1. South Jersey Gas Energy Efficiency Program Evaluation
October 17, 2016

2. Presentation Overview
SJG Energy Efficiency Programs Overview
SJG Energy Efficiency Programs Evaluation Overview
Key Evaluation Findings
Summary and Recommendations 2

3. SJG Energy Efficiency PROGRAMs overview3

4. SJG Energy Efficiency Program Goals
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 4

5. SJG Energy Efficiency Residential Programs
HVAC Rebate
High-efficiency heating and water heating systems
$500 SJG rebate
In addition to $900 NJCEP rebate
Participation in SJG audit required
HVAC Loan
0% SJG loan up to $6,500
HPwES Loan
Measures projected to save at least 20% (NJCEP Tier III)
0% SJG loan up to $10,000
In addition to NJCEP rebate up to $5,000
OPower Reports
Mail and communication to customers
Compare usage to similar neighbors
Tips for usage reduction 5

6. SJG Energy Efficiency C&I Programs
0% SJG loan up to $53,571
In addition to NJCEP rebate up to $125,000
Direct Install Loan
0% SJG loan up to $100,000
In addition to NJCEP rebate
Smart Start Loan
Requires submittal of usage reduction plan
Pay for Performance Loan 6

7. South Jersey Gas Energy Efficiency programs evaluation overview7

8. Evaluation Overview Background Research Program Data Analysis
Participant In-Depth Interviews
Participant Surveys
Contractor In-Depth Interviews
Usage Impact Analysis
Non-Energy Benefits 8

9. BACKGROUND RESEARCH 9

10. SJG Program Participation
Year
Residential
Commercial & Industrial
HVAC Rebate
HVAC Loan
HPwES Loan
Direct Install
Smart Start
2010
1,148
585 10
2011
3,026
321 13
2012
1,138
390 46
2013
936
267 14
2014
527 95
640
2015
692
336
1,168 20 9
7,467
431
3,371 92 10

11. SJG HPwES Measures HPwES Measures Installed Year 2010 2011 2012 2013
2014
2015
Number of Jobs
585
321
390
267
640
1,168
Gas Furnace
89%
90%
92%
81%
91%
Gas Boiler 8% 7% 6%
13%
Central A/C Unit
62%
69%
77%
68%
70%
71%
Gas Domestic Hot Water Heater
76%
85%
87%
78%
83%
Air Sealing
17%
99%
100%
Attic/Floor Insulation
58%
75%
Attic/Wall Insulation
14%
21%
19%
27%
20%
16%
Basement/Wall Insulation 5% 9% 4%
Ceiling Insulation 2% 1%
11%
Custom Insulation 3%
Custom Safety Measure
28%
37%
64% 11

12. Regulatory Uncertainty
SJG Program Challenges
Contractor Payment
Lack of timely payments from NJCEP.
Some contractors stopped participating.
Regulatory Uncertainty
Creates financial risk for SJG and trade allies.
Contractors negatively impacted when programs were curtailed or modified.
Instability and uncertainty made communication with customers difficult.
Two-year program is not long enough to achieve momentum.
Customers make rushed decisions at the end of program cycles.
HPwES participation has declined due to reduced incentives, increased interest rates and reduced loan terms. 12

13. SJG Program Accomplishments
Contractors developed to implement home performance.
Increased number of contractors in Southern NJ who understand building science.
Contractor Development
Executed contract with AEG to improve reporting into IMS.
Data and Reporting
Many homes participated in the energy efficiency programs and achieved energy savings.
Energy Saving
Homes have been sealed and are more comfortable.
Comfort Improvements
Required concurrent installation of high-efficiency hot water and heating systems.
Prevents orphaned hot water heaters.
Health and Safety
Increased focus on the importance of building science.
Building Science 13

14. SJG Program Modifications
Changes Made
Energy Finance Solutions (EFS) website improved.
Other improvements to EFS procedures.
Planned Changes
OPower reports will include information on SJG programs.
SJG Recommended Changes
More program marketing in partnership with NJCEP. 14

