7121-3.0543-4 NJNG & NJCEP Incentives NJNG HPwES Incentives$23,694,72022.06216.71215.3499127 NJNG Enhanced Rebates$4,804,50022.06216.71215.349926 NJCEP Rebates$2,178,46022.06216.71215.349912 Customer Net Costs HPwES Net Costs$1,568,64022.06216.71215.34998 Rebate Net Costs$35,030,97022.06216.71215.3499187 Customer Total Savings Natural Gas Savings$10,086,71316.71212.769313.9428141 Total Employment Impact 495

39. Economic Benefits Output and Employment 39 Type of ImpactImpact Output ($)$9,864,167 Employment (job-years)495

40. Health & Safety Benefits Methodology 40 EnergySavvy Data Available for 2014 participants Issues identified during NJNG Audits for Enhanced Rebates and $6500 OBRP Percent who address issues is not known

41. Health & Safety Issues Identified 41 Homes With Issue Rebate$6,500 OBRP #%#% Improper Dryer Venting89423%6125% Improper Bath Venting72419%6225% Did Not Pass Oven Inspection1895%62% Moisture Issues1323%104% Gas Piping Leaks902%4 Did Not Pass Depressurization Worst Case Test762%-- Did Not Pass Water Heater Draft (Worst Case)521%-- Gas Piping Leaks at Dryer281%00% Did Not Pass Water Heater Draft (Natural)15<1%-- Asbestos Issues15<1%00% CO ≥100ppm by Water Heater8<1%-- Structure Issues7<1%00% CO ≥100ppm in CAZ00%--

42. Health & Safety Benefits Participants with Any Issue 42 Customer Has Any Issue Rebate$6,500 OBRP #%#% Yes1,61642%9940% No1,96951%14760% No Health & Safety Data2837%00% Total3,868100%246100%

43. SUMMARY 43

44. Non-Energy Benefits 44 Non-Energy Benefits accrue to households, ratepayers/taxpayers, and society. Measurement and monetization is feasible and practical, but requires planning and investment of evaluation resources. As is true with measurement and verification of energy benefits, it is important to focus on those benefits with the greatest impact on program effectiveness and cost-effectiveness.

45. Contact Information 45 Jackie Berger President jackie-berger@ appriseinc.org 609-252-8009 David Carroll Managing Director david-carroll@ appriseinc.org 609-252-8010 APPRISE 32 Nassau Street Suite 200 Princeton, NJ 08542