15. PARTICIPANT FEEDBACK 15

16. Participant Feedback In-Depth Interviews
HVAC
HPwES
OPower
Direct Install
Smart Start
Program Participation
4/15-12/15
9/15-12/15
3/16-5/16
2015
2015 & 2016
Selected Sample
100 50 20 14
Sample Stratification
50 rebate
50 loan
None
50: 2 contacts
50: 4 contacts
Completed Interviews 51 24 21 10 6
Interview Length
9-35 minutes
10-25 minutes
4-8 minutes
8-17 minutes
Response Rate
54%
52%
30%
58%
Cooperation Rate
77%
83%
48%
91%
100% 16

17. Participant Feedback Quantitative Surveys
Quantitative Participant Surveys
HVAC
HPwES
OPower
Program Participation
4/ /2015
9/ /2015
3/2016-5/2016
Selected Sample
300
800
Completed Interviews
160
156
126
Response Rate
62%
57%
28%
Cooperation Rate
89%
91%
44% 17

18. Satisfaction & Recommendations
Participant Feedback
Information Goals
Information Source
Motivation for participation
Participation
Energy efficiency implementation
Other factors impacting measure selection
Program Impact
Energy Bills
Home Comfort
Additional Planned Measures
Customer Impact
Satisfaction
Challenges
Rebate and Financing
Equipment/Improvements
SJG Programs
Contractors
Satisfaction & Recommendations 18

19. Participant Feedback Information Source
C&I Direct Install Program Information Source
Contractor: 8
SJG Representative: 4
SJG Advertisement: 3 19

20. Participant Feedback HPwES Participation
*Other reasons mentioned
NJCEP Rebate
Home Value
Increase Comfort 20

21. Participant Feedback C&I Participation
Participation Reason
Direct Install and Smart Start
Save Money on Energy Bills 6
Rebates and 0% Financing
New Equipment 5
Increase Energy Efficiency 2
Interested in Converting to Gas
Flexibility of Loan Payments 1
*Some participants provided more than one response 21

22. Participant Feedback HVAC Rebate vs Loan
*Other reasons mentioned
Loan Application Denied
Received Another Loan
Contractor Not Eligible 22

23. Participant Feedback Energy Finance Solutions23

24. Participant Feedback HPwES Measures Installed24

25. Participant Feedback HPwES Program Impact25

26. Participant Feedback HPwES Loan Impact26

27. Participant Feedback Program Impact
C&I Impact
7 of 10 Direct Install participants
4 of 6 Smart Start participants
Would not have implemented improvements without SJG Loan 27

28. 13 out of 16 C&I participants said their energy bills were lower.
Participant Feedback Bill Impact
13 out of 16 C&I participants said their energy bills were lower. 28

29. Participant Feedback OPower Program Impacts
What tips were provided in the letters/ s about how to reduce your energy usage? Did you take any of these actions?
Have you visited the website referenced in the letter/ after receiving the report?
Have you visited SJG’s website actions after receiving the report?
Did you learn about SJG’s HVAC/HPwES program from these recent letters/ s that compared your natural gas usage to your neighbor? 29

30. Participant Feedback Other Impacts HVAC HPwES C&I
15% said their home was warmer or more comfortable
12% said their hot water was hotter
9% said their heating was more even
Other benefits included reduced noise, and hot water getting hot faster
HVAC
40% said their home was warmer or more comfortable
10% said their heating was more even
Other benefits included improved air quality and reduced noise
HPwES
10 of 16 participants noted comfort improvements
C&I 30

31. Participant Feedback HVAC Satisfaction31

32. Participant Feedback HPwES Satisfaction32

33. Participant Feedback OPower Comparison
Those who did not feel the neighbor comparison was “Very Helpful” were most likely to state this was because their neighbors are different, their neighbors’ homes are different sizes, or their neighbors are not home year-round. 33

34. Participant Feedback
OPower Reports 34

35. Participant Feedback C&I Satisfaction Direct Install Smart Start
9 of 10 participants were very satisfied with the contractor
All 10 participants found the assessment very helpful
All 10 participants were very satisfied with the assessment
All 10 participants were very satisfied with the program process
9 of 10 participants were very satisfied with the SJG Loan program
Smart Start
4 of 6 participants were very satisfied with the program process
5 of 6 participants were very satisfied with the SJG Loan program 35

36. HVAC HPwES C&I Participant Feedback Recommendations
Increase program advertising
Simplify or streamline the process
Increase the rebate or loan amount
Provide better customer service or program coordination
HVAC
Improve the loan application process
Improve the loan payment process
Improve customer service or communication
HPwES
Simplify program and savings information
Continue the program
Increase advertising
C&I 36

37. CONTRACTOR FEEDBACK 37

38. Contractor Feedback Methodology
HVAC
11 Contractors
HPwES
12 Contractors
Direct Install
1 Contractor
Shore Green Energy
25 Contractors Interviewed 38

39. Contractor Feedback Information Goals
Program Information
Contractor information source
Customer Awareness
Customer Information Source
High Efficiency Equipment
Adequacy and impact of incentives
Other factors that influence installations
Program Impact
Energy efficiency implementation
Whole house approach
Business impact for contractors
Assessment
Barriers to participation
Satisfaction and recommendations 39

40. Contractor Feedback Information Source
Contractor Information Source
South Jersey Gas
Another Contractor
NJCEP
Contractor Association
Customer Information Source
Contractor
SJG Marketing 40

41. Contractor Feedback Program Incentives
Do you feel that customers would install the high-efficiency option without the SJG Loan?
Do you think customers would move forward with HPwES if the SJG Loan had not been available?
Upgrade Without Incentives
HVAC Contractors
HPwES Contractors
Total
SJG Loan
SJG Rebate
Yes 1 2 4 No 8 5 18
Not as Frequently 3
Maybe 6
Don’t Know 11 12 34 41

42. Contractor Feedback Other Influential Factors
Comfort
8 contractors
Saving energy
7 contractors
Old or Broken Equipment
Cost
4 contractors
What other factors in addition to the program incentives influenced customers’ decision to purchase high efficiency equipment or to move forward with the home performance project? 42

43. Contractor Feedback Whole House Work43

44. Contractor Feedback Whole House Work
What more can the program do to encourage whole house upgrades?
HVAC Contractor Recommendations
Remove BPI Requirement
Offer More Incentives and Rebates
Keep Rebates at Set Level for Longer Period
Reduce Contracting Time
HPwES Contractor Recommendations
Increase Rebate and Loan Amount
Improve Loan Term and Reduce Loan Paperwork
Build Customer Awareness about Home Performance
Lower Efficiency Requirements
Increase Number of Contractors in Program 44

45. Contractor Feedback Business Impact
Increased Revenue
New Customers Generated
More Conversions to Natural Gas
Increased Contractor Participation in Home Performance
Helped Educate Customers about Home Performance 45

46. Contractor Feedback Barriers to Participation
Paperwork
NJCEP Portal
Financial Approval for Loans
Venting Requirements
4 of 11 HVAC Contractors Noted 1 or More Barriers
Credit Requirements and Loan Denials
Required Energy Reduction
Program Software
Loan Paperwork
Contractor Cash Flow and Payment Risk
Insulation Requirements
9 of 12 HPwES Contractors Noted 1 or More Barriers 46

47. Contractor Feedback Contractor Satisfaction
All contractors were very or somewhat satisfied.
Contractor complaints related to:
Difficulty getting the loan processed by Energy Finance Solutions
Reliance on SJG to install gas lines
Paperwork that needs to be streamlined
Difficulty of financing approval 47

48. USAGE IMPACTS 48

49. HVAC Impact Natural Gas Savings
Treatment
Matched Comparison
Net Savings #
ccf
Savings %
Pre
Post
Raw
249
935
749
187***
20.0%
951
826
125***
13.1%
62***
6.6%
Degree Day
840
771
69***
8.2%
819
837
-18***
-2.2%
87***
10.3%
PRISM
241
838
780
58***
6.9%
856
-20***
-2.3%
78***
9.3%
***Denotes significance at the 99 percent level 49

50. HVAC Impact Savings By Incentive Type50

51. HVAC Impact Savings By Pre-Usage51

52. HPwES Impact Natural Gas Savings
Treatment
Matched Comparison
Net Savings #
ccf
Savings %
Pre
Post
Raw
646
982
664
318***
32.4%
984
866
118***
11.9%
201***
20.4%
Degree Day
869
675
194***
22.3%
859
871
-13***
-1.5%
206***
23.8%
PRISM
628
865
680
184***
21.3%
889
-21***
-2.4%
205***
23.7%
***Denotes significance at the 99 percent level 52

53. HPwES Impact Savings By NJCEP Rebate53

54. HPwES Impact Savings By Pre-Usage54

55. HPwES Impact Savings By Contractor55

56. HPwES Impact Savings By Contractor
Treatment
Matched Comparison Group
Net Savings
Average Project Cost
Obs
Pre
Post
Savings
ccf % A
281
890
678
211***
23.7%
883
897
-14**
-1.6%
225***
25.3%
$14,756 B 98
834
637
198***
806
812 -6
-0.7%
204***
24.4%
$17,697 C 50
746
615
131***
17.6%
742
745 -3
-0.4%
135***
18.0%
$14,839 D 47
901
696
205***
22.7%
882
898
-16
-1.9%
221***
24.5%
$15,743 E 34
872
694
178***
20.4%
875
920
-45*
-5.1%
223***
25.5%
$15,698 F 20
871
732
139***
16.0%
864
869 -5
-0.5%
144***
16.5%
$17,190
Other Contractors
116
887
702
184***
20.8%
879
-11
-1.2%
195***
22.0%
$15,595
All
646
859
675
194***
22.3%
-13***
-1.5%
206***
23.8%
$15,556 56

57. NON-ENERGY BENEFITS 57

58. Environmental Benefits
Non-Energy Benefits
Environmental Benefits
Economic Benefits
Health & Safety Benefits 58

59. Environmental Benefits Methodology
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 59

60. Natural Gas Emission Rate Marginal Value of Avoided Emissions
Environmental Benefits Avoided Emissions
HVAC
HPwES
2014 and 2015 Participants
1,650
1,808
Natural Gas Savings Per Participant (ccf) 87
206
Total Natural Gas Savings (ccf)
143,550
372,448
Total Natural Gas Savings (MMBtu)
14,492
38,088
Natural Gas Emission Rate
(Tons /1,000 MMBtu)
Marginal Value of Avoided Emissions
(2015 dollars /Ton) 1
CO2-eq (2014)2 62
$42.18
CO2-eq (2015)2
$43.32
SO23
$110,771
NOx3
0.046
$22,857
PM 2.53
$465,192
VOC3
$43,862
1 Avoided emissions for CO2-eq are in metric tons. Avoided emissions for all other air pollutants are in short tons.
2 OMB (2015). Two marginal values, corresponding to the annual value of the social cost of carbon (SCC) applicable to the year in which gas savings and avoided emissions occurred (2014 or 2015), were used in this analysis.
3 APEEP values from Muller (2008). 60

61. Marginal Value of Avoided Emissions
Environmental Benefits Value of Avoided Emissions
HVAC
HPwES
Total Savings
Avoided Emissions
(tons)
Marginal Value of Avoided Emissions
($ per ton)
Savings
CO2-eq
898
$42.18
$43.32
$38,476
2,360
$101,251
$139,727
SO2
0.0042
$110,771
$470
0.0111
$1,235
$1,705
NOx
0.6645
$22,857
$15,189
1.7465
$39,920
$55,109
PM 2.5
0.0134
$465,192
$6,248
0.0353
$16,422
$22,670
VOC
0.0389
$43,862
0.1022
$4,482
$6,188
Total
$62,089
$163,309
$225,398
Monetary values in 2015 dollars
Avoided emissions for CO2-eq are in metric tons. Avoided emissions for all other air pollutants are in short tons.
CO2 values differ for 2014 and 2015. 61

62. Environmental Benefits Value of Avoided Emissions
Time Period
HVAC
HPwES
Total Benefit
2014 & 2015
$62,089
$163,309
$225,398
Lifetime
$741,213
$1,949,576
$2,690,790
Monetary values in 2015 dollars
Avoided emissions for CO2-eq are in metric tons. Avoided emissions for all other air pollutants are in short tons 62

63. Economic Benefits Theory
South Jersey Gas program 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 63

64. Economic Benefits Methodology
Regional Input-Output Modeling System II (RIMS-II)
Produced by Bureau of Economic Analysis (BEA)
Multiplier = (Direct Effect + Indirect Effect + Induced Effects) / Direct Effects
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) 64

65. Economic Benefits Sources of Economic Impact
SJG Administrative Spending
SJG HVAC Loans & Rebates, SJG HPwES Loans and NJCEP Incentives
Customer Net Costs
Customer Natural Gas Savings 65

66. Output Multiplier Without Program Output Multiplier Increase
Economic Benefits HVAC Output Multipliers
Source of Economic Impact
Output Multiplier
With Program
Output Multiplier Without Program
Output Multiplier Increase
Sector
Multiplier
SJG Admin Spending
Administration, Prog. Dev.
Office admin
1.8524
Other Retail
1.7976
0.0548
Sales, Marketing, Website
Business support
1.8880
0.0904
Rebate Processing/Inspect.
Prof, scientific, tech
1.7646
Evaluation
HVAC Audit
Services to buildings/dwelling
1.7747
SJG & NJCEP Incentives
SJG HVAC Loan/Rebate
Services to buildings/dwellings
1.7447
NJCEP HVAC Rebate
Customer Net Costs
HVAC Customer Net Costs
Customer Total Savings
HVAC Natural Gas Savings
Natural gas dist.
1.3929
0.4047 66

67. Output Multiplier Without Program Output Multiplier Increase
Economic Benefits HPwES Output Multipliers
Source of Economic Impact
Output Multiplier
With Program
Output Multiplier Without Program
Output Multiplier Increase
Sector
Multiplier
SJG Admin Spending
Administration, Prog. Dev.
Office admin
1.8524
Other Retail
1.7976
0.0548
Sales, Marketing, Website
Business support
1.8880
0.0904
Rebate Processing/Inspect.
Prof, scientific, tech
1.7646
Evaluation
SJG & NJCEP Incentives
SJG HPwES Loan/Rebate
Services to buildings/dwellings
1.7447
NJCEP HPwES Rebate
Customer Net Costs
HPwES Customer Net Costs
Customer Total Savings
HPwES Natural Gas Savings
Natural gas dist.
1.3929
0.4047 67

68. Economic Benefits HVAC Output Impact
Source of Economic Impact
Base Amount
Output Multiplier
Economic Impact ($)
With Program
Without Program
Change
SJG HVAC Admin Spending
Administration, Prog. Dev.
$208,180
1.8524
1.7976
0.0548
$11,408
Sales, Marketing, Website
$14,664
1.8880
0.0904
$1,326
Rebate Processing/Insp.
$378,723
1.7646
-$12,498
Evaluation
$27,571
-$910
HVAC Audit
$371,100
1.7447
-$19,631
SJG & NJCEP Incentives
SJG HVAC Loan/Rebate
$3,566,020
-$188,642
NJCEP HVAC Rebate
$1,485,000
-$78,557
Customer Net Costs
HVAC Customer Net Costs
$7,798,940
-$412,564
Customer Total Savings
HVAC Natural Gas Savings
$2,067,016
1.3929
0.4047
$836,521
TOTAL NET HVAC IMPACT
$136,453 68

69. Economic Benefits HPwES Output Impact
Source of Economic Impact
Base Amount
Output Multiplier
Economic Impact ($)
With Program
Without Program
Change
SJG HPwES Admin Spending
Administration, Prog. Dev.
$192,847
1.8524
1.7976
0.0548
$10,568
Sales, Marketing, Website
$311,787
1.8880
0.0904
$28,186
Rebate Processing/Insp.
$419,223
1.7646
-$13,834
Evaluation
$43,609
-$1,439
SJG & NJCEP Incentives
SJG HPwES Loan
$17,404,016
1.7447
-$920,672
NJCEP HPwES Rebate
$8,399,296
-$444,323
Customer Net Costs
HPwES Customer Net Costs
$3,026,496
-$160,102
Customer Total Savings
HPwES Natural Gas Savings
$5,432,359
1.3929
0.4047
$2,198,476
TOTAL NET HPwES Impact
$696,860 69

70. Economic Benefits Output and Employment
2014 & 2015 Impacts
Output ($)
$833,312
Employment (job-years)
133 70

71. Health & Safety Benefits
Gas Leaks
Improper Dryer and Bath Venting
CO Levels Above Acceptable Ranges
Water Heater Backdrafting
Moisture Issues
Structure Issues
Asbestos Issues 71

72. KEY FINDINGS & RECOMMENDATIONS72

73. Overview of Findings Program Accomplishments Customer Participation
Contractor Participation
Participant and Contractor Satisfaction
Gas Usage Impacts
Environmental, Economic, H&S Benefits 73

74. HVAC Additional Measures
SJG Incremental Impact
Awareness
Contractor was customers’ most common information source.
SJG was contractors’ most common information source.
HVAC Implementation
Influenced installation of high-efficiency heating and water heating systems.
HVAC Additional Measures
Participants installed additional measures as a result of SJG assessment.
HPwES Implementation
Influenced additional energy efficiency improvements 74

75. Recommendations Program Design Program Offerings
HVAC customers have fewer opportunities for further energy savings
Consider other incentives to encourage HVAC participants to install whole house improvements
OPower Neighbor Comparison
Provide more information on selection of neighbors for comparison
Explain why it is a valid comparison
SJG Program Info
Include information on SJG Programs in OPower report
Change is planned for next mailing 75

76. Marketing and Outreach
Recommendations
Marketing and Outreach
Contractor Outreach
Contractor is most common source of information for customers
Continue intensive outreach and support to contractors to increase customer recruitment
Contractor Materials
Customers are not aware of all available rebates
Develop simplified brochure for contractors to provide to customers
Include information on SJG rebates, NJCEP rebates, and total rebates 76

77. Recommendations Implementation Shore Green Energy Education
Educate customers with opportunities for whole house performance work about NJCEP and SJG HPwES Programs.
Or SJG should follow up with these customers.
CO Detector Education
Encourage contractors to provide CO detectors as part of heating system installation.
Most common problem found in 30% of Shore Green Energy inspections.
SJG reported they will consider CO detectors for next filing. 77

78. Energy Finance Solutions
Recommendations
Energy Finance Solutions
Assess potential for additional efficiency improvements
EFS Paperwork
Assess whether website performance improved since EFS changes
EFS Website
Discuss improvements with EFS
Effective customer service
Need to resubmit same paperwork again
EFS Processing
Conduct research to ensure EFS improvements to their loan process and website over the past year have resulted in higher customer satisfaction
Additional Research 78

79. Recommendations Data Collection Health and Safety Information
Account Numbers
HVAC Loan participant data often missing SJG account number
Work with NJCEP or EFS to ensure data availability
Health and Safety Information
Collect data to assess the magnitude of health and safety impacts
Develop data collection spreadsheet for Shore Green Energy to report H&S issues
Discuss collection, reporting, and sharing of H&S data for HPwES 79

80. SJG Program Continuation
Continue SJG Programs if Funding is Available
High Natural Gas Savings
Other Non-Energy Benefits
Increased Investments in Energy Efficiency 80

81. Contact
Jackie Berger, Ph.D. President and Co-Founder APPRISE 32 Nassau Street, Suite 200 Princeton, NJ 